ST CLAIR FUNDS INC
497, 1998-05-05
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<PAGE>

                                ST. CLAIR FUNDS, INC.
                                  480 PIERCE STREET
                             BIRMINGHAM, MICHIGAN 48009
                              TELEPHONE (800) 438-5789
                                          
PROSPECTUS

          St. Clair Funds, Inc. (the "Company") is an open-end investment 
company (a mutual fund) that currently offers a selection of investment 
portfolios.  This Prospectus describes five of the investment portfolios 
offered by the Company (the "Funds"):

                    Munder Institutional S&P 500 Index Equity Fund
                    Munder Institutional S&P MidCap Index Equity Fund
                    Munder Institutional S&P SmallCap Index Equity Fund
                    Munder Institutional Short Term Treasury Fund
                    Munder Institutional Money Market Fund

          Munder Capital Management (the "Advisor") serves as investment 
advisor to the Funds.

          This Prospectus explains the objectives, policies, risks and fees 
of each Fund.  Investors are encouraged to read this Prospectus carefully 
before investing and retain it for future reference.  A Statement of 
Additional Information ("SAI") has been filed with the Securities and 
Exchange Commission (the "SEC") and is incorporated by reference into this 
Prospectus.  The SAI may be obtained free of charge by calling the Company 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.

          ALTHOUGH THE MUNDER INSTITUTIONAL MONEY MARKET 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.

          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 THE PRINCIPAL AMOUNT INVESTED.

   SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED
   BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
      NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
        COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
             ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                     THE DATE OF THIS PROSPECTUS IS MAY 1, 1998

<PAGE>


                                 TABLE OF CONTENTS
   
                                                                            PAGE

Fund Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
     What are the key facts regarding the Funds? . . . . . . . . . . . . . . .3

Financial Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Fund Choices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
     What Funds are offered? . . . . . . . . . . . . . . . . . . . . . . . . .8
     Who may want to invest in the Funds?. . . . . . . . . . . . . . . . . . 10
     What are the Funds' investments and investment practices? . . . . . . . 10
     What are the risks of investing in the Funds? . . . . . . . . . . . . . 13

Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
     How is the Funds' performance calculated? . . . . . . . . . . . . . . . 15
     Where can I obtain performance data?. . . . . . . . . . . . . . . . . . 15

Purchases of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
     What price do I pay for shares? . . . . . . . . . . . . . . . . . . . . 16
     When can I purchase shares? . . . . . . . . . . . . . . . . . . . . . . 16
     What is the minimum required investment?. . . . . . . . . . . . . . . . 16
     How can I purchase shares?. . . . . . . . . . . . . . . . . . . . . . . 16

Redemptions of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
     What price do I receive for redeemed shares?. . . . . . . . . . . . . . 16
     When can I redeem shares? . . . . . . . . . . . . . . . . . . . . . . . 17
     How can I redeem shares?. . . . . . . . . . . . . . . . . . . . . . . . 17
     When will I receive redemption amounts? . . . . . . . . . . . . . . . . 17

Structure and Management of the Funds. . . . . . . . . . . . . . . . . . . . 17
     How are the Funds structured? . . . . . . . . . . . . . . . . . . . . . 17
     Who manages and services the Funds? . . . . . . . . . . . . . . . . . . 17
     What are my rights as a shareholder?. . . . . . . . . . . . . . . . . . 18

Dividends, Distributions and Taxes . . . . . . . . . . . . . . . . . . . . . 18
     When will I receive distributions from the Funds? . . . . . . . . . . . 18
     How will distributions be made? . . . . . . . . . . . . . . . . . . . . 19
     Are there tax implications of my investments in the Funds?. . . . . . . 19

Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
    



                                       2
<PAGE>


                                  FUND HIGHLIGHTS
                                          
                    WHAT ARE THE KEY FACTS REGARDING THE FUNDS?

Q:   WHAT ARE THE FUNDS' GOALS?

A:
     -    The Munder Institutional S&P 500 Index Equity Fund ("LargeCap 500
          Index 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 Munder Institutional S&P MidCap Index Equity Fund ("MidCap Index
          Fund") seeks to provide price performance and income that is
          comparable to the Standard & Poor's MidCap 400 Index ("S&P MidCap
          400").
     -    The Munder Institutional S&P SmallCap Index Equity Fund ("SmallCap
          Index Fund") seeks to provide price performance and income that is
          comparable to the Standard & Poor's SmallCap 600 Index ("S&P SmallCap
          600").
     -    The Munder Institutional Short Term Treasury Fund ("Short Term
          Treasury Fund") seeks to provide an enhanced money market return
          consistent with the preservation of capital.
     -    The Munder Institutional Money Market Fund ("Money Market Fund") 
          seeks to provide current income consistent with the preservation of 
          capital and liquidity.

Q:   WHAT ARE THE FUNDS' STRATEGIES?

A:   LARGECAP 500 INDEX 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.

     MIDCAP INDEX 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 MidCap
          400.  The Fund is managed through a "quantitative" or "indexing"
          investment approach, which attempts to duplicate the investment
          composition and performance of the S&P MidCap 400 through statistical
          procedures.

     SMALLCAP INDEX 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 
          SmallCap 600.  The Fund is managed through a "quantitative" or 
          "indexing" investment approach, which attempts to duplicate the 
          investment composition and performance of the S&P SmallCap 600 
          through statistical procedures.

     SHORT TERM TREASURY FUND

     -    This Fund invests only in U.S. Treasury securities and repurchase
          agreements relating to U.S. Treasury securities.

     MONEY MARKET FUND

     -    This Fund invests in a broad range of short-term, high quality, U.S.
          dollar-denominated instruments that are available in the money
          markets.

     Each Fund implements a different investment strategy which is described in
this Prospectus.



                                       3

<PAGE>


Q:   WHAT ARE THE FUNDS' RISKS?

A:   The following table summarizes the primary risks of investing in the 
Funds:

             FUND                                      RISK
             ----                                      ----
     LargeCap 500 Index Fund              Potential loss of investment due to
     MidCap Index Fund                    changes in the stock market in
     SmallCap Index Fund                  general, changes in the stock prices
                                          of particular companies and
                                          perceptions about particular
                                          industries.

     Short Term Treasury Fund             Potential loss of investment due to
                                          changes in the bond market and in
                                          interest rates.

     Money Market Fund                    Potential failure to maintain $1.00
                                          net asset value.

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 directly from the Distributor or from the Funds' 
transfer agent, First Data Investor Services Group, Inc. (the "Transfer 
Agent") or through arrangements with institutions.

     The minimum initial investment for each Fund is as follows:  $3,000,000 
for the LargeCap 500 Index Fund, $1,000,000 for each of the MidCap Index Fund 
and the SmallCap Index Fund and $10,000,000 for each of the Short Term 
Treasury Fund and the Money Market Fund.
     
     Shares may be redeemed through arrangements between the investors and
institutions.
     
Q:   WHEN AND HOW ARE DISTRIBUTIONS MADE?

A:   Dividend distributions are made from the dividends and interest earned 
on investments.  Dividends paid at least quarterly (if income is available): 
LargeCap 500 Index Fund, MidCap Index Fund, SmallCap Index Fund.

     Dividends paid monthly: Short Term Treasury Fund and 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 gains 
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.

                               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 Charge 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.



                                       4
<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.  Such expenses include payments to Directors, auditors, legal 
counsel and service providers (such as the Advisor), registration fees and 
distribution fees.  The fees shown below are based on estimated operating 
expenses for the current fiscal year.  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 table below and in the Example.

<TABLE>
<CAPTION>
                                     LARGECAP 500                    SMALLCAP      SHORT TERM       MONEY
                                        INDEX          MIDCAP         INDEX         TREASURY        MARKET
                                         FUND        INDEX FUND        FUND           FUND           FUND
                                    ------------------------------------------------------------------------
<S>                                  <C>             <C>              <C>          <C>              <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net
assets)
Advisory Fees. . . . . . . . . . . . .   .07%           .15%           .15%           .20%           .20%
Other Expenses+. . . . . . . . . . . .   .02%*          .03%*          .03%*          .03%*           .0%*
                                        -------        -------        -------        -------        -------
Total Fund Operating Expenses+ . . . .   .09%*          .18%*          .18%*          .23%*          .20%*
                                        -------        -------        -------        -------        -------
                                        -------        -------        -------        -------        -------
</TABLE>
___________________
   
*    The Advisor has voluntarily agreed to reimburse expenses to limit "Other 
Expenses" to .02% with respect to the LargeCap 500 Index Fund, .03% with 
respect to the MidCap Index Fund, .03% with respect to the SmallCap Index 
Fund, .03% with respect to the Short Term Treasury Fund, and .0% with respect 
to the Money Market Fund.  In the absence of such expense reimbursements, it 
is estimated that the other expenses and the total fund operating expenses 
would be as follows:  .54% and .61%, respectively, for LargeCap 500 Index 
Fund, 3.73% and 3.88%, respectively, for MidCap Index Fund, 3.73% and 3.88%, 
respectively, for SmallCap Index Fund, .55% and .75%, respectively, for Short 
Term Treasury Fund and .18% and .38%, respectively, for Money Market Fund.
    
+    After expense reimbursements.


                                      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 following 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          3
                                                              YEAR      YEARS
                                                              ----      -----
<S>                                                           <C>       <C>
LARGECAP 500 INDEX FUND. . . . . . . . . . . . . . . . . . .   $1        $3
MIDCAP INDEX FUND. . . . . . . . . . . . . . . . . . . . . .   $2        $6
SMALLCAP INDEX FUND. . . . . . . . . . . . . . . . . . . . .   $2        $6
SHORT TERM TREASURY FUND . . . . . . . . . . . . . . . . . .   $2        $7
MONEY MARKET FUND. . . . . . . . . . . . . . . . . . . . . .   $2        $6
</TABLE>

               [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]



                                       5
<PAGE>
                                FINANCIAL HIGHLIGHTS

     The following financial highlights for the period ended December 31, 
1997 were audited by Ernst & Young LLP, independent auditors.  The financial 
highlights for the LargeCap 500 Index Fund for the period ended March 31, 
1998 are unaudited.  The MidCap Index Fund commenced operations on February 
13, 1998.  As of the date of this prospectus, the Short Term Treasury Fund 
and the Money Market Fund had not commenced operations.  The financial 
highlights should be read in conjunction with the Annual Report of the Munder 
Institutional Funds dated December 31, 1997 , which is incorporated by 
reference in the SAI and the unaudited Financial Statements for the LargeCap 
500 Index Fund dated March 31, 1998 included in the SAI.  You may obtain the 
Annual Report of the Munder Institutional Funds and unaudited Financial 
Statements for the LargeCap 500 Index Fund without charge by calling (800) 
438-5789.

<TABLE>
<CAPTION>
                                                       LARGECAP 500 INDEX FUND
                                                       -----------------------
                                                     PERIOD ENDED
                                                       3/31/98      PERIOD ENDED
                                                      (UNAUDITED)    12/31/97(a)
                                                      -----------   ------------
<S>                                                  <C>            <C>
Net asset value, beginning of period . . . . . . . .    $10.00         $10.00
                                                        ------         ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . . . .      0.04           0.04
Net realized and unrealized gain on investments. . .      1.35           0.00(b)
                                                        ------         ------
Total from investment operations . . . . . . . . . .      1.39           0.04
                                                        ------         ------
LESS DISTRIBUTIONS:
Distributions from net investment income . . . . . .      ----          (0.04)
                                                        ------         ------
Total distributions. . . . . . . . . . . . . . . . .      ----          (0.04)
                                                        ------         ------
Net asset value, end of period . . . . . . . . . . .    $11.39         $10.00
                                                        ------         ------
                                                        ------         ------
TOTAL RETURN(c). . . . . . . . . . . . . . . . . . .     13.90%          0.39%
                                                        ------         ------
                                                        ------         ------

RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) . . . . . . . .   $62,625        $63,999
Ratio of operating expenses to average net assets. .      0.09%(d)       0.09%(d)
Ratio of net investment income to average net assets      1.46%(d)       1.76%(d)
Ratio of operating expenses to average net assets 
without expense reimbursement. . . . . . . . . . . .      0.33%(d)       0.61%(d)
Portfolio turnover rate. . . . . . . . . . . . . . .         2%          0.08%
Average commission rate(e) . . . . . . . . . . . . .   $0.0242        $0.0100
</TABLE>
______________________
(a)  LargeCap 500 Index Fund commenced operations on October 14, 1997.
(b)  The amount shown at this caption for each share outstanding throughout the
     period, may not accord with the change in aggregate gains and losses in 
     the portfolio securities for the period because of the timing of purchases
     and withdrawals of shares in relation to the fluctuating market values of 
     the portfolio.
(c)  Total return represents aggregate total return for the period indicated.
(d)  Annualized.
(e)  Average commission rate paid per share of securities purchased and sold by
     the Fund.



                                       6
<PAGE>
<TABLE>
<CAPTION>
                                                                        SMALLCAP
                                                                         INDEX
                                                                         FUND
                                                                         ----
                                                                        PERIOD
                                                                         ENDED
                                                                      12/31/97(a)
                                                                      -----------
<S>                                                                   <C>
Net asset value, beginning of period . . . . . . . . . . . . . . . . .  $10.00
                                                                        ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . .    0.04
Net realized and unrealized gain on investments. . . . . . . . . . . .    0.26
                                                                        ------
Total from investment operations . . . . . . . . . . . . . . . . . . .    0.30
                                                                        ------
LESS DISTRIBUTIONS:
Distributions from net investment income . . . . . . . . . . . . . . .   (0.04)
Distributions from net realized gains. . . . . . . . . . . . . . . . .   (0.03)
                                                                        ------
Total distributions. . . . . . . . . . . . . . . . . . . . . . . . . .   (0.07)
                                                                        ------
Net asset value, end of period . . . . . . . . . . . . . . . . . . . .  $10.23
                                                                        ------
                                                                        ------
TOTAL RETURN(b). . . . . . . . . . . . . . . . . . . . . . . . . . . .    3.00%
                                                                        ------
                                                                        ------

RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) . . . . . . . . . . . . . . . . .  $2,559
Ratio of operating expenses to average net assets. . . . . . . . . . .    0.18%(c)
Ratio of net investment income to average net assets . . . . . . . . .    0.80%(c)
Ratio of operating expenses to average net assets without 
      expense reimbursement. . . . . . . . . . . . . . . . . . . . . .    3.88%(c)
Portfolio turnover rate. . . . . . . . . . . . . . . . . . . . . . . .       8%
Average commission rate(d) . . . . . . . . . . . . . . . . . . . . . .  $0.0109
</TABLE>
____________________
(a)  SmallCap Index Fund commenced operations on August 7, 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.



                                       7
<PAGE>
                                    FUND CHOICES

     This Prospectus describes the following Funds offered by the Company: 
LargeCap 500 Index Fund, MidCap Index Fund, SmallCap Index Fund, Short Term 
Treasury Fund and Money Market Fund.  Investing in shares of any Fund should 
not be considered a complete investment program, but an important segment of 
a well-diversified investment program.

                              WHAT FUNDS ARE OFFERED?

                              LARGECAP 500 INDEX FUND

     GOAL AND PRINCIPAL INVESTMENT.  The goal of the LargeCap 500 Index Fund 
is to provide performance and income that is comparable to the S&P 500.  The 
S&P 500 is an index of 500 stocks which emphasizes large capitalization 
companies. See Appendix A for more information on the S&P 500.  The Fund will 
normally hold the securities of at least 80% of the stocks in the S&P 500.  
Stock selections are based primarily on market capitalization and industry 
weightings.

     The Fund seeks quarterly performance within a .95 correlation with the 
S&P 500.  The Fund's ability to achieve performance comparable to that of the 
S&P 500 may be affected by, among other things, transaction costs, 
administration and other expenses incurred by the Fund, changes in the 
composition of the S&P 500, and the timing and amount of investor purchases 
and redemptions.

     The Fund is managed through the use of a "quantitative" or "indexing" 
investment approach, which attempts to duplicate the investment composition 
and performance of the S&P 500 through statistical procedures.  As a result, 
the Advisor does not employ traditional methods of fund investment 
management, such as selecting securities on the basis of economic, financial 
and market analysis.
   
     PORTFOLIO MANAGEMENT.  Kenneth A. Schluchter III and Darin McBride 
jointly manage the Fund.  Mr. Schluchter, the Director of Domestic 
Investments of the Advisor, has managed the Fund since its inception.  He was 
previously a Systems Developer and Data Analyst for Compuware Incorporated 
(1993-1995). Mr. McBride, a Portfolio Manager of the Advisor has also managed 
the portfolio since its inception.  Previously, Mr. McBride was a Portfolio 
Research Analyst at Flexible Plan Investments, Ltd. (1995-1997) and an 
Account Executive at Ryder Systems, Inc. (1993-1994).
    
                                 MIDCAP INDEX FUND

     GOAL AND PRINCIPAL INVESTMENT.  The goal of the MidCap Index Fund is to 
provide performance and income that is comparable to the S&P MidCap 400.  The 
S&P MidCap 400 is an index of 400 stocks which emphasize medium 
capitalization companies.  See Appendix A for more information on the S&P 
MidCap 400.  The Fund will normally hold the securities of at least 80% of 
the issuers included in the S&P MidCap 400.  Stock selections are based 
primarily on market capitalization and industry weightings.

     The Fund seeks quarterly performance within a .95 correlation with the 
S&P MidCap 400.  The Fund's ability to achieve performance comparable to that 
of the S&P MidCap 400 may be affected by, among other things, transaction 
costs, administration and other expenses incurred by the Fund, changes in the 
composition of the S&P MidCap 400, and the timing and amount of investor 
purchases and redemptions.

     The Fund is managed through the use of a "quantitative" or "indexing" 
investment approach, which attempts to duplicate the investment composition 
and performance of the S&P MidCap 400 through statistical procedures.  As a 
result, the Advisor does not employ traditional methods of fund investment 
management, such as selecting securities on the basis of economic, financial 
and market analysis.



                                       8
<PAGE>
   
     PORTFOLIO MANAGEMENT.  Kenneth A. Schluchter III and Darin McBride jointly
manage the Fund.  Mr. Schluchter, the Director of Domestic Investments of the
Advisor, has managed the Fund since its inception.  He was previously a Systems
Developer and Data Analyst for Compuware Incorporated (1993-1995). Mr. McBride,
a Portfolio Manager of the Advisor has also managed the portfolio since its
inception.  Previously, Mr. McBride was a Portfolio Research Analyst at Flexible
Plan Investments, Ltd. (1995-1997) and an Account Executive at Ryder Systems,
Inc. (1993-1994).
    
                                SMALLCAP INDEX FUND

     GOAL AND PRINCIPAL INVESTMENTS.  The goal of the SmallCap Index Fund is 
to provide performance and income that is comparable to the S&P SmallCap 600. 
The S&P SmallCap 600 is an index of 600 stocks which emphasize small 
capitalization companies.  See Appendix A for more information on the S&P 
SmallCap 600.  The Fund will normally hold the securities of at least 80% of 
the issuers included in the S&P SmallCap 600.  Stock selections are based 
primarily on market capitalization and industry weightings.  

     The Fund seeks quarterly performance within a .95 correlation with the 
S&P SmallCap 600.  The Fund's ability to achieve performance comparable to 
that of the S&P SmallCap 600 may be affected by, among other things, 
transaction costs, administration and other expenses incurred by the Fund, 
changes in the composition of the S&P SmallCap 600, and the timing and amount 
of investor purchases and redemptions.

     The Fund is managed through the use of a "quantitative" or "indexing" 
investment approach, which attempts to duplicate the investment composition 
and performance of the S&P SmallCap 600 through statistical procedures.  As a 
result, the Advisor does not employ traditional methods of fund investment 
management, such as selecting securities on the basis of economic, financial 
and market analysis.
   
     PORTFOLIO MANAGEMENT.  Kenneth A. Schluchter III and Mark Drouse jointly 
manage the Fund.  Mr. Schluchter, the Director of Domestic Investments of the 
Advisor, has managed the Fund since its inception.  He was previously a 
Systems Developer and Data Analyst for Compuware Incorporated (1993-1995).  
Mr. Drouse has also been a Portfolio Manager of the Fund since its inception. 
He is a Portfolio Manager for the Advisor utilizing his systems experience 
in quantitative investment management.  His prior positions include Portfolio 
Analyst for Advisor (1996-1997), Systems Administrator of Munder Capital 
Management (1995-1996) and WAN Network Administrator for Comerica Bank 
(1993-1995).
    
                              SHORT TERM TREASURY FUND

     GOAL AND PRINCIPAL INVESTMENTS.  The goal of the Short Term Treasury 
Fund is to provide investors with a high level of current income consistent 
with capital preservation.  Under normal conditions, the Fund invests only in 
U.S. Treasury securities and repurchase agreements fully collateralized by 
U.S. Treasury securities.  Under normal market conditions, the Fund will 
invest 100% of its total assets in these securities.  The Fund's 
dollar-weighted average maturity usually will not exceed two years.

     The Fund is not a money market fund and, although it seeks to maintain 
minimum fluctuation of principal value, no assurance can be given that, when 
an investor desires to redeem Fund shares, the value of such shares will not 
be less than the value when originally purchased.

     PORTFOLIO MANAGEMENT.  Sharon E. Fayolle, Vice President and Director of 
Money Market Trading for the Advisor, manages the Fund.  Prior to joining the 
Advisor in 1996, she was a European Portfolio Manager for Ford Motor Company. 



                                       9
<PAGE>
                                   MONEY MARKET FUND

     GOAL AND PRINCIPAL INVESTMENTS.  The primary goal of the Money Market 
Fund 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, such as bank, commercial and other 
obligations (including Federal, state and local government obligations) that 
are available in the money markets.

                        WHO MAY WANT TO INVEST IN THE FUNDS?

INDEX 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 
Company.

SHORT TERM TREASURY FUND AND MONEY MARKET FUND

     These Funds are designed for investors who desire a high level of income 
and liquidity and, in the case of the Money Market Fund, stability of 
principal.

             WHAT ARE THE FUNDS' INVESTMENTS AND INVESTMENT PRACTICES?

     Each of the LargeCap 500 Index Fund, MidCap Index Fund and SmallCap 
Index Fund (collectively, the "Index Funds") invests in EQUITY SECURITIES 
which include common stocks, preferred stocks, convertible preferred stocks 
and warrants or rights to subscribe to or purchase such securities.  
Securities considered for purchase by the Funds may be listed or unlisted, 
and may be issued by companies with various levels of market capitalization.

     Each Fund (other than the Short Term Treasury Fund) may invest in CASH 
EQUIVALENTS, which are high-quality, short-term money market instruments 
including, among other things, commercial paper, bankers' acceptances and 
negotiable certificates of deposit of banks or savings and loan associations, 
short-term corporate obligations and short-term securities issued by, or 
guaranteed by, the U.S. Government and its agencies or instrumentalities.  
These instruments will be used primarily pending investment, to meet 
anticipated redemptions or as a temporary defensive measure.  If a Fund is 
investing defensively, it may not be pursuing its investment objective.

     The Index Funds may purchase AMERICAN DEPOSITARY RECEIPTS ("ADRS"), 
EUROPEAN DEPOSITARY RECEIPTS ("EDRS") AND GLOBAL DEPOSITARY RECEIPTS 
("GDRS"). ADRs are issued by  U.S. financial institutions and EDRs and GDRs 
are issued by European financial institutions.  They are receipts evidencing 
ownership of underlying foreign securities.

     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.  
The Short Term Treasury Fund will invest only in repurchase agreements fully 
collateralized by U.S. Treasury securities.  With respect to the Money Market 
Fund, the securities held subject to a repurchase agreement may have stated 
maturities exceeding 397 days, provided the repurchase agreement itself 
matures in 397 days.



                                      10
<PAGE>

     The Funds (other than the Short Term Treasury Fund) may invest in MONEY 
MARKET FUNDS.  The LargeCap 500 Index Fund and the MidCap Index Fund may also 
invest in Standard & Poor's Depositary Receipts ("SPDRs") and shares of other 
open-end investment companies that are structured to seek performance that 
corresponds to that of the appropriate Index.  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 BORROW MONEY in an amount up to 5% of its assets for 
temporary purposes and in an amount up to 33 1/3% of its assets to meet 
redemptions.  This is a "fundamental" policy which only can be changed by 
shareholders.

     Each Index 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.  

     The Short Term Treasury Fund may purchase "ZERO COUPON" treasury 
securities.  These are U.S. Treasury notes and bonds which have been stripped 
of their unmatured interest coupons and receipts or which are certificates 
representing interests in such stripped debt obligations and coupons.  Such 
securities are purchased at a discount from their face amount, giving the 
purchaser the right to receive their full value at maturity.  A zero coupon 
security pays no interest to its holder during its life.

     Each Fund is classified as a "diversified fund", which means that with 
respect to 75% of each Fund's assets, each Fund cannot invest more than 5% of 
its assets in a single issuer (other than the U.S. Government and its 
agencies and instrumentalities).  In addition, each Fund cannot invest more 
than 25% of its assets in a single issuer.

     The 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 securities and certain other securities may bear longer 
maturities), and the dollar-weighted average portfolio maturity of the Money 
Market Fund will not exceed 90 days.  Eligible Securities consist of 
securities that are determined by the Advisor, under guidelines established 
by the Board of Directors, to present minimal credit risk.  The Money Market 
Fund may also hold uninvested cash pending investment of late payments for 
purchase orders or during temporary defensive periods.



                                      11
<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>
                                                                                                       SHORT            
                                                        LARGECAP                      SMALLCAP         TERM          MONEY
        INVESTMENTS AND                                 500 INDEX      MIDCAP          INDEX         TREASURY        MARKET
     INVESTMENT PRACTICES                                 FUND       INDEX FUND        FUND            FUND           FUND
     --------------------                               ---------    ----------       --------       --------        ------
<S>                                                     <C>          <C>              <C>            <C>             <C>
FOREIGN SECURITIES.  Includes securities issued 
by foreign companies and foreign governments 
and their agencies, instrumentalities or political 
subdivisions and supranational organizations.  
Present more risks than U.S. securities. . . . . .          25%           25%            25%              N             Y

FORWARD FOREIGN CURRENCY EXCHANGE 
CONTRACTS.  Obligations of a Fund to purchase 
or sell a specific currency at a future date at a 
set price.  May decrease a Fund's loss due to a 
change in currency value, but also limits gains 
from currency changes. . . . . . . . . . . . . . .           Y              Y             Y              N               N

STRIPPED SECURITIES: 
     -    Participations in trusts that hold U.S.            N              N             N              N               Y
          Treasury and agency securities
     -    U.S. Treasury-issued receipts. . . . . .           N              N             N              Y               Y
     -    Non-U.S. Treasury receipts . . . . . . .           N              N             N              N               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

FUTURES AND OPTIONS ON FUTURES. (1)  
Contracts in which a Fund agrees, 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              N               N

OPTIONS.  A Fund may buy options giving it the 
right to require a buyer to buy a security held 
by the Fund (put options), buy options giving it 
the right to require a seller to sell securities to 
the Fund (call options), sell (write) options 
giving a buyer the right to require the Fund to 
buy securities from the buyer or write options 
giving a buyer the right to require the Fund to 
sell securities to the buyer during a set time at a 
set price.  Options may relate to stock indices, 
individual securities, foreign currencies or 
futures contracts.  See the SAI for more details 
and additional limitations . . . . . . . . . . . .           Y              Y             Y              N               N
</TABLE>
Key:
 Y  = investment allowed without restriction
 N  = investment not allowed
(1)   The limitation on margin and premiums for futures and related options 
      is 5% of a Fund's assets.



                                      12
<PAGE>
<TABLE>
<CAPTION>
                                                                                                       SHORT            
                                                        LARGECAP                      SMALLCAP         TERM          MONEY
        INVESTMENTS AND                                 500 INDEX      MIDCAP          INDEX         TREASURY        MARKET
     INVESTMENT PRACTICES                                 FUND       INDEX FUND        FUND            FUND           FUND
     --------------------                               ---------    ----------       --------       --------        ------
<S>                                                     <C>          <C>              <C>            <C>             <C>
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

ILLIQUID SECURITIES.  Typically there is no ready 
market for these securities, which inhibits the 
ability to sell them and to obtain their full 
market value, or there are legal restrictions 
on their resale by the Fund. . . . . . . . . . . .          15%           15%            15%              N            10%

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%

BANK OBLIGATIONS.  U.S. dollar denominated 
bank obligations, including certificates of 
deposit, bankers' acceptances, bank notes, time 
deposits issued by U.S. or foreign banks or 
savings institutions having total assets in excess 
of $1 billion. . . . . . . . . . . . . . . . . . .          25%           25%            25%              N             Y

U.S. GOVERNMENT OBLIGATIONS:
     -    Issued or guaranteed by U.S. 
          Government . . . . . . . . . . . . . . .           Y              Y             Y              Y               Y
     -    Issued or guaranteed by U.S. 
          Government agencies and 
          instrumentalities. . . . . . . . . . . .           Y              Y             Y              N               Y
   
CORPORATE OBLIGATIONS:
     -    Commercial paper . . . . . . . . . . . .           Y              Y             Y              N               Y
     -    Corporate bonds. . . . . . . . . . . . .           Y              Y             Y              N               Y
     -    Notes. . . . . . . . . . . . . . . . . .           Y              Y             Y              N               Y
     -    Other short-term obligations . . . . . .           Y              Y             Y              N               Y
     -    Variable Master Demand Notes . . . . . .           Y              Y             Y              N               Y
     -    Debentures . . . . . . . . . . . . . . .           Y              Y             Y              N               Y
    
ASSET-BACKED SECURITIES.  Includes debt 
securities backed by mortgages, installment 
sales contracts and credit card receivables. . . .           N              N             N              N               Y

GUARANTEED INVESTMENT CONTRACTS.  
Agreements of a Fund to make payments to an 
insurance company's general account in 
exchange for a minimum level of interest based 
on an index. . . . . . . . . . . . . . . . . . . .           N              N             N              N               Y
</TABLE>
Key:
 Y  = investment allowed without restriction
 N  = investment not allowed

                   WHAT ARE THE RISKS OF INVESTING IN THE FUNDS?
                                          
ALL FUNDS

     Consistent with a long-term investment approach, investors in a Fund 
should be prepared and able to maintain their investments during periods of 
adverse market conditions.  By itself, no Fund constitutes a balanced 
investment program and there is no guarantee that any Fund will achieve its 
investment objectives since there is uncertainty in every investment.



                                      13
<PAGE>
     A Fund's risk is mostly dependent on the types of securities it 
purchases and its investment techniques.  Certain Funds are authorized to use 
options, futures, and forward foreign currency exchange contracts, which are 
types of derivative instruments.  Derivative instruments are instruments that 
derive their value from a different underlying security, index or financial 
indicator. The use of derivative instruments exposes a Fund to additional 
risks and transaction costs.  Risks inherent in the use of derivative 
instruments include: (1) the risk that interest rates, securities prices and 
currency markets will not move in the direction that a portfolio manager 
anticipates; (2) imperfect correlation between the price of derivative 
instruments and movements in the prices of the securities, interest rates or 
currencies being hedged; (3) the fact that skills needed to use these 
strategies are different than those needed to select portfolio securities; 
(4) the possible absence of a liquid secondary market for any particular 
instrument and possible exchange-imposed price fluctuation limits, either of 
which may make it difficult or impossible to close out a position when 
desired; (5) leverage risk, that is, the risk that adverse price movements in 
an instrument can result in a loss substantially greater than the Fund's 
initial investment in that instrument (in some cases, the potential loss is 
unlimited); and (6) particularly in the case of privately-negotiated 
instruments, the risk that the counterparty will not perform its obligations, 
which could leave the Fund worse off than if it had not entered into the 
position.

     The risks of various investment techniques the Funds use are described 
in more detail in the SAI.

INDEX 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.

     There are certain risks and costs involved in investing in securities of 
companies and governments of foreign nations, which are in addition to the 
usual risks inherent in U.S. investments.  These considerations include the 
possibility of political instability (including revolution), future political 
and economic developments and dependence on foreign economic assistance. 
Investments in companies domiciled in foreign countries, therefore, may be 
subject to potentially higher risks than investments in the United States.

SHORT TERM TREASURY FUND
   
     The value of the Short Term Treasury Fund's shares, like the value of 
most fixed income securities, will rise and fall in response to changes in 
economic conditions, interest rates and the market's perception of the 
underlying securities held by the Fund.  Investing in the Fund 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 
Fund invests mostly in Fixed Income Securities, whose values typically rise 
when interest rates fall and whose values fall when interest rates rise.  
Fixed Income Securities with shorter maturities (time period until repayment) 
tend to be less affected by interest rate changes, but generally offer lower 
yields than securities with longer maturities.  Current yield levels should 
not be considered representative of yields for any future time.  Securities 
with variable interest rates may exhibit greater price variations than 
ordinary securities.  Zero coupon bonds are subject to greater market 
fluctuations from changing interest rates than debt obligations of comparable 
maturities which make current distributions of interest.
    
MONEY MARKET FUND

     The Money Market Fund attempts to maintain a constant net asset value of 
$1.00 per share.  However, your investment in the Fund is not guaranteed.



                                      14
<PAGE>
MIDCAP INDEX FUND AND SMALLCAP INDEX 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.  
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.

                                    PERFORMANCE
                                          
                     HOW IS THE FUNDS' PERFORMANCE CALCULATED?

     There are various ways in which the Funds may calculate and report their 
performance.

     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 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 reflects the average percentage change in 
value of an investment of shares in the Funds from the beginning date of the 
measuring period to the end of the measuring period.

     Each Fund may also publish its current yield.  Yield is the net 
investment income generated by a share of the Fund during a 30-day period 
divided by the maximum offering price per share on the 30th day.

     The current yield of shares in the Money Market Fund refers to the net 
income generated by an investment in shares of the Fund 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 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.

     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 use a Fund's performance data to compare 
it to investments 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 mutual funds reported by Lipper Analytical 
Services, Inc. or information reported in national financial publications 
(such as MORNINGSTAR, INC., MONEY MAGAZINE, FORBES, BARRON'S, THE WALL STREET 
JOURNAL and THE NEW YORK TIMES), or in 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 Fund's annual report dated December 31 of each year and 
semi-annual report dated June 30 of each year, which will automatically be 
mailed to shareholders.  To obtain copies of financial reports or performance 
information, call (800) 438-5789.



                                      15
<PAGE>
                                PURCHASES OF SHARES

     The following persons may purchase shares of the Funds: 
     -    fiduciary and discretionary accounts of institutions 
     -    high net worth individuals  
     -    institutional investors (including:  banks, savings institutions, 
          credit unions and other financial institutions, corporations,
          foundations, partnerships, pension and profit sharing and employee 
          benefit plans and trusts and insurance companies, investment
          companies, investment advisors and broker-dealers acting for their 
          own accounts or for the accounts of institutional investors)

                          WHAT PRICE DO I PAY FOR SHARES?

     Shares of the Funds are sold at net asset value per share next 
determined after receipt of a purchase order in proper form.  Shares are sold 
without an initial or contingent deferred sales charge.  The net value 
("NAV") of each Fund (except the Money Market Fund) is determined as of the 
close of trading on the New York Stock Exchange ("NYSE") (normally 4:00 p.m., 
Eastern time) on each day the NYSE is open for trading (a "Business Day").  
The NAV of the Money Market Fund is determined as of 3:00 p.m. (Eastern time) 
and as of the close of trading on the NYSE on each Business Day.  NAV is 
calculated by totaling the value of all of the assets of the Fund, 
subtracting the Fund's liabilities and expenses charged and dividing the 
result by the number of outstanding shares.

                            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 each Fund is as follows: $3,000,000 
for the LargeCap 500 Index Fund; $1,000,000 for each of the MidCap Index Fund 
and the SmallCap Index Fund and $10,000,000 for each of the Short Term 
Treasury Fund and the Money Market Fund.

                             HOW CAN I PURCHASE SHARES?

     Purchase orders may be placed directly through the Distributor or the 
Transfer Agent or through arrangements with institutions.  Payments for 
shares may be made by institutions in federal funds or other funds 
immediately available to the Sub-Custodian no later than 4:00 p.m. (Eastern 
time) on the next Business Day following receipt of the purchase order.

     You will not be issued a share certificate unless you request one in 
writing.  We reserve the right to (i) reject any purchase order and (ii) 
suspend the offering of Shares for any period of time.  You may pay for 
shares of each Fund with securities which the Fund is allowed to hold.

                               REDEMPTIONS OF SHARES
                                          
                    WHAT PRICE DO I RECEIVE FOR REDEEMED SHARES?
                                          
     The redemption price is the net asset value next determined after we
receive the redemption request in proper order.



                                      16
<PAGE>
                             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 net asset value per share next 
determined after receipt of the order by the Transfer Agent.  Shares held by 
an institution on behalf of its Customers must be redeemed in accordance with 
instructions and limitations pertaining to the account at that institution.

                      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.  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 Company is an open-end management investment company, which is a 
mutual fund that sells and redeems shares every day that it is open for 
business.  It is managed under the direction of its governing Board of 
Directors, which is responsible for the overall management of the Company and 
supervises the Funds' service providers.  The Company is a Maryland 
corporation.

                        WHO MANAGES AND SERVICES THE FUNDS?
   
     INVESTMENT ADVISOR.  The Funds' investment advisor is Munder Capital 
Management, a Delaware general partnership with its principal offices at 480 
Pierce Street, Birmingham, Michigan 48009.  The principal partners of the 
Advisor are Old MCM, Inc. ("MCM"), Munder Group LLC, Woodbridge and WAM 
Holdings, Inc. ("WAM").  MCM was founded in February 1985 as a Delaware 
corporation and was a registered investment advisor.  Woodbridge and WAM are 
indirect, wholly-owned subsidiaries of Comerica Incorporated.  Mr. Lee P. 
Munder, the Advisor's chairman, indirectly owns or controls approximately 45% 
and Comerica Incorporated owns or controls approximately 44% of the 
partnership interests in the Advisor.  As of December 31, 1997, the Advisor 
and its affiliates had approximately $45 billion in assets under management, 
of which $22.2 billion were invested in equity securities, $9 billion were 
invested in money market or other short-term instruments, $9.3 billion were 
invested in other fixed income securities, and $4.5 billion in 
non-discretionary assets.
    
     The Advisor provides overall investment management for the Funds, 
provides research and credit analysis and is responsible for all purchases 
and sales of portfolio securities.

     The Advisor is entitled to receive an annual fee equal to .07% of the 
average daily net assets of the LargeCap 500 Index Fund, .15% of the average 
daily net assets of each of the MidCap Index Fund and SmallCap Index Fund and 
 .20% of the average daily net assets of each of the Short Term Treasury Fund 
and Money Market Fund.

     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 



                                      17
<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.

     ADMINISTRATOR.  State Street Bank and Trust Company ("State Street" or 
the "Administrator") is the Funds' administrator.  The Administrator is 
located at 225 Franklin Street, Boston, Massachusetts 02110.  The 
Administrator generally assists the Company in all aspects of its 
administration and operations, including the maintenance of financial records 
and fund accounting.  State Street is entitled to receive fees at an annual 
rate of .0120% of the first $3 billion of the Funds' aggregate net assets; 
 .01% of the next $3 billion and .0075% of the Funds' aggregate net assets in 
excess of $6 billion (with a minimum annual fee of $200,000) plus the lesser 
of 0.005% of net assets or $150,000 for up to ten funds, and $10,000 per fund 
in excess of ten funds. State Street is also entitled to reimbursement for 
out-of-pocket expenses.

     State Street has entered into a Sub-Administration Agreement with the 
Distributor under which the Distributor provides certain administrative 
services with respect to the Fund.  The Administrator pays the Distributor a 
fee for these services out of its own resources at no cost to the Fund.

     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.

     CUSTODIAN AND SUB-CUSTODIAN.  Comerica Bank (the "Custodian") whose 
principal business address is One Detroit Center, 500 Woodward Avenue, 
Detroit, Michigan 48226, provides custodial services to the Funds.  No 
compensation is paid to the Custodian for such 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 
Sub-Custodian to the Funds.

     DISTRIBUTOR.  Funds Distributor, Inc. is the distributor of the Funds' 
shares and is located at 60 State Street, Suite 1300, 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 Company as a whole and affecting your particular Fund.  The 
Company 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 Director.  The SAI contains 
more information regarding voting rights.

     Comerica Bank currently has the right to vote a majority of the 
outstanding shares of the Funds as agent, custodian or trustee for its 
customers and therefore it is considered to be a controlling person of the 
Company.

                         DIVIDENDS, DISTRIBUTIONS AND TAXES
                                          
                 WHEN WILL I RECEIVE DISTRIBUTIONS FROM THE FUNDS?

     Each Fund expects to pay dividends and distributions from the net income 
and net realized capital gains, if any, earned on investments held by the 
Fund. Dividends from net income are declared and paid quarterly for each Fund 
(except the Money Market Fund and the Short Term Treasury Fund).  Dividends 
from net income are declared daily and paid monthly with respect to the Money 
Market Fund and are declared and paid monthly with respect to the Short Term 
Treasury Fund.



                                      18
<PAGE>

     Each Fund's net realized capital gains (including net short-term capital 
gains), if any, are distributed at least annually.

     Shareholders of the Money Market Fund whose purchase orders are received 
and become effective by 3:00 p.m. (Eastern time) on any day on which the NYSE 
is open for business receive dividends for that day.  Shareholders of the 
Money Market Fund whose redemption orders have been received by 3:00 p.m. 
(Eastern time) on a Business Day will not receive dividends for that day, 
while shareholders whose redemption orders are received after 3:00 p.m. 
(Eastern time) on a Business Day will receive that day's dividends.  
Shareholders of Funds other than the Money Market Fund will not receive 
dividends for the day purchase orders are received, but will receive 
dividends for the day redemption orders are received.  The above-stated 
dividend determination time with respect to redemptions is also applicable 
with respect to expedited redemption orders received by telephone.

     It is possible that a Fund may make a distribution in excess of the 
Fund's current and accumulated earnings and profits.  You will treat such a 
distribution as a return of capital which is applied against and reduces your 
basis in your shares.  To the extent that the amount of any such distribution 
exceeds your basis in your shares, you will treat the excess 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 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?
                                          
     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 rates, regardless of how long you have owned shares in the Fund. 
Dividends derived 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 



                                      19
<PAGE>

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.

     More information about the tax treatment of distributions from the Funds 
and about other potential tax liabilities, including backup withholding for 
certain taxpayers and information about tax aspects of dispositions of shares 
of the Funds, is contained in the SAI.  You should consult your tax advisor 
regarding the impact of owning Fund shares on your own personal tax 
situation, including the applicability of any state and local taxes.

                               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.



                                      20
<PAGE>
                                     APPENDIX A
                                          
STANDARD & POOR'S INDEXES

     "Standard & Poor's-Registered Trademark-", "S&P-Registered Trademark-", 
"S&P 500-Registered Trademark-", "Standard and Poor's 500", "500", "S&P 
MidCap 400", "Standard & Poor's MidCap 400", "400", "S&P SmallCap 
600-Registered Trademark-", "Standard & Poor's SmallCap 600", and "600" are 
trademarks of McGraw-Hill Companies, Inc. ("McGraw-Hill") and have been 
licensed for use by the Company.  Standard and Poor's Ratings Service ("S&P") 
is a division of McGraw-Hill.

     The Funds are not sponsored, endorsed, sold or promoted by S&P.  S&P 
makes no representation or warranty, express or implied, to the owners of the 
Funds or any member of the public regarding the advisability of investing in 
securities generally or in the Funds particularly or the ability of the S&P 
500, the S&P MidCap 400 or the S&P SmallCap 600 (together, the "Indexes") to 
track general stock market performance.  S&P's only relationship to the 
Company is the licensing of certain trademarks and trade names of S&P and of 
the Indexes which are determined, composed and calculated by S&P without 
regard to the Company or the Funds.  S&P has no obligation to take the needs 
of the Company or the owners of the Funds into consideration in determining, 
composing or calculating the Indexes.  S&P is not responsible for and has not 
participated in the determination of the prices and amount of the Funds or 
the timing of the issuance or sale of the Funds or in the determination or 
calculation of the equation by which the Funds are to be converted into cash. 
S&P has no obligation or liability in connection with the administration, 
marketing or trading of the Funds.

     S&P does not guarantee the accuracy and/or the completeness of the 
Indexes 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 Company, owners of the Funds, 
or any other person or entity from the use of the Indexes 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 Indexes 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.

     The S&P 500 is an index of 500 common stocks, most of which trade on the 
NYSE.  As of December 31, 1997, the S&P 500 represented approximately 70% of 
the market capitalization of publicly owned stocks in the United States.

     The S&P MidCap 400 is an index of 400 stocks which emphasizes medium 
capitalization companies.  The market capitalization of an issuer in the S&P 
MidCap 400 generally ranges from $100 million to $9 billion.  As of December 
31, 1997, the S&P MidCap 400 represented approximately 8% of the market 
capitalization of publicly owned stocks in the United States.

     The S&P SmallCap 600 is an index of 600 stocks which emphasizes small 
capitalization companies.  As of December 31, 1997, the S&P SmallCap 600 
represented approximately, 4% of the market capitalization of publicly owned 
stocks in the United States.



                                      21
<PAGE>
LIQUIDITY PLUS MONEY MARKET FUND
- ----------------------------------------------------------

     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 is a mutual fund that seeks to provide current interest income 
consistent with liquidity and stability of principal.  The Fund invests 
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 explains the objective, policies, risks and fees of the 
Fund.  You should read this Prospectus and retain it for future reference.  A 
Statement of Additional Information ("SAI") describing the Fund 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 Fund 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 Fund.

     SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR 
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED OR GUARANTEED.  AN 
INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF 
THE PRINCIPAL AMOUNT INVESTED.

     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.
   
     Shares of the Fund ("Shares") are sold only to Comerica Securities, its 
affiliates and subsidiaries 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.
    
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 MAY 1, 1998.

<PAGE>

                                 TABLE OF CONTENTS
   
<TABLE>
<CAPTION>
                                                                   PAGE
<S>                                                                <C>
Financial Information. . . . . . . . . . . . . . . . . . . . . .     3
Fund Information . . . . . . . . . . . . . . . . . . . . . . . .     4
Purchases of Shares. . . . . . . . . . . . . . . . . . . . . . .     7
Redemptions of Shares. . . . . . . . . . . . . . . . . . . . . .     8
Structure and Management of Fund . . . . . . . . . . . . . . . .     9
Dividends, Distributions and Taxes . . . . . . . . . . . . . . .    11
Performance. . . . . . . . . . . . . . . . . . . . . . . . . . .    12
Additional Information . . . . . . . . . . . . . . . . . . . . .    12
</TABLE>
    



                                       2
<PAGE>
                               FINANCIAL INFORMATION
                                          
                              FUND OPERATING EXPENSES
   
     The purpose of this table is to assist you in understanding the expenses 
charged directly to the Fund, which investors in the Fund will bear 
indirectly for the current fiscal year.  Such expenses include payments to 
Directors, auditors, legal counsel and service providers (such as the 
Advisor), registration fees and distribution fees.  The amount of "Other 
Expenses" in the table below is based on estimated expenses and projected 
assets for the current fiscal year and will fluctuate based on the actual 
amount of assets in the Fund. 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 table and in 
the Example shown below.  Shares of the Fund are sold without an initial or 
contingent deferred sales charge to Comerica Securities, its affiliates and 
subsidiaries, and certain other Institutional Investors.
    

<TABLE>
<CAPTION>
      ANNUAL OPERATING EXPENSES
      (AS A PERCENTAGE OF AVERAGE NET ASSETS)
      <S>                                                             <C>
      Advisory Fees . . . . . . . . . . . . . . . . . . . . . . .     0.35%
      12b-1 Fees  . . . . . . . . . . . . . . . . . . . . . . . .     0.35%
      Other Expenses. . . . . . . . . . . . . . . . . . . . . . .     0.16%
                                                                      ----
          Total Fund Operating Expenses . . . . . . . . . . . . .     0.86%
                                                                      ----
                                                                      ----
</TABLE>

                                      EXAMPLE

     This example shows the amount of expenses you would pay (directly or
indirectly) on a $1,000 investment in the Fund assuming (1) a 5% annual return
and (2) redemption at the end of the time periods.  THIS EXAMPLE IS NOT A
REPRESENTATION OF PAST OR FUTURE PERFORMANCE OR OPERATING EXPENSES; ACTUAL
PERFORMANCE OR OPERATING EXPENSES MAY BE LARGER OR SMALLER THAN THOSE SHOWN.

                 1 YEAR      3 YEARS     5 YEARS      10 YEARS
                 ------      -------     -------      --------
                   $9          $28         $48         $106



                                       3
<PAGE>

                                FINANCIAL HIGHLIGHTS

     The following financial highlights were audited by Ernst & Young LLP, 
independent auditors.  This information should be read in conjunction with 
the Fund's most recent Annual Report, which is incorporated by reference into 
the SAI.  You may obtain a copy of the Annual Report without charge by 
calling (800) 438-5789.

<TABLE>
<CAPTION>
                                                                                     PERIOD ENDED
                                                                                      12/31/97(a)
                                                                                      --------
<S>                                                                                  <C>
Net asset value, beginning of period . . . . . . . . . . . . . . . . . . . . . . . .    $1.00
                                                                                        -----
INCOME FROM INVESTMENT OPERATIONS:
    Net investment income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     0.030
                                                                                         -----
    Total from investment operations . . . . . . . . . . . . . . . . . . . . . . . .     0.030
                                                                                         -----
LESS DISTRIBUTIONS:
     Distributions from net investment income. . . . . . . . . . . . . . . . . . . .    (0.030)
                                                                                         -----
     Total distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    (0.030)
                                                                                         -----
Net asset value, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . .    $1.00
                                                                                         -----
                                                                                         -----
TOTAL RETURN (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     2.59%
                                                                                         -----
                                                                                         -----
RATIOS TO AVERAGE NET ASSET/SUPPLEMENTAL DATA:
     Net assets, end of period (in 000's)  . . . . . . . . . . . . . . . . . . . . . $56,636
     Ratio of operating expenses to average net assets . . . . . . . . . . . . . . .    0.86%(c)
     Ratio of net investment income to average net assets. . . . . . . . . . . . . .    4.29%(c)
     Ratio of operating expenses to average net assets without expenses reimbursed .    0.86%(c)
</TABLE>
_______________________
(a)  The Fund commenced operations on June 4, 1997.
(b)  Total return represents aggregate total return for the period indicated.
(c)  Annualized.

                                  FUND INFORMATION

     This section summarizes the Fund's principal investments.  The sections 
entitled "What are the Fund's Investments and Investment Practices?" and 
"What are the Risks of Investing in the Fund?" and the SAI give more 
information about the Fund's investment techniques and risks.

     GOAL AND PRINCIPAL INVESTMENTS.  The goal of the Fund is to provide 
current interest income consistent with liquidity and stability of principal.

     The Fund invests its assets in a broad range of short-term, high quality 
U.S. dollar-denominated instruments such as government, bank, and commercial 
paper obligations available in the money markets.

                              WHO MAY WANT TO INVEST?

     The Fund is designed for investors who desire a high level of income, 
liquidity and stability of principal.

             WHAT ARE THE FUND'S INVESTMENTS AND INVESTMENT PRACTICES?
                                          
     The Fund may invest in CASH EQUIVALENTS, which are high-quality, 
short-term money market instruments including, among other things, commercial 
paper, including variable amount master demand notes, 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.



                                       4
<PAGE>

     The Fund may invest in 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.  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 ("ECDs"), Eurodollar Time 
Deposits ("ETDs"), Canadian Time Deposits ("CTDs"), Schedule Bs, Yankee 
Certificates of Deposit ("Yankee CDs") and Yankee Bankers' Acceptances 
("Yankee BAs").  

     The Fund may enter into REPURCHASE AGREEMENTS.  Under a repurchase 
agreement, the 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 Fund may invest in REVERSE REPURCHASE AGREEMENTS.  Under a reverse 
repurchase agreement, the Fund sells securities and agrees to buy them back 
later at an agreed upon time and price.  Reverse repurchase agreements are 
used to borrow money for temporary purposes.

     The Fund may buy shares of registered MONEY MARKET FUNDS.  The Fund will 
bear a portion of the expenses of any investment company whose shares it 
purchases, including operating costs and investment advisory, distribution 
and administration fees.  These expenses would be in addition to the Fund's 
own expenses.  The 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 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.  

     The 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.

     Subject to applicable maturity and credit criteria, the Fund may 
purchase ASSET-BACKED SECURITIES which are securities backed by mortgages, 
installment sales contracts, credit card receivables or other assets.  

     The Fund may purchase STRIPPED SECURITIES.  Stripped securities include 
participations in trusts that hold U.S. Treasury and agency securities (such 
as TIGRs and CATS), U.S. Treasury-issued receipts and non-U.S. Treasury 
receipts.

     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.  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.

     The Fund may invest up to 5% of its assets in MUNICIPAL OBLIGATIONS 
which are payable from the issuer's general revenues, the revenue of a 
specific project, current revenues or a reserve fund.



                                       5
<PAGE>

     The Fund may invest in GUARANTEED INVESTMENT CONTRACTS ("GICs").  GICs 
are agreements of the Fund to make payments to an insurance company's general 
account in exchange for a minimum level of interest based on an index.

     The Fund may purchase securities on a "WHEN-ISSUED" basis and may 
purchase or sell securities on a "FORWARD COMMITMENT" basis.  Although the 
price to be paid by the Fund is set at the time of the agreement, the Fund 
usually does not pay for securities until they are received.  The value of 
the securities may change between the time the price is set and the time the 
price is paid.  When the Fund purchases securities for future delivery, the 
Fund's custodian will set aside cash or liquid securities to "cover" the 
Fund's position.  The Fund does not intend to purchase securities for future 
delivery for speculative purposes.

     The Fund may invest up to 25% of its assets in U.S. dollar-denominated 
FOREIGN SECURITIES such as debt obligations issued by foreign governments and 
their agencies, instrumentalities or political subdivisions, supranational 
organizations, and foreign corporations or convertible into foreign stock.

     The Fund may invest up to 10% of the value of its net assets in ILLIQUID 
SECURITIES.  Illiquid securities are securities for which there is no ready 
market, which inhibits the ability to sell them and obtain their full market 
value, or which are legally restricted as to their resale by the Fund.

     The 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 the Fund will not exceed 90 
days.  Eligible securities consist of securities that are determined by the 
Advisor, under guidelines established by the Board of Directors, to present 
minimal credit risk.  The Fund may also hold uninvested cash pending 
investment of late payments for purchase orders or during temporary defensive 
periods.

     The Fund may LEND SECURITIES to broker-dealers and other financially 
sound institutional investors who will pay the Fund for the use of the 
securities, thus potentially increasing the Fund's return.  The borrower must 
set aside cash or liquid securities equal to the value of the securities 
borrowed at all times during the term of the loan.  Loans may not exceed 25% 
of the value of the Fund's total assets.

     The Fund may BORROW MONEY in an amount up to 33 1/3% of its assets for 
temporary purposes.  This is a "fundamental" policy which only can be changed 
by shareholders.  Whenever borrowings exceed 5% of the Fund's total assets, 
the Fund will not make any additional investments.

     The Fund is classified as a "diversified fund."  With respect to 75% of 
the Fund's assets, it cannot invest more than 5% of its assets in a single 
issuer (other than the U.S. Government and its agencies and 
instrumentalities).  In addition, the Fund cannot invest more than 25% of its 
assets in a single issuer. This is a "fundamental" policy which can only be 
changed by shareholders. However, as an operating policy the Fund intends to 
adhere to the 5% limitation with regard to 100% of its portfolio.  The Fund 
may invest more than 25% of its assets in domestic bank certificates of 
deposit, bankers' acceptances, U.S. Government Securities, and repurchase 
agreements secured by such obligations.

                    WHAT ARE THE RISKS OF INVESTING IN THE FUND?

     By itself, the Fund does not constitute a balanced investment program 
and there is no guarantee that the Fund will achieve its investment objective 
since there is uncertainty in every investment.

     The Fund attempts to maintain a constant net asset value of $1.00 per 
share.  However, your investment in the Fund is not guaranteed.  Although the 
Fund expects under normal market conditions to be as fully invested as 
possible, the Fund may hold uninvested cash pending investment of late 
payment for purchase orders (or other payments) or during temporary defensive 
periods. Uninvested cash will not earn income.



                                       6
<PAGE>

     To the extent that the Fund invests in illiquid securities, the Fund 
risks not being able to sell such 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.

     Risks involved in lending securities include possible delay in 
recovering the loaned securities and possible loss of the securities or the 
collateral if the borrower fails financially.  

     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.  

     The risks of the various investment techniques are described in further 
detail in the SAI.

                                PURCHASES OF SHARES

     Institutional Investors that have entered into agreements with the 
Company to provide shareholder services for Customer Accounts may purchase 
shares of the Fund.

                          WHAT PRICE DO I PAY FOR SHARES?

     Shares of the Fund are sold at net asset value next determined by the 
Fund without any initial or contingent sales charge.  The Fund determines its 
net asset value ("NAV") as of 12:00 noon (Eastern time) and as of the close 
of trading on the New York Stock Exchange ("NYSE") (normally 4:00 p.m. 
Eastern time) on each day the NYSE is open for trading (a "Business Day").  
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.

                            WHEN CAN I PURCHASE SHARES?

     Shares of the Fund are sold on a continuous basis and can be purchased 
on any Business Day.

                             HOW CAN I PURCHASE SHARES?

     All share purchases on behalf of a Customer Account are effected through 
procedures established in connection with the requirements of the account. 
Confirmations of share purchases 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.

     Provided their procedures are compatible with the purchase and 
redemption operations of the Fund, Institutional Investors may purchase 
shares of the Fund on behalf of their Customers through automatic "sweeping" 
and other programs established by the Institutional Investors.  There is no 
minimum for initial or subsequent investments.



                                       7
<PAGE>

     Purchase orders by an institution for shares of the Fund must be 
received, together with payment, by Funds Distributor, Inc. (the 
"Distributor") or First Data Investor Services Group, Inc. (the "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 will be given to the institution placing the order, 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 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.

     You may pay for shares of the Fund with securities which the Fund is 
allowed to hold, subject to approval by the Advisor.

     We reserve the right to (i) reject any purchase order if, in our 
opinion, it is in the Fund's best interest to do so and (ii) suspend the 
offering of shares for any period of time.  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.

                               REDEMPTIONS OF SHARES
                                          
                    WHAT PRICE DO I RECEIVE FOR REDEEMED SHARES?
                                          
     The redemption price is the net asset value next determined after the 
Transfer Agent receives the redemption order.
                                          
                             WHEN CAN I REDEEM SHARES?

     You can redeem shares on any Business Day, provided all required 
documents have been received by the Transfer Agent.  The 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 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.  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.

                      WHEN WILL I RECEIVE REDEMPTION AMOUNTS?

     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 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 the Fund.



                                       8
<PAGE>
                        STRUCTURE AND MANAGEMENT OF THE FUND
                                          
                            HOW IS THE FUND STRUCTURED?

     The Company is managed under the direction of the Board of Directors, 
which is responsible for the overall management of the Company and supervises 
the Fund's service providers.  The Company is a Maryland corporation.

                         WHO MANAGES AND SERVICES THE FUND?
   
     INVESTMENT ADVISOR.  The Fund's 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 Old MCM, Inc. ("MCM"), Munder Group LLC, Woodbridge and WAM 
Holdings, Inc. ("WAM").  Woodbridge and WAM are indirect, wholly-owned 
subsidiaries of Comerica Incorporated.  Mr. Lee P. Munder, the Advisor's 
chairman, indirectly owns or controls approximately 45% and Comerica 
Incorporated owns or controls approximately 44% of the partnership interests 
in the Advisor.  As of December 31, 1997, the Advisor and its affiliates had 
approximately $45 billion in assets under active management, of which $22.2 
billion were invested in equity securities, $9 billion were invested in money 
market or other short-term instruments, $9.3 billion were invested in other 
fixed income securities, and $4.5 billion in non-discretionary assets.
    
     The Advisor 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.

     The Advisor is entitled to receive an annual fee equal to .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, 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.  State Street Bank and Trust Company ("State Street" or 
the "Administrator") serves as administrator for the Fund.  The Administrator 
is located at 225 Franklin Street, Boston, Massachusetts 02110.  The 
Administrator generally assists the Fund in all aspects of its administration 
and operations, including the maintenance of financial records and fund 
accounting.

     As compensation for its services, State Street is entitled to receive 
fees, based on the aggregate average daily net assets of the Fund and certain 
other investment portfolios that are advised by the Advisor and for which 
State Street 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).  State 
Street is also entitled to reimbursement for out-of-pocket expenses.  State 
Street has entered into a Sub-Administration Agreement with the Distributor 
under which the Distributor provides certain administrative services with 
respect to the Fund.  The Administrator pays the Distributor a fee for these 
services out of its own resources at no cost to the Fund.

     TRANSFER AGENT.  First Data Investor Services Group, Inc. ("First 
Data"), whose principal business address is 53 State Street, Boston, 
Massachusetts 02109 serves as transfer agent and dividend disbursing agent.  
First Data is a wholly-owned subsidiary of First Data Corporation.  
Shareholder inquiries may be direct to First Data at P.O. Box 5130, 
Westborough, Massachusetts 01581-5130.



                                       9
<PAGE>

     CUSTODIAN AND SUB-CUSTODIAN.  Comerica Bank (the "Custodian"), whose 
principal business address is One Detroit Center, 500 Woodward Avenue, 
Detroit, Michigan 48226, provides custodial services to the Fund.  No 
compensation is paid to the Custodian for such services.  Comerica receives a 
fee of 0.01% of the aggregate average daily net assets of the Fund 
beneficially owned by Comerica and its customers for certain shareholder 
services provided by Comerica to the Fund.  State Street serves as 
Sub-Custodian to the Fund.
   
     DISTRIBUTOR.  Funds Distributor, Inc. (the "Distributor") is the 
distributor of the Fund's shares.  The Distributor is located at 60 State 
Street, Suite 1300, Boston, Massachusetts 02109.  It markets and sells the 
Fund's shares.
    
     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 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 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.



                                      10
<PAGE>
                        WHAT ARE MY RIGHTS AS A SHAREHOLDER?

     All shareholders have equal voting, liquidation and other rights.  You 
are entitled to one vote for each share you hold and a fractional vote for 
each fraction of a share you hold.  You will be asked to vote on matters 
affecting the Company as a whole and affecting your particular Fund.  The 
Company 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 Director.  The SAI contains 
more information regarding voting rights.

     Comerica Bank currently has the right to vote a majority of the 
outstanding shares of the Fund as agent, custodian or trustee for its 
customers and therefore it is considered to be a controlling person of the 
Company.

                         DIVIDENDS, DISTRIBUTIONS AND TAXES
                                          
                         WHEN WILL I RECEIVE DISTRIBUTIONS?

     The net investment income of the Fund is declared daily and distributed 
monthly 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 who 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.

                          HOW WILL DISTRIBUTIONS BE MADE?

     Dividends are distributed 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.

           ARE THERE ANY TAX IMPLICATIONS OF MY INVESTMENTS IN THE FUNDS?

     In general, as long as the 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.  The 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 Fund intends 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 shares of the Fund.  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.

     The Fund does not expect to realize any net long-term capital gains and, 
therefore, does not currently foresee paying any capital gains.

     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 but not paid until 
January of the following year will be considered to be paid on December 31 of 
the year in which the dividend was declared.

     Shortly after the end of the year, you will receive from the Fund a 
statement of the amount and nature of the distributions made to you during 
the year.



                                      11
<PAGE>

     More information about the tax treatment of distributions from the Fund 
and about other potential tax liabilities, including backup withholding for 
certain taxpayers and information about tax aspects of dispositions of shares 
of the Fund, is contained in the SAI.  You should consult your tax advisor 
regarding the impact owning shares of the Fund on your own tax situation, 
including the applicability of any state and local taxes.

                                    PERFORMANCE
                                          
                     HOW IS THE FUND'S PERFORMANCE CALCULATED?
   
     The Fund may publish its current yield.  The current yield of shares in 
the Fund 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 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.
    
     The 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.  The Fund may also compare its 
performance 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 Fund may report how it is 
performing in comparison to the Consumer Price Index, an indication of 
inflation reported by the U.S. Government.

                               ADDITIONAL INFORMATION

     SHAREHOLDER COMMUNICATIONS.  You will receive unaudited Semi-Annual 
Reports and audited Annual Reports on a regular basis from the Fund.  In 
addition, you will receive updated Prospectuses or Supplements to this 
Prospectus.  In order to eliminate duplicate mailings, the Fund 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.



                                      12
<PAGE>


                               ST. CLAIR FUNDS, INC.
                                 480 PIERCE STREET
                             BIRMINGHAM, MICHIGAN 48009
                              TELEPHONE (800) 438-5789
                                          
                                     PROSPECTUS

     St. Clair Funds, Inc. (the "Company") is an open-end investment company 
(a mutual fund) that currently offers a selection of investment portfolios.  
This Prospectus describes five of the investment portfolios offered by the 
Company (the "Funds"):

               Munder S&P 500 Index Equity Fund
               Munder S&P MidCap Index Equity Fund
               Munder S&P SmallCap Index Equity Fund
               Munder Aggregate Bond Index Fund
               Munder Foreign Equity Fund

     Shares of the Funds are available to the public only through the 
purchase of certain variable annuity and variable life insurance contracts, 
subject to obtaining regulatory approval ("Contracts") issued by various life 
insurance companies (the "Insurers").  THE PROSPECTUS(ES) FOR THE SPECIFIC 
CONTRACT(s) SHOULD BE READ IN CONJUNCTION WITH THIS PROSPECTUS.

     Munder Capital Management (the "Advisor") serves as investment advisor 
to the Funds.

     This Prospectus contains the information that a prospective investor 
should know before investing in the Funds.  Investors are encouraged to read 
this Prospectus and retain it for future reference.  A Statement of 
Additional Information dated _______, 1998, as amended or supplemented from 
time to time, has been filed with the Securities and Exchange Commission (the 
"SEC") and is incorporated by reference into this Prospectus.  The Statement 
of Additional Information may be obtained free of charge by calling the 
Company at (800) 438-5789.  In addition, the SEC maintains a web site 
(http://www.sec.gov) that contains the Statement of Additional Information 
and other information regarding the Funds.

     SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR 
ENDORSED BY, ANY BANK, AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL 
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER 
AGENCY.  AN INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE 
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.

SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.


               The date of this Prospectus is _______, 1998.

<PAGE>

                                 TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                            PAGE
<S>  <C>                                                                    <C>
The Funds
     Investment Objectives and Policies . . . . . . . . . . . . . . . . . .   3
     Portfolio Instruments and Practices and Associated Risk Factors. . . .   6
     Investment Limitations . . . . . . . . . . . . . . . . . . . . . . . .  13
     Purchase and Redemption of Shares. . . . . . . . . . . . . . . . . . .  13
     Dividends and Distributions. . . . . . . . . . . . . . . . . . . . . .  13
Other Information
     Net Asset Value. . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
     Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
     Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16
     Description of Shares. . . . . . . . . . . . . . . . . . . . . . . . .  17
     Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
</TABLE>


     NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION, OR TO MAKE ANY 
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUNDS' STATEMENT 
OF ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION 
WITH THE OFFERING MADE BY THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH 
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN 
AUTHORIZED BY THE COMPANY OR HUNTLEIGH FUND DISTRIBUTORS, INC., (THE 
"DISTRIBUTOR").  THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE 
COMPANY OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY 
NOT LAWFULLY BE MADE.



                                       2
<PAGE>
                                    THE COMPANY

     Each of the Funds is a series of shares issued by the Company, an 
open-end management investment company registered under the Investment 
Company Act of 1940, as amended (the "1940 Act").  The Company's principal 
office is located at 480 Pierce Street, Birmingham, Michigan 48009 and its 
telephone number is (800) 438-5789.

                         INVESTMENT OBJECTIVES AND POLICIES

     This Prospectus describes the following Funds offered by the Company: 
Munder S&P 500 Index Equity Fund ("LargeCap Index Fund"), Munder S&P MidCap 
Index Equity Fund ("MidCap Index Fund"), Munder S&P SmallCap Index Equity 
Fund ("SmallCap Index Fund"), Munder Aggregate Bond Index Fund ("Bond Index 
Fund") and Munder Foreign Equity Fund ("Foreign Fund").  Investing in shares 
of any Fund should not be considered a complete investment program, but an 
important segment of a well-diversified investment program.

LARGECAP INDEX FUND

     The investment objective of the LargeCap Index Fund is to provide price 
performance and income that is comparable to the Standard & Poor's 500 
Composite Stock Price Index ("S&P 500"), an index which emphasizes large 
capitalization companies.  The S&P 500 is an index of 500 common stocks, most 
of which trade on the New York Stock Exchange Inc. ("NYSE").  As of December 
31, 1997, the S&P 500 represented approximately 70% of the market 
capitalization of publicly owned stocks in the United States.  Although the 
Fund may not hold securities of all 500 issuers included in the S&P 500, it 
will normally hold the securities of at least 80% of such issuers.  Stock 
selections are based primarily on market capitalization and industry 
weightings.  The Fund may also invest in Standard & Poor's Depositary 
Receipts ("SPDRs").  SPDRs are securities traded on the American Stock 
Exchange 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 certain S&P 
indices. See "Portfolio Instruments and Practices and Associated Risk 
Factors-Investment Company Securities."  The Fund seeks quarterly performance 
within a .95 correlation with the S&P 500.  The Fund's ability to achieve 
performance comparable to that of the S&P 500 may be affected by, among other 
things, transaction costs; administration and other expenses incurred by the 
Fund; changes in the composition of the S&P 500; and the timing and amount of 
investor purchases and redemptions.

     The Fund is managed through the use of a "quantitative" or "indexing" 
investment approach, which attempts to duplicate the investment composition 
and performance of the S&P 500 through statistical procedures.  As a result, 
the Advisor does not employ traditional methods of fund investment 
management, such as selecting securities on the basis of economic, financial 
and market analysis.

     In addition to investing in stocks, the LargeCap Index Fund is also 
authorized to invest in high quality short-term fixed income securities as 
cash reserves or for temporary defensive purposes.  The Fund may also invest 
in stock index futures contracts and options on stock indices and stock index 
futures contracts.  See "Portfolio Instruments and Practices and Associated 
Risk Factors" for a description of investment practices of the Fund.

MIDCAP INDEX FUND

     The investment objective of the MidCap Index Fund is to provide price 
performance and income that is comparable to the Standard & Poor's MidCap 400 
Index ("S&P MidCap 400"), an index which emphasizes medium capitalization 
companies.  As of December 31, 1997, the S&P MidCap 400 represented 
approximately 8% of the market capitalization of publicly owned stocks in the 
United States.  Although the Fund may not hold securities of all 400 issuers 
included in the S&P MidCap 400, it will normally hold the securities of at 
least 80% of such issuers.  Stock selections are based primarily on market 
capitalization and industry weightings.  The Fund may also invest in SPDRS.  
See "Portfolio Instruments and Practices and Associated Risk Factors- 
Investment Company Securities." The Fund seeks quarterly performance within a 
 .95 correlation with the S&P MidCap 400.  The Fund's ability to 

                                       3
<PAGE>

achieve performance comparable to that of the S&P MidCap 400 may be affected 
by, among other things, transaction costs; administration and other expenses 
incurred by the Fund; changes in the composition of the S&P MidCap 400; and 
the timing and amount of investor purchases and redemptions.

     The Fund is managed through the use of a "quantitative" or "indexing" 
investment approach, which attempts to duplicate the investment composition 
and performance of the S&P MidCap 400 through statistical procedures.  As a 
result, the Advisor does not employ traditional methods of fund investment 
management, such as selecting securities on the basis of economic, financial 
and market analysis.

     Medium capitalization companies typically are subject to a greater 
degree of change in earnings and business prospects than larger, more 
established companies.  In addition, securities of medium capitalization 
companies are traded in lower volume than those issued by larger companies 
and may be more volatile.  As a result, the Fund may be subject to greater 
price volatility than a fund consisting of larger capitalization stocks.

     In addition to investing in stocks, the MidCap Index Fund is also 
authorized to invest in high quality short-term fixed income securities as 
cash reserves or for temporary defensive purposes.  The Fund may also invest 
in stock index futures contracts and options on stock indices and stock index 
futures contracts.  See "Portfolio Instruments and Practices and Associated 
Risk Factors" for a description of investment practices of the Fund.

SMALLCAP INDEX FUND

     The investment objective of the SmallCap Index Fund is to provide price 
performance and income that is comparable to the Standard & Poor's SmallCap 
600 Index ("S&P SmallCap 600"), an index which emphasizes small 
capitalization companies.  As of December 31, 1997, the S&P SmallCap 600 
represented approximately 4% of the market capitalization of publicly owned 
stocks in the United States.  Although the Fund may not hold securities of 
all 600 issuers included in the S&P SmallCap 600, it will normally hold the 
securities of at least 80% of such issuers.  Stock selections are based 
primarily on market capitalization and industry weightings.  The Fund seeks 
quarterly performance within a .95 correlation with the S&P SmallCap 600.  
The Fund's ability to achieve performance comparable to that of the S&P 
SmallCap 600 may be affected by, among other things, transaction costs; 
administration and other expenses incurred by the Fund; changes in the 
composition of the S&P SmallCap 600; and the timing and amount of investor 
purchases and redemptions.

     The Fund is managed through the use of a "quantitative" or "indexing" 
investment approach, which attempts to duplicate the investment composition 
and performance of the S&P SmallCap 600 through statistical procedures.  As a 
result, the Advisor does not employ traditional methods of fund investment 
management, such as selecting securities on the basis of economic, financial 
and market analysis.

     Smaller capitalization companies typically are subject to a greater 
degree of change in earnings and business prospects than larger, more 
established companies.  In addition, securities of smaller capitalization 
companies are traded in lower volume than those issued by larger companies 
and may be more volatile.  As a result, the Fund may be subject to greater 
price volatility than a fund consisting of larger capitalization stocks.

     In addition to investing in stocks, the SmallCap Index Fund is also 
authorized to invest in high quality short-term fixed income securities as 
cash reserves or for temporary defensive purposes.  The Fund may also invest 
in stock index futures contracts and options on stock indices and stock index 
futures contracts.  See "Portfolio Instruments and Practices and Associated 
Risk Factors" for a description of investment practices of the Fund.

BOND INDEX FUND

     The investment objective of the Bond Index Fund is to provide investment 
exposure and income which generally correspond to the Lehman Brothers 
Aggregate Bond Index ("Aggregate Bond Index").  The Aggregate Bond Index is a 
broad market weighted index which encompasses three major classes of 
investment grade fixed-income securities in the United States:  U.S. Treasury 
and agency securities, corporate bonds and international (dollar-denominated) 
bonds, and mortgage-backed securities, all with maturities of greater than 
one year.  The Bond 



                                       4
<PAGE>

Index Fund will be constructed to approximately match the composition of the 
Aggregate Bond Index and seeks performance within a .95 correlation to the 
Aggregate Bond Index.

     The Aggregate Bond Index Includes fixed-rate debt issues rated 
investment grade or higher by Moody's Investor Service, Inc. ("Moody's"), 
Standard and Poor's Corporation, or Fitch Investors' Service.  All issues 
have at least one year maturity and an outstanding par value of at least $100 
million for U.S. Government issues and $25 million for all others.

     The Fund is managed through the use of a "quantitative" or "indexing" 
investment approach, which attempts to duplicate the investment composition 
and performance of the Aggregate Bond Index through statistical procedures.  
As a result, the Advisor does not employ traditional methods of fund 
investment management, such as selecting securities on the basis of economic, 
financial and market analysis.  The Fund may temporarily hold securities in 
other categories, including bankers acceptances, certificates of deposit and 
commercial paper that the Advisor may determine to be a suitable investment 
to achieve the stated objective for the Fund.  The Fund may also invest in 
bond index futures contracts and options on bond indices and bond index 
futures contracts.  The Fund is authorized to invest in high quality 
short-term fixed income securities as cash reserves or for temporary 
defensive purposes.  See "Portfolio Investments and Practices and Associated 
Risk Factors" for a description of investment practices of the Fund.

FOREIGN FUND

     The investment objective of the Foreign Fund is to provide a long-term 
appreciation by investing primarily in the common stock of foreign issuers 
and American Depository Receipts ("ADRs").  ADRs are receipts typically 
issued by a United States bank or trust company evidencing ownership of the 
underlying foreign securities.  The Fund will emphasize companies with a 
market capitalization of at least $100 million.  In selecting issuers, the 
Advisor may consider, among other factors, the location of the issuer, its 
competitive stature, the issuer's past record and future prospects for 
growth, and the marketability of its securities.

     The eligible universe of investments for the Fund will consist of common 
stock and ADRs of foreign incorporated companies trading in the following 
exchanges or markets:  NYSE, American Stock Exchange ("AMEX"), NASDAQ 
National Market System ("NASDAQ") and the United States over-the-counter 
market ("OTC") (the "Eligible Universe").

     On a continuing basis, but at least annually, the Advisor creates a list 
of securities eligible for purchase by the Fund (the "Eligible List").  The 
Advisor then calculates the adjusted market capitalization of all securities 
in the Eligible Universe.  The securities will then be sorted in descending 
order of adjusted market capitalization.  The securities in the Eligible 
Universe with a market capitalization greater than $100 million will 
constitute the Eligible List for the next 12-month period.  On a regular 
basis, securities will be added to the Eligible Universe as new ADR 
facilities and exchange listings occur, provided these new listings meet the 
other stated eligibility requirements. There will be no fixed limit as to the 
number of securities that the Fund can hold.

     The securities purchased by the Fund will be selected from the Eligible 
List.  These securities will be held in proportion to their individual market 
capitalization as a percentage of the market capitalization of the entire 
Fund portfolio.  Market capitalization of a stock will be computed by 
multiplying the market price of the stock by the number of shares 
outstanding, adjusted for control blocks.  A control block is defined as a 
block of stock owned by another corporation.  The primary sources of 
information regarding the existence and size of control blocks will be the 
S&P Stock Reports and the Morgan Stanley Capital International Perspective.  
Control blocks will be updated each time the Eligible List of securities is 
created or an issuer is added to the Eligible Universe.  A security held in 
the Fund's portfolio may be retained even if such security is no longer 
included on the Eligible List.

     In addition to investing in stocks, the Fund may, for the purpose of 
hedging its portfolio, purchase and write put and call options on foreign 
stock indices listed on domestic stock exchanges.  The Fund may also invest 
in convertible securities, stock index futures contracts, options on stock 
index futures contracts and, to a limited extent, warrants.  The Fund is also 
authorized to invest in high quality short-term fixed income securities as 
cash reserves 



                                       5
<PAGE>

or for temporary defensive purposes.  See "Portfolio Instruments and 
Practices and Associated Risk Factors -- Foreign Securities."

STANDARD & POOR'S INDEXES

     "Standard & Poor's-Registered Trademark-", "S&P-Registered Trademark-", 
"S&P 500-Registered Trademark-", "Standard and Poor's 500", "500", "S&P 
MidCap 400", "Standard & Poor's MidCap 400", "400", "S&P SmallCap 
600-Registered Trademark-", "Standard & Poor's 600", and "600" are trademarks 
of McGraw-Hill Companies, Inc. ("McGraw-Hill") and have been licensed for use 
by the Company. Standard and Poor's Ratings Service ("S&P") is a division of 
McGraw-Hill.

     The Funds are not sponsored, endorsed, sold or promoted by S&P.  S&P 
makes no representation or warranty, express or implied, to the owners of the 
Funds or any member of the public regarding the advisability of investing in 
securities generally or in the Funds particularly or the ability of the S&P 
500, the S&P MidCap 400 or the S&P SmallCap 600 (together, the "Indexes") to 
track general stock market performance.  S&P's only relationship to the 
Company is the licensing of certain trademarks and trade names of S&P and of 
the Indexes which are determined, composed and calculated by S&P without 
regard to the Company or the Fund.  S&P has no obligation to take the needs 
of the Company or the owners of the Funds into consideration in determining, 
composing or calculating the Indexes.  S&P is not responsible for and has not 
participated in the determination of the prices and amount of the Funds or 
the timing of the issuance or sale of the Funds or in the determination or 
calculation of the equation by which the Funds are to be converted into cash. 
 S&P has no obligation or liability in connection with the administration, 
marketing or trading of the Funds.

     S&P does not guarantee the accuracy and/or the completeness of the 
Indexes 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 Company, owners of the Funds, 
or any other person or entity from the use of the Indexes 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 Indexes 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.

INFORMATION REGARDING ALL FUNDS

     Each Fund may also lend its portfolio securities and borrow money for 
investment purposes (i.e., "leverage" its portfolio).  In addition, each Fund 
may enter into transactions in options on securities, securities indices and 
futures contracts and related options.  When deemed appropriate by the 
Advisor, a Fund may invest cash balances in repurchase agreements and may 
invest in other money market investments to maintain liquidity in an amount 
to meet expenses or for day-to-day operating purposes.  These investment 
techniques are described below and under the heading "Investment Objectives 
and Policies" in the Statement of Additional Information.

     When the Advisor believes that market conditions warrant, a Fund may 
adopt a temporary defensive position and may invest without limit in money 
market securities denominated in U.S. dollars.  See "Portfolio Instruments 
and Practices and Associated Risk Factors-Liquidity Management."

                  PORTFOLIO INSTRUMENTS AND PRACTICES AND
                          ASSOCIATED RISK FACTORS

     Investment strategies that are available to the Funds are set forth 
below. Additional information concerning certain of these strategies and 
their related risks is contained in the Statement of Additional Information.

     EQUITY SECURITIES.  "Equity securities," as used in this Prospectus, 
refers to common stock, preferred stock, and warrants or rights to subscribe 
to or purchase such securities and sponsored or unsponsored ADRs.  Securities 
considered for purchase by the Funds may be listed or unlisted, and may be 
issued by companies with various levels of market capitalization.



                                       6
<PAGE>

     Each Fund (other than the Bond Index Fund) may invest up to 5% of its 
net assets at the time of purchase in warrants and similar rights (other than 
those that have been acquired in units or attached to other securities).  
Warrants represent rights to purchase securities at a specific price valid 
for a specific period of time.  The prices of warrants do not necessarily 
correlate with the prices of the underlying securities.  Each Fund (other 
than the Bond Index Fund) may invest in convertible preferred stock.  A 
convertible security is a security that may be converted either at a stated 
price or rate within a specified period of time into a specified number of 
shares of common stock.  By investing in convertible securities, a Fund seeks 
the opportunity, through the conversion feature, to participate in the 
capital appreciation of the common stock into which the securities are 
convertible, while earning higher current income than is available from the 
common stock.

     As mutual funds investing primarily in common stocks, the LargeCap Index 
Fund, MidCap Index Fund, SmallCap Index Fund and Foreign Fund are subject to 
market risk--i.e., the possibility that common stock prices will decline over 
short or even extended periods.  Stock markets tend to be cyclical, with 
periods when stock prices generally rise and periods when stock prices 
generally decline.

     FOREIGN SECURITIES.  There are certain risks and costs involved in 
investing in securities of companies and governments of foreign nations, 
which are in addition to the usual risks inherent in U.S. investments.  These 
considerations include the possibility of political instability (including 
revolution), future political and economic developments and dependence on 
foreign economic assistance.  Investments in companies domiciled in foreign 
countries, therefore, may be subject to potentially higher risks than 
investments in the United States.

     The Bond Index Fund may invest in international dollar-denominated bonds 
and non-domestic bank obligations including Yankee bonds, which are dollar 
denominated bonds issued in the U.S. by foreign banks and corporations; 
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 Banker's 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 U.S.

     The Foreign Fund may invest in foreign securities of companies domiciled 
in countries with emerging economies located in the Asia-Pacific region, 
Eastern Europe, Latin and South America and Africa.  Political and economic 
structures in many of these countries may be undergoing significant evolution 
and rapid development, and emerging market countries may lack the social, 
political and economic stability characteristic of more developed countries.

     In addition, many Asian countries may be subject to a greater degree of 
social, political and economic instability than is the case in the United 
States and European countries.  Such instability may result from (i) 
authoritarian governments or military involvement in political and economic 
decision-making; (ii) popular unrest associated with demands for improved 
political, economic and social conditions; (iii) internal insurgencies; (iv) 
hostile relations with neighboring countries; and (v) ethnic, religious and 
racial disaffection.

     The economies of most emerging markets and Asian countries are heavily 
dependent upon international trade and are accordingly affected by protective 
trade barriers and the economic conditions of their trading partners, 
principally, the United States, Japan, China and the European Community.  The 
enactment by the United States or other principal trading partners of 
protectionist trade legislation, reduction of foreign investment in the local 
economies and general declines in the international securities markets could 
have a significant adverse effect upon the securities of issuers domiciled in 
such countries.

     DEPOSITARY RECEIPTS. ADRs are depositary receipts typically issued by a 
U.S. bank or trust company which evidence ownership of underlying securities 
issued by a foreign corporation.  Generally, depositary receipts in 
registered form are designed for use in the U.S. securities market and 
depositary receipts in bearer form are designed for use in securities markets 
outside the United States.  Depositary receipts may not necessarily be 
denominated in the same currency as the underlying securities into which they 
may be converted. Depositary receipts may be issued pursuant to sponsored or 
unsponsored programs. In sponsored programs, an issuer has made 



                                       7
<PAGE>

arrangements to have its securities traded in the form of depositary 
receipts.  In unsponsored programs, the issuer may not be directly involved 
in the creation of the program.  Although regulatory requirements with 
respect to sponsored and unsponsored programs are generally similar, in some 
cases it may be easier to obtain financial information from an issuer that 
has participated in the creation of a sponsored program.  Accordingly, there 
may be less information available regarding issuers of securities underlying 
unsponsored programs and there may not be a correlation between such 
information and the market value of the depositary receipts. Depositary 
receipts also involve the risks of other investments in foreign securities, 
as discussed above.  For purposes of the Funds' investment policies, a Fund's 
investments in depositary receipts will be deemed to be investments in the 
underlying securities.

     FUTURES CONTRACTS AND OPTIONS.  The Funds may invest in futures 
contracts and options on futures contracts for hedging purposes or to 
maintain liquidity. However, a Fund may not purchase or sell a futures 
contract unless immediately after any such transaction the sum of the 
aggregate amount of margin deposits on its existing futures positions and the 
amount of premiums paid for related options is 5% or less of its total assets.

     Futures contracts obligate a Fund, at maturity, to take or make delivery 
of certain securities or the cash value of a bond or securities index.  When 
interest rates are rising, futures contracts can offset a decline in value of 
the Fund's portfolio securities.  When rates are falling, these contracts can 
secure higher yields for securities the Fund intends to purchase.

     The Funds may purchase and sell call and put options on futures 
contracts traded on an exchange or board of trade.  When a Fund purchases an 
option on a futures contract, it has the right to assume a position as a 
purchaser or seller of a futures contract at a specified exercise price at 
any time during the option period.  When a Fund sells an option on a futures 
contract, it becomes obligated to purchase or sell a futures contract if the 
option is exercised.  In anticipation of a market advance, a Fund may 
purchase call options on futures contracts as a substitute for the purchase 
of futures contracts to hedge against a possible increase in the price of 
securities which the Fund intends to purchase.  Similarly, if the value of a 
Fund's portfolio securities is expected to decline, the Fund might purchase 
put options or sell call options on futures contracts rather than sell 
futures contracts.  In connection with a Fund's position in a futures 
contract or option thereon, the Fund will create a segregated account of 
liquid assets or will otherwise cover its position in accordance with 
applicable requirements of the SEC.

     In addition, the Funds may write covered call options, buy put options, 
buy call options and write secured put options on particular securities or 
various stock indices for investment or hedging purposes.  Options trading is 
a highly specialized activity which entails greater than ordinary investment 
risks.  A call option for a particular security gives the purchaser of the 
option the right to buy, and a writer the obligation to sell, the underlying 
security at the stated exercise price at any time prior to the expiration of 
the option, regardless of the market price of the security.  The premium paid 
to the writer is in consideration for undertaking the obligations under the 
option contract. A put option for a particular security gives the purchaser 
the right to sell the underlying security at the stated exercise price at any 
time prior to the expiration date of the option, regardless of the market 
price of the security. In contrast to an option on a particular security, an 
option on a stock index provides the holder with the right to make or receive 
a cash settlement upon exercise of the option.

     The use of derivative instruments exposes a Fund to additional risks and 
transaction costs.  Risks inherent in the use of derivative instruments 
include: (1) the risk that interest rates, securities prices and currency 
markets will not move in the direction that a portfolio manager anticipates; 
(2) imperfect correlation between the price of derivative instruments and 
movements in the prices of the securities, interest rates or currencies being 
hedged; (3) the fact that skills needed to use these strategies are different 
than those needed to select portfolio securities; (4) inability to close out 
certain hedged positions to avoid adverse tax consequences; (5) the possible 
absence of a liquid secondary market for any particular instrument and 
possible exchange-imposed price fluctuation limits, either of which may make 
it difficult or impossible to close out a position when desired; (6) leverage 
risk, that is, the risk that adverse price movements in an instrument can 
result in a loss substantially greater than a Fund's initial investment in 
that instrument (in some cases, the potential loss is unlimited); and (7) 
particularly in the case of privately-negotiated instruments, the risk that 
the counterparty will fail to perform its obligations, which could leave 



                                        8
<PAGE>

a Fund worse off than if it had not entered into the position.  For a further 
discussion, see "Fund Investments" and the Appendix in the Statement of 
Additional Information.

     When a Fund invests in a derivative instrument, it may be required to 
segregate cash and other liquid portfolio securities to "cover" the Fund's 
position.  Assets segregated or set aside generally may not be disposed of so 
long as a Fund maintains the positions requiring segregation or cover. 
Segregating assets could diminish a Fund's return due to the opportunity 
losses of foregoing other potential investments with the segregated assets.

     The Funds are not commodity pools, and all futures transactions engaged 
in by a Fund must constitute bona fide hedging or other permissible 
transactions in accordance with the rules and regulations promulgated by the 
Commodity Futures Trading Commission.  Successful use of futures and options 
is subject to special risk considerations.

     For a further discussion see "Additional Information on Fund 
Investments" and the Appendix to the Statement of Additional Information.

     CORPORATE OBLIGATIONS.  The Bond Index Fund may purchase corporate bonds 
and commercial paper that meet the applicable quality and maturity 
limitations. The Bond Index Fund will purchase only those securities which 
are considered to be investment grade or better (within the four highest 
rating categories of S&P or Moody's or, if unrated, of comparable quality).  
Obligations rated "Baa" by Moody's lack outstanding investment 
characteristics and have speculative characteristics.  Adverse economic 
conditions or changing circumstances are more likely to lead to a weakened 
capacity of obligations rated "BBB" by S&P to pay interest and repay 
principal than in the case of higher grade obligations. After purchase by the 
Fund, a security may cease to be rated or its rating may be reduced below the 
minimum required for purchase by the Fund.  Neither event will require the 
Fund to sell such security.  However, the Advisor will reassess promptly 
whether the security presents minimal credit risks and determine whether 
continuing to hold the security is in the best interests of the Fund. To the 
extent that the ratings given by Moody's, S&P or another nationally 
recognized statistical rating organization ("NRSRO") for securities may 
change as a result of changes in the rating systems or because of corporate 
reorganization of such rating organizations, the Fund will attempt to use 
comparable ratings as standards for its investments in accordance with 
investment objective and policies of the Fund.  Descriptions of each rating 
category are included as Appendix A to the Statement of Additional 
Information.

     ASSET-BACKED SECURITIES.  Subject to applicable credit criteria, the 
Bond Index 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 unscheduled 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.  In calculating the average weighted 
maturity of the Bond Index Fund, the maturity of mortgage-backed instruments 
will be based on estimates of average life.  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 at 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 the premium paid.

     Presently there are several types of mortgage-backed securities or 
guaranteed by U.S. Government agencies, including guaranteed mortgage 
pass-through certificates, which provide the holder with a pro rate interest 
in the underlying mortgages, and collateralized mortgage obligations 
("CMOs"), which provide the holder with a specified interest in the cash flow 
of a pool of underlying mortgages or other mortgage-backed securities.  
Insurers 



                                       9
<PAGE>

of CMOs frequently elect to be taxed as a pass-through entity known as real 
estate mortgage investment conduits, or REMICs.  CMOs are issued in multiple 
classes, each with a specified fixed or floating interest rate and a final 
distribution date.  The relative payment rights of the various CMO classes 
may be structured in many ways.  In most cases, however, payments of 
principal are applied to the CMO classes in the order of their respective 
stated maturities, so that no principal payments will be made on a CMO class 
until all other classes having an earlier stated maturity date are paid in 
full.  The classes may include accrual certificates (also known as 
"Z-Bonds"), which only accrue interest at a specified rate until other 
specified classes have been retired and are converted thereafter to 
interest-paying securities.  They may also include planned amortization 
classes ("PAC") which generally require, within certain limits, that 
specified amounts of principal be applied on each payment date, and generally 
exhibit less yield and market volatility than other classes.  The Fund will 
not purchase "residual" CMO interests, which normally exhibit the greatest 
price volatility.

     STRIPPED SECURITIES.  The Bond Index Fund may purchase participations 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 the 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.  Stripped 
securities will normally 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.

     REPURCHASE AGREEMENTS.  The Funds may agree to purchase securities from 
financial institutions subject to the seller's agreement to repurchase them 
at an agreed-upon time and price ("repurchase agreements").  The financial 
institutions with which a Fund may enter into repurchase agreements include 
member banks of the Federal Reserve System, any foreign bank or any domestic 
or foreign broker/dealer which is recognized as a reporting government 
securities dealer.  The Advisor will review and continuously monitor the 
creditworthiness of the seller under a repurchase agreement, and will require 
the seller to maintain liquid assets in a segregated account in an amount 
that is greater than the repurchase price.  Default by or bankruptcy of the 
seller would, however, expose a Fund to possible loss because of adverse 
market action or delays in connection with the disposition of the underlying 
obligations.

     INVESTMENT COMPANY SECURITIES.  In connection with the management of 
daily cash positions, the Funds may invest in securities issued by other 
investment companies which invest in short-term debt securities and which 
seek to maintain a $1.00 net asset value per share (i.e., "money market 
funds").  The Foreign Fund may purchase shares of investment companies 
investing primarily in foreign securities, including so called "country 
funds".  The LargeCap Fund and the MidCap Fund may also invest in SPDRs and 
shares of other open-end investment companies that are structured to seek 
performance that corresponds to that of the appropriate Index.  Securities of 
other investment companies will be acquired within limits prescribed by the 
1940 Act.  These limitations, among other matters, restrict the purchase or 
acquisition of any security issued by any other investment company (the 
"acquired fund"), if immediately after such acquisition, a Fund would own 
more than 3% of the outstanding voting securities of the acquired fund; more 
than 5% of a Fund's assets would be invested in the securities of the 
acquired fund; or more than 10% of a Fund's assets would be invested in 
securities issued by investment companies in the aggregate.  As a shareholder 
of another investment company, a Fund would bear, along with other 
shareholders, its pro rata portion of the other investment company's 
expenses, including advisory fees.  These expenses would be in addition to 
the expenses a Fund bears directly in connection with its own operations.

     VARIABLE AND FLOATING RATE SECURITIES.  Each Fund may purchase variable 
and floating rate securities which are debt instruments with variable or 
floating interest rates.  These securities may include variable amount master 
demand notes which are unsecured instruments that permit the indebtedness 
thereunder to vary in addition to providing for periodic adjustments in the 
interest rate. Unrated variable and floating rate securities will be 
determined by the Advisor to be of comparable quality at the time of purchase 
to rated securities purchasable by a Fund.  The absence of an active 
secondary market, however, could make it difficult to dispose of the 
securities, and a 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 securities held by a Fund will be subject to the 
Fund's limitation on 



                                      10
<PAGE>

illiquid investments when the Fund may not demand payment of the principal 
amount within seven days absent a reliable trading market.

     LIQUIDITY MANAGEMENT.  Pending investment, to meet anticipated 
redemption requests, or as a temporary defensive measure if the Advisor 
determines that market conditions warrant, the Funds may also invest without 
limitation in short-term U.S. Government obligations, high quality money 
market instruments, variable and floating rate instruments and repurchase 
agreements as described above.

     High quality money market instruments may include commercial paper.  The 
Funds may also purchase U.S. dollar-denominated bank obligations, such as 
certificates of deposit, bankers' acceptances and interest-bearing savings 
and time deposits, issued by U.S. or foreign banks or savings institutions 
having total assets at the time of purchase in excess of $1 billion.  The 
Bond Index Fund may also invest in Yankee Bas and Yankee CDs.  Short-term 
obligations purchased by the Funds will either have short-term debt ratings 
at the time of purchase in the top two categories by one or more unaffiliated 
NRSROs or be issued by issuers with such ratings.  Unrated instruments 
purchased by a Fund will be of comparable quality as determined by the 
Advisor.

     ILLIQUID SECURITIES.  Each Fund may invest up to 15% of the value of its 
net assets (determined at time of acquisition) in securities which are 
illiquid. Illiquid securities would generally repurchase agreements and time 
deposits with notice/termination dates in excess of seven days, and certain 
securities which are subject to trading restrictions because they are not 
registered under the Securities Act of 1933, as amended (the "Act").  If, 
after the time of acquisition, events cause this limit to be exceeded, the 
Fund will take steps to reduce the aggregate amount of illiquid securities as 
soon as reasonably practicable in accordance with the policies of the SEC.

     The Funds may invest in commercial obligations issued in reliance on the 
"private placement" exemption from registration afforded by Section 4(2) of 
the Act ("Section 4(2) paper").  The Funds may also purchase securities that 
are not registered under the Act, but which can be sold to qualified 
institutional buyers in accordance with Rule 144A under the Act ("Rule 144A 
securities"). Section 4(2) paper is restricted as to disposition under the 
Federal securities laws, and generally is sold to institutional investors 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 Company's Board of Directors.

     U.S. GOVERNMENT OBLIGATIONS.  The Funds may purchase obligations issued 
or guaranteed by the U.S. Government and U.S. Government agencies and 
instrumentalities.  Obligations of certain agencies and instrumentalities of 
the U.S. Government, such as those of the Government National Mortgage 
Association, are supported by the full faith and credit of the U.S. Treasury. 
Others, such as those of the Export-Import Bank of the United States, are 
supported by the right of the issuer to borrow from the U.S. Treasury; and 
still others, such as those of the Student Loan Marketing Association, are 
supported only by the credit of the agency or instrumentality issuing the 
obligation.  No assurance can be given that the U.S. Government would provide 
financial support to U.S. Government-sponsored instrumentalities if it is not 
obligated to do so by law.

     BORROWING AND REVERSE REPURCHASE AGREEMENTS.  Each Fund is authorized to 
borrow money in amounts up to 5% of the value of the Fund's total assets at 
the time of such borrowing for temporary purposes.  The Funds may also borrow 
funds for temporary purposes by selling portfolio securities to financial 
institutions such as banks and broker/dealers and agreeing to repurchase them 
at a mutually specified date and price ("reverse repurchase agreements").  
Reverse repurchase agreements involve the risk that the market value of the 
securities sold by a Fund may decline below the repurchase price.  A Fund 
would pay interest on amounts obtained pursuant to a reverse repurchase 
agreement.  Additionally, a Fund is authorized to borrow money in amounts up 
to 331/3% of its assets, as permitted by the 1940 Act, for the purpose of 
meeting redemption requests. Borrowing by a Fund creates an opportunity for 
greater total return but, at the same time, increases exposure to capital 
risk.  Leveraging by means of 



                                      11
<PAGE>

borrowing may exaggerate the effect of any increase or decrease in the value 
of portfolio securities on a Fund's net asset value.  In addition, borrowed 
funds are subject to interest costs that may offset or exceed the return 
earned on the borrowed funds.  However, a Fund will not purchase portfolio 
securities while borrowings exceed 5% of the Fund's total assets.  For more 
detailed information with respect to the risks associated with borrowing, see 
the heading "Borrowing" in the Statement of Additional Information.

     WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS.  Each 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 a 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.  Each Fund will 
establish a segregated account consisting of cash, U.S. Government securities 
or other liquid portfolio securities in an amount equal to the amount of its 
when-issued purchases and forward commitments.  Each Fund's when-issued 
purchases and forward purchase commitments are not expected to exceed 25% of 
the value of the particular Fund's total assets absent unusual market 
conditions.  The Funds do not intend to engage in when-issued purchases and 
forward commitments for speculative purposes but only in furtherance of their 
investment objectives.

     FIXED INCOME SECURITIES.  Generally, the market value of fixed income 
securities held by the Funds can be expected to vary inversely to changes in 
prevailing interest rates.  Investors should also recognize that, in periods 
of declining interest rates, the yields of investment portfolios composed 
primarily of fixed income securities will tend to be higher than prevailing 
market rates and, in periods of rising interest rates, yields will tend to be 
somewhat lower. The market value of a Fund's investment will also change in 
response to the relative financial strengths of each issuer.  Changes in the 
financial strengths of an issuer or charges in the ratings of a particular 
security may also affect the value of those investments.  Fluctuations in the 
market value of fixed income securities subsequent to their acquisitions will 
not affect cash income from such securities, but will be reflected in a 
Fund's net asset value.

     The Funds may purchase zero coupon bonds (i.e., discount debt 
obligations that do not make periodic interest payments).  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.

     As a mutual fund investing primarily in fixed-income securities, the 
Bond Index Fund is subject to interest rate, income, call, credit and 
prepayment risk.

     Interest rate risk is the potential for fluctuations in bond prices due 
to changing interest rates.  Income risk is the potential for a decline in 
the Fund's income due to falling market interest rates.  Credit risk is the 
possibility that a bond issuer will fail to make timely payments of either 
interest or principal to the Fund.  Prepayment risk (applicable to 
mortgage-backed securities) and call risk (applicable to corporate bonds) is 
the likelihood that, during periods of falling interest rates, securities 
with high stated interest rates will be prepaid (or "called") prior to 
maturity, requiring the Fund to invest proceeds at generally lower interest 
rates.

     LENDING OF PORTFOLIO SECURITIES.  To enhance the return of the 
portfolio, each Fund may lend securities in its portfolio representing up to 
25% of its total assets, taken at market value, to securities firms and 
financial institutions, provided that each loan is secured continuously by 
collateral in the form of cash, high quality money market instruments or 
short-term U.S. Government securities adjusted daily to have a market value 
at least equal to the current market value of the securities loaned.  The 
risk in lending portfolio securities, as with other extensions of credit, 
consists of possible delay in the recovery of the securities or possible loss 
of rights in the collateral should the borrower fail financially.

     DIVERSIFICATION.  Each Fund is classified as a diversified investment 
company under the 1940 Act.

     PORTFOLIO TRANSACTIONS AND TURNOVER.  All orders for the purchase or 
sale of securities on behalf of the Funds are placed by the Advisor with 
broker/dealers that the Advisor selects.  A high portfolio turnover rate 
involves larger brokerage commission expenses or transaction costs which must 
be borne directly by the Fund, and 



                                      12
<PAGE>

may result in the realization of short-term capital gains which are taxable 
to shareholders as ordinary income.  The Advisor will not consider portfolio 
turnover rate a limiting factor in making investment decisions consistent 
with a Fund's objective and policies.  It is anticipated that the annual 
portfolio turnover rate for each Fund will be as follows:  less than 10% for 
each of the LargeCap Index Fund, MidCap Index Fund and SmallCap Index Fund; 
less than 25% for the Bond Index Fund; and from 10% to 15% for the Foreign 
Fund.

                               INVESTMENT LIMITATIONS

     The investment objective and policies of each Fund may be changed by the 
Company's Board of Directors without shareholder approval.  No assurance can 
be given that any Fund will achieve its investment objective.

     Each Fund has also adopted certain fundamental investment limitations 
that may be changed only with the approval of a "majority of the outstanding 
shares of the Fund" (as defined in the Statement of Additional Information).  
These limitations are set forth in the Statement of Additional Information.

                         PURCHASE AND REDEMPTION OF SHARES

     Shares of each Fund are sold by the Distributor on a continuous basis to 
separate accounts of the Insurers.  The Distributor is a registered 
broker/dealer with principal offices at 222 South Central Avenue, Suite 300, 
St. Louis, Missouri 63141.

     Each Fund's Shares are continuously offered to each Insurer's separate 
accounts at the net asset value per share next determined after a proper 
purchase request has been received by the Insurer.  The Funds and the 
Distributor reserve the right to reject any purchase order for shares of the 
Funds.

     Payments for redeemed shares will ordinarily be made within seven (7) 
business days after the Funds receive a redemption order from the relevant 
Insurer.  The redemption price will be the net asset value per share next 
determined after the Insurer receives the Contractowner's request in proper 
form.  The Company reserves the right to suspend or postpone redemptions 
during any period when:  (i) trading on the NYSE is restricted, as determined 
by the SEC, or the NYSE is closed for other than customary weekend and 
holiday closings; (ii) the SEC has by order permitted such suspension or 
postponement for the protection of shareholders; or (iii) an emergency, as 
determined by the SEC, exists, making disposal of portfolio securities or 
valuation of net assets of the Funds not reasonably practicable.

     THE PROSPECTUS FOR THE RELEVANT INSURER'S VARIABLE ANNUITY OR VARIABLE 
LIFE INSURANCE POLICY DESCRIBES THE ALLOCATION, TRANSFER AND WITHDRAWAL 
PROVISIONS OF SUCH ANNUITY OR POLICY.

                            DIVIDENDS AND DISTRIBUTIONS

     Each Fund expects to pay dividends and distributions from the net income 
and net realized capital gains, if any, earned on investments held by the 
Fund. Dividends from net income are declared and paid quarterly for each Fund 
(other than the Foreign Fund).  Dividends from net income are declared daily 
and paid at least annually for the Foreign Fund.  Each Fund's net realized 
capital gains (including net short-term capital gains), if any, are 
distributed at least annually.  All dividends and capital gains distributions 
paid by each Fund will be automatically reinvested, at net asset value, by 
the Insurer's separate accounts in additional shares of the Fund.  
Contractowners who own units in a separate account which correspond to shares 
in the Funds will be notified when distributions are made.

     A Fund's expenses are deducted from the income of the Fund before 
dividends are declared and paid.  These expenses include, but are not limited 
to, fees paid to the Advisor, Administrator, Custodian and Transfer Agent; 
shareholder servicing fees; fees and expenses of officers and Directors; 
taxes; interest; legal and auditing fees; brokerage fees and commissions; 
expenses of preparing prospectuses and statements of additional information; 
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 or an Insurer.  Any 
general expenses of the Company that are not



                                      13
<PAGE>

readily identifiable as belonging to a particular fund of the Company are 
allocated among all funds of the Company by or under the direction of the 
Board of Directors in a manner that the Board determines to be fair and 
equitable, taking into consideration whether it is appropriate for expenses 
to be borne by the Funds in addition to the Company's other funds.  Except as 
noted in this Prospectus and the Statement of Additional Information, the 
Funds' service contractors bear expenses in connection with the performance 
of their services, and each Fund bears the expenses incurred in its 
operations.  The Advisor, Administrator, Custodian and Transfer Agent may 
voluntarily waive all or a portion of their respective fees from time to time.

                                  NET ASSET VALUE

     Net asset value for shares in a Fund is calculated by dividing the value 
of all securities and other assets belonging to the Fund, less the 
liabilities charged, by the number of outstanding shares.

     The net asset value per share of each Fund for the purpose of pricing 
purchase and redemption orders is determined as of the close of regular 
trading hours on the NYSE (currently 4:00 p.m., New York time) on each day on 
which the NYSE is open for trading (a "Business Day").  With respect to the 
Funds, securities traded on a national securities exchange or on NASDAQ are 
valued at the last sale price on such exchange or market as of the close of 
business on the date of valuation.  Securities traded on a national 
securities exchange or on NASDAQ for which there were no sales on the date of 
valuation and securities traded on other over-the-counter markets, including 
listed securities for which the primary market is believed to be 
over-the-counter, are valued at the mean between the most recently quoted bid 
and asked prices.  Options will be valued at market value or fair value if 
not market exists.  Futures contracts will be valued in like manner, except 
that open futures contract sales will be valued using the closing settlement 
price or, in the absence of such a price, the most recently quoted asked 
price.  Restricted securities and securities and assets for which market 
quotations are not readily available are valued at fair value by the Advisor 
under the supervision of the Board of Directors.  Debt securities with 
remaining maturities of 60 days or less are valued at amortized cost, unless 
the Board of Directors determines that such valuation does not constitute 
fair value at that time.  Under this method, such securities are valued 
initially at cost on the date of purchase (or the 61st day before maturity).

     The Company does not accept purchase and redemption orders on days on 
which the NYSE is closed.  The NYSE is currently scheduled to be closed on 
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, 
Memorial Day (observed), Independence Day, Labor Day, Thanksgiving and 
Christmas, and on the preceding Friday or subsequent Monday when one of these 
holidays falls on a Saturday or Sunday, respectively.

                                     MANAGEMENT

BOARD OF DIRECTORS

     The Company is managed under the direction of its Board of Directors.  
The Statement of Additional Information contains the name and background 
information regarding each Director.

INVESTMENT ADVISOR
   
     Munder Capital Management, a Delaware general partnership with its 
principal offices at 480 Pierce Street, Birmingham, Michigan 48009, serves as 
the Funds' investment advisor.  The Advisor was formed in December 1994.  The 
principal partners of the Advisor are Old MCM, Inc. ("MCM"), Munder Group 
LLC, Woodbridge and WAM Holdings, Inc. ("WAM").  MCM was founded in February 
1985 as a Delaware corporation and was a registered investment advisor.  
Woodbridge and WAM are indirect, wholly-owned subsidiaries of Comerica 
Incorporated.  Mr. Lee P. Munder, the Advisor's chairman, indirectly owns or 
controls approximately 45% and Comerica Incorporated owns or controls 
approximately 44% of the partnership interests in the Advisor.  As of 
December 31, 1997, the Advisor and its affiliates had approximately $45 
billion in assets under management, of which $22.2 billion were invested in 
equity securities, $9 billion were invested in money market or other 
short-term instruments, $9.3 billion were invested in other fixed income 
securities, and $4.5 billion in non-discretionary assets.
    


                                      14
<PAGE>

     Subject to the supervision of the Board of Directors of the Company, the 
Advisor provides overall investment management for the Funds, provides 
research and credit analysis, is responsible for all purchases and sales of 
portfolio securities, maintains books and records with respect to the Funds' 
securities transactions and provides periodic and special reports to the 
Board of Directors as requested.

     For the advisory services provided and expenses assumed with regard to 
the Funds, the Advisor has agreed to a fee, computed daily and payable 
monthly at an annual rate of .05% of the average daily net assets.

     The Advisor may, from time to time, make payments to banks, 
broker-dealers or other financial institutions for certain services to the 
Funds and/or their shareholders, including sub-administration, sub-transfer 
agency and shareholder servicing.  Such payments are made out of the 
Advisor's own resources and do not involve additional costs to the Funds or 
their shareholders.

PORTFOLIO MANAGERS

     TODD B. JOHNSON, Chief Investment Officer of the Advisor is the 
co-manager of the Foreign Fund.  Mr. Johnson is also the co-manager of the 
Munder International Equity Fund (previously, from January, 1996 to October, 
1996, was the portfolio manager) and the Munder Index 500 Fund (previously, 
from July, 1992 to October, 1996, was the portfolio manager) of the Munder 
Funds Trust. Mr. Johnson previously served as a portfolio manager at 
Woodbridge Capital Management (June, 1992 to December, 1994) and 
Manufacturers Bank (June, 1986 to June, 1992).  Mr. Johnson received a B.A. 
in Finance from Michigan State University and M.B.A. from Wayne State 
University.

     THEODORE MILLER, Senior Portfolio Manager of the Advisor is the 
co-manager of the Foreign Fund.  Mr. Miller is also the co-manager of the 
Munder International Equity Fund of The Munder Funds Trust (since October, 
1996). Prior to being appointed co-manager of the Munder International Equity 
Fund, Mr. Miller acted as the primary analyst for the Fund, assisting the 
manager with portfolio decisions.  Prior to joining the Advisor, Mr. Miller 
worked in Derivatives Marketing for Interaciones Global Inc. (1993-1995), in 
Equity Sales/Trader for McDonald & Co. Securities Inc. (1991-1993) and 
started his career in 1986 and was a derivative and equity transaction 
execution specialist with various New York investment banks.  Mr. Miller 
received his B.S. from the University of Pittsburgh and his M.B.A. from 
Indiana University.

ADMINISTRATOR, TRANSFER AGENT, CUSTODIAN AND SUB-CUSTODIAN

     State Street Bank and Trust Company ("State Street" or the 
"Administrator") is the Funds' administrator.  The Administrator is located 
at 225 Franklin Street, Boston, Massachusetts 02110.  The Administrator 
generally assists the Company in all aspects of its administration and 
operations.  State Street is entitled to receive fees at an annual rate of 
0.120% of the first $3 billion of the Funds' aggregate net assets; .01% of 
the next $3 billion and .0075% of the Funds' aggregate net assets in excess 
of $6 billion (with a minimum annual fee of $200,000) plus the lesser of 
0.005% of net assets or $150,000 for up to ten funds, and $10,000 per fund in 
excess of ten funds.  The Administrator is also entitled to reimbursement for 
out-of-pocket expenses.

     First Data Investor Services Group, Inc. ("First Data" or the "Transfer 
Agent"), whose principal business address is 53 State Street, Boston, 
Massachusetts 02109, serves as the Company's transfer agent and dividend 
disbursing agent.  First Data is a wholly-owned subsidiary of First Data 
Corporation.  Shareholder inquiries may be directed to First Data at P.O. Box 
5130, Westborough, Massachusetts 01581-5130.

     Comerica Bank (the "Custodian"), whose principal business address is One 
Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226, provides 
custodial services to the Funds.  The Custodian is a wholly owned subsidiary 
of Comerica Incorporated, a publicly-held bank holding company.  No 
compensation is paid to the Custodian for such 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 
Sub-Custodian to the Funds.



                                      15
<PAGE>

     For an additional description of the services performed by the 
Administrator, Transfer Agent, Custodian and Sub-Custodian, see the Statement 
of Additional Information.

SHAREHOLDER SERVICING ARRANGEMENTS

     Under the Rule 12b-1 of the 1940 Act, the Funds have adopted a 
Shareholder Servicing Plan (the "Plan") that provides for payment to the 
Insurers offering the separate accounts, dealers that offer the Contracts and 
the Funds' Distributor ("Service Organizations") for providing shareholder 
services to Contractowners.  The Plan authorizes payments at an annual rate 
of up to .25% of each Fund's average daily net assets.

     The services provided by the Service Organizations under the Plan may 
include execution and processing of orders from Insurers; processing 
purchase, exchange and redemption requests furnished to the Insurers by the 
Contractowners; placing orders with the Transfer Agent; processing dividend 
and distribution payments from the Funds; providing statements of additional 
information and information periodically showing positions in Fund shares and 
providing such other similar services as may reasonably be requested.

                                       TAXES

     Each Fund intends to qualify as a regulated investment company under 
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). 
Such qualification relieves a Fund of liability for Federal income taxes to 
the extent its earnings are distributed in accordance with the Code

     Qualification as a regulated investment company under the Code for any 
taxable year requires, among other things, that a Fund distribute to its 
shareholders an amount equal to at least 90% of its investment company 
taxable income and 90% of its net tax-exempt interest income for such year.  
In general a Fund's investment company income will be its taxable income 
(including dividends, interest, and short-term capital gains) subject to 
certain adjustments and excluding the excess of any net long-term capital 
gain for the taxable year over the net short-term capital loss. if any, for 
such year.  Each Fund intends to distribute substantially all of its 
investment company taxable income each taxable year.

     The Funds serve as the underlying investments for Contracts issued 
through separate accounts of life insurance companies which may or may not be 
affiliated.  Section 817(h) of the Code imposes certain diversification 
standards on the underlying assets of segregated asset accounts that fund 
contracts such as the Contracts (that is, the assets of the Fund's), which 
are in addition to the diversification requirements imposed on the Funds by 
the 1940 Act and Subchapter M.  Failure to satisfy those standards would 
result in imposition of Federal income tax on a Contract owner with respect 
to the increase in the value of the contract.  Section 817(h)(2) provides 
that a segregated asset account that funds contracts such as the Contracts is 
treated as meeting the diversification standards if, as of the close of each 
calendar quarter, the assets in the account meet the diversification 
requirements for a regulated investment company and no more than 55% of those 
assets consist of cash, cash items, U.S. Government securities and securities 
of other regulated investment companies.

     The Treasury Regulations amplify the diversification standards set forth 
in Section 817(h) and provide an alternative to the provision described 
above. Under the regulations, an investment portfolio will be deemed 
adequately diversified if (i) no more than 55% of the value of the total 
assets of the portfolio is represented by any one investment; (ii) no more 
than 70% of such value is represented by any two investments; (iii) no more 
than 80% of such value is represented by any three investments; and (iv) no 
more than 90% of such value is represented by any four investments.  For 
purposes of these Regulations all securities of the same issuer are treated 
as a single investment, but each United States government agency or 
instrumentality shall be treated as a separate issuer.

     Each Fund will be managed with the intention of complying with these 
diversification requirements.  It is possible that, in order to comply with 
these requirements, less desirable investment decisions may be made which 
would affect the investment performance of a Fund.



                                      16
<PAGE>

TAXES-FOREIGN INVESTMENTS

     Income or gain from investments in foreign securities may be subject to 
foreign withholding or other taxes.  It is expected that the Funds will be 
subject to foreign withholding taxes with respect to income received from 
sources within foreign countries.  If more than 50% of the value of a Fund's 
total assets at the close of a taxable year consists of stock or securities 
of foreign corporations, the Fund may elect, for U.S. Federal income tax 
purposes, to treat certain foreign taxes paid by it, including generally any 
withholding taxes and other foreign income taxes, as paid by its 
shareholders.  If a Fund makes this election, the amount of such foreign 
taxes paid by the Fund will be included in its shareholders' income pro rata 
(in addition to taxable distributions actually received by them), and the 
shareholders would be entitled (a) to credit their proportionate amount of 
such taxes against their U.S. Federal income tax liabilities subject to 
certain limitations described in the Statement of Additional Information, or 
(b) if they itemize their deductions, to deduct such proportionate amount 
from their U.S. income.

     If a Fund invests in certain "passive foreign investment companies" 
("PFICs"), it will be subject to Federal income tax (and possibly additional 
interest charges) on a portion of any "excess distribution" or gain from the 
disposition of such shares even if it distributes such income to its 
shareholders.  If a Fund elects to treat the PFIC as a "qualified election 
fund" ("QEF") and the PFIC furnishes certain financial information in the 
required form to such Fund, the Fund will instead be required to include in 
income each year its allocable share of the ordinary earnings and net capital 
gains on the QEF, regardless of whether received, and such amounts will be 
subject to the various distributions 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.

     The prospectus for an Insurer's variable annuity contracts or variable 
life insurance policies describes the federal income tax treatment of 
distributions from such contracts of Contractowners.

     The foregoing is only a brief summary of important tax law provisions 
that can affect the Funds.  Other Federal, state or local law provisions may 
also affect the Funds and their operations.  Anyone who is considering 
allocating, transferring or withdrawing monies held under an Insurer's 
variable contract to or from a Fund should consult a qualified tax adviser.

                               DESCRIPTION OF SHARES

     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.  The Company's Articles of Incorporation 
authorize the Board of Directors to classify or reclassify any authorized but 
unissued shares of the Company into one or more additional portfolios (or 
classes of shares within a portfolio) by setting or changing in any one or 
more respects their respective preferences, conversion or other rights, 
voting powers, restrictions, limitations as to dividends, qualifications and 
terms and conditions of redemption.  Pursuant to such authority, the 
Company's Board of Directors has authorized the issuance of shares of common 
stock representing interests in Munder S&P 500 Index Equity Fund, Munder S&P 
MidCap Index Equity Fund, Munder S&P SmallCap Index Equity Fund, Munder 
Aggregate Bond Index Fund, Munder Foreign Equity Fund, Liquidity Plus Money 
Market Fund, Munder Institutional S&P 500 Index Equity Fund, Munder 
Institutional S&P MidCap Index Equity Fund, Munder Institutional S&P SmallCap 
Index Equity Fund, Munder Institutional Short Term Treasury Fund and Munder 
Institutional Money Market Fund, each of which is classified as a diversified 
investment company under the 1940 Act.

     Each share of a Fund has a par value of $.001 and 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 at the discretion of the Company's Board of Directors.  The 
Company's shareholders are entitled to one vote for each full share held and 
proportionate fractional votes for fractional shares held.  Shareholders will 
vote in the aggregate and not by Fund, except where otherwise required by law 
or when the Board of Directors determines that the matter to be voted upon 
affects only the interests of the shareholders of a particular Fund.  Voting 
rights are not cumulative and, accordingly, the holders of more than 50% of 
the aggregate number of shares can elect 100% of 



                                      17
<PAGE>

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.  The Company is not required and does not currently 
intend to hold annual meetings of shareholders for the election of Board 
members except as required under the 1940 Act.  A meeting of shareholders 
will be called upon the written request of at least 10% of the outstanding 
shares of the Company.  To the extent required by law, the Company will 
assist in shareholder communications in connection with such a meeting. For 
further discussion of the voting rights of shareholders, see "Additional 
Information Concerning Shares" in the Statement of Additional Information.

     Through their respective separate accounts, the Insurers are the Funds' 
sole stockholders of record, and as such under the 1940 Act, the Insurers are 
deemed to be in control of the Funds.  Nevertheless, when a shareholders' 
meeting occurs, each Insurer solicits and accepts voting instructions from 
its Contractowners who have allocated or transferred monies for an investment 
in a Fund as of the record date of the meeting.  Each Insurer then votes each 
Fund's shares that are attributable to its Contractowners' interests in the 
Fund in proportion to the voting instructions received.  Each Insurer will 
vote any share that it is entitled to vote directly due to amounts it has 
contributed or accumulated in its separate accounts in the manner described 
in the prospectuses for its variable annuities and variable life insurance 
policies.

                                    PERFORMANCE

     The Funds' performance may be used from time to time in advertisements, 
shareholder reports or other communications to existing or prospective owners 
of the Insurers' Contracts.  When performance information is provided in 
advertisements, it will include the effect of all charges deducted under the 
terms of the specified contracts, as well as all recurring and non-recurring 
charges incurred by a Fund.  Performance information may include a Fund's 
investment results and/or comparisons of its investment results to various 
unmanaged indices or results of other mutual funds or investment or savings 
vehicles.  The Fund's investment results as used in such communications will 
be calculated on a total rate of return or yield basis in the manner set 
forth below.  From time to time, fund rankings may be quoted from various 
sources, such as Lipper Analytical Services, Inc., Value Line and Morningstar 
Inc.

     The Company may provide period and average annualized "total return" 
quotations for the Funds.  A Fund's "total return" refers to the change in 
the value of an investment in the Fund over a stated period based on any 
change in net asset value per share and including the value of any shares 
purchasable with any dividends or capital gains distributed during such 
period.  Period total return may be annualized.  An annualized total return 
is a compounded total return which assumes that the period total return is 
generated over a one-year period, and that all dividends and capital gains 
distributions are reinvested. An annualized total return will be  higher than 
a period total return if the period is shorter than one year, because of the 
compounding effect.

     The yield of shares in the Bond Index Fund are computed based on the net 
income of such Fund during a 30-day (or one month) period (which period will 
be identified in connection with the particular yield quotation).  More 
specifically, the yield is computed by dividing the per share net income 
during a 30-day (or one-month) period by the maximum offering price per share 
on the last day of the period and annualizing the result on a semi-annual 
basis.

     Performance will fluctuate and any quotation of performance should not 
be considered as representative of future performance of shares in the Funds. 
Shareholders should remember that performance is generally a function of the 
kind and quality of the instruments held in a fund, portfolio maturity, 
operating expenses, and market conditions.  Any fees charged by institutions 
directly to their customers' accounts in connection with investments in a 
Fund will not be included in calculations of yield and performance.

     Shareholders will receive unaudited financial reports semi-annually that 
include the Funds' financial statements, including a list of investment 
securities held by the Funds' at those dates.  Annual reports are audited by 
independent accountants.



                                      18
<PAGE>

                    MUNDER INSTITUTIONAL S&P 500 INDEX EQUITY FUND
                  MUNDER INSTITUTIONAL S&P MIDCAP INDEX EQUITY FUND
                 MUNDER INSTITUTIONAL S&P SMALLCAP INDEX EQUITY FUND
                    MUNDER INSTITUTIONAL SHORT TERM TREASURY FUND
                        MUNDER INSTITUTIONAL MONEY MARKET FUND


                         STATEMENT OF ADDITIONAL INFORMATION


     St. Clair Funds, Inc. (the "Company") currently offers a selection of 
investment portfolios, five of which are discussed in this Statement of 
Additional Information: Munder Institutional S&P 500 Index Equity Fund 
("LargeCap 500 Index Fund"), Munder Institutional S&P MidCap Index Equity 
Fund ("MidCap Index Fund"), Munder Institutional S&P SmallCap Index Equity 
Fund ("SmallCap Index Fund") (collectively, the "Index Funds"), Munder 
Institutional Short Term Treasury Fund ("Short Term Treasury Fund") and 
Munder Institutional Money Market Fund ("Money Market Fund") (collectively 
with the Index Funds, the "Funds").  The Funds' investment advisor is Munder 
Capital Management (the "Advisor").  

     This Statement of Additional Information is intended to supplement the 
information provided to investors in the Funds' Prospectus dated May 1, 1998 
and has been filed with the Securities and Exchange Commission ("SEC") as 
part of the Company's Registration Statement.  This Statement of Additional 
Information is not a prospectus, and should be read only in conjunction with 
the Funds' Prospectus dated May 1, 1998.  The contents of this Statement of 
Additional Information are incorporated by reference in the Prospectus in 
their entirety. A copy of the Prospectus may be obtained through Funds 
Distributor, Inc. (the "Distributor"), or by calling the Funds at (800) 
438-5789.  This Statement of Additional Information is dated May 1, 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
                                                                           PAGE

<TABLE>
<S>                                                                        <C>
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        3
Fund Investments. . . . . . . . . . . . . . . . . . . . . . . . . . .        3
Risk Factors and Special Considerations . . . . . . . . . . . . . . .       16
Investment Limitations. . . . . . . . . . . . . . . . . . . . . . . .       17
Directors and Officers. . . . . . . . . . . . . . . . . . . . . . . .       19
Investment Advisory and Other Service Arrangements. . . . . . . . . .       23
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . .       25
Additional Purchase and Redemption Information. . . . . . . . . . . .       27
Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . .       28
Performance Information . . . . . . . . . . . . . . . . . . . . . . .       28
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       31
Additional Information Concerning Shares. . . . . . . . . . . . . . .       35
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . .       36
Registration Statement. . . . . . . . . . . . . . . . . . . . . . . .       37
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . .       38
Appendix A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       39
Appendix B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       42
</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 the Prospectus in connection with the offering made by the 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 Prospectus 
does not constitute an offering by the Funds or by the Distributor in any 
jurisdiction in which such offering may not lawfully be made.



                                       2
<PAGE>
                                      GENERAL

     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.
   
     As stated in the Prospectus, the investment advisor of the Fund is 
Munder Capital Management (the "Advisor").  The principal partners of the 
Advisor are Old MCM, Inc. ("Old MCM"), Munder Group LLC, Woodbridge Capital 
Management, Inc. ("Woodbridge") and WAM Holdings, Inc. ("WAM").  Mr. Lee P. 
Munder, the Advisor's Chairman, indirectly owns or controls approximately 45% 
and Comerica Incorporated owns or controls approximately 44% of the 
partnership interests of the Advisor.
    
     Capitalized terms used herein and not otherwise defined have the same 
meanings as are given to them in the Prospectus.

                                  FUND INVESTMENTS

     The following supplements the information contained in the Funds' 
Prospectus concerning the investment objective and policies of the Funds.  
Each Fund's investment objective is a non-fundamental policy and may be 
changed without the authorization of the holders of a majority of the Fund's 
outstanding shares.  There can be no assurance that any Fund will achieve its 
objective. 

     INVESTMENT COMPANY SECURITIES.  The Funds (other than the Short Term 
Treasury Fund) may invest in securities issued by other investment companies. 
The LargeCap 500 Index Fund and the MidCap Index Fund may invest in Standard 
& Poor's Depositary 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 certain corresponding S&P indices.  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 corresponding S&P 
index.  SPDRs are traded on the American Stock Exchange.

     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.  

     BANK OBLIGATIONS.  The Funds (other than the Short Term Treasury 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.  The Money 
Market Fund will invest in the obligations of domestic banks and savings 
institutions only if their deposits are federally insured.  Investments by a 
Fund (other than the Money Market Fund) in (i) obligations of domestic banks 
and (ii) obligations of foreign banks and foreign branches of domestic banks 
each will not exceed 25% of the Fund's total assets at the time of investment.



                                       3
<PAGE>

     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.  Although the Funds (other than Short 
Term Treasury Fund) will invest in obligations of foreign banks or foreign 
branches of U.S. banks only when the Advisor 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.

     COMMERCIAL PAPER.  Investments by a Fund (other than the Money Market 
Fund) in commercial paper will consist of issues rated at the time in one of 
the highest four rating categories by at least one nationally-recognized 
statistical rating organization ("NRSRO").  Investments by the Money Market 
Fund will consist of issuers having at the time, a quality rating within the 
two highest rating categories of an NRSRO.  In addition, the Funds may 
acquire unrated commercial paper and corporate bonds that are determined by 
the Advisor at the time of purchase to be of comparable quality to rated 
instruments that may be acquired by such Fund as previously described.

     VARIABLE AND FLOATING RATE SECURITIES.  The Funds (other than Short Term 
Treasury Fund) may purchase variable and floating rate securities which are 
debt instruments with variable or floating interest rates.  Unrated variable 
and floating securities will be determined by the Advisor to be of comparable 
quality at the time of purchase to rated securities purchasable by a Fund.  
The Funds (other than the Short Term Treasury Fund) 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, the 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.

     The absence of a secondary market could make it difficult to dispose of 
the securities, and a 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 securities 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.  The Funds invest in variable amount master demand notes only when 
the Advisor deems the investment to involve minimal credit risk.

     OPTIONS.  The Index Funds 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.  

     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 



                                       4
<PAGE>

expiration of the option, regardless of the market price of the security.  
The premium paid to the writer is in consideration for undertaking the 
obligations under the option contract. A put option for a particular security 
gives the purchaser the right to sell the underlying security at the stated 
exercise price at any time prior to the expiration date of the option, 
regardless of the market price of the security.

     The writer of an option that wished to terminate its obligation may 
effect a "closing purchase transaction."  This is accomplished by buying an 
option of the same series as the option previously written.  The effect of 
the purchase is that the writer's position will be canceled by the clearing 
corporation. However, a writer may not effect a closing purchase transaction 
after being notified of the exercise of an option.  Likewise, an investor who 
is the holder of an option may liquidate its position by effecting a "closing 
sale transaction."  The cost of such a closing purchase plus transaction 
costs may be greater than the premium received upon the original option, in 
which event the relevant 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 Index 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 such 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 Index Funds may write options in connection with buy-and-write 
transactions; that is, the Index Funds may purchase a security and then write 
a call option against that security.  The exercise price of the call such 
Funds determine to write will depend upon the expected price movement of the 
underlying security.  The exercise price of a call option may be below 
("in-the-money"), equal to ("at-the-money") or above ("out-of-the-money") the 
current value of the underlying security at the time the option is written.  
Buy-and-write transactions using in-the-money call options may be used when 
it is expected that the price of the underlying security will remain flat or 
decline moderately during the option period.  Buy-and-write transactions 
using out-of-the-money call options may be used when it is expected that the 
premiums received from writing the call option plus the appreciation in the 
market price of the underlying security up to the exercise price will be 
greater than the appreciation in the price of the underlying security alone.  
If the call options are exercised in such transactions, the maximum gain to 
the relevant Fund will be the premium received by it for writing the option, 
adjusted upwards or downwards by the difference between the Fund's purchase 
price of the security and the exercise price.  If the options are not 
exercised and the price of the underlying security declines, the amount of 
such decline will be offset in part, or entirely, by the premium received.

     In the case of a call option on a security, the option is "covered" if a 
Fund owns the security underlying the call or has an absolute and immediate 
right to acquire that security without additional cash consideration (or, if 
additional cash consideration is required, cash or cash equivalents in such 
amount as are held in a segregated account by its custodian) upon conversion 
or exchange of other securities held by it.  For a call option on an index, 
the option is covered if a Fund maintains with its Custodian cash or cash 
equivalents equal to the contract value.  A call option is also covered if a 
Fund holds a call on the same security or index as the call written where the 
exercise price of the call held is (i) equal to or less than the exercise 
price of the call written, or (ii) greater than the exercise price of the 
call written provided the difference is maintained by the portfolio in cash 
or cash equivalents in a segregated account with its custodian.  The Index 
Funds may write call options that are not covered for cross-hedging purposes. 
 Each of the Index Funds will limit its investment in uncovered put and call 
options purchased or written by the Fund to 5% of the Fund's total assets.  
The Index Funds will write put options



                                       5

<PAGE>

only if they are "secured" by cash or cash equivalents maintained in a 
segregated account by the Funds' custodian in an amount not less than the 
exercise price of the option at all times during the option period.

     The writing of covered put options is similar in terms of risk/return 
characteristics to buy-and-write transactions.  If the market price of the 
underlying security rises or otherwise is above the exercise price, the put 
option will expire worthless and the relevant Fund's gain will be limited to 
the premium received.  If the market price of the underlying security 
declines or otherwise is below the exercise price, the Fund may elect to 
close the position or take delivery of the security at the exercise price and 
the Fund's return will be the premium received from the put option minus the 
amount by which the market price of the security is below the exercise price. 

     Each of the Index Funds may purchase put options to hedge against a 
decline in the value of its portfolio.  By using put options in this way, a 
Fund will reduce any profit it might otherwise have realized in the 
underlying security by the amount of the premium paid for the put option and 
by transaction costs. Each of the Index Funds may purchase call options to 
hedge against an increase in the price of securities that it anticipates 
purchasing in the future.  The premium paid for the call option plus any 
transaction costs will reduce the benefit, if any, realized by the relevant 
Fund upon exercise of the option, and, unless the price of the underlying 
security rises sufficiently, the option may expire worthless to the Fund.

     When a Fund purchases an option, the premium paid by it is recorded as 
an asset of the Fund.  When a Fund writes an option, an amount equal to the 
net premium (the premium less the commission) received by the Fund is 
included in the liability section of the Fund's statement of assets and 
liabilities as a deferred credit.  The amount of this asset or deferred 
credit will be subsequently marked-to-market to reflect the current value of 
the option purchased or written.  The current value of the traded option is 
the last sale price or, in the absence of a sale, the average of the closing 
bid and asked prices.  If an option purchased by a Fund expires unexercised 
the Fund realizes a loss equal to the premium paid.  If a Fund enters into a 
closing sale transaction on an option purchased by it, the Fund will realize 
a gain if the premium received by the Fund on the closing transaction is more 
than the premium paid to purchase the option, or a loss if it is less.  If an 
option written by a Fund expires on the stipulated expiration date or if 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 a Fund is exercised, the 
proceeds of the sale will be increased by the net premium originally received 
and the Fund will realize a gain or loss.

     There are several risks associated with transactions in options on 
securities and indices.  For example, there are significant differences 
between the securities and options markets that could result in an imperfect 
correlation between these markets, causing a given transaction not to achieve 
its objectives.  An option writer, unable to effect a closing purchase 
transaction, will not be able to sell the underlying security (in the case of 
a covered call option) or liquidate the segregated account (in the case of a 
secured put option) until the option expires or the optioned security is 
delivered upon exercise with the result that the writer in such circumstances 
will be subject to the risk of market decline or appreciation in the security 
during such period.

     There is no assurance that a Fund will be able to close an unlisted 
option position.  Furthermore, unlisted options are not subject to the 
protections afforded purchasers of listed options by the Options Clearing 
Corporation, which performs the obligations of its members who fail to do so 
in connection with the purchase or sale of options.

     In addition, a liquid secondary market for particular options, whether 
traded over-the-counter or on a national securities exchange ("Exchange") may 
be absent for reasons which include the following:  there may be insufficient 
trading interest in certain options; restrictions may be imposed by an 
Exchange



                                       6
<PAGE>

on opening transactions or closing transactions or both; trading halts, 
suspensions or other restrictions may be imposed with respect to particular 
classes or series of options or underlying securities; unusual or unforeseen 
circumstances may interrupt normal operations on an Exchange; the facilities 
of an Exchange or the Options Clearing Corporation may not at all times be 
adequate to handle current trading volume; or one or more Exchanges could, 
for economic or other reasons, decide or be compelled at some future date to 
discontinue the trading of options (or a particular class or series of 
options), in which event the secondary market on that Exchange (or in that 
class or series of options) would cease to exist, although outstanding 
options that had been issued by the Options Clearing Corporation as a result 
of trades on that Exchange would continue to be exercisable in accordance 
with their terms.

     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 Index Funds 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 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 anticipates that a particular foreign currency may 
decline substantially relative to the U.S. dollar or other leading 
currencies, in order to reduce risk, a Fund may enter into a forward contract 
to sell, for a fixed amount, the amount of foreign currency approximating the 
value of some or all of the Fund's securities denominated in such foreign 
currency.  Similarly, when the obligations held by a Fund create a short 
position in a foreign currency, the Fund may enter into a forward contract to 
buy, for a fixed amount, an amount of foreign currency approximating the 
short position.  With respect to any forward foreign currency contract, it 
will not generally be possible to match precisely the amount covered by that 
contract and the value of the securities involved due to the changes in the 
values of such securities resulting from market movements between the date 
the forward contract is entered into and the date it matures. In addition, 
while forward contracts may offer protection from losses resulting from 
declines or appreciation in the value of a particular foreign currency, they 
also limit potential gains which might result from changes in the value of 
such currency.  A Fund will also incur costs in connection with forward 
currency contracts and conversions of foreign currencies and U.S. dollars.

     A separate account consisting of cash or liquid securities equal to the 
amount of a Fund's assets that could be required to consummate forward 
contracts will be established with the Funds' Custodian except to the extent 
the contracts are otherwise "covered."  For the purpose of determining the 
adequacy of the securities in the account, the deposited securities will be 
calculated 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.

     DEPOSITARY RECEIPTS.  American Depositary Receipts ("ADRs") are 
depositary receipts typically issued by a U.S. bank or trust company which 
evidence ownership of underlying securities issued by a 



                                       7
<PAGE>

foreign corporation.  Generally, depositary receipts in registered form are 
designed for use in the U.S. securities market and depositary receipts in 
bearer form are designed for use in securities markets outside the United 
States.  Depositary receipts may not necessarily be denominated in the same 
currency as the underlying securities into which they may be converted.  
Depositary receipts may be issued pursuant to sponsored or unsponsored 
programs.  In sponsored programs, an issuer has made arrangements to have its 
securities traded in the form of depositary receipts. In unsponsored 
programs, the issuer may not be directly involved in the creation of the 
program.  Although regulatory requirements with respect to sponsored and 
unsponsored programs are generally similar, in some cases it may be easier to 
obtain financial information from an issuer that has participated in the 
creation of a sponsored program.  Accordingly, there may be less information 
available regarding issuers of securities underlying unsponsored programs and 
there may not be a correlation between such information and the market value 
of the depositary receipts.  Depositary receipts also involve the risks of 
other investments in foreign securities.  For purposes of the Funds' 
investment policies, a Fund's investments in depositary receipts will be 
deemed to be investments in the underlying securities.

     RIGHTS AND WARRANTS.  As stated in the Prospectus, each Index 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. Warrants acquired by a Fund in units or 
attached to other securities are not subject to this restriction or to the 
restriction that each Fund's investment in warrants or rights may not exceed 
5% of its net assets at the time of purchase.

     CONVERTIBLE PREFERRED STOCK.  Each Index Fund may invest in convertible 
preferred stock.  A convertible security is a security that may be converted 
either at a stated price or a rate within a specified period of time into a 
specified number of shares of common stock.  By investing in convertible 
securities, a Fund seeks the opportunity, through the conversion feature, to 
participate in the capital appreciation of the common stock into which the 
securities are convertible, while earning higher current income than is 
available from the common stock.

     STOCK INDEX FUTURES, OPTIONS ON STOCK INDICES AND OPTIONS ON STOCK INDEX 
FUTURES CONTRACTS.  The Index Funds may purchase and sell stock index 
futures, options on stock indices and options on stock index futures 
contracts as a hedge against movements in the equity 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 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 index 
gives the holder the right to receive, upon exercise of the option, an amount 
of cash if the closing level of that stock 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 indices are in cash, 



                                       8
<PAGE>
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 expects general stock 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 relevant Fund's 
futures contract or index option resulting from the increase in the index.  
If, on the other hand, the Advisor expects general stock 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 relevant Fund's portfolio may also be expected to decline, 
but that decrease would be offset in part by the increase in the value of the 
Fund's position in such futures contract or put option.

     The Index Funds may purchase and write call and put options on stock 
index futures contracts.  Each Index 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, the Index Funds may 
purchase put options or write call options on stock index futures, rather 
than selling futures contracts, in anticipation of a decline in general stock 
market prices or purchase call options or write put options on stock index 
futures, rather than purchasing such futures, to hedge against possible 
increases in the price of securities which such Funds intend to purchase.

     In connection with transactions in stock index futures, stock index 
options and options on stock index futures, the Funds will be required to 
deposit as "initial margin" an amount of cash and short-term U.S. Government 
securities equal to from 5% to 8% of the contract amount.  Thereafter, 
subsequent payments (referred to as "variation margin") are made to and from 
the broker to reflect changes in the value of the option or futures contract. 
 No Fund may at any time commit more than 5% of its total assets to initial 
margin deposits on futures contracts, index options and options on futures 
contracts.  For a detailed description of futures contracts and related 
options, see Appendix B to this Statement of Additional Information.

     U.S. GOVERNMENT OBLIGATIONS.  The Funds may purchase obligations issued 
or guaranteed by the U.S. Government and U.S. Government agencies and 
instrumentalities, except that the Short Term Treasury Fund will only 
purchase obligations issued by the U.S. Treasury.  Obligations of certain 
agencies and instrumentalities of the U.S. Government, such as those of the 
Government National Mortgage Association, are supported by the full faith and 
credit of the U.S. Treasury.  Others, such as those of the Export-Import Bank 
of the United States, are supported by the right of the issuer to borrow from 
the U.S. Treasury; and still others, such as those of the Student Loan 
Marketing Association, are supported only by the credit of the agency or 
instrumentality issuing the obligation.  No assurance can be given that the 
U.S. Government would provide financial support to U.S. government-sponsored 
instrumentalities if it is not obligated to do so by law.  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, 
Federal National Mortgage Association, Government National Mortgage 
Association, General Services Administration, Student Loan Marketing 
Association, Central Bank for Cooperatives, Federal Home Loan Mortgage 
Corporation, Federal Intermediate Credit Banks and Maritime Administration.

     U.S. Treasury securities differ in their interest rates, maturities and 
times of issuance.  Treasury bills have initial maturities of one year or 
less, Treasury notes have initial maturities of one to ten years and Treasury 
bonds generally have initial maturities greater than ten years.  A portion of 
the U.S.



                                       9
<PAGE>

Treasury securities purchased by the Short Term Treasury Fund may be "zero 
coupon" Treasury securities.  These are U.S. treasury notes and bonds which 
have been stripped of their unmatured interest coupons and receipts or which 
are certificates representing interests in such stripped debt obligations and 
coupons.  Such securities are purchased at a discount from their face amount, 
giving the purchaser the right to receive their full value at maturity.  A 
zero coupon security pays no interest to its holder during its life.  Its 
value to an investor consists of the difference between its face value at the 
time of maturity and the price for which it was acquired, which is generally 
an amount significantly less than its face value (sometimes referred to as a 
"deep discount" price).

     The interest earned on such securities is, implicitly, automatically 
compounded and paid out at maturity.  While such compounding at a constant 
rate eliminates the risk of receiving lower yields upon reinvestment of 
interest if prevailing interest rates decline, the owner of a zero coupon 
security will be unable to participate in higher yields upon reinvestment of 
interest received if prevailing interest rates rise.  For this reason, zero 
coupon securities are subject to substantially greater market price 
fluctuations during periods of changing prevailing interest rates than are 
comparable debt securities which make current distributions of interest.  
Current federal tax law requires that a holder (such as a Fund) of a zero 
coupon security accrue a portion of the discount at which the security was 
purchased as income each year even though the Fund receives no interest 
payments in cash on the security during the year.

     Certain banks and brokerage firms have separated ("stripped") the 
principal portions ("corpus") from the coupon portions of the U.S. Treasury 
bonds and notes and sell them separately in the form of receipts or 
certificates representing undivided interests in these instruments (which 
instruments are generally held by a bank in a custodial or trust account).  
The Short Term Treasury Fund will not purchase any such receipts or 
certificates representing stripped corpus or coupon interests in U.S. 
Treasury securities sold by banks and brokerage firms.  The Short Term 
Treasury Fund will only purchase zero coupon Treasury securities which have 
been stripped by the Federal Reserve Bank.

     U.S. TREASURY INFLATION-PROTECTION SECURITIES.  The Short Term Treasury 
Fund may purchase securities issued by the U.S. Government, which includes 
U.S. Treasury inflation-protection securities.  The Fund does not expect to 
invest more than 5% of its total assets in such inflation-protection 
securities.

     Inflation-protection securities are a new type of marketable book-entry 
security issued by the United States Department of Treasury ("Treasury") with 
a nominal return linked to the inflation rate in prices.  
Inflation-protection securities will be auctioned and issued on a quarterly 
basis on the 15th of January, April, July, and October beginning on January 
15, 1997.  Initially, they will be issued as 10-year notes, with other 
maturities added thereafter. The index used to measure inflation will be 
non-seasonally adjusted U.S. City Average All Items Consumer Price Index for 
All Urban Consumers ("CPI-U").

     The value of the principal will be adjusted for inflation, and every six 
months the security will pay interest, which will be an amount equal to a 
fixed percentage of the inflation-adjusted value of the principal.  The final 
payment of principal of security will not be less than the original par 
amount of the security at issuance.

     The principal of the inflation-protection security will be indexed to 
the non-seasonally adjusted CPI-U.  To calculate the inflation-adjusted 
principal value for a particular valuation date, the value of the principal 
at issuance is multiplied by the index ratio applicable to that valuation 
date.  The index ratio for any date is the ration of reference Consumer Price 
Index ("CPI") applicable to such date to the reference CPI applicable to the 
original issue date.  Semiannual coupon interest is determined by multiplying 
the inflation-adjusted principal amount by one-half of the stated rate of 
interest on each interest payment date.



                                      10
<PAGE>

     Inflation-adjusted principal or the original par amount, whichever is 
larger, will be paid on the maturity date as specified in the applicable 
offering announcement.  If at maturity the inflation-adjusted principal is 
less than the original principal value of the security, an additional amount 
will be paid at maturity so that the additional amount plus the 
inflation-adjusted principal equals the original principal amount.  Some 
inflation-protection securities may be stripped into principal and interest 
components.  In the case of a stripped security, the holder of the stripped 
principal would receive this additional amount.  The final interest payment, 
however, will be based on the final inflation-adjusted principal value, not 
the original par amount.

     The reference CPI for the first day of any calendar month is the CPI-U 
for the third preceding calendar month.  (For example, the reference CPI for 
December 1 is the CPI-U reported for September of the same year, which is 
released in October).  The reference CPI for any other day of the month is 
calculated by a linear interpolation between the reference CPI applicable to 
the first day of the month and the reference CPI applicable to the first day 
of the following month.

     Any revision the Bureau of Labor Statistics (or successor agency) makes 
to any CPI-U number that has been previously released will not be used in 
calculations of the value of outstanding inflation-protection securities.  In 
the case that the CPI-U for a particular month is not reported by the last 
day of the following month, the Treasury will announce an index number based 
on the last year-over-year CPI-U inflation rate available.  Any calculations 
of the Treasury's payment obligations on the inflation-protection security 
that need that month's CPI-U number will be based on the index number that 
the Treasury has announced.  If the CPI-U is rebased to a different year, the 
Treasury will continue to use the CPI-U series based on the base reference 
period in effect when the security was first issued as long as that series 
continues to be published.  If the CPI-U is discontinued during the period 
the inflation-protection security is outstanding, the Treasury will, in 
consultation with the Bureau of Labor Statistics (or successor agency), 
determine an appropriate substitute index and methodology for linking the 
discontinued series with the new price index series.  Determinations of the 
Secretary of Treasury in this regard are final.

     Inflation-protection securities will be held and transferred in either 
of two book-entry systems:  the commercial book-entry system ("TRADES") and 
TREASURY DIRECT system through which an individual investor can make a 
noncompetitive bid on U.S. Treasury securities.  The securities will be 
maintained and transferred at their original par amount, i.e., not at their 
inflation-adjusted value.  Separate Trading of Registered Interest and 
Principal of Securities ("STRIPS") components will be maintained and 
transferred in TRADES at their value based on the original par amount of the 
fully constituted security.

     STRIPPED SECURITIES.  The Money Market Fund 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 is not aware of any binding legislative, judicial or 
administrative authority on this issue.



                                      11
<PAGE>

     Only instruments which are stripped by the issuing agency will be 
considered U.S. Government obligations.  Securities such as CATS and TIGRs 
which are stripped by their holder do not qualify as U.S. Government 
obligations.

     Within the past several years the Treasury Department has facilitated 
transfers of ownership of zero coupon securities by accounting separately for 
the beneficial ownership of particular interest coupon and principal payments 
or Treasury securities through the Federal Reserve book-entry record-keeping 
system.  The Federal Reserve program as established by the Treasury 
Department is known as "STRIPS" or "Separate Trading of Registered Interest 
and Principal of Securities."  Under the STRIPS program, the Money Market 
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.

     Stripped securities will normally be considered illiquid instruments 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.  Debt instruments purchased by a 
Fund may be structured to have variable or floating interest rates.  These 
instruments may include variable amount master demand notes that permit the 
indebtedness to vary in addition to providing for periodic adjustments in the 
interest rates.  The Advisor will consider the earning power, cash flows and 
other liquidity ratios of the issuers and guarantors of such instruments and, 
if the instrument is subject to a demand feature, will continuously monitor 
their financial ability to meet payment on demand.  Where necessary to ensure 
that a variable or floating rate instrument is equivalent to the quality 
standards applicable to the relevant 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 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 when 
the Fund is not entitled to exercise its demand rights.

     Variable and floating rate instruments held by a Fund will be subject to 
the Fund's limitation on illiquid investments when the Fund may not demand 
payment of the principal amount within seven days absent a reliable trading 
market.

     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 
will review and continuously monitor the creditworthiness of the seller under 
a repurchase agreement, and will require the seller to maintain liquid assets 
in a segregated account in an amount that is greater than the repurchase 
price.  Default by, or bankruptcy of the seller would, however, expose a Fund 
to possible loss because of adverse market action or delays in connection 
with the disposition of underlying obligations.  With respect to the Money 
Market Fund, the securities held subject to a repurchase agreement may have 
stated maturities exceeding 397 days, provided that the repurchase agreement 
itself matures in 397 days.

     The repurchase price under the repurchase agreements described in the 
Prospectus generally equals the price paid by a Fund plus interest negotiated 
on the basis of current short-term rates (which may be more or less than the 
rate on the securities underlying the repurchase agreement).



                                      12
<PAGE>

     Securities subject to repurchase agreements will be held by the 
Company's custodian (or sub-custodian) in the Federal Reserve/Treasury 
book-entry system or by another authorized securities depository.  Repurchase 
agreements are considered to be loans by a Fund under the Investment Company 
Act of 1940, as amended (the "1940 Act").

     BORROWING.  Each Fund is authorized to borrow money in an amount up to 
5% of the value of its total assets at the time of such borrowings for 
temporary purposes, and is authorized to borrow money in excess of the 5% 
limit as permitted by the 1940 Act to meet redemption requests.  This 
borrowing may be unsecured.  The 1940 Act requires a Fund to maintain 
continuous asset coverage of 300% of the amount borrowed.  If the 300% asset 
coverage should decline as a result of market fluctuations or other reasons, 
a Fund may be required to sell some of its portfolio holdings within three 
days to reduce the debt and restore the 300% asset coverage, even though it 
may be disadvantageous from an investment standpoint to sell securities at 
that time.  Money borrowed will be subject to interest costs which may or may 
not be recovered by an appreciation of the securities purchased.  A Fund may 
also be required to maintain minimum average balances in connection with such 
borrowing or to pay a commitment or other fees to maintain a line of credit; 
either of these requirements would increase the cost of borrowing over the 
stated interest rate.  Each Fund may, in connection with permissible 
borrowings, transfer, as collateral, securities owned by the Fund.  A Fund 
may not purchase portfolio securities while borrowings exceed 5% of the 
Fund's total assets.

     REVERSE REPURCHASE AGREEMENTS.  The Funds may borrow funds for temporary 
or emergency purposes by selling portfolio securities to financial 
institutions such as banks and broker/dealers and agreeing to repurchase them 
at a mutually specified date and price ("reverse repurchase agreements").  
Reverse repurchase agreements involve the risk that the market value of the 
securities sold by the Fund may decline below the repurchase price.  A Fund 
will pay interest on amounts obtained pursuant to a reverse repurchase 
agreement.  While reverse repurchase agreements are outstanding, a Fund will 
maintain, in a segregated account, cash, U.S. Government securities or other 
liquid portfolio securities of an amount at least equal to the market value 
of the securities, plus accrued interest, subject to the agreement.

     GUARANTEED INVESTMENT CONTRACTS.  The Money Market Fund may make limited 
investments in guaranteed investment contracts ("GICs") issued by U.S. 
insurance companies.  Pursuant to such contracts, a Fund makes cash 
contributions to a deposit fund of the insurance company's general account.  
The insurance company then credits to the Fund on a monthly basis interest 
which is based on an index (in most cases this index is expected to be the 
Salomon Brothers CD Index), but is guaranteed not to be less than a certain 
minimum rate.  A GIC is normally a general obligation of the issuing 
insurance company and not funded by a separate account.  The purchase price 
paid for a GIC becomes part of the general assets of the insurance company, 
and the contract is paid from the company's general assets.  A Fund will only 
purchase GICs from insurance companies which, at the time of purchase, have 
assets of $1 billion or more and meet quality and credit standards 
established by the Advisor pursuant to guidelines approved by the Board of 
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 a Fund to 
lock-in a price or yield on a security, regardless of future changes in 
interest rates.



                                      13
<PAGE>

     When a Fund agrees to purchase securities on a when-issued or forward 
commitment basis, the Sub-Custodian will set aside cash or liquid portfolio 
securities equal to the amount of the commitment in a separate account. 
Normally, the Sub-Custodian will set aside portfolio securities to satisfy a 
purchase commitment, and in such a case a Fund may be required subsequently 
to place additional assets in the separate account in order to ensure that 
the value of the account remains equal to the amount of the Fund's 
commitments.  It may be expected that the market value of a Fund's net assets 
will fluctuate to a greater degree when it sets aside portfolio securities to 
cover such purchase commitments than when it sets aside cash.  Because a 
Fund's liquidity and ability to manage its portfolio might be affected when 
it sets aside cash or portfolio securities to cover such purchase 
commitments, the Advisor expects that its commitments to purchase when-issued 
securities and forward commitments will not exceed 25% of the value of a 
Fund's total assets absent unusual market conditions.

     The Funds 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 a 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 net asset 
value of a Fund starting on the day the Fund agrees to purchase the 
securities.  A Fund does not earn interest on the securities it has committed 
to purchase until they are paid for and delivered on the settlement date.

     ILLIQUID SECURITIES.  Each Fund (other than the Money Market Fund and 
the Short Term Treasury Fund) may invest up to 15% of the value of its net 
assets (determined at time of acquisition) in securities which are illiquid.  
The Money Market Fund may invest up to 10% of the value of its net assets 
(determined at time of acquisition) in securities which 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 
which are subject to trading restrictions because they are not registered 
under the Securities Act of 1933, as amended (the "Act").  If, after the time 
of acquisition, events cause this limit to be exceeded, the Fund will take 
steps to reduce the aggregate amount of illiquid securities as soon as 
reasonably practicable in accordance with the policies of the SEC.

     The Funds (other than the 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"). The Funds may also purchase securities that are not registered 
under the Act, but which can be sold to qualified institutional buyers in 
accordance with Rule 144A under the Act, ("Rule 144A securities").  Section 
4(2) paper is restricted as to disposition under the Federal securities laws, 
and generally is sold to institutional investors 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 



                                      14
<PAGE>

Company's Board of Directors.  It is possible that unregistered securities 
purchased by a Fund in reliance upon Rule 144A could have the effect of 
increasing the level of a Fund's illiquidity to the extent that qualified 
institutional buyers become, for a period, uninterested in purchasing these 
securities.

     ASSET-BACKED SECURITIES.  Subject to applicable credit criteria, the 
Money Market 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 unscheduled 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.  In calculating the average weighted maturity of 
the Money Market Fund, the maturity of mortgage-backed instruments will be 
based on estimates of average life.  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 at 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 the 
premium paid.

     LENDING OF PORTFOLIO SECURITIES.  To enhance the return on its 
portfolio, each Fund may lend securities in its portfolio (subject to a limit 
of 25% of its total assets) to securities firms and financial institutions, 
provided that each loan is secured continuously by collateral in the form of 
cash or U.S. Government securities adjusted daily to have a market value at 
least equal to the current market value of the securities loaned.  These 
loans are terminable at any time, and the Fund will receive any interest or 
dividends paid on the loaned securities.  In addition, it is anticipated that 
a Fund may share with the borrower some of the income received on the 
collateral for the loan or the Fund will be paid a premium for the loan. The 
risk in lending portfolio securities, as with other extensions of credit, 
consists of a possible delay in recovery of the securities or a possible loss 
of rights in the collateral should the borrower fail financially.  In 
determining whether a Fund will lend securities, the Advisor will consider 
all relevant facts and circumstances.  A Fund will only enter into loan 
arrangements with broker-dealers, banks or other institutions which the 
Advisor has determined are creditworthy under guidelines established by the 
Board of Directors.

     YIELDS AND RATINGS.  The yields on certain obligations, including the 
money market instruments in which each Fund may invest (such as commercial 
paper and bank obligations), are dependent on a variety of factors, including 
general money market conditions, conditions in the particular market for the 
obligation, the financial condition of the issuer, the size of the offering, 
the maturity of the obligation and the ratings of the issue.  The ratings of 
S&P, Moody's, Duff & Phelps Credit Rating Co., Thomson Bank Watch, Inc., and 
other nationally recognized statistical rating organizations 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.

     Subsequent to its purchase by a Fund, a rated security may cease to be 
rated or its rating may be reduced below the minimum rating required for 
purchase by the Fund.  The Board of Directors or the Advisor, pursuant to 
guidelines established by the Board, will consider such an event in 
determining



                                      15
<PAGE>

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

     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.  The Index Funds are not managed in 
this manner.  Instead, with the aid of a computer program, the Advisor 
purchases and sells securities for each Index Fund in an attempt to produce 
investment results that substantially duplicate the investment composition 
and performance of each Index Fund's respective corresponding index (the 
"Corresponding Index"), taking into account redemptions, sales of additional 
Fund shares, and other adjustments as described below.

     An Index Fund does not expect to hold at any particular time all of the 
stocks included in the Corresponding Index.  The Advisor believes, however, 
that through the application of capitalization weighting and sector balancing 
techniques it will be able to construct and maintain each Index Fund's 
investment portfolio so that it reasonably tracks the performance of its 
Corresponding Index.  The Advisor will compare the industry sector 
diversification of the stocks an Index Fund would acquire solely on the basis 
of their weighted capitalizations with the industry sector diversification of 
all issuers included in the relevant Corresponding Index.  This comparison is 
made because the Advisor believes that, unless an Index Fund holds all stocks 
included in its Corresponding Index, 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. As a result, 
events disproportionately affecting such industries could affect the 
performance of the Fund differently than the performance of the Corresponding 
Index.  Conversely, if smaller companies were not purchased by the Fund, the 
representation of industries included in the Corresponding Index 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 an Index 
Fund's portfolio and will purchase balancing securities in these sectors 
until the portfolio's sector weightings closely match those of the 
Corresponding Index. This process continues until the portfolio is fully 
invested (except for cash holdings).

     Redemptions of a substantial number of shares of an Index 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 Corresponding Index.

     If an issuer drops in ranking, or is eliminated entirely from an Index 
Fund's Corresponding Index, 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 
Corresponding Index, such securities might not be sold.  Such sales may 
result in lower prices for such securities than may been realized or in 
losses that may not have been incurred if the Advisor were not required to 
effect the purchases and sales. The failure of an issuer to declare or pay 
dividends, the institution against an issuer of potentially materially 
adverse legal proceedings, the existence or threat of defaults materially and 
adversely affecting an issuer's future declaration and payment of dividends, 
or the existence of other materially adverse credit factors will not 
necessarily be the basis for the disposition of portfolio securities, unless 
such event causes the issuer to be eliminated entirely from the Corresponding 
Index.  However, although the Advisor does not intend to screen securities 
for investment by an Index Fund by traditional methods of financial and 
market analysis, the Advisor will monitor each Index Fund's investment with a 
view towards removing stocks of companies which may impair for any reason the 
Fund's ability to achieve its investment objective.



                                      16
<PAGE>

     The Index Funds will invest primarily in the common stocks that 
constitute their Corresponding Indexes in accordance with their relative 
capitalization and sector weightings as described above. It is possible, 
however, that a Fund will from time to time receive, as part of a "spin-off" 
or other corporate reorganization of an issuer included in a Corresponding 
Index, securities that are themselves outside the Corresponding Index.  Such 
securities will be disposed of by the Fund in due course consistent with the 
Fund's investment objective.
                                          
                               INVESTMENT LIMITATIONS

     Each Fund is subject to the investment limitations enumerated in this 
section which may be changed with respect to a particular Fund only by a vote 
of the holders of a majority of the Fund's outstanding shares (as defined 
under "Miscellaneous - Shareholder Approvals").

          Each Fund may not:

          1.   With respect to 75% of the Fund's assets, invest more than 5% 
               of the Fund's assets (taken at 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. However, as an operating policy the Money 
               Market Fund intends to adhere to the 5% limitation (with 
               respect to the Fund's investment in the outstanding securities 
               of any one issuer) with regard to 100% of its portfolio to the 
               extent required under applicable regulations under the 1940 
               Act;

          2.   Purchase securities if more than 25% of the value of the 
               Fund's total assets would be invested in the securities of 
               issuers conducting their principal business activities in the 
               same industry; provided that: (i) there is no limit on 
               investments in U.S. Government Securities or, with respect to 
               the Money Market Fund, obligations of domestic commercial 
               banks (including U.S. branches of foreign banks subject to 
               regulations under U.S. laws applicable to domestic banks and, 
               to the extent that its parent is unconditionally liable for 
               the obligation, foreign branches of U.S. banks); (ii) there is 
               no limit on investments in issuers domiciled in a single 
               country; (iii) financial service companies are classified 
               according to the end users of their services (for example, 
               automobile finance, bank finance and diversified finance are 
               each considered to be a separate industry); and (iv) utility 
               companies are classified according to their services (for 
               example, gas, gas transmission, electric, and telephone are 
               each considered to be a separate industry);

          3.   Borrow money or enter into reverse repurchase agreements 
               except that the Fund may (i) borrow money or enter into 
               reverse repurchase agreements for temporary purposes in 
               amounts not exceeding 5% of its total assets and (ii) borrow 
               money for the purpose of meeting redemption requests, in 
               amounts (when aggregated with amounts borrowed under clause 
               (i)) not exceeding 33 1/3% of its total assets;

          4.   Pledge, mortgage or hypothecate its assets other than to 
               secure borrowings permitted by restriction 3 above (collateral 
               arrangements with respect to margin requirements for options 
               and futures transactions are not deemed to be pledges or 
               hypothecations for this purpose);



                                      17
<PAGE>

          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 Act in selling
               portfolio securities;

          7.   Purchase or sell real estate or any interest therein, but not
               including securities issued by companies (including real estate
               investment trusts) that invest in real estate or interests
               therein;

          8.   Make investments for the purpose of exercising control of
               management; 

          9.   Invest in commodities or commodity futures contracts, provided
               that this limitation shall not prohibit the purchase or sale by
               a Fund of financial futures and stock index futures contracts,
               options on futures contracts, options on securities and
               securities indices, as permitted by the Fund's Prospectus; or

          10.  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 may be
               deemed to give rise to a senior security and as consistent with
               interpretations under the 1940 Act.

     Although not a matter of fundamental policy, the Funds consider 
securities which are issued or guaranteed by the same foreign government to 
be issued by the same industry for purposes of the 25% asset limitation on 
investments in securities of issuers conducting their principal business 
activity in the same industry.

     Additional investment restrictions adopted by each Fund, 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 or which are not 
               otherwise marketable; 

          2.   Invest in other investment companies except as permitted under
               the 1940 Act; or

          3.   Purchase securities on margin, or make short sales of 
               securities except for the use of short-term credit necessary 
               for the clearance of purchase and sales of portfolio 
               securities, but a Fund may make margin deposits in connection 
               with transactions in options, futures and options on futures.

     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).  In 
addition, if a Fund's holdings of illiquid securities exceeds 15% (10% for 
the Money Market Fund) because of changes in the value of the Fund's 
investments, the Fund will take action to reduce its holdings of illiquid 
securities within a time frame deemed to be in the 



                                      18
<PAGE>

best interest of the Fund.  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.
                                          
                               DIRECTORS AND OFFICERS

     The directors and executive officers of the Company, and their business
addresses and principal occupations during the past five years, are:


<TABLE>
<CAPTION>
                                                                                         Principal Occupations
Name, Address and Age                     Positions with Company                      During the Past Five Years
- ---------------------                     ----------------------                      ---------------------------
<S>                                       <C>                                         <C>
   
 Charles W. Elliott                       Chairman of the Board of Directors          Senior Advisor to the President - Western
 1024 Essex Circle                                                                    Michigan University since July 1995;
 Kalamazoo, MI  49008                                                                 Executive Vice President - Administration
 Age: 65                                                                              & Chief Financial Officer, Kellogg Company
                                                                                      from January 1987 through June 1995;
                                                                                      before that Price Waterhouse.  Board of
                                                                                      Directors, Steelcase Financial
                                                                                      Corporation.
    

 John Rakolta, Jr.                         Director and Vice Chairman of the Board    Chairman and Chief Executive Officer,
 1876 Rathmor                              of Directors                               Walbridge Aldinger Company (construction
 Bloomfield Hills, MI  48304                                                          company).
 Age: 50

 Thomas B. Bender                          Director                                    Investment Advisor, Financial & Investment
 7 Wood Ridge Road                                                                     Management Group (since April, 1991); Vice
 Glen Arbor, MI  49636                                                                 President Institutional Sales, Kidder,
 Age: 64                                                                               Peabody & Co. (Retired April, 1991);
                                                                                       Trustee, Vining Real Estate Investment
                                                                                       Trust.

 David J. Brophy                           Director                                    Professor, University of Michigan;
 1025 Martin Place                                                                     Director, River Place Financial Corp.
 Ann Arbor, MI  48104
 Age: 61
</TABLE>



                                      19
<PAGE>
<TABLE>
<CAPTION>
                                                                                         Principal Occupations
Name, Address and Age                     Positions with Company                      During the Past Five Years
- ---------------------                     ----------------------                      ---------------------------
<S>                                       <C>                                         <C>


Dr. Joseph E. Champagne                   Director                                    Dean, University Center, Macomb College 
319 East Snell Road                                                                   since September 1997; Corporate and 
Rochester, MI  48306                                                                  Executive Consultant since September 1995;
Age: 59                                                                               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 
                                                                                      Controls of Troy, MI.

Thomas D. Eckert                          Director                                    President and Chief Executive Officer, 
10726 Falls Pointe Drive                                                              Capital Automotive REIT from November 
Great Falls, VA  22066                                                                1997 to present (real estate investment 
Age: 50                                                                               trust specializing in retail automotive 
                                                                                      properties); prior to that President, 
                                                                                      Mid-Atlantic Division of Pulte Home 
                                                                                      Corporation (developer of residential land 
                                                                                      and construction of housing units) from 1983
                                                                                      until 1997.

Lee P. Munder*                            Director and President                      Chairman of the Advisor since February 1998;
480 Pierce Street                                                                     Chief Executive Officer of World Asset 
Suite 300                                                                             Management since January 1995; Chief 
Birmingham, MI  48009                                                                 Executive Officer of Old MCM, Inc. 
Age: 52                                                                               (predecessor to Advisor) since 1985; and
                                                                                      Director, LPM Investment Services, Inc. 
                                                                                      (LPM).

</TABLE>



                                      20
<PAGE>
<TABLE>
<CAPTION>
                                                                                         Principal Occupations
Name, Address and Age                     Positions with Company                      During the Past Five Years
- ---------------------                     ----------------------                      ---------------------------
<S>                                       <C>                                         <C>
 Terry H. Gardner                         Vice President, Chief Financial Officer     Vice President and Chief Financial Officer
 480 Pierce Street                        and Treasurer                               of the Advisor; Vice President and Chief
 Suite 300                                                                            Financial Officer of Old MCM, Inc.
 Birmingham, MI  48009                                                                (February 1993 to present); and Secretary
 Age: 37                                                                              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 1995);
 Birmingham, MI  48009                                                                Executive Vice President of the Advisor
 Age: 46                                                                              (April 1995 to February 1998); and
                                                                                      Executive Vice President of Comerica, Inc.

 Gerald Seizert                           Vice President                              Chief Executive Officer of the Advisor
 480 Pierce Street                                                                    (since February 1998); Chief Investment
 Suite 300                                                                            Officer/Equities of the Advisor (since
 Birmingham, MI  48009                                                                April 1995); Executive Vice President of
 Age: 45                                                                              the Advisor (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 Marketing
 480 Pierce Street                                                                    for the Advisor; Vice President and
 Suite 300                                                                            Director of Client Services of Old MCM,
 Birmingham, MI  48009                                                                Inc. (August 1988 to December 1994).
 Age: 40

 James C. Robinson                        Vice President                              Vice President and Chief Investment
 480 Pierce Street                                                                    Officer/Fixed Income for the Advisor; Vice
 Suite 300                                                                            President and Director of Fixed Income of
 Birmingham, MI  48009                                                                Old MCM, Inc. (1987-1994).
 Age: 36

 Leonard J. Barr, II                      Vice President                              Vice President and Director of Core Equity
 480 Pierce Street                                                                    Research of the Advisor; Director and
 Suite 300                                                                            Senior Vice President of Old MCM, Inc.
 Birmingham, MI  48009                                                                (since 1988); Director of LPM.
 Age: 53
</TABLE>



                                     21
<PAGE>
<TABLE>
<CAPTION>
                                                                                         Principal Occupations
Name, Address and Age                     Positions with Company                      During the Past Five Years
- ---------------------                     ----------------------                      ---------------------------
<S>                                       <C>                                         <C>
 Ann F. Putallaz                          Vice President                              Vice President and Director of Fiduciary
 480 Pierce Street                                                                    Services of the Advisor (since January
 Suite 300                                                                            1995); Director of Client and Marketing
 Birmingham, MI  48009                                                                Services of Woodbridge Capital Management,
 Age: 54                                                                              Inc.

 Lisa A. Rosen                            Secretary, Assistant Treasurer              General Counsel of the Advisor (since May
 480 Pierce Street                                                                    1996); formerly Counsel, First Data
 Suite 300                                                                            Investor Services Group, Inc.; Assistant
 Birmingham, MI  48009                                                                Vice President and Counsel with The Boston
 Age: 30                                                                              Company Advisors, Inc.; Associate with
                                                                                      Hutchins, Wheeler & Dittmar.

 Therese Hogan                             Assistant Secretary                        Director, State Regulation Department,
 53 State Street                                                                      First Data Investor Services Group (June
 Boston, MA 02109                                                                     1994-present); formerly Senior Legal
 Age: 36                                                                              Assistant, Palmer & Dodge (October 1993-
                                                                                      June 1994); Blue Sky Paralegal, Robinson &
                                                                                      Cole (February 1984-October 1993).
</TABLE>
*    "Interested person" of the Company, as defined in the 1940 Act.

     Directors of the Company receive an aggregate fee from the Company, The 
Munder Funds Trust (the "Trust"), The Munder Funds, Inc. ("Munder") and The 
Munder Framlington Funds Trust ("Framlington Trust") comprised of an annual 
retainer fee and a fee for each Board meeting attended, and are reimbursed 
for all out-of-pocket expenses relating to attendance at meetings.

     The following table summarizes the compensation paid by the Company, the 
Trust, Munder and Framlington Trust to their respective Directors/Trustees 
for the fiscal year ended December 31, 1997.

<TABLE>
<CAPTION>
                                                      Pension
                                Aggregate            Retirement          Estimated
                               Compensation           Benefits             Annual           
     Name of                  from the Company,       Accrued             Benefits           Total from
      Person               the Trust, Munder and    as Part of              upon              the Fund
   and Position              Framlington Trust     Fund Expenses          Retirement           Complex
   ------------              -----------------     -------------          ----------           -------
<S>                        <C>                     <C>                   <C>                 <C>
Charles W. Elliott
Chairman                           $26,000                None                None              $26,000

John Rakolta, Jr.
Vice Chairman                      $23,000                None                None              $23,000

Thomas B. Bender
Trustee and Director               $26,000                None                None              $26,000
</TABLE>



                                      22
<PAGE>
<TABLE>
<CAPTION>
                                                      Pension
                                Aggregate            Retirement          Estimated
                               Compensation           Benefits             Annual           
     Name of                  from the Company,       Accrued             Benefits           Total from
      Person               the Trust, Munder and    as Part of              upon              the Fund
   and Position              Framlington Trust     Fund Expenses          Retirement           Complex
   ------------              -----------------     -------------          ----------           -------
<S>                        <C>                     <C>                   <C>                 <C>
David J. Brophy
Trustee and Director               $26,000                None                None              $26,000

Dr. Joseph E. Champagne
Trustee and Director               $26,000                None                None              $26,000

Thomas D. Eckert
Trustee and Director               $22,500                None                None              $22,500
</TABLE>

     No officer, director or employee of the Advisor, Comerica, the 
Sub-Custodian, the Distributor, the Administrator or the Transfer Agent 
currently receives any compensation from the Company.  As of March 23, 1998, 
the Directors and officers of the Company, as a group, owned less than 1% of 
outstanding shares of the Funds of the Company.

                 INVESTMENT ADVISORY AND OTHER SERVICE ARRANGEMENTS
   
     INVESTMENT ADVISOR.  The Advisor of the Fund is Munder Capital 
Management, a Delaware general partnership.  The general partners of the 
Advisor are Woodbridge, WAM, Old MCM and Munder Group, LLC.  Woodbridge and 
WAM are wholly-owned subsidiaries of Comerica Bank -- Ann Arbor, which, in 
turn is a wholly-owned subsidiary of Comerica Incorporated, a publicly-held 
bank holding company.
    
     The Investment Advisory Agreement between the Advisor and the Company 
with respect to the Funds (the "Advisory Agreement") was approved by the 
Company's Board of Directors on May 6, 1997 and by shareholders on May 6, 
1997.  Under the terms of the Advisory Agreement, the Advisor furnishes 
continuing investment supervision to the Funds and is responsible for the 
management of each Fund's portfolio.  The responsibility for making decisions 
to buy, sell or hold a particular security rests with the Advisor, subject to 
review by the Company's Board of Directors.

     The Advisory Agreement will continue in effect for a period of two years 
from its effective date. If not sooner terminated, the Advisory Agreement 
will continue in effect for successive one year periods thereafter, provided 
that each continuance is specifically approved annually by (a) the vote of a 
majority of the Board of Directors who are not parties to the Advisory 
Agreement or interested persons (as defined in the 1940 Act), cast in person 
at a meeting called for the purpose of voting on approval, and (b) either (i) 
the vote of a majority of the outstanding voting securities of the Fund, or 
(ii) the vote of a majority of the Board of Directors.  The Advisory 
Agreement is terminable by vote of the Board of Directors, or by the holders 
of a majority of the outstanding voting securities of a Fund, at any time 
without penalty, upon 60 days' written notice to the Advisor. The Advisor may 
also terminate its advisory relationship with a Fund without penalty upon 90 
days' written notice to the Company.  The Advisory Agreement terminates 
automatically in the event of its assignment (as defined in the 1940 Act).

     For the advisory services provided and expenses assumed with regard to 
the Funds, the Advisor has agreed to a fee from each Fund, computed daily and 
payable monthly on a separate Fund-by-Fund basis, at an annual rate of .07% 
of the average daily net assets of the LargeCap 500 Index Fund, .15% of the 
average daily net assets of each of the MidCap Index Fund and SmallCap Index 
Fund and .20% of the average daily net assets of each of the Short Term 
Treasury Fund and Money Market Fund.

     For the period from commencement of operations on October 14, 1997 and 
August 7, 1997, respectively for LargeCap 500 Index Fund and SmallCap Index 
Fund through December 31, 1997, the Advisor received fees in the amounts of 
$7,005 for the LargeCap 500 Index Fund and $1,554 for the 



                                       23
<PAGE>

SmallCap Index Fund.  For the period from commencement of operations through 
December 31, 1997, the Advisor voluntarily reimbursed expenses in the amounts 
of $53,427 for the LargeCap 500 Index Fund and $38,346 for the SmallCap Index 
Fund.

     DISTRIBUTION AGREEMENT.  The Company has entered into a distribution 
agreement, under which the Distributor, as agent, sells shares of the Fund on 
a continuous basis.  The Distributor has agreed to use appropriate efforts to 
solicit orders for the purchase of shares of the 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 fund shares (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, Suite 1300, Boston, Massachusetts 02109.

     ADMINISTRATION AGREEMENT.  State Street Bank and Trust Company ("State 
Street") located at 225 Franklin Street, Boston, Massachusetts 02110, serves 
as administrator for the Company pursuant to an administration agreement (the 
"Administration Agreement").  State Street has agreed to maintain office 
facilities for 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 or any state securities 
commission having jurisdiction over the Company.  State Street may enter into 
an agreement with one or more third parties pursuant to which such third 
parties will provide administrative services on behalf of the Funds.

     The Administration Agreement provides that the Administrator performing 
services thereunder shall not be liable under the Agreement except for its 
willful misfeasance, bad faith or negligence in the performance of its duties 
or from the reckless disregard by it of its duties and obligations thereunder.

     For the period from commencement of operations on October 14, 1997 and 
August 7, 1997, respectively for LargeCap 500 Index Fund and SmallCap Index 
Fund through December 31, 1997, the administration fees of State Street 
accrued as follows:  LargeCap 500 Index Fund $841 and SmallCap Index Fund $87.

     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 a custodian agreement ("Custody Agreement") with 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 
agreement (the "Sub-Custodian Contract") among the Company, Comerica Bank and 
State Street.  State Street is also the Sub-Custodian with respect to the 
custody of foreign securities held by certain of 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 Contract, 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 each Fund's operations.  

     First Data Investor Services Group Inc. ("Investor Services Group") 
serves as the transfer and dividend disbursing agent for the Funds pursuant 
to a transfer agency agreement (the "Transfer Agency Agreement") with 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 



                                      24
<PAGE>
each Fund and (v) makes periodic reports to the Board of Directors concerning 
the operations of the Funds.

     OTHER INFORMATION PERTAINING TO ADMINISTRATION, SUB-CUSTODIAN AND 
TRANSFER AGENCY AGREEMENTS.  As stated in the Prospectus, the Administrator, 
the Transfer Agent and the Sub-Custodian each receives a separate fee for its 
services.  In approving the Administration Agreement, the Sub-Custodian 
Contract and the Transfer Agency Agreement, the Board of Directors did 
consider the services that are to be provided under their respective 
agreements, the experience and qualifications of the respective service 
contractors, the reasonableness of the fees payable by the Company in 
comparison to the charges of competing vendors, the impact of the fees on the 
estimated total ordinary operating expense ratio of each Fund and the fact 
that neither the Administrator, the Sub-Custodian nor the Transfer Agent is 
affiliated with the Company or the Advisor.  The Board also considered its 
responsibilities under federal and state law in approving these agreements.   

                               PORTFOLIO TRANSACTIONS

     Subject to the general supervision of the Board of Directors, the 
Advisor makes decisions with respect to and places orders for all purchases 
and sales of portfolio securities for each Fund.

     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.  

     For the period from commencement of operations on October 14, 1997 and 
August 7, 1997, respectively for LargeCap 500 Index Fund and SmallCap Index 
Fund through December 31, 1997, the Funds paid brokerage commissions as 
follows: $9,081 for the LargeCap 500 Index Fund and $1,241 for the SmallCap 
Index Fund.

     Over-the-counter issues, including corporate debt and government 
securities, are normally traded on a "net" basis (i.e., without commission) 
through dealers, or otherwise involve transactions directly with the issuer 
of an instrument.  With respect to over-the-counter transactions, the Advisor 
will normally deal directly with dealers who make a market in the instruments 
involved except in those circumstances where more favorable prices and 
execution are available elsewhere.  The cost of 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 
believes such practice to be in each Fund's interests.

     The portfolio turnover rate of each Fund is calculated by dividing the 
lesser of the Fund's annual sales or purchases of portfolio securities 
(exclusive of purchases or sales of securities whose maturities at the time 
of acquisition were one year or less) by the monthly average value of the 
securities held by the Fund during the year.  Each Fund may engage in 
short-term trading to achieve its investment objective.  Portfolio turnover 
may vary greatly from year to year as well as within a particular year.

     In the Advisory Agreement, the Advisor agrees to select broker-dealers 
in accordance with guidelines established by the Company's Board of Directors 
from time to time and in accordance with applicable law.  In assessing the 
terms available for any transaction, the Advisor shall consider all factors 
it deems relevant, including the breadth of the market in the security, the 
price of the security, the financial condition and execution capability of 
the broker-dealer, and the reasonableness of the 



                                      25
<PAGE>

commission, if any, both for the specific transaction and on a continuing 
basis.  In addition, the Advisory Agreement authorizes the Advisor, subject 
to the prior approval of the Company's Board of Directors, to cause each Fund 
to pay a broker-dealer which furnishes brokerage and research services a 
higher commission than that which might be charged by another broker-dealer 
for effecting the same transaction, provided that the Advisor determines in 
good faith that such commission is reasonable in relation to the value of the 
brokerage and research services provided by such broker-dealer, viewed in 
terms of either the particular transaction or the overall responsibilities of 
the Advisor to the Fund.  Such brokerage and research services might consist 
of reports and statistics on specific companies or industries, general 
summaries of groups of bonds and their comparative earnings and yields, or 
broad overviews of the securities markets and the economy.

     Supplementary research information so received is in addition to, and 
not in lieu of, services required to be performed by the Advisor and does not 
reduce the advisory fees payable to the 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, the Funds 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, 
the Distributor or any affiliated person (as defined in the 1940 Act) of the 
foregoing entities except to the extent permitted by SEC exemptive order or 
by applicable law.

     Investment decisions for each Fund and for other investment accounts 
managed by the 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 the Funds are concerned, in other cases it is 
believed to be beneficial to the Funds.  To the extent permitted by law, the 
Advisor may aggregate the securities to be sold or purchased for the Funds 
with those to be sold or purchased for other investment companies or accounts 
in executing transactions.

     The Funds will not purchase securities during the existence of any 
underwriting or selling group relating to such securities of which the 
Advisor or any affiliated person (as defined in the 1940 Act) thereof is a 
member except pursuant to procedures adopted by the Company's Board of 
Directors in accordance with Rule 10f-3 under the 1940 Act.

     The Company is 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 to state the value of such holding.  As of December 31, 1997, the 
LargeCap 500 Index Fund held securities of Chase Manhattan valued at 
$394,200, First Chicago NBD Corporation valued at $200,400, NationsBank 
Corporation valued at $364,875, Merrill Lynch & Company, Inc. valued at 
$196,931, J.P. Morgan & Company, Inc. valued at $169,313, Morgan Stanley, 
Dean Witter, Discover & Co. valued at $289,712 and Charles Schwab Corporation 
valued at $92,263.  As of December 31, 1997, the SmallCap Index Fund held 
securities of Deposit Guaranty Corporation valued at $17,062.

     Except as noted in the Prospectus and this Statement of Additional 
Information the Funds' service contractors bear all expenses in connection 
with the performance of their services and each Fund bears the expenses 
incurred in its operations.  These expenses include, but are not limited to, 
fees paid to the Advisor, Administrator, Sub-Custodian and Transfer Agent; 
fees and expenses of officers and Directors; taxes; interest; legal and 
auditing fees; brokerage fees and commissions; certain fees and 



                                      26
<PAGE>

expenses in registering and qualifying each 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 Company that are not readily identifiable as 
belonging to a particular investment portfolio of the Company are allocated 
among all investment portfolios of the Company by or under the direction of 
the Board of Directors in a manner that the Board of Directors determines to 
be fair and equitable, taking into consideration whether it is appropriate 
for expenses to be borne by the Funds in addition to the Company's other 
funds.  The Advisor, Administrator, 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' prospectus and 
such information is incorporated herein by reference.

     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.  

     OTHER INFORMATION.  The Funds may suspend the right of redemption or 
postpone the date of payment for Shares during any period when: (a) trading 
on the New York Stock Exchange (the "Stock Exchange") is restricted by 
applicable rules and regulations of the SEC; (b) the Stock Exchange is closed 
for other than customary weekend and holiday closings; (c) the SEC has by 
order permitted such suspension; or (d) an emergency exists as determined by 
the SEC.  Upon the occurrence of any of the foregoing conditions, the Funds 
may also suspend or postpone the recordation of the transfer of its Shares.

     In addition, the Funds may compel the redemption of, reject any order 
for, or refuse to give effect on the Funds' books to the transfer of, its 
Shares where the relevant investor or investors have not furnished the Funds 
with valid, certified taxpayer identification numbers and such other 
tax-related certifications as the Fund may request.  The Funds may also 
redeem Shares involuntarily if it otherwise appears appropriate to do so in 
light of the Funds' responsibilities under the 1940 Act or in connection with 
a failure of the appropriate person(s) to furnish certified taxpayer 
identification numbers and other tax-related certifications.  

     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 Prospectus.  For further information about this form of 
payment please contact the Transfer Agent.  In connection with an in-kind 
securities payment, the Funds will require, among other things, that the 
securities be valued on the day of purchase in accordance with the pricing 
methods used by the Fund and that the Fund receive satisfactory assurances 
that (1) it will have good and marketable title to the securities received by 
it; (2) that the securities are in proper form for transfer to the Funds; and 
(3) adequate information will be provided concerning the basis and other tax 
matters relating to the securities.



                                      27
<PAGE>

     Redemption proceeds are normally paid in cash; however, each Fund may 
pay the redemption price in whole or in 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. 
                                          
                                  NET ASSET VALUE

     Net asset value for shares in a Fund is calculated by dividing the value 
of all securities and other assets belonging to the Fund, less the 
liabilities charged, by the number of outstanding shares.

     The net asset value per share of each Fund (except the Money Market 
Fund) for the purpose of pricing purchase and redemption orders is determined 
as of the close of regular trading hours on the NYSE (currently 4:00 p.m., 
Eastern time) on each Business Day.  Securities traded on a national 
securities exchange or on NASDAQ for which there were no sales on the date of 
valuation and securities traded on other over-the-counter markets, including 
listed securities for which the primary market is believed to be 
over-the-counter, are valued at the mean between the most recently quoted bid 
and asked prices.  Options will be valued at market value or fair value if no 
market exists.  Futures contracts will be valued in like manner, except that 
open futures contract sales will be valued using the closing settlement price 
or, in the absence of such a price, the most recently quoted asked price.  
Restricted securities and securities and assets for which market quotations 
are not readily available are valued at fair value by the Advisor under the 
supervision of the Board of Directors.  Debt securities with remaining 
maturities of 60 days or less are valued at amortized cost, unless the Board 
of Directors determines that such valuation does not constitute fair value at 
that time.  Under this method, such securities are valued initially at cost 
on the date of purchase (or the 61st day before maturity).

     In seeking to maintain a stable net asset value of $1.00 per share with 
respect to the Money Market Fund, the Company values the Fund's 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.

     In determining the approximate market value of portfolio investments, 
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 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 of Directors.

                              PERFORMANCE INFORMATION

     From time to time, quotations of a Fund's performance may be included in 
advertisements, sales literature, or reports to shareholders or prospective 
investors.  These performance figures are calculated in the following manner:

YIELD OF THE MONEY MARKET FUND

     The Money Market Fund's 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;



                                      28
<PAGE>

(b) dividing the net change by the value of the account at the beginning of 
the period to obtain the base period return; and (c) annualizing the results 
(i.e., multiplying the base period return by 365/7).  The net change in the 
value of the account reflects the value of additional shares purchased with 
dividends declared and all dividends declared on both the original share and 
such additional shares, but does not include realized gains and losses or 
unrealized appreciation and depreciation.  Compound effective yields are 
computed by adding 1 to the base period return (calculated as described 
above), raising the sum to a power equal to 365/7 and subtracting 1.

     Yield may fluctuate daily and does not provide a basis for determining
future yields.  Because the yield of the Fund will fluctuate, it 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 the 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 OF THE SHORT TERM TREASURY FUND

     The Short Term Treasury Fund's 30-day SEC yield (or one month) standard 
yield described in the Prospectus is calculated for the Fund in accordance 
with the method prescribed by the SEC for mutual funds:

                              a - b
               YIELD  =   2[(-------+1)6 - 1]
                               cd

Where:    a =  dividends and interest earned by a Fund during the period;

          b =  expenses accrued for the period (net of expense 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 the Fund at a discount or premium (variable "a" in the formula), 
the Fund computes the yield to maturity of such instrument based on the 
market value of the obligation (including actual accrued interest) at the 
close of business on the last business day of each month, or, with respect to 
obligations purchased during the month, the purchase price (plus actual 
accrued interest). Such yield is then divided by 360 and the quotient is 
multiplied by the market value of the obligation (including actual accrued 
interest) in order to determine the interest income on the obligation for 
each day of the subsequent month that the obligation is in the portfolio.  It 
is assumed in the above calculation that each month contains 30 days.  The 
maturity of a debt obligation with a call provision is deemed to be the next 
call date on which the obligation reasonably may be expected to be called or, 
if none, the maturity date.  For the purpose of computing yield on equity 
securities held by the 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 



                                      29
<PAGE>

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).  

AVERAGE ANNUAL TOTAL RETURN

     A Fund may advertise its "average annual total return" and will compute 
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 and of any CDSC deduction (or a fractional 
                         portion thereof);

               P     =   hypothetical initial payment of $1,000; 

               n     =   number of years and portion of a year

AGGREGATE TOTAL RETURN

     A Fund may advertise its "aggregate total return" and will compute such 
return 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.  



                                      30
<PAGE>

     Based on the foregoing calculation, the aggregate total return for the 
period from commencement of operations on October 14, 1997 and August 7, 
1997, respectively for LargeCap 500 Index Fund and SmallCap Index Fund 
through December 31, 1997 was 0.39% for the LargeCap 500 Index Fund and 3.0% 
for the SmallCap Index Fund.

     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, the 
Funds' 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, the Money Market 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. 


                                       TAXES
                                          
     The following summarizes certain additional tax considerations generally 
affecting each Fund and its shareholders that are not described in the Funds' 
Prospectus. No attempt is made to present a detailed explanation of the tax 
treatment of the Funds or its shareholders, and the discussion here and in 
the Prospectus is not intended as a substitute for careful tax planning.  
Potential investors should consult their tax advisors with specific reference 
to their own tax situations.

     GENERAL.  Each Fund intends to elect and qualify annually to be taxed as 
a regulated investment company under Subchapter M, of the Internal Revenue 
Code of 1986, as amended (the "Code").  As a regulated investment company, a 
Fund generally is exempt from Federal income tax on its net investment income 
and realized capital gains which it distributes to its shareholders, provided 
that it distributes an amount equal to the sum of (a) at least 90% of its 
investment company taxable income (net investment income and the excess of 
net short-term capital gain over net long-term capital loss), if any, for the 
year and (b) at least 90% of its net tax-exempt interest income, if any, for 
the year (the "Distribution Requirement") and satisfies certain other 
requirements of the Code that are described below. Distributions of 
investment company taxable income and net tax-exempt interest income made 
during the taxable year or, under specified circumstances, within twelve 
months after the close of the taxable year will satisfy the Distribution 
Requirement.

     In addition to satisfaction of the Distribution Requirement, each Fund 
must derive with respect to a taxable year at least 90% of its gross income 
from dividends, interest, certain payments with respect to securities loans 
and gains from the sale or other disposition of stock or securities or 
foreign currencies, or from other income derived with respect to its business 
of investing in such stock, securities, or currencies (the "Income 
Requirement").  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 the Fund has not invested more than 5% of the value of its total assets 
in securities of such issuer and as to which the Fund does not hold more than 
10% of the outstanding voting securities of such issuer) and no more 



                                      31
<PAGE>

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 the Fund controls and which are engaged in the same or similar 
trades or businesses.

     Certain debt instruments acquired by a Fund may include "original issue 
discount" or "market discount".  As a result, a Fund may be deemed under tax 
law rules to have earned discount income in taxable periods in which it does 
not actually receive any payments on the particular debt instruments 
involved.  This income, however, will be subject to the Distribution 
Requirements and must also be distributed in accordance with the excise tax 
distribution rules discussed below, which may cause the Fund to have to 
borrow or liquidate securities to generate cash in order to timely meet these 
requirements (even though such borrowing or liquidating securities at that 
time may be detrimental from the standpoint of optimal portfolio management). 
 Gain from the sale of a debt instrument having market discount may be 
treated for tax purposes as ordinary income to the extent that market 
discount accrued during the Fund's ownership of that instrument.

     Distributions of net investment income received by a Fund and any net 
realized short-term capital gains distributed by the Fund will be taxable to 
shareholders as ordinary income and will not be eligible for the dividends 
received deduction for corporations.

     Each Fund intends to distribute to shareholders any excess of net 
long-term capital gain over net short-term capital loss ("net capital gain") 
for each taxable year.  Such gain is distributed as a capital gain dividend 
and is taxable to shareholders as gain from the sale or exchange of a capital 
asset held for more than one year, regardless of the length of time the 
shareholder has held the 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 gains.  
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 a Fund does not qualify as a regulated 
investment company, all of its taxable income will be subject to tax at 
regular corporate rates without any deduction for distributions to 
shareholders.  In such event, all distributions (whether or not derived from 
exempt-interest income) would be taxable as ordinary income and would be 
eligible for the dividends received deduction in the case of corporate 
shareholders to the extent of the Fund's current and accumulated earnings and 
profits.

     Shareholders will be advised annually as to the Federal income tax 
consequences of distributions made by the Fund 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, each 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 the Fund during 
January of the following calendar year.  Such distributions will be taxable 
to shareholders in the calendar year in which 



                                      32
<PAGE>

the distributions are declared, rather than the calendar year in which the 
distributions are received.  To prevent application of the excise tax, each 
Fund intends to make its distributions in accordance with the calendar year 
distribution requirement.

     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 contracts and certain options (namely, nonequity 
options and dealer equity options) in which a Fund may invest are "section 
1256 contracts."  Gains or losses on section 1256 contracts generally are 
considered 60% long-term and 40% short-term capital gains or losses; however, 
foreign currency gains or losses (as discussed below) arising from certain 
section 1256 contracts may be treated as ordinary income or loss.  Also, 
section 1256 contracts held by a Portfolio 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" (that is, treated as sold at fair market value), 
resulting in unrealized gains or losses being treated as though they were 
realized.

     Generally, the hedging transactions 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 a Fund.  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 the losses are 
realized. Because only a few regulations implementing the straddle rules have 
been promulgated, the tax consequences to the Funds of engaging in hedging 
transactions are not entirely clear.  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.

     Each Fund may make one or more of the elections available under the Code 
which are applicable to straddles.  If a Fund makes any of the elections, the 
amount, character and timing of the recognition of gains or losses from the 
affected straddle positions will be determined under rules that vary 
according to the election(s) made.  The rules applicable under certain of the 
elections may operate to accelerate the recognition of gains or losses from 
the affected straddle positions.

     Because 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 may be distributed to 
shareholders, and which will be taxed to them as ordinary income or long-term 
capital gain, may be increased or decreased as compared to a fund that did 
not engage in such hedging transactions.

     The diversification requirements applicable to each Fund's assets may 
limit the extent to which each Fund will be able to engage in transactions in 
options and futures contracts.



                                      33
<PAGE>

     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 or ordinary 
loss.  Similarly, on disposition of debt securities denominated in a foreign 
currency and on disposition of certain options and futures contracts, gains 
or losses attributable to fluctuations in the value of 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.

     DISPOSITION OF SHARES.  Upon the redemption, sale or exchange of shares 
of a Fund, a shareholder may realize a capital 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 shares acquired pursuant to a dividend reinvestment plan) within a 
period of 61 days beginning 30 days before and ending 30 days after 
disposition of the shares.  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 a disposition 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 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.

     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.

     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 one-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 



                                      34
<PAGE>

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 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.

     The Company will be required in certain cases to withhold and remit to 
the United States Treasury 31% of taxable distributions paid to any 
shareholder (i) who has provided either an incorrect tax identification 
number or no number at all, (ii) who is subject to backup withholding by the 
Internal Revenue Service for failure to report the receipt of taxable 
interest or dividend income properly, or (iii) who has failed to certify to 
the Company that he is not subject to backup withholding or that he is an 
"exempt recipient."

     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 
a 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 a Fund.  Shareholders are 
advised to consult their own tax advisers with respect to the particular tax 
consequences to them of an investment in a Fund.

     The foregoing general discussion of Federal income tax consequences is 
based on the Code and the regulations issued thereunder as in effect on the 
date of this Statement of Additional Information.  Future legislative or 
administrative changes or court decisions may significantly change the 
conclusions expressed herein, and any such changes or decisions may have a 
retroactive effect with respect to the transactions contemplated herein.

     Although each Fund expects to qualify as a "regulated investment 
company" and to be relieved of all or substantially all Federal income taxes, 
depending upon the extent of its activities in states and localities in which 
its offices are maintained, in which its agents or independent contractors 
are located or in which it is otherwise deemed to be conducting business, the 
Fund may be subject to the tax laws of such states or localities.
                                          
                      ADDITIONAL INFORMATION CONCERNING SHARES

     The Company is a Maryland corporation. The Company's Articles of 
Incorporation authorize the Board of Directors to classify or reclassify any 
authorized but unissued shares of the Company into one or more additional 
portfolios (or classes of shares within a portfolio) by setting or changing 
in any one or more respects their respective preferences, conversion or other 
rights, voting powers, restrictions, limitations as to dividends, 
qualifications and terms and conditions of redemption.  Pursuant to such 
authority, the Company's Board of Directors have authorized the issuance of 
shares of common stock representing interests in Munder S&P 500 Index Equity 
Fund, Munder S&P MidCap Index Equity Fund, Munder S&P SmallCap Index Equity 
Fund, Munder Aggregate Bond Index Fund, Munder Foreign Equity Fund, Liquidity 
Plus Money Market Fund, Munder Institutional S&P 500 Index Equity Fund, 
Munder Institutional S&P MidCap Index Equity Fund, Munder Institutional S&P 
SmallCap Index Equity Fund, Munder Institutional Short Term Treasury Fund and 
Munder Institutional Money Market Fund.



                                      35
<PAGE>

     Shares of the Funds have no subscription or pre-emptive rights and only 
such conversion or exchange rights as the Board may grant in its discretion. 
When issued for payment as described in the applicable Prospectus and 
Statement of Additional Information, shares will be fully paid and 
non-assessable by the Company.  In the event of a liquidation or dissolution 
of 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 Fund and the Company's other 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, based on the number of shares of the 
Fund that are held by each shareholder.

     Shareholders of the Funds, as well as those of any other investment 
portfolio now or hereafter offered by 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 Board of 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 Company shall not be deemed to have been effectively acted upon unless 
approved by the holders of a majority of the outstanding shares of each Fund 
affected by the matter.  A Fund is affected by a matter unless it is clear 
that the interests of such Fund in the matter are substantially identical to 
the interests of other Funds of the Company or that the matter does not 
affect any interest of such Fund.  Under the Rule, the approval of an 
investment 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 directors may be effectively acted upon by shareholders of the Company 
voting together in the aggregate without regard to a particular Fund.

     Shareholder meetings to elect Directors will not be held unless and 
until such time as required by law.  At that time, the Directors then in 
office will call a shareholders' meeting to elect Directors.  Except as set 
forth above, the Directors will continue to hold office and may appoint 
successor directors. Meetings of the shareholders of the Company shall be 
called by the Directors upon the written request of shareholders owning at 
least 10% of the outstanding shares entitled to vote.

     Notwithstanding any provision of Maryland law requiring a greater vote 
of the Company's shares (or of any class voting as a class) in connection 
with any corporate action, unless otherwise provided by law (for example, by 
Rule 18f-2) or the Company's Articles of Incorporation, the Company may take 
or authorize such action upon the favorable vote of the holders of more than 
50% of the outstanding Common Stock of the Funds and the Company's other 
funds, if any (voting together without regard to class).
                                          
                                   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 Company.

     INDEPENDENT AUDITORS.  Ernst & Young LLP, 200 Clarendon Street, Boston, 
MA 02116 serves as the Company's independent auditors.

     CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.  As of March 23, 
1998 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:



                                      36
<PAGE>
<TABLE>
<CAPTION>
                                                          PERCENTAGE OF TOTAL SHARES
         NAME OF FUND              NAME AND ADDRESS             OUTSTANDING
         ------------              ----------------             -----------
     <S>                       <C>                        <C>
     LargeCap 500 Index Fund       Calhoun & Company                100%
               and             c/o Comerica Bank Detroit
        MidCap Index Fund           P.O. Box 75000
                                Detroit, MI 48275-3455
</TABLE>

     As of March 23, 1998, Munder Capital Management, on behalf of its 
clients owned 100% of the SmallCap Index Fund.

     SHAREHOLDER APPROVALS.  As used in this Statement of Additional 
Information and in the Prospectuses, a "majority of the outstanding shares" 
of the Fund means the lesser of (a) 67% of the shares of the Fund represented 
at a meeting at which the holders of more than 50% of the outstanding shares 
of the Fund are present in person or by proxy, or (b) more than 50% of the 
outstanding shares of the Fund.

     BANKING LAWS.  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 Company contemplated by their respective agreements with the Company 
without violation of applicable banking laws or regulations.  It should be 
noted, however, that there have been no cases deciding whether bank and 
non-bank subsidiaries of a registered bank holding company may perform 
services comparable to those that are to be performed by these companies, and 
future changes in either Federal or state statutes and regulations relating 
to permissible activities of banks and their subsidiaries or affiliates, as 
well as future judicial or administrative decisions or interpretations of 
current and future statutes and regulations, could prevent these companies 
from continuing to perform such service for the Company.

     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 Company, the Company might be required to alter 
materially or discontinue its arrangements with such companies and change its 
method of operations.  It is not anticipated, however, that any change in the 
Company's method of operations would affect the net asset value per share of 
the Funds or result in a financial loss to any shareholder of the Funds.

                               REGISTRATION STATEMENT

     This Statement of Additional Information and the Funds' Prospectus do 
not contain all the information included in the Funds' 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.



                                      37
<PAGE>

     Statements contained herein and in the Funds' Prospectus as to the 
contents of any contract or other documents referred to are not necessarily 
complete, and, in such instance, reference is made to the copy of such 
contract or other documents filed as an exhibit to the Funds' registration 
statement, each such statement being qualified in all respect by such 
reference.

                                FINANCIAL STATEMENTS
                                          
     The financial statements for the Company including the notes thereto, dated
December 31, 1997 have been audited by Ernst & Young LLP and are incorporated by
reference into this Statement of Additional Information from the Annual Report
of the Company dated as of December 31, 1997.  The information under the caption
"Financial Highlights" of the Funds for the period from commencement of
operations through December 31, 1997, appearing in the Prospectus dated May 1,
1998 has been derived from the financial statements audited by Ernst & Young
LLP.  The unaudited financial statements and notes thereto for the LargeCap 500
Index Fund for the period from commencement of operations through March 31, 1998
follow Appendix B to this Statement of Additional Information.



                                      38
<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.

     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.



                                      39
<PAGE>

     "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."



                                      40
<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+".  



                                      41
<PAGE>
                                     APPENDIX B

     As stated in the Prospectus, the Funds may enter into certain futures 
transactions and options for hedging purposes.  Such transactions are 
described in this Appendix.

I.  INDEX FUTURES CONTRACTS

     GENERAL.  A 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 indexed, such as the Standard & Poor's 500 or the New York Stock 
Exchange Composite Index.  In contrast, certain exchanges offer futures 
contracts on narrower market indexes, such as the Standard & Poor's 100 or 
indexes based on an industry or market segment, such as oil and gas stocks.

     Futures contracts are traded on organized exchanges regulated by the 
Commodity Futures Trading Commission.  Transactions on such exchanges are 
cleared through a clearing corporation, which guarantees the performance of 
the parties to each contract.

     A Fund will sell index futures contracts in order to offset a decrease 
in market value of its portfolio securities that might otherwise result from 
a market decline.  A Fund will purchase index futures contracts in 
anticipation of purchases of securities.  In a substantial majority of these 
transactions, a Fund will purchase such securities upon termination of the 
long futures position, but a long futures position may be terminated without 
a corresponding purchase of securities.

     In addition, a Fund may utilize index futures contracts in anticipation 
of changes in the composition of its portfolio holdings.  For example, in the 
event that a Fund expects to narrow the range of industry groups represented 
in its holdings it may, prior to making purchases of the actual securities, 
establish a long futures position based on a more restricted index, such as 
an index comprised of securities of a particular industry group.  A Fund may 
also sell futures contracts in connection with this strategy, in order to 
protect against the possibility that the value of the securities to be sold 
as part of the restructuring of the portfolio will decline prior to the time 
of sale.

     EXAMPLES OF STOCK INDEX FUTURES TRANSACTIONS.  The following are 
examples of transactions in stock index futures (net of commissions and 
premiums, if any).

                    ANTICIPATORY PURCHASE HEDGE:  Buy the Future
                 Hedge Objective:  Protect Against Increasing Price
     
          Portfolio                            Futures
          ---------                            -------
                                        -Day Hedge is Placed-
Anticipate buying $62,500 in            Buying 1 Index Futures at 125
Equity Securities                       Value of Futures = $62,500/Contract

                                        -Day Hedge is Lifted-
Buy Equity Securities with Actual       Sell 1 Index Futures at 130
Cost = $65,000                          Value of Futures = $65,000/Contract
Increase in Purchase Price = $2,500     Gain on Futures = $2,500



                                      42
<PAGE>
                    HEDGING A STOCK PORTFOLIO:  Sell the Future
                    Hedge Objective:  Protect Against Declining
                               Value of the Portfolio

Factors:

Value of Stock Portfolio = $1,000,000
Value of Futures Contract - 125 X $500 = $62,500
Portfolio Beta Relative to the Index = 1.0

          Portfolio                            Futures
          ---------                            -------
                                        -Day Hedge is Placed-
Anticipate Selling $1,000,000           Sell 16 Index Futures at 125
in Equity Securities                    Value of Futures = $1,000,000
                                        
                                        -Day Hedge is Lifted-
Equity Securities - Own Stock           Buy 16 Index Futures at 120
     with Value = $960,000              Value of Futures = $960,000
Loss in Portfolio Value = $40,000       Gain on Futures = $40,000  


II.  MARGIN PAYMENTS

     Unlike purchase or sales of portfolio securities, no price is paid or 
received by a Fund upon the purchase or sale of a futures contract.  
Initially, the Fund will be required to deposit with the broker or in a 
segregated account with the Custodian an amount of cash or cash equivalents, 
known as initial margin, based on the value of the contract.  The nature of 
initial margin in futures transactions is different from that of margin in 
security transactions in that futures contract margin does not involve the 
borrowing of funds by the customer to finance the transactions.  Rather, the 
initial margin is in the nature of a performance bond or good faith deposit 
on the contract which is returned to the Fund upon termination of the futures 
contract assuming all contractual obligations have been satisfied.  
Subsequent payments, called variation margin, to and from the broker, will be 
made on a daily basis as the price of the underlying instruments fluctuates 
making the long and short positions in the futures contract more or less 
valuable, a process known as marking-to-the-market.  For example, when a 
particular Fund has purchased a futures contract and the price of the 
contract has risen in response to a rise in the underlying instruments, that 
position will have increased in value and the Fund will be entitled to 
receive from the broker a variation margin payment equal to that increase in 
value.  Conversely, where the Fund has purchased a futures contract and the 
price of the futures contract has declined in response to a decrease in the 
underlying instruments, the position would be less valuable and the Fund 
would be required to make a variation margin payment to the broker. At any 
time prior to expiration of the futures contract, the Advisor 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.



                                      43
<PAGE>

III.  RISKS OF TRANSACTIONS IN FUTURES CONTRACTS

     There are several risks in connection with the use of futures by the 
Funds as hedging devices.  One risk arises because of the imperfect 
correlation between movements in the price of the futures and movements in 
the price of the instruments which are the subject of the hedge.  The price 
of the future may move more than or less than the price of the instruments 
being hedged.  If the price of the futures moves less than the price of the 
instruments which are the subject of the hedge, the hedge will not be fully 
effective but, if the price of the instruments being hedged has moved in an 
unfavorable direction, the Fund would be in a better position than if it had 
not hedged at all.  If the price of the instruments being hedged has moved in 
a favorable direction, this advantage will be partially offset by the loss on 
the futures.  If the price of the futures moves more than the price of the 
hedged instruments, the Fund involved will experience either a loss or gain 
on the futures which will not be completely offset by movements in the price 
of the instruments which are the subject of the hedge.  To compensate for the 
imperfect correlation of movements in the price of instruments being hedged 
and movements in the price of futures contracts, the Fund may buy or sell 
futures contracts in a greater dollar amount than the dollar amount of 
instruments being hedged if the volatility over a particular time period of 
the prices of such instruments has been greater than the volatility over such 
time period of the futures, or if otherwise deemed to be appropriate by the 
Advisor.  Conversely, the Funds may buy or sell fewer futures contracts if 
the volatility over a particular time period of the prices of the instruments 
being hedged is less than the volatility over such time period of the futures 
contract being used, or if otherwise deemed to be appropriate by the Advisor. 
 It is also possible that, when the Fund had sold futures to hedge its 
portfolio against a decline in the market, the market may advance and the 
value of instruments held in the Fund may decline.  If this occurred, the 
Fund would lose money on the futures and also experience a decline in value 
in its portfolio securities.

     Where futures are purchased to hedge against a possible increase in the 
price of securities before a Fund is able to invest its cash (or cash 
equivalents) in an orderly fashion, it is possible that the market may 
decline instead; if the Fund then concludes not to invest its cash at that 
time because of concern as to possible further market decline or for other 
reasons, the Funds will realize a loss on the futures contract that is not 
offset by a reduction in the price of the instruments that were to be 
purchased.

     In instances involving the purchase of futures contracts by the Funds, 
an amount of cash and cash equivalents, equal to the market value of the 
futures contracts, will be deposited in a segregated account with the 
Custodian and/or in a margin account with a broker to collateralize the 
position and thereby insure that the use of such futures is unleveraged.

     In addition to the possibility that there may be an imperfect 
correlation, or no correlation at all, between movements in the futures and 
the instruments being hedged, the price of futures may not correlate 
perfectly with movement in the cash market due to certain market distortions. 
 Rather than meeting additional margin deposit requirements, investors may 
close futures contracts through off-setting transactions which could distort 
the normal relationship between the cash and futures markets.  Second, with 
respect to financial futures contracts, the liquidity of the futures market 
depends on participants entering into off-setting transactions rather than 
making or taking delivery.  To the extent participants decide to make or take 
delivery, liquidity in the futures market could be reduced thus producing 
distortions.  Third, from the point of view 



                                      44
<PAGE>

of speculators, the deposit requirements in the futures market are less 
onerous than margin requirements in the securities market.  Therefore, 
increased participation by speculators in the futures market may also cause 
temporary price distortions.  Due to the possibility of price distortion in 
the futures market, and because of the imperfect correlation between the 
movements in the cash market and movements in the price of futures, a correct 
forecast of general market trends or interest rate movements by the Advisor 
may still not result in a successful hedging transaction over a short time 
frame.

     Positions in futures may be closed out only on an exchange or board of 
trade which provides a secondary market for such futures.  Although the Funds 
intend to purchase or sell futures only on exchanges or boards of trade where 
there appear to be active secondary markets, there is no assurance that a 
liquid secondary market on any exchange or board of trade will exist for any 
particular contract or at any particular time.  In such event, it may not be 
possible to close a futures investment position, and in the event of adverse 
price movements, the Funds would continue to be required to make daily cash 
payments of variation margin.  However, in the event futures contracts have 
been used to hedge portfolio securities, such securities will not be sold 
until the futures contract can be terminated.  In such circumstances, an 
increase in the price of the securities, if any, may partially or completely 
offset losses on the futures contract.  However, as described above, there is 
no guarantee that the price of the securities will in fact correlate with the 
price movements in the futures contract and thus provide an offset on a 
futures contract.

     Further, it should be noted that the liquidity of a secondary market in 
a futures contract may be adversely affected by "daily price fluctuation 
limits" established by commodity exchanges which limit the amount of 
fluctuation in a futures contract price during a single trading day.  Once 
the daily limit has been reached in the contract, no trades may be entered 
into at a price beyond the limit, thus preventing the liquidation of open 
futures positions.  The trading of futures contracts is also subject to the 
risk of trading halts, suspensions, exchange or clearing house equipment 
failures, government intervention, insolvency of a brokerage firm or clearing 
house or other disruptions of normal activity, which could at times make it 
difficult or impossible to liquidate existing positions or to recover excess 
variation margin payments.

     Successful use of futures by the Funds is also subject to the 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.

IV.  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 

                                      45
<PAGE>

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.

V.  OTHER MATTERS

     Accounting for futures contracts will be in accordance with generally 
accepted accounting principles.



                                      46
<PAGE>
                    MUNDER INSTITUTIONAL S&P 500 INDEX EQUITY FUND
                 Portfolio of Investments, March 31, 1998 (Unaudited)

<TABLE>
<CAPTION>
SHARES                                                                     VALUE
- --------------------------------------------------------------------------------
<S>       <C>                                                       <C>
COMMON STOCKS -- 98.8%

ADVERTISING -- 0.2%
  1,000   Interpublic Group of Companies, Inc.                          $ 62,125
  1,100   Omnicom Group, Inc.                                             51,769
                                                                     -----------
                                                                         113,894
                                                                     -----------


AEROSPACE -- 1.4%
  6,900   Boeing Company                                                 359,662
    600   General Dynamics Corporation                                    51,675
  1,300   Lockheed Martin Corporation                                    146,250
    600   Northrop Grumman Corporation                                    64,463
  2,300   Raytheon Company Class B                                       134,262
  1,600   United Technologies Corporation                                147,700
                                                                     -----------
                                                                         904,012
                                                                     -----------


AIRLINES -- 0.4%
    700   AMR Corporation +                                              100,231
    600   Delta Air Lines, Inc.                                           70,950
  1,550   Southwest Airlines Company                                      45,822
    700   US Airways Group, Inc. +                                        51,888
                                                                     -----------
                                                                         268,891
                                                                     -----------


APPAREL -- 0.3%
    600   Fruit Of The Loom, Inc. +                                       18,375
    600   Liz Claiborne, Inc.                                             29,925
  2,000   NIKE, Inc., Class B                                             88,500
    400   Reebok International Ltd.                                       12,200
    800   V.F. Corporation                                                42,050
                                                                     -----------
                                                                         191,050
                                                                     -----------


AUTOMOBILES -- 1.7%
  4,600   Chrysler Corporation                                           191,187
  8,300   Ford Motor Company                                             537,944
  4,900   General Motors Corporation                                     330,444
    600   Navistar International Corporation +                            21,000
                                                                     -----------
                                                                       1,080,575
                                                                     -----------


AUTOMOBILE PARTS & EQUIPMENT -- 0.5%
  1,000   AutoZone, Inc. +                                                33,875
    300   Cummins Engine, Inc.                                            16,538
    900   Dana Corporation                                                52,369
    600   Echlin, Inc.                                                    31,462
  1,200   Genuine Parts Company                                           45,750
    700   Johnson Controls, Inc.                                          42,481
    600   Pep Boys -- Manny, Moe & Jack                                   13,913
    600   Snap-On, Inc.                                                   27,375
  1,000   TRW, Inc.                                                       55,125
                                                                     -----------
                                                                         318,888
                                                                     -----------

BANKS -- 9.4%
  4,490   Banc One Corporation                                           283,992
  2,600   Bank of New York, Inc.                                         163,312
  4,800   BankAmerica Corporation                                        396,600
  1,200   BankBoston                                                     132,300
    900   Bankers Trust New York Corporation                             108,281
  1,100   BB&T Corporation                                                74,456
  2,900   Chase Manhattan Corporation                                    391,137
  3,200   Citicorp                                                       454,400
    900   Comerica, Inc.                                                  95,231
  1,400   CoreStates Financial Corporation                               125,650
  1,300   Fifth Third Bancorporation                                     111,150
  2,000   First Chicago Corporation                                      176,250
  4,300   First Union Corporation                                        244,025
  2,100   Fleet Financial Group, Inc.                                    178,631
  1,300   Huntington Bancshares, Inc.                                     47,369
  3,000   KeyCorp (New)                                                  113,438
  3,500   MBNA Corporation                                               125,344
  1,800   Mellon Bank Corporation                                        114,300
    900   Mercantile Bancorporation                                       49,331
  1,200   Morgan (J.P.) & Company, Inc.                                  161,175
  4,100   Morgan Stanley, Dean Witter, Discover and Company              298,787
  1,500   National City Corporation                                      109,969
  6,518   NationsBank Corporation                                        475,407
    900   Northern Trust Corporation                                      67,275
  5,200   Norwest Corporation                                            216,125
  2,100   PNC Bank Corporation                                           125,869
    400   Republic New York Corporation                                   53,350
  1,300   State Street Corporation                                        88,481
  1,200   Summit Bancorp                                                  60,075
  1,700   SunTrust Banks, Inc.                                           128,138
  1,400   Synovus Financial Corporation                                   51,975
  1,700   U.S. Bancorp                                                   212,075
  1,400   Wachovia Corporation                                           118,738
  1,800   Washington Mutual, Inc.                                        129,094
    700   Wells Fargo & Company                                          231,875
                                                                     -----------
                                                                       5,913,605
                                                                     -----------


BROADCASTING -- 0.4%
  4,900   CBS Corporation                                                166,294
    800   Clear Channel Communications +                                  78,400
    400   Meredith Corporation                                            16,850
                                                                     -----------
                                                                         261,544
                                                                     -----------
</TABLE>

                       See Notes to Financial Statements
                                       1
<PAGE>
                  MUNDER INSTITUTIONAL S&P 500 INDEX EQUITY FUND
                Portfolio of Investments, March 31, 1998 (Unaudited)
                                   (CONTINUED)

<TABLE>
<CAPTION>
SHARES                                                                     VALUE
- --------------------------------------------------------------------------------
<S>       <C>                                                       <C>
COMMON STOCKS -- (CONTINUED)

BUILDING MATERIALS -- 0.8%
    600   Centex Corporation                                           $  22,875
    400   Crane Company                                                   21,200
    300   Fleetwood Enterprises                                           13,969
  5,000   Home Depot, Inc.                                               337,187
    300   Kaufman & Broad Home Corporation                                 9,769
  1,100   Masco Corporation                                               65,450
  1,000   Pall Corporation                                                21,500
    200   Pulte Corporation                                                9,300
                                                                     -----------
                                                                         501,250
                                                                     -----------


BUSINESS EQUIPMENT AND SUPPLIES -- 1.8%
    900   Avery Dennison Corporation                                      48,038
  1,100   Ikon Office Solutions                                           38,019
  6,700   International Business Machines
          Corporation                                                    695,962
  2,000   Pitney Bowes, Inc.                                             100,375
  2,200   Xerox Corporation                                              234,162
                                                                     -----------
                                                                       1,116,556
                                                                     -----------


BUSINESS SERVICES -- 0.4%
  5,862   Cendant Corporation +                                          232,282
    700   Deluxe Corporation                                              23,056
    700   Moore Corporation Ltd.                                          11,638
                                                                     -----------
                                                                         266,976
                                                                     -----------


CHEMICALS AND PLASTICS -- 3.1%
    900   Air Products & Chemicals, Inc.                                  74,587
  1,600   Dow Chemical Company                                           155,600
  7,800   dupont (E.I.) de Nemours & Company                             530,400
    700   Eastman Chemical Company                                        47,206
    900   Ecolab, Inc.                                                    26,100
  1,200   Engelhard Corporation                                           22,800
    300   FMC Corporation +                                               23,550
    600   Grace (W.R.) & Company +                                        50,213
    500   Great Lakes Chemical Corporation                                27,000
    800   Hercules, Inc.                                                  39,500
    400   Kerr-McGee Corporation                                          27,825
    600   Mallinckrodt Group, Inc.                                        23,700
  2,800   Minnesota Mining & Manufacturing Company                       255,325
  4,100   Monsanto Company                                               213,200
  1,100   Morton International, Inc.                                      36,094
    600   Nalco Chemical Company                                          24,338
  1,300   Praxair, Inc.                                                   66,869
    800   Raychem Corporation                                             33,250
  1,400   Rockwell International Corporation                              80,325
    600   Rohm & Haas Company                                             61,987
    900   Sigma-Aldrich Corporation                                       33,525
    600   Union Camp Corporation                                          35,850
  1,000   Union Carbide Corporation                                       50,125
                                                                     -----------
                                                                       1,939,369
                                                                     -----------


COAL -- 0.2%
  1,500   CSX Corporation                                                 89,250
    200   Eastern Enterprises                                              8,600
    700   Fluor Corporation                                               34,825
                                                                     -----------
                                                                         132,675
                                                                     -----------


COMMUNICATION EQUIPMENT -- 1.3%
  1,300   Cabletron Systems, Inc. +                                       18,931
  6,600   GTE Corporation                                                395,175
    700   Harris Corporation                                              36,488
  4,100   Motorola, Inc.                                                 248,562
  1,200   National Semiconductor
          Corporation +                                                   25,125
    700   Scientific-Atlanta, Inc.                                        13,694
  1,300   Tellabs, Inc. +                                                 87,262
                                                                     -----------
                                                                         825,237
                                                                     -----------


COMPUTER HARDWARE, SOFTWARE OR SERVICES -- 7.2%
  2,400   3COM Corporation +                                              86,250
    600   Adobe Systems, Inc.                                             27,113
  1,200   Advanced Micro Devices, Inc. +                                  34,875
  1,500   AMP, Inc.                                                       65,719
  1,000   Apple Computer, Inc. +                                          27,500
    400   Autodesk, Inc.                                                  17,250
  2,000   Automatic Data Processing, Inc.                                136,125
  1,700   Bay Networks, Inc. +                                            46,113
    700   Ceridian Corporation +                                          37,756
  6,950   CISCO Systems Inc. +                                           475,206
 10,900   Compaq Computer Corporation                                    282,037
  3,750   Computer Associates International, Inc.                        216,562
  1,400   Computer Sciences Corporation                                   77,000
    400   Data General Corporation +                                       7,075
  4,600   Dell Computer Corporation +                                    311,650
  1,000   Digital Equipment Corporation +                                 52,312
  7,200   Hewlett Packard Company                                        456,300
  1,000   Honeywell, Inc.                                                 82,687
 17,500   Microsoft Corporation +                                      1,566,250
  2,400   Novell, Inc. +                                                  25,725
  6,800   Oracle Systems Corporation +                                   214,625

</TABLE>

                       See Notes to Financial Statements
                                       2
<PAGE>
                  MUNDER INSTITUTIONAL S&P 500 INDEX EQUITY FUND
                Portfolio of Investments, March 31, 1998 (Unaudited)
                                   (CONTINUED)

<TABLE>
<CAPTION>
SHARES                                                                     VALUE
- --------------------------------------------------------------------------------
<S>       <C>                                                       <C>
COMMON STOCKS -- (CONTINUED)

COMPUTER HARDWARE, SOFTWARE OR SERVICES -- (CONTINUED)
  2,000   Parametric Technology Corporation +                         $   66,625
  1,700   Seagate Technologies, Inc. +                                    42,925
  1,400   Silicon Graphics, Inc. +                                        19,513
  2,600   Sun Microsystems, Inc. +                                       108,469
  1,800   Unisys Corporation +                                            34,200
                                                                     -----------
                                                                       4,517,862
                                                                     -----------


COMPUTER -- SEMICONDUCTORS -- 1.9%
  2,500   Applied Materials +                                             88,281
  3,400   EMC Corporation +                                              128,563
 11,700   Intel Corporation                                              913,331
  1,200   LSI Logic Corporation +                                         30,300
  1,700   Micron Technology, Inc. +                                       49,406
                                                                     -----------
                                                                       1,209,881
                                                                     -----------


CONSUMER NON-DURABLES -- 3.7%
  1,600   Corning, Inc.                                                   70,800
 23,500   General Electric Company                                     2,025,406
    400   Grainger (W.W.), Inc.                                           41,125
  1,400   Lowe's Companies, Inc.                                          98,262
  1,300   Newell Company                                                  62,969
                                                                     -----------
                                                                       2,298,562
                                                                     -----------


CONSUMER SERVICES -- 0.2%
    900   Block (H & R), Inc.                                             42,806
    600   Manor Care, Inc.                                                22,200
  1,700   Service Corporation International                               72,144
                                                                     -----------
                                                                         137,150
                                                                     -----------


CONSUMER STAPLES -- 0.1%
    700   Pioneer Hi-Bred International, Inc.                             68,294
                                                                     -----------


CONTAINERS -- 0.2%
    300   Ball Corporation                                                 9,825
  1,000   Crown Cork & Seal Company, Inc.                                 53,500
  1,200   Owens-Illinois, Inc. +                                          51,900
                                                                     -----------
                                                                         115,225
                                                                     -----------


COSMETICS -- TOILETRY -- 0.2%
    400   Alberto-Culver Company, Class B                                 12,175
  1,100   Avon Products, Inc.                                             85,800
                                                                     -----------
                                                                          97,975
                                                                     -----------


DIVERSIFIED -- 1.7%
    300   Aeroquip-Vickers, Inc.                                          17,344
  3,900   AlliedSignal Corporation                                       163,800
  1,100   Cognizant Corporation                                           63,112
  1,400   Fortune Brands, Inc.                                            55,825
  1,000   Loews Corporation                                              104,250
    250   Sodexho Marriott Services, Inc.                                  6,641
  1,100   Textron, Inc.                                                   84,700
  1,000   Thermo Electron Corporation +                                   40,375
  4,100   Tyco International Ltd.                                        223,962
  4,400   Unilever NV                                                    301,950
                                                                     -----------
                                                                       1,061,959
                                                                     -----------


ELECTRICAL EQUIPMENT -- 0.4%
  1,000   Cooper Industries, Inc.                                         59,438
    300   Foster Wheeler Corporation                                       9,169
    400   General Signal Corporation                                      18,700
    400   Tektronix, Inc.                                                 17,850
  2,700   Texas Instruments, Inc.                                        146,137
    400   Thomas & Betts Corporation                                      25,600
                                                                     -----------
                                                                         276,894
                                                                     -----------


ELECTRONICS -- 0.6%
    700   Eaton Corporation                                               66,631
    400   EG & G, Inc.                                                    11,625
  3,100   Emerson Electric Company                                       202,081
  1,000   General Instrument Corporation +                                20,938
    700   KLA-Tencor Corporation +                                        26,775
    900   Tandy Corporation                                               42,300
                                                                     -----------
                                                                         370,350
                                                                     -----------


ENERGY AND RESOURCES -- 0.2%
  1,405   Burlington Resources, Inc.                                      67,352
  1,400   Dresser Industries, Inc.                                        67,288
                                                                     -----------
                                                                         134,640
                                                                     -----------


ENTERTAINMENT -- 1.6%
    900   Brunswick Corporation                                           31,388
  4,700   Disney (Walt) Company                                          501,725
    600   Harcourt General Corporation                                    33,225
  1,000   Hasbro, Inc.                                                    35,312
    600   King World Productions, Inc.                                    17,550
  2,000   Mattel, Inc.                                                    79,250
  3,900   Time Warner, Inc.                                              280,800
                                                                     -----------
                                                                         979,250
                                                                     -----------


ENVIROMENTAL CONTROL -- 0.0%#
    400   Safety-Kleen Corporation                                        11,350
                                                                     -----------

</TABLE>

                       See Notes to Financial Statements
                                       3
<PAGE>
                  MUNDER INSTITUTIONAL S&P 500 INDEX EQUITY FUND
                Portfolio of Investments, March 31, 1998 (Unaudited)
                                   (CONTINUED)

<TABLE>
<CAPTION>
SHARES                                                                     VALUE
- --------------------------------------------------------------------------------
<S>       <C>                                                       <C>
COMMON STOCKS -- (CONTINUED)

FINANCIAL SERVICES -- 3.8%
  3,200   American Express Company                                   $   293,800
  1,700   American General Corporation                                   109,969
    400   Beneficial Corporation                                          49,725
    900   Countrywide Credit Industries                                   47,869
    800   Dow Jones & Company, Inc.                                       42,350
  1,000   Equifax, Inc.                                                   36,500
  4,800   Federal Home Loan Mortgage
          Corporation                                                    227,700
  7,300   Federal National Mortgage
          Association                                                    461,725
  3,000   First Data Corporation                                          97,500
  1,100   Green Tree Financial Corporation                                31,281
    900   Household International, Inc.                                  123,975
    900   Lehman Brothers Holdings, Inc.                                  67,387
  2,300   Merrill Lynch & Company, Inc.                                  190,900
  1,800   Schwab (Charles) Corporation                                    68,400
    400   Temple-Inland, Inc.                                             24,850
  8,267   Travelers Group, Inc.                                          496,020
                                                                     -----------
                                                                       2,369,951
                                                                     -----------


FOOD AND BEVERAGES -- 6.4%
  1,700   Albertson's, Inc.                                               89,463
  3,400   Anheuser-Busch Companies, Inc.                                 157,462
  3,200   Campbell Soup Company                                          181,600
 17,700   Coca-Cola Company                                            1,370,644
  3,300   ConAgra, Inc.                                                  106,013
    300   Coors (Adolph) Company, Class B                                 10,500
  2,500   Heinz (H.J.) Company                                           145,937
  1,200   Hershey Foods Corporation                                       85,950
  2,800   Kellogg Company                                                120,750
 10,900   PepsiCo, Inc.                                                  465,294
 17,400   Philip Morris Companies, Inc.                                  725,362
  1,100   Quaker Oats Company                                             62,975
    900   Ralston-Purina Company                                          95,400
  3,300   Sara Lee Corporation                                           203,362
  2,500   Seagram Company Ltd.                                            95,469
  1,300   UST, Inc.                                                       41,925
  1,000   Wrigley (Wm) Jr. Company                                        81,750
                                                                     -----------
                                                                       4,039,856
                                                                     -----------


FOOD DISTRIBUTION -- 0.9%
  3,800   Archer-Daniels-Midland Company                                  83,362
  1,200   Bestfoods                                                      140,250
  1,300   General Mills, Inc.                                             98,800
    600   Giant Food, Inc., Class A                                       23,175
    300   Great Atlantic & Pacific Tea Company, Inc.                       9,075
  1,800   Kroger Company +                                                83,138
    600   Supervalu, Inc.                                                 27,975
  2,800   Sysco Corporation                                               71,750
  1,000   Winn Dixie Stores, Inc.                                         46,375
                                                                     -----------
                                                                         583,900
                                                                     -----------


GLASS PRODUCTS -- 0.1%
    400   Owens Corning Fiberglass
          Corporation                                                     14,375
  1,200   PPG Industries, Inc.                                            81,525
                                                                     -----------
                                                                          95,900
                                                                     -----------


HEALTH CARE FACILITIES -- 0.4%
  4,500   Columbia/HCA Healthcare Corporation                            145,125
  1,100   Humana, Inc. +                                                  27,294
  2,100   Tenet Healthcare Corporation +                                  76,256
                                                                     -----------
                                                                         248,675
                                                                     -----------


HEALTH CARE PRODUCTS -- 4.0%
  5,300   Abbott Laboratories                                            399,156
    600   Allergan, Inc.                                                  22,800
    400   Bausch & Lomb, Inc.                                             18,275
  1,000   Becton, Dickinson & Company                                     68,063
  8,300   Merck & Company, Inc.                                        1,065,512
  9,300   Pfizer, Inc.                                                   927,094
                                                                     -----------
                                                                       2,500,900
                                                                     -----------


HOLDING COMPANIES -- 0.2%
    700   Providian, LLC                                                  40,206
  1,600   Public Service Enterprise                                       60,600
                                                                     -----------
                                                                         100,806
                                                                     -----------


HOME APPLIANCES -- 0.2%
    800   Black & Decker Corporation                                      42,450
    800   Maytag Corporation                                              38,250
    600   Whirlpool Corporation                                           41,138
                                                                     -----------
                                                                         121,838
                                                                     -----------


HOME FURNISHINGS AND HOUSEWARES -- 0.8%
  4,500   American Home Products Corporation                             429,187
    300   Armstrong World                                                 25,969
  1,000   Rubbermaid, Inc.                                                28,500
    200   Springs Industries, Inc.                                        10,988
    600   Tupperware Corporation                                          15,975
                                                                     -----------
                                                                         510,619
                                                                     -----------
</TABLE>

                       See Notes to Financial Statements
                                       4
<PAGE>
                  MUNDER INSTITUTIONAL S&P 500 INDEX EQUITY FUND
                Portfolio of Investments, March 31, 1998 (Unaudited)
                                   (CONTINUED)

<TABLE>
<CAPTION>
SHARES                                                                     VALUE
- --------------------------------------------------------------------------------
<S>       <C>                                                       <C>
COMMON STOCKS -- (CONTINUED)

HOTELS AND RESTAURANTS -- 0.9%
  1,300   Darden Restaurants, Inc.                                     $  20,231
    900   Harrah's Entertainment Corporation +                            22,106
  1,700   Hilton Hotels Corporation                                       54,187
  1,000   Marriott International, Inc. +                                  37,187
  1,000   Marriott International, Inc., Class A +                         35,813
  4,700   McDonald's Corporation                                         282,000
  1,200   Mirage Resorts, Inc. +                                          29,175
  1,000   Tricon Global Restaurants, Inc. +                               30,063
  1,100   Wendy's International, Inc.                                     24,544
                                                                     -----------
                                                                         535,306
                                                                     -----------


INSURANCE -- 4.2%
  1,000   Aetna Life & Casualty Company                                   83,437
  3,000   Allstate Corporation                                           275,812
  4,800   American International Group, Inc.                             604,500
  1,400   AON Corporation                                                 90,650
  1,400   Chubb Corporation                                              109,725
    600   CIGNA Corporation                                              123,000
    400   Cincinnati Financial Corporation                                50,100
  1,300   Conseco, Inc.                                                   73,613
    700   General Re Corporation                                         154,437
  1,000   Hartford Financial Services Group, Inc.                        108,500
    600   Jefferson-Pilot Corporation                                     53,363
    900   Lincoln National Corporation                                    76,387
  1,400   Marsh & McLennan Companies, Inc.                               122,237
    800   MBIA, Inc.                                                      62,000
  1,000   MGIC Investment Corporation                                     65,688
    600   Progressive Corporation                                         80,812
  1,100   SAFECO Corporation                                              60,122
    700   St. Paul Companies, Inc.                                        62,388
  1,300   SunAmerica, Inc.                                                62,238
  1,100   Torchmark, Inc.                                                 50,394
    600   Transamerica Corporation                                        69,900
  1,300   United Healthcare Corporation                                   84,175
  1,200   UNUM Corporation                                                66,225
    900   USF & G Corporation                                             22,444
                                                                     -----------
                                                                       2,612,147
                                                                     -----------


MACHINE -- TOOL -- 0.1%
    700   Stanley Works                                                   39,025
                                                                     -----------


MACHINERY AND HEAVY EQUIPMENT -- 0.7%
  2,600   Caterpillar, Inc.                                              143,162
    300   Cincinnati Milacron, Inc.                                        9,563
  1,700   Deere & Company                                                105,294
  1,500   Dover Corporation                                               57,000
  1,100   Ingersoll-Rand Company                                          52,731
  1,000   Parker-Hannifin Corporation                                     51,250
                                                                     -----------
                                                                         419,000
                                                                     -----------


MANUFACTURING -- 0.7%
  1,600   Alcan Aluminum Ltd.                                             50,000
  1,400   Aluminum Company of America                                     96,337
  1,300   Boston Scientific Corporation +                                 87,750
    200   Briggs & Stratton Corporation                                    9,163
    600   Brown-Forman Corporation,
          Class B                                                         33,000
    600   Case Corporation                                                40,875
    700   PACCAR, Inc.                                                    41,694
    600   Reynolds Metals Company                                         36,862
  1,400   Sherwin-Williams Company                                        49,700
                                                                     -----------
                                                                         445,381
                                                                     -----------


MEDICAL INSTRUMENTS, SERVICES, AND SUPPLIES -- 2.2%
    400   Bard (C.R.), Inc.                                               14,700
  1,900   Baxter International, Inc.                                     104,737
    900   Biomet, Inc.                                                    27,000
    900   Cardinal Health, Inc.                                           79,369
  1,000   Guidant Corporation                                             73,375
  1,700   HBO & Company                                                  102,638
  2,700   HEALTHSOUTH Corporation +                                       75,769
  9,300   Johnson & Johnson Company                                      681,806
  3,200   Medtronic, Inc.                                                166,000
    200   Shared Medical Systems Corporation                              15,675
    700   St. Jude Medical, Inc. +                                        23,406
    600   United States Surgical Corporation                              19,800
                                                                     -----------
                                                                       1,384,275
                                                                     -----------


METALS AND MINING -- 0.5%
  1,400   Allegheny Teldyne, Inc.                                         38,937
    300   ASARCO, Inc.                                                     8,006
  2,600   Barrick Gold Corporation                                        56,225
  1,600   Battle Mountain Gold Company                                    10,200
    700   Cyprus Amax Minerals Company                                    11,638
  1,300   Freeport McMoran Copper & Gold,
          Class B                                                         25,919
  1,000   Homestake Mining Company                                        10,875
  1,400   Inco Ltd.                                                       26,163
  1,300   Newmont Mining Corporation                                      39,731
    600   Phelps Dodge Corporation                                        38,737
  1,700   Placer Dome, Inc.                                               22,419
                                                                     -----------
                                                                         288,850
                                                                     -----------


METAL FABRICATING -- 0.2%
  1,700   Illinois Tool Works, Inc.                                      110,075
                                                                     -----------

</TABLE>

                       See Notes to Financial Statements
                                       5
<PAGE>
                  MUNDER INSTITUTIONAL S&P 500 INDEX EQUITY FUND
                Portfolio of Investments, March 31, 1998 (Unaudited)
                                   (CONTINUED)

<TABLE>
<CAPTION>
SHARES                                                                     VALUE
- --------------------------------------------------------------------------------
<S>       <C>                                                       <C>
COMMON STOCKS -- (CONTINUED)

NATURAL GAS -- 0.4%
    400   Columbia Gas System, Inc.                                    $  31,100
    800   Consolidated Natural Gas Company                                46,150
  2,200   Enron Corporation                                              102,025
    400   NICOR, Inc.                                                     16,900
    300   ONOEK, Inc.                                                     12,225
    700   Pacific Enterprises, Inc.                                       28,569
    700   Sonat, Inc.                                                     30,450
                                                                     -----------
                                                                         267,419
                                                                     -----------


NEWS AND PUBLISHING -- 0.6%
  2,000   Gannett Company, Inc.                                          143,750
    700   Knight-Ridder, Inc.                                             39,113
    800   New York Times Company, Class A                                 56,000
    800   Times Mirror Company (New), Class A                             50,700
  1,000   Tribune Company                                                 70,500
                                                                     -----------
                                                                         360,063
                                                                     -----------


OIL -- 7.1%
    700   Amerada Hess Corporation                                        40,819
  3,400   Amoco Corporation                                              293,675
    700   Apache Corporation                                              25,725
    600   Ashland, Inc.                                                   33,975
  2,200   Atlantic Richfield Company                                     172,975
  1,400   Baker Hughes, Inc.                                              56,350
  4,500   Chevron Corporation                                            361,406
    900   Coastal Corporation                                             58,613
 17,700   Exxon Corporation                                            1,196,962
  1,800   Halliburton Company                                             90,337
    900   Louisiana Land & Exploration Company                            20,925
    400   McDermott International, Inc.                                   16,525
  5,400   Mobil Corporation                                              413,775
  2,300   Occidental Petroleum Corporation                                67,419
    900   Oryx Energy Company +                                           23,400
    400   Pennzoil Company                                                25,850
  1,800   Phillips Petroleum Company                                      89,887
 15,400   Royal Dutch Petroleum Company                                  874,912
  1,400   Tenneco, Inc.                                                   59,763
  3,800   Texaco, Inc.                                                   228,950
  1,700   Union Pacific Corporation                                       95,519
  1,800   Union Pacific Resources Group                                   42,975
  1,700   Unocal Corporation                                              65,769
  2,000   USX-Marathon Group                                              75,250
                                                                     -----------
                                                                       4,431,756
                                                                     -----------


OIL EQUIPMENT AND SERVICES -- 0.5%
    400   Helmerich & Payne, Inc.                                         12,500
  3,400   Schlumberger Ltd.                                              257,550
    400   Western Atlas, Inc.                                             30,950
                                                                     -----------
                                                                         301,000
                                                                     -----------


PAPER AND FOREST PRODUCTS -- 1.1%
    400   Bemis Company, Inc.                                             18,050
    400   Boise Cascade Corporation                                       14,425
    800   Champion International Corporation                              43,450
  1,600   Fort James Corporation                                          73,300
    700   Georgia-Pacific Corporation                                     45,325
    400   Harnischfeger Industries, Inc.                                  13,675
  2,100   International Paper Company                                     98,306
  3,742   Kimberly-Clark Corporation                                     187,568
    900   Mead Corporation                                                32,231
    300   Potlatch Corporation                                            12,919
    900   Stone Container Corporation                                     11,250
  1,400   Weyerhaeuser Company                                            79,100
    900   Willamette Industries, Inc.                                     33,806
                                                                     -----------
                                                                         663,405
                                                                     -----------


PERSONAL ITEMS -- 2.9%
  2,000   Colgate-Palmolive Company                                      173,250
  3,900   Gillette Company                                               462,881
    900   International Flavors & Fragrances, Inc.                        42,413
    300   Jostens, Inc.                                                    7,200
  9,300   Procter & Gamble Company                                       784,687
  1,900   Warner-Lambert Company                                         323,594
                                                                     -----------
                                                                       1,794,025
                                                                     -----------


PETROLEUM REFINING -- 0.2%
    500   Anadarko Petroleum Corporation                                  34,500
    700   Rowan Companies +                                               20,300
    600   Sun Company                                                     24,525
  2,200   Williams Companies, Inc.                                        70,400
                                                                     -----------
                                                                         149,725
                                                                     -----------


PHARMACEUTICALS -- 2.8%
     30   Allergan Specialty Therapeutics, Inc. +                            364
    700   ALZA Corporation                                                31,369
  6,900   Bristol-Myers Squibb Company                                   719,756
  7,700   Lilly (Eli) & Company                                          459,112
  3,500   Pharmacia & Upjohn, Inc.                                       153,125
  5,100   Schering-Plough Corporation                                    416,606
                                                                     -----------
                                                                       1,780,332
                                                                     -----------
</TABLE>

                       See Notes to Financial Statements
                                       6
<PAGE>
                  MUNDER INSTITUTIONAL S&P 500 INDEX EQUITY FUND
                Portfolio of Investments, March 31, 1998 (Unaudited)
                                   (CONTINUED)

<TABLE>
<CAPTION>
SHARES                                                                     VALUE
- --------------------------------------------------------------------------------
<S>       <C>                                                       <C>
COMMON STOCKS -- (CONTINUED)

PHOTOGRAPHIC EQUIPMENT AND SUPPLIES -- 0.3%
  2,200   Eastman Kodak Company                                      $   142,725
    400   Polaroid Corporation                                            17,600
                                                                     -----------
                                                                         160,325
                                                                     -----------


PRINTING AND PUBLISHING -- 0.3%
    600   American Greetings Corporation, Class A                         27,600
  1,000   Donnelley (R.R.) & Sons Company                                 41,063
  1,400   Dun & Bradstreet Corporation                                    47,862
    800   McGraw-Hill, Inc.                                               60,850
    900   Westvaco Corporation                                            27,675
                                                                     -----------
                                                                         205,050
                                                                     -----------


RAILROADS -- 0.2%
  2,600   Norfolk Southern Corporation                                    97,175
                                                                     -----------


RESEARCH AND DEVELOPMENT -- 0.2%
  1,800   Amgen, Inc.                                                    109,575
                                                                     -----------


RETAIL -- STORE -- 3.8%
  1,900   American Stores Company                                         49,400
    900   Charming Shoppes, Inc. +                                         4,275
    800   Circuit City Stores -- Circuit City Group                       34,200
    900   Consolidated Stores Corporation +                               38,644
  1,700   Costco Companies, Inc. +                                        90,737
  1,400   CVS Corporation                                                105,700
  1,500   Dayton Hudson Corporation                                      132,000
  1,000   Dillard's, Inc.                                                 36,938
  1,400   Federated Department Store +                                    72,538
  2,750   Gap, Inc.                                                      123,750
  3,400   K mart Corporation +                                            56,738
  1,900   Limited, Inc.                                                   54,506
    300   Longs Drug Stores Company                                        9,131
  1,600   May Department Stores Company                                  101,600
    300   Mercantile Stores Company                                       20,156
    700   Nordstrom, Inc.                                                 44,669
  1,700   Penney (J.C.) Company, Inc.                                    128,669
  1,700   Rite Aid Corporation                                            58,225
    300   Russell Corporation                                              8,044
  2,700   Sears, Roebuck & Company                                       155,081
  1,100   TJX Companies, Inc.                                             49,775
  2,000   Toys R Us, Inc. +                                               60,125
 16,100   Wal-Mart Stores, Inc.                                          818,081
  3,400   Walgreen Company                                               119,637
  1,100   Woolworth Corporation +                                         27,500
                                                                     -----------
                                                                       2,400,119
                                                                     -----------

SAVINGS AND LOAN ASSOCIATIONS -- 0.2%
    800   Ahmanson (H.F.) Company                                         62,000
    400   Golden West Financial Corporation                               38,325
                                                                     -----------
                                                                         100,325
                                                                     -----------


SOAPS AND DETERGENTS -- 0.1%
    900   Clorox Company                                                  77,119
                                                                     -----------


STEEL -- 0.2%
    900   Armco, Inc. +                                                    5,288
  1,000   Bethlehem Steel Corporation +                                   13,563
    400   Inland Steel Industries, Inc.                                   11,050
    700   Nucor Corporation                                               38,106
    600   Timken Company                                                  20,287
    700   USX-U.S.Steel Group, Inc.                                       26,425
    800   Worthington Industries, Inc.                                    14,500
                                                                     -----------
                                                                         129,219
                                                                     -----------


TECHNOLOGY -- 0.7%
  7,600   Ameritech Corporation                                          375,725
  1,000   ITT Industries                                                  38,063
    400   Millipore Corporation                                           13,900
    400   Perkin-Elmer Corporation                                        28,925
                                                                     -----------
                                                                         456,613
                                                                     -----------


TELECOMMUNICATIONS -- 7.7%
  3,500   AirTouch Communications, Inc. +                                171,281
  1,300   ALLTEL Corporation                                              56,794
    700   Andrew Corporation +                                            13,869
 11,700   AT & T Corporation                                             767,812
  5,400   Bell Atlantic Corporation                                      553,500
  6,800   BellSouth Corporation                                          459,425
  2,400   Comcast Corporation Special, Class A (non-voting)               84,750
  1,000   DSC Communications Corporation +                                18,188
  1,100   Frontier Corporation                                            35,819
  4,400   Lucent Technologies, Inc.                                      562,650
  4,800   MCI Communications Corporation                                 237,600
  3,600   Northern Telecommunications Ltd.                               232,650
 12,600   SBC Communications                                             549,675
  3,000   Sprint Corporation                                             203,063
  3,500   Tele-Communications, Inc., Class A                             108,828
  4,200   US West Media, Inc.                                            145,950
  3,300   US West, Inc. +                                                180,675
  2,400   Viacom, Inc., Class B +                                        129,000
  7,000   WorldCom, Inc.                                                 301,437
                                                                     -----------
                                                                       4,812,966
                                                                     -----------

</TABLE>

                       See Notes to Financial Statements
                                       7
<PAGE>
                  MUNDER INSTITUTIONAL S&P 500 INDEX EQUITY FUND
                Portfolio of Investments, March 31, 1998 (Unaudited)
                                   (CONTINUED)

<TABLE>
<CAPTION>
SHARES                                                                     VALUE
- --------------------------------------------------------------------------------
<S>       <C>                                                       <C>
COMMON STOCKS -- (CONTINUED)

TIRE AND RUBBER -- 0.2%
    700   Cooper Tire & Rubber Company                                 $  16,625
    400   Goodrich (B.F.) Company                                         20,425
  1,300   Goodyear Tire & Rubber Company                                  98,475
                                                                     -----------
                                                                         135,525
                                                                     -----------


TRANSPORTATION -- 0.4%
  1,300   Burlington Northern Santa Fe                                   135,200
    840   FDX Corporation +                                               59,745
    700   Ryder System, Inc.                                              26,600
                                                                     -----------
                                                                         221,545
                                                                     -----------


UTILITIES -- 2.4%
    900   Ameren Corporation                                              37,912
  1,300   American Electric Power Company, Inc.                           65,325
  1,000   Baltimore Gas & Electric Company                                32,688
  1,000   Carolina Power & Light Company                                  45,250
  1,700   Central & Southwest Corporation                                 45,475
  1,300   Cinergy Corporation                                             48,100
  1,600   Consolidated Edison Company                                     74,800
  1,300   Dominion Resources, Inc.                                        54,600
  1,200   DTE Energy Company                                              47,175
  2,500   Duke Energy Company                                            148,906
  2,600   Edison International                                            76,375
  1,700   Entergy Corporation                                             50,575
  1,572   FirstEnergy Corporation                                         48,437
  1,300   FPL Group, Inc.                                                 83,525
  1,000   GPU, Inc.                                                       44,250
  2,000   Houston Industries, Inc.                                        57,500
    400   National Service Industries, Inc.                               23,525
  1,200   Niagara Mohawk Power Corporation +                              15,600
    600   Northern States Power Company                                   35,400
  2,000   PacifiCorp                                                      49,250
  1,500   PECO Energy Company                                             33,187
    300   People's Energy Corporation                                     10,913
  3,000   PG & E Corporation                                              99,000
  1,100   PP & L Resources, Inc.                                          25,988
  4,800   Southern Company                                               132,900
  1,700   Texas Utilities Company                                         66,831
  1,500   Unicom Corporation                                              52,500
                                                                     -----------
                                                                       1,505,987
                                                                     -----------


WASTE MANAGEMENT -- 0.3%
  1,400   Browning-Ferris Industries, Inc.                                45,675
  2,300   Laidlaw, Inc., Class B (non-voting)                             36,512
  3,100   Waste Management, Inc.                                          95,519
                                                                     -----------
                                                                         177,706
                                                                     -----------


TOTAL COMMON STOCKS
       (Cost  $54,327,392)                                            61,857,392
                                                                     -----------


PRINCIPAL
AMOUNT
- ---------

U.S. TREASURY BILLS -- 0.1%
  $100,000 5.31%++ due 4/30/98 **                                         99,589
                                                                     -----------

TOTAL U.S. TREASURY BILLS
       (Cost  $99,589)                                                    99,589
                                                                     -----------

REPURCHASE AGREEMENT -- 0.8%
          (Cost  $496,000)
$496,000  Agreement with State Street Bank
          and Trust Company, 5.750% dated
          3/31/1998, to be repurchased at 
          $496,079 on 4/1/1998, collateralized
          by $510,000 U.S. Treasury Note,
          5.750% maturing 09/30/1999
          (value $510,717)                                               496,000
                                                                     -----------

TOTAL INVESTMENTS
    (Cost  $54,922,981*)                           99.7%              62,452,981

OTHER ASSETS AND
LIABILITIES (Net)                                   0.3                  171,738
                                                 ------              -----------

NET ASSETS                                        100.0%            $ 62,624,719
                                                 ------              -----------
                                                 ------              -----------
</TABLE>
_______________________________________________________________________________
   *  Aggregate cost for Federal tax purposes is $54,922,981.
  **  Securities pledged as collateral for futures contracts.
   +  Non-income producing security.
  ++  Rate represents annualized yield at date of purchase.
   # Amount represents less than 0.1% of net assets.

<TABLE>
<CAPTION>
 NUMBER
   OF                                                                  UNREALIZED
CONTRACTS                                                             APPRECIATION
- ---------                                                             ------------
<S>                                                                   <C>
FUTURES CONTRACTS - LONG POSITION
2      S&P 500 Index,
           June 1998                                                    $  6,282
                                                                         -------
                                                                         -------
</TABLE>

                       See Notes to Financial Statements
                                       8
<PAGE>

MUNDER INSTITUTIONAL S&P 500 INDEX EQUITY FUND
     STATEMENT OF ASSETS AND LIABILITIES, MARCH 31, 1998 (UNAUDITED)
<TABLE>
- ---------------------------------------------------------------------------------------------------------
<S>                                                                                         <C>
ASSETS:
Investments, at value (Cost $54,922,981)
See accompanying schedule:
      Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $  61,956,981
      Repurchase agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              496,000
                                                                                            -------------
Total investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           62,452,981
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               20,831
Receivable for Fund shares sold. . . . . . . . . . . . . . . . . . . . . . . . . . .                2,557
Receivable for investment securities sold. . . . . . . . . . . . . . . . . . . . . .                4,666
Dividends receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               66,599
Interest receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   79
Receivable from investment advisor . . . . . . . . . . . . . . . . . . . . . . . . .               64,684
Variation margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                2,400
Unamortized organization costs . . . . . . . . . . . . . . . . . . . . . . . . . . .                7,603
Prepaid assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               16,512
                                                                                            -------------
      TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           62,638,912
                                                                                            -------------

LIABILITIES:
Custodian fees payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                6,992
Shareholder servicing fees payable . . . . . . . . . . . . . . . . . . . . . . . . .                1,540
Administration fee payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  593
Accrued Director's fees and expenses . . . . . . . . . . . . . . . . . . . . . . . .                  289
Accrued expenses and other payables. . . . . . . . . . . . . . . . . . . . . . . . .                4,779
                                                                                            -------------
      TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               14,193
                                                                                            -------------

NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $  62,624,719
                                                                                            -------------
                                                                                            -------------

NET ASSETS consist of:
Undistributed net investment income. . . . . . . . . . . . . . . . . . . . . . . . .              225,754
Accumulated net realized loss on investments sold and futures contracts. . . . . . .              688,706
Net unrealized appreciation of investments and futures contracts . . . . . . . . . .            7,536,282
Par value  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                5,499
Paid-in capital in excess of par value . . . . . . . . . . . . . . . . . . . . . . .           54,168,478
                                                                                            -------------
      TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $  62,624,719
                                                                                            -------------
                                                                                            -------------

NET ASSET VALUE offering and redemption price per share
      ($62,624,719 / 5,499,155 shares of common stock outstanding) . . . . . . . . .             $  11.39
                                                                                            -------------
                                                                                            -------------
</TABLE>

                          See Notes to Financial Statements

<PAGE>

MUNDER INSTITUTIONAL S&P 500 INDEX EQUITY FUND
     STATEMENT OF OPERATIONS, PERIOD ENDED MARCH 31, 1998* (UNAUDITED)
<TABLE>
- --------------------------------------------------------------------------------------------------------
<S>                                                                                             <C>
INVESTMENT INCOME:
Interest   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            $  11,687
Dividends (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              226,597
                                                                                                ---------
      Total investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . .              238,284
                                                                                                ---------

EXPENSES:
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               23,016
Investment advisory fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               10,747
Legal and audit fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                6,133
Transfer agent fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                3,297
Administration fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                2,499
Directors' fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  160
Other. . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . .. . . . . . . .                5,414
                                                                                                ---------
      Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               51,266
Expenses reimbursed by investment advisor. . . . . . . . . . . . . . . . . . . . . .              (37,382)
                                                                                                ---------
      Net Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               13,884
                                                                                                ---------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              224,400
                                                                                                ---------

NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
      INVESTMENTS:
Net realized loss gain/(loss) from:
      Security transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . .              589,583
      Futures contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              133,841
Net change in unrealized appreciation of:
      Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            7,223,141
      Futures contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              (26,278)
                                                                                                ---------
Net realized and unrealized gain on investments. . . . . . . . . . . . . . . . . . .            7,920,287
                                                                                                ---------

NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         $  8,144,687
                                                                                                ---------
                                                                                                ---------

(c) Net of foreign withholding taxes of:.. . . . . . . . . . . . . . . . . . . . . .               $  204
                                                                                                ---------
                                                                                                ---------
</TABLE>
_________________________
(*) The Institutional S&P 500 Index Equity Fund commenced operations on 
October 14, 1997.

                            See Notes to Financial Statements

<PAGE>

MUNDER INSTITUTIONAL S&P 500 INDEX EQUITY FUND
     STATEMENT OF CHANGES IN NET ASSETS, PERIOD ENDED MARCH 31, 1998

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
                                                                                                PERIOD
                                                                                                 ENDED         PERIOD
                                                                                                3/31/98         ENDED
                                                                                              (UNAUDITED)    12/31/97 (a)
                                                                                              -----------    ------------
<S>                                                                                           <C>            <C>
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          $   224,400    $   178,575
Net realized gain/(loss) on investments sold
      and futures contracts during the year. . . . . . . . . . . . . . . . . . . . .              723,424        (34,718)
Net change in unrealized appreciation of investments
      and future contracts during the period . . . . . . . . . . . . . . . . . . . .            7,196,863        339,419
                                                                                              -----------    -----------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . . .            8,144,687        483,276
Distributions to shareholders from net investment income . . . . . . . . . . . . . .                   --       (178,471)
Net increase/(decrease) in net assets from Fund share transactions . . . . . . . . .           (9,518,944)    63,694,171
                                                                                              -----------    -----------
Net increase/(decrease) in net assets. . . . . . . . . . . . . . . . . . . . . . . .           (1,374,257)    63,668,976
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           63,998,976              0
                                                                                              -----------    -----------

End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          $62,624,719    $63,998,976
                                                                                              -----------    -----------
                                                                                              -----------    -----------

Undistributed net investment income. . . . . . . . . . . . . . . . . . . . . . . . .          $   225,754    $     1,354
                                                                                              -----------    -----------
                                                                                              -----------    -----------
</TABLE>
_________________________
(a) The Institutional S&P 500 Index Equity Fund commenced operations on 
October 14, 1997.

                                     See Notes to Financial Statements


<PAGE>

MUNDER INSTITUTIONAL S&P 500 INDEX EQUITY FUND
     FINANCIAL HIGHLIGHTS, FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
                                                                                                 PERIOD
                                                                                                  ENDED          PERIOD
                                                                                                 3/31/98          ENDED
                                                                                               (UNAUDITED)     12/31/97 (a)
                                                                                               -----------     ------------
<S>                                                                                             <C>            <C>
Net asset value, beginning of period . . . . . . . . . . . . . . . . . . . . . . . .             $  10.00       $  10.00
                                                                                                 --------       --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 0.04           0.04
      Net realized and unrealized gain on investments. . . . . . . . . . . . . . . .                 1.35           0.00(e)
                                                                                                 --------       --------
Total from investment operations . . . . . . . . . . . . . . . . . . . . . . . . . .                 1.39           0.04
                                                                                                 --------       --------
LESS DISTRIBUTIONS: 
Distributions to shareholders from net investment income . . . . . . . . . . . . . .                   --          (0.04)
                                                                                                 --------       --------
Total distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   --          (0.04)
                                                                                                 --------       --------
Net asset value, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . .             $  11.39       $  10.00
                                                                                                 --------       --------
                                                                                                 --------       --------
TOTAL RETURN (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               13.90%           0.39%
                                                                                                 --------       --------
                                                                                                 --------       --------

RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) . . . . . . . . . . . . . . . . . . . . . . . .             $ 62,625       $ 63,999
Ratio of operating expenses to average net assets. . . . . . . . . . . . . . . . . .                 0.09%(c)       0.09%(c)
Ratio of net investment income to average net assets . . . . . . . . . . . . . . . .                 1.46%(c)       1.76%(c)
Ratio of operating expenses to average net assets
     without expense reimbursement . . . . . . . . . . . . . . . . . . . . . . . . .                 0.33%(c)       0.61%(c)
Portfolio turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    2%          0.08%
Average commission rate (d). . . . . . . . . . . . . . . . . . . . . . . . . . . . .             $ 0.0242       $ 0.0100
</TABLE>
_____________________________
(a)  Munder Institutional S&P 500 Index Equity Fund commenced operations on
     October 14, 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)  The amount shown at this caption for each share outstanding throughout the
     period, may not accord with the change in aggregate gains and losses in the
     portfolio securities for the period, because of the timing of purchases and
     withdrawals of shares in relation to the fluctuating market values of the
     portfolio.

                                       See Notes to Financial Statements


<PAGE>

MUNDER INSTITUTIONAL S&P 500 INDEX EQUITY FUND
     NOTES TO FINANCIAL STATEMENTS, MARCH 31, 1998 (UNAUDITED)

1.   ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

     The Munder Institutional S&P 500 Index Equity Fund (the "Fund") is a 
diversified portfolio of St. Clair Funds, Inc. (the "Company") which is 
registered under the Investment Company Act of 1940, as amended (the "1940 
Act"), as an open-end investment company.  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 Fund, Inc. on September 18, 1996.  The 
Fund commenced operations on October 14, 1997.

     The preparation of financial statements in accordance with generally 
accepted accounting principles requires management to make estimates and 
assumptions that affect the reported amounts of assets and liabilities at the 
date of the financial statements and the reported amounts of increases and 
decreases in net assets from operations during the reporting period.  Actual 
results could differ from those estimates.  The following is a summary of 
significant accounting policies followed by the Fund in the preparation of 
its financial statements:

     SECURITY VALUATION: Securities (including financial futures, if any) 
traded on a recognized stock exchange or on the NASDAQ National Market System 
("NASDAQ") are valued at the last sale price on the securities exchange on 
which such securities are primarily traded or at the last sale price on the 
national securities market as of the close of business on the date of the 
valuation. Securities traded on a national securities exchange or on NASDAQ 
for which there were no sales on the date of valuation and securities traded 
on over-the-counter markets, including listed securities for which the 
primary market is believed to be over-the-counter, are valued at the mean 
between the most recently quoted bid and asked prices.  Restricted securities 
and securities and assets for which market quotations are not readily 
available, are valued at fair value by the advisor, under the supervision of 
the Board of Directors.  Debt securities with remaining maturities of 60 days 
or less at the time of purchase are valued on an amortized cost basis, unless 
the Board of Directors determines that such valuation does not constitute 
fair value at that time.  Under this method such securities are valued 
initially at cost on the date of purchase (or on the 61st day before 
maturity).  Thereafter, a constant proportionate amortization of any discount 
or premium is recorded until maturity of the security.

     FUTURES CONTRACTS: The Fund may enter into futures contracts for the 
purpose of hedging against changes in the value of the portfolio securities 
held and in the value of the securities it intends to purchase, or in order 
to maintain liquidity.  Upon entering into a futures contract, the Fund is 
required to deposit with the broker an amount of cash or cash equivalents 
equal to a certain percentage of the contract amount.  This is known as the 
"initial margin." Subsequent payments ("variation margin") are made or 
received by the Fund each day, depending on the daily fluctuation of the 
value of the contract. The daily changes in the contract are recorded as 
unrealized gains or losses. The Fund recognizes a realized gain or loss when 
the contract is closed.  The net unrealized appreciation/ (depreciation), if 
any, is shown in the financial statements.

     There are several risks in connection with the use of futures contracts 
as a hedging device.  The change in value of futures contracts primarily 
corresponds with the value of their underlying instruments, which may not 
correlate with the change in value of the hedged investments.  In addition, 
there is the risk that the Fund may not be able to enter into a closing 
transaction because of an illiquid secondary market.

<PAGE>

MUNDER INSTITUTIONAL S&P 500 INDEX EQUITY FUND
    NOTES TO FINANCIAL STATEMENTS, MARCH 31, 1998 (UNAUDITED)
     (CONTINUED)

     REPURCHASE AGREEMENTS: The Fund may engage in repurchase agreement 
transactions.  Under the terms of a typical repurchase agreement, the Fund 
takes possession of an underlying debt obligation subject to an obligation of 
the seller to repurchase, and the Fund to resell, the obligation at an 
agreed-upon price and time, thereby determining the yield during the Fund's 
holding period. This arrangement results in a fixed rate of return that is 
not subject to market fluctuations during the Fund's holding period.  The 
value of the collateral is at least equal, at all times, to the total amount 
of the repurchase obligations, including interest.  In the event of 
counterparty default, the Fund has the right to use the collateral to satisfy 
the terms of the repurchase agreement. However, there could be potential loss 
to the Fund in the event the Fund is delayed or prevented from exercising its 
right to dispose of the collateral securities, including the risk of a 
possible decline in the value of the collateral securities during the period 
while the Fund seeks to assert its rights.  The Fund's Advisor, acting under 
the supervision of the Board of Directors, reviews the value of the 
collateral and the creditworthiness of those banks and dealers with which a 
Fund enters into repurchase agreements to evaluate potential risks.

     SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are 
recorded on the trade date.  The cost of investments sold is determined by 
use of the specific identification method for both financial reporting and 
income tax purposes.  Interest income is recorded on the accrual basis.

     DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends from net 
investment income are declared and paid at least quarterly by the Fund.  
Capital gains distributions, if any, will be made at least annually.  
Distributions to shareholders are recorded on the ex-dividend date.

     Income dividends and capital gain distributions are determined in 
accordance with income tax regulations which may differ from generally 
accepted accounting principles.  These differences are primarily due to 
differing treatments of certain expenses and income and gains on various 
investment securities held by the Fund, timing differences and differing 
characterization of distributions made by the Fund as a whole.

     FEDERAL INCOME TAXES: The Fund intends to qualify as a regulated 
investment company by complying with the requirements of the Internal Revenue 
Code of 1986, as amended, applicable to regulated investment companies and to 
distribute substantially all of its earnings to its shareholders.  Therefore, 
no Federal income or excise tax provision is required.

2.   INVESTMENT ADVISOR, ADMINISTRATOR, CUSTODIAN, TRANSFER AGENT AND OTHER   
     RELATED PARTY TRANSACTIONS

     Munder Capital Management (the "Advisor"), an independent investment 
management firm, serves as the Fund's investment advisor. For its advisory 
services to the Munder Institutional S&P 500 Index Fund, the Advisor is 
entitled to receive a fee, computed daily and payable monthly, at an annual 
rate of 0.07% of the value of the Fund's average daily net assets.

<PAGE>

MUNDER INSTITUTIONAL S&P 500 INDEX EQUITY FUND
     NOTES TO FINANCIAL STATEMENTS, MARCH 31, 1998 (UNAUDITED)
     (CONTINUED)

     The Advisor has reimbursed certain expenses, payable by the Fund, for 
the period ended March 31, 1998, as reflected in the Statement of Operations.

     Comerica Bank ("Comerica") provides custodial services to the Fund.  No 
compensation is paid to the Custodian for its services. State Street Bank & 
Trust Company ("State Street") serves as the sub-custodian to the Fund. For 
its services as sub-custodian, State Street receives a fee based on the 
aggregate average daily net assets of  the Fund and certain other investment 
portfolios advised by the Advisor for which State Street provides custodial 
services, as well as certain transaction based fees. As of November 1, 1997, 
Comerica receives a fee of 0.01% of the aggregate average daily net assets of 
the Fund beneficially owned by Comerica and its customers, as compensation 
for certain shareholder services provided by Comerica to the Fund.

     Each Director of the Company is paid an aggregate fee, consisting of a 
$20,000 annual retainer, for services in such capacity plus $1,500 for each 
meeting attended per year, plus out-of-pocket expenses incurred as a Board 
member for services provided as a Board member of the Company, The Munder 
Funds Trust, The Munder Funds, Inc., and Munder Framlington Funds Trust.  The 
Trustees or Directors are also reimbursed for any expenses incurred by them 
in connection with their duties as Trustees or Directors.  No officer, 
director or employee of the Advisor, Comerica, or State Street currently 
receives any compensation from the Company.

3.   SECURITIES TRANSACTIONS

     Cost of purchases and proceeds from sales of securities other than 
short-term investments and U.S. Government securities were $861,486 and 
$9,868,534, respectively, for the period ended March 31, 1998.

     At March 31, 1998, aggregate gross unrealized appreciation for all 
securities for which there was an excess of value over tax cost was 
$8,310,700 and aggregate gross unrealized depreciation for all securities for 
which there was an excess of tax cost over value was $780,700.

4.   COMMON STOCK

     At March 31, 1998, fifty million shares of $0.001 par value common stock 
were authorized for the Fund.

     Changes in common stock for the Fund were as follows:


<TABLE>
<CAPTION>
                                               PERIOD ENDED                  PERIOD ENDED
                                                  3/31/98                       12/31/97
                                         -----------------------       ------------------------
                                          SHARES         AMOUNT         SHARES         AMOUNT
                                         -------         ------         ------         ------
<S>                                      <C>           <C>             <C>             <C>
Sold                                         -               -         6,397,926      $63,674,977
Issued as Reinvestment of dividends          -               -             1,919           19,194
Redeemed                                  (900,690)    $(9,518,944)        -               -
                                         ----------    ------------    ---------      ------------
Net Increase/(Decrease)                   (900,690)    $(9,518,944)    6,399,845       $63,694,171
                                         ----------    ------------    ---------      ------------
                                         ----------    ------------    ---------      ------------

</TABLE>



<PAGE>

                          LIQUIDITY PLUS MONEY MARKET FUND
                                          
                        Statement of Additional Information
                                          
     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 advisor is Munder Capital Management (the
"Advisor").

     This Statement of Additional Information is intended to supplement the
information provided to investors in the Fund's Prospectus dated May 1, 1998 and
has been filed with the Securities and Exchange Commission ("SEC") as part of
the Company's Registration Statement.  This Statement of Additional Information
is not a prospectus, and should be read only in conjunction with the Fund's
Prospectus dated May 1, 1998.  The contents of this Statement of Additional
Information are incorporated by reference in the Prospectus in their entirety. 
A copy of the Prospectus may be obtained through Funds Distributor, Inc. (the
"Distributor"), or by calling the Fund at (800) 438-5789.  This Statement of
Additional Information is dated May 1, 1998.

     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 the possible loss of
principal.


                                 TABLE OF CONTENTS

                                                                            Page

   

     General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
     Fund Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
     Additional Investment Limitations . . . . . . . . . . . . . . . . . . . 12
     Directors and Officers. . . . . . . . . . . . . . . . . . . . . . . . . 14
     Investment Advisory and Other Service Arrangements. . . . . . . . . . . 18
     Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . . . 21
     Additional Purchase and Redemption Information. . . . . . . . . . . . . 22
     Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
     Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
     Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
     Additional Information Concerning Shares. . . . . . . . . . . . . . . . 27
     Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
     Registration Statement. . . . . . . . . . . . . . . . . . . . . . . . . 29
     Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . 29
     Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

    

     No person has been authorized to give any information or to make any
representations not contained in this Statement of Additional Information or in
the Prospectus in connection with the offering made by the 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.  The 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.


<PAGE>

                                      GENERAL

     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.

   

     As stated in the Prospectus, the investment advisor of the Fund is Munder
Capital Management (the "Advisor").  The principal partners of the Advisor are
Old MCM, Inc., Munder Group LLC, Woodbridge Capital Management, Inc.
("Woodbridge") and WAM Holdings, Inc. ("WAM").  Mr. Lee P. Munder, the Advisor's
Chairman, indirectly owns or controls approximately 45% and Comerica
Incorporated owns or controls approximately 44% of the partnership interests of
the Advisor.  Capitalized terms used herein and not otherwise defined have the
same meanings as are given to them in the Prospectus.

    

     Shares of the Fund 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 custodial 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.

                                  FUND INVESTMENTS

     The following policies supplement the Fund's investment objective and
policies as set forth in the Prospectus.  A description of applicable credit
ratings is set forth in the Appendix hereto.

     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.  The Fund will invest in the obligations of domestic banks 
and savings institutions only if their deposits are federally insured.

     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.  Although the Fund will invest in 
obligations of foreign banks or foreign branches of U.S. banks only when the 
Advisor 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.  


                                      2
<PAGE>

     REPURCHASE AGREEMENTS.  The Fund may agree to purchase securities from 
financial institutions such as banks and non-bank dealers of U.S. Government 
securities that are listed on the Federal Reserve Bank of New York's list of 
reporting dealers, subject to the seller's agreement to repurchase them at an 
agreed-upon time and price ("repurchase agreements").  The Advisor will 
review and continuously monitor the creditworthiness of the seller under a 
repurchase agreement, and will require the seller to maintain liquid assets 
in a segregated account in an amount that is greater than the repurchase 
price.  Default by, or bankruptcy of the seller would, however, expose the 
Fund to possible loss because of adverse market action or delays in 
connection with the disposition of underlying obligations except with respect 
to repurchase agreements secured by U.S. Government securities.

     The repurchase price under the repurchase agreements described in the 
Prospectus generally equals the price paid by the Fund plus interest 
negotiated on the basis of current short-term rates (which may be more or 
less than the rate on the securities underlying the repurchase agreement).

     Securities subject to repurchase agreements will be held by the Fund'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 the Fund under the Investment Company Act of 
1940 (the "1940 Act").

     Repurchase agreements shall be deemed to have a maturity equal to the 
period remaining until the date on which the repurchase of the underlying 
securities is scheduled to occur, or, where the agreement is subject to 
demand, the notice period applicable to a demand for the repurchase of the 
securities.

     REVERSE REPURCHASE AGREEMENTS.  The Fund may borrow funds for temporary 
or emergency purposes by selling portfolio securities to financial 
institutions such as banks and broker/dealers and agreeing to repurchase them 
at a mutually specified date and price ("reverse repurchase agreements").  
Reverse repurchase agreements involve the risk that the market value of the 
securities sold by the Fund may decline below the repurchase price.  The Fund 
will pay interest on amounts obtained pursuant to a reverse repurchase 
agreement.  While reverse repurchase agreements are outstanding, the Fund 
will maintain in a segregated account cash, U.S. Government securities or 
other liquid securities in an amount at least equal to the market value of 
the securities, plus accrued interest, subject to the agreement.

     INVESTMENT COMPANY SECURITIES.  The Fund may invest in securities issued 
by other investment companies.  As a shareholder of another investment 
company, the Fund would bear its pro rata portion of the other investment 
company's expenses, including advisory fees.  These expenses would be in 
addition to the expenses the Fund bears directly in connection with its own 
operations.  The 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.  It is the 
policy not to invest in securities issued by other investment companies which 
pay asset-based fees to the Advisor, the Administrator, the Sub-Custodian, 
the Distributor or their affiliates.


                                      3
<PAGE>

     STRIPPED SECURITIES.  The Fund 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 Fund is not aware of any binding legislative, judicial or 
administrative authority on this issue.

     Only instruments which are stripped by the issuing agency will be 
considered U.S. Government obligations.  Securities such as CATS and TIGRs 
which are stripped by their holder do not qualify as U.S. Government 
obligations.

     Within the past several years the Treasury Department has facilitated 
transfers of ownership of zero coupon securities by accounting separately for 
the beneficial ownership of particular interest coupon and principal payments 
or Treasury securities through the Federal Reserve book-entry recordkeeping 
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, the 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.

     Stripped securities will normally be considered illiquid instruments and 
will be acquired subject to the limitation on illiquid investments unless 
determined to be liquid under guidelines established by the Board of 
Directors.

     In addition, the 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.


                                      4
<PAGE>

     Yields on SMBS will be extremely sensitive to the prepayment experience 
on the underlying mortgage loans, and there are other associated risks.  For 
IO classes of SMBS and SMBS that were purchased at prices exceeding their 
principal amounts there is a risk that a Fund may not fully recover its 
initial investment.

     The determination of whether a particular government-issued IO or PO 
backed by fixed-rate mortgages is liquid may be made under guidelines and 
standards established by the Board of Directors.  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 the 
Fund's net asset value per share.

     VARIABLE AND FLOATING RATE INSTRUMENTS.  Debt instruments may be 
structured to have variable or floating interest rates.  Variable and 
floating rate obligations purchased by the Fund may have stated maturities in 
excess of the 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) or if 
the instruments are 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 rates.  The Advisor will consider the earning power, cash flows and 
other liquidity ratios of the issuers and guarantors of such instruments and, 
if the instrument is subject to a demand feature, will continuously monitor 
their financial ability to meet payment on demand.  Where necessary to ensure 
that a variable or floating rate instrument is equivalent to the quality 
standards applicable to the 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.

     In determining average weighted portfolio maturity of the Fund, 
short-term variable rate securities shall be deemed to have a maturity equal 
to the earlier of the period remaining until the next readjustment of the 
interest rate or the period remaining until the principal amount can be 
recovered through demand, and short-term floating rate securities shall be 
deemed to have a maturity of one day.  For purposes of this paragraph, 
"short-term" with respect to a security means that the principal amount, in 
accordance with the terms of the security, must unconditionally be paid in 
397 calendar days or less.

     In determining average weighted portfolio maturity of the Fund, 
long-term variable rate securities shall be deemed to have a maturity equal 
to the longer of the period remaining until the next readjustment of the 
interest rate or the period remaining until the principal amount can be 
recovered through demand, and long-term floating rate securities shall be 
deemed to have a maturity equal to the period remaining until the principal 
amount can be recovered through demand. For purposes of this paragraph, 
"long-term" with respect to a security means that the principal amount of the 
security is scheduled to be paid in more than 397 days.

     Variable rate government securities where the variable rate of interest 
is readjusted no less frequently than every 762 days shall be deemed to have 
a maturity equal to the period remaining until the next interest rate 
readjustment.  Floating rate government securities shall be deemed to have a 
remaining maturity of one day.

     The absence of an active secondary market for certain variable and 
floating rate notes 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.


                                      5
<PAGE>

     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 (DELAYED-DELIVERY 
TRANSACTIONS).  When-issued purchases and forward commitments 
(delayed-delivery transactions) are commitments by the 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 the Fund agrees to purchase securities on a when-issued or forward 
commitment basis, the Sub-Custodian will set aside cash or liquid portfolio 
securities equal to the amount of the commitment in a separate account. 
Normally, the Sub-Custodian will set aside portfolio securities to satisfy a 
purchase commitment, and in such a case the Fund may be required subsequently 
to place additional assets in the separate account in order to ensure that 
the value of the account remains equal to the amount of the Fund's 
commitments.  It may be expected that the market value of the Fund's net 
assets will fluctuate to a greater degree when it sets aside portfolio 
securities to cover such purchase commitments than when it sets aside cash.  
Because the Fund's liquidity and ability to manage its portfolio might be 
affected when it sets aside cash or portfolio securities to cover such 
purchase commitments, the Advisor expects that its commitments to purchase 
when-issued securities and forward commitments will not exceed 25% of the 
value of a Fund's total assets absent unusual market conditions.

     The 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, the 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 the 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 the 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.

     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


                                      6
<PAGE>

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.  In addition, the Fund may acquire unrated 
commercial paper and corporate bonds that are determined by the Advisor at 
the time of purchase to be of comparable quality to rated instruments that 
may be acquired by such Fund as previously described.

     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" for a description of 
applicable ratings.

     ILLIQUID SECURITIES.  The Fund may invest up to 10% of the value of its 
net assets (determined at time of acquisition) in securities which 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 
which are subject to trading restrictions because they are not registered 
under the Securities Act of 1933, as amended (the "Act").  If, after the time 
of acquisition, events cause this limit to be exceeded, the Fund will take 
steps to reduce the aggregate amount of illiquid securities as soon as 
reasonably practicable in accordance with the policies of the SEC.

     The 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 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.  The Advisor will determine the liquidity of such investments 
pursuant to guidelines established by the Company's Board of Directors.  It 
is possible that unregistered securities purchased by a Fund in reliance upon 
Rule 144A could have the effect of increasing the level of a Fund's 
illiquidity to the extent that qualified institutional buyers become, for a 
period, uninterested in purchasing these securities.

     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


                                      7
<PAGE>

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.  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.

     FOREIGN SECURITIES.  The Fund may invest up to 25% of its assets in U.S. 
dollar denominated securities of foreign issuers such as foreign commercial 
paper and obligations of foreign banks.  Income and gains on such securities 
may be subject to foreign withholding taxes.  Investors should consider 
carefully the substantial risks involved in securities of companies and 
governments of foreign nations, which are in addition to the usual risks 
inherent in domestic investments.

     There may be less publicly available information about foreign companies 
comparable to the reports and ratings published about companies in the United 
States.  Foreign companies are not generally subject to uniform accounting, 
auditing and financial reporting standards, and auditing practices and 
requirements may not be comparable to those applicable to United States 
companies.  Foreign markets have substantially less volume than the New York 
Stock Exchange and securities of some foreign companies are less liquid and 
more volatile than securities of comparable United States companies.  
Commission rates in foreign countries, which are generally fixed rather than 
subject to negotiation as in the United States, are likely to be higher.  In 
many foreign countries there is less government supervision and regulation of 
stock exchanges, brokers, and listed companies than in the United States.  
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 the Fund's investment opportunities, including restrictions on 
investment in issuers or industries deemed sensitive to national interest; 
(iv) foreign taxation; (v) the absence of developed legal structures 
governing private or foreign investment or allowing for judicial redress for 
injury to private property; (vi) the absence, until recently in certain 
Eastern European countries, of a capital market structure or market-oriented 
economy; and (vii) the possibility that recent favorable economic 
developments in Eastern Europe may be slowed or reversed by unanticipated 
political or social events in such countries.

     Investments in Eastern European countries may involve risks of 
nationalization, expropriation and confiscatory taxation.  The Communist 
governments of a number of East European countries expropriated large amounts 
of private 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 the Fund.

     The Advisor endeavors to buy and sell foreign currencies on as favorable 
a basis as practicable.  Some price spread on currency exchange (to cover 
service charges) may be incurred, particularly when 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


                                      8
<PAGE>

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.

     The 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 the 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 the 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 will attempt to avoid unfavorable consequences and to take advantage 
of favorable developments in particular nations where, from time to time, it 
places the 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.

     VARIABLE AND FLOATING RATE SECURITIES.  The Fund may purchase variable 
and floating rate securities which are debt instruments with variable or 
floating interest rates.  Unrated variable and floating securities will be 
determined by the Advisor to be of comparable quality at the time of purchase 
to rated securities purchasable by a Fund.  The Fund 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, the 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. 

     The absence of a secondary market could make it difficult to dispose of 
the securities, and a 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 securities 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.  The Funds invest in variable amount master demand notes only when 
the Advisor deems the investment to involve minimal credit risk.

     U.S. GOVERNMENT OBLIGATIONS.  The Funds may purchase obligations issued 
or guaranteed by the U.S. Government and U.S. Government agencies and 
instrumentalities, except that the Short Term Treasury Fund will only 
purchase obligations issued by the U.S. Treasury.  Obligations of certain 
agencies and instrumentalities of the U.S. Government, such as those of the 
Government National Mortgage Association, are supported by the full faith and 
credit of the U.S. Treasury.  Others, such as those of the Export-Import Bank 
of the United States, are supported by the right of the issuer to borrow from 
the U.S. Treasury; and still others, such as those of the Student Loan 
Marketing Association, are supported only by the credit of the agency or 
instrumentality issuing the obligation.  No assurance can be given that the 
U.S. Government would provide financial support to U.S. government-sponsored 


                                      9
<PAGE>

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, 
Federal National Mortgage Association, Government National Mortgage 
Association, General Services Administration, Student Loan Marketing 
Association, Central Bank for Cooperatives, Federal Home Loan Mortgage 
Corporation, Federal Intermediate Credit Banks and Maritime Administration.  

     U.S. Treasury securities differ in their interest rates, maturities and 
times of issuance.  Treasury bills have initial maturities of one year or 
less, Treasury notes have initial maturities of one to ten years and Treasury 
bonds generally have initial maturities greater than ten years.  A portion of 
the U.S. Treasury securities purchased by the Fund may be "zero coupon" 
Treasury securities.  These are U.S. treasury notes and bonds which have been 
stripped of their unmatured interest coupons and receipts or which are 
certificates representing interests in such stripped debt obligations and 
coupons.  Such securities are purchased at a discount from their face amount, 
giving the purchaser the right to receive their full value at maturity.  A 
zero coupon security pays no interest to its holder during its life.  Its 
value to an investor consists of the difference between its face value at the 
time of maturity and the price for which it was acquired, which is generally 
an amount significantly less than its face value (sometimes referred to as a 
"deep discount" price).

     The interest earned on such securities is, implicitly, automatically 
compounded and paid out at maturity.  While such compounding at a constant 
rate eliminates the risk of receiving lower yields upon reinvestment of 
interest if prevailing interest rates decline, the owner of a zero coupon 
security will be unable to participate in higher yields upon reinvestment of 
interest received if prevailing interest rates rise.  For this reason, zero 
coupon securities are subject to substantially greater market price 
fluctuations during periods of changing prevailing interest rates than are 
comparable debt securities which make current distributions of interest.  
Current federal tax law requires that a holder (such as a Fund) of a zero 
coupon security accrue a portion of the discount at which the security was 
purchased as income each year even though the Fund receives no interest 
payments in cash on the security during the year.

     Certain banks and brokerage firms have separated ("stripped") the 
principal portions ("corpus") from the coupon portions of the U.S. Treasury 
bonds and notes and sell them separately in the form of receipts or 
certificates representing undivided interests in these instruments (which 
instruments are generally held by a bank in a custodial or trust account).  
The Fund will not purchase any such receipts or certificates representing 
stripped corpus or coupon interests in U.S. Treasury securities sold by banks 
and brokerage firms. The Fund will only purchase zero coupon Treasury 
securities which have been stripped by the Federal Reserve Bank.

     MUNICIPAL OBLIGATIONS.  The Fund may invest up to 5% of its assets in 
municipal obligations which include general obligation securities, which are 
backed by the full taxing power of a municipality, or revenue securities, 
which are backed by revenues of a project or facility.  Industrial 
development bonds are a type of revenue bond backed by the credit and 
security of a private issuer and may involve greater risk.  Bond anticipation 
notes normally provide interim financing in advance of an issue of bonds or 
notes, the proceeds of which are used to repay anticipation notes.  Tax and 
revenue anticipation notes are issued by municipalities in expectation of 
future tax or other revenues, and are payable from those specific taxes or 
revenues.  Tax-exempt commercial paper is issued by municipalities to help 
finance short-term capital or operating needs.


                                      10
<PAGE>

     BORROWING.  Each Fund is authorized to borrow money in an amount up to 
5% of the value of its total assets at the time of such borrowings for 
temporary purposes, and is authorized to borrow money in excess of the 5% 
limit as permitted by the 1940 Act to meet redemption requests.  This 
borrowing may be unsecured.  The 1940 Act requires a Fund to maintain 
continuous asset coverage of 300% of the amount borrowed.  If the 300% asset 
coverage should decline as a result of market fluctuations or other reasons, 
a Fund may be required to sell some of its portfolio holdings within three 
days to reduce the debt and restore the 300% asset coverage, even though it 
may be disadvantageous from an investment standpoint to sell securities at 
that time.  Money borrowed will be subject to interest costs which may or may 
not be recovered by an appreciation of the securities purchased.  A Fund may 
also be required to maintain minimum average balances in connection with such 
borrowing or to pay a commitment or other fees to maintain a line of credit; 
either of these requirements would increase the cost of borrowing over the 
stated interest rate.  Each Fund may, in connection with permissible 
borrowings, transfer, as collateral, securities owned by the Fund.  A Fund 
may not purchase portfolio securities while borrowings exceed 5% of the 
Fund's total assets.

     GUARANTEED INVESTMENT CONTRACTS.  The Fund may make limited investments 
in guaranteed investment contracts ("GICs") issued by U.S. insurance 
companies. Pursuant to such contracts, a Fund makes cash contributions to a 
deposit fund of the insurance company's general account.  The insurance 
company then credits to the Fund on a monthly basis interest which is based 
on an index (in most cases this index is expected to be the Salomon Brothers 
CD Index), but is guaranteed not to be less than a certain minimum rate.  A 
GIC is normally a general obligation of the issuing insurance company and not 
funded by a separate account.  The purchase price paid for a GIC becomes part 
of the general assets of the insurance company, and the contract is paid from 
the company's general assets.  A Fund will only purchase GICs from insurance 
companies which, at the time of purchase, have assets of $1 billion or more 
and meet quality and credit standards established by the Advisor pursuant to 
guidelines approved by the Board of 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.

     LENDING OF PORTFOLIO SECURITIES.  To enhance the return on its 
portfolio, each Fund may lend securities in its portfolio (subject to a limit 
of 25% of its total assets) to securities firms and financial institutions, 
provided that each loan is secured continuously by collateral in the form of 
cash or U.S. Government securities adjusted daily to have a market value at 
least equal to the current market value of the securities loaned.  These 
loans are terminable at any time, and the Fund will receive any interest or 
dividends paid on the loaned securities.  In addition, it is anticipated that 
a Fund may share with the borrower some of the income received on the 
collateral for the loan or the Fund will be paid a premium for the loan. The 
risk in lending portfolio securities, as with other extensions of credit, 
consists of a possible delay in recovery of the securities or a possible loss 
of rights in the collateral should the borrower fail financially.  In 
determining whether a Fund will lend securities, the Advisor will consider 
all relevant facts and circumstances.  A Fund will only enter into loan 
arrangements with broker-dealers, banks or other institutions which the 
Advisor has determined are creditworthy under guidelines established by the 
Board of Directors.

     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


                                      11
<PAGE>

Watch, Inc., and other nationally recognized statistical rating organizations 
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.

     Subsequent to its purchase by a Fund, a rated security may cease to be 
rated or its rating may be reduced below the minimum rating required for 
purchase by the Fund.  The Board of Directors or the Advisor, pursuant to 
guidelines established by the Board, 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.

                         ADDITIONAL INVESTMENT LIMITATIONS

     The Fund is subject to the investment restrictions and limitations 
listed below which may be changed only by a vote of the holders of a majority 
of the Fund's outstanding shares (as defined under "Miscellaneous-Shareholder 
Approvals").

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 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;


                                      12
<PAGE>

     6.   Knowingly invest more than 10% of its total assets in illiquid
          securities including time deposits with maturities longer than seven
          days and repurchase agreements providing for settlement more than
          seven days after notice;

     7.   Pledge, mortgage or hypothecate its assets other than to secure
          borrowings permitted by restriction 5 above;

     8.   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;

     9.   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;

     10.  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; or

     11.  Invest in commodities or commodity futures contracts, provided that
          this limitation shall not prohibit the purchase or sale by the Fund of
          financial futures contracts and options on financial futures
          contracts, options on securities and securities indices, as permitted
          by the Fund's Prospectus.

     Additional investment restrictions adopted by the Fund, which may be
changed by the Board of Directors, provide that the Fund may not:

     1.   Purchase or sell interests in oil, gas or other mineral exploration or
          development plans or leases;

     2.   Invest in other investment companies except as permitted under the
          1940 Act; or

     3.   Make investments for the purpose of exercising control or management.

     If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in the value of
the Fund's investments will not constitute a violation of such limitation.  In
addition, if the Fund's holdings of illiquid securities exceeds 10% because of
changes in the value of the Fund's investments, the Fund will take action to
reduce its holdings of illiquid securities within a time frame deemed to be in
the best interest of the Fund.  Otherwise, the Fund may continue to hold a
security even though it causes the Fund to exceed a percentage limitation
because of fluctuation in the value of the Fund's assets.


                                      13
<PAGE>


                               DIRECTORS AND OFFICERS

     The directors and executive officers of the Company, and their business
addresses and principal occupations during the past five years, are:

<TABLE>
<CAPTION>


 Name, Address and Age    Positions with Company     During the Past Five Years
 ---------------------    ----------------------     --------------------------
 <S>                      <C>                        <C>

   

 Charles W. Elliott       Chairman of the Board of   Senior Advisor to the
 1024 Essex Circle        Directors                  President - Western
 Kalamazoo, MI  49008                                Michigan University since
 Age: 65                                             July 1995; Executive Vice
                                                     President -
                                                     Administration & Chief
                                                     Financial Officer,
                                                     Kellogg Company from
                                                     January 1987 through June
                                                     1995; before that Price
                                                     Waterhouse.  Board of
                                                     Directors, Steelcase
                                                     Financial Corporation.

    

 John Rakolta, Jr.        Director and Vice          Chairman and Chief
 1876 Rathmor             Chairman of the Board of   Executive Officer,
 Bloomfield Hills, MI     Directors                  Walbridge Aldinger
 48304                                               Company (construction
 Age: 50                                             company).

 Thomas B. Bender         Director                   Investment Advisor,
 7 Wood Ridge Road                                   Financial & Investment
 Glen Arbor, MI  49636                               Management Group (since
 Age: 64                                             April, 1991); Vice
                                                     President Institutional
                                                     Sales, Kidder, Peabody &
                                                     Co. (Retired April,
                                                     1991); Trustee, Vining
                                                     Real Estate Investment
                                                     Trust.

 David J. Brophy          Director                   Professor, University of
 1025 Martin Place                                   Michigan; Director, River
 Ann Arbor, MI  48104                                Place Financial Corp.
 Age: 61

</TABLE>

                                      14
<PAGE>

<TABLE>
<CAPTION>
 <S>                                                 <C>
 Dr. Joseph E. Champagne  Director                   Dean, University Center,
 319 East Snell Road                                 Macomb College since
 Rochester, MI  48306                                September 1997; Corporate
 Age: 59                                             and Executive Consultant
                                                     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 Controls
                                                     of Troy, MI.

 Thomas D. Eckert         Director                   President and Chief
 10726 Falls Pointe                                  Executive Officer,
 Drive                                               Capital Automotive REIT
 Great Falls, VA  22066                              from November 1997 to
 Age: 50                                             present (real estate
                                                     investment trust
                                                     specializing in retail
                                                     automotive properties);
                                                     prior to that President,
                                                     Mid-Atlantic Division of
                                                     Pulte Home Corporation
                                                     (developer of residential
                                                     land and construction of
                                                     housing units) from 1983
                                                     until 1997.

 Lee P. Munder*           Director and President     Chairman of the Advisor
 480 Pierce Street                                   since February 1998;
 Suite 300                                           Chief Executive Officer
 Birmingham, MI  48009                               of World Asset Management
 Age: 52                                             since January 1995; Chief
                                                     Executive Officer of Old
                                                     MCM, Inc. (predecessor to
                                                     Advisor) since 1985; and
                                                     Director, LPM Investment
                                                     Services, Inc. ("LPM").

</TABLE>
                                      15
<PAGE>

<TABLE>
<CAPTION>
 <S>                      <C>                        <C>
 Terry H. Gardner         Vice President, Chief      Vice President and Chief
 480 Pierce Street        Financial Officer and      Financial Officer of the
 Suite 300                Treasurer                  Advisor; Vice President
 Birmingham, MI  48009                               and Chief Financial
 Age: 37                                             Officer of Old MCM, Inc.
                                                     (February 1993 to
                                                     present) and; Secretary
                                                     of LPM.


 Paul Tobias              Vice President             Chief Executive Officer
 480 Pierce Street                                   of the Advisor (since
 Suite 300                                           February 1998); Chief
 Birmingham, MI  48009                               Operating Officer of the
 Age: 46                                             Advisor (since April
                                                     1995); Executive Vice
                                                     President of the Advisor
                                                     (April 1995 to February
                                                     1998); and Executive Vice
                                                     President of Comerica,
                                                     Inc.

 Gerald Seizert           Vice President             Chief Executive Officer
 480 Pierce Street                                   of the Advisor (since
 Suite 300                                           February 1998); Chief
 Birmingham, MI  48009                               Investment
 Age: 45                                             Officer/Equities of the
                                                     Advisor (since April
                                                     1995); Executive Vice
                                                     President of the Advisor
                                                     (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
 480 Pierce Street                                   Director of Marketing for
 Suite 300                                           the Advisor; Vice
 Birmingham, MI  48009                               President and Director of
 Age: 40                                             Client Services of Old
                                                     MCM, Inc. (August 1988 to
                                                     December 1994).

 James C. Robinson        Vice President             Vice President and Chief
 480 Pierce Street                                   Investment Officer/Fixed
 Suite 300                                           Income for the Advisor;
 Birmingham, MI  48009                               Vice President and
 Age: 36                                             Director of Fixed Income
                                                     of Old MCM, Inc. (1987-
                                                     1994).

 Leonard J. Barr, II      Vice President             Vice President and
 480 Pierce Street                                   Director of Core Equity
 Suite 300                                           Research of the Advisor;
 Birmingham, MI  48009                               Director and Senior Vice
 Age: 53                                             President of Old MCM,
                                                     Inc. (since 1988);
                                                     Director of LPM.

</TABLE>

                                      16
<PAGE>

<TABLE>
<CAPTION>
 <S>                      <C>                        <C>
 Ann F. Putallaz          Vice President             Vice President and
 480 Pierce Street                                   Director of Fiduciary
 Suite 300                                           Services of the Advisor
 Birmingham, MI  48009                               (since January 1995);
 Age: 52                                             Director of Client and
                                                     Marketing Services of
                                                     Woodbridge Capital
                                                     Management, Inc.

 Lisa A. Rosen            Secretary, Assistant       General Counsel of the
 480 Pierce Street        Treasurer                  Advisor (since May 1996);
 Suite 300                                           formerly Counsel, First
 Birmingham, MI  48009                               Data Investor Services
 Age: 30                                             Group, Inc.; Assistant
                                                     Vice President and
                                                     Counsel with The Boston
                                                     Company Advisors, Inc.;
                                                     Associate with Hutchins,
                                                     Wheeler & Dittmar.

 Therese Hogan            Assistant Secretary        Director, State
 53 State Street                                     Regulation Department,
 Boston, MA 02109                                    First Data Investor
 Age: 36                                             Services Group (June
                                                     1994-present); formerly
                                                     Senior Legal Assistant,
                                                     Palmer & Dodge (October
                                                     1993-June 1994); Blue Sky
                                                     Paralegal, Robinson &
                                                     Cole (February 1984-
                                                     October 1993).

</TABLE>

*    "Interested person" of the Company, as defined in the 1940 Act.

     Directors of the Company receive an aggregate fee from the Company, The 
Munder Funds Trust (the "Trust"), The Munder Funds, Inc. ("Munder") and The 
Munder Framlington Funds Trust ("Framlington Trust") comprised of an annual 
retainer fee and a fee for each Board meeting attended, and are reimbursed 
for all out-of-pocket expenses relating to attendance at meetings.

     The following table summarizes the compensation paid by the Company, the 
Trust, Munder and Framlington Trust to their respective Directors/Trustees 
for the fiscal year ended December 31, 1997.

<TABLE>
<CAPTION>

                          Aggregate            Pension                                    
                         Compensation         Retirement           Estimated         Total from
     Name of           from the Company,      Benefits               Annual           the Fund
     Person         the Trust, Munder and      Accrued              Benefits           Complex
     and Position     Framlington Trust       as Part of             upon               -------
     ------------     -----------------     Fund Expenses          Retirement
                                            -------------          ----------
     <S>              <C>                   <C>                   <C>                  <C>

Charles W. Elliott         $26,000              None                None              $26,000
Chairman

John Rakolta, Jr.          $23,000              None                None                $23,000
Vice Chairman

</TABLE>

                                      17
<PAGE>

<TABLE>
<CAPTION>

<S>                         <C>                 <C>                 <C>

Thomas B. Bender            $26,000             None                None              $26,000
Trustee and Director

David J. Brophy             $26,000             None                None                $26,000
Trustee and Director

Dr. Joseph E. Champagne     $26,000             None                None                $26,000
Trustee and Director

Thomas D. Eckert            $22,500             None                None              $22,500
Trustee and Director

</TABLE>


     No officer, director or employee of the Advisor, Comerica, the 
Sub-Custodian, the Distributor, the Administrator or Transfer Agent currently 
receives any compensation from the Company.  As of March 23, 1998, the 
Directors and officers of the Company, as a group, owned less than 1% of 
outstanding shares of the Fund.

                 INVESTMENT ADVISORY AND OTHER SERVICE ARRANGEMENTS

   

     INVESTMENT ADVISOR.  The Advisor of the Fund is Munder Capital 
Management, a Delaware general partnership.  The general partners of the 
Advisor are Woodbridge, WAM, Old MCM, and Munder Group, LLC.  Woodbridge and 
WAM are wholly-owned subsidiaries of Comerica Bank -- Ann Arbor, which in 
turn is a wholly-owned subsidiary of Comerica Incorporated, a publicly held 
bank holding company.

    

    The Advisory Agreement between the Advisor and the Company with respect 
to the Fund (the "Advisory Agreement") was approved by the Company's Board of 
Directors on November 7, 1996 and by shareholders on November 7, 1996.  Under 
the terms of the Advisory Agreement, the Advisor furnishes continuing 
investment supervision to the Fund and is responsible for the management of 
the Fund's portfolio.  The responsibility for making decisions to buy, sell 
or hold a particular security rests with the Advisor, subject to review by 
the Company's Board of Directors.

     The Advisory Agreement will continue in effect for a period of two years 
from its effective date.  If not sooner terminated, the Advisory Agreement 
will continue in effect for successive one year periods thereafter, provided 
that each continuance is specifically approved annually by (a) the vote of a 
majority of the Board of Directors who are not parties to the Advisory 
Agreement or interested persons (as defined in the 1940 Act), cast in person 
at a meeting called for the purpose of voting on approval, and (b) either (i) 
the vote of a majority of the outstanding voting securities of the Fund, or 
(ii) the vote of a majority of the Board of Directors.  The Advisory 
Agreement is terminable with respect to the Fund by a vote of the Board of 
Directors, or by the holders of a majority of the outstanding voting 
securities of the Fund, at any time without penalty, on 60 days' written 
notice to the Advisor.  The Advisor may also terminate its advisory 
relationship with respect to the Fund on 60 days' written notice to the 
Company, and the Advisory Agreement terminates automatically in the event of 
its assignment.

     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.


                                      18
<PAGE>

     For the period from commencement of operations on June 4, 1997 through 
December 31, 1997, the Advisor received fees in the amount of $52,118.

     DISTRIBUTION AGREEMENT.  The Company has entered into a distribution 
agreement, under which the Distributor, as agent, sells shares of the Fund on 
a continuous basis.  The Distributor has agreed to use appropriate efforts to 
solicit orders for the purchase of shares of the 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 Fund Shares (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, Suite 1300, Boston, Massachusetts 02109.

     DISTRIBUTION SERVICES ARRANGEMENTS.  The Fund has adopted a Service and 
Distribution Plan (the "Plan"), pursuant to which it uses its assets to 
finance activities relating to the distribution of its shares to investors 
and the provision of certain shareholder services.  Under the Service and 
Distribution Plans, the Distributor is paid an annual service fee of 0.25% of 
the value of average daily net assets of the Fund and an annual distribution 
fee at the rate of 0.10% of the value of average daily net assets of the Fund.

     During the period from commencement of operations on June 4, 1997 
through December 31, 1997, the Fund paid the Distributor service fee in the 
amount of $37,266 and distribution fees in the amount of $14,890.

     Under the terms of the Plan, the Plan continues from year to year, 
provided such continuance is approved annually by vote of the Board of 
Directors, including a majority of the Board of Directors who are not 
interested persons of 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 Plan 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 Plan also must be approved by 
the Directors in the manner described above. The 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 Fund (as defined in the 1940 Act) upon not more than 30 days' written 
notice to any other party to the Plan.  Pursuant to the Plan, the Distributor 
will provide the Board of Directors periodic reports of amounts expended 
under the Plan and the purposes for which such expenditures were made.

     The Distributor expects to pay sales commissions to dealers authorized 
to sell the Fund's shares at the time of sale.  The Distributor will use its 
own funds (which may be borrowed) to pay such commissions pending 
reimbursement pursuant to the Plan.  In addition, the Advisor may use its own 
resources to make payments to the Distributor or dealers authorized to sell 
the Fund's shares to support their sales efforts.

     ADMINISTRATION AGREEMENT.  State Street Bank and Trust Company ("State 
Street"), located at 225 Franklin Street, Boston, Massachusetts 02110, serves 
as administrator for the Company pursuant to an administration agreement (the 
"Administration Agreement").  State Street has agreed to maintain office 
facilities for the Company; provide accounting and bookkeeping services for 
the Fund, including the computation of the Fund's net asset value, net income 
and realized capital gains, if any; furnish statistical and research data, 
clerical services, and stationery and office supplies; prepare and file 
various reports with the appropriate regulatory agencies; and prepare various 
materials required by the SEC or any state securities commission having 
jurisdiction over the Company.  State Street may enter into an


                                      19
<PAGE>

agreement with one or more third parties pursuant to which such third parties 
will provide administrative services on behalf of the Fund.

     The Administration Agreement provides that the Administrator performing 
services thereunder shall not be liable under the Agreement except for its 
willful misfeasance, bad faith or negligence in the performance of its duties 
or from the reckless disregard by it of its duties and obligations thereunder.

   

     For the period of June 4, 1997 (commencement of operations) through 
October 31, 1997, First Data Investor Services Group, Inc. served as the 
administrator for the Fund.  For the period June 4, 1997 through October 31, 
1997, the Fund paid First Data Investor Services Group, Inc. administrative 
fees in the amount of $2,016.53.  For the period from November 1, 1997 
through December 31, 1997, State Street received administrative fees in the 
amount $5,427.79.

    

     CUSTODIAN, SUB-CUSTODIAN AND TRANSFER AGENCY AGREEMENTS.  Comerica Bank 
(the "Custodian") whose principal business address is One Detroit Center, 500 
Woodward Avenue, Detroit, Michigan 46226, is the custodian of the Company's 
assets pursuant to a custodian agreement (the "Custody Agreement").  For the 
period from commencement of operations to October 31, 1997 the Custodian 
received fees of $1,609.64.  Commencing October 31, 1997 the Custodian 
receives no compensation for such services.  State Street serves as 
sub-custodian to the Fund pursuant to a sub-custodian agreement (the 
"Sub-Custodian Contract") among the Company, Comerica Bank and State Street.  
State Street is also the Sub-Custodian with respect to the custody of foreign 
securities held by the Fund. 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 Contract, the Sub-Custodian (i) maintains a separate account in 
the name of the Fund, (ii) holds and transfers portfolio securities on 
account of the Fund, (iii) accepts receipts and makes disbursements of money 
on behalf of the Fund, (iv) collects and receives all income and other 
payments and distributions on account of the Fund's securities and (v) makes 
periodic reports to the Company's Board of Directors concerning the Fund's 
operations.

     First Data Investor Services Group, Inc. ("Investor Services Group" or 
the "Transfer Agent") located at 53 State Street, Boston, Massachusetts 02109 
serves as the transfer and dividend disbursing agent for the Company pursuant 
to a transfer agency agreement (the "Transfer Agency Agreement"), under which 
Investor Services Group (i) issues and redeems shares of the Fund, (ii) 
addresses and mails all communications by the 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 Fund and (v) 
makes periodic reports to the Board of Directors concerning the operations of 
the Fund.

     OTHER INFORMATION PERTAINING TO ADMINISTRATION, SUB-CUSTODIAN AND 
TRANSFER AGENCY AGREEMENTS.  As stated in the Prospectus, the Administrator, 
the Transfer Agent and the Sub-Custodian each receives a separate fee for its 
services.  In approving the Administration Agreement, the Sub-Custodian 
Contract and the Transfer Agency Agreement, the Board of Directors did 
consider the services that are to be provided under their respective 
agreements, the experience and qualifications of the respective service 
contractors, the reasonableness of the fees payable by the Company in 
comparison to the charges of competing vendors, the impact of the fees on the 
estimated total ordinary operating expense ratio of each Fund and the fact 
that neither the Administrator, the Sub-Custodian nor the Transfer Agent is 
affiliated with the Company or the Advisor.  The Board also considered its 
responsibilities under federal and state law in approving these agreements.


                                      20
<PAGE>

                               PORTFOLIO TRANSACTIONS

     Pursuant to the Advisory Agreement, the Advisor determines which 
securities are to be sold and purchased by the Fund and which brokers are to 
be eligible to execute its portfolio transactions.  Portfolio securities are 
normally purchased directly from the issuer or from an underwriter or market 
maker for the securities.  Purchases from underwriters of portfolio 
securities include a commission or concession paid by the issuer to the 
underwriter and purchases from dealers serving as market makers may include 
the spread between the bid and asked price.  While the Advisor generally 
seeks competitive spreads or commissions, the Fund may not necessarily pay 
the lowest spread or commission available on each transaction for reasons 
discussed below.

     Allocation of transactions, including their frequency, to various 
dealers is determined by the Advisor in its best judgment and in a manner 
deemed fair and reasonable to shareholders.  The primary consideration is the 
prompt execution of orders in an effective manner at the most favorable 
price.  Subject to this consideration, dealers who provide supplemental 
investment research to the Advisor may receive orders for transactions by the 
Fund.  Information so received is in addition to and not in lieu of services 
required to be performed by the Advisor, nor would the receipt of such 
information reduce the Advisor's fees.  Such information may be useful to the 
Advisor in serving both the Fund and other clients, and conversely, 
supplemental information obtained by the placement of business of other 
clients may be useful to the Advisor in carrying out its obligations to the 
Fund.

     The Fund will not execute portfolio transactions through, acquire 
portfolio securities issued by, make savings deposits in, or enter into 
repurchase or reverse repurchase agreements with the Advisor, the 
Distributor, or their affiliates.

     Investment decisions for the Fund are made independently from those for 
any other investment portfolios or accounts ("accounts") managed by the 
Advisor. Such accounts may also invest in the same securities as the Fund.  
When a purchase or sale of the same security is made at substantially the 
same time on behalf of the Fund and another account, the transaction will be 
averaged as to price, and available investments allocated as to amount, in a 
manner which the Advisor believes to be equitable to the Fund and such other 
account.  In some instances, this investment procedure may adversely affect 
the price paid or received by the Fund or the size of the position obtained 
or sold by the Fund. To the extent permitted by law, the Advisor may 
aggregate the securities to be sold or purchased for the Fund with those to 
be sold or purchased for other accounts in order to obtain the best execution.

     The Fund does not intend to seek profits through short-term trading.  
Since the Fund will invest only in short-term debt instruments, brokerage 
commissions will not normally be paid, and portfolio turnover is not expected 
to have a material effect on the net income of the Fund.  The Fund's 
portfolio turnover rate is expected to be zero for regulatory reporting 
purposes.

     Except as noted in the Prospectus and this Statement of Additional 
Information the Fund's service contractors bear all expenses in connection 
with the performance of their services and the Fund bears the expenses 
incurred in its operations.  These expenses include, but are not limited to, 
fees paid to the Advisor, Administrator, Sub-Custodian and Transfer Agent; 
fees and expenses of officers and Directors; taxes; interest; legal and 
auditing fees; brokerage fees and commissions; certain fees and expenses in 
registering and qualifying each 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;


                                      21
<PAGE>

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 Company that are not readily identifiable as belonging to a particular 
investment portfolio of the Company are allocated among all investment 
portfolios of the Company by or under the direction of the Board of Directors 
in a manner that the Board of Directors determines to be fair and equitable, 
taking into consideration whether it is appropriate for expenses to be borne 
by the Fund in addition to the Company's other funds.  The Advisor, 
Administrator, 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 Fund's Prospectus and 
such information is incorporated herein by reference.

     Differing types of Customer Accounts over which Institutional Investors 
exercise substantial investment discretion may be used to purchase Fund 
Shares, including trust accounts.  Investors purchasing Fund Shares may 
include officers, directors, or employees of Comerica Bank or its affiliated 
banks.

     The Fund may suspend the right of redemption or postpone the date of 
payment for Shares during any period when: (a) trading on the New York Stock 
Exchange (the "Exchange") is restricted by applicable rules and regulations 
of the SEC; (b) the Exchange is closed for other than customary weekend and 
holiday closings; (c) the SEC has by order permitted such suspension; or (d) 
an emergency exists as determined by the SEC.  Upon the occurrence of any of 
the foregoing conditions, the Fund may also suspend or postpone the 
recordation of the transfer of its Shares.

     In addition, the Fund may compel the redemption of, reject any order 
for, or refuse to give effect on the Fund's books to the transfer of, its 
Shares where the relevant investor or investors have not furnished the Fund 
with valid, certified taxpayer identification numbers and such other 
tax-related certifications as the Fund may request.  The Fund may also redeem 
Shares involuntarily if it otherwise appears appropriate to do so in light of 
the Fund's responsibilities under the 1940 Act or in connection with a 
failure of the appropriate person(s) to furnish certified taxpayer 
identification numbers and other tax-related certifications.

     Payment for shares may, in the discretion of the Advisor, be made in the 
form of securities that are permissible investments for the Fund as described 
in the Prospectus.  For further information about this form of payment please 
contact the Transfer Agent.  In connection with an in-kind securities 
payment, the Fund will require, among other things, that the securities be 
valued on the day of purchase in accordance with the pricing methods used by 
the Fund and that the Fund receive satisfactory assurances that (1) it will 
have good and marketable title to the securities received by it; (2) that the 
securities are in proper form for transfer to the Fund; and (3) adequate 
information will be provided concerning the basis and other tax matters 
relating to the securities.

                                NET ASSET VALUE

     The Fund has elected to use the amortized cost method of valuation 
pursuant to Rule 2a-7 under the 1940 Act.  This involves valuing an 
instrument at its cost initially and thereafter assuming a constant 
amortization to maturity of any discount or premium, regardless of the impact 
of fluctuating interest rates


                                      22
<PAGE>

on the market value of the instrument.  This method may result in periods 
during which value, as determined by amortized cost, is higher or lower than 
the price the Fund would receive if it sold the instrument.  The value of 
securities in the Fund can be expected to vary inversely with changes in 
prevailing interest rates.

     Pursuant to Rule 2a-7, as amended, the Fund will maintain a 
dollar-weighted average portfolio maturity appropriate to its objective of 
maintaining a stable net asset value per Share, provided that the Fund will 
neither purchase any security with a remaining maturity of more than 397 days 
(securities subject to repurchase agreements, variable and floating rate 
instruments, and certain other securities may bear longer maturities) nor 
maintain a dollar-weighted average portfolio maturity which exceeds 90 days.

     In addition, the Fund 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 Adviser 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.

     The Company's Board of Directors has also undertaken to establish 
procedures reasonably designed, taking into account current market conditions 
and the Fund's investment objective, to stabilize the Fund's net asset value 
per Share for purposes of sales and redemptions at $1.00. These procedures 
include review by the Board of Directors, at such intervals as it deems 
appropriate, to determine the extent, if any, to which the Fund's net asset 
value per Share calculated by using available market quotations deviates from 
$1.00 per Share. In the event such deviation exceeds one-half of one percent, 
the Rule requires that the Board promptly consider what action, if any, 
should be initiated.  If the Board believes that the extent of any deviation 
from the Fund's $1.00 amortized cost price per Share may result in material 
dilution or other unfair results to new or existing investors, it will take 
such steps as it considers appropriate to eliminate or reduce to the extent 
reasonably practicable any such dilution or unfair results.  These steps may 
include: selling portfolio instruments prior to maturity; shortening the 
average portfolio maturity; withholding or reducing dividends; or redeeming 
Shares in kind.

                                       YIELD

     The Fund's annual standardized 7-day yield is computed by determining 
the net change, exclusive of capital changes, in the value of a hypothetical 
pre-existing account in the Fund having a balance of one Share at the 
beginning of the period, dividing the net change in account value by the 
value of the account at the beginning of the base period to obtain the base 
period return, and multiplying the base period return by 365/7.  The net 
change in the value of an account in the Fund includes the value of 
additional Shares purchased with dividends from the original Share and any 
such additional Shares, and all fees, other than non-recurring account or 
sales charges, that are charged to all shareholder accounts in proportion to 
the length of the base period and the Fund's average account size.  The 
capital changes to be excluded from the calculation of the net change in 
account value are realized gains and losses from the sale of securities and 
unrealized appreciation and depreciation.  The Fund's effective annualized 
yield is computed by compounding the unannualized base period return 
(calculated as above) by adding 1 to the base period return, raising the sum 
to a power equal to 365 divided by 7, and subtracting 1 from the result.


                                      23
<PAGE>

     Based on the foregoing computations, for the seven-day period ended 
December 31, 1997 the Fund's annualized yield was 4.89% and the effective 
yield was 5.01%.

     Yield may fluctuate daily and does not provide a basis for determining 
future yields.  Because the yield of the Fund will fluctuate, it 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 the 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.

     From time to time, in advertisements or in reports to shareholders, the 
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, the 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. 

                                       TAXES

     The following summarizes certain additional tax considerations generally 
affecting the Fund and its shareholders that are not described in the Fund' 
sProspectus.  No attempt is made to present a detailed explanation of the tax 
treatment of the Funds or its shareholders, and the discussion here and in 
the Prospectus is not intended as a substitute for careful tax planning.  
Potential investors should consult their tax advisors with specific reference 
to their own tax situations.

     GENERAL.  The Fund intends to elect and qualify annually to be taxed as 
a regulated investment company under Subchapter M, of the Internal Revenue 
Code of 1986, as amended (the "Code").  As a regulated investment company, a 
Fund generally is exempt from Federal income tax on its net investment income 
and realized capital gains which it distributes to its 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, the Fund 
must derive with respect to a taxable year at least 90% of its gross income 
from dividends, interest, certain payments with respect to securities loans 
and gains from the sale or other disposition of stock or securities or 
foreign currencies, or from other income derived with respect to its business 
of investing in such stock, securities, or currencies (the "Income 
Requirement").  Interest (including original issue discount and "accrued 
market discount") received by a Fund at maturity or on disposition of a 
security held for less than three months will not be treated (in contrast to 
other income which is attributable to realized market appreciation) as gross 
income from the sale or other disposition of securities held for less than 
three months for this purpose.  


                                      24
<PAGE>

     In addition to the foregoing requirements, at the close of each quarter 
of its taxable year, at least 50% of the value of the Fund's assets must 
consist of cash and cash items, U.S. Government securities, securities of 
other regulated investment companies, and securities of other issuers (as to 
which the Fund has not invested more than 5% of the value of its total assets 
in securities of such issuer and as to which the Fund does not hold more than 
10% of the outstanding voting securities of such issuer) and no more than 25% 
of the value of the Fund's total assets may be invested in the securities of 
any one issuer (other than U.S. Government securities and securities of other 
regulated investment companies), or in two or more issuers which the Fund 
controls and which are engaged in the same or similar trades or businesses.  

     Certain debt instruments acquired by the Fund may include "original 
issue discount" or "market discount".  As a result, the Fund may be deemed 
under tax law rules to have earned discount income in taxable periods in 
which it does not actually receive any payments on the particular debt 
instruments involved.  This income, however, will be subject to the 
Distribution Requirements and must also be distributed in accordance with the 
excise tax distribution rules discussed below, which may cause the Fund to 
have to borrow or liquidate securities to generate cash in order to timely 
meet these requirements (even though such borrowing or liquidating securities 
at that time may be detrimental from the standpoint of optimal portfolio 
management).  Gain from the sale of a debt instrument having market discount 
may be treated for tax purposes as ordinary income to the extent that market 
discount accrued during the Fund's ownership of that instrument.

     Distributions of net investment income received by the Fund and any net 
realized short-term capital gains distributed by the Fund will be taxable to 
shareholders as ordinary income and will not be eligible for the dividends 
received deduction for corporations.

     The 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 the 
shareholder has held the Fund shares, and regardless of whether the 
distribution is paid in cash or reinvested in shares.  The Fund expects that 
capital gain dividends will be taxable to shareholders as long-term gains.  
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 the 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 the Fund's current and accumulated earnings and 
profits.

     Shareholders will be advised annually as to the Federal income tax 
consequences of distributions made by the Fund 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, each Fund must distribute during 
each calendar year an amount equal to the sum of (1) at least 98% of its 


                                      25
<PAGE>

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 the 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, each Fund intends to make its 
distributions in accordance with the calendar year distribution requirement.

     The Company will be required in certain cases to withhold and remit to 
the United States Treasury 31% of taxable distributions paid to any 
shareholder (i) who has provided either an incorrect tax identification 
number or no number at all, (ii) who is subject to backup withholding by the 
Internal Revenue Service for failure to report the receipt of taxable 
interest or dividend income properly, or (iii) who has failed to certify to 
the Company that he is not subject to backup withholding or that he is an 
"exempt recipient."

     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 
a 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 a Fund.  Shareholders are 
advised to consult their own tax advisers with respect to the particular tax 
consequences to them of an investment in a Fund.

     The foregoing general discussion of Federal income tax consequences is 
based on the Code and the regulations issued thereunder as in effect on the 
date of this Statement of Additional Information.  Future legislative or 
administrative changes or court decisions may significantly change the 
conclusions expressed herein, and any such changes or decisions may have a 
retroactive effect with respect to the transactions contemplated herein.

     Although the 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, the 
Fund may be subject to the tax laws of such states or localities.

     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 or ordinary 
loss.  Similarly, on disposition of debt securities denominated in a foreign 
currency and on disposition of certain options and futures contracts, gains 
or losses attributable to fluctuations in the value of 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 the Fund's investment company taxable 
income to be distributed to its shareholders as ordinary income.


                                      26
<PAGE>

     DISPOSITION OF SHARES.  Upon the redemption, sale or exchange of shares 
of the Fund, a shareholder may realize a capital 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 shares acquired pursuant to a dividend reinvestment plan) within a 
period of 61 days beginning 30 days before and ending 30 days after 
disposition of the shares.  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 a disposition 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 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.

     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.

                      ADDITIONAL INFORMATION CONCERNING SHARES

     The Company is a Maryland corporation.  The Company's Articles of 
Incorporation authorize the Board of Directors to classify or reclassify any 
authorized but unissued shares of the Company into one or more additional 
portfolios (or classes of shares within a portfolio) by setting or changing 
in any one or more respects their respective preferences, conversion or other 
rights, voting powers, restrictions, limitations as to dividends, 
qualifications and terms and conditions of redemption.  Pursuant to such 
authority, the Company's Board of Directors have authorized the issuance of 
shares of common stock representing interests in Munder S&P 500 Index Equity 
Fund, Munder S&P MidCap Index Equity Fund, Munder S&P SmallCap Index Equity 
Fund, Munder Aggregate Bond Index Fund, Munder Foreign Equity Fund, Liquidity 
Plus Money Market Fund, Munder Institutional S&P 500 Index Equity Fund, 
Munder Institutional S&P MidCap Index Equity Fund, Munder Institutional S&P 
SmallCap Index Equity Fund, Munder Institutional Short Term Treasury Fund and 
Munder Institutional Money Market Fund.

     Shares have no subscription or pre-emptive rights and only such 
conversion or exchange rights as the Board may grant in its discretion.  When 
issued for payment as described in the Fund's Prospectus and this Statement 
of Additional Information, the Fund's Shares will be fully paid and 
nonassessable.  In the event of a liquidation or dissolution of the Company, 
Shares of the Fund are entitled to receive the assets available for 
distribution belonging to the Fund, and a proportionate distribution, based 
upon the relative asset values of the Fund and the Company's other 
Portfolios, of any general assets not belonging to any particular Portfolio 
which are available for distribution.

     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 Company shall not be deemed to have been 
effectively acted upon unless approved by the holders of a majority of the 
outstanding shares


                                      27
<PAGE>

of a Portfolio affected by the matter.  A Portfolio is affected by a matter 
unless it is clear that the interests of the Portfolio in the matter are 
identical to the interests of the Company's other Portfolios or that the 
matter does not affect any-interest of the Portfolio.  Under Rule 18f-2, the 
approval of an investment advisory agreement or any change in a fundamental 
investment policy would be effectively acted upon with respect to a Portfolio 
only if approved by a majority of the outstanding shares of the Portfolio.  
However, Rule 18f-2 also provides that the ratification of the appointment of 
independent auditors, the approval of principal underwriting contracts, and 
the election of directors may be effectively acted upon by shareholders of 
the Company voting together without regard to class.

     Shareholder meetings to elect Directors will not be held unless and 
until such time as required by law.  At that time, the Directors then in 
office will call a shareholders' meeting to elect Directors.  Except as set 
forth above, the Directors will continue to hold office and may appoint 
successor directors. Meetings of the shareholders of the Company shall be 
called by the Directors upon the written request of shareholders owning at 
least 10% of the outstanding shares entitled to vote.

     Notwithstanding any provision of Maryland law requiring a greater vote 
of the Company's shares (or of any class voting as a class) in connection 
with any corporate action, unless otherwise provided by law (for example, by 
Rule 18f-2) or by the Company's Articles of Incorporation, the Company may 
take or authorize such action upon the favorable vote of the holders of more 
than 50% of the outstanding Common Stock of the Fund and the Company's other 
Portfolios, if any, (voting together without regard to class).

                                   MISCELLANEOUS

     COUNSEL.  The law firm of Dechert Price & Rhoads, 1775 Eye Street, N.W., 
Washington, D.C. 20006, serves as counsel to the Company.

     INDEPENDENT AUDITORS.  Ernst & Young LLP, 200 Clarendon Street, Boston, 
MA 02116, serves as the Company's independent auditors.

     CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.  As of March 23, 
1998 the following persons were beneficial owners of 5% or more of the 
outstanding shares of the Fund because they possessed voting or investment 
power with respect to such shares:

<TABLE>
<CAPTION>
                                      PERCENTAGE OF TOTAL SHARES
         NAME AND ADDRESS                     OUTSTANDING
         ----------------                     -----------
         <S>                                  <C>

   National Financial Services                    100%
          P.O. Box 3908
      Church Street Station
        New York, NY 10008

</TABLE>

     BANKING LAWS.  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


                                      28
<PAGE>


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 Company contemplated by their respective agreements with the Company 
without violation of applicable banking laws or regulations.  It should be 
noted, however, that there have been no cases deciding whether bank and 
non-bank subsidiaries of a registered bank holding company may perform 
services comparable to those that are to be performed by these companies, and 
future changes in either Federal or state statutes and regulations relating 
to permissible activities or banks and their subsidiaries or affiliates, as 
well as future judicial or administrative decisions or interpretations of 
current and future statutes and regulations, could prevent these companies 
from continuing to perform such service for the Company.

     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 Company, the Company might be required to alter 
materially or discontinue its arrangements with such companies and change its 
method of operations.  It is not anticipated, however, that any change in the 
Company's method of operations would affect the net asset value per share of 
any Fund or result in a financial loss to any Customer.

     SHAREHOLDER APPROVALS.  As used in this Statement of Additional 
Information and in the 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 portfolio represented at a meeting at which the holders 
of more than 50% of the outstanding shares of such Fund or portfolio are 
present in person or by proxy, or (b) more than 50% of the outstanding shares 
of such Fund or portfolio.

                           REGISTRATION STATEMENT

     This Statement of Additional Information and the Fund's Prospectus 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 the Fund's Prospectus 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 respect by such 
reference.

                          FINANCIAL STATEMENTS

     The financial statements for the Fund including the notes thereto dated 
December 31, 1997 have been audited by Ernst & Young LLP and are incorporated 
by reference into this SAI from the Annual Report of the Fund dated December 
31, 1997.  The information under the caption "Financial Highlights" of the 
Fund for the period from commencement of operations through December 31, 1997 
appearing in the Prospectus dated May 1, 1998 has been derived from the 
financial statements audited by Ernst & Young LLP.


                                      29
<PAGE>

                                   APPENDIX

                             - Rated Investments -

CORPORATE BONDS

     Excerpts from Moody's Investors Services, Inc. ("Moody's") description of
its bond ratings:

     "Aaa":   Bonds that are rated "Aaa" are judged to be of the best 
quality.  They carry the smallest degree of investment risk and are generally 
referred to as "gilt edge."  Interest payments are protected by a large or by 
an exceptionally stable margin and principal is secure.  While the various 
protective elements are likely to change, such changes as can be visualized 
are most unlikely to impair the fundamentally strong position of such issues.

     "Aa":    Bonds that are rated "Aa" are judged to be of high-quality by 
all standards.  Together with the "Aaa" group they comprise what are 
generally known as "high-grade" bonds.  They are rated lower than the best 
bonds because margins of protection may not be as large as in "Aaa" 
securities or fluctuation of protective elements may be of greater amplitude 
or there may be other elements present which make the long-term risks appear 
somewhat larger than in "Aaa" securities.

     "A":     Bonds that are rated "A" possess many favorable investment 
attributes and are to be considered as upper-medium-grade obligations.  
Factors giving security to principal and interest are considered adequate, 
but elements may be present which suggest a susceptibility to impairment 
sometime in the future.

     "Baa":   Bonds that are rated "Baa" are considered as medium grade 
obligations, I.E., they are neither highly protected nor poorly secured. 
Interest payments and principal security appears adequate for the present but 
certain protective elements may be lacking or may be characteristically 
unreliable over any great length of time.  Such bonds lack outstanding 
investment characteristics and in fact have speculative characteristics as 
well.

     "Ba":    Bonds that are rated "Ba" are judged to have speculative 
elements; their future cannot be considered as well assured.  Often the 
protection of interest and principal payments may be very moderate and 
thereby not well safeguarded during both good and bad times over the future. 
Uncertainty of position characterizes bonds in this class.

     "B":     Bonds that are rated "B" generally lack characteristics of 
desirable investments.  Assurance of interest and principal payments or of 
maintenance of other terms of the contract over any long period of time may 
be small.

     "Caa":   Bonds that are rated "Caa" are of poor standing.  These issues 
may be in default or present elements of danger may exist with respect to 
principal or interest.

     Moody's applies numerical modifiers (1, 2 and 3) with respect to bonds 
rated "Aa" through "B".  The modifier 1 indicates that the bond being rated 
ranks in the higher end of its generic rating category; the modifier 2 
indicates a mid-range ranking; and the modifier 3 indicates that the bond 
ranks in the lower end of its generic rating category.

     Excerpts from Standard & Poor's Corporation ("S&P") description of its 
bond ratings:


                                      30
<PAGE>

     "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."


                                      31

<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+".  


                                      32

<PAGE>

                          MUNDER S&P 500 INDEX EQUITY FUND
                        MUNDER S&P MIDCAP INDEX EQUITY FUND
                       MUNDER S&P SMALLCAP INDEX EQUITY FUND
                          MUNDER AGGREGATE BOND INDEX FUND
                             MUNDER FOREIGN EQUITY FUND
                                          
                                          
                        STATEMENT OF ADDITIONAL INFORMATION
                                     ______, 1998


     St. Clair Funds, Inc. (the "Company") currently offers a selection of 
investment portfolios, five of which are offered in this Statement of 
Additional Information:  Munder S&P 500 Index Equity Fund ("LargeCap Index 
Fund"), Munder S&P MidCap Index Equity Fund ("MidCap Index Fund"), Munder S&P 
SmallCap Index Equity Fund ("SmallCap Index Fund"), Munder Aggregate Bond 
Index Fund ("Bond Index Fund") and Munder Foreign Equity Fund ("Foreign 
Fund") (collectively, the "Funds").  The Fund's investment advisor is Munder 
Capital Management (the "Advisor").

     Shares of the Funds are available to the public only through the 
purchase of certain variable annuity and variable life insurance contracts 
subject to regulatory approval ("Contracts") issued by various life insurance 
companies (the "Insurers").

     This Statement of Additional Information is intended to supplement the 
information provided to investors in the Funds' Prospectus dated ______, 1998 
and has been filed with the Securities and Exchange Commission ("SEC") as 
part of the Company's Registration Statement.  This Statement of Additional 
Information is not a prospectus, and should be read only in conjunction with 
the Funds' Prospectus dated ______, 1998.  The contents of this Statement of 
Additional Information are incorporated by reference in the Prospectus in 
their entirety.   A copy of the Prospectus may be obtained through Huntleigh 
Fund Distributors, Inc. (the "Distributor"), or by calling the Funds at (800) 
438-5789.  This Statement of Additional Information is dated ______, 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
                                                          Page

General ..................................................   3
Fund Investments .........................................   3
Risk Factors and Special Consideration - Index Funds .....  14
Investment Limitations ...................................  16
Directors and Officers  ..................................  17
Investment Advisory and Other Service Arrangements .......  22
Control Person and Principal Holder of Securities ........  24
Portfolio Transactions ...................................  24
Purchase and Redemption Information ......................  26
Net Asset Value ..........................................  26
Performance Information ..................................  27
Taxes  ...................................................  28
Additional Information Concerning Shares  ................  31
Miscellaneous ............................................  32
Appendix A ............................................... A-1
Appendix B ............................................... B-1


No person has been authorized to give any information or to make any 
representations not contained in this Statement of Additional Information or 
in the Prospectus in connection with the offering made by the 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 Prospectus 
does not constitute an offering by the Funds or by the Distributor, in any 
jurisdiction in which such offering may not lawfully be made.    


                             2

<PAGE>

                                   GENERAL

     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.

   
     As stated in the Prospectus, the investment advisor of the Fund is 
Munder Capital Management (the "Advisor").  The principal partners of the 
Advisor are Old MCM, Inc. ("Old MCM"), Munder Group LLC, Woodbridge Capital 
Management, Inc. ("Woodbridge") and WAM Holdings, Inc. ("WAM").  Mr. Lee P. 
Munder, the Advisor's Chairman, indirectly owns or controls approximately 45% 
and Comerica Incorporated owns or controls approximately 44% of the 
partnership interests of the Advisor.  Capitalized terms used herein and not 
otherwise defined have the same meanings as are given to them in the 
Prospectus.
    
                                FUND INVESTMENTS

     The following supplements the information contained in the Funds' 
Prospectus concerning the investment objective and policies of the Funds.  
Each Fund's investment objective is a non-fundamental policy and may be 
changed without the authorization of the holders of a majority of the Fund's 
outstanding shares.  There can be no assurance that any Fund will achieve its 
objective.

     FOREIGN SECURITIES.  The Foreign Fund may invest in common stock of 
foreign issuers and American Depositary Receipts ("ADRs") listed on a 
domestic securities exchange or included in the NASDAQ National Market System 
or the United States Over-the-Counter Market ("OTC").  ADRs are receipts 
typically issued by a United States bank or trust company evidencing 
ownership of the underlying foreign securities.  Certain such institutions 
issuing ADRs may not be sponsored by the issuer.  A non-sponsored depositary 
may not provide the same shareholder information that a sponsored depositary 
is required to provide under its contractual arrangements with the issuer.

     The Bond Index Fund may invest in international dollar-denominated bonds 
such as Yankee bonds, which are dollar denominated bonds issued in the U.S. 
by foreign banks and corporations.

     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 domiciled 
companies comparable to the reports and ratings published about companies in 
the United States.  Investments in companies domiciled in foreign countries 
may be subject to potentially higher risks than investments in the United 
States. These risks include (i) less social, political and economic stability 
(ii) certain national policies which may restrict a Fund's investment 
opportunities, including restrictions on investment in issuers or industries 
deemed sensitive to national interest; (iii) the absence, until recently in 
certain Eastern European countries, of a capital market structure or 
market-oriented economy and (iv) the possibility that recent favorable 
economic developments in Eastern Europe may be slowed or reversed by 
unanticipated political or social events in such countries.

     Many Asian countries may be subject to a greater degree of social,
political and economic instability than is the case in the United States and
European countries.  Such instability may result from 


                                    3

<PAGE>

(i) authoritarian governments or military involvement in political and 
economic decision-making; (ii) popular unrest associated with demands for 
improved political and economic and social conditions; (iii) internal 
insurgencies; (iv) hostile relations with neighboring countries; and (v) 
ethnic, religious and racial disaffection.  The economies of most of emerging 
markets and Asian countries are heavily dependent upon international trade 
and are accordingly affected by protective trade barriers and the economic 
conditions of their trading partners, principally, the United States, Japan, 
China and the European Community.

     FUTURES CONTRACTS AND RELATED OPTIONS.  The Funds currently expect that 
they may purchase and sell futures contracts on interest-bearing securities 
or securities or bond indices, and may purchase and sell call and put options 
on futures contracts.  For a detailed description of futures contracts and 
related options, see Appendix B to this Statement of Additional Information.

     INTEREST RATE SWAP TRANSACTIONS.  The Bond Index Fund may enter into 
interest rate swap agreements for purposes of attempting to obtain a 
particular desired return at a lower cost to the Fund than if the Fund had 
invested directly in an instrument that yielded that desired return.  
Interest rate swap transactions involve the exchange by the 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 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 Fund's 
ability to engage in certain interest rate transactions.  Gains from 
transactions in interest rate swaps distributed to shareholders of the Fund 
will be taxable as ordinary income or, in certain circumstances, as long-term 
capital gains to the shareholders

     The Bond Index 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").  The Fund's obligations under a 
swap agreement will be accrued daily (offset against any amounts owed to the 
Fund).  Accrued but unpaid net amounts owed to a swap counterparty will be 
covered by the maintenance of a segregated account consisting of cash.  U.S. 
Government securities or other high-grade debt securities, to avoid any 
potential leveraging of the Fund's portfolio.

     The Bond Index 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 
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 the 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 larger 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


                                      4

<PAGE>

adversely affect the Fund's ability to terminate existing swap agreements or 
to realize amounts to be received under such agreements.

     INVESTMENT COMPANY SECURITIES.  The Funds may invest in securities 
issued by other investment companies.  The Foreign Fund may purchase shares 
of investment companies investing primarily in foreign securities, including 
so called "country funds".   In addition, the LargeCap Index Fund and the 
MidCap Index Fund may invest in Standard & Poor's Depositary 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 
certain corresponding S&P indices.  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 corresponding S&P index.  SPDRs are traded 
on the American Stock Exchange.

     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 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.

     MONEY MARKET INSTRUMENTS.  As described in the Prospectus, the Funds may 
invest from time to time in "money market instruments," a term that includes, 
among other things, bank obligations, commercial paper, variable amount 
master demand notes and corporate bonds with remaining maturities of 397 days 
or less.

     Bank obligations including 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 when the 
Advisor 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, and 
investments by a Fund in the obligations of foreign banks and foreign 
branches of U.S. banks will not exceed 25% of such Fund's total assets at the 
time of purchase.

     Investments by a Fund in commercial paper will consist of issues rated 
at the time A-1 and/or P-1 by Standard & Poor's Rating Service ("S&P"), a 
division of McGraw-Hill Companies, Inc., or Moody's Investor Services, Inc. 
("Moody's"). In addition, the Funds may acquire unrated commercial paper and 
corporate bonds that are determined by the Advisor at the time of purchase to 
be of comparable quality to rated instruments that may be acquired by such 
Fund as previously described.

     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 


                                    5

<PAGE>

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.

     OPTIONS.  The Funds may write covered call options, buy put options, buy 
call options and write secured put options in an amount not exceeding 5% of 
their net assets.  Such options may relate to particular securities and may 
or may not be listed on a national securities exchange and issued by the 
Options Clearing Corporation.    Options trading is a highly specialized 
activity which entails greater than ordinary investment risk.  Options on 
particular securities may be more volatile than the underlying securities, 
and therefore, on a percentage basis, an investment in options may be subject 
to greater fluctuation than an investment in the underlying securities 
themselves.

     A call option for a particular security gives the purchaser of the 
option the right to buy and a writer the obligation to sell, the underlying 
security at the stated exercise price at any time prior to the expiration of 
the option, regardless of the market price of the security.  The premium paid 
to the writer is in consideration for undertaking the obligation under the 
option contract.  A put option for a particular security gives the purchaser 
the right to sell the underlying security at the stated exercise price at any 
time prior to the expiration date of the option, regardless of the market 
price of the security.

     The writer of an option that wished to terminate its obligation may 
effect a "closing purchase transaction."  This is accomplished by buying an 
option of the same series as the option previously written.  The effect of 
the purchase is that the writer's position will be canceled by the clearing 
corporation. However, a writer may not effect a closing purchase transaction 
after being notified of the exercise of an option.  Likewise, an investor who 
is the holder of an option may liquidate its position by effecting a "closing 
sale transaction."  The cost of such a closing purchase plus transaction 
costs may be greater than the premium received upon the original option, in 
which event each Fund will have incurred a loss in the transaction.  There is 
no guarantee that either a closing purchase or a closing sale transaction can 
be effected.



                                     6

<PAGE>

     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 Funds may write options in connection with buy-and-write 
transactions; that is, the Funds may purchase a security and then write a 
call option against that security.  The exercise price of the call the Funds 
determine to write will depend upon the expected price movement of the 
underlying security.  The exercise price of a call option may be below 
("in-the-money"), equal to ("at-the-money") or above ("out-of-the-money") the 
current value of the underlying security at the time the option is written.  
Buy-and-write transactions using in-the-money call options may be used when 
it is expected that the price of the underlying security will remain flat or 
decline moderately during the option period.  Buy-and-write transactions 
using out-of-the-money call options may be used when it is expected that the 
premiums received from writing the call option plus the appreciation in the 
market price of the underlying security up to the exercise price will be 
greater than the appreciation in the price of the underlying security alone.  
If the call options are exercised in such transactions, the maximum gain to 
the relevant Fund will be the premium received by it for writing the option, 
adjusted upwards or downwards by the difference between the Fund's purchase 
price of the security and the exercise price.  If the options are not 
exercised and the price of the underlying security declines, the amount of 
such decline will be offset in part, or entirely, by the premium received.

     In the case of a call option on a security the option is "covered" if a 
Fund owns the security underlying the call or has an absolute and immediate 
right to acquire that security without additional cash consideration (or if 
additional cash consideration is required cash or cash equivalents in such 
amount as are held in a segregated account by its custodian) upon conversion 
or exchange of other securities held by it.  For a call option on an index, 
the option is covered if a Fund maintains with its Custodian cash or cash 
equivalents equal to the contract value.  A call option is also covered if a 
Fund holds a call on the same security, or index as the call written where 
the exercise price of the call held is (i) equal to or less than the exercise 
price of the call written or (ii) greater than the exercise price of the call 
written provided the difference is maintained by the portfolio in cash or 
cash equivalents in a segregated account with its custodian.  The Funds may 
write call options that are not covered for cross-hedging purposes.  Each of 
the Funds will limit its investment in uncovered put and call options 
purchased or written by the Fund to 5% of the Fund's total assets.  The Funds 
will write put options only if they are "secured" by cash or cash equivalents 
maintained in a segregated account by the Funds' custodian in an amount not 
less than the exercise price of the option at all times during the option 
period.

     The writing of covered put options is similar in terms of risk/return 
characteristics to buy-and-write transactions.  If the market price of the 
underlying security rises or otherwise is above the exercise price, the put 
option will expire worthless and the relevant Fund's gain will be limited to 
the premium received.  If the market price of the underlying security 
declines or otherwise is below the exercise price, the Fund may elect to 
close the position or take delivery of the security at the exercise price and 
the Fund's return will be the premium received from the put option minus the 
amount by which the market price of the security is below the exercise price.


                                        7

<PAGE>

     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, the Funds will 
reduce any profit it might otherwise have realized in the underlying security 
by the amount of the premium paid for the put option and by transaction 
costs. Each of the Funds may purchase call options to hedge against an 
increase in the price of securities that it anticipates purchasing in the 
future.  The premium paid for the call option plus any transaction costs will 
reduce the benefit, if any, realized by the Funds upon exercise of the 
option, and, unless the price of the underlying security rises sufficiently, 
the option may expire worthless to the Fund.

     When a Fund purchases an option, the premium paid by it is recorded as 
an asset of the Fund.  When the Fund writes an option, an amount equal to the 
net premium (the premium less the commission) received by the Fund is 
included in the liability section of the Fund's statement of assets and 
liabilities as a deferred credit.  The amount of this asset or deferred 
credit will be subsequently marked-to-market to reflect the current value of 
the option purchased or written.  The current value of the traded option is 
the last sale price or, in the absence of a sale, the average of the closing 
bid and asked prices.  If an option purchased by the Fund expires unexercised 
the Fund realizes a loss equal to the premium paid.  If the Fund enters into 
a closing sale transaction on an option purchased by it, the Fund will 
realize a gain if the premium received by the Fund on the closing transaction 
is more than the premium paid to purchase the option, or a loss if it is 
less.  If an option written by the Fund expires on the stipulated expiration 
date or if the Fund enters into a closing purchase transaction, it will 
realize a gain (or loss if the cost of a closing purchase transaction exceeds 
the net premium received when the option is sold) and the deferred credit 
related to such option will be eliminated.  If an option written by the Fund 
is exercised, the proceeds of the sale will be increased by the net premium 
originally received and the Fund will realize a gain or loss.

     There are several risks associated with transactions in options on 
securities and indices.  For example, there are significant differences 
between the securities and options markets that could result in an imperfect 
correlation between these markets, causing a given transaction not to achieve 
its objectives.  An option writer, unable to effect a closing purchase 
transaction, will not be able to sell the underlying security (in the case of 
a covered call option) or liquidate the segregated account (in the case of a 
secured put option) until the option expires or the optioned security is 
delivered upon exercise with the result that the writer in such circumstances 
will be subject to the risk of market decline or appreciation in the security 
during such period.

     There is no assurance that a Fund will be able to close an unlisted 
option position.  Furthermore, unlisted options are not subject to the 
protections afforded purchasers of listed options by the Options Clearing 
Corporate, 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) could 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.


                                      8

<PAGE>

     RIGHTS AND WARRANTS.  As stated in the Prospectus, each Fund (other than 
the Bond Index 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.  Warrants acquired by a 
Fund in units or attached to other securities are not subject to this 
restriction.

     STOCK INDEX FUTURES,  OPTIONS ON STOCK AND BOND INDICES AND OPTIONS ON 
STOCK AND BOND INDEX FUTURES CONTRACTS.  The Funds (except the Bond Index 
Fund) may purchase and sell stock index futures, and options on stock indices 
and stock index futures contracts and the Bond Index Fund may purchase and 
sell bond index futures and options on bond indices and bond index futures 
contracts as a hedge against movements in the equity and bond markets, 
respectively.

     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 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 relevant 
Fund's futures contract or index option resulting from the increase in the 
index.  If, on the other hand, the Advisor expects general stock or bond 
market prices to decline, it might sell a futures contract, or purchase a put 
option.  If that index does in fact decline, the value of some or all of the 
securities in the relevant Fund's portfolio may also be expected to decline, 
but that decrease would be offset in part by the increase in the value of the 
Fund's position in such futures contract or put option.

     The Funds (except the Bond Index Fund) may purchase and write call and 
put options on stock index futures contracts and the Bond Index Fund may 
purchase and write call and put options on bond index futures contracts.  
Each 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, the Funds may purchase put


                                       9

<PAGE>

options or write call options on stock and index futures (bond index futures 
in the case of the Bond Index 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 the Funds intend to purchase.

     In connection with transactions in stock or bond index futures, stock or 
bond index options and options on stock index or bond futures, the Funds will 
be required to deposit as "initial margin" an amount of cash and short-term 
U.S. Government securities equal to from 5% to 8% of the contract amount. 
Thereafter, subsequent payments (referred to as "variation margin") are made 
to and from the broker to reflect changes in the value of the option or 
futures contract.  No Fund may at any time commit more than 5% of its total 
assets to initial margin deposits on futures contracts, index options and 
options on futures contracts

     STRIPPED SECURITIES.  The Bond Index Fund 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 these 
stripped securities most likely will be deemed the beneficial holders of the 
underlying U.S. Government obligations for federal tax and securities 
purposes.  The Trust is not aware of any binding legislative, judicial or 
administrative authority on this issue.

     Only instruments which are stripped by the issuing agency will be 
considered U.S. Government obligations.   Securities such as CATS and TIGRs 
which are stripped by their holder do not qualify as U.S. Government 
obligations.

     Within the past several years the Treasury Department has facilitated 
transfers of ownership of zero coupon securities by accounting separately for 
the beneficial ownership of particular interest coupon and principal payments 
or Treasury securities through the Federal Reserve book-entry, record-keeping 
system.  The Federal Reserve program as established by the Treasury 
Department is known as "STRIPS" or "Separate Trading of Registered Interest 
and Principal of Securities."  Under the STRIPS program a Fund is able to 
have its beneficial ownership of zero coupon securities recorded directly in 
the book-entry record-keeping system in lieu of having to hold certificates 
or other evidences of ownership of the underlying U.S. Treasury securities.

     In addition, the Bond Index 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


                                     10

<PAGE>

common case, one class of SMBS will receive all of the interest (the 
interest-only or "I0" 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 I0 class.  
The notional principal amount is used solely for purposes of the 
determination of interest distributions and certain other rights of holders 
of such IO class and does not represent an interest in principal 
distributions of the mortgage assets.

     Yields on SMBS will be extremely sensitive to the prepayment experience 
on the underlying mortgage loans, and there are other associated risks.  For 
IO classes of SMBS and SMBS that were purchased at prices exceeding their 
principal amounts there is a risk that a Fund may not fully recover its 
initial investment.

     The determination of whether a particular government-issued IO or PO 
backed by fixed-rate mortgages is liquid may be made under guidelines and 
standards established by the Board of 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.

     U.S. GOVERNMENT OBLIGATIONS.  The Funds may purchase obligations issued 
or guaranteed by the U.S. Government and U.S. Government agencies and 
instrumentalities.  Obligations of certain agencies and instrumentalities of 
the U.S. Government, such as those of the GNMA, are supported by the full 
faith and credit of the U.S. Treasury.  Others, such as those of the 
Export-Import Bank of the United States, are supported by the right of the 
issuer to borrow from the U.S. Treasury; and still others, such as those of 
the Student Loan Marketing Association, are supported only by the credit of 
the agency or instrumentalities 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.  These instruments 
may include variable amount master demand notes that permit the indebtedness 
to vary in addition to providing for periodic adjustments in the interest 
rates.  The Advisor will consider the earning power, cash flows and other 
liquidity ratios of the issuers and guarantors of such instruments and, if 
the instrument is subject to a demand feature, will continuously monitor 
their financial ability to   meet payment on demand.  Where necessary to 
ensure that a variable or floating rate instrument is equivalent to the 
quality standards applicable to the Fund, the 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.


                                    11

<PAGE>

     The absence of an active secondary market for certain variable and 
floating rate notes could make it difficult to dispose of the instruments, 
and the Bond Index 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 Bond Index 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.

     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 Advisor will review and continuously, monitor the 
creditworthiness of the seller under a repurchase agreement, and, will 
require the seller to maintain liquid assets in a segregated account in an 
amount that is greater than the repurchase price.  Default by, or bankruptcy 
of the seller would, however, expose a Fund to possible loss because of 
adverse market action or delays in connection with the disposition of 
underlying obligations.

     The repurchase price under the repurchase agreements described in the 
Prospectus generally equals the price paid by a Fund plus interest negotiated 
on the basis of current short-term rates (which may be more or less than the 
rate on the securities underlying the repurchase agreement).

     Securities subject to repurchase agreements will be held by the 
Company's custodian (or subcustodian) in the Federal Reserve/Treasury 
book-entry system or by another authorized securities depository.  Repurchase 
agreements are considered to be loans by a Fund under the Investment Company 
Act of 1940, as amended (the "1940 Act").

     BORROWING.  Each Fund is authorized to borrow money in an amount up to 
5% of the value of its total assets at the time of such borrowings for 
temporary purposes, and is authorized to borrow money in excess of the 5% 
limit as permitted by the 1940 Act to meet redemption requests.  This 
borrowing may, be unsecured.  The 1940 Act requires a Fund to maintain 
continuous asset coverage of 300% of the amount borrowed.  If the 300% asset 
coverage should decline as a result of market fluctuations or other reasons, 
a Fund may be required to sell some of its portfolio holdings within three 
days to reduce the debt and restore the 300% asset coverage, even though it 
may be disadvantageous from an investment standpoint to sell securities at 
that time.  Borrowing may exaggerate the effect on a Fund's net asset value 
of any increase or decrease in the market value of securities purchased with 
borrowed funds.  Money borrowed will be subject to interest costs which may 
or may not be recovered by an appreciation of the securities purchased.  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 rate.  Each Fund may, in connection with permissible 
borrowings, transfer, as collateral, securities owned by the Fund.

     REVERSE REPURCHASE AGREEMENTS.  The Funds may borrow funds for temporary 
or emergency purposes by selling portfolio securities to financial 
institutions such as banks and broker/dealers and agreeing to repurchase them 
at a 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.  A Fund 
will pay interest on amounts obtained pursuant to a reverse repurchase 
agreement.  While reverse repurchase agreements are outstanding, a Fund will 
maintain, in a segregated account, cash, U.S. Government securities or other 
liquid high-grade debt securities of an 


                                    12

<PAGE>

amount at least equal to the market value of the securities, plus accrued 
interest, subject to the agreement.

     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 a Fund to 
lock-in a price or yield on a security, regardless of future changes in 
interest rates.

     When a Fund agrees to purchase securities on a when-issued or forward 
commitment basis, the Custodian will set aside cash or liquid portfolio 
securities equal to the amount of the commitment in a separate account. 
Normally, the Custodian will set aside portfolio securities to satisfy a 
purchase commitment, and in such a case the Fund may be required subsequently 
to place additional assets in the separate account in order to ensure the 
value of the account remains equal to the amount of the Fund's commitments.  
It may be expected that the market value of the Fund's net assets will 
fluctuate to a greater degree when it sets aside portfolio securities to 
cover such purchase commitments than when it sets aside cash.  Because a 
Fund's liquidity and ability to manage its portfolio might be affected when 
it sets aside cash or portfolio securities to cover such purchase 
commitments, the Advisor expects that its commitments to purchase when-issued 
securities and forward commitments will not exceed 25% of the value of the 
Fund's total assets absent unusual market conditions.

     The Funds 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 net asset 
value of the 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.

     LENDING OF PORTFOLIO SECURITIES.  To enhance the return on its 
portfolio, each Fund may lend securities in its portfolio (subject to a limit 
of 25% of its total assets) to securities firms and financial institutions, 
provided that each loan is secured continuously by collateral in the form of 
cash or U.S. Government securities adjusted daily to have a market value at 
least equal to the current market value of the securities loaned.  These 
loans are terminable at any time, and the Fund will receive interest or 
dividends paid on the loaned securities.  In addition, it is anticipated that 
a Fund may share with the borrower some of the income received on the 
collateral for the loan or the Fund will be paid a premium for the loan.  The 
risk in lending portfolio securities as with other extensions of credit, 
consists of a possible delay in recovery of the securities or a possible loss 
of rights in the collateral should the borrower fail financially.  In 
determining whether a Fund will lend securities, the Advisor will consider 
all relevant facts and circumstances.  A Fund will only enter into loan 
arrangements with broker-dealers, 


                                     13

<PAGE>

banks or other institutions which the Advisor has determined are creditworthy 
under guidelines established by the Board of Directors.

     YIELDS AND RATINGS.  The yields on certain obligations, including the 
money market instruments in which each Fund may invest (such as commercial 
paper and bank obligations), are dependent on a variety of factors, including 
general money market conditions, conditions in the particular market for the 
obligation, the financial condition of the issuer, the size of the offering, 
the maturity of the obligation and the ratings of the issue.  The ratings of 
S&P, Moody's, Duff & Phelps Credit Rating Co., Thomson Bank Watch, Inc. and 
other nationally recognized statistical NRSROs represent their respective 
opinions as to the quality of the obligations they undertake to rate.  
Ratings, however, are general and are not absolute standards of quality.  
Consequently, obligations with the same rating, maturity, and interest rate 
may have different market prices.

     OTHER.  Subsequent to its purchase by a Fund, a rated security may cease 
to be rated or its rating may be reduced below the minimum rating required 
for purchase by the Fund.  The Board of Directors or the Advisor, pursuant to 
guidelines established by the Board, will consider such an event in 
determining whether the Fund involved should continue to hold the security in 
accordance with the interests of the Fund and applicable regulations of the 
SEC.

     It is possible that unregistered securities purchased by a Fund in 
reliance upon Rule 144A under the Securities Act of 1933, as amended (the 
"Act"), could have the effect of increasing the level of a Fund's illiquidity 
to the extent that qualified institutional buyers become, for a period, 
uninterested in purchasing these securities.

               RISK FACTORS AND SPECIAL CONSIDERATIONS - INDEX FUNDS

     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 LargeCap 
Index Fund, MidCap Index Fund, SmallCap Index Fund (the "Equity Index Funds") 
and the Bond Index Fund are not managed in this manner.  Instead,  with the 
aid of a computer program, the Advisor purchases and sells securities for 
each Fund in an attempt to produce investment results that substantially 
duplicate the investment composition and performance of each Fund's 
respective corresponding Index (the "Corresponding Index"), taking into 
account redemptions, sales of additional Fund shares, and other adjustments 
as described below.

     With respect to the Equity Index Funds, a Fund does not expect to hold 
at any particular time all of the stocks included in the Corresponding Index. 
The Advisor believes, however, that through the application of 
capitalization weighing and sector balancing techniques it be able to 
construct and maintain each Equity Index Fund's investment portfolio so that 
it reasonably tracks the performance of its Corresponding Index.  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 Corresponding 
Index.  This comparison is made because the Advisor believes that, unless a 
Fund holds all stocks included in the Corresponding Index, the selection of 
stocks for purchase by the Fund solely on the basis of their weighted market 
capitalizations would tend to place their concentration in certain industry 
sectors.  As a result, event disproportionately affecting such industries 
could affect the performance of the Fund differently than the performance of 
the Corresponding Index.  Conversely, if smaller companies were not 
purchased by the Fund, the representation of industries included in the 
Corresponding Index that are not dominated by the most heavily 
market-capitalized companies would be reduced or eliminated.    


                                       14

<PAGE>

     For these reasons, the Advisor will identify the sectors which are (or, 
except for sector balancing, would be) most underrepresented in a Fund's 
portfolio and will purchase balancing securities in these sectors until the 
portfolio's sector weightings closely match those of the Corresponding Index. 
This process continues until the portfolio is fully invested (exempt for cash 
holdings).

     Redemptions of a substantial number of shares of a 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 Corresponding Index.

     If an issuer drops in ranking, or is eliminated entirely from the 
Corresponding Index, the Advisor may be required to sell some or all of the 
common stock of such issuer then held by a 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 
Corresponding Index, such securities might not be sold.  Such sales may 
result in lower prices for such securities than may be 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 not necessarily 
be the basis for the disposition of portfolio securities, unless such event 
causes the issuer to be eliminated entirely from the Corresponding Index.  
However, although the Advisor does not intend to screen securities for 
investment by a 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 Funds will invest primarily in the common stocks that constitute the 
Corresponding Index in accordance with their relative capitalization and 
sector weightings as described above.  It is possible, however, that a Fund 
will from time to time receive, as part of a "spin-off" or other corporate 
reorganization of an issuer included in the Corresponding Index, securities 
that are themselves outside the Corresponding Index.  Such securities will be 
disposed of by the Fund in due course consistent with the Fund's investment 
objective.

     With respect to the Bond Index Fund, the Fund will invest in a group of 
fixed income securities selected from the Lehman Brothers Aggregate Bond 
Index ("Aggregate Bond Index") which are expected to perform similarly to the 
Index as a whole.  The Bond Index Fund will be unable to hold all of the 
individual issues which comprise the Aggregate Bond Index because of the 
large number of securities involved.  The Fund will however be constructed to 
approximately match the composition of the Aggregate Bond Index.

     As the Bond Index Fund will invest primarily in fixed-income securities, 
the Fund is subject to interest rate, income, call, credit and prepayment 
risk (with respect to mortgage-backed securities.) Interest rate risk is the 
potential for fluctuations in bond prices due to changing interest rates. 
Income risk is the potential for a decline in the Fund's income due to 
falling market interest rates.  Credit risk is the possibility that a bond 
issuer will fail to make timely-payments of either interest or principal to 
the Fund. Prepayment risk (for mortgage-backed securities) and call risk (for 
corporate bonds) is the likelihood that, during periods of falling interest 
rates, securities with high stated interest rates will be prepaid (or 
"called") prior to maturity requiring the Fund to invest the proceeds at 
generally lower interest rates.


                                   15

<PAGE>
                               INVESTMENT LIMITATIONS

     Each Fund is subject to the investment limitations enumerated in this 
section which may be changed with respect to a particular Fund only by a vote 
of the holders of a majority of the Fund's outstanding shares (as defined 
under "Miscellaneous - Shareholder Approvals").

     Each Fund may not:

     1.   With respect to 75% of the Fund's assets, invest more than 5% of the
          Fund's assets (taken at market value at the time or 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;

     2.   Invest more than 25% of its total assets in the securities of issuers
          conducting their principal business activities in any one industry
          (securities issued or guaranteed by the United States Government, its
          agencies or instrumentalities are not considered to represent
          industries);

     3.   Borrow money or enter into reverse repurchase agreements except that
          the Fund may (i) borrow money, or enter into reverse repurchase
          agreements for temporary purposes in amounts not exceeding 5% of its
          total assets and (ii) borrow money for the purpose of meeting
          redemption requests, in amounts (when aggregated with amounts borrowed
          under clause (i)) not exceeding 33 1/3% of its total assets;

     4.   Pledge, mortgage or hypothecate its assets other than to secure
          borrowings permitted by restriction 3 above (collateral arrangements
          with respect to margin requirements for options and futures
          transactions are not deemed to be pledges or hypothecations for this
          purpose);

     5.   Make loans of securities to other persons in excess of 25% of the
          Fund's total assets, provided the Fund may invest without limitation
          in short-term debt obligations (including repurchase agreements) and
          publicly distributed debt obligations.

     6.   Underwrite securities of other issuers, except insofar as the Fund
          may, be deemed an underwriter under the Act in selling portfolio
          securities;

     7.   Purchase or sell real estate or any interest therein, but not
          including securities issued by companies (including real estate
          investment trusts) that invest in real estate or interests therein;

     8.   Purchase securities on margin, or make short sales of securities
          except for the use of short-term credit necessary, for the clearance
          of purchase and sales of portfolio securities, but the Fund may make
          margin deposits in connection with transactions in options, futures
          and options on futures;

     9.   Make investments for the purpose of exercising control of management;


                                   16

<PAGE>

     10.  Invest in commodities or commodity futures contracts, provided that
          this limitation shall not prohibit the purchase or sale by the Fund of
          financial futures contracts and options on financial futures
          contracts, options on securities and securities indices, as permitted
          by the Fund's Prospectus; or

     11.  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 may be deemed to give rise to
          a senior security and as consistent with interpretations under the
          1940 Act.

     Additional investment restrictions adopted by each Fund which may be 
changed by the Board of Directors, provide that a Fund may not:

     1.   Invest more than 15% of its net assets (taken at market value at the
          time of purchase) in securities which cannot be readily resold because
          of legal or contractual restrictions or which are not otherwise
          marketable; or

     2.   Invest in other investment companies except as permitted under
          the 1940 Act.

     If a percentage limitation is satisfied at the time of investment, a 
later increase or decrease in such percentage resulting from a change in the 
value of 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).  In 
addition if a Fund's holdings of illiquid securities exceeds 15% because of 
changes in the value of the Fund's investments, the Fund will take action to 
reduce its holdings of illiquid securities within a time frame deemed to be 
in the best interest of the Fund. 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.

                               DIRECTORS AND OFFICERS

     The directors and executive officers of the Company, and their business 
addresses and principal occupations during the past five years, are:

<TABLE>
<CAPTION>

       NAME, ADDRESS AND AGE    POSITIONS WITH COMPANY   DURING THE PAST FIVE YEARS
       ---------------------    ----------------------   --------------------------
       <S>                      <C>                       <C>
   
           Charles W. Elliott   Chairman of the            Senior Advisor to
           1024 Essex Circle    Board of Directors         the President -
           Kalamazoo, MI                                   Western Michigan
           49008                                           University since
           Age: 65                                         July 1995; Executive
                                                           Vice President -
                                                           Administration &
                                                           Chief Financial
                                                           Officer, Kellogg
                                                           Company from January
                                                           1987 through June
                                                           1995; before that
                                                           Price Waterhouse. 
                                                           Board of Directors,
                                                           Steelcase Financial
                                                           Corporation.
    
</TABLE>

                                      17


<PAGE>

<TABLE>
<CAPTION>

       <S>                      <C>                       <C>
           John Rakolta, Jr.    Director and Vice          Chairman and Chief
           1876 Rathmor         Chairman of the            Executive Officer,
           Bloomfield Hills,    Board of Directors         Walbridge Aldinger
           MI  48304                                       Company
           Age: 50                                         (construction
                                                           company).
    
           Thomas B. Bender     Director                   Investment Advisor,
           7 Wood Ridge Road                               Financial &
           Glen Arbor, MI                                  Investment
           49636                                           Management Group
           Age: 64                                         (since April, 1991);
                                                           Vice President
                                                           Institutional Sales,
                                                           Kidder, Peabody &
                                                           Co. (Retired April,
                                                           1991); Trustee,
                                                           Vining Real Estate
                                                           Investment Trust.

           David J. Brophy      Director                   Professor,
           1025 Martin Place                               University of
           Ann Arbor, MI                                   Michigan; Director,
           48104                                           River Place
           Age: 61                                         Financial Corp.

            Dr. Joseph E.       Director                   Dean, University
            Champagne                                      Center, Macomb
            319 East Snell Road                            College since
            Rochester, MI                                  September 1997;
            48306                                          Corporate and
            Age: 59                                        Executive Consultant
                                                           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
                                                           Controls of Troy, MI.
</TABLE>

                                     18

<PAGE>

<TABLE>
<CAPTION>

       <S>                      <C>                       <C>
            Thomas D. Eckert    Director                   President and Chief
            10726 Falls Pointe                             Executive Officer,
            Drive                                          Capital Automotive
            Great Falls, VA                                REIT from November
            22066                                          1997 to present
            Age: 50                                        (real estate
                                                           investment trust
                                                           specializing in
                                                           retail automotive
                                                           properties); prior
                                                           to that President
                                                           and COO, Mid-
                                                           Atlantic Division of
                                                           Pulte Home
                                                           Corporation
                                                           (developer of
                                                           residential land and
                                                           construction of
                                                           housing units) from
                                                           1983 until 1997.

            Lee P. Munder*      Director and               Chairman of the
            480 Pierce Street   President                  Advisor since
            Suite 300                                      February 1998; Chief
            Birmingham, MI                                 Executive Officer of
            48009                                          World Asset
            Age: 52                                        Management since
                                                           January 1995; Chief
                                                           Executive Officer of
                                                           Old MCM, Inc.
                                                           (predecessor to
                                                           Advisor) since 1985;
                                                           and Director, LPM
                                                           Investment Services,
                                                           Inc. ("LPM").

            Terry H. Gardner    Vice President,            Vice President and
            480 Pierce Street   Chief Financial            Chief Financial
            Suite 300           Officer and                Officer of the
            Birmingham, MI      Treasurer                  Advisor; Vice
            48009                                          President and Chief
            Age: 37                                        Financial Officer of
                                                           Old MCM, Inc.
                                                           (February 1993 to
                                                           present) and;
                                                           Secretary of LPM.

           Paul Tobias          Vice President             Chief Executive
           480 Pierce Street                               Officer of the
           Suite 300                                       Advisor (since
           Birmingham, MI                                  February 1998);
           48009                                           Chief Operating
           Age: 46                                         Officer of the
                                                           Advisor (since April
                                                           1995); Executive
                                                           Vice President of
                                                           the Advisor (April
                                                           1995-February
                                                           1998); and Executive
                                                           Vice President of
                                                           Comerica, Inc.
</TABLE>
                                     19

<PAGE>

<TABLE>
<CAPTION>

       <S>                      <C>                       <C>
           Gerald Seizert       Vice President             Chief Executive
           480 Pierce Street                               Officer of the
           Suite 300                                       Advisor (since
           Birmingham, MI                                  February 1998);
           48009                                           Chief Investment
           Age: 45                                         Officer/Equities of
                                                           the Advisor (since
                                                           April 1995);
                                                           Executive Vice
                                                           President of the
                                                           Advisor (April 1995-
                                                           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
           480 Pierce Street                               Director of
           Suite 300                                       Marketing for the
           Birmingham, MI                                  Advisor; Vice
           48009                                           President and
           Age: 40                                         Director of Client
                                                           Services of Old MCM,
                                                           Inc. (August 1988 to
                                                           December 1994).

           James C. Robinson    Vice President             Vice President and
           480 Pierce Street                               Chief Investment
           Suite 300                                       Officer/Fixed Income
           Birmingham, MI                                  for the Advisor;
           48009                                           Vice President and
           Age: 36                                         Director of Fixed
                                                           Income of Old MCM,
                                                           Inc. (1987-1994).

           Leonard J. Barr, II  Vice President             Vice President and
           480 Pierce Street                               Director of Core
           Suite 300                                       Equity Research of
           Birmingham, MI                                  the Advisor;
           48009                                           Director and Senior
           Age: 53                                         Vice President of
                                                           Old MCM, Inc. (since
                                                           1988); Director of LPM.
    

           Ann F. Putallaz      Vice President             Vice President and
           480 Pierce Street                               Director of
           Suite 300                                       Fiduciary Services
           Birmingham, MI                                  of the Advisor
           48009                                           (since January
           Age: 52                                         1995); Director of
                                                           Client and Marketing
                                                           Services of
                                                           Woodbridge Capital
                                                           Management, Inc.

           Lisa A. Rosen        Secretary, Assistant       General Counsel of
           480 Pierce Street    Treasurer                  the Advisor (since
           Suite 300                                       May 1996); formerly
           Birmingham, MI                                  Counsel, First Data
           48009                                           Investor Services
           Age: 30                                         Group, Inc.; Assistant 
                                                           Vice President and
                                                           Counsel with The
                                                           Boston Company
                                                           Advisors, Inc.;
                                                           Associate with Hutchins, 
                                                           Wheeler & Dittmar.
</TABLE>

                                      20

<PAGE>

<TABLE>
<CAPTION>

       <S>                      <C>                       <C>
           Therese Hogan        Assistant Secretary        Director, State Regulation
           53 State Street                                 Department, First
           Boston, MA 02109                                Data Investor
           Age: 36                                         Services Group (June
                                                           1994-present);
                                                           formerly Senior
                                                           Legal Assistant,
                                                           Palmer & Dodge
                                                           (October 1993-June
                                                           1994); Blue Sky
                                                           Paralegal, Robinson
                                                           & Cole (February
                                                           1984-October 1993).
</TABLE>

*    "Interested person" of the Company, as defined in the 1940 Act.

     Directors of the Company receive an aggregate fee from the Company, The 
Munder Funds Trust (the "Trust"), The Munder Funds, Inc. ("Munder") and The 
Munder Framlington Funds Trust ("Framlington Trust") comprised of an annual 
retainer fee and a fee for each Board meeting attended, and are reimbursed 
for all out-of-pocket expenses relating to attendance at meetings.

     The following table summarizes the compensation paid by the Company, 
Munder, the Trust and Framlington Trust to their respective 
Directors/Trustees for the fiscal year ended December 31, 1997.

    
<TABLE>
<CAPTION>

                           Aggregate                Pension
                         Compensation             Retirement          Estimated
  Name of             from the Company, the    Benefits Accrued    Annual Benefits       Total from
   Person                Trust, Munder and        as Part of            upon               the Fund
and Position            Framlington Trust        Fund Expenses       Retirement            Complex
- ------------          --------------------    ------------------  -----------------     --------------
<S>                      <C>                     <C>                 <C>                    <C>
Charles W. Elliott
Chairman                 $26,000                  None                None                  $26,000

John Rakolta, Jr.
Vice Chairman            $23,000                  None                None                  $23,000

Thomas B. Bender
Trustee and Director     $26,000                  None                None                  $26,000

David J. Brophy
Trustee and Director     $26,000                  None                None                  $26,000

Dr. Joseph E. Champagne
Trustee and Director     $26,000                  None                None                  $26,000

Thomas D. Eckert
Trustee and Director     $22,500                  None                None                  $22,500

</TABLE>
    

     No officer, director or employee of the Advisor, Comerica, the 
Distributor, the Administrator, the Sub-Custodian or the Transfer Agent 
currently receives any compensation from the Company, the Trust, Munder or 
Framlington Trust.


                                      21    
<PAGE>

                 INVESTMENT ADVISORY AND OTHER SERVICE ARRANGEMENTS
   
     INVESTMENT ADVISOR.  The Advisor of the Fund is Munder Capital 
Management, a Delaware general partnership.  The general partners of the 
Advisor are Woodbridge, WAM, Old MCM and Munder Group, LLC.  Woodbridge and 
WAM are wholly-owned subsidiaries of Comerica Bank -- Ann Arbor, which, in 
turn is a wholly-owned subsidiary of Comerica Incorporated, a publicly-held 
bank holding company.
    
     Under the terms of the Investment Advisory Agreement between the Company
and the Advisor with respect to the Funds (the "Advisory Agreement"), the
Advisor furnishes continuing investment supervision to the Funds and is
responsible for the management of each Fund's portfolio.  The responsibility for
making decisions to buy, sell or hold a particular security rests with the
Advisor, subject to review by the Company's Board of Directors.

     The Advisory Agreement will continue in effect for a period of two years
from its effective date.  If not sooner terminated 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 Directors who are not parties to the Advisory Agreement or
interested persons (as defined in the 1940 Act), cast in person at a meeting
called for the purpose of voting on approval, and (b) either (i) the vote of a
majority of the outstanding voting securities of the Fund, or (ii) the vote of a
majority of the Board of Directors.  The Advisory Agreement is terminable by
vote of the Board of Directors, or by the holders of a majority of the
outstanding voting securities of a Fund, at any time without penalty, upon 60
days' written notice to the Advisor.  The Advisor may also terminate its
advisory relationship with a Fund without penalty upon 90 days' written notice
to the Company.  The Advisory Agreement terminates automatically in the event of
its assignment (as defined in the 1940 Act).

     For the advisory services provided and expenses assumed by it, the Advisor
has agreed to a fee from each Fund, computer daily and payable monthly at an
annual rate of .05% of average daily net assets of the Fund.

     DISTRIBUTION AGREEMENT.  The Company has entered into a distribution
agreement, under which the Distributor, as agent, sells shares of the Fund on a
continuous basis to separate accounts of the Insurers.  The Distributor's
principal offices are located at South Central Avenue, Suite 300, St. Louis,
Missouri 63141.

     SHAREHOLDER SERVICING ARRANGEMENTS.  Under Rule 12b-1 of the 1940 Act, the
Funds have adopted a Shareholder Servicing Plan (the "Plan") under which the
Distributor,  Insurers, and other dealers that offer the Contracts may be paid
by the Funds in connection with providing shareholder services to the
Contractowners.  Under the Plan, each Fund may incur such shareholder servicing
expenses in amounts up to an annual rate of .25% of the average daily net assets
of each Fund.

     The services provided by the Service Organizations under the Plan may
include execution and processing of orders from Insurers; processing purchase,
exchange and redemption requests furnished to the Insurers by the
Contractowners; placing orders with the Transfer Agent; processing dividend and
distribution payments from the Funds; providing statements of additional
information and information periodically showing positions in Fund shares; and
providing such other personal and account maintenance services as may reasonably
be requested by the Funds.

                                      22

<PAGE>

     Under the terms of the Plan, the Plan continues from year to year, provided
such continuance is approved annually by vote of the Board of Directors,
including a majority of the Board of Directors who are not interested persons of
the Company and who have no direct or indirect financial interest in the
operation of the Plan (the "Non-Interested Plan Directors").  The Plan may not
be amended to increase the amount to be spent for the services without
shareholder approval, and all amendments of the Plan also must be approved by
the Directors in the manner described above.  The 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
Fund (as defined in the 1940 Act) on not more than 30 days' written notice to
any other party to the Plan.  Pursuant to the Plan, the Distributor will provide
the Board of Directors periodic reports of amounts expended under the Plan and
the purpose for which such expenditures were made.

     ADMINISTRATION AGREEMENT.  State Street Bank and Trust Company ("State
Street") located at 225 Franklin Street, Boston, Massachusetts 02110, serves as
administrator for the Company pursuant to an administration agreement (the
"Administration Agreement").  State Street has agreed to maintain office
facilities for 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 or any state securities commission having
jurisdiction over the Company.

     The Administration Agreement provides that the Administrator performing
services thereunder shall not be liable under the Agreement except for its
willful misfeasance, bad faith or negligence in the performance of its duties or
from the reckless disregard by it of its duties and obligations thereunder.

     CUSTODIAN, SUB-CUSTODIAN AND TRANSFER AGENCY AGREEMENTS.  Comerica Bank, 
whose principal business address is One Detroit Center, 500 Woodward Avenue, 
Detroit, MI 48226, is the custodian of each Fund pursuant to a custodian 
agreement ("Custody Agreement") with the Company.  The Custodian receives no 
compensation for its services.  State Street serves as the sub-custodian to 
the Funds pursuant to a sub-custodian agreement (the "Sub-Custodian 
Contract") among the Company, Comerica Bank and State Street.  State Street 
is also the Sub-Custodian with respect to the custody of foreign securities 
held by certain of 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 Contract, the Custodian (i) maintains a separate account in the 
name of each Fund, (ii) holds and transfers portfolio securities on account 
of each Fund, (iii) accepts receipts and makes disbursements of money on 
behalf of each Fund, (iv) collects and receives all income and other payments 
and distributions on account of each Fund's securities and (v) makes periodic 
reports to the Board of Directors concerning each Fund's operations.  

     First Data Investor Services Group Inc. ("Investor Services Group") serves
as the transfer and dividend disbursing agent for the Funds pursuant to a
transfer agency agreement (the "Transfer Agency Agreement") with 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 each Fund and (v)
makes periodic reports to the Board of Directors concerning the operations of
the Funds.

                                      23

<PAGE>

     OTHER INFORMATION PERTAINING TO ADMINISTRATION AND TRANSFER AGENCY
AGREEMENTS.  As stated in the Prospectus, the Administrator, the Transfer Agent
and the Custodian each receives a separate fee for its services.  In approving
the Administration Agreement and Transfer Agency Agreement, the Board of
Directors did consider the services that are to be provided under their
respective agreements, the experience and qualifications of the respective
service contractors, the reasonableness of the fees payable by the Company in
comparison to the charges of competing vendors, the impact of the fees on the
estimated total ordinary operating expense ratio of each Fund and the fact that
neither the Administrator nor the Transfer Agent is affiliated with the Company
or the Advisor.  The Board also considered its responsibilities under federal
and state law in approving these agreements.   

                 CONTROL PERSON AND PRINCIPAL HOLDER OF SECURITIES

     The separate accounts of the Insurers are the sole shareholders of the 
Funds and therefore are considered to be control persons of the Funds.

                               PORTFOLIO TRANSACTIONS

     Subject to the general supervision of the Board of Directors, the Advisor
makes decisions with respect to and places orders for all purchases and sales of
portfolio securities for each Fund.

     Transactions on U.S. stock exchanges involve the payment of negotiated
brokerage commissions.  On exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers.  Transactions on foreign
stock exchanges involve payment for brokerage commissions which are generally
fixed.

     Over-the-counter issues, including corporate debt and government securities
are normally traded on a "net" basis (i.e., commission) through dealers, or
otherwise involve transactions directly with the issuer of an instrument.  With
respect to over-the-counter transactions, the Advisor will normally deal
directly with dealers who make a market in the instruments involved except in
those circumstances where more favorable prices and execution are available
elsewhere.  The cost of foreign and domestic securities purchased from
underwriters includes an underwriting commission or concession, and the prices
at which securities are purchased from and sold to dealers include a dealer's
mark-up or mark-down.

     The Funds may participate, if and when practicable.  In bidding for the
purchase of portfolio securities directly from an issuer in order to take
advantage of the lower purchase price available to members of a bidding group. 
The Funds will engage in this practice, however, only when the Advisor believes
such practice to be in each Fund's interests. 

     The portfolio turnover rate of each Fund is calculated by dividing the
lesser of the Fund's annual sales or purchases of portfolio securities
(exclusive of purchases or sales of securities whose maturities at the time of
acquisition were one year or less) by the monthly average value of the
securities held by the Fund during the year.  Each Fund may engage in short-term
trading to achieve its investment objective.  Portfolio turnover may vary
greatly from year to year as well as within a particular year.

     In the Advisory Agreement, the Advisor agrees to select broker-dealers 
in accordance with guidelines established by the Company's Board of Directors 
from time to time and in accordance with applicable law.  In assessing the 
terms available for any transaction, the Advisor shall consider all factors 
it deems relevant, including the breadth of the market in the security, the 
price of the security, the

                                      24

<PAGE>

financial condition and execution capability of the broker-dealer, and the 
reasonableness of the commission, if any, both for the specific transaction 
and on a continuing basis.  In addition, the Advisory Agreement authorizes 
the Advisor, subject to the prior approval of the Company's Board of 
Directors, to cause each Fund to pay a broker-dealer which furnishes 
brokerage and research services a higher commission than that which might be 
charged by another broker-dealer for effecting the same transaction, provided 
that the Advisor determines in good faith that such commission is reasonable 
in relation to the value of the brokerage and research services provided by 
such broker-dealer, viewed in terms of either the particular transaction or 
the overall responsibilities of the Advisor to the Fund.  Such brokerage and 
research services might consist of reports and statistics on specific 
companies or industries, general summaries of groups of bonds and their 
comparative earnings and yields, or broad overviews of the securities markets 
and the economy.

     Supplementary research information so received is in addition to, and not
in lieu of services required to be performed by the Advisor and does not reduce
the advisory fees payable to the Advisor by the Funds.  It is possible that
certain of the supplementary or other services received will primarily benefit
one or more other investment companies or other accounts for which investment
discretion is exercised.  Conversely, the Funds 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, the
Distributor or any affiliated person (as defined in the 1940 Act) of the foreign
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 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 equitable price or
value of the security as far as the Funds are concerned.  In other cases it is
believed to be beneficial to the Funds.  To the extent permitted by law, the
Advisor may aggregate the securities to be sold or purchased for the Funds with
those to be sold or purchased for other investment companies or accounts in
executing transactions.

     The Funds will not purchase securities during the existence of any
underwriting or selling group relating to such securities of which the Advisor
or any affiliated person (as defined in the 1940 Act) thereof is a member except
pursuant to procedures adopted by the Company's Board of Directors in accordance
with Rule 10f-3 under the 1940 Act.

     Except as noted in the Prospectus and this Statement of Additional 
Information the Funds' service contractors bear all expenses in connection 
with the performance of its services and each Fund bears the expenses 
incurred in its operations.  These expenses include, but are not limited to, 
fees paid to the Advisor, Administrator, Custodian and Transfer Agent; 
shareholder servicing fees; fees and expenses of officers and directors; 
taxes; interest; legal and auditing fees; fees and commissions; certain fees 
and expenses in registering and qualifying each 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 Company

                                      25

<PAGE>

that are not readily identifiable as belonging to a particular investment 
portfolio of the Company are allocated among all investment portfolios of the 
Company by or under the direction of the Board Directors in a manner that the 
Board of Directors determines to be fair and equitable, taking into 
consideration whether it is appropriate for expenses to be borne by the Funds 
in addition to the Company's other funds.  The Advisor,  Administrator,  
Custodian and Transfer Agent may voluntarily waive all or a portion of their 
respective fees from time to time.

                        PURCHASE AND REDEMPTION INFORMATION

     Purchases and redemptions are discussed in the Funds' Prospectus and such
information is incorporated herein by reference.

     PURCHASES.  Each Fund's shares are continuously offered to the Insurers'
separate accounts at the net asset value per share next determined after a
proper purchase request has been received by the Insurer.  The Funds and the
Distributor reserve the right to reject any purchase order for shares of the
Funds.

     REDEMPTIONS.  Payments for redeemed shares will ordinarily be made within
seven (7) business days after the Funds receive a redemption order from the
relevant Insurer. The redemption price will be the net asset value per share
next determined after the Insurer receives the Contractowner's request in proper
form.  The Company, reserves the right to suspend or postpone redemptions during
any period when: (i) trading on the New York Stock Exchange is restricted, as
determined by the SEC, or the New York Stock Exchange is closed for other than
customary weekend and holiday closings; (ii) the SEC has by order permitted such
suspension or postponement for the protection of shareholders; or (iii) an
emergency, as determined by the SEC, exists, making disposal of portfolio
securities or valuation of net assets of the Funds not reasonably practicable.

     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 portfolio of the 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.  Each Fund is
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 prospectus(es) for the Insurers' variable annuities describe the
allocation, transfer and withdrawal provisions of such annuities.

                                  NET ASSET VALUE

     In determining the approximate market value of portfolio investments, the
Company may employ 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 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 of Directors.

                                      26

<PAGE>

                              PERFORMANCE INFORMATION

     From time to time, quotations of a Fund's performance may be included in
advertisements, sales literature, or reports to existing or prospective owners
of the Insurers' Contracts.  These performance figures are calculated in the
following manner:

YIELD

     The Bond Index Fund's 30 day (or one month) standard yield described in the
Prospectus is calculated for the Fund in accordance with the method described 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; and

          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 the Fund at a discount or premium (variable "a" in the formula),
the Fund computes the yield to maturity of such instrument based on the market
value of the obligation (including actual accrued interest) at the close of
business on the last business day of each month, or, with respect to obligations
purchased during the month, the purchase price (plus actual accrued interest). 
Such yield is then divided by 360 and the quotient is multiplied by the market
value of the obligation (including actual accrued interest) in order to
determine the interest income on the obligation for each day of the subsequent
month that the obligation is in the portfolio.  It is assumed in the above
calculation that each month contains 30 days.  The maturity of a debt obligation
with a call provision is deemed to be the next call date on which the obligation
reasonably may be expected to be called or, if none, the maturity date.  For
the purpose of computing yield on equity securities held by the 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.

     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 the 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).

AVERAGE ANNUAL TOTAL RETURN

     A Fund may advertise its "average annual total return" and will compute
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:

                                      27

<PAGE>

               P (1+ T)n = ERV

Where     T    =    average annual total return;

          ERV  =    ending redeemable value of a hypothetical $1,000
                    payment made at the beginning of the 1, 5, or 10 year (or
                    other) periods at the end of the applicable period (or a
                    fractional portion thereof);

          P    =    hypothetical initial payment of $1,000; and

          n    =    period covered by the computation expressed in years.

AGGREGATE TOTAL RETURN

     A Fund may advertise its "aggregate total return" and will compute such 
return 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:

          Aggregate Total Return =    (ERV) - 1
                                       ---
                                        P

     The calculations are made assuming that (1) all dividends and capital gain
distributions are reinvested on the reinvestment rates 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
period 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 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, the
Funds' 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, the Funds' 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.

                                       TAXES

     The following summarizes certain additional tax considerations generally,
affecting the Fund and its shareholders that are not described in the Fund's
Prospectuses.  No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussion here and in

                                      28

<PAGE>

the Prospectuses is not intended as a substitute for careful tax planning. 
Potential investors should consult their tax advisors with specific reference 
to their own tax situations.

     Each Fund will elect to be taxed separately as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code").  As a regulated investment company, a Fund generally is exempt from
Federal Income tax on its net investment income and realized capital gains which
it distributes to the separate accounts, 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 gains 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 income derived with respect to its business of investing in such stock,
securities, or currencies (the "Income Requirement").  Interest (including
original issue discount and "accrued market discount") received by a Fund at
maturity or on disposition of a security held for less than three months will
not be treated (in contrast to other income which is attributable to realized
market appreciation) as gross income from the sale or other disposition of
securities held for less than three months for this purpose.

     In addition to the foregoing requirements, at the close of each quarter of
its taxable year, at least 50% of the value of each Fund's assets must consist
of cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and securities of other issuers (as to which the
Fund has not invested more than 5% of the value of its total assets in
securities of such issuer and as to which the Fund does not hold more than 10%
of the outstanding voting 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 the Fund
controls and which are engaged in the same or similar trades or businesses. 
Repurchase agreements collateralized by U.S. treasury securities are not treated
for purposes of the diversification requirement described in this paragraph as
U.S. Government securities.

     Certain debt instruments acquired by a Fund may include "original issue
discount" or "market discount".  As a result, a Fund may be deemed under tax law
rules to have earned discount income in taxable periods in which it does not
actually receive any payments on the particular debt instruments involved.  This
income, however, will be subject to the Distribution Requirements and must also
be distributed in accordance with the excise tax distribution rules discussed
above, which may cause the Fund to have to borrow or liquidate securities to
generate cash in order to timely meet these requirements (even though such
borrowing or liquidating securities at that time may be detrimental from the
standpoint of optimal portfolio management).  Gain from the sale of a debt
instrument having market discount may be treated for tax purposes as ordinary-
income to the extent that market discount accrued during the Fund's ownership of
that instrument.

     Distributions of net investment income received by a Fund from investments
in debt securities and any net realized short-term capital gains distributed by
the Fund will be taxable to the separate

                                      29

<PAGE>

accounts 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 sole exchange of a capital asset held
for more than one year, regardless of the length of time the shareholder has
held the Fund shares, and regardless of whether the distribution is paid in cash
or reinvested in shares.

     If for any taxable year a Fund does not qualify as a registered investment
company, all of its taxable income will be subject to tax at regular corporate
rates without any deduction for distributions to shareholders.

     The Code imposes a non-deductible excise tax on regulated investment
companies that fail to currently distribute an amount equal to specified
percentages of their ordinary taxable income and capital gain net income (excess
of capital gains over capital losses).  Each Fund intends to make sufficient
distributions or deemed distributions of its ordinary taxable income and capital
gain net income each calendar year to avoid liability for this excise tax.

     To comply with regulations under Section 817(h) of the Code, each Fund will
be required to diversify its investments so that on the last day of each
calendar quarter no more than 55% of the value of its assets is represented by
any one investment, no more than 70% is represented by any two investments, no
more than 80% is represented by any three investments, and no more than 90% is
represented by any four investments.   Generally, all securities of the same
issuer are treated as a single investment.  For the purposes of Section 817(h)
of the Code, obligations of the U.S. Treasury and each U.S. Government
instrumentality are treated as securities of separate issuers.  The Treasury
Department has indicated that it may issue future pronouncements addressing the
circumstances in which a variable annuity contract owner's control of the
investments of a separate account may cause the variable contract owner, rather
than the separate account's sponsoring insurance company, to be treated as the
owner of the assets held by the separate account.  If the variable annuity
contract owner is considered the owner of the securities underlying the separate
account,  income and gains produced by. those securities would be included
currently in the variable annuity contract owner's gross income.  It is not
known what standards will be set forth in such pronouncements or when, if at
all, these pronouncements may be issued.  In the event that rules or regulations
are adopted, there can be no assurance that a Fund will be able to operate as
described currently in the Prospectus or that the Fund will not have to change
its investment policies or goals.

     The foregoing general discussion of Federal income tax consequences is
based on the Code and the regulations issued thereunder as in effect on the date
of this Statement of Additional Information. Future legislative or
administrative changes or court decisions may significantly, change the
conclusions expressed herein, and such changes or decisions may have a
retroactive effect with respect to the transactions contemplated herein.

     Although each Fund expects to qualify as a "regulated investment company"
and to be relieved of all or substantially all Federal income taxes, depending
upon the extent of its activities in states and localities in which its offices
are maintained, in which its agents or independent contractors are located or in
which it is otherwise deemed to be conducting business, the Fund may be subject
to the tax laws of such states or localities.

                                      30

<PAGE>

                      ADDITIONAL INFORMATION CONCERNING SHARES

     The Company is a Maryland corporation.  The Company's Articles of
Incorporation authorize the Board of Directors to classify or reclassify any
authorized but unissued shares of the Company into one or more additional
portfolios (or classes of shares within a portfolio) by setting or changing in
any one or more respects their respective preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption.  Pursuant to such authority, the
Company's Board of Directors have authorized the issuance of shares of common
stock representing interests in Munder S&P 500 Index Equity Fund, Munder S&P
MidCap Index Equity Fund, Munder S&P SmallCap Index Equity Fund, Munder
Aggregate Bond Index Fund, Munder Foreign Equity Fund, Liquidity Plus Money
Market Fund and Institutional Index Equity Fund.

     Shares of Funds have no subscription or pre-emptive rights and only such
conversion or exchange rights as the Board may grant in its discretion.  When
issued for payment as described in the applicable Prospectus and Statement of
Additional Information, shares will be fully paid and nonassessable by the
Company.  In the event of a liquidation or dissolution of 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 relating net asset values of the Fund
and the Company's other 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, based on the number of shares of the Fund that are held by each
shareholder.

     Shareholders of the Funds, as well as those of any other investment
portfolio now or hereafter offered by 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 Board of 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 Company
shall not be deemed to have been effectively acted upon unless approved by the
holders of a majority of the outstanding shares of each Fund affected by the
matter.  A Fund is affected by a matter unless it is clear that the interests of
such Fund in the matter are substantially identical to the interests of other
Funds of the Company or that the matter does not affect any interest of such
Fund.  Under the Rule, the approval of an investment 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 directors may be effectively acted upon by
shareholders of the Company voting together in the aggregate without regard to a
particular Fund.

     Shareholder meetings to elect directors will not be held unless and until
such time as required by law.  At that time, the directors then in office will
call a shareholders' meeting to elect directors except as set forth above, the
directors will continue to hold office and may appoint successor directors
meetings of the shareholders of the Company shall be called by the directors
upon the written request of shareholders owning at least 10% of the outstanding
shares entitled to vote.

     Notwithstanding any provision of Maryland law requiring a greater vote of
the Company's shares (or of any class voting as a class) in connection with any
corporate action, unless otherwise provided by law (for example, by Rule 18f-2)
or the Company's Articles of Incorporation, the Company may take or authorize
such action upon the favorable vote of the holders of more than 50% of the

                                      31

<PAGE>

outstanding Common Stock of The Funds and the Company's other Funds, if any
(voting together without regard to class).

                                   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 Company.

     INDEPENDENT AUDITORS.  Ernst & Young LLP, 200 Clarendon Street, Boston,
Massachusetts 02116, serves as the Company's independent auditors.

     SHAREHOLDER APPROVALS.  As used in this Statement of Additional Information
and in the Prospectuses, a "majority of the outstanding voting shares" of the
Fund means the lesser of (a) 67% of the shares of the Fund represented at a
meeting at which the holders of more than 50% of the outstanding shares of the
Fund are present in person or by proxy, or (b) more than 50% of the outstanding
shares of the Fund.

     BANKING LAWS.  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
Company contemplated by their respective agreements with the Company without
violation of applicable bank laws or regulations.  It should be noted, however,
that there have been no cases deciding whether bank and non-bank subsidiaries of
a registered bank holding compared 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 present these companies from continuing to perform such service for the
Company.

     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 Company, the Company might be required to alter
materially or discontinue its arrangements with such companies and change its
method of operations.  It is not anticipated, however, that any change in the
Company's method of operations would affect the net asset value per share of the
Funds or result in a financial loss to any shareholder of the Funds.

                                      32

<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 amplitude or there may be other 
elements present which make the long-term risks appear some what 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 maybe
presents 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 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 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 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
exposure 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 Prospectus, the Funds may enter into certain futures
transactions and options for hedging purposes.  Such transactions are described
in this Appendix.

1.        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 specified 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
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.

                                      B-1

<PAGE>

     Interest rate futures contracts are traded in an auction environment on the
floors of several exchanges principally, the Chicago Board of Trade, the Chicago
Mercantile Exchange and the New York Futures Exchange.  The Funds would deal
only in standardized contracts on recognized exchanges.  Each exchange
guarantees performance under contract provisions through a clearing corporation,
a nonprofit organization managed by the exchange membership.

     A public market now exists in futures contracts covering various financial
instruments including long-term United States Treasury Bonds and Notes,
Government National Mortgage Association (GNMA) modified pass-through mortgage
backed securities; three-month United States Treasury Bills; and ninety-day
commercial paper.  The Funds may trade in any interest rate futures contracts
for which there exists a public market, including, without limitation, the
foregoing instruments.

     EXAMPLE OF FUTURES CONTRACT SALE.  The Funds would engage in an interest
rate futures contract sale to maintain the income advantage from continued
holding of a long-term bond while endeavoring to avoid part or all of the loss
in market value that would otherwise accompany a decline in long-term securities
prices.  Assume that the market value of a certain security held by a particular
Fund tends to move in concern with the futures market prices of long-term United
States Treasury bonds ("Treasury Bonds").  The Advisor 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 Advisor 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 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 cash and futures prices below.

     The Advisor could be wrong in its forecast of interest rates and the
equivalent futures market price could rise above 98.  In this case, the market
value of the portfolio securities, including the portfolio security being
protected, would increase.  The benefit of this increase would be reduced by the
loss realized on closing out the futures contract sale.

     If interest rate levels did not change, the Fund in the above example might
incur a loss of 2 points (which might be reduced by an offsetting transaction
prior to the settlement date).  In each transaction, transaction expenses would
also be incurred.

     EXAMPLE OF FUTURES CONTRACT PURCHASE.  The Funds would engage in an
interest rate futures contract purchase when they are not fully invested in
long-term bonds but wish to defer for a time the purchase of long-term bonds in
light of the availability of advantageous interim investments, e.g., shorter
term securities whose yields are greater than those available on long-term
bonds.  A Fund's basic motivation would be to maintain for a time the income
advantage from investing in the short-term securities; the Fund would be
endeavoring at the same time to eliminate the effect of all or part of an
expected increase in market price of the long-term bonds that the Fund may
purchase.


                                      B-2

<PAGE>

     For example, assume that the market price of a long-term bond that the Fund
may purchase, currently yielding 10%, tends to move in concert with futures
market prices of Treasury bonds.  The Advisor wishes to fix the current market
price (and thus 10% yield) of the long-term bond until the time (four months
away in this example) when it may purchase the bond.  Assume the long-term bond
has a market price of 100, and the Advisor believes that because of an
anticipated fall in interest rates, the prices will have risen to 105 (and the
yield will have dropped to about 9 1/2%) in four months.  The Fund might enter
into futures contracts purchases of Treasury bonds for an equivalent price of
98.  At the same time, the Fund would assign a pool of investments in short-term
securities that are either maturing in four months or earmarked for sale in four
months, for purchase of the long-term bond at an assumed market price of 100. 
Assume these short-term securities are yielding 15%.  If the market price of the
long-term bond does indeed rise from 100 to 105, the equivalent futures market
price for Treasury bonds might also rise from 98 to 103.  In that case, the 5
point increase in the price that the Fund pays for the long-term bond would be
offset by the 5 point gain realized by closing out the futures contract
purchase.

     The Advisor could be wrong in its forecast of interest rates, long-term 
interest rates might rise to above 10%; and the equivalent futures market 
price could fall below 98.  If short-term rates at the same time fall to 10% 
or below, it is possible that the Fund would continue with its purchase 
program for long-term bonds.  The market price 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 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 indexed,
such as the Standard & Poor's 500 or the New York Stock Exchange Composite
index.  In contrast, certain exchanges offer futures contracts on narrower
market indexes, such as the Standard & Poor's 100 or indexes based on an
industry, or market segment, such as oil and gas stocks.

                                      B-3

<PAGE>

     Futures contracts are traded on organized exchanges regulated by the
Commodity Futures Trading Commission.  Transactions on such exchanges are
cleared through a clearing corporation, which guarantees the performance of the
parties to each contract.

     A Fund will sell index futures contracts in order to offset a decrease in
market value of its portfolio securities that might otherwise result from a
market decline.  A Fund will purchase index futures contracts in anticipation of
purchases of securities.  In a substantial majority of these transactions, a
Fund will purchase such securities upon termination of the long futures
position, but a long futures position may be terminated without a corresponding
purchase of securities.

     In addition, a Fund may utilize index futures contracts in anticipation of
changes in the composition of its portfolio holdings.  For example, in the event
that a Fund expects to narrow the range of industry groups represented in its
holdings it may, prior to making purchases of the actual securities, establish a
long futures position based on a more restricted index, such as an index
comprised of securities of a particular industry group.  A Fund may also sell
futures contracts in connection with this strategy in order to protect against
the possibility that the value of the securities to be sold as part of the
restructuring of the portfolio will decline prior to the time of sale.

     EXAMPLES OF STOCK INDEX FUTURES TRANSACTIONS.  The following are examples
of transactions in stock index futures (net of commissions and premiums, if
any).

                    ANTICIPATORY PURCHASE HEDGE:  Buy the Future
                 Hedge Objective:  Protect Against Increasing Price
<TABLE>
<CAPTION>
               PORTFOLIO                                        FUTURES
               ---------                                        -------
<S>                                                    <C>
Anticipate buying $62,500 in Equity Securities         -Day Hedge is Placed-
                                                       Buying 1 Index Futures at 125
                                                       Value of Futures = $62,500/Contract

Buying Equity Securities with Actual Cost = $$62,500   -Day Hedge is Lifted-
Increase in Purchase Price = $2,500                    Sell 1 Index Futures at 130
                                                       Value of Futures = $62,500/Contract
                                                       Gain on Futures = $2,500
</TABLE>

                                      B-4

<PAGE>

                    HEDGING A STOCK PORTFOLIO:  Sell the Future
                    Hedge Objective:  Protect Against Declining
                               Value of the Portfolio

Factors:

Value of Stock Portfolio = $1,000,000
Value of Futures Contract = 125 X $500 = $62,500 
Portfolio Beta Relative to the Index = 1.0
<TABLE>
<CAPTION>
                      PORTFOLIO                                  FUTURES
                      ---------                                  -------
<S>                                                       <C>
Anticipate Selling $1,000,000 in Equity Securities        -Day Hedge is Placed-
                                                          Sell 16 Index Futures at 125
                                                          Value of Futures = $1,000,000

Equity Securities - Own Stock                             -Day Hedge is Lifted-
       with Value = $960,000                              Buy 16 Index Futures at 120
Loss in Portfolio Value = $40,000                         Gain on Futures = $40,000
</TABLE>

III. MARGIN PAYMENTS

     Unlike purchase or sales of portfolio securities, no price is paid or
received by a Fund upon the purchase or sale of a futures contract.  Initially,
the Fund will be required to deposit with the broker or in a segregated account
with the Custodian an amount of cash or cash equivalents, known as initial
margin, based on the value of the contract.  The nature of initial margin in
futures transactions is different from that of margin in security transactions
in that futures contract margin does not involve the borrowing of funds by the
customer to finance the transactions.  Rather, the initial margin is in the
nature of a performance bond or good faith deposit on the contract which is
returned to the Fund upon termination of the futures contract assuming all
contractual obligations have been satisfied.  Subsequent payments, called
variation margin, to and from the broker, will be made on a daily basis as the
price of the underlying instruments fluctuates making the long and short
positions in the futures contract more or less valuable, a process known as
marking-to-the-market.  For example, when a particular Fund has purchased a
futures contract and the price of the contract has risen in response to a rise
in the underlying instruments, that position will have increased in value and
the Fund will be entitled to receive from the broker a variation margin payment
equal to that increase in value.  Conversely, where the Fund has purchased a
futures contract and the price of the futures contract has declined in response
to a decrease in the underlying instruments, the position would be less valuable
and the Fund would be required to make a variation margin payment to the broker.
At any time prior to expiration of the futures contract, the 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.

                                      B-5

<PAGE>

IV.  RISKS OF TRANSACTIONS IN FUTURES CONTRACTS

     There are several risks in connection with the use of futures by the 
Funds as hedging devices.  One risk arises because of the imperfect 
correlation between movements in the price of the futures and movements in 
the price of the instruments which are the subject of the hedge. The price of 
the future may move more than or less than the price of the instruments being 
hedged.  If the price of the futures moves less than the price of the 
instruments which are the subject of the hedge, the hedge will not be fully 
effective but, if the price of the instruments being hedged has moved in 
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 
Advisor.  Conversely, the Funds may buy or sell fewer futures if the 
volatility over a particular time period of the prices of the instruments 
being hedged is less than the volatility over such time period of the futures 
contract being used, or if otherwise deemed to be appropriate by the Advisor. 
It is also possible that when the Fund had sold futures to hedge its 
portfolio against a decline in the market, the market may advance and the 
value of instruments held in the Fund may decline.  If this occurred, the 
Fund would lose money on the futures and also experience a decline in value 
in its portfolio securities.

     Where futures are purchased to hedge against a possible increase in the
price of securities before a Fund is able to invest its cash (or cash
equivalents) in an orderly fashion, it is possible that the market may decline
instead; if the Fund then concludes not to invest its cash at that time because
of concern as to possible further market decline or for other reasons, the Funds
will realize a loss on the futures contract that is not offset by a reduction in
the price of the instruments that were to be purchased.

     In instances involving the purchase of futures contracts by the Funds, an
amount of cash and cash equivalents, equal to the market value of the futures
contracts, will be deposited in a segregated account with the Custodian and/or
in a margin account with a broker to collateralize the position and thereby
insure that the use of such futures is unleveraged.

                                      B-6

<PAGE>

     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 offsetting 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 offsetting 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 spectators in the futures market may also cause temporary price
distortions. Due to the possibility of price distortion in the futures market,
and because of the imperfect correlation between the movements in the cash
market and movements in the price of futures, a correct forecast of general
market trends or interest rate movements by the Advisor 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, an 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
contact and thus provide an offset on a futures contract.

     Further, it should be noted that the liquidity of a secondary market in a
futures contract 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 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, 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 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.

                                      B-7

<PAGE>

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 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.

VII.      OTHER MATTERS

     Accounting for futures contracts will be in accordance with generally
accepted accounting principles.

                                      B-8

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