[LOGO]
THE
MUNDER
FUNDS
Prospectus Class A,B & C Shares
Equity Funds
PROSPECTUS
Class A, Class B and Class C Shares
The Munder Funds Trust (the "Company"), formerly Ambassador Funds, is an
open-end investment company (a mutual fund) that currently offers a selection of
fifteen investment portfolios. The Munder Funds, Inc. ("Munder") is an open-end
investment company that currently offers five investment portfolios. This
Prospectus describes six investment portfolios offered by the Company (the
"Munder Funds") and four investment portfolios offered by Munder (the "MFI
Funds") described below (collectively, the "Funds"):
Munder Multi-Season Growth Fund*
Munder Real Estate Equity Investment Fund*
Munder Accelerating Growth Fund
Munder Small Company Growth Fund
Munder Mid-Cap Growth Fund
Munder International Equity Fund
Munder Index 500 Fund**
Munder Growth & Income Fund
Munder Value Fund
Munder Balanced Fund
* Class C Shares of the Multi-Season Growth Fund and the Real Estate Equity
Investment Fund were formerly known as Class D Shares.
**Class C Shares of the Index 500 Fund are not currently available for
purchase.
Munder Capital Management (the "Advisor"), serves as the investment advisor of
the Funds.
This Prospectus contains information that a prospective investor should know
before investing. Investors are encouraged to read this Prospectus and retain it
for future reference. A Statement of Additional Information dated October 28,
1995, 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 Funds at (800) 438-5789.
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
<PAGE>
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.
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 OCTOBER 28, 1995.
TABLE OF CONTENTS
<PAGE>
[LOGO]
THE
MUNDER
FUNDS
Prospectus Class A,B & C Shares
Equity Funds
TABLE OF CONTENTS
TABLE OF CONTENTS
PROSPECTUS SUMMARY 3
THE FUNDS
Expense Table 6
Financial Highlights 11
Investment Objectives and Policies 19
Portfolio Instruments and Practices 27
Investment Limitations 34
HOW TO DO BUSINESS WITH US
How to Purchase Shares 35
How to Redeem Shares 40
Conversion of Class B Shares 44
How to Exchange Shares 44
Dividends and Distributions 45
OTHER INFORMATION
Net Asset Value 46
Management 47
Taxes 50
Description of Shares 52
Performance 53
Shareholder Account Information 54
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 Funds
or the Distributor. This 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.
<PAGE>
[LOGO]
THE
MUNDER
FUNDS
Prospectus Class A,B & C Shares
Equity Funds
PROSPECTUS SUMMARY
PROSPECTUS
CLASS A, CLASS B AND CLASS C SHARES
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing in this Prospectus.
INVESTMENT OBJECTIVES
Each Munder Fund, other than the Growth & Income Fund, Index 500 Fund and
Balanced Fund, seeks capital appreciation. The Growth & Income Fund seeks
capital appreciation and current income by investing primarily in
dividend-paying equity securities. The Index 500 Fund seeks to provide price
performance and income that is comparable to the Standard & Poor's 500 Composite
Stock Index ("S&P 500"). The Balanced Fund seeks to provide an attractive
investment return through a combination of growth of capital and current income.
The Real Estate Equity Investment Fund seeks capital appreciation and current
income by investing primarily in securities of United States companies which are
principally engaged in the real estate industry or own significant real estate
assets. The Multi-Season Growth Fund, Mid-Cap Growth Fund and Value Fund seek to
provide shareholders long-term capital appreciation.
PRINCIPAL INVESTMENTS
The Funds, other than the Balanced Fund, invest primarily in equity
securities, with each Fund implementing a different investment strategy. The
Balanced Fund allocates its assets primarily among three major asset groups:
equity securities, fixed income securities and cash equivalents.
INVESTMENT PROGRAM
The Multi-Season Growth Fund invests primarily in a diversified portfolio
of equity securities of companies that have demonstrated superior long-term
earnings growth, financial stability, attractive valuation and relative price
momentum. The Real Estate Equity Investment Fund invests primarily in securities
of United States companies which are principally engaged in the real estate
industry or which own significant real estate assets. The Accelerating Growth
Fund emphasizes stocks of companies, determined by the Advisor to demonstrate
accelerating earnings growth and which are expected to continue expanding
earnings at an accelerated pace, maintain a substantial competitive advantage,
have a focused management team and a stable balance sheet. The Small Company
Growth Fund focuses on stocks of smaller companies with the potential for
significant long-term capital appreciation. The Mid-Cap Growth Fund invests
primarily in a diversified portfolio of equity securities of companies that have
market capitalizations that range between $100 million and $5 billion and have
demonstrated superior earnings growth, financial stability, attractive valuation
and relative price momentum. The International Equity Fund invests primarily in
the equity securities of foreign companies selected for their long-term growth
potential. The Index 500 Fund invests in a portfolio of stocks constructed to
provide price performance and income to track the market as represented by the
S&P 500. The Growth & Income Fund invests in a broadly diversified portfolio of
dividend-paying stocks whose prospects for dividend growth and capital
appreciation are considered favorable by the Advisor. The Value Fund invests in
a diversified portfolio of equity securities of well-established companies with
intermediate to large market capitalizations which the Advisor believes to be
undervalued at the time of purchase. The Balanced Fund allocates its assets
primarily among equity securities, fixed income securities and cash equivalents
to provide growth of capital and current income. See "Investment Objectives and
Policies."
PURCHASE PLANS
This Prospectus offers three classes of shares ("Classes") to investors.
Investors may select Class A Shares, Class B Shares or Class C Shares, each with
different expense levels and with a public offering price that reflects
different sales charges. Purchases in excess of $250,000 must be for Class A
Shares or Class C Shares.
<PAGE>
CLASS A SHARES
Offered at net asset value plus a maximum initial sales charge of 5.50%
with respect to each Fund, other than the Index 500 Fund. Class A Shares of each
Fund, other than the Index 500 Fund, pay a shareholder servicing fee at the
annual rate of 0.25% of the value of average daily net assets. Class A Shares of
the Index 500 Fund are offered at net asset value plus a maximum initial sales
charge of 2.50%. Class A Shares of the Index 500 Fund pay a shareholder
servicing fee at the annual rate of 0.10% of the value of average daily net
assets. See "How to Purchase Shares."
CLASS B SHARES
Offered at net asset value per share subject to a contingent deferred sales
charge ("CDSC") imposed on certain redemptions made within six years of the date
of purchase at the maximum rate of 5.00% of the lesser of the Shares' net asset
value or original purchase price with respect to each Fund other than the Index
500 Fund. Class B Shares of each Fund, other than the Index 500 Fund, are
subject to shareholder servicing and distribution fees at the annual rate of
1.00% of the value of average daily net assets. Class B Shares of the Index 500
Fund are offered at asset value per share subject to a CDSC imposed on certain
redemptions made within six years of the date of purchase at a maximum rate of
3.00% of the lesser of the Shares' net asset value or original purchase price.
Class B Shares of the Index 500 Fund are subject to shareholder servicing and
distribution fees at the annual rate of .45% of the value of average daily net
assets. Class B Shares will convert automatically to Class A Shares, based on
relative net asset value, at the end of six years after the date of original
purchase. See "How to Purchase Shares."
CLASS C SHARES
Offered at net asset value per share subject to a contingent deferred sales
charge imposed on certain redemptions made within one year of the date of
purchase at the rate of 1.00% of the lesser of the shares' net asset value or
original purchase price. Each Fund is subject to shareholder servicing and
distribution fees at the annual rate of 1.00% of the value of average daily net
assets.
PURCHASING SHARES
Class A Shares, Class B Shares and Class C Shares (the "Shares") of each of
the Funds are offered continuously and may be purchased from the Distributor
through certain broker-dealers and other financial institutions or through the
Transfer Agent. The Shares are subject to the applicable sales charge or CDSC.
See "How to Purchase Shares."
MINIMUM INVESTMENT
$1,000 minimum investment ($50 through Automatic Investment Plan). $50
minimum for subsequent purchases.
EXCHANGE PRIVILEGES
Shares may be exchanged for shares of the same Class of other funds of the
Company and Munder, subject to any applicable sales charges.
REINVESTMENT
Automatic reinvestment of dividends and capital gains without a sales
charge or CDSC, unless a shareholder elects to receive cash.
OTHER FEATURES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
------------------------- ------------------------- -------------------------
<S> <C> <C>
Automatic Investment Plan Automatic Investment Plan Automatic Investment Plan
Automatic Withdrawal Plan Automatic Withdrawal Plan Automatic Withdrawal Plan
Retirement Plans Retirement Plans Retirement Plans
Telephone Exchanges Telephone Exchanges Telephone Exchanges
Rights of Accumulation Reinvestment Privilege Reinvestment Privilege
Letter of Intent
Quantity Discounts
Reinvestment Privilege
</TABLE>
DIVIDENDS AND OTHER DISTRIBUTIONS
Dividends from net investment income are declared and paid quarterly for
all Funds, except the Multi-Season Growth Fund, Mid-Cap Growth Fund,
International Equity Fund and Value Fund, which declare and pay dividends at
least
<PAGE>
annually, and the Real Estate Equity Investment Fund which declares and pays
dividends monthly. Capital gains, if any, are distributed at least annually.
NET ASSET VALUE
Determined once daily on each business day.
REDEEMING SHARES
Class A Shares of the Funds may be redeemed at net asset value by mail
or telephone. Certain redemptions of Class A Shares may be subject to a
CDSC. Class B Shares and Class C Shares are redeemable at net asset value
less any applicable CDSC by mail or telephone. See "How to Redeem
Shares."
INVESTMENT RISKS AND SPECIAL CONSIDERATIONS
A Fund's performance and price per Share will change daily based on many
factors; including the quality of the instruments in each Fund's investment
portfolio, national and international economic conditions, the overall level of
equity prices, general market conditions and international exchange rates.
Depending on these factors, the net asset value of each Fund may decrease
instead of increase. Certain Funds may seek to achieve their investment
objectives through investments in securities of foreign issuers (that involve
risks not typically associated with U.S. issuers), instruments below or with the
lowest investment grade ratings which have speculative characteristics, and
certain options and futures strategies. The Multi-Season Growth Fund, Small
Company Growth Fund and Mid-Cap Growth Fund may invest in the securities of
emerging growth companies, which may involve greater price volatility and risk
than those incurred by funds that do not invest in such companies. In addition,
the Real Estate Equity Investment Fund invests primarily in the real estate
industry and could conceivably own real estate directly as a result of a default
on debt securities it owns. The Fund, therefore, may be subject to certain risks
associated with the direct ownership of real estate. There is no assurance that
any Fund will achieve its investment objective. See "Portfolio Instruments and
Practices."
INVESTMENT ADVISOR
As investment advisor for the Funds, Munder Capital Management, provides
overall investment management for each Fund, provides research and credit
analysis, is responsible for all purchases and sales of portfolio securities,
maintains records relating to such purchases and sales, and provides reports to
the Company's Board of Trustees and Munder's Board of Directors. See
"Management--Investment Advisor."
DISTRIBUTOR
Funds Distributor, Inc.
<PAGE>
[LOGO]
THE
MUNDER
FUNDS
Prospectus Class A,B & C Shares
Equity Funds
THE FUNDS
PROSPECTUS
Class A, Class B and Class C Shares
EXPENSE TABLE
The tables below set forth certain information concerning shareholder
transaction expenses and projected annual operating expenses for the Shares of
the Funds (except the Mid-Cap Growth Fund and the Value Fund) for the current
fiscal year. The expense information in the tables has been restated with
respect to the Multi-Season Growth Fund and Index 500 Fund to reflect
anticipated fees and waivers. The Mid-Cap Growth Fund and the Value Fund did not
commence operations until August 14, 1995 and therefore the expense information
set forth below is based on estimated operating expenses for each Fund.
<TABLE>
<CAPTION>
CLASS A SHARES
REAL ESTATE SMALL
MULTI-SEASON EQUITY ACCELERATING COMPANY MID-CAP
GROWTH INVESTMENT GROWTH GROWTH GROWTH
FUND FUND FUND FUND FUND
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
Shareholder transaction expenses:
Maximum sales load on purchases* 5.50% 5.50% 5.50% 5.50% 5.50%
Maximum sales load on reinvested dividends None None None None None
Maximum contingent deferred sales charge** None None None None None
Redemption fees None None None None None
Exchange Fees None None None None None
Annual operating expenses:
(as a percentage of average net assets)
Advisory fees .75%^ .74% .75% .75% .74%
12b-1 fees .25% .25% .25% .25% .25%
Other expenses .25% .26% .21% .20% .21%
----- ----- ----- ----- -----
Total fund operating expenses 1.25%^ 1.25% 1.20% 1.21% 1.20%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLASS A SHARES
GROWTH &
INTERNATIONAL INDEX INCOME VALUE BALANCED
EQUITY FUND 500 FUND FUND FUND FUND
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Shareholder transaction expenses:
Maximum sales load on purchases* 5.50% 2.50% 5.50% 5.50% 5.50%
Maximum sales load on reinvested dividends None None None None None
Maximum contingent deferred sales charge** None None None None None
Redemption fees None None None None None
Exchange Fees None None None None None
Annual operating expenses:
(as a percentage of average net assets)
Advisory fees .75% .07%^ .75% .74% .65%
12b-1 fees .25% .10%^ .25% .25% .25%
Other expenses .21% .18% .28% .21% .26%
----- ----- ----- ----- -----
Total fund operating expenses 1.21% .35%^ 1.28% 1.20% 1.16%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
*Maximum sales load applicable to Class A Shares. Reductions and waivers of
sales loads are described under "How to Purchase Shares."
**A deferred sales charge of 1.00% is assessed on certain redemptions of Class A
Shares of the Funds, other than the Index 500 Fund, that are purchased with no
initial sales charge as part of an investment of $1,000,000 or more. A deferred
sales charge of 1.00% is assessed on certain redemptions of Class A Shares of
the Munder Funds purchased on or before June 27, 1995 as part of an investment
of $500,000 or more. A deferred sales charge of 0.50% is assessed on certain
redemptions of Class A Shares of the Index 500 Fund that are purchased with no
initial sales charge as part of an investment of $500,000 or more. See "How to
Redeem Shares."
^Reflects waivers as described on page 10. Without waivers, the ratio of
advisory fees to average net assets would be 1.00% for the Multi-Season Growth
Fund and .20% for the Index 500 Fund; the ratio of 12b-1 fees to average net
assets would be .25% for the Index 500 Fund. Without waivers, total fund
operating expenses would be 1.50% for the Multi-Season Growth Fund and .63% for
the Index 500 Fund.
<TABLE>
<CAPTION>
CLASS B SHARES
REAL ESTATE SMALL
MULTI-SEASON EQUITY ACCELERATING COMPANY MID-CAP
GROWTH INVESTMENT GROWTH GROWTH GROWTH
FUND FUND FUND FUND FUND
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Shareholder transaction expenses:
Maximum sales load on purchases None None None None None
Maximum sales load on reinvested dividends None None None None None
Maximum contingent deferred sales charge^^ 5.00% 5.00% 5.00% 5.00% 5.00%
Redemption fees None None None None None
Exchange fees None None None None None
Annual operating expenses:
(as a percentage of average net assets)
Advisory fees .75%^ .74% .75% .75% .74%
12b-1 fees 1.00% 1.00% 1.00% 1.00% 1.00%
Other expenses .25% .26% .20% .21% .21%
----- ----- ----- ----- -----
Total fund operating expenses 2.00%^ 2.00% 1.95% 1.96% 1.95%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLASS B SHARES
GROWTH &
INTERNATIONAL INDEX INCOME VALUE BALANCED
EQUITY FUND 500 FUND FUND FUND FUND
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Shareholder transaction expenses:
Maximum sales load on purchases None None None None None
Maximum sales load on reinvested dividends None None None None None
Maximum contingent deferred sales charge^^ 5.00% 3.00% 5.00% 5.00% 5.00%
Redemption fees None None None None None
Exchange fees None None None None None
Annual operating expenses:
(as a percentage of average net assets)
Advisory fees .75% .07%^ .75% .74% .65%
12b-1 fees 1.00% .45%^ 1.00% 1.00% 1.00%
Other expenses .21% .18% .28% .21% .26%
----- ----- ----- ----- -----
Total fund operating expenses 1.96% .70%^ 2.03% 1.95% 1.91%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
^Reflects waivers as described on page 10. Without waivers, the ratio of
advisory fees to average net assets would be 1.00% for the Multi-Season Growth
Fund and .20% for the Index 500 Fund; the ratio of 12b-1 fees to average net
assets would be 1.00% for the Index 500 Fund. Without waivers, total fund
operating expenses would be 2.25% for the Multi-Season Growth Fund and 1.38% for
the Index 500 Fund.
^^Maximum CDSC applicable to Class B Shares. Class B Shares of the Munder Funds
purchased on or before June 27, 1995 are subject to a different CDSC schedule.
See "How to Redeem Shares--Contingent Deferred Sales Charge--Class B Shares."
Waivers of CDSC are described under "How to Redeem Shares."
Because of the 12b-1 fees paid by the Funds as shown in the above tables,
long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc.
<TABLE>
<CAPTION>
CLASS C SHARES
REAL ESTATE SMALL
MULTI-SEASON EQUITY ACCELERATING COMPANY MID-CAP
GROWTH INVESTMENT GROWTH GROWTH GROWTH
FUND FUND FUND FUND FUND
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Shareholder transaction expenses:
Maximum sales load on purchases None None None None None
Maximum sales load on reinvested dividends None None None None None
Maximum contingent deferred sales charge* 1.00% 1.00% 1.00% 1.00% 1.00%
Redemption fees None None None None None
Exchange fees None None None None None
Annual operating expenses:
(as a percentage of average net assets)
Advisory fees .75%^ .74% .75% .75% .74%
12b-1 fees 1.00% 1.00% 1.00% 1.00% 1.00%
Other expenses .25% .26% .20% .21% .21%
<PAGE>
----- ----- ----- ----- -----
Total fund operating expenses 2.00%^ 2.00% 1.95% 1.96% 1.95%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
<TABLE>
<CAPTION>
Class C Shares
Growth &
International Index Income Value Balanced
Equity Fund 500 Fund Fund Fund Fund
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Shareholder transaction expenses:
Maximum sales load on purchases None None None None None
Maximum sales load on reinvested dividends None None None None None
Maximum contingent deferred sales charge* 1.00% 1.00% 1.00% 1.00% 1.00%
Redemption fees None None None None None
Exchange fees None None None None None
Annual operating expenses:
(as a percentage of average net assets)
Advisory fees .75% .07%^ .75% .74% .65%
12b-1 fees 1.00% 1.00% 1.00% 1.00% 1.00%
Other expenses .21% .18% .28% .21% .26%
----- ----- ----- ----- -----
Total fund operating expenses 1.96% 1.25%^ 2.03% 1.95% 1.91%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
*A deferred sales charge of 1.00% is assessed on redemptions of Class C Shares
made within the first year of investing.
^Reflects advisory fees after waivers. Without waivers, the ratio of advisory
fees to average net assets would be 1.00% for the Multi-Season Growth Fund and
.20% for the Index 500 Fund. Without waivers, total fund operating expenses
would be 2.25% for the Multi-Season Growth Fund and 1.38% for the Index 500
Fund. Waivers are described on page 10.
Because of the 12b-1 fees paid by the Funds as shown in the above tables,
long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc.
With respect to each Fund, the amount of "Other Expenses" in the tables above is
based on estimated expenses and projected assets for the current fiscal year.
See "Management" in this Prospectus and the financial statements and related
notes incorporated by reference in the Statement of Additional Information for a
further description of the Funds' operating expenses. Any fees charged by
institutions directly to customer accounts for services provided in connection
with investments in shares of the Funds are in addition to the expenses shown in
the above Expense Table and the Example shown below. The Transfer Agent may
deduct a wire redemption fee of $7.50 for wire redemptions under $5,000.
Example
An investor would pay the following expenses on a $1,000 investment in Class A
Shares (subject to the applicable sales load), assuming (1) a hypothetical 5%
annual return and (2) redemption at the end of the following time periods:
<TABLE>
<CAPTION>
CLASS A SHARES
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Multi-Season Growth Fund $67 $93 $120 $198
Real Estate Equity Investment Fund $67 $93 $120 $198
Accelerating Growth Fund $67 $91 $117 $193
Small Company Growth Fund $67 $91 $118 $194
Mid-Cap Growth Fund $67 $91 N/A N/A
International Equity Fund $67 $91 $118 $194
<PAGE>
Index 500 Fund $28 $36 $ 44 $ 68
Growth & Income Fund $67 $93 $121 $201
Value Fund $67 $91 N/A N/A
Balanced Fund $66 $90 $115 $188
</TABLE>
An investor would pay the following expenses on a $1,000 investment in Class B
Shares (subject to the applicable CDSC), assuming (1) a hypothetical 5% annual
return and (2) redemption at the end of the following time periods and (3) no
redemption at the end of the following periods:
<TABLE>
<CAPTION>
CLASS B SHARES
1 YEAR 3 YEARS 5 YEARS 10 YEARS*
------------------------------------------------------------------------------------------------------
NO NO NO NO
RE- RE- RE- RE- RE- RE- RE- RE-
DEMPTION DEMPTION DEMPTION DEMPTION DEMPTION DEMPTION DEMPTION DEMPTION
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Multi-Season Growth Fund $70 $20 $93 $63 $128 $108 $195 $195
Real Estate Equity
Investment Fund $70 $20 $93 $63 $128 $108 $195 $195
Accelerating Growth Fund $70 $20 $91 $61 $125 $105 $189 $189
Small Company Growth
Fund $70 $20 $92 $62 $126 $106 $190 $190
Mid-Cap Growth Fund $70 $20 $91 $61 N/A N/A N/A N/A
International Equity Fund $70 $20 $92 $62 $126 $106 $190 $190
Index 500 Fund $37 $7 $42 $22 $ 49 $ 39 $ 67 $ 67
Growth & Income Fund $71 $21 $94 $64 $129 $109 $198 $198
Value Fund $70 $20 $91 $61 N/A N/A N/A N/A
Balanced Fund $69 $19 $90 $60 $123 $103 $185 $185
-------------------- -------------------- -------------------- --------------------
</TABLE>
*Reflects conversion of Class B Shares to Class A Shares (which pay lower
ongoing expenses) six years after purchase. See "How to Redeem
Shares--Contingent Deferred Sales Charge--Class B Shares." Class B Shares of the
Munder Funds purchased on or before June 27, 1995 are subject to a different
CDSC schedule. See "How to Redeem Shares--Contingent Deferred Sales
Charge--Class B Shares."
An investor would pay the following expenses on a $1,000 investment in Class C
Shares (subject to the applicable CDSC), assuming (1) a hypothetical 5% annual
return and (2) redemption at the end of the following time periods.
<TABLE>
<CAPTION>
CLASS C SHARES
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------------------
<S> <C> <C> <C> <C>
Multi-Season Growth Fund $30 $63 $108 $233
Real Estate Equity Investment Fund $30 $63 $108 $233
Accelerating Growth Fund $30 $61 $105 $227
Small Company Growth Fund $30 $62 $106 $229
Mid-Cap Growth Fund $30 $61 N/A N/A
International Equity Fund $30 $62 $106 $229
Index 500 Fund $23 $40 $ 69 $151
Growth & Income Fund $31 $64 $109 $236
Value Fund $30 $61 N/A N/A
Balanced Fund $29 $60 $103 $223
</TABLE>
<PAGE>
The foregoing Expense Tables and Examples are intended to assist investors in
understanding the various shareholder transaction expenses and operating
expenses of the Funds that investors bear either directly or indirectly. The
expense information in the table with respect to the Multi-Season Growth Fund
and Index 500 Fund has been restated to reflect anticipated fees and waivers. As
stated below under "Management," the Advisor has agreed to an advisory fee
computed separately on a Fund-by-Fund basis at an annual rate of 1.00% of the
first $500 million of the average daily net assets and .75% of net assets in
excess of $500 million of the Multi-Season Growth Fund; .75% of average daily
net assets of each the Accelerating Growth Fund, Small Company Growth Fund,
International Equity Fund and Growth & Income Fund; .74% of the average daily
net assets of each the Real Estate Equity Investment Fund, Mid-Cap Growth Fund
and Value Fund; .65% of average daily net assets of the Balanced Fund; and .20%
of the first $250 million of the average daily net assets, .12% of the next $250
million of net assets and .07% of net assets in excess of $500 million of the
Index 500 Fund. As noted above, the Advisor expects to waive a portion of its
fees with respect to the Multi-Season Growth Fund and Index 500 Fund during the
current fiscal year. Class A Shares of the Index 500 Fund pay a 12b-1 fee of up
to .25% of the value of average daily net assets. Class B Shares of the Index
500 Fund pay a 12b-1 fee of up to 1.00% of the value of average daily net
assets. The Distributor expects to waive a portion of the 12b-1 fees with
respect to Class A and Class B Shares of the Index 500 Fund during the current
fiscal year. The Advisor and the Distributor may discontinue such waivers at any
time in their sole discretion. Without waivers, an investor in the Multi-Season
Growth Fund and Index 500 Fund would pay the following expenses on a $1,000
investment over periods of one, three, five and ten years, respectively,
assuming a hypothetical 5% annual return: $69, $100, $132 and $225 for Class A
Shares of the Multi-Season Growth Fund and $31, $45, $59 and $102 for Class A
Shares of the Index 500 Fund, assuming the maximum sales load and redemption at
the end of each time period; $73, $100, $140 and $221 for Class B Shares of the
Multi-Season Growth Fund and $44, $64, $86 and $126 for Class B Shares of the
Index 500 Fund, assuming redemption at the end of each time period and deduction
at the time of redemption of the maximum CDSC applicable and $33, $70, $120 and
$258 for Class C Shares of the Multi-Season Growth Fund and $24, $44, $76 and
$166 for Class C Shares of the Index 500 Fund, assuming redemption at the end of
each time period.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
INVESTMENT RETURN OR OPERATING EXPENSES. ACTUAL INVESTMENT RETURN AND OPERATING
EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN. THE HYPOTHETICAL EXPENSES IN THE
EXAMPLE REFLECT FEE WAIVERS AT THE ANTICIPATED RATES.
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the Funds' financial
statements audited by Ernst & Young LLP, independent auditors, except that, for
periods ended prior to June 30, 1995 for the Multi-Season Growth Fund, such
financial highlights are derived from the financial statements audited by Arthur
Andersen LLP, independent auditors. No fees for distribution and support
services under the "Class A Plan" (as defined below) were paid by the Munder
Funds for the periods through December 31, 1993. Prior to March 1, 1994 Class B
Shares of the Munder Funds were not offered. Class C Shares of the Munder Funds
were not offered during the periods shown and, accordingly, no financial
information is provided with respect to such shares. The following data should
be read in conjunction ith the financial statements, related notes, and other
financial information incorporated by reference in the Statement of Additional
Information. Further information about the Funds, including financial nformation
with respect to the Funds' other Classes of Shares, is contained in the Funds'
Annual Reports dated June 30, 1995 which may be obtained without charge by
calling (800) 438-5789.
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND(A)
--------------------------------------------
PERIOD ENDED PERIOD ENDED PERIOD ENDED
6/30/95(B)(C) 6/30/95(B)(C) 6/30/95(B)(C)
CLASS A CLASS B CLASS C
---------- ---------- ----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $10.38 $10.27 $10.28
Income from Investment Operations: __________ __________ __________
Net investment income (loss) 0.01 (0.03) (0.02)
Net realized and unrealized gain on investments 1.63 1.61 1.60
---------- ---------- ----------
Total from investment operations 1.64 1.58 1.58
---------- ---------- ----------
Less Distributions:
Distributions from net realized gains - - -
---------- ---------- ----------
Total distributions - - -
---------- ---------- ----------
Net Asset Value, End of Period $12.02 $11.85 $11.86
---------- ---------- ----------
---------- ---------- ----------
Total Return(d) 15.80% 15.38% 15.37%
---------- ---------- ----------
---------- ---------- ----------
Ratios to Average Net Assets/Supplemental Data:
<PAGE>
Net Assets, End of Period (in thousands) $9,409 $54,349 $3,207
Ratio of operating expenses to average net assets 1.65%(e) 2.40%(e) 2.40%(e)
Ratio of net investment income (loss) to average net assets 0.28%(e) (0.47)%(e) (0.47)%(e)
Portfolio turnover rate 27% 27% 27%
Ratio of operating expenses to average net assets without waivers 1.97%(e) 2.72%(e) 2.72%(e)
Net investment (loss) per share without waivers(f) $(0.00)(g) $(0.05) $(0.04)
</TABLE>
(a) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was December 31.
(c) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Annualized.
(f) Amounts shown for periods prior to June 30, 1995 are unaudited.
(g) Amount represents less than $0.01 per share.
(h) The Munder Multi-Season Growth Fund Class A Shares, Class B Shares and Class
C Shares commenced operations on August 4, 1993, April 29, 1993 and September
20, 1993, respectively. Class C Shares were formerly known as Class D Shares.
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND(A)
---------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
12/31/94 12/31/94 12/31/94
CLASS A CLASS B CLASS C
---------- ---------- ----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $10.68 $10.65 $10.66
Income from Investment Operations: __________ __________ __________
Net investment income (loss) 0.01 (0.07) (0.07)
Net realized and unrealized (loss) on investments (0.27) (0.27) (0.27)
---------- ---------- ----------
Total from investment operations (0.26) (0.34) (0.34)
---------- ---------- ----------
Less Distributions:
Distributions from net realized gains (0.04) (0.04) (0.04)
---------- ---------- ----------
Total distributions (0.04) (0.04) (0.04)
---------- ---------- ----------
Net Asset Value, End of Period $10.38 $10.27 $10.28
---------- ---------- ----------
---------- ---------- ----------
Total Return(d) (2.45)% (3.21)% (3.21)%
---------- ---------- ----------
---------- ---------- ----------
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands) $ 2,829 $46,549 $ 2,071
Ratio of operating expenses to average net assets 1.75% 2.50% 2.50%
Ratio of net investment income (loss) to average net assets 0.04% (0.71)% (0.65)%
Portfolio turnover rate 48% 48% 48%
Ratio of operating expenses to average net assets without waivers 3.05% 2.89% 4.57%
<PAGE>
Net investment (loss) per share without waivers(f) $(0.32) $(0.11) $(0.29)
</TABLE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND(A)
-------------------------------------------
PERIOD ENDED PERIOD ENDED PERIOD ENDED
12/31/93(H) 12/31/93(H) 12/31/93(H)
CLASS A CLASS B CLASS C
---------- ---------- ----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $10.16 $10.00 $10.19
---------- ---------- ----------
Income from Investment Operations:
Net investment income (loss) (0.01) (0.04) (0.01)
Net realized and unrealized gain on investments 0.53 0.69 0.48
---------- ---------- ----------
Total from investment operations 0.52 0.65 0.47
---------- ---------- ----------
Less Distributions:
Distributions from net realized gains - - -
---------- ---------- ----------
Total distributions - - -
---------- ---------- ----------
Net Asset Value, End of Period $10.68 $10.65 $10.66
---------- ---------- ----------
---------- ---------- ----------
Total Return(d) 5.12% 6.50% 4.61%
---------- ---------- ----------
---------- ---------- ----------
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands) $2,104 $46,860 $ 249
Ratio of operating expenses to average net assets 1.75%(e) 2.50%(e) 2.50%(e)
Ratio of net investment income (loss) to average net assets (0.18)%(e) (0.69)%(e) (0.99)%(e)
Portfolio turnover rate 238% 238% 238%
Ratio of operating expenses to average net assets without waivers 3.32%(e) 2.94%(e) 15.47%(e)
Net investment (loss) per share without waivers(f) $(0.10) $ (0.07) $(0.14)
</TABLE>
(a) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was December 31.
(c) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Annualized.
(f) Amounts shown for periods prior to June 30, 1995 are unaudited.
(g) Amount represents less than $0.01 per share.
(h) The Munder Multi-Season Growth Fund Class A Shares, Class B Shares and Class
C Shares commenced operations on August 4, 1993, April 29, 1993 and September
20, 1993, respectively. Class C Shares were formerly known as Class D Shares.
<PAGE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY
INVESTMENT FUND(A)
-------------------------
PERIOD PERIOD
ENDED ENDED
6/30/95(B)(C) 6/30/95(B)(C)
CLASS A CLASS B
---------- ----------
<S> <C> <C>
Net Asset Value, Beginning of Period $10.00 $10.00
---------- ----------
Income from Investment Operations:
Net investment income 0.36 0.30
Net realized and unrealized gain on investments 0.07 0.07
---------- ----------
Total from investment operations 0.43 0.37
---------- ----------
Less Distributions:
Dividends from net investment income (0.34) (0.28)
---------- ----------
Total distributions (0.34) (0.28)
---------- ----------
Net Asset Value, End of Period $10.09 $10.09
========== ==========
Total Return(d) 4.45% 3.87%
========== ==========
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands) $ 223 $1,496
Ratio of operating expenses to average net assets 1.50%(e) 2.25%(e)
Ratio of net investment income to average net assets 5.03%(e) 4.28%(e)
Portfolio turnover rate 3% 3%
Ratio of operating expenses to average net assets without waivers 7.23%(e) 7.98%(e)
Net investment loss per share without waivers $(0.05) $(0.10)
</TABLE>
(a) The Fund is authorized to issue Class C Shares. As of June 30, 1995, the
Fund had not begun selling Class C Shares.
(b) The Munder Real Estate Equity Investment Fund Class A Shares and Class B
Shares commenced operations on September 30, 1994 and October 3, 1994,
respectively.
(c) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Annualized.
<TABLE>
<CAPTION>
ACCELERATING GROWTH FUND(A)(B)
PERIOD PERIOD YEAR PERIOD YEAR PERIOD
<PAGE>
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/95(C) 6/30/95(C) 2/28/95(F) 2/28/95(F)(G)2/28/94 2/28/93(G)
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS A
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.73 $12.66 $13.98 $12.88 $12.08 $11.74
---------- ---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (loss) (0.01) (0.02) (0.03) (0.07) (0.00)(h) 0.01
Net realized and unrealized gain (loss) on
investments 2.10 2.06 (0.88) 0.19 2.17 0.62
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 2.09 2.04 (0.91) 0.12 2.17 0.63
---------- ---------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends from net investment income - - - - (0.02) (0.01)
Distributions from net realized gains - - (0.34) (0.34) (0.25) (0.28)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions - - (0.34) (0.34) (0.27) (0.29)
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period $14.82 $14.70 $12.73 $12.66 $13.98 $12.08
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Total Return(d) 16.42% 16.11% (6.45)% 0.99% 18.00% 5.43%
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands) $4,701 $ 67 $4,138 $ 39 $5,152 $ 349
Ratio of operating expenses to average
net assets 1.20%(e) 1.95%(e) 1.18% 1.88%(f) 1.03% 0.96%(f)
Ratio of net investment income (loss)
to average net assets (0.21)%(e) (0.96)%(e) (0.25)% (0.95)%(f) (0.02)% 0.18%(f)
Portfolio turnover rate 31% 31% 90% 90% 34% 56%
Ratio of operating expenses to average
net assets without waivers 1.44%(e) 2.19%(e) 1 .41% 2.11%(f) 1.28% 1.21%(f)
Net investment income (loss) per share
without waivers $(0.02) $(0.02) $(0.07) $(0.08) $0.00(h) $0.00(h)
</TABLE>
(a) Formerly, Ambassador Growth Fund.
(b) The Fund is authorized to issue Class C Shares. As of June 30, 1995, the
Fund had not begun selling Class C Shares.
(c) Fiscal year changed to June 30. Prior to this, the fiscal year end was the
last day of February.
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Annualized.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) The Munder Accelerating Growth Fund Class A Shares and Class B Shares
commenced operations on November 23, 1992 and April 25, 1994, respectively.
(h) Amount represents less than $0.01 per share.
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND(A)(B)
PERIOD PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/95(C) 6/30/95(C) 2/28/95(F) 2/28/95(F)(G) 2/28/94 2/28/93(G)
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS A
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $13.89 $13.81 $14.37 $13.54 $12.72 $12.32
---------- ---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment (loss) (0.02) (0.05) (0.07) (0.05) (0.05) (0.01)
Net realized and unrealized gain (loss) on
investments 1.41 1.39 (0.39) 0.34 1.97 0.41
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 1.39 1.34 (0.46) 0.29 1.92 0.40
---------- ---------- ---------- ---------- ---------- ----------
Less Distributions:
Distributions from net realized gains - - (0.02) (0.02) (0.27) -
---------- ---------- ---------- ---------- ---------- ----------
Total distributions - - (0.02) (0.02) (0.27) -
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period $15.28 $15.15 $13.89 $13.81 $14.37 $12.72
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Total Return(d) 10.01% 9.70% (3.21)% 2.13% 15.11% 3.25%
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands) $ 2,871 $ 46 $ 2,697 $ 39 $ 3,269 $ 742
Ratio of operating expenses to average
net assets 1.21%(e) 1.96%(e) 1.23% 1.85%(e) 1.01% 0.96%(e)
Ratio of net investment (loss) to average
net assets (0.41)(e) (1.16)%(e) (0.40)% (1.02)%(e) (0.36)% (0.29)%(e)
Portfolio turnover rate 39% 39% 45% 45% 47% 46%
Ratio of operating expenses to average net
assets without waivers 1.46%(e) 2.21%(e) 1.48% 2.10%(e) 1.26% 1.21%(e)
Net investment (loss) per share
without waivers $(0.03) $(0.06) $(0.11) $(0.06) $(0.08) $(0.02)
</TABLE>
(a) Formerly, Ambassador Small Company Growth Fund.
(b) The Fund is authorized to issue Class C Shares. As of June 30, 1995, the
Fund had not begun selling Class C Shares.
(c) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Annualized.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory business of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) The Munder Small Company Growth Fund Class A Shares and Class B Shares
commenced operations on November 23, 1992 and April 28, 1994, respectively.
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND(A)(B)
PERIOD PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/95(C) 6/30/95(C) 2/28/95(F)(G) 2/28/95(F)(G)(H) 2/28/94 2/28/93(H)
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS A
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.29 $12.26 $13.68 $13.45 $10.64 $10.60
---------- ---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income 0.12 0.08 0.17 0.08 0.19 0.01
Net realized and unrealized gain (loss)
oninvestments 1.01 1.01 (1.48) (1.21) 2.85 0.16
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 1.13 1.09 (1.31) (1.13) 3.04 0.17
---------- ---------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends from net investment income - - (0.02) (0.00)(i) - (0.11)
Distributions net realized gains - - - - - (0.02)
Distributions from capital - - (0.06) (0.06) - -
---------- ---------- ---------- ---------- ---------- ----------
Total distributions - - (0.08) (0.06) - (0.13)
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period $13.42 $13.35 $12.29 $12.26 $13.68 $10.64
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Total Return(d) 9.28% 8.89% (9.67)% (8.38)% 28.57% 1.60%
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Ratios to Average Net Assets/Supplemental
Data:
Net Assets, End of Period (in thousands) $1,400 $ 128 $1,339 $ 118 $1,450 $ 42
Ratio of operating expenses to average net
assets 1.21%(e) 1.96%(e) 1.18% 1.88%(e) 1.13% 1.03%(e)
Ratio of net investment income to average
net assets 2.57%(e) 1.82%(e) 1.31% 0.61%(e) 0.80% 0.42%(e)
Portfolio turnover rate 14% 14% 20% 20% 15% 1%
Ratio of operating expenses to average net
assets without waivers 1.46%(e) 2.21%(e) 1.43% 2.13%(e) 1.38% 1.28%(e)
Net investment income per share without
waivers $ 0.11 $ 0.07 $ 0.14 $ 0.05 $ 0.13 $ 0.01
</TABLE>
(a) Formerly, Ambassador International Stock Fund.
(b) The Fund is authorized to issue Class C Shares. As of June 30, 1995, the
Fund had not begun selling Class C Shares.
<PAGE>
(c) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Annualized.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(g) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory business of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(h) The Munder International Equity Fund Class A and Class B Shares commenced
operations on November 30, 1992 and March 9, 1994, respectively.
(i) Amount represents less than $0.01 per share.
<TABLE>
<CAPTION>
INDEX 500 FUND(A)(B)
PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
6/30/95(C) 2/28/95(F)(G) 2/28/94 2/28/93(H)
CLASS A CLASS A CLASS A CLASS A
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.39 $12.06 $11.47 $11.61
----------- ------------ ------------ ------------
Income from Investment Operations:
Net investment income 0.09 0.29 0.30 0.06
Net realized and unrealized
gain on investments 1.46 0.50 0.59 0.20
----------- ------------ ------------ ------------
Total from investment operations 1.55 0.79 0.89 0.26
----------- ------------ ------------ ------------
Less Distributions:
Dividends from net investment income (0.14) (0.29) (0.30) (0.07)
Distributions from net realized gains - (0.17) - (0.33)
----------- ------------ ------------ ------------
Total distributions (0.14) (0.46) (0.30) (0.40)
----------- ------------ ------------ ------------
Net Asset Value, End of Period $13.80 $12.39 $12.06 $11.47
----------- ------------ ------------ ------------
----------- ----------- ------------ ------------
Total Return(d) 12.58% 6.81% 7.89% 2.34%
=========== ============ ============ ============
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands) $684 $429 $489 $ 67
Ratio of operating expenses
to average net assets 0.50%(e) 0.50% 0.31% 0.25%(e)
Ratio of net investment income
to average net assets 2.41%(e) 2.49% 2.51% 2.54%(e)
Portfolio turnover rate 6% 7% 1% 22%
Ratio of operating expenses to
average net assets without waivers 0.63%(e) 0.64% 0.48% 0.38%(e)
Net investment income per
share without waivers $0.09 $0.28 $0.28 $0.06
</TABLE>
(a) Formerly, Ambassador Indexed Stock Fund.
<PAGE>
(b) The Fund is authorized to issue Class B Shares and Class C Shares. As
of June 30, 1995, the Fund had not begun selling Class C Shares.
(c) Fiscal year end was changed to June 30. Prior to this, the fiscal year
end was the last day of February.
(d) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(e) Annualized.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(g) On February 1, 1995, Munder Capital Management replaced Woodbridge
Capital Management, Inc. as investment advisor for the Fund as a result of
the consolidation of the investment advisory business of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(h) The Munder Index 500 Fund Class A Shares commenced operations on
December 9, 1992.
<TABLE>
<CAPTION>
GROWTH & INCOME FUND(A)(B)
PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
6/30/95(C) 6/30/95(C) 2/28/95(F)(G) 2/28/95(F)(G)
CLASS A CLASS B CLASS A CLASS B
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.42 $10.41 $10.10 $10.10
----------- ------------ ------------ ------------
Income from Investment Operations:
Net investment income 0.10 0.09 0.23 0.19
Net realized and unrealized
gain on investments 0.80 0.77 0.24 0.25
----------- ------------ ------------ ------------
Total from investment operations 0.90 0.86 0.47 0.44
----------- ------------ ------------ ------------
Less Distributions:
Dividends from net investment income (0.18) (0.14) (0.15) (0.13)
Distributions from net realized gains - - (0.00)(h) (0.00)(h)
----------- ------------ ------------ ------------
Total distributions (0.18) (0.14) (0.15) (0.13)
----------- ------------ ------------ ------------
Net Asset Value, End of Period $11.14 $11.13 $10.42 $10.41
=========== ============ ============ ============
Total Return(d) 8.69% 8.30% 4.79% 4.47%
=========== ============ ============ ============
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period
(in thousands) $ 226 $ 57 $ 128 $ 51
Ratio of operating expenses
to average net assets 1.09%(e) 1.84%(e) 0.53%(e) 1.27%(e)
Ratio of net investment income
to average net assets 3.33%(e) 2.58%(e) 4.72%(e) 3.96%(e)
Portfolio turnover rate 13% 13% 12% 12%
Ratio of operating expenses to
average net assets without waivers 1.51%(e) 2.26%(e) 1.53%(e) 2.27%(e)
Net investment income per share
without waivers $0.09 $0.08 $0.18 $0.14
</TABLE>
(a) Formerly, Ambassador Growth & Income Fund.
(b) The Fund is authorized to issue Class C Shares. As of June 30, 1995,
the Fund had not begun selling Class C Shares.
(c) Fiscal year changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(d) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(e) Annualized.
(f) The Munder Growth & Income Fund Class A Shares and Class B Shares
commenced operations on August 8, 1994 and August 9, 1994, respectively.
<PAGE>
(g) On February 1, 1995, Munder Capital Management replaced Woodbridge
Capital Management, Inc. as investment advisor for the Fund as a result of
the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(h) Amount represents less than $0.01 per share.
<TABLE>
<CAPTION>
BALANCED FUND(A)(B)
PERIOD ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED
6/30/95(C) 6/30/95(C) 2/28/95(F) 2/28/95(F)(G) 2/28/94(G)
CLASS A CLASS B CLASS A CLASS B CLASS A
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.95 $ 9.93 $10.35 $ 9.56 $ 9.86
---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income 0.09 0.06 0.19 0.07 0.14
Net realized and unrealized gain
(loss) on investments 0.85 0.84 (0.41) 0.37 0.47
---------- ---------- ---------- ---------- ----------
Total from investment operations 0.94 0.90 (0.22) 0.44 0.61
---------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends from net investment income (0.12) (0.07) (0.18) (0.07) (0.12)
---------- ---------- ---------- ---------- ----------
Total distributions (0.12) (0.07) (0.18) (0.07) (0.12)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period $10.77 $10.76 $ 9.95 $ 9.93 $10.35
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total Return(d) 9.44% 9.11% (2.07)% 4.65% 6.20%
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands) $ 314 $ 15 $ 286 $ 19 $ 321
Ratio of operating expenses
to average net assets 1.16%(e) 1.91%(e) 1.22% 1.85%(e) 1.02%(e)
Ratio of net investment income
to average net assets 2.51%(e) 1.76%(e) 1.89% 1.26%(e) 1.67%(e)
Portfolio turnover rate 52% 52% 116% 116% 50%
Ratio of operating expenses to
net assets without waivers 1.51%(e) 2.26%(e) 1.57% 2.20%(e) 1.27%(e)
Net investment income
per share without waivers $0.07 $0.05 $0.16 $0.05 $0.12
</TABLE>
(a) Formerly, Ambassador Balanced Fund.
(b) The Fund is authorized to issue Class C Shares. As of June 30, 1995,
the Fund had not begun selling Class C Shares.
(c) Fiscal year end was changed to June 30. Prior to this, the fiscal year
end was the last day of February.
(d) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(e) Annualized.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge
Capital Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory business of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) The Munder Balanced Fund Class A Shares and Class B Shares commenced
operations on April 30, 1993 and June 21, 1994, respectively.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
This Prospectus describes the following Funds: the Multi-Season Growth
Fund, Real Estate Equity Investment Fund, Mid-Cap Growth Fund and Value Fund
offered by Munder and the Accelerating Growth Fund, Small Company Growth Fund,
International Equity Fund, Index 500 Fund, Growth & Income Fund and Balanced
Fund offered by the Company. Purchasing shares of any Fund should not be
considered a complete investment program, but an important segment of a
well-diversified investment program.
The Funds (other than the Real Estate Equity Investment, Index 500,
Growth & Income and Balanced Funds) are designed for investors seeking capital
appreciation primarily through the equity markets. The Real Estate Equity
Investment Fund is designed for investors seeking capital appreciation and
current income primarily through U.S. companies principally engaged in the real
estate industry or which own significant real estate assets. The Index 500 Fund
is designed for investors seeking price performance and income to track the
market as represented by the S&P 500. The Growth & Income Fund is designed for
investors seeking capital appreciation and current income through the equity
markets. The Balanced Fund is designed for investors seeking an attractive
investment return through a combination of growth of capital and current income.
The Multi-Season Growth Fund invests primarily in a diversified portfolio of
equity securities of companies that have demonstrated superior long-term
earnings growth, financial stability, attractive valuation and relative price
momentum. The Accelerating Growth Fund emphasizes stocks of companies determined
by the Advisor to demonstrate accelerating earnings growth and which are
expected to continue expanding earnings at an accelerated pace, maintain a
substantial competitive advantage, have a focused management team and a stable
balance sheet. The Small Company Growth Fund focuses on smaller companies with
the potential for significant long-term capital appreciation. The Mid-Cap Growth
Fund invests primarily in equity securities of companies that have market
capitalizations that range between $100 million and $5 billion and have
demonstrated superior earnings growth, financial stability, attractive valuation
and relative price momentum. The International Equity Fund invests primarily in
the equity securities of foreign companies selected for their long-term growth
potential. The Index 500 Fund consists of a portfolio of stocks constructed to
provide price performance and income to track the market as represented by the
S&P 500, a broad-based and widely used unmanaged index of common stocks. The
Growth & Income Fund focuses on dividend-paying stocks whose prospects for
dividend growth and capital appreciation are considered favorable by the
Advisor. The Value Fund invests primarily in equity securities of
well-established companies with intermediate to large market capitalizations
which the Advisor believes to be undervalued at the time of purchase. The
Balanced Fund allocates its assets primarily among equity securities, fixed
income securities and cash equivalents to provide growth of capital and current
income.
MULTI-SEASON GROWTH FUND
The investment objective of the Multi-Season Growth Fund is to provide
shareholders with long-term capital appreciation. The Fund seeks to achieve this
objective by investing primarily in a diversified portfolio of equity securities
of companies that have demonstrated superior long-term earnings growth,
financial stability, attractive valuation and relative price momentum. Income is
not a primary consideration in the selection of investments. This style which
incorporates both growth investing and value constraints has been nationally
recognized as GARP (Growth at a Reasonable Price) and seeks to produce
attractive returns during various market environments.
The Advisor believes that superior investment returns are derived from
securities of financially stable companies that reward shareholders with
superior earnings growth, are attractively priced and enjoy relative price
momentum. Specifically, the Advisor will examine the earnings growth
characteristics of approximately 5,500 companies for each of the last five years
to determine earnings strength, consistency and momentum. Companies which have
demonstrated superior earnings growth will be further reviewed for financial
stability. Corporate balance sheets will be scrutinized to select those
companies which reinvest a significant portion of profits, demonstrate a high
return on equity and carry a relatively low debt load. Companies that meet these
earnings growth and financial stability criteria are further judged for their
value relative to these criteria and the market. Historically, the median
valuation of the portfolios managed by the Advisor has been no more than a
moderate premium to that of the S&P 500. Once determined to be attractive
values, those securities exhibiting the strongest relative price momentum to the
S&P 500 normally will be chosen by the Advisor for the Fund. Within these
parameters, the Advisor typically will establish equity positions in
approximately 50 to 100 companies. Equity securities generally will be sold from
the Fund's portfolio when they consistently fail to achieve any two or more of
the four criteria stated above.
The Fund invests substantially all, and at least 65%, of its assets in
equity securities. Equity securities include common and preferred stocks and
securities convertible into or exchangeable for common stocks, such as
convertible preferred stocks, convertible debentures or warrants. No more than
25% of the assets of the Fund will be invested in one industry group. In
addition, the Fund will not own more than 10% of the outstanding voting
securities of a single issuer. The Fund may also invest up to 20% of the value
of its total assets in equity securities of foreign issuers, including companies
domiciled in developing countries.
The Fund may also invest in short-term money market instruments. Under
normal market conditions, short-term money market instruments could comprise up
to 35% of the Fund's total assets. The Fund could invest a higher percentage of
its assets in money market instruments for temporary defensive purposes.
The Fund's investment objective is a fundamental policy and may not be
changed without the authorization of the holders of a majority (as defined in
the Investment Company Act of 1940, as amended (the "1940 Act")) of the Fund's
outstanding shares.
REAL ESTATE EQUITY INVESTMENT FUND
The Real Estate Equity Investment Fund's investment objectives are to
provide shareholders with capital appreciation and current income. It seeks to
achieve these objectives by investing primarily in securities of United States
companies which are principally engaged in the real estate industry or which own
significant real estate assets. It will not invest directly in real estate.
Under normal conditions, the Fund will invest at least 65% of its total
assets in equity securities of companies listed on U.S. securities exchanges or
NASDAQ which are principally engaged in the real estate industry. Equity
securities include common stock, preferred stock and securities convertible into
common stock. A company is "principally engaged" in the real estate industry if
at least 50% of its assets, gross income or net profits are attributable to
ownership, construction, management or sale of residential, commercial or
industrial real estate. Real estate industry companies may include among others:
equity real estate investment trusts, which pool investors' funds for investment
primarily in commercial real estate properties; mortgage real estate investment
trusts, which invest pooled funds in real estate related loans; brokers, home
builders or real estate developers; and companies with substantial real estate
holdings, such as paper and lumber producers and hotel and entertainment
companies. The Fund will invest in real estate investment trusts only if they
are traded on major U.S. exchanges or NASDAQ. The Fund will not invest more than
15% of its total assets in equity real estate investment trusts, excluding
self-managed and/or self-administrated trusts. The specific risks of investing
in real estate industry companies are summarized under "Portfolio Instruments
and Practices--Industry Concentration."
The Fund may also invest up to 35% of its total assets in equity
securities of issuers whose products and services are related to the real estate
industry, such as manufacturers and distributors of building supplies and
financial institutions which
<PAGE>
issue or service mortgages. The Fund will invest more than 25% of its total
assets in the real estate and real estate related industries. In addition to
these securities, the Fund may invest up to 35% of its total assets in
securities of companies outside the real estate and real estate related
industries believed by the Advisor to be undervalued and to have capital
appreciation potential. Moreover, consistent with its objective of current
income, the Fund may invest in nonconvertible debt securities of companies
outside the real estate and real estate related industries. The debt securities
purchased (except for those described below) will be of investment grade or
better quality (e.g., rated no lower than Baa by Moody's Investor Services, Inc.
("Moody's") or BBB by Standard & Poor's Corporation ("S&P") or if not so rated,
believed by the Advisor to be of comparable quality). From time to time, the
Fund may invest up to 5% of its total assets in securities rated below
investment grade and in unrated debt securities of issuers which are secured by
real estate assets where the Advisor believes that the securities are trading at
a discount and that the underlying collateral is sufficient to ensure repayment
of principal. In such situations, it is conceivable that the Fund could, in the
event of default, end up holding the underlying real estate directly.
The Fund may also invest in short-term money market securities. Under
normal market conditions, short-term money market securities could comprise up
to 35% of the Fund's total assets. The Fund could invest a higher percentage of
its assets in money market securities for temporary defensive purposes.
The Fund's investment objective is fundamental and may not be changed
without the authorization of the holders of a majority of the Fund's outstanding
shares. Unless otherwise noted, all other investment policies of the Fund are
non-fundamental and may be changed by the Board of Directors without shareholder
approval.
ACCELERATING GROWTH FUND
The investment objective of the Accelerating Growth Fund is to provide
long-term capital appreciation, with income a secondary consideration. The Fund
seeks to achieve its objective by investing primarily in equity securities and
instruments convertible or exchangeable into equity securities. The Fund's
investment portfolio will consist primarily of the stocks of companies
determined by the Advisor to demonstrate accelerating earnings growth and which
are expected to continue expanding earnings at an accelerated pace, maintain a
substantial competitive advantage, have a focused management team and a stable
balance sheet.
Under normal market conditions, at least 65% of the Fund's total assets
will be invested in equity securities. In addition to investing in equity
securities, the Fund is authorized to invest in high quality short-term fixed
income securities as cash reserves. See "Portfolio Instruments and Practices"
for a description of investment practices of the Fund, including limited
investments in warrants, foreign securities and stock index futures and options.
SMALL COMPANY GROWTH FUND
The investment objective of the Small Company Growth Fund is to provide
long-term capital appreciation. The Fund pursues its objective by investing
primarily in equity securities such as common stocks and instruments convertible
or exchangeable into common stocks.
Securities held by the Fund will generally be issued by smaller
companies. Smaller companies will be considered those companies with market
capitalizations that are less than the capitalization of companies which
predominate the major market indices, such as the S&P 500. The market
capitalization of the issuers of securities purchased by the Fund will be
between $50 million and $1 billion at the time of purchase. In managing the
Fund, the Advisor seeks smaller companies with above-average growth prospects.
Factors considered in selecting such issuers include participation in a fast
growing industry, a strategic niche position in a specialized market, adequate
capitalization and fundamental value.
The Fund has been designed to provide investors with potentially greater
long-term rewards than those provided by an investment in a fund that seeks
capital appreciation from equity securities of larger, more established
companies. Since small capitalization companies are generally not as well-known
to investors and have less of an investor following than larger companies, they
may provide opportunities for greater investment gains as a result of
inefficiencies in the marketplace.
Small 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 small 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. By maintaining a broadly diversified
portfolio, the Advisor will attempt to reduce this volatility.
Under normal market conditions, at least 65% of the Fund's total assets
will be invested in small company equity securities. In addition to investing in
equity securities, the Fund is also authorized to invest in high quality
short-term fixed income securities as cash reserves. See "Portfolio Instruments
and Practices" for a description of investment practices of the Fund, including
limited investments in warrants, foreign securities and stock index futures and
options.
MID-CAP GROWTH FUND
The investment objective of the Mid-Cap Growth Fund is to provide
shareholders with long-term capital appreciation. It seeks to achieve this
objective by investing primarily in a diversified portfolio of equity securities
of companies that have market capitalizations between $100 million and $5
billion and have demonstrated superior earnings growth, financial stability,
attractive valuation and relative price momentum. Income is not a primary
consideration in the selection of investments. This style which incorporates
both growth investing and value constraints has been nationally recognized as
GARP (Growth at a Reasonable Price) and seeks to produce attractive returns
during various market environments.
The Advisor believes that superior investment returns are derived from
securities of financially stable companies that reward shareholders with
superior earnings growth, are attractively priced and enjoy relative price
momentum. Specifically, the Advisor will examine the earnings growth
characteristics of approximately 10,000 companies for each of the last three
years to determine earnings strength, consistency and momentum. Companies which
have demonstrated superior earnings growth will be further reviewed for
financial stability. Corporate balance sheets will be scrutinized to select
those companies which reinvest a significant portion of profits, demonstrate a
high return on equity and carry a relatively low debt load. Companies that meet
these earnings growth and financial stability criteria are further judged for
their value relative to these criteria and the market. Once determined to be
attractive values, those securities exhibiting relative price momentum to the
Standard & Poor's Mid-Cap Index generally will be favored by the Advisor for the
Fund. Within these parameters, the Advisor typically will establish equity
positions in approximately 50 to 100 companies. Equity securities generally will
be sold from the Fund's portfolio when they consistently fail to achieve any two
or more of the four criteria stated above.
The Fund invests substantially all, and at least 65%, of its total assets
in equity securities of companies with market capitalizations that range between
$100 million and $5 billion. Equity securities include common and preferred
stocks and
<PAGE>
securities convertible into or exchangeable for common stocks, such as
convertible preferred stocks, convertible debentures or warrants. No more than
25% of the assets of the Fund will be invested in one industry group. In
addition, the Fund will not own more than 10% of the outstanding voting
securities of a single issuer.
The Fund may also invest in short-term money market securities. Under
normal market conditions, short-term money market securities could comprise up
to 35% of the Fund's total assets. The Fund could invest a higher percentage of
its assets in money market securities for temporary defensive purposes.
INTERNATIONAL EQUITY FUND
The investment objective of the International Equity Fund is to provide
long-term capital appreciation by investing primarily in the equity securities
of foreign issuers. These securities will be held directly or in the form of
American Depositary Receipts ("ADRs") or European Depositary Receipts ("EDRs").
ADRs are receipts typically issued by a United States bank or trust company
evidencing ownership of the underlying foreign securities. EDRs are receipts
issued by a European financial institution evidencing a similar arrangement. 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.
On a continuing basis, but at least quarterly, the Advisor creates a list
of securities eligible for purchase by the Fund. The Advisor then calculates the
adjusted market capitalization of all the equity securities, ADRs and EDRs
considered to be eligible for purchase. Market capitalization for equity
securities is calculated by multiplying the market price of the security by the
number of shares outstanding, adjusted for control blocks. A control block is
defined as a block of securities owned by another corporation. The primary
sources of information regarding the existence and size of control blocks are
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 a company is added to the eligible universe.
Following calculation of the adjusted market capitalization, the list of
eligible securities is then sorted in descending order of adjusted market
capitalization. Securities with market capitalizations greater than $100 million
are considered for purchase by the Fund. On a regular basis, securities will be
added to the eligible universe as new ADR and EDR facilities and exchange
listings occur, subject to meeting other eligibility requirements. Each time the
list of eligible securities is created, any security held by the Fund that does
not appear on the updated eligibility list will be sold as soon as practicable.
Equity securities on the eligible securities list are continuously
evaluated on the basis of total return in relation to their respective local,
regional and global markets. From the list of eligible securities a portfolio is
constructed that is composed of two major sections. The first section is
designed to provide broad coverage of international markets. Securities
representation generally covers all major markets and industry sectors. The
second section is designed to complement the first section by increasing
exposure to securities that are expected to outperform their markets and
industry sectors on a relative basis. The blending of the two sections is
designed to provide an international portfolio that provides a broad market
exposure to stock markets and has the capability to enhance the value of the
portfolio by adjusting allocations to stocks that are expected to outperform
their respective markets on a relative basis.
The Fund will increase its exposure to the second section when the
Advisor identifies securities that are expected to outperform their markets and
the Fund will conversely increase its exposure to the first section when the
Advisor believes a broader market exposure is required. When the Advisor
believes broader market exposure will benefit the Fund, the Fund may allocate up
to 80% of its assets for investment in the first section securities. When the
Advisor identifies strong potential for specific securities to outperform their
relative benchmarks, the Fund may invest up to 50% of its total assets in the
second section securities.
The Advisor will determine section two allocation by examining the
relationship each security has with the economic environment of its respective
industry, country market and geographic region. A stock's economic environment
is analyzed by identifying relevant key economic factor relationships with each
stock, sector and market and then determining the level of influence the factors
have in influencing the stock price.
The Fund may invest in the securities of issuers located in the principal
trading market which is in countries which include, but are not limited to, the
following: Argentina, Australia, Belgium, Brazil, Canada, Chile, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Korea, Luxembourg,
Malaysia, Mexico, The Netherlands, New Zealand, Norway, Peru, The Philippines,
Portugal, Singapore, Spain, Sweden, Switzerland, Taiwan, Turkey and The United
Kingdom.
Under normal market conditions, at least 65% of the Fund's total assets
will be invested in the equity securities of foreign issuers and such issuers
will be located in at least three foreign countries. 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 foreign and
domestic stock exchanges. The Fund may also invest in convertible securities,
stock index futures, and, to a limited extent, warrants. The Fund is also
authorized to invest in high quality short-term fixed income securities as cash
reserves. See "Portfolio Instruments and Practices."
INDEX 500 FUND
The investment objective of the Index 500 Fund is to provide price
performance and income that is comparable to the performance of the S&P 500, an
index which emphasizes large capitalization companies. As of December 31, 1994,
the S&P 500 represented approximately 74% 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 Index, 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 Depository 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 the S&P
500. See "Portfolio Instruments and Practices-- Investment Company Securities."
The Fund seeks quarterly performance within a .95 correlation with the S&P 500.
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.
The Index 500 Fund is not sponsored, endorsed, sold or promoted by S&P.
S&P makes no representation or warranty, express or implied, to the owners of
the Index 500 Fund or any member of the public regarding the advisability of
investing in securities generally or in the Index 500 Fund particularly or the
ability of the S&P 500 Index to trace general stock market performance. S&P's
only relationship to the Company is the licensing of certain trademarks and
trade names of S&P and of the S&P 500 Index which is determined, composed and
calculated by S&P without regard to the Company or the Index 500 Fund. S&P has
no obligation to take the needs of the Company or the owners of the Index 500
Fund into
<PAGE>
consideration in determining, composing or calculating the S&P 500 Index. S&P is
not responsible for and has not participated in the determination of the prices
and amount of the Index 500 Fund or the timing of the issuance or sale of the
Index 500 Fund or in the determination or calculation of the equation by which
the Index 500 Fund is to be converted into cash. S&P has no obligation or
liability in connection with the administration, marketing or trading of the
Index 500 Fund.
S&P does not guarantee the accuracy and/or the completeness of the S&P
500 Index or any data included therein and S&P shall have no liability for any
errors, omissions, or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the Company, owners of the Index 500
Fund, or any other person or entity from the use of the S&P 500 Index or any
data included therein. S&P makes no express or implied warranties, and expressly
disclaims all warranties of merchantability of fitness for a particular purpose
or use with respect to the S&P 500 Index or any data included therein. Without
limiting any of the foregoing, in no event shall S&P have any liability for any
special, punitive, indirect, or consequential damages (including lost profits),
even if notified of the possibility of such damages.
"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard & Poor's 500",
and "500" are trademarks of McGraw-Hill, Inc. and have been licensed for use by
the Company. The Index 500 Fund is not sponsored, endorsed, sold or promoted by
S&P and S&P makes no representation regarding the advisability of investing in
the Index 500 Fund.
In addition to investing in stocks, the Index 500 Fund is also authorized
to invest in high quality short-term fixed income securities as cash reserves.
The Fund may also invest in stock index futures. See "Portfolio Instruments and
Practices" for a description of investment practices of the Fund.
GROWTH & INCOME FUND
The investment objective of the Growth & Income Fund is to provide
capital appreciation and current income by investing primarily in
dividend-paying equity securities. The Fund is designed for investors seeking
current income and capital appreciation through the equity markets. The Fund
will seek to achieve its objectives principally by investing in a broadly
diversified portfolio of dividend-paying stocks of companies whose prospects for
dividend growth and capital appreciation are considered favorable by the
Advisor. In general, the Advisor selects large, well-known companies that it
believes have above-average and secure dividends. The Fund will seek to produce
a current yield greater than the S&P 500.
The Fund's investment philosophy is founded on the Advisor's belief that
over time, dividend income can account for a significant component of the total
return from equity investments. Over time, reinvested dividend income has
accounted for approximately one-half of the total return of the S&P 500. Second,
dividends are normally a more stable and predictable source of return than
capital appreciation. While the price of a company's stock generally increases
or decreases in response to short-term earnings and market fluctuations, its
dividends are generally less volatile. Finally, the Advisor believes that stocks
which distribute a high level of current income tend to have less price
volatility than those which pay below average dividends.
To achieve its objective, the Fund will invest under normal circumstances
at least 65% of its assets in income-producing common stocks and convertible
preferred stocks. The Fund also may invest in convertible bonds which are debt
securities convertible into or ultimately exchangeable for common stock. The
Fund may invest up to 20% of the value of its total assets in securities that
are rated below investment grade by S&P or Moody's. In addition to investing in
common stocks and convertible securities, the Fund is authorized to invest in
high quality short-term fixed income securities as cash reserves. See "Portfolio
Instruments and Practices" for a description of these and other investment
practices of the Fund, including investments in warrants, foreign securities and
in stock index futures and options.
VALUE FUND
The investment objective of the Value Fund is to provide long-term
capital appreciation, with income a secondary objective. The Fund seeks to
achieve its objective by investing primarily in equity securities of
well-established companies with intermediate to large market capitalizations or
capitalizations which exceed $750 million. The Advisor will generally favor
companies that are believed by the Advisor to be undervalued at the time of
purchase. Companies will also exhibit a stable or improving earnings record and
sound finances at the time of purchase.
Securities may become undervalued generally because they are temporarily
out of favor due to economic conditions, a market decline, industry conditions
or actual or anticipated developments affecting the company. The Fund may be
considered "contrarian" in nature because its investments may be considered out
of favor with general investors. Generally, the Fund will invest at least 65% of
its total assets in equity securities. The Fund will typically invest in
companies with lower price/earnings ratios, lower price/cash flow ratios and/or
lower price/book values than the equity markets in general, as measured by the
S&P 500. In addition, a company's valuation level will be compared to its own
historical valuation. The dividend yield of portfolio companies is expected to
approximate that of the general equity market. No more than 25% of the assets of
the Fund will be invested in one industry group. In addition, the Fund will not
own more than 10% of the outstanding voting securities of a single issuer.
It is the Advisor's intention to invest primarily in domestic equity
securities. In addition to investing in domestic common stocks, the Fund may
invest in other equity securities and equity equivalents. Other equity
securities and equity equivalents include securities that permit the Fund to
receive an equity interest in an issuer, the opportunity to acquire an equity
interest in an issuer, or the opportunity to receive a return on its investment
that permits the Fund to benefit from the growth over time in the equity of an
issuer. Examples of equity securities and equity equivalents include ADRs,
preferred stock, convertible preferred stock and convertible debt securities.
Equity equivalents may also include securities whose value or return is derived
from the value or return of a different security. An example of the type of
derivative security in which the Fund might invest includes depositary receipts.
The Fund may also invest in short-term money market instruments.
The Fund will limit its purchase of convertible debt securities that, at
the time of purchase, are rated below investment grade by S&P or Moody's, or if
not rated by S&P or Moody's, are of equivalent investment quality as determined
by the Advisor, to 5% of the value of the Fund's total assets. For more detailed
information with respect to such securities and the risks associated with such
investments see "Lower Rated Debt Securities" in the Statement of Additional
Information.
BALANCED FUND
The investment objective of the Balanced Fund is to provide an attractive
investment return through a combination of growth of capital and current income.
The Fund seeks to achieve its objective by allocating assets among three major
asset groups: equity securities, fixed income securities and cash equivalents.
In pursuing its investment objective, the Advisor will allocate the Fund's
assets based upon its evaluation of the relative attractiveness of the major
asset groups.
<PAGE>
The Fund's policy is to invest at least 25% of the value of its total
assets in fixed income securities including short-term obligations and no more
than 75% in equity securities at all times. The actual percentage of assets
invested in fixed income and equity securities will vary from time to time,
depending on the judgment of the Advisor as to general market and economic
conditions, trends and yields, interest rates and fiscal and monetary
developments. The Fund will not purchase a security if, as a result of such
purchase, less than 25% of its total assets would be in fixed income securities
(including short and long-term debt securities, preferred stocks, and
convertible debt securities and preferred stocks, to the extent their value is
attributable to their fixed income characteristics). This policy is not
fundamental and may be changed by the Board of Trustees without a vote of the
majority of shareholders, but only with 60 days' prior shareholder notice and in
accordance with the 1940 Act.
Subject to the above limitations, the Fund's assets may be invested in
U.S. Government and agency obligations, corporate bonds, senior debt securities,
preferred and common stocks in such proportions and of such type as are deemed
by the Advisor to be best adapted to the current economic and market outlook.
The Advisor may incorporate several considerations into its asset allocation
decision-making process including the Advisor's outlook for future returns on
each asset class, inflation, interest rates and long-term corporate earnings
growth. Investment returns are normally strongly influenced by such variables
and their expected changes over time. Therefore, the Advisor will attempt to
take advantage of changing economic conditions by increasing or decreasing the
ratio of stocks to fixed income obligations or cash equivalents in the Fund. For
example, if the Advisor expected more rapid economic growth leading to better
corporate earnings in the future, it would normally increase the Fund's equity
holdings while reducing its fixed income and cash equivalent holdings.
The Fund reserves the right to hold as a temporary defensive measure up
to 100% of its total assets in cash and short-term obligations (having remaining
maturities of 18 months or less) at such times and in such proportions as, in
the opinion of the Advisor, prevailing market or economic conditions warrant.
Short-term obligations include, but are not limited to, domestic commercial
paper, bankers' acceptances, certificates of deposit, demand and time deposits
of domestic and foreign banks and savings and loan associations, repurchase
agreements, and obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities.
PORTFOLIO INSTRUMENTS AND PRACTICES
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. The Funds will invest in common stocks, and may invest
in warrants and similar rights to purchase common stock. A 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. In addition,
the Funds (except the Index 500 Fund) may invest in convertible bonds and
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. Although a Fund may acquire convertible
securities that are rated below investment grade by S&P or Moody's, it is
expected that, except for the Growth & Income Fund, investments in lower-rated
convertible securities will not exceed 5% of the value of the total assets of a
Fund at the time of purchase. The Growth & Income Fund may invest up to 20% of
the value of its total assets in securities that are rated below investment
grade by S&P or Moody's. These high yield, high risk securities are commonly
referred to as junk bonds. Securities that are rated Ba by Moody's or BB by S&P
have speculative characteristics with respect to the capacity to pay interest
and repay principal. Securities that are rated B generally lack characteristics
of a desirable investment, and assurance of interest and principal payments over
any long period of time may be small. Securities that are rated Caa or CCC are
of poor standing. These issues may be in default or present elements of danger
that may exist with respect to principal or interest. In light of the risks, the
Advisor, in evaluating the creditworthiness of an issue, will take various
factors into consideration, which may include, as applicable, the issuer's
financial resources, its sensitivity to economic conditions and trends, the
ability of the issuer's management and regulatory matters. To the extent a Fund
purchases convertibles rated below investment grade or convertibles that are not
rated, a greater risk exists as to the timely repayment of the principal of, and
the timely payment of interest or dividends on, such securities. Particular
risks include (a) the sensitivity of such securities to interest rate and
economic changes, (b) the lower payments, (c) the relatively low trading market
liquidity for the securities, (d) the impact that legislation may have on the
market for these securities (and, in turn, on a Fund's net asset value) and (e)
the creditworthiness of the issuers of such securities. During an economic
downturn or substantial period of rising interest rates, highly leveraged
issuers may experience financial stress which would negatively affect their
ability to meet their principal and interest payment obligations, to meet
projected business goals and to obtain additional financing. An economic
downturn could also disrupt the market for lower-rated convertible securities
and negatively affect the value of outstanding securities and the ability of the
issuers to repay principal and interest. If the issuer of a convertible security
held by a Fund defaulted, the Fund could incur additional expenses to seek
recovery. Adverse publicity and investor perceptions, whether or not they are
based on fundamental analysis, could also decrease the values and liquidity of
lower-rated convertible securities held by a Fund, especially in a thinly traded
market.
When-Issued Securities and Delayed-Delivery Transactions. In order to
secure prices deemed advantageous at the time, the Funds may purchase or sell
securities on a when-issued or a delayed-delivery basis. A Fund will not enter
into a when-issued or delayed-delivery transaction for speculative purposes but
only in furtherance of its investment objective. In such transactions delivery
of the securities occurs beyond the normal settlement period, but no payment or
delivery is made by the Fund prior to the actual delivery or payment by the
other party to the transaction. Due to fluctuations in the value of securities
purchased on a when-issued or a delayed-delivery basis, the yields and prices
obtained on such securities may be higher or lower than those available in the
market on the dates when the investments are actually delivered to the buyers.
Similarly, the sale of securities for delayed delivery can involve the risk that
the prices available in the market when delivery is made may actually be higher
than those obtained in the transaction itself. Each Fund's when-issued or
delayed delivery purchase transactions will not exceed 25% of the value of the
Fund's total assets absent unusual market conditions. Each Fund will establish a
segregated account consisting of cash, U.S. Government securities or other
high-grade debt securities in an amount equal to the amount of its when-issued
securities.
Foreign Securities. The Funds (except the Real Estate Equity Investment
Fund) may invest in the securities of foreign issuers. 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 recordkeeping requirements.
<PAGE>
The Multi-Season Growth Fund and the Mid-Cap Growth Fund each may invest
up to 20% of its total assets in equity securities of foreign issuers, including
companies domiciled in developing countries. The International Equity Fund may
also invest in countries with emerging economies or securities markets 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 such countries may lack the
social, political and economic stability characteristic of more developed
countries. As a result, the risks described above, including the risks of
nationalization or expropriation of assets, may be heightened, and the limited
volume of trading in securities in these countries may make such investments
illiquid and particularly volatile.
Although a Fund may invest in securities denominated in foreign
currencies, portfolio securities and other assets held by the Funds are valued
in U.S. dollars. As a result, the net asset value of a Fund's shares may
fluctuate with U.S. dollar exchange rates as well as with price changes of its
portfolio securities in the various local markets and currencies. In addition to
favorable and unfavorable currency exchange-rate developments, the Funds are
subject to the possible imposition of exchange control regulations or freezes on
convertibility of currency.
Investments in foreign securities may be in the form of ADRs, EDRs or
similar securities. These securities may not be denominated in the same currency
as the securities they represent. ADRs are receipts typically issued by a United
States bank or trust company evidencing ownership of the underlying foreign
securities. EDRs are receipts issued by a European financial institution
evidencing a similar arrangement. Generally, ADRs, in registered form, are
designed for use in United States securities markets, and EDRs, in bearer form,
are designed for use in the European securities markets. The Multi-Season Growth
Fund and the Mid-Cap Growth Fund typically will only purchase foreign securities
which are represented by sponsored or unsponsored ADRs listed on a domestic
securities exchange or included in the NASDAQ National Market System. Ownership
of unsponsored ADRs may not entitle a Fund to financial or other reports from
the issuer, to which it would be entitled as the owner of sponsored ADRs.
Interest or dividend payments on such securities may be subject to foreign
withholding taxes.
Forward Foreign Currency Exchange Contracts. The Funds (except the Real
Estate Equity Investment Fund) may enter into forward currency exchange
contracts in an effort to reduce the level of volatility caused by changes in
foreign currency exchange rates. A Fund may not enter into these contracts for
speculative purposes. A forward currency exchange contract is an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of contract. A Fund will segregate cash or liquid
securities to cover its obligation to purchase foreign currency under a forward
foreign currency contract. Although such contracts tend to minimize the risk of
loss due to a decline in the value of the hedged currency, at the same time they
tend to limit any potential gain that might be realized should the value of such
currency increase. The Mid-Cap Growth Fund and Value Fund will not enter into
forward foreign currency exchange contracts if as a result, the Fund will have
more than 20% of its total assets committed to consummation of such forward
foreign currency exchange contracts.
Futures Contracts and Options. Each Fund 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. The Multi-Season Growth Fund does not
presently anticipate engaging in transactions involving options on securities,
or stock indices or options on stock index futures contracts, although it has
the authority to do so. The Real Estate Equity Investment Fund may to a limited
extent, enter into financial futures contracts including futures contracts based
on securities indices, purchase and write put and call options and engage in
related closing transactions to the extent available to hedge all or a portion
of its portfolio or as an efficient means of regulating its exposure to the
equity markets. In addition, the Real Estate Equity Investment Fund will not
hedge more than 30% of its total assets and will not write covered call options
against more than 15% of the value of the equity securities held in the
portfolio.
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 the 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, each Fund, may write covered call options, buy put options,
buy call options and write secured put options on particular securities or
various stock indices. 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 a Fund worse off than if it had not
entered into the position.
When a Fund invests in a derivative instrument, it may be required to
segregate cash and other high-grade liquid debt securities or certain portfolio
securities to "cover" the Fund's position. Assets segregated or set aside
generally may not be disposed of so long as the 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.
A Fund is not a commodity pool, 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 Appendix B to the Statement of Additional Information.
<PAGE>
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
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. 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.
Reverse Repurchase Agreements. Each Fund (except the Multi-Season Growth
Fund) may borrow funds for temporary purposes by selling portfolio securities to
financial institutions such as banks and broker/dealers and agreeing to
repurchase them at a mutually specified date and price ("reverse repurchase
agreements"). Reverse repurchase agreements involve the risk that the market
value of the securities sold by a Fund may decline below the repurchase price. A
Fund would pay interest on amounts obtained pursuant to a reverse repurchase
agreement.
Investment Company Securities. In connection with the management of their
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
International Equity Fund may purchase shares of investment companies investing
primarily in foreign securities, including so called "country funds." Country
funds have portfolios consisting exclusively of securities of issuers located in
one or more foreign countries. The Index 500 Fund may also invest in SPDRs and
shares of other investment companies that are structured to seek a similar
correlation to the performance of the S&P 500. Securities of other investment
companies will be acquired within limits prescribed by the 1940 Act. These
limitations, among other matters, restrict investments in securities of other
investment companies to no more than 10% of the value of a Fund's total assets,
with no more than 5% invested in the securities of any one investment company.
As a shareholder of another investment company, a Fund, other than the Real
Estate Equity Investment 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 each Fund bears
directly in connection with its own operations.
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. The Balanced Fund may also invest in these securities in furtherance of
its investment objective.
High quality money market instruments may include obligations issued by
Canadian corporations and Canadian counterparts of U.S. corporations and
Europaper, which is U.S. dollar-denominated commercial paper of a foreign
issuer. 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. Short-term obligations purchased by a Fund will either have short-term
debt ratings at the time of purchase in the top two categories by one or more
unaffiliated nationally recognized statistical rating organizations ("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 total value of
its net assets (determined at time of acquisition) in securities which are
illiquid. Illiquid securities would generally include 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, a Fund will
take steps to reduce the aggregate amount of illiquid securities as soon as
reasonably practicable in accordance with the policies of the SEC.
Each of the Funds 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"). Each 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 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 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 a 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
Trustees or Munder's Board of Directors. The Multi-Season Growth, Mid-Cap Growth
and Value Funds' investments in restricted securities will be limited to 5% of
each Fund's total assets excluding Rule 144A securities. The Real Estate Equity
Investment Fund will limit its investment in restricted securities to 10% of the
Fund's total assets, excluding Rule 144A securities, and will limit its
investment in all restricted securities, including Rule 144A securities, to 15%
of its total assets.
Corporate Obligations. The Balanced Fund may purchase corporate bonds
that 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.
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. Descriptions of each
rating category are included as Appendix A to the Statement of Additional
Information.
In addition, debt securities with longer maturities, which tend to
produce higher yields, are subject to potentially greater capital appreciation
and depreciation than obligations with shorter maturities. The market value of
the Balanced Fund's investments will change in response to changes in interest
rates and the relative financial strength of each issuer. During periods of
falling interest rates, the values of long-term fixed income securities
generally rise. Conversely, during periods of rising interest rates the values
of such securities generally decline. Changes in the financial strength of an
issuer or changes in the ratings of any particular security may also affect the
value of these 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 the Balanced Fund's net asset value.
The Balanced Fund may also 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.
Asset-Backed Securities. The Balanced Fund may purchase investment grade
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 market 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 Balanced 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 Balanced
Fund purchases
<PAGE>
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 Balanced Fund's principal investment to the extent of premium paid.
Presently there are several types of mortgage-backed securities issued or
guaranteed by U.S. Government agencies, including guaranteed mortgage
pass-through certificates, which provide the holder with a pro rata 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. Issuers 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
Balanced Fund will not purchase residual CMO interests, which normally exhibit
the greatest price volatility.
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.
Stripped Securities. The Balanced 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.
Borrowing. The Funds are authorized to borrow money in amounts up to 5%
of the value of each Fund's total assets at the time of such borrowing for
temporary purposes. However, a Fund is authorized to borrow money in amounts up
to 33 1/3% 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.
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 a 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.
Lending of Portfolio Securities. To enhance the return of each of their
respective portfolios, each Fund may lend securities in their portfolios
representing up to 25% of their 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.
Portfolio Transactions and Turnover. All orders for the purchase or sale
of securities on behalf of a Fund 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 a Fund, and 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
portfolio turnover rate of each of the Mid-Cap Growth Fund and Value Fund will
not exceed 100%. See "Financial Highlights" for the portfolio turnover rate of
each of the Funds other than Mid-Cap Growth Fund and Value Fund.
Industry Concentration. Because the Real Estate Equity Investment Fund
invests primarily in the real estate industry, it could conceivably own real
estate directly as a result of a default on debt securities it owns. The Fund,
therefore, may be subject to certain risks associated with the direct ownership,
as well as indirect ownership, of real estate. These risks include: declines in
the value of real estate, risks related to general and local economic
conditions, overbuilding and increased competition, increases in property taxes
and operating expenses, changes in zoning laws, casualty or condemnation losses,
variations in rental income, changes in neighborhood values, the appeal of
properties to tenants and increase in interest rates. If the Fund has rental
income or income from the disposition of real property, the receipt of such
income may adversely affect its ability to retain its tax status as a regulated
investment company. See "Tax Status" in the Statement of Additional Information.
Because the Fund may invest more than 25% of its total assets in any one sector
of the real estate or real estate related industries, it may be subject to
greater risk and market fluctuations than a portfolio representing a broader
range of industries.
In addition, equity real estate investment trusts may be affected by
changes in the value of the underlying property owned by the trust, while
mortgage real estate investment trusts may be affected by the quality of credit
extended. Equity and mortgage real estate investment trusts are dependent upon
management skill, may not be diversified and are subject to the risk of
financing projects. Such trusts are also subject to heavy cash flow dependency,
defaults by borrowers, self liquidation and the possibility of failing to
qualify for the beneficial tax treatment available to real estate investment
trusts under the Internal Revenue Code of 1986, as amended (the "Code") and to
maintain exemption from the 1940 Act. Real estate investment trusts may be
subject to interest rate risks similar to fixed income securities. In general,
fixed income security prices vary inversely with interest rates (when interest
rates rise, prices fall; and, conversely, when interest rates fall, prices
rise). Additionally, while the Fund intends to primarily purchase publicly
traded real estate investment trusts, some real estate investment trusts may be
subject to lower market liquidity due to their small size. This may impact the
Fund's ability to sell the securities, or the price at which such securities may
be sold. Changes in prevailing interest rates may adversely affect the value of
the debt securities in which the Fund will invest. By investing in real estate
investment trusts indirectly through the Fund, a shareholder will bear not only
his or her proportionate share of expenses of the Fund, but also, indirectly,
similar expenses of the real estate investment trusts.
INVESTMENT LIMITATIONS
Except for the Multi-Season Growth and Real Estate Equity Investment
Funds' investment objectives, the investment objectives and policies stated
above may be changed by the Company's Board of Trustees or Munder's Board of
Directors
<PAGE>
without approval by a majority of a Fund's outstanding shares. No assurance can
be given that a Fund will achieve its investment objective.
Each Munder Fund has also adopted certain fundamental investment
limitations that may be changed only with the approval of a "majority of the
outstanding shares of a Fund" (as defined in the Statement of Additional
Information). The following descriptions summarize several of the Munder Funds'
fundamental investment policies, which are set forth in full in the Statement of
Additional Information. The MFI Funds' restrictions are set forth in the
Statement of Additional Information.
No Munder Fund may:
(1) purchase securities (except U.S. Government securities) if more than
5% of its total assets will be invested in the securities of any one issuer,
except that up to 25% of a Fund's total assets may be invested without regard to
this 5% limitation;
(2) subject to the foregoing 25% exception, purchase more than 10% of the
outstanding voting securities of any issuer;
(3) invest 25% or more of its total assets in one or more issuers
conducting their principal business activities in the same industry; and
(4) borrow money except for temporary purposes in amounts up to one-third
of the value of its total assets at the time of such borrowing. Whenever
borrowings exceed 5% of a Fund's total assets, the Fund will not make any
additional investments.
These investment limitations are applied at the time investment
securities are purchased.
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