<PAGE>
As filed with the Securities and Exchange Commission
on August 28, 1998
Registration Nos. 33-30913
811-5899
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933[ X ]
Pre-Effective Amendment No. ---- [ ]
Post-Effective Amendment No. 26 [ X ]
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940[ X ]
Amendment No. 28 [ X ]
(Check appropriate box or boxes)
The Munder Funds Trust
(Exact Name of Registrant as Specified in Charter)
480 Pierce Street, Birmingham, Michigan 48009
(Address of Principal Executive Offices) (Zip code)
Registrant's Telephone Number: (248) 647-9200
Cynthia Surprise
Vice President and Associate Counsel
State Street Bank and Trust Company
1776 Heritage Drive, AFB
North Quincy, MA 02171
(Name and Address of Agent for Service)
Copies to:
Lisa Anne Rosen, Esq. Paul R. Roye, Esq.
Munder Capital Management Dechert Price & Rhoads
480 Pierce Street 1775 Eye Street, NW
Birmingham, Michigan 48009 Washington, DC 20006
[X] It is proposed that this filing will become effective 60 days after filing
pursuant to paragraph (a)(1) of Rule 485
<PAGE>
THE MUNDER FUNDS TRUST
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Equity Funds Class A, B and C Shares)
<TABLE>
<CAPTION>
Part A
- ---------
Item Heading
---- -------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial Information
3. Condensed Financial Information Not applicable
4. General Description of Registrant Cover Page; Fund Highlights; Structure and
Management of Fund
5. Management of the Fund Structure and Management of Fund;
Dividends, Distributions and Taxes;
Performance
6. Capital Stock and Other Securities Structure and Management of Fund; Purchases
and Exchanges of Shares; Redemption of
Shares; Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered Purchases and Exchanges of Shares
8. Redemption or Repurchase Redemptions of Shares
9. Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
THE MUNDER FUNDS TRUST
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Class K Shares)
<TABLE>
<CAPTION>
Part A
- ---------
Item Heading
---- -------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial Information
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page; Fund Highlights; Structure and
Management of Fund
5. Management of the Fund Structure and Management of Fund;
Dividends, Distributions and Taxes;
Performance
6. Capital Stock and Other Securities Structure and Management of Fund; Purchases
and Exchanges of Shares; Redemption of
Shares; Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered Purchases and Exchanges of Shares
8. Redemption or Repurchase Redemptions of Shares
9. Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
THE MUNDER FUNDS TRUST
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Class Y Shares)
<TABLE>
<CAPTION>
Part A
- ---------
Item Heading
---- -------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial Information
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page; Fund Highlights; Structure and
Management of Fund
5. Management of the Fund Structure and Management of Fund;
Dividends, Distributions and Taxes;
Performance
6. Capital Stock and Other Securities Structure and Management of Fund; Purchases
and Exchanges of Shares; Redemption of
Shares; Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered Purchases and Exchanges of Shares
8. Redemption or Repurchase Redemptions of Shares
9. Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
THE MUNDER FUNDS TRUST
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Income Funds Class A, B and C Shares)
<TABLE>
<CAPTION>
Part A
- ---------
Item Heading
---- -------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial Information
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page; Fund Highlights; Structure and
Management of Fund
5. Management of the Fund Structure and Management of Fund;
Dividends, Distributions and Taxes;
Performance
6. Capital Stock and Other Securities Structure and Management of Fund; Purchases
and Exchanges of Shares; Redemption of
Shares; Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered Purchases and Exchanges of Shares
8. Redemption or Repurchase Redemptions of Shares
9. Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
THE MUNDER FUNDS TRUST
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Money Market Funds Class A, B and C Shares)
<TABLE>
<CAPTION>
Part A
- ---------
Item Heading
---- -------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial Information
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page; Fund Highlights; Structure and
Management of Fund
5. Management of the Fund Structure and Management of Fund;
Dividends, Distributions and Taxes;
Performance
6. Capital Stock and Other Securities Structure and Management of Fund; Purchases
and Exchanges of Shares; Redemption of
Shares; Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered Purchases and Exchanges of Shares
8. Redemption or Repurchase Redemptions of Shares
9. Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
THE MUNDER FUNDS TRUST
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(The Munder Index 500 Fund Class A, B and C Shares)
<TABLE>
<CAPTION>
Part A
- ---------
Item Heading
---- -------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial Information
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page; Fund Highlights; Structure and
Management of Fund
5. Management of the Fund Structure and Management of Fund;
Dividends, Distributions and Taxes;
Performance
6. Capital Stock and Other Securities Structure and Management of Fund; Purchases
and Exchanges of Shares; Redemption of
Shares; Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered Purchases and Exchanges of Shares
8. Redemption or Repurchase Redemptions of Shares
9. Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
THE MUNDER FUNDS TRUST
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(The Munder Index 500 Fund Class Y Shares)
<TABLE>
<CAPTION>
Part A
- ---------
Item Heading
---- -------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial Information
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page; Fund Highlights; Structure and
Management of Fund
5. Management of the Fund Structure and Management of Fund;
Dividends, Distributions and Taxes;
Performance
6. Capital Stock and Other Securities Structure and Management of Fund; Purchases
and Exchanges of Shares; Redemption of
Shares; Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered Purchases and Exchanges of Shares
8. Redemption or Repurchase Redemptions of Shares
9. Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
THE MUNDER FUNDS TRUST
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Statement of Additional Information
(Munder Funds)
<TABLE>
<CAPTION>
Part B
- --------
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History See Prospectus --"Structure and Management of
the Fund;" General; Directors and Officers
13. Investment Objectives and Policies Fund Investments; Investment Limitations;
Portfolio Transactions
14. Management of the Fund See Prospectus --"Structure and Management of
the Fund;" Directors and Officers;
Miscellaneous
15. Control Persons and Principal See Prospectus --Holders of Securities
"Structure and Management of the Fund;"
Miscellaneous
16. Investment Advisory Services and Other Investment Advisory Services and Other
Service Arrangements; See Prospectus
--"Structure and Management of the Fund"
17. Brokerage Allocation and Other Portfolio Transactions
18. Capital Stock and Other Securities See Prospectus --"Structure and Management of
the Fund;" Additional Information Concerning
Shares
19. Purchase, Redemption and Pricing of Additional Purchase and Redemption
Securities Being Offered Information; Net Asset Value; Additional
Information Concerning Shares
20. Tax Status Taxes
21. Underwriters Investment Advisory and Other Service
Arrangements
22. Calculation of Performance Data Performance Information
23. Financial Statements Not applicable
</TABLE>
<PAGE>
THE MUNDER FUNDS TRUST
The purposes of this Post-Effective Amendment filing are (i) to combine
prospectuses with respect to certain series of the Registrant and (ii) to
incorporate supplements to the Prospectuses and Statement of Additional
Information.
<PAGE>
CLASS A, B & C SHARES
[Munder
Logo]
Prospectus
October 27, 1998
THE MUNDER EQUITY FUNDS
Accelerating Growth
Balanced
Growth & Income
Growth Opportunities
International Equity
Micro-Cap Equity
Multi-Season Growth
NetNet
Real Estate Equity Investment
Small-Cap Value
Small Company Growth
Value
THE MUNDER FRAMLINGTON FUNDS
Framlington Emerging Markets
Framlington Global Financial Services
Framlington Healthcare
Framlington International Growth
Prospectus begins on next page
<PAGE>
PROSPECTUS
Class A, Class B and Class C Shares
The Munder Funds Trust (the "Trust"), The Munder Funds, Inc. (the
"Company") and The Munder Framlington Funds Trust ("Framlington") are open-end
investment companies. This Prospectus describes investment portfolios offered by
the Trust (the "Trust Funds"), the Company (the "Company Funds") and Framlington
("Framlington Funds") described below (referred to as the "Funds"):
Munder Accelerating Growth Fund*
Munder Balanced Fund
Munder Growth & Income Fund
Munder Growth Opportunities Fund
Munder International Equity Fund
Munder Micro-Cap Equity Fund
Munder Multi-Season Growth Fund
Munder NetNet Fund
Munder Real Estate Equity Investment Fund
Munder Small-Cap Value Fund
Munder Small Company Growth Fund
Munder Value Fund
Munder Framlington Emerging Markets Fund
Munder Framlington Global Financial Services Fund
Munder Framlington Healthcare Fund
Munder Framlington International Growth Fund
* The Accelerating Growth Fund is closed to new investors.
Munder Capital Management (the "Advisor") serves as the investment adviser
of the Funds.
This Prospectus explains the objectives, policies, risks and fees of each
Fund. You should read this Prospectus carefully before investing and retain it
for future reference. A Statement of Additional Information ("SAI") describing
each of the Funds has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated by reference into this Prospectus. You can
obtain the SAI free of charge by calling the Funds at (800) 438-5789. In
addition, the SEC maintains a Web site (http://www.sec.gov) that contains the
SAI and other information regarding the Funds.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED OR GUARANTEED. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF THE PRINCIPLE AMOUNT INVESTED.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES:
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS OCTOBER 27, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Highlights
What are the key facts regarding the Funds?.................. 3
Financial Information............................................. 5
Fund Choices
What Funds are offered?...................................... 34
Who may want to invest in the Funds?......................... 41
What are the Funds' investments and investment practices?.... 41
What are the risks of investing in the Funds?................ 48
Performance
How is the Funds' performance calculated?.................... 49
Where can I obtain performance data?......................... 50
Purchases and Exchanges of Shares
What share class should I choose for my investment?.......... 50
What price do I pay for shares?.............................. 51
When can I purchase shares?.................................. 53
What is the minimum required investment?..................... 53
How can I purchase shares?................................... 54
How can I exchange shares?................................... 55
Redemptions of Shares
What price do I receive for redeemed shares?................. 55
When can I redeem shares?.................................... 56
How can I redeem shares?..................................... 57
When will I receive redemption amounts?...................... 58
Structure and Management of the Funds
How are the Funds structured?................................ 58
Who manages and services the Funds?.......................... 58
What are my rights as a shareholder?......................... 61
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?............ 61
How will distributions be made?.............................. 62
Are there tax implications of my investments in the Funds?... 62
Additional Information............................................ 63
</TABLE>
2
<PAGE>
FUND HIGHLIGHTS
WHAT ARE THE KEY FACTS REGARDING THE FUNDS?
Q: What are the Funds' goals?
A:
The Accelerating Growth Fund, Framlington Emerging Markets Fund, Framlington
Global Financial Services Fund, Framlington Healthcare Fund, Framlington
International Growth Fund, Growth Opportunities Fund, International Equity
Fund, Micro-Cap Equity Fund, Multi-Season Growth Fund, NetNet Fund, Small-
Cap Value Fund, Small Company Growth Fund and Value Fund primarily seek to
provide long-term capital appreciation.
The Balanced Fund, Growth & Income Fund and Real Estate Equity Investment
Fund seek to provide capital appreciation and current income.
Q: What are the Funds' strategies?
A: The Funds, other than the Balanced Fund, invest primarily in Equity
Securities. The Balanced Fund allocates its assets primarily among three types
of assets--Equity Securities, Fixed Income Securities and Cash Equivalents.
"Equity Securities" include common stocks, preferred stocks, warrants and other
securities convertible into common stock. "Fixed Income Securities" are
securities which either pay interest at set times at either fixed or variable
rates, or which realize a discount upon maturity. Fixed Income Securities
include corporate bonds, debentures, notes and other similar corporate debt
instruments, zero coupon bonds (discount debt obligations that do not make
interest payments) and variable amount master demand notes that permit the
amount of indebtedness to vary in addition to providing for periodic adjustments
in the interest rates. "Cash Equivalents" are instruments which are highly
liquid and virtually free of investment risk.
Q: What are the Funds' risks?
A: The following table summarizes the primary risks of investing in the Funds:
<TABLE>
<CAPTION>
...................................................................................................................
FUND RISK
- ------------------------------------------- ------------------------------------------------------------------
<S> <C>
All Funds Potential loss of investment due to changes in the stock market
in general, changes in the stock prices of particular companies
and perceptions about particular industries.
- -------------------------------------------------------------------------------------------------------------------
International Equity Fund, Because of large investments in foreign securities, the Funds are
Framlington International Growth Fund, riskier than domestic funds due to factors such as freezes on
Framlington Emerging Markets Fund and convertibility of currency, changes in exchange rates, political
Framlington Global Financial Services Fund instability and differences in accounting and reporting standards.
- -------------------------------------------------------------------------------------------------------------------
Micro-Cap Equity Fund, Because of large investments in mid-capitalization,
Small-Cap Value Fund, small-capitalization and/or emerging growth companies, the Funds
Small Company Growth Fund, are riskier than large-capitalization funds since such companies
Growth Opportunities Fund and typically have greater earnings fluctuations and greater reliance
NetNet Fund on a few key customers than larger companies.
- -------------------------------------------------------------------------------------------------------------------
Real Estate Equity Investment Fund, These Funds concentrate their investments in single industries
Framlington Healthcare Fund, and could experience larger price fluctuations than funds
Framlington Global Financial Fund and invested in a broader range of industries.
NetNet Fund
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
Q: What are the options for investment in the Funds?
A: Each Fund, other than the NetNet Fund, offers five different investment
options, or classes: Class A, B, C, K and Y. The NetNet Fund offers four
different investment options, or classes: Class A, B, C and Y. Class K and Y
shares, which are only offered to institutional and other qualified investors,
are offered in other prospectuses.
<TABLE>
<CAPTION>
Maximum Front MAXIMUM
CLASS RULE 12B-1 FEES* End Sales Load** CDSC***
----- ----------------- ----------------- -------------
<S> <C> <C> <C>
Class A 0.25% 5.5% None+
Class B 1% None 5%
Class C 1% None 1%, if redeemed within
1 year of purchase
</TABLE>
_____________________________________
* An annual fee for distributing shares and servicing shareholder accounts based
on the Fund's average daily net assets.
** A one-time fee charged at the time of purchase of shares. The fee declines
based on the amount you invest.
*** A contingent deferred sales charge ("CDSC") is a one-time fee charged at the
time of redemption. The fee declines based on the length of time you hold the
shares.
+ A CDSC of 1% is imposed on certain redemptions of Class A Shares if redeemed
within one year of purchase.
(i) If you invest over $250,000, you must buy Class A or Class C Shares.
Q: How do I buy and sell shares of the Funds?
A: Funds Distributor, Inc. (the "Distributor") sells shares of the Funds. You
may purchase shares from the Distributor through broker-dealers or other
financial institutions or from the Funds' transfer agent, First Data Investor
Services Group, Inc. (the "Transfer Agent"), by mailing the attached Account
Application Form with a check to the Transfer Agent. You must invest at least
$250 ($50 through the Automatic Investment Plan) initially and at least $50 for
subsequent purchases.
Shares may be redeemed (sold back to the Fund) by mail or by telephone.
You may also acquire the Funds' shares by exchanging shares of the same
class of other funds of the Trust, the Company and Framlington, and exchange
Fund shares for shares of the same class of other funds of the Trust, the
Company and Framlington.
Q: What shareholder privileges do the Funds offer?
<TABLE>
<CAPTION>
A: CLASS A SHARES Class B Shares Class C Shares
-------------- -------------- ----------------------------------
<S> <C> <C>
Automatic Investment Plan Automatic Investment Plan Automatic Investment Plan
Automatic Withdrawal Plan Automatic Withdrawal Plan Automatic Withdrawal Plan
Retirement Plans Retirement Plans Retirement Plans
Telephone Exchanges Telephone Exchanges Telephone Exchanges
Rights of Accumulation Reinvestment Privilege Reinvestment Privilege
Letter of Intent
Quantity Discounts
Reinvestment Privilege
</TABLE>
4
<PAGE>
Q: When and how are distributions made?
A: Dividend distributions are made from the dividends and interest earned on
investments. Dividends paid at least annually: Framlington Emerging Markets
Fund, Framlington Global Financial Services Fund, Framlington Healthcare Fund,
Framlington International Growth Fund, Growth Opportunities Fund, International
Equity Fund, Micro-Cap Equity Fund, Multi-Season Growth Fund, NetNet Fund,
Small-Cap Value Fund and Value Fund.
Dividends paid at least quarterly (if income is available): Accelerating
Growth Fund, Balanced Fund, Growth & Income Fund and Small Company Growth Fund.
Dividends paid monthly: Real Estate Equity Investment Fund.
The Funds distribute capital gains at least annually. Unless you elect to
receive distributions in cash, all dividends and capital gain distributions of a
Fund will be automatically used to purchase additional shares of that Fund.
Q: Who manages the Funds' assets?
A: Munder Capital Management is the Funds' investment advisor. The Advisor is
responsible for all purchases and sales of the securities held by the Funds
other than the Framlington Funds. The Advisor provides overall investment
management services for the Framlington Funds. Framlington Overseas Investment
Management Limited (the "Sub-Advisor") is responsible for all purchases and
sales of securities held by the Framlington Emerging Markets, Healthcare and
International Growth Funds. The Advisor is responsible for purchases and sales
of domestic securities and the Sub-Advisor is responsible for sales of foreign
securities for the Framlington Global Financial Services Fund.
FINANCIAL INFORMATION
SHAREHOLDER TRANSACTION EXPENSES (1)
The purpose of this table is to assist you in understanding the expenses a
shareholder in the Funds will bear directly.
<TABLE>
<CAPTION>
Class A CLASS B CLASS C
Shares Shares Shares
----------- ----------- ----------
<S> <C> <C> <C>
Maximum Sales Charge on Purchase (as a % of Offering Price)........... 5.5%(2) None None
Sales Charge Imposed on Reinvested Dividends.......................... None None None
Maximum Deferred Sales Charge......................................... None(3) 5%(4) None(5)
Redemption Fees(6)................................................... None None None
Exchange Fees........................................................ None None None
</TABLE>
____________________________________
Notes:
(1) Does not include fees which institutions may charge for services they
provide to you.
(2) The sales charge declines as the amount invested increases.
(3) A 1% CDSC applies to redemptions of Class A Shares within one year of
investment that were purchased with no initial sales charge as part of an
investment of $1,000,000 or more.
(4) The CDSC payable upon redemption of Class B Shares declines over time.
(5) A 1% CDSC applies to redemptions of Class C Shares within one year of
purchase.
(6) The Transfer Agent may charge a fee of $7.50 for wire redemptions under
$5,000.
5
<PAGE>
FUND OPERATING EXPENSES
The purpose of this table is to assist you in understanding the expenses
charged directly to each Fund, which investors in the Funds will bear indirectly
for the current fiscal year. Such expenses include payments to Trustees,
Directors, auditors, legal counsel and service providers (such as the Advisor),
registration fees and distribution fees. The expenses shown below are based on
expenses for the Funds' past fiscal year, except (i) the expenses for the Real
Estate Equity Investment Fund and Value Fund have been restated to reflect the
discontinuation of voluntary expense reimbursements effective as of the date of
this Prospectus, (ii) the expenses for the Multi-Season Growth Fund reflect an
anticipated voluntary advisory fee waiver for the current fiscal year, (iii) the
expenses for the NetNet Fund have been restated to reflect the discontinuation
of the voluntary 12b-1 fee waiver for Class A Shares and (iv) the expenses for
the Micro-Cap Equity Fund, Small-Cap Value Fund, Growth Opportunities Fund and
the Framlington Funds are based on estimated operating expenses for the current
fiscal year and reflect anticipated voluntary expense reimbursements for the
Micro-Cap Equity Fund, Framlington Healthcare Fund, Framlington Global Financial
Services Fund and Growth Opportunities Fund. The Advisor may discontinue such
voluntary waivers or expense reimbursements at any time in its sole discretion.
Because of the 12b-1 fee, you may over the long term pay more than the amount of
the maximum permitted front-end sales charge. [Update]
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS) ACCELERATING GROWTH FUND BALANCED FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees.............................................. .75% .75% .75% .65% .65% .65%
12b-1 Fees................................................. .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses............................................. .20% .20% .20% .32% .32% .32%
---- ---- ---- ---- ---- ----
Total Fund Operating Expenses............................. 1.20% 1.95% 1.95% 1.22% 1.97% 1.97%
==== ==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND GROWTH OPPORTUNITIES FUND INTERNATIONAL EQUITY FUND
ANNUAL FUND OPERATING ----------------------------- ----------------------------- ------------------------------
EXPENSES(AS A % OF AVERAGE CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
NET ASSETS) SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
- -------------------------- ------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees........... .75% .75% .75% .75% .75% .75% .75% .75% .75%
12b-1 Fees............... .25% 1.00% 1.00% .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses+.......... .20% .20% .20% .40%++ .40%++ .40%++ .26% .26% .26%
---- ---- ---- ------- ------- ------- ---- ---- ----
Total Fund Operating
Expenses+............... 1.20% 1.95% 1.95% 1.40%++ 2.15%++ 2.15%++ 1.26% 2.01% 2.01%
==== ==== ==== ======= ======= ======= ===== ==== ====
</TABLE>
<TABLE>
<CAPTION>
MICRO-CAP EQUITY FUND MULTI-SEASON GROWTH FUND NETNET FUND
ANNUAL FUND OPERATING ----------------------------- ----------------------------- -----------------------------
EXPENSES(AS A % OF AVERAGE CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
NET ASSETS) SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
- -------------------------- ------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees.......... 1.00% 1.00% 1.00% .75%* .75%* .75%* 1.00% 1.00% 1.00%
12b-1 Fees............. .25% 1.00% 1.00% .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses+....... .25%++ .25%++ .25%++ .25% .25% .25% .28%++ .28%++ .28%++
------- ------- ------- ----- ------ ------ ------- ------- -------
Total Fund Operating
Expenses+............... 1.50%++ 2.25%++ 2.25%++ 1.25%* 2.00%* 2.00%* 1.53%++ 2.28%++ 2.28%++
======= ======= ======= ====== ====== ====== ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY
INVESTMENT FUND SMALL-CAP VALUE FUND SMALL COMPANY GROWTH FUND
ANNUAL FUND OPERATING ----------------------------- ----------------------------- -----------------------------
EXPENSES(AS A % OF AVERAGE CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
NET ASSETS) SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
- -------------------------- ------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees........... .74% .74% .74% .75% .75% .75% .75% .75% .75%
12b-1 Fees............. .25% 1.00% 1.00% .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses+......... .36% .36% .36% .38% .38% .38% .22% .22% .22%
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses+.............. 1.35% 2.10% 2.10% 1.38% 2.13% 2.13% 1.22% 1.97% 1.97%
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
ANNUAL FUND FRAMLINGTON EMERGING FRAMLINGTON GLOBAL FINANCIAL
OPERATING VALUE FUND MARKETS FUND SERVICES FUND
---------------------------- ----------------------------- ------------------------------
EXPENSES (AS A % OF CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
AVERAGE NET ASSETS) SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees......... .74% .74% .74% 1.25% 1.25% 1.25% .75% .75% .75%
12b-1 Fees............ .25% 1.00% 1.00% .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses+....... .28% .28% .28% .29% .29% .29% .50%++ .50%++ .50%++
----- ----- ----- ----- ----- ----- ----- ----- -----
Total Fund Operating
Expenses+............. 1.27% 2.02% 2.02% 1.79% 2.54% 2.54% 1.50%++ 2.25%++ 2.25%++
===== ===== ===== ===== ===== ===== ===== ===== =====
<CAPTION>
ANNUAL FUND FRAMLINGTON INTERNATIONAL
OPERATING EXPENSES FRAMLINGTON HEALTHCARE FUND GROWTH FUND
----------------------------------- ---------------------------------
(AS A PERCENTAGE OF AVERAGE CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
NET ASSETS) SHARES SHARES SHARES SHARES SHARES SHARES
- ------------------------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees......... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
12b-1 Fees............ .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses+....... .30%++ .30%++ .30%++ .30% .30% .30%
----- ----- ----- ----- ----- -----
Total Fund Operating
Expenses+............. 1.55%++ 2.30%++ 2.30%++ 1.55% 2.30% 2.30%
===== ===== ===== ===== ===== =====
</TABLE>
- -------------------------------------
*The Advisor expects to voluntarily waive a portion of its advisory fees for the
current fiscal year. Without waivers, the ratio of advisory fees to average net
assets would be 1.00% and total fund operating expenses would be 1.50%--Class A
Shares; 2.25%--Class B Shares; and 2.25%--Class C Shares.
+After expense reimbursements, if any.
++The Advisor expects to voluntarily reimburse the Funds for certain operating
expenses. In the absence of such expense reimbursements, it is estimated that
total fund operating expenses would be: Micro-Cap Equity Fund: 1.60%--Class A,
2.35%--Class B, 2.35%--Class C, Growth Opportunities Fund: 1.53%--Class A,
2.28%--Class B, 2.28%--Class C, NetNet Fund: 2.34%--Class A, 3.09%--Class B,
[_____ -- Class C,] Framlington Global Financial Services Fund: 1.67%--Class A,
2.42%--Class B, 2.42%--Class C and Framlington Healthcare Fund: 1.76%--Class A,
2.51%--Class B and 2.51%--Class C.
EXAMPLE
This example shows the amount of expenses you would pay (directly or indirectly)
on a $1,000 investment in the Fund assuming (1) a 5% annual return, (2)
redemption at the end of the time periods (including the deduction of the
deferred sales charge, if any) and (3) no redemption at the end of the time
periods. THIS EXAMPLE IS NOT A REPRESENTATION OF PAST OR FUTURE PERFORMANCE OR
OPERATING EXPENSES; ACTUAL PERFORMANCE OR OPERATING EXPENSES MAY BE LARGER OR
SMALLER THAN THOSE SHOWN.
<TABLE>
<CAPTION>
ACCELERATING GROWTH FUND BALANCED FUND
--------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1 Year
Redemption.................. $ 67 $ 70 $ 30 $ 67 $ 70 $ 30
No Redemption.................. $ 67 $ 20 $ 20 $ 67 $ 20 $ 20
3 Years
Redemption.................. $ 91 $ 91 $ 61 $ 92 $ 92 $ 62
No Redemption.................. $ 91 $ 61 $ 61 $ 92 $ 62 $ 62
5 Years
Redemption.................. $117 $125 $105 $118 $126 $106
No Redemption.................. $117 $105 $105 $118 $126 $106
10 Years
Redemption.................. $193 $227 $227 $195 $230 $230
No Redemption.................. $193 $227 $227 $195 $230 $230
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND GROWTH OPPORTUNITIES FUND INTERNATIONAL EQUITY FUND
--------------------------------------------------------------------------------------------------------
Class A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year
Redemption............ $ 67 $ 70 $ 30 $69 $ 73 $32 $ 67 $ 70 $ 30
No Redemption... $ 67 $ 20 $ 20 $69 $ 73 $22 $ 67 $ 20 $ 20
3 Years
Redemption...... $ 91 $ 91 $ 61 $98 $122 $68 $ 93 $ 93 $ 63
No Redemption.... $ 91 $ 61 $ 61 $98 $122 $68 $ 93 $ 63 $ 63
5 YEARS
Redemption...... $117 $125 $105 $120 $128 $108
No Redemption.... $117 $105 $105 $120 $108 $108
10 YEARS
Redemption...... $193 $227 $227 $199 $234 $234
No Redemption.... $193 $227 $227 $199 $234 $234
</TABLE>
<TABLE>
<CAPTION>
MICRO-CAP EQUITY FUND MULTI-SEASON GROWTH FUND NETNET FUND
--------------------------------------------------------------------------------------------------------
Class A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year
Redemption............ $ 69 $ 73 $ 33 $ 67 $ 70 $ 30 $ 70 $ 75
No Redemption... $ 69 $ 23 $ 23 $ 67 $ 20 $ 20 $ 70 $ 23
3 Years
Redemption...... $100 $100 $ 70 $ 93 $ 93 $ 63 $101 $104
No Redemption.... $100 $ 70 $ 70 $ 93 $ 63 $ 63 $101 $ 72
5 YEARS
Redemption...... $132 $140 $120 $120 $128 $108
No Redemption.... $132 $120 $120 $120 $108 $108
10 YEARS
Redemption...... $225 $250 $258 $198 $233 $233
No Redemption.... $225 $258 $258 $198 $233 $233
</TABLE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY
INVESTMENT FUND SMALL-CAP VALUE FUND SMALL COMPANY GROWTH FUND
--------------------------------------------------------------------------------------------------------
Class A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year
Redemption............ $ 68 $ 71 $ 31 $ 68 $ 72 $ 32 $ 67 $ 70 $ 30
No Redemption... $ 68 $ 21 $ 21 $ 68 $ 22 $ 22 $ 67 $ 20 $ 20
3 Years
Redemption...... $ 95 $ 96 $ 66 $ 96 $ 97 $ 67 $ 92 $ 92 $ 62
No Redemption.... $ 95 $ 66 $ 66 $ 96 $ 67 $ 67 $ 92 $ 62 $ 62
5 YEARS
Redemption...... $125 $133 $113 $127 $134 $114 $118 $126 $106
No Redemption.... $125 $113 $113 $127 $114 $114 $118 $106 $106
10 YEARS
Redemption...... $209 $243 $243 $212 $246 $246 $195 $230 $230
No Redemption.... $209 $243 $243 $212 $246 $246 $195 $230 $230
</TABLE>
<TABLE>
<CAPTION>
VALUE FUND FRAMLINGTON EMERGING MARKETS FRAMLINGTON GLOBAL FINANCIAL SERVICES
FUND FUND
--------------------------------------------------------------------------------------------------------
Class A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year
Redemption............ $ 67 $ 71 $ 31 $ 72 $ 76 $ 36 $ 70 $ 74 $33
No Redemption... $ 67 $ 21 $ 21 $ 72 $ 26 $ 26 $ 70 $ 23 $23
3 Years
Redemption...... $ 93 $ 93 $ 63 $108 $109 $ 79 $101 $104 $71
No Redemption.... $ 93 $ 63 $ 63 $108 $ 79 $ 79 $101 $ 71 $71
5 YEARS
Redemption...... $121 $129 $109 $147 $155 $135
No Redemption.... $121 $109 $109 $147 $135 $135
10 YEARS
Redemption...... $200 $235 $235 $254 $288 $288
No Redemption.... $200 $235 $235 $254 $288 $288
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON HEALTHCARE FUND FRAMLINGTON INTERNATIONAL GROWTH FUND
--------------------------------------------------------------------------------
Class A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1 Year
Redemption.................. $ 70 $ 73 $ 33 $ 70 $ 73 $ 33
No Redemption.................. $ 70 $ 23 $ 23 $ 70 $ 23 $ 23
3 Years
Redemption.................. $101 $102 $ 72 $101 $102 $ 72
No Redemption.................. $101 $ 72 $ 72 $101 $ 72 $ 72
5 Years
Redemption.................. $135 $143 $123 $135 $143 $123
No Redemption.................. $135 $123 $123 $135 $123 $123
10 Years
Redemption.................. $230 $264 $264 $230 $264 $264
No Redemption.................. $230 $264 $264 $230 $264 $264
</TABLE>
9
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights were audited by Ernst & Young LLP,
independent auditors, except that Multi-Season Growth Fund's financial
statements for periods ended prior to June 30, 1995 were audited by another
independent auditor. Class B Shares of the Company's Funds were not offered
prior to March 1, 1994. The Growth Opportunities Fund Class A, Class B and
Class C Shares, the Framlington Global Financial Services Fund Class A, Class B
and Class C Shares and the NetNet Fund Class C Shares had not yet commenced
operations on June 30, 1998. This information should be read in conjunction
with the Funds' most recent Annual Reports, which are incorporated by reference
into the SAI. You may obtain the Annual Reports without charge by calling (800)
438-5789.
<TABLE>
<CAPTION>
ACCELERATING GROWTH(a)
----------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(I) 6/30/96 6/30/95(D) 2/28/95(E)
CLASS A CLASS A CLASS A CLASS A CLASS A
----------- ---------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......
Income from investment operations:
Net investment income/(loss).............
Net realized and unrealized gain/(loss)
on investments..........................
Total from investment operations.........
Less distributions:
Dividends from net investment income.....
Distributions from net realized gains....
Total distributions......................
Net asset value, end of period.............
Total return(b)..........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's).....
Ratio of operating expenses to average
net assets..............................
Ratio of net investment income/(loss) to
average net assets......................
Portfolio turnover rate..................
Ratio of operating expenses to average
net assets w/o waivers..................
Average commission rate(g)...............
</TABLE>
- ---------------
(a) The Munder Accelerating Growth Fund Class A Shares, Class B Shares and Class
C Shares commenced operations on November 23, 1992, April 25, 1994 and September
26, 1995, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Amount rounds to less than 0.01%.
(i) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
10
<PAGE>
<TABLE>
<CAPTION>
ACCELERATING GROWTH FUND(a)
- -----------------------------------------------------------------------------------------------------
YEAR PERIOD YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/94 2/28/93 6/30/98 6/30/97(I) 6/30/96 6/30/95(D) 6/30/97(I) 6/30/96 6/30/95(D)
CLASS A CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B CLASS B CLASS B
- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND(a)
------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(G) 6/30/96(G) 6/30/95(D) 2/28/95(E)
CLASS A CLASS A CLASS A CLASS A CLASS A
----------- ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......
Income from investment operations:
Net investment income...................
Net realized and unrealized gain/(loss)
on investments.........................
Total from investment operations........
Less distributions:
Dividends from net investment income....
Distributions from net realized gains...
Total distributions.....................
Net asset value, end of period............
Total return(b).........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)....
Ratio of operating expenses to average
net assets.............................
Ratio of net investment income to
average net assets.....................
Portfolio turnover rate.................
Ratio of operating expenses to average
net assets w/o waivers.................
Average commission rate(f)..............
</TABLE>
- ---------------
(a) The Munder Balanced Fund Class A Shares, Class B Shares and Class C Shares
commenced operations on April 30, 1993, June 21, 1994 and January 24, 1996,
respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
12
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND(a)
- -----------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR PERIOD PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/94 6/30/98 6/30/97(G) 6/30/96(G) 6/30/95(D) 2/28/95(E) 6/30/98 6/30/97(G) 6/30/96(G)
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B CLASS C CLASS C CLASS C
- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND(a)
-------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(H) 6/30/96(H) 6/30/95(D) 2/28/95(E)
CLASS A CLASS A CLASS A CLASS A CLASS A
---------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......
Income from investment operations:
Net investment income....................
Net realized and unrealized gain on
investments.............................
Total from investment operations.........
Less distributions:
Dividends from net investment income.....
Distributions from net realized gains....
Total distributions......................
Net asset value, end of period.............
Total return(b)..........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's).....
Ratio of operating expenses to average
net assets..............................
Ratio of net investment income to average
net assets..............................
Portfolio turnover rate..................
Ratio of operating expenses to average
net assets w/o waivers..................
Average commission rate(g)...............
</TABLE>
- ---------------
(a) The Munder Growth & Income Fund Class A Shares, Class B Shares and Class C
Shares commenced operations on August 8, 1994, August 9, 1994 and December 5,
1995, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
14
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND(a)
- --------------------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(H) 6/30/96(H) 6/30/95(D) 2/28/95(E) 6/30/98 6/30/97(H) 6/30/96(H)
CLASS B CLASS B CLASS B CLASS B CLASS B CLASS C CLASS C CLASS C
- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND(a)
-------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/97 6/30/97(f) 6/30/96(f) 6/30/95(d) 2/28/95(e,f) 2/28/94
CLASS A CLASS A CLASS A CLASS A CLASS A CLASS A
--------- --------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......
Income from investment operations:
Net investment income....................
Net realized and unrealized gain on
investments.............................
Total from investment operations.........
Less distributions:
Dividends from net investment income.....
Distributions from net realized gains
Distributions from capital...............
Total distributions......................
Net asset value, end of period.............
Total return(b)..........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's).....
Ratio of operating expenses to average
net assets..............................
Ratio of net investment income to average
net assets..............................
Portfolio turnover rate..................
Ratio of operating expenses to average
net assets w/o waivers..................
Average commission rate(h)...............
</TABLE>
- ---------------
(a) The Munder International Equity Fund Class A Shares, Class B Shares and
Class C Shares commenced operations on November 30, 1992, March 9, 1994 and
September 29, 1995, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(g) Amount represents less than $0.01 per share.
(h) Average commission rate paid per share of securities purchased and sold by
the Fund.
16
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND(a)
- ---------------------------------------------------------------------------------------------------------------
PERIOD YEAR YEAR YEAR PERIOD PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/93 6/30/98 6/30/97(f) 6/30/96(f) 6/30/95(d) 2/28/95(e,f) 6/30/98 6/30/97(f) 6/30/96(f)
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B CLASS C CLASS C CLASS C
- ------- ------- ------- ------- ------- ----------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
MICRO-CAP EQUITY FUND(a)
--------------------------------------------------------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(e) 6/30/98 6/30/97(e) 6/30/98 6/30/97(e)
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C
--------- --------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.....
Income from investment operations:
Net investment income..................
Net realized and unrealized gain
on investments........................
Total from investment operations.......
Less distributions:
Dividends from net investment income...
Distributions from net realized gains..
Total distributions....................
Net asset value, end of period...........
Total return(b)........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)...
Ratio of operating expenses to
average net assets....................
Ratio of net investment income to
average net assets....................
Portfolio turnover rate................
Ratio of operating expenses to
average net assets w/o waivers........
Average commission rate(d).............
</TABLE>
- ---------------
(a) The Munder Micro-Cap Equity Fund Class A Shares, Class B Shares and Class C
Shares commenced operations on December 26, 1996, February 24, 1997 and March
31, 1997, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
18
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND(a)
-----------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(h) 6/30/96(h) 6/30/95(d,e,f) 12/31/94 12/31/93
CLASS A CLASS A CLASS A CLASS A CLASS A CLASS A
--------- --------- ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.........
Income from investment operations:
Net investment income......................
Net realized and unrealized gain on
investments...............................
Total from investment operations...........
Less distributions:
Dividends from net investment income.......
Distributions from net realized gains......
Total distributions........................
Net asset value, end of period...............
Total return(b)............................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's).......
Ratio of operating expenses to average net
assets....................................
Ratio of net investment income to average
net assets................................
Portfolio turnover rate....................
Ratio of operating expenses to average net
assets w/o waivers........................
Average commission rate(g).................
</TABLE>
- ---------------
(a) The Munder Multi-Season Growth Fund Class A Shares, Class B Shares and Class
C Shares commenced operations on August 4, 1993, April 29, 1993 and September
20, 1993, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
December 31.
(e) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
(f) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
19
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND(a)
-----------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(h) 6/30/96(h) 6/30/95(d,e,f) 12/31/94 12/31/93
CLASS B CLASS B CLASS B CLASS B CLASS B CLASS B
--------- --------- ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.....
Income from investment operations:
Net investment income..................
Net realized and unrealized
gain on investments...................
Total from investment operations.......
Less distributions:
Dividends from net investment income...
Distributions from net realized gains..
Total distributions....................
Net asset value, end of period...........
Total return(b)........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)...
Ratio of operating expenses to average
net assets............................
Ratio of net investment income to
average net assets....................
Portfolio turnover rate................
Ratio of operating expenses to average
net assets w/o waivers................
Average commission rate(g).............
</TABLE>
- ----------------
(a) The Munder Multi-Season Growth Fund Class A Shares, Class B Shares and Class
C Shares commenced operations on August 4, 1993, April 29, 1993 and September
20, 1993, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
December 31.
(e) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
(f) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
20
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH(a)
--------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(h) 6/30/96(h) 6/30/95(d,e,f) 12/31/94 12/31/93
CLASS C CLASS C CLASS C CLASS C CLASS C CLASS C
------- ------- ------- ------------- -------- --------
<S> <C> <C> <C> <C> <C>
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
NETNET FUND
---------------------------------------------------
YEAR PERIOD PERIOD
ENDED ENDED ENDED
6/30/98 6/30/97(a) 6/30/98
CLASS A CLASS A CLASS B
---------------- ------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period..............
Income from investment operations:
Net investment loss.............................
Net realized and unrealized gain on investments.
Total from investment operations................
Less distributions:
Distributions from net realized gains...........
Total distributions.............................
Net asset value, end of period....................
Total return(b).................................
Ratio to average net assets/supplemental data:
Net assets, end of period (in 000's)............
Ratio of operating expenses to average net
assets.........................................
Ratio of net investment loss to average net
assets.........................................
Portfolio turnover rate.........................
Ratio of operating expenses to average net
assets without waivers and expenses reimbursed.
Average commission rate(d)........................
</TABLE>
- ---------------
(a) The Munder NetNet Fund commenced operations on August 16, 1996.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
22
<PAGE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY INVESTMENT FUND(a)
---------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96(f) 6/30/95(d) 6/30/98 6/30/97
CLASS A CLASS A CLASS A CLASS A CLASS B CLASS B
--------- --------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...
Income from investment operations:
Net investment income................
Net realized and unrealized gain on
investments.........................
Total from investment operations.....
Less distributions:
Dividends from net investment income.
Distributions from net realized gains
Distributions from capital...........
Total distributions..................
Net asset value, end of period.........
Total return(b)......................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in 000's).
Ratio of operating expenses to
average net assets..................
Ratio of net investment income to
average net assets..................
Portfolio turnover rate..............
Ratio of operating expenses to average
net assets w/o waivers and/or
expenses reimbursed.................
Average commission rate(e)...........
</TABLE>
- ----------------
(a) The Munder Real Estate Equity Investment Fund Class A Shares, Class B Shares
and Class C Shares commenced operations on September 30, 1994, October 3, 1994
and January 5, 1996, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Average commission rate paid per share of securities purchased and sold by
the Fund.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
23
<PAGE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY INVESTMENT FUND(a)
----------------------------------------------------------------------------
YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/96(f) 6/30/95(d) 6/30/98 6/30/97 6/30/96(f)
CLASS B CLASS B CLASS C CLASS C CLASS C
----------- ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.....
Income from investment operations:
Net investment income..................
Net realized and unrealized gain on
investments...........................
Total from investment operations.......
Less distributions:
Dividends from net investment income...
Distributions from net realized gains..
Distributions from capital.............
Total distributions....................
Net asset value, end of period...........
Total return(b)........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)...
Ratio of operating expenses to average
net assets............................
Ratio of net investment income to
average net assets....................
Portfolio turnover rate................
Ratio of operating expenses to average
net assets w/o waivers and/or expenses
reimbursed............................
Average commission rate(e).............
</TABLE>
- ---------------
(a) The Munder Real Estate Equity Investment Fund Class A Shares, Class B Shares
and Class C Shares commenced operations on September 30, 1994, October 3, 1994
and January 5, 1996, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Average commission rate paid per share of securities purchased and sold by
the Fund.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
24
<PAGE>
<TABLE>
<CAPTION>
SMALL-CAP VALUE FUND(a)
---------------------------------------------------------------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(f) 6/30/98 6/30/97(f) 6/30/98 6/30/96(f)
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C
-------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.....
Income from investment operations:
Net investment income..................
Net realized and unrealized gain on
investments...........................
Total from investment operations.......
Less distributions:
Dividends from net investment income...
Distributions from net realized gains..
Distributions from capital.............
Total distributions....................
Net asset value, end of period...........
Total return(b)........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)...
Ratio of operating expenses to average
net assets............................
Ratio of net investment income to
average net assets....................
Portfolio turnover rate................
Ratio of operating expenses to average
net assets w/o waivers and/or expenses
reimbursed ...........................
Average commission rate(e).............
</TABLE>
- ---------------
(a) The Munder Small-Cap Value Fund Class A Shares, Class B Shares and Class C
Shares commenced operations on January 10, 1997, February 11, 1997 and January
13, 1997, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Average commission rate paid per share of securities purchased and sold by
the Fund.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
25
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND(a)
---------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(f) 6/30/96(f) 6/30/95(e) 2/28/95(d) 2/28/94
CLASS A CLASS A CLASS A CLASS A CLASS A CLASS A
--------- --------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period....
Income from investment operations:
Net investment income.................
Net realized and unrealized gain on
investments..........................
Total from investment operations......
Less distributions:
Dividends from net investment income..
Distributions from net realized gains.
Total distributions...................
Net asset value, end of period..........
Total return(b).......................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)..
Ratio of operating expenses to
average net assets...................
Ratio of net investment income to
average net assets...................
Portfolio turnover rate...............
Ratio of operating expenses to average
net assets w/o waivers...............
Average commission rate(g)............
</TABLE>
- ----------------
(a) The Munder Small Company Growth Fund Class A Shares, Class B Shares and
Class C Shares commenced operations on November 23, 1992, April 28, 1994 and
September 26, 1995, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
26
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND(a)
- -------------------------------------------------------------------------------------------------------------
PERIOD YEAR YEAR YEAR PERIOD PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/93(e) 6/30/98 6/30/97(f) 6/30/96(f) 6/30/95(e) 2/28/95(d) 6/30/98 6/30/97(f) 6/30/96(f)
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B CLASS C CLASS C CLASS C
- --------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND(a)
------------------------------------------------------------------------------------
YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(e) 6/30/96(e) 6/30/98 6/30/97(e) 6/30/96(e)
CLASS A CLASS A CLASS A CLASS B CLASS B CLASS B
--------- --------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.....
Income from investment operations:
Net investment income..................
Net realized and unrealized gain on
investments...........................
Total from investment operations.......
Less distributions:
Dividends from net investment income...
Distributions from net realized gains..
Total distributions....................
Net asset value, end of period...........
Total return(b)........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)...
Ratio of operating expenses to average
net assets............................
Ratio of net investment income to
average net assets....................
Portfolio turnover rate................
Ratio of operating expenses to average
net assets w/o waivers and expenses
reimbursed............................
Average commission rate(d).............
</TABLE>
- ---------------
(a) The Munder Value Fund Class A Shares, Class B Shares and Class C Shares
commenced operations on September 14, 1995, September 19, 1995 and February 9,
1996, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
28
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND(A)
- ------------------------------------------------------
YEAR YEAR YEAR
ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/96(E)
CLASS C CLASS C CLASS C
- -------------- ---------------- ---------------
<S> <C> <C>
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON EMERGING MARKETS FUND(A)
--------------------------------------------------------------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/98 6/30/97(E) 6/30/98 6/30/97(E)
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C
--------- --------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.....
Income from investment operations:
Net investment income..................
Net realized and unrealized gain on
investments...........................
Total from investment operations.......
Less distributions:
Dividends from net investment income...
Distributions from net realized gains..
Total distributions....................
Net asset value, end of period...........
Total return(b)........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)...
Ratio of operating expenses to average
net assets............................
Ratio of net investment income to
average net assets....................
Portfolio turnover rate................
Ratio of operating expenses to average
net assets w/o expenses reimbursed....
Average commission rate(d).............
</TABLE>
- -----------------
(a) The Munder Framlington Emerging Markets Fund Class A Shares, Class B Shares
and Class C Shares commenced operations on January 14, 1997, February 25, 1997
and March 3, 1997, respectively. The Munder Framlington Healthcare Fund Class A
Shares, Class B Shares and Class C Shares commenced operations on February 14,
1997, January 31, 1997 and January 13, 1997, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(f) Amount represents less than $0.01 per share.
30
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON HEALTHCARE FUND(A)
- -----------------------------------------------------------------------------------------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/98 6/30/97 6/30/98 6/30/97
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C
- ------------ --------------- ---------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON INTERNATIONAL GROWTH FUND(A)
---------------------------------------------------------------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/98 6/30/97(E) 6/30/98 6/30/97(E)
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C
--------- --------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......
Income from investment operations:
Net investment income....................
Net realized and unrealized gain on
investments.............................
Total from investment operations.........
Less distributions:
Dividends from net investment income.....
Distributions from net realized gains....
Total distributions......................
Net asset value, end of period.............
Total return(b)..........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's).....
Ratio of operating expenses to average
net assets..............................
Ratio of net investment income to average
net assets..............................
Portfolio turnover rate..................
Ratio of operating expenses to average
net assets w/o expenses reimbursed.....
Average commission rate(d)...............
</TABLE>
- ----------------
(a) The Munder Framlington International Growth Fund Class A Shares, Class B
Shares and Class C Shares commenced operations on February 20, 1997, March 19,
1997 and February 13, 1997, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(f) Amount represents less than $0.01 per share.
32
<PAGE>
FUND CHOICES
WHAT FUNDS ARE OFFERED?
This Prospectus offers Class A, Class B and Class C Shares of the Funds
described below. This section summarizes each Fund's principal investments.
The sections entitled "What are the Funds' Investments and Investment
Practices?" and "What are the Risks of Investing in the Funds?" and the SAI give
more information about the Funds' investment techniques and risks. Capitalized
terms are explained in the section "What are the Funds' Investments and
Investment Practices?"
ACCELERATING GROWTH FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide
long-term capital appreciation; its secondary goal is to provide income. Under
normal conditions, the Fund will invest at least 65% of its assets in Equity
Securities.
In choosing Equity Securities the Advisor considers, among other factors:
. the potential for accelerated earnings growth
. the maintenance of a substantial competitive advantage
. a focused management team
. a stable balance team.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
The Fund is closed to new investments.
BALANCED FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide an
attractive investment return through a combination of growth of capital and
current income. The Fund will allocate its assets among three asset groups:
Equity Securities, Fixed Income Securities and Cash Equivalents.
. The Fund normally will invest at least 25% of its assets in Fixed
Income Securities and no more than 75% of its assets in Equity
Securities. The Fund will notify shareholders at least 30 days before
changing this policy.
The Advisor will allocate the Fund's assets to the three asset groups based
on its view of the following factors, among others:
. general market and economic conditions and trends
. interest rates and inflation rates
. fiscal and monetary developments
. long-term corporate earnings growth.
The Advisor will try to take advantage of changing economic conditions by
adjusting the ratio of Equity Securities to Fixed Income Securities or Cash
Equivalents. For example, if the Advisor believes that rapid economic growth
will lead to better corporate earnings in the future, then it might increase the
Fund's Equity Securities holdings and reduce its Fixed Income Securities and
Cash Equivalents holdings.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
33
<PAGE>
GROWTH & INCOME FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide capital
appreciation and current income. It primarily invests in dividend-paying Equity
Securities and is designed for investors seeking current income and capital
appreciation from the equity markets.
. Under normal circumstances, the Fund will invest at least 65% of its
assets in income-producing common stocks and convertible preferred
stocks.
. The Fund may also purchase Fixed Income Securities which are
convertible into or exchangeable for common stock.
. The Fund may invest up to 35% of its assets in Fixed Income
Securities, including 20% of its assets in Fixed Income Securities
that are rated below investment grade.
The Advisor generally selects large, well-known companies that it believes
have favorable prospects for dividend growth and capital appreciation. The Fund
will seek to produce a current yield greater than the Standard & Poor's 500
Composite Stock Price Index ("S&P 500").
The Fund focuses on dividend-paying Equity Securities because, over time,
dividend income has accounted for a significant portion of the total return of
the S&P 500. In addition, dividends are usually a more stable and predictable
source of return than capital appreciation. The Advisor believes that stocks
which distribute a high level of current income generally have more stable
prices than those which pay below average dividends.
PORTFOLIO MANAGEMENT. Otto Hinzmann, Jr. is the Fund's portfolio manager,
a position he has held since February 1995. Mr. Hinzmann has been a Vice
President and Director of Equity Management of the Advisor or Old MCM, Inc.
("MCM"), the predecessor to the Advisor, since January 1987.
GROWTH OPPORTUNITIES FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. The Fund invests at least 65% of its assets in the Equity
Securities of companies with market capitalizations between $500 million and $5
billion. Its style, which focuses on both growth prospects and valuation, is
known as GARP (Growth at a Reasonable Price) and seeks to produce attractive
returns during various market environments.
The Advisor chooses the Fund's investments as follows: The Advisor reviews
the earnings growth of approximately 10,000 companies over the past three years.
It invests in approximately 50 to 100 companies based on:
. superior earnings growth
. financial stability
. relative market value
. price changes compared to the Standard & Poor's MidCap 400 Index.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
INTERNATIONAL EQUITY FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. The Fund invests primarily in Foreign Securities,
American Depositary Receipts ("ADRs") and European Depositary Receipts ("EDRs").
At least once a quarter, the Advisor creates a list of Foreign Securities, ADRs
and EDRs (the "Securities List") which the Fund may purchase based on the
country where the company is
34
<PAGE>
located, its competitive advantages, its past financial record, its future
prospects for growth and the market for its securities. The Advisor updates the
Securities List frequently (at least quarterly), adds new securities to the
Securities List if they are eligible and sells securities not on the updated
Securities List as soon as practicable.
After the Advisor creates the Securities List, it divides the list into two
sections. The first section is designed to provide broad coverage of
international markets. The second section increases exposure to securities that
the Advisor expects will perform better than other stocks in their industry
sectors and their markets as a whole. When the Advisor believes broader market
exposure will benefit the Fund, it will allocate up to 80% of the Fund's assets
in first section securities. When the Advisor identifies strong potential for
specific securities to perform well, the Fund may invest up to 50% of its assets
in second section securities.
. Under normal market conditions, at least 65% of the Fund's assets are
invested in Equity Securities in at least three foreign countries.
. The Fund emphasizes companies with a market capitalization of at least
$100 million.
PORTFOLIO MANAGEMENT. Todd B. Johnson and Theodore Miller jointly manage
the Fund. Mr. Johnson, a Chief Investment Officer of the Advisor, and Mr.
Miller, senior portfolio manager of the Fund, have managed the Fund since July
1992 and October 1996, respectively. Mr. Miller previously worked as the
primary analyst for the Fund (1996) and for Interacciones Global Inc. (1993-
1995) and McDonald & Co. Securities Inc. (1991-1993).
MICRO-CAP EQUITY FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. It invests primarily in Equity Securities of smaller
capitalization companies. The Fund attempts to provide investors with
potentially higher returns than a fund that invests primarily in larger more
established companies. Since smaller capitalization companies are generally not
as well known to investors and have less of an investor following than larger
companies, they may provide higher returns due to inefficiencies in the
marketplace.
. Under normal market conditions, the Fund will invest at least 65% of
its assets in Equity Securities of companies having a market
capitalization of $200 million or less, which is considerably less
than the market capitalization of S&P 500 companies.
The Advisor will choose companies that:
. present the ability to grow significantly over the next several years
. may benefit from changes in technology, regulations and industry
sector trends
. are still in the developmental stage and may have limited product
lines.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
MULTI-SEASON GROWTH FUND
GOAL AND OBJECTIVES. The Fund's goal is to provide long-term capital
appreciation. This goal is "fundamental" and cannot be changed without
shareholder approval. Its style, which focuses on both growth prospects and
valuation, is known as GARP (Growth at a Reasonable Price) and seeks to produce
attractive returns during various market environments. The Fund invests at
least 65% of its assets in Equity Securities. The Fund generally invests in
Equity Securities with market capitalizations over $1 billion.
The Advisor chooses the Fund's investments as follows: The Advisor reviews
the earnings growth of approximately 5,500 companies over the past five years.
It invests in approximately 50 to 100 companies based on:
. superior earnings growth
35
<PAGE>
. financial stability
. relative market value
. price changes compared to the S&P 500.
PORTFOLIO MANAGEMENT. The portfolio managers of the Fund, Leonard J. Barr
II and Lee P. Munder, have managed the Fund since its inception in April 1993.
Mr. Barr is the Senior Vice President and Director of Research of the Advisor.
From April 1988 to April 1993 he held similar positions with MCM. Mr. Munder is
the Chairman of the Advisor.
NETNET FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. Under normal conditions, the Fund will invest at least
65% of its assets in Equity Securities.
In choosing which companies' stock the Fund should purchase, the Advisor
invests in those companies listed on a U.S. securities exchange or NASDAQ
which are engaged in the research, design, development or manufacturing, or
engaged to a significant extent in the business of distributing products,
processes or services for use with Internet or Intranet related businesses. The
Internet is a world-wide network of computers designed to permit users to share
information and transfer data quickly and easily. The World Wide Web ("WWW"),
which is a means of graphically interfacing with the Internet, is a hyper-text
based publishing medium containing text, graphics, interactive feedback
mechanisms and links within WWW documents and to other WWW documents. An
Intranet is the application of WWW tools and concepts to a company's internal
documents and databases.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
REAL ESTATE EQUITY INVESTMENT FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide both capital
appreciation and current income. This goal is "fundamental" and cannot be
changed without shareholder approval. The Fund invests primarily in U.S.
companies which are principally engaged in the real estate industry or which own
significant real estate. A company is "principally engaged" in the real estate
industry if at least 50% of its assets, gross income or net profits are
attributable to ownership, construction, management or sale of residential,
commercial or industrial real estate. The Fund will not own real estate
directly.
Under normal conditions, the Fund invests at least 65% of its total assets
in Equity Securities of U.S. companies in the real estate industry including:
. equity real estate investment trusts ("REITS")
. brokers, home builders and real estate developers
. companies with substantial real estate holdings (for example, paper
and lumber producers, hotels and entertainment companies)
. manufacturers and distributors of building supplies
. mortgage REITS
. financial institutions which issue or service mortgages.
In addition, the Fund may invest:
. up to 35% of its assets in companies other than real estate industry
companies
. in Fixed Income Securities including up to 5% of its assets in debt
securities rated below investment grade or unrated if secured by real
estate assets if the Advisor believes that the underlying collateral
is sufficient
. in REITS only if they are traded on a securities exchange or NASDAQ.
36
<PAGE>
PORTFOLIO MANAGEMENT. Peter K. Hoglund and Robert E. Crosby jointly manage
the Fund. Mr. Hoglund has managed the Fund since October 1996. Mr. Hoglund
formerly was the primary analyst of the Fund (October 1994 to October 1996).
Mr. Crosby has managed the Fund since March 1998. Mr. Crosby was formerly the
primary analyst of the Fund (October 1996 to March 1998). Mr. Crosby has been
with the Advisor since 1993, and also serves as portfolio manager for separately
managed institutional accounts.
SMALL-CAP VALUE FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation, with income as a secondary objective. It invests
primarily in Equity Securities of smaller capitalization companies. The Fund
attempts to provide investors with potentially higher returns than a fund that
invests primarily in larger more established companies. Since small companies
are generally not as well known to investors and have less of an investor
following than larger companies, they may provide higher returns due to
inefficiencies in the marketplace.
. Under normal market conditions, the Fund will invest at least 65% of
its assets in Equity Securities of companies with market
capitalizations below $750 million, which is less than the market
capitalization of S&P 500 companies.
The Advisor will concentrate on companies that it believes are undervalued.
A company's Equity Securities may be undervalued because the company is
temporarily overlooked or out of favor due to general economic conditions, a
market decline, industry conditions or developments affecting the particular
company. The Fund will usually invest in Equity Securities of companies with
low price/earnings ratios, low price/cash flow ratios and low price/book values
compared to the general market.
In addition to valuation, the Advisor considers these factors, among
others, in choosing companies:
. a stable or improving earnings record
. sound finances
. above-average growth prospects
. participation in a fast growing industry
. strategic niche position in a specialized market
. adequate capitalization.
PORTFOLIO MANAGEMENT. Gerald Seizert, Edward Eberle and Brian Wall jointly
manage the Fund. Mr. Seizert, a Chief Executive Officer of the Advisor, has
managed the Fund since it commenced operations. Prior to joining the Advisor in
1995, Mr. Seizert was a Director and Managing Partner of Loomis, Sayles &
Company, L.P. Mr. Eberle, who has managed the Fund since March 1997, was
formerly the primary analyst for the Fund. Prior to joining the Advisor in
1995, he was an Executive Vice President and Portfolio Manager for Westpointe
Financial Corporation. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge Capital Management, Inc. ("Woodbridge") (1994-1995) and an Assistant
Vice President in Equity Research for Merrill Lynch, Pierce Fenner & Smith in
New York (1992-1994).
SMALL COMPANY GROWTH FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. The Fund invests primarily in Equity Securities of
smaller capitalization companies. The Fund attempts to provide investors with
potentially higher returns than a fund that invests primarily in larger more
established companies. Since smaller capitalization companies are generally not
as well-known to investors and have less of an investor following than larger
companies, they may provide higher returns due to inefficiencies in the
marketplace.
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<PAGE>
. Under normal market conditions, the Fund will invest at least 65% of
the Fund's assets in Equity Securities of companies with market
capitalizations below $750 million, which is less than the market
capitalization of S&P 500 companies.
The Advisor considers these factors, among others, in choosing companies:
. above-average growth prospects
. participation in a fast-growing industry
. strategic niche position in a specialized market
. adequate capitalization.
PORTFOLIO MANAGEMENT. Carl Wilk and Michael P. Gura jointly manage the
Fund. Mr. Wilk, a Senior Portfolio Manager of the Advisor, has managed the Fund
since October 1996 and was the Fund's primary analyst from 1995 to 1996. Prior
to joining the Advisor in 1995, Mr. Wilk was a Senior Equity Research Analyst
for the Fund at Woodbridge. Mr. Gura has managed the Fund since March 1997.
Prior to joining the Advisor in 1995, Mr. Gura was a Vice President and Senior
Equity Analyst for the Fund at Woodbridge (1994-1995) and an investment officer
for Manufacturers National Bank Trust Department (1989-1994).
VALUE FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide
long-term capital appreciation, its secondary goal is to provide income. The
Fund invests primarily in the Equity Securities of well-established companies
with intermediate to large capitalizations, which typically exceed $750
million.
. The Fund will invest at least 65% of its assets in Equity Securities.
The Advisor will concentrate on companies that it believes are undervalued.
A company's Equity Securities may be undervalued because the company is
temporarily overlooked or out of favor due to general economic conditions, a
market decline, industry conditions or developments affecting the particular
company. The Fund will usually invest in Equity Securities of companies with
low price/earnings ratios, low price/cash flow ratios and low price/book values
compared to the general market.
In addition to valuation, the Advisor considers these factors, among
others, in choosing companies:
. a stable or improving earnings record
. sound finances
. above-average growth prospects
. participation in a fast growing industry
. strategic niche position in a specialized market
. adequate capitalization.
PORTFOLIO MANAGEMENT. Gerald Seizert, Edward Eberle and Brian Wall jointly
manage the Fund. Mr. Seizert, a Chief Executive Officer of the Advisor, has
managed the Fund since it commenced operations. Prior to joining the Advisor in
1995, Mr. Seizert was a Director and Managing Partner of Loomis, Sayles &
Company, L.P. Mr. Eberle, who has managed the Fund since March 1997, was
formerly the primary analyst for the Fund. Prior to joining the Advisor in
1995, he was an Executive Vice President and Portfolio Manager for Westpointe
Financial Corporation. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge (1994-1995) and an Assistant Vice President in Equity Research for
Merrill Lynch, Pierce Fenner & Smith in New York (1992-1994).
38
<PAGE>
FRAMLINGTON EMERGING MARKETS FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. The Fund invests at least 65% of its assets in companies
in emerging market countries, as defined by the World Bank, the International
Finance Corporation, the United Nations or the European Bank for Reconstruction
and Development.
A company will be considered to be in an emerging market country if:
. the company is organized under the laws of, or has a principal office
in, an emerging market country
. the company's stock is traded primarily in an emerging market country,
. most of the company's assets are in an emerging market country, or
. most of the company's revenues or profits come from goods produced or
sold, investments made or services performed in an emerging market
country.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Sub-Advisor makes investment decisions for the Fund. William
Calvert heads the committee.
FRAMLINGTON GLOBAL FINANCIAL SERVICES FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. Under normal market conditions, the Fund invests at least
65% of its assets in Equity Securities of U.S. and foreign companies which are
principally engaged in the financial services industry and companies providing
services primarily within the financial services industry. The Fund focuses
specifically on companies which are likely to benefit from growth or
consolidation in the financial services industry.
Examples of companies in the financial services industry are:
. commercial, industrial and investment banks
. savings and loan associations
. brokerage companies
. consumer and industrial finance companies
. real estate and leasing companies
. insurance companies
. holding companies for each of the above.
A company is "principally engaged" in the financial services industry if at
least 50% of its gross income, net sales or net profits comes from activities in
the financial services industry or if the company dedicates more than 50% of its
assets to the production of revenues from the financial services industry.
Under normal market conditions, the Fund invests at least 65% of its assets
in at least three different countries, including the United States.
The Sub-Advisor allocates assets among countries based on its analysis of
the trends in the financial services industry in particular regions, the
relative valuation of financial services companies in different regions and its
assessment of the prospects for a particular equity market and its
currency.
PORTFOLIO MANAGEMENT. A committee of professional managers employed by the
Advisor or the Sub-Advisor makes decisions for the Fund.
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<PAGE>
FRAMLINGTON HEALTHCARE FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation by investing in companies providing healthcare and medical
services and products worldwide. Currently, most of these companies are located
in the United States.
The Fund will invest in:
. pharmaceutical producers
. biotechnology firms
. medical device and instrument manufacturers
. distributors of healthcare products
. healthcare providers and managers
. other healthcare service companies.
Under normal conditions, the Fund will invest at least 65% of its assets in
healthcare companies, which are companies for which at least 50% of sales,
earnings or assets arise from or are dedicated to health services or medical
technology activities.
PORTFOLIO MANAGEMENT. Antony Milford is the Head of the Specialist Desk
for the Sub-Advisor. He is the Fund's primary portfolio manager, a position he
has held since the Fund's inception. Mr. Milford has managed funds for the Sub-
Advisor since 1971.
FRAMLINGTON INTERNATIONAL GROWTH FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. Under normal market conditions, at least 65% of the
Fund's assets will be invested in Equity Securities in at least three foreign
countries.
The Sub-Advisor will choose companies that demonstrate:
. above-average profitability
. high quality management
. the ability to grow significantly in their countries.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Sub-Advisor makes investment decisions for the Fund. Simon Key,
Chief Investment Officer of the Sub-Advisor, heads the committee.
WHO MAY WANT TO INVEST IN THE FUNDS?
The Funds are designed for investors who desire potentially high capital
appreciation and who can accept short-term variations in return for potentially
greater returns over the long term. In general, the greater the risk, the
greater the potential reward. Investors who have a short time horizon, who
desire a high level of income or who are conservative in their investment
approach may wish to invest in other portfolios offered by the Trust and the
Company.
WHAT ARE THE FUNDS' INVESTMENTS AND INVESTMENT PRACTICES?
Each Fund will invest in EQUITY SECURITIES, which include common stocks,
preferred stocks, warrants and other securities convertible into common stocks.
Many of the common stocks the Funds (other than Growth & Income Fund) will buy
will not pay dividends; instead, stocks will be bought for the potential that
their prices will increase, providing capital appreciation for the Fund. The
value of Equity Securities will fluctuate due to many
40
<PAGE>
factors, including the past and predicted earnings of the issuer, the quality of
the issuer's management, general market conditions, the forecasts for the
issuer's industry and the value of the issuer's assets. Holders of Equity
Securities only have rights to value in the company after all debts have been
paid, and they could lose their entire investment in a company that encounters
financial difficulty. Warrants are rights to purchase securities at a specified
time at a specified price.
Each Fund may invest in MONEY MARKET INSTRUMENTS, which are high-quality,
short-term money market instruments including, among other things, commercial
paper, bankers' acceptances and negotiable certificates of deposit of banks or
savings and loan associations, short-term corporate obligations and short-term
securities issued by, or guaranteed by, the U.S. Government and its agencies or
instrumentalities. These instruments will be used primarily pending investment,
to meet anticipated redemptions or as a temporary defensive measure. If a Fund
is investing defensively, it may not be pursuing its investment objective.
The Funds may enter into REPURCHASE AGREEMENTS. Under a repurchase
agreement, a Fund agrees to purchase securities from a seller and the seller
agrees to repurchase the securities at a later time, typically within seven
days, at a set price. The seller agrees to set aside collateral at least equal
to the repurchase price. This ensures that the Fund will receive the purchase
price at the time it is due, unless the seller defaults or declares bankruptcy,
in which event the Fund will bear the risk of possible loss due to adverse
market action or delays in liquidating the underlying obligation.
The Funds may purchase ADRs, EDRs and GLOBAL DEPOSITORY RECEIPTS ("GDRs").
ADRs are issued by U.S. financial institutions and EDRs and GDRs are issued by
European financial institutions. They are receipts evidencing ownership of
underlying Foreign Securities.
The Funds may buy shares of registered MONEY MARKET FUNDS. The Funds will
bear a portion of the expenses of any investment company whose shares they
purchase, including operating costs and investment advisory, distribution and
administration fees. These expenses would be in addition to a Fund's own
expenses. Each Fund may invest up to 10% of its assets in other investment
companies and no more than 5% of its assets in any one investment company.
The Funds may purchase FIXED INCOME SECURITIES. Fixed Income Securities
are securities which either pay interest at set times at either fixed or
variable rates, or which realize a discount upon maturity. Fixed Income
Securities include corporate bonds, debentures, notes and other similar
corporate debt instruments, zero coupon bonds (discount debt obligations that do
not make interest payments) and variable amount master demand notes that permit
the amount of indebtedness to vary in addition to providing for periodic
adjustments in the interest rate. Each Fund may purchase U.S. GOVERNMENT
SECURITIES, which are securities issued by, or guaranteed by, the U.S.
Government or its agencies or instrumentalities. Such securities include U.S.
Treasury bills, which have initial maturities of less than one year, U.S.
Treasury notes, which have initial maturities of one to ten years, U.S. Treasury
bonds, which generally have initial maturities of greater than ten years, and
obligations of the Federal Home Loan Mortgage Corporation, Federal National
Mortgage Association and Government National Mortgage Association. Under normal
market conditions, the Funds will not invest to a significant extent, or on a
routine basis, in U.S. Government Securities.
Each Fund may BORROW MONEY in an amount up to 5% of its assets for
temporary purposes and in an amount up to 33 1/3% of its assets to meet
redemptions. This is a "fundamental" policy which can be changed only by
shareholders.
All of the Equity Funds, are classified as "diversified funds." With
respect to 75% of each diversified Fund's assets, each diversified Fund cannot
invest more than 5% of its assets in a single issuer (other than U.S. Government
and its agencies and instrumentalities). In addition each diversified Fund
cannot invest more than 25% of its assets in a single issuer. These
restrictions do not apply to the non-diversified Funds.
41
<PAGE>
INVESTMENT CHART
The following chart summarizes the Funds' investments and investment
practices. The SAI contains more details. All percentages are based on a Fund's
total assets except where otherwise noted. See "What are the Risks of Investing
in the Funds?" for a description of the risks involved with the Funds'
investment practices.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND ACCELERATING GROWTH & GROWTH INTERNATIONAL MICRO-CAP
INVESTMENT PRACTICES GROWTH BALANCED INCOME OPPORTUNITIES EQUITY EQUITY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOREIGN SECURITIES. Includes securities
issued by non-U.S. companies. Present
more risks than U.S. securities. 25% 25% 25% 25% Y 25%
- ------------------------------------------------------------------------------------------------------------------------------------
LOWER-RATED DEBT SECURITIES. Fixed
Income Securities which are rated
below investment grade by Standard &
Poor's Ratings Service, Moody's
Investors Service, Inc. or other
nationally recognized rating agency.
Considered riskier than investment
grade securities. Y Y 20% Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT-GRADE ASSET BACKED
SECURITIES. Includes debt securities
backed by mortgages, installment sales
contracts and credit card receivables. N Y N N N N
- ------------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Includes
participations in trusts that hold U.S.
Treasury and agency securities which
represent either the interest payments
or principal payments on the securities
or combination of both. N Y N N N N
- ------------------------------------------------------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE
CONTRACTS. Obligations of a
Fund to purchase or sell a specific
currency at a future date at a set price.
May decrease a Fund's loss due to a
change in a currency value, but also
limits gains from currency changes. Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD
COMMITMENTS. Agreement by a Fund
to purchase securities at a set price,
with delivery and payment in the
future. The value of securities may
change between the time the price is set
and payment. Not to be used for
speculation. Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
FUTURES AND OPTIONS ON FUTURES. (1)
Contracts in which a Fund has the right
or the obligation, at maturity, to make
delivery of or receive securities, the
cash value of an index, or foreign
currency. Used for hedging purposes
or to maintain liquidity. Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1) THE LIMITATION ON MARGINS AND PREMIUMS FOR FUTURES AND OPTIONS ON FUTURES IS
5% OF A FUND'S ASSETS.
(2) BASED ON NET ASSETS.
42
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MULTI- REAL ESTATE SMALL- SMALL FRAMLINGTON FRAMLINGTON FRAMLINGTON
SEASON EQUITY CAP COMPANY EMERGING GLOBAL FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH NETNET INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
25% Y N 25% 25% 25% Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
Y N 5% Y Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ------------------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ------------------------------------------------------------------------------------------------------------------------------------
Y Y N Y Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND ACCELERATING GROWTH & GROWTH INTERNATIONAL MICRO-CAP
INVESTMENT PRACTICES GROWTH BALANCED INCOME OPPORTUNITIES EQUITY EQUITY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPTIONS. A Fund may buy options
giving it the right to require a
buyer to buy a security held by the
Fund (put options), buy options
giving it the right to require a
seller to sell securities to the
Fund (call options), sell (write)
options giving a buyer the right to
require the Fund to buy securities
from the buyer or write options
giving a buyer the right to require
the Fund to sell securities to the
buyer during a set time at a set
price. Options may relate to
securities indices, individual
securities, foreign currencies or Y Y Y Y Y Y
futures contracts. See the SAI for
more details and additional
limitations.
- ------------------------------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund
sells securities and agrees to
buy them back later at an agreed
upon time and price. A method to
borrow money for temporary
purposes. Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS.
Companies, usually traded publicly,
that manage a portfolio of real
estate. Risks involved in such
investments include vulnerability to
decline in real estate prices and new N N N N N N
construction rates.
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT SALES. A transaction in which
the Fund sells a security it does
not own in anticipation that the
market price of that security will
decline. It must borrow the
security sold short and deliver it
to the broker-dealer through which
it made the short sale as collateral
for its obligation to deliver the
security upon conclusion of the
sale. May also sell securities
that it owns or has the right to
acquire at no additional cost but
does not intend to deliver to the N N N N N N
buyer, a practice known as selling
short "against the box."
- ------------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there
is no ready market for these
securities, which inhibits the ability
to sell them for full market value, or
there are legal restrictions on their
resale by the Fund. 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
- ------------------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend
securities to financial institutions
which pay for the use of the
securities. May increase return.
Slight risk of borrower failing 25% 25% 25% 25% 25% 25%
financially.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1) THE LIMITATION ON MARGINS AND PREMIUMS FOR FUTURES AND OPTIONS ON FUTURES
IS 5% OF A FUND'S ASSETS.
(2) BASED ON NET ASSETS.
44
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MULTI- REAL ESTATE SMALL- SMALL FRAMLINGTON FRAMLINGTON FRAMLINGTON
SEASON EQUITY CAP COMPANY EMERGING GLOBAL FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH NETNET INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Y Y Y Y Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ------------------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ------------------------------------------------------------------------------------------------------------------------------------
15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
- ------------------------------------------------------------------------------------------------------------------------------------
25% 25% 25% 25% 25% 25% 25% 25% 25% 25%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
WHAT ARE THE RISKS OF INVESTING IN THE FUNDS?
Investing in the Funds may be less risky than investing in individual
stocks due to the diversification of investing in a portfolio of many different
stocks; however, such diversification does not eliminate all risks. Because the
Funds invest mostly in Equity Securities, rises and falls in the stock market in
general, as well as in the value of particular Equity Securities held by the
Funds, can affect the Funds' performance. Your investment in the Funds is not
guaranteed. The net asset value of the Funds will change daily and you might
not recoup the amount you invest in the Funds.
The Funds are not meant to provide a vehicle for playing short-term swings
in the stock market. Consistent with a long-term investment approach, investors
in a Fund should be prepared and able to maintain their investments during
periods of adverse market conditions. By itself, no Fund is a balanced
investment program and there is no guarantee that any Fund will achieve its
investment objective since there is uncertainty in every investment.
A Fund's risk is mostly dependent on the types of securities it purchases
and its investment techniques. Each Fund is authorized to use options, futures,
and forward foreign currency exchange contracts, which are types of derivative
instruments. Derivative instruments are instruments that derive their value
from a different underlying security, index or financial indicator. The use of
derivative instruments exposes a Fund to additional risks and transaction costs.
Risks inherent in the use of derivative instruments include: (1) the risk that
interest rates, securities prices and currency markets will not move in the
direction that a portfolio manager anticipates; (2) imperfect correlation
between the price of derivative instruments and movements in the prices of the
securities, interest rates or currencies being hedged; (3) the fact that skills
needed to use these strategies are different than those needed to select equity
securities; (4) the possible absence of a liquid secondary market for any
particular instrument and possible exchange imposed price fluctuation limits,
either of which may make it difficult or impossible to close out a position when
desired; (5) leverage risk, that is, the risk that adverse price movements in an
instrument can result in a loss substantially greater than the Fund's initial
investment in that instrument (in some cases, the potential loss is unlimited);
(6) particularly in the case of privately-negotiated instruments, the risk that
the counterparty will not perform its obligations, which could leave the Fund
worse off than if it had not entered into the position and (7) inability to
close out certain hedged positions to avoid adverse tax consequences.
To the extent that a Fund invests in illiquid securities, the Fund risks
not being able to sell securities at the time and the price that it would like.
A Fund may therefore have to lower the price, sell substitute securities or
forego an investment opportunity, each of which might adversely affect the
Fund.
The risks of the various investment techniques the Funds use are described
in more detail in the SAI.
Growth Opportunities Fund, Micro-Cap Equity Fund, Small-Cap Value Fund and Small
Company Growth Fund
The Advisor believes that smaller companies can provide greater growth
potential and potentially higher returns than larger firms. Investing in smaller
companies, however, is riskier than investing in larger companies. The stock of
smaller companies may trade infrequently and in lower volume, making it more
difficult for a Fund to sell the stocks of smaller companies when it chooses.
Smaller companies may have limited product lines, markets, financial resources
and distribution channels, which makes them more sensitive to changing economic
conditions. Stocks of smaller companies historically have had larger
fluctuations in price than stocks of larger companies included in the S&P 500.
Framlington Emerging Markets Fund, Framlington Global Financial Services Fund,
Framlington International Growth Fund and International Equity Fund
Investing in any of these Funds, with their larger investment in Foreign
Securities, may involve more risk than investing in a U.S. fund for the
following reasons: (1) there may be less public information available about
foreign companies than is available about U.S. companies; (2) foreign companies
are not generally subject to the
46
<PAGE>
uniform accounting, auditing and financial reporting standards and practices
applicable to U.S. companies; (3) foreign stock markets have less volume than
the U.S. market, and the securities of some foreign companies are less liquid
and more volatile than the securities of comparable U.S. companies; (4) there
may be less government regulation of stock exchanges, brokers, listed companies
and banks in foreign countries than in the United States; (5) the Fund may incur
fees on currency exchanges when it changes investments from one country to
another; (6) the Fund's foreign investments could be affected by expropriation,
confiscatory taxation, nationalization of bank deposits, establishment of
exchange controls, political or social instability or diplomatic developments;
(7) fluctuations in foreign exchange rates will affect the value of the Fund's
portfolio securities, the value of dividends and interest earned, gains and
loses realized on the sale of securities, net investment income and unrealized
appreciation or depreciation of investments; and (8) possible imposition of
dividend or interest withholding by a foreign country.
Framlington Global Financial Services Fund
Financial services companies are subject to extensive governmental
regulation which may limit both the amount and types of loans and other
financial commitments they can make, and the interest rates and fees they can
charge. Profitability is largely dependent on the availability and cost of
capital funds, and can fluctuate significantly when interest rates change.
Credit losses resulting from financial difficulties of borrowers can negatively
impact the industry. Insurance companies may be subject to severe price
competition. Legislation is currently being considered which would reduce the
separation between commercial and investment banking businesses. If enacted,
this could significantly impact the industry and the Fund. The Fund may be
riskier than a fund investing in a broader range of industries.
Although securities of large and well-established companies in the
financial services industry will be held in the Fund's portfolio, the Fund also
will invest in medium, small and/or newly-public companies which may be subject
to greater share price fluctuations and declining growth, particularly in the
event of rapid changes in the industry and/or increased competition. Securities
of those smaller and/or less seasoned companies may, therefore, expose
shareholders of the Fund to above-average risk.
Framlington Healthcare Fund
The Fund will invest most of its assets in the healthcare industry, which
is particularly affected by rapidly changing technology and extensive government
regulation, including cost containment measures. The Fund may be riskier than a
fund investing in a broader range of industries.
NetNet Fund
The Fund will invest primarily in companies engaged in Internet and
Intranet related activities. The value of such companies is particularly
vulnerable to rapidly changing technology, extensive government regulation and
relatively high risks of obsolescence caused by scientific and technological
advances. The value of the Fund's shares may fluctuate more than shares of a
fund investing in a broader range of industries.
Real Estate Equity Investment Fund
The Fund will invest primarily in the real estate industry and may invest
more than 25% of its assets in any one sector of the real estate industry. As a
result, the Fund will be particularly vulnerable to declines in real estate
prices and new construction rates. The Fund may be riskier than a fund
investing in a broader range of industries.
PERFORMANCE
HOW IS THE FUND'S PERFORMANCE CALCULATED?
There are various ways in which the Funds may calculate and report their
performance. Performance is calculated separately for each class of shares.
47
<PAGE>
One method is to show a Fund's total return. Cumulative total return is
the percentage change in the value of an amount invested in a class of shares of
a Fund over a stated period of time and takes into account reinvested dividends
plus in the case of Class A Shares, the payment of the maximum sales charge and,
in the case of Class B and Class C Shares, the maximum CDSC. Cumulative total
return most closely reflects the actual performance of a Fund. However, a
shareholder who opts to receive dividends in cash, a Class A shareholder who
paid a sales charge lower than 5.5%, or a Class B or C shareholder who paid
lower than the maximum CDSC will have a different return than the reported
performance.
Average annual total return refers to the average annual compounded rates
of return over a specified period on an investment in shares of a Fund
determined by comparing the initial amount invested to the ending redeemable
value of the amount, taking into account reinvested dividends, the payment of
the maximum sales charge on Class A Shares, and the payment of the maximum CDSC
on Class B and Class C Shares.
Each Fund may also publish its current yield. Yield is the net investment
income generated by a share of a Fund during a 30-day period divided by the
maximum offering price on the 30th day. "Maximum offering price" includes the
sales charge for Class A Shares.
The Funds may sometimes publish total returns that do not take into account
sales charges and such returns will be higher than returns which include sales
charges. You should be aware that (i) past performance does not indicate how a
Fund will perform in the future; and (ii) each Fund's return and net asset value
will fluctuate, so you cannot necessarily use a Fund's performance data to
compare it to investment in certificates of deposit, savings accounts or other
investments that provide a fixed or guaranteed yield.
Each Fund may compare its performance to that of other mutual funds, such
as the performance of similar funds reported by Lipper Analytical Services, Inc.
or information reported in national financial publications (such as Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times) or
in local or regional publications. Each Fund may also compare its total return
to other broad-based indices. These indices show the value of selected
portfolios of securities (assuming reinvestment of interest and dividends) which
are not managed by a portfolio manager. The Funds may report how they are
performing in comparison to the Consumer Price Index, an indication of inflation
reported by the U.S. Government.
WHERE CAN I OBTAIN PERFORMANCE DATA?
The Wall Street Journal and certain local newspapers report information on
the performance of mutual funds. In addition, performance information is
contained in the Funds' annual report dated June 30 of each year and semi-annual
report dated December 31 of each year, which will automatically be mailed to
shareholders. To obtain copies of financial reports or performance information,
call (800) 438-5789.
PURCHASES AND EXCHANGES OF SHARES
WHICH SHARE CLASS SHOULD I CHOOSE FOR MY INVESTMENT?
Each of the Funds offers Class A, Class B and Class C Shares. Each Class
has its own cost structure, allowing you to choose the one that best meets your
requirements given the amount of your purchase and the intended length of your
investment. You should consider both ongoing annual expenses and initial or
contingent deferred sales charges in estimating the costs of investing in a
particular class of shares.
48
<PAGE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C>
. Front end sales charge. . No front end sales charge. All . No front end sales charge or
There are several ways to your money goes to work for you right CDSC, except for a CDSC for
reduce these sale charges. away. redemptions made within the first
. Lower annual expenses than Higher annual expenses than Class A year after investing. All your
Class B and Class C Shares. Shares. money goes to work for you right
. A CDSC on shares you sell within away.
six years of purchase. . Shares do not convert to another
. Automatic conversion to Class A class.
Shares approximately six years after . Higher annual expenses than Class
issuance, thus reducing future annual A Shares.
expenses.
. CDSC is waived for certain
redemptions.
</TABLE>
Each Fund other than the NetNet Fund issues Class K and Class Y Shares,
which have different sales charges, expense levels and performance. The NetNet
Fund offer only Class Y Shares. Class K and Class Y Shares are available to
limited types of investors. Call (800) 438-5789 to obtain more information
concerning Class K and Class Y Shares.
WHAT PRICE DO I PAY FOR SHARES?
The purchase price for Class A Shares is the net asset value ("NAV") next
determined after we receive your order in proper form PLUS any applicable sales
charge. The purchase price for Class B and Class C Shares is the NAV next
determined. You should be aware that broker-dealers (other than the Funds'
Distributor) may charge investors additional fees if shares are purchased
through them.
Except in certain limited circumstances, each Fund determines its NAV on
each day the New York Stock Exchange ("NYSE") is open for trading (a "Business
Day") at the close of such trading (normally 4:00 p.m. Eastern time). Each Fund
calculates NAV separately for each class of shares. NAV is calculated by
totaling the value of all of the assets of a Fund allocated to a particular
class of shares, subtracting the Fund's liabilities and expenses charged to that
class and dividing the result by the number of shares of that class outstanding.
APPLICABLE SALES CHARGE. Except in the circumstances described below, you
must pay a sales charge at the time of purchase of Class A Shares. The sales
charge as a percentage of your investment decreases as the amount you invest
increases. The current sales charge rates and commissions paid to selected
dealers are as follows:
<TABLE>
<CAPTION>
SALES CHARGE
AS A PERCENTAGE OF DEALER REALLOWANCE
------------------ AS A PERCENTAGE
YOUR INVESTMENT NET ASSET VALUE OF THE OFFERING PRICE
--------------- --------------- ---------------------
<S> <C> <C> <C>
Less than $25,000......................... 5.50% 5.82% 5.00%
$25,000 but less than $50,000............. 5.25% 5.54% 4.75%
$50,000 but less than $100,000............ 4.50% 4.71% 4.00%
$100,000 but less than $250,000........... 3.50% 3.63% 3.25%
$250,000 but less than $500,000........... 2.50% 2.56% 2.25%
$500,000 but less than $1,000,000......... 1.50% 1.52% 1.25%
$1,000,000 or more........................ None* None* (see below)**
</TABLE>
__________________________
*No initial sales charge applies on investments of $1 million or more. However,
a CDSC of 1% is imposed on certain redemptions within one year of purchase.
Class A Shares of the Trust Funds purchased on or before June 27, 1995 are
subject to a different CDSC, which is described in the SAI.
**The Distributor will pay a 1% commission to dealers who initiate and are
responsible for purchases of $1 million or more.
49
<PAGE>
The Distributor may pay the entire commission to dealers. If that occurs,
the dealer may be considered an "underwriter" under Federal securities laws.
SALES CHARGE WAIVERS. We will waive the initial sales charge on sales of
Class A Shares to the following types of purchasers:
(1) individuals with an investment account or relationship with the
Advisor;
(2) full-time employees and retired employees of the Advisor, employees of
the Funds' service providers and immediate family members of such
persons;
(3) registered broker-dealers that have entered into selling agreements
with the Distributor, for their own accounts or for retirement plans
for their employees or sold to registered representatives for full-time
employees (and their families) that certify to the Distributor at the
time of purchase that such purchase is for their own account (or for
the benefit of their families);
(4) certain qualified employee benefit plans as described below;
(5) individuals who reinvest a distribution from a qualified retirement
plan for which the Advisor serves as investment advisor;
(6) individuals who reinvest the proceeds of redemptions from Class Y
Shares of the Funds of the Trust, the Company or Framlington, within 60
days of redemption;
(7) banks and other financial institutions that have entered into
agreements with the Trust, the Company or Framlington to provide
shareholder services for customers (including customers of such banks
and other financial institutions, and the immediate family members of
such customers);
(8) fee-based financial planners or employee benefit plan consultants
acting for the accounts of their clients;
(9) employer sponsored retirement plans which are administered by Universal
Pensions, Inc. ("UPI Plans");
(10) employer sponsored 401(k) plans that are administered by Merrill Lynch
Group Employee Services ("Merrill Lynch Plans") which meet the
criteria described below under "Qualified Employer Sponsored
Retirement Plans";
(11) individuals who reinvest proceeds of redemptions from Class A, Class B
or Class C Shares of the Short Term Treasury Fund, provided such
individuals were shareholders of the Short Term Treasury Fund on June
2, 1998; and
(12) individuals who were shareholders of the NetNet Fund prior to June 1,
1998.
QUALIFIED EMPLOYER SPONSORED RETIREMENT PLANS
We will waive the initial sales charge on purchases of Class A Shares by
employer sponsored retirement plans that are qualified under Section 401(a) or
Section 403(b) of the Code (each, a "Qualified Employee Benefit Plan") and that
(1) invest $1,000,000 or more in Class A Shares of investment portfolios offered
by the Trust, the Company or Framlington or (2) have at least 75 eligible plan
participants. In addition, we will waive the CDSC of 1% charged on certain
redemptions within one year of purchase for Qualified Employee Benefit Plan
purchases that meet the above criteria. A 1% commission will be paid by the
Distributor to dealers and other entities (as permitted by applicable Federal
and state law) who initiate and are responsible for Qualified Employee Benefit
Plan purchases that meet the above criteria. For purposes of this sales charge
waiver, Simplified Employee Pension Plans ("SEPs"), Individual Retirement
Accounts ("IRAs") and UPI Plans are not considered to be Qualified Employee
Benefit Plans.
We also will waive (i) the initial sales charge on Class A Shares on
purchases by UPI Plans for employees participating in an employer-sponsored or
administered retirement program operating under Section 408A of the Code and
(ii) the CDSC of 1% imposed on certain redemptions within one year of purchase
for these accounts. The Distributor will pay a 1% commission to dealers and
others (as permitted by applicable Federal and state law) who initiate and are
responsible for UPI Plan purchases.
We will waive the initial sales charge for all investments by Merrill Lynch
Plans if (i) the Plan is recordkept on a daily valuation basis by Merrill Lynch
Group Employee Services ("Merrill Lynch") and, on the date
50
<PAGE>
the plan sponsor (the "Plan Sponsor") signs the Merrill Lynch Recordkeeping
Service Agreement, the Plan has $3 million or more in assets invested in
broker/dealer funds not advised or managed by Merrill Lynch Asset Management,
L.P. ("MLAM") that are made available pursuant to a Services Agreement between
Merrill Lynch and the Funds' principal underwriter or distributor and in funds
advised or managed by MLAM (collectively, the "Applicable Investments"); or (ii)
the Plan is recordkept on a daily valuation basis by an independent recordkeeper
whose services are provided through a contract or alliance arrangement with
Merrill Lynch, and on the date the Plan Sponsor signs the Merrill Lynch
Recordkeeping Service Agreement, the Plan has $3 million or more in assets,
excluding money market funds, invested in Applicable Investments; or (iii) the
Plan has 500 or more eligible employees, as determined by the Merrill Lynch plan
conversion manager, on the date the Plan Sponsor signs the Merrill Lynch
Recordkeeping Service Agreement.
SALES CHARGE REDUCTIONS. You may qualify for reduced sales charges in the
following cases:
. LETTER OF INTENT. If you intend to purchase at least $25,000 of Class
A, Class B and Class C Shares of the Funds you may wish to complete
the Letter of Intent Section of your Account Application Form. By
doing so, you agree to invest a certain amount over a 13-month period.
You would pay a sales charge on any Class A Shares you purchase during
the 13 months based on the total amount to be invested under the
Letter of Intent. You can apply any investments you made in any of the
funds during the preceding 90-day period toward fulfillment of the
Letter of Intent (although there will be no refund of sales charges
you paid during the 90-day period). You should inform the Transfer
Agent that you have a Letter of Intent each time you make an
investment.
You are not obligated to purchase the amount specified in the
Letter of Intent. If you purchase less than the amount specified,
however, you must pay the difference between the sales charge paid and
the sales charge applicable to the purchases actually made. The
Custodian will hold such amount in escrow. The Custodian will pay the
escrowed funds to your account at the end of the 13 months unless you
do not complete your intended investment.
. QUANTITY DISCOUNTS. You may combine purchases of Class A Shares that
are made by you, your spouse, your children under age 21 and your IRA
when calculating the sales charge. You must notify your broker or the
Transfer Agent to qualify.
. RIGHT OF ACCUMULATION. You may add the value of any shares of non-
money market funds of the Trust, the Company or Framlington you
already own to the amount of your next Class A Share investment for
purposes of calculating the sales charge at the time of current
purchase. You must notify your broker or the Transfer Agent to
qualify.
Certain brokers may not offer these programs or may impose conditions on
use of these programs. You should consult with your broker prior to purchasing
the Funds' shares.
For further information on sales charge waivers and reductions call the
Funds at (800) 438-5789.
WHEN CAN I PURCHASE SHARES?
Shares of each Fund are sold on a continuous basis and can be purchased on
any Business Day.
WHAT IS THE MINIMUM REQUIRED INVESTMENT?
The minimum initial investment for Class A, Class B and Class C Shares of a
Fund is $250 and subsequent investments must be at least $50. Purchases in
excess of $250,000 must be for Class A or Class C Shares.
51
<PAGE>
HOW CAN I PURCHASE SHARES?
You can purchase Class A, Class B and Class C Shares in a number of
different ways. You may place orders directly through the Transfer Agent or the
Distributor or through arrangements with your authorized broker.
. BY BROKER. Any broker authorized by the Distributor can sell you
shares of the Funds. Please note that brokers may charge you fees for
their services.
. BY MAIL. You may open an account by completing, signing and mailing
the attached Account Application Form and a check or other negotiable
bank draft (payable to The Munder Funds) for $250 or more to: THE
MUNDER FUNDS, C/O FIRST DATA INVESTOR SERVICES GROUP, P.O. BOX 5130,
WESTBOROUGH, MASSACHUSETTS 01581-5130. Be sure to specify on your
Account Application Form the class of shares being purchased. If the
class is not specified, your purchase will automatically be invested
in Class A Shares. For additional investments send a letter stating
the Fund and share class you wish to purchase, your name and your
account number with a check for $50 or more to the address listed
above.
. BY WIRE. To open a new account, you should call the Funds at (800)
438-5789 to obtain an account number and complete wire instructions
prior to wiring any funds. Within seven days of purchase, you must
send a completed Account Application Form containing your certified
taxpayer identification number to the Transfer Agent at the address
provided above. Wire instructions must state the Fund name, share
class, your registered name and your account number. Your bank wire
should be sent through the Federal Reserve Bank Wire System to:
Boston Safe Deposit and Trust Company
Boston, MA
ABA# 011001234
DDA# 16-798-3
Account No.:
You may make additional investments at any time using the wire procedures
described above. Note that banks may charge fees for transmitting wires.
. AUTOMATIC INVESTMENT PLAN ("AIP"). Under the AIP you may arrange for
periodic investments in a Fund through automatic deductions from a
checking or savings account. To enroll in the AIP you should complete
the AIP Application Form or call the Funds at (800) 438-5789. The
minimum pre-authorized investment amount is $50. You may discontinue
the AIP at any time. We may discontinue the AIP on 30 days' written
notice to you.
. REINVESTMENT PRIVILEGE. Once a year you may reinvest redemption
proceeds from Class A, B and C Shares of a Fund (or Class A, B and C
Shares of another non-money market fund of the Trust, the Company or
Framlington) in shares of the same class of the same Fund without any
sales charges, if the reinvestment is made within 60 days of
redemption. You or your broker must notify the Transfer Agent in
writing at the time of reinvestment in order to eliminate the sales
charge.
The Transfer Agent will send you confirmations of the opening of an account
and of all subsequent purchases, exchanges or redemptions in the account. If
your account has been set up by a broker or other investment professional,
account activity will be detailed in their statements to you. We do not issue
share certificates. We reserve the right to (i) reject any purchase order if,
in our opinion, it is in the Funds' best interest to do so and (ii) suspend the
offering of shares of any class for any period of time.
See the SAI for further information regarding purchases of the Funds'
shares.
52
<PAGE>
HOW CAN I EXCHANGE SHARES?
You may exchange shares of the Funds for shares of the same class of other
funds of the Trust, the Company or Framlington based on their relative net asset
values. Class A Shares acquired through an exchange of a money market fund of
the Trust or the Company that were (1) acquired through the use of the exchange
privilege and (2) can be traced back to a purchase of shares in one or more
funds of the Trust or the Company for which a sales charge was paid, can be
exchanged for Class A Shares of a fund of the Trust, the Company or Framlington.
Class B and Class C Shares will continue to age from the date of the original
purchase and will retain the same CDSC rate as they had before the
exchange.
You must meet the minimum purchase requirements for the fund of the Trust,
the Company or Framlington that you purchase by exchange. If you are exchanging
into shares of a fund with a higher sales charge, you must pay the difference at
the time of the exchange. Please note that a share exchange is a taxable event
and accordingly, you may realize a taxable gain or loss. Before making an
exchange request, read the Prospectus of the fund you wish to purchase by
exchange. You can obtain a Prospectus for any fund of the Trust, the Company or
Framlington by contacting your broker or the Funds at (800) 438-5789. Brokers
may charge a fee for handling exchanges.
. EXCHANGES BY TELEPHONE. You may give exchange instructions by
telephone to the Funds at (800) 438-5789. You may not exchange shares
by telephone if you hold share certificates. We reserve the right to
reject any telephone exchange request and to place restrictions on
telephone exchanges.
. EXCHANGES BY MAIL. You may send exchange orders to your broker or to
the Transfer Agent at The Munder Funds c/o First Data Investor
Services Group, PO Box 5130, Westborough, Massachusetts
01581-5130.
We may modify or terminate the exchange privilege at any time. You will be
given notice of any material modifications except where notice is not required.
REDEMPTIONS OF SHARES
WHAT PRICE DO I RECEIVE FOR REDEEMED SHARES?
The redemption price is the NAV next determined after we receive the
redemption request in proper order. We will reduce the amount you receive by
the amount of any applicable CDSC. See "Purchases of Shares--What Price Do I Pay
for Shares?" for an explanation of how the net asset value next determined is
calculated.
CONTINGENT DEFERRED SALES CHARGES. You pay a CDSC when you redeem:
. Class A Shares that are part of an investment of at least $1 million
within one year of buying them
. Class B Shares within six years of buying them
. Class C Shares within one year of buying them.
These time periods include the time you held Class B or Class C Shares
which you may have exchanged for Class B or Class C Shares of the Fund.
The CDSC schedule for Class B shares purchased after June 27, 1995 is set
forth below. See the SAI for the CDSC schedule for Class B Shares purchased
before that time. The CDSC is based on the original net asset value at the time
of your investment or the net asset value at the time of redemption, whichever
is lower.
53
<PAGE>
<TABLE>
<CAPTION>
CLASS B SHARES
YEARS SINCE PURCHASE CDSC
- --------------------- ----
<S> <C>
First.................................................................... 5.00%
Second................................................................... 4.00%
Third.................................................................... 3.00%
Fourth................................................................... 3.00%
Fifth.................................................................... 2.00%
Sixth.................................................................... 1.00%
Seventh and thereafter................................................... 0.00%
</TABLE>
The Distributor pays sales commissions of 4.00% of the purchase price of
Class B Shares of the Funds to brokers at the time of sale that initiate and are
responsible for purchases of such Class B Shares of the Funds.
You will not pay a CDSC to the extent that the value of the redeemed shares
represents:
. reinvestment of dividends or capital gains distributions
. capital appreciation of shares redeemed.
When you redeem shares, we will assume that you are redeeming first shares
representing reinvestment of dividends and capital gains distributions, then any
appreciation on shares redeemed, and then remaining shares held by you for the
longest period of time. We will calculate the holding period of shares of a
Fund acquired through an exchange of shares of the Munder Money Market Fund from
the date that the shares of the Fund were initially purchased.
CDSC WAIVERS. We will waive the CDSC payable upon redemptions of shares
which you purchased after June 27, 1995 for:
. redemptions made within one year after the death of a shareholder or
registered joint owner
. minimum required distributions made from an IRA or other retirement
plan account after you reach age 70 1/2
. involuntary redemptions made by the Fund
. redemptions limited to 10% per year of an account's NAV. For example,
if you maintain an annual balance of $10,000 you can redeem up to
$1,000 annually free of charge.
Consult the SAI for Class B Share CDSC waivers which apply when you redeem
shares acquired in an exchange of shares of another Fund of the Company or the
Trust that were purchased on or before June 27, 1995.
We will waive the CDSC for Class B Shares for all redemptions by Merrill
Lynch Plans if: (i) the Plan is recordkept on a daily valuation basis by Merrill
Lynch; or (ii) the Plan is recordkept on a daily valuation basis by an
independent recordkeeper whose services are provided through a contract or
alliance arrangement with Merrill Lynch; or (iii) the Plan has less than 500
eligible employees, as determined by the Merrill Lynch plan conversion manager,
on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service
Agreement.
WHEN CAN I REDEEM SHARES?
You can redeem shares on any Business Day, provided all required documents
have been received by the Transfer Agent. A Fund may temporarily stop redeeming
shares when the NYSE is closed or trading on the NYSE is restricted, when an
emergency exists and the Fund cannot sell its assets or accurately determine the
value of its assets or if the SEC orders the Fund to suspend redemptions.
54
<PAGE>
HOW CAN I REDEEM SHARES?
You may redeem shares of the Funds in several ways:
. BY MAIL. You may mail your redemption request to: THE MUNDER FUNDS C/O
FIRST DATA INVESTOR SERVICES GROUP, P.O. BOX 5130, WESTBOROUGH,
MASSACHUSETTS 01581-5130. The redemption request should state the name
of the Fund, share class, account number, amount of redemption,
account name and where to send the proceeds. All account owners must
sign. If a stock certificate has been issued to you, you must endorse
the stock certificate and return it together with the written
redemption request.
A SIGNATURE GUARANTEE is required for the following redemption
requests: (a) redemptions proceeds greater than $50,000; (b)
redemption proceeds not being made payable to the owner of the
account; (c) redemption proceeds not being mailed to the address of
record on the account or (d) if the redemption proceeds are being
transferred to another Munder Funds account with a different
registration. You can obtain a signature guarantee from a financial
institution such as a commercial bank, trust company, savings
association or from a securities firm having membership on a
recognized securities exchange.
. BY TELEPHONE. You can redeem your shares by calling your broker or the
Funds at (800) 438-5789. There is no minimum requirement for telephone
redemptions paid by check. The Transfer Agent may deduct a wire fee
(currently $7.50) for wire redemptions under $5,000.
If you are redeeming at least $1,000 of shares and you have
authorized expedited redemption on your Account Application Form,
simply call the Fund prior to 4:00 p.m. (Eastern Time), and request
the funds be mailed to the commercial bank or registered broker-dealer
you designated on your Account Application Form. We will send your
redemption amount to you on the next Business Day. We reserve the
right at any time to change or impose fees for this expedited
redemption procedure.
We record all telephone calls for your protection and take measures
to identify the caller. If the Transfer Agent properly acts on
telephone instructions and follows the reasonable procedures to ensure
against unauthorized transactions, neither the Trust, the Company, the
Distributor nor the Transfer Agent will be responsible for any losses.
If these procedures are not followed, the Transfer Agent may be liable
to you for losses resulting from unauthorized instructions.
During periods of unusual economic or market activity, you may
experience difficulties or delays in effecting telephone redemptions.
In such cases you should consider placing your redemption request by
mail.
. AUTOMATIC WITHDRAWAL PLAN ("AWP"). If you have an account value of
$2,500 or more in a Fund, you may redeem shares on a monthly,
quarterly, semi-annual or annual basis. The minimum withdrawal is $50.
We usually process withdrawals on the 20th day of the month and
promptly send you your redemption amount. You may enroll in the AWP by
completing the AWP Application Form available through the Transfer
Agent. To participate in the AWP you must have your dividends
automatically reinvested and may not hold share certificates. You may
change or cancel the AWP at any time upon notice to the Transfer
Agent. You should not buy Class A Shares (and pay a sales charge)
while you participate in the AWP and you must pay any applicable
CDSC's when you redeem shares.
. INVOLUNTARY REDEMPTION. We may redeem your account if its value falls
below $250 as a result of redemptions (but not as a result of a
decline in net asset value). You will be notified in writing and
allowed 60 days to increase the value of your account to the minimum
investment level.
55
<PAGE>
WHEN WILL I RECEIVE REDEMPTION AMOUNTS?
We will typically send redemption amounts to you within seven Business Days
after you redeem shares. We may hold redemption amounts from the sale of shares
you purchased by check until the purchase check has cleared, which may be as
long as 15 days.
STRUCTURE AND MANAGEMENT OF THE FUNDS
HOW ARE THE FUNDS STRUCTURED?
The Trust, the Company and Framlington are each an open-end management
investment company, which is a mutual fund that sells and redeems shares every
day that it is open for business. They are managed under the direction of their
governing Boards of Trustees and Directors, which are responsible for the
overall management of the Trust, the Company and Framlington and supervise the
Funds' service providers. The Trust and Framlington are organized as
Massachusetts business trusts and the Company is a Maryland corporation.
WHO MANAGES AND SERVICES THE FUNDS?
INVESTMENT ADVISOR AND SUB-ADVISOR. The Funds' investment advisor is
Munder Capital Management, a Delaware general partnership with its principal
offices at 480 Pierce Street, Birmingham, Michigan 48009. The principal
partners of the Advisor are MCM, Munder Group LLC and WAM Holdings, Inc.
("WAM"). MCM was founded in April, 1985 as a Delaware corporation and was a
registered investment advisor. WAM is an indirect, wholly-owned subsidiary of
Comerica Incorporated which owns or controls approximately 88% of the
partnership interests in the Advisor. As of June 30, 1998, the Advisor and its
affiliates had approximately $48.2 billion in assets under management, of which
$25.4 billion were invested in equity securities, $8.1 billion were invested in
money market or other short-term instruments, $9.2 billion were invested in
other fixed income securities and $5.5 billion in non-discretionary assets.
The Advisor provides overall investment management and research and
credit analysis for each Fund and is responsible for all purchases and sales of
portfolio securities for each Fund other than the Framlington Funds.
Framlington Overseas Investment Management Limited is the sub-advisor
of the Framlington Funds. The Sub-Advisor is an indirect subsidiary of
Framlington Holdings Limited which is, in turn, owned 49% by the Advisor and 51%
by Credit Commercial de France S.A., a French banking corporation listed on the
Societe des Bourses Francaises.
The Sub-Advisor provides research and credit analysis for each of the
Framlington Funds and is responsible for all purchase and sales of portfolio
securities for each of the Framlington Funds other than the Framlington Global
Financial Services Fund. Each of the Advisor and Sub-Advisor manages a portion
of the assets of the Framlington Global Financial Services Fund. The Advisor is
responsible for all purchases and sales of domestic securities held by the Fund.
The Sub-Advisor is responsible for the allocation of the Fund's assets among
countries and for all purchases and sales of foreign securities held by the
Fund.
During the fiscal year ended June 30, 1998, the Advisor was paid an
advisory fee at an annual rate based on the average daily net assets of each
Fund (after waivers, if any) as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Accelerating Growth Fund.....................................0.75% Growth & Income Fund...............................0.75%
Balanced Fund................................................0.65% Growth Opportunities Fund..........................0.75%
Framlington Emerging Markets Fund............................1.25% International Equity Fund .........................0.75%
Framlington Global Financial Services Fund...................0.75% Micro-Cap Equity Fund .............................1.00%
Framlington International Growth Fund........................1.00% Multi-Season Growth Fund ..........................0.75%
Framlington Healthcare Fund..................................1.00% NetNet Fund........................................1.00%
</TABLE>
56
<PAGE>
<TABLE>
<S> <C> <C> <C>
Real Estate Equity Investment Fund...........................0.74% Small Company Growth Fund..........................0.75%
Small-Cap Value Fund.........................................0.75% Value Fund.........................................0.74%
</TABLE>
The Advisor waived advisory fees during the past fiscal year for the Multi-
Season Growth Fund. The Advisor is entitled to receive an annual fee equal to
1.00% of the first $500 million of the Multi-Season Growth Fund's average daily
net assets and .75% of the Fund's average daily net assets over $500
million.
The Sub-Advisor is entitled to receive an advisory fee equal to one half of
the fee paid to the Advisor by each of the Framlington Funds as compensation for
its services as Sub-Advisor. The Advisor pays fees to the Sub-Advisor and the
Framlington Funds pay no fees directly to the Sub-Advisor.
The Advisor may, from time to time, make payments to banks, broker-dealers
or other financial institutions for certain services to the Funds and/or their
shareholders, including sub-administration, sub-transfer agency and shareholder
servicing. The Advisor makes such payments out of its own resources and there
are no additional costs to the Funds or their shareholders.
The Advisor selects broker-dealers to execute portfolio transactions for
the Funds based on best price and execution terms. The Advisor may consider as
a factor the number of shares sold by the broker-dealer.
PERFORMANCE OF FRAMLINGTON FUNDS MANAGED BY THE SUB-ADVISOR
The tables below contain certain performance information provided by the
Sub-Advisor relating to accounts managed by the Sub-Advisor and which have
investment objectives and policies similar to those of the corresponding
Framlington Funds. See "Fund Choices" and "What are the Funds' Investments and
Investment Practices?" In the case of the Healthcare portfolio performance, the
data relates to a unit trust organized under the laws of the United Kingdom
managed by the same personnel of the Sub-Advisor with similar investment
objectives and policies to the Framlington Healthcare Fund. In the case of
Emerging Markets portfolio performance, the data relates to a Canadian-based
institutional emerging markets portfolio managed by the same personnel of the
Sub-Advisor with similar investment objectives and policies to the Framlington
Emerging Markets Fund.
The trust account performance is provided by Micropal, an independent
research organization that is a recognized source of performance data in the UK
unit trust industry. The data is U.S. dollar adjusted on the basis of exchange
rates provided by Datastream using WM/Reuters closing rates. The performance
figures are net of brokerage commissions, actual investment advisory fees and
initial sales charges. The data assume the reinvestment of net income and
capital gain distributions. The trust account returns are calculated using
beginning offer and ending bid prices for periods ended December 31, 1996.
You should not rely on the following performance data of the Sub-Advisor's
client accounts as an indication of future performance of the Framlington Funds.
It should be noted that the management of the Funds will be affected by
regulatory requirements under the Investment Company Act of 1940, as amended
(the "1940 Act") and requirements of the Internal Revenue Code of 1986, as
amended, to qualify as a regulated investment company.
<TABLE>
<CAPTION>
UK S&P HEALTHCARE
PERIOD ENDED HEALTH COMPOSITE INDEX
DECEMBER 31, 1996 PORTFOLIO CAPITAL CHANGE
----------------- ---------- --------------
<S> <C> <C>
1 Year.............................................................. 10.75% 18.48%
3 Years............................................................. 96.93% 100.49%
5 Years............................................................. 99.43% 45.60%
Inception on April 30, 1987......................................... 411.08% 239.64%
</TABLE>
Performance for the Health trust account is calculated on an offer-bid
basis; US Dollar adjusted total return net of all management fees but not
reflective of U.K. tax. Source: Micropal.
57
<PAGE>
S&P Healthcare Composite Index performance shows capital change in U.S.
Dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Datastream.
<TABLE>
<CAPTION>
PERIOD ENDED CANADIAN EMERGING MSCI EMERGING MARKETS FREE
DECEMBER 31, 1996 MARKETS ACCOUNT TOTAL RETURN
- ----------------- --------------- ------------
<S> <C> <C>
1 Year................................................................... 5.16% 6.03%
Inception on November 1, 1994............................................ (3.68)% (12.37)%
</TABLE>
MSCI Emerging Markets Free Index performance shows total return in U.S.
dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Datastream.
The performance of the Canadian institutional account is measured by the
World Markets Company on a total return basis and has been re-calculated net of
the management fee charged the Canadian institutional account. The inception
date of the Canadian institutional account is November 1, 1994.
INDICES
The S&P Healthcare Composite Index is the composite Healthcare section of
the S&P 500 Index as defined and tracked by S&P. This index covers securities
listed in the United States only.
The MSCI Emerging Markets Free Index is maintained by Morgan Stanley
Capital International and covers 26 countries and represents the investment
opportunities in emerging markets available to foreign investors. Total return
is calculated using the prices of the companies tracked and assumes the
reinvestment of dividends.
TRANSFER AGENT. First Data Investor Services Group, Inc. is the Funds'
transfer agent. The Transfer Agent is a wholly owned subsidiary of First Data
Corporation and is located at 53 State Street, Boston, Massachusetts 02109.
ADMINISTRATOR. State Street Bank and Trust Company ("State Street" or
"Administrator") is the Funds' administrator. State Street is located at 225
Franklin Street, Boston, Massachusetts 02110. State Street generally assists
the Company, the Trust and Framlington in all aspects of its administration and
operations including overseeing the maintenance of financial records and fund
accounting. As compensation for its services for the Company, the Trust and
Framlington, State Street is entitled to receive fees, based on the aggregate
daily net assets of the Funds and certain other investment portfolios that are
advised by the Advisor for which it provides services, computed daily and
payable monthly at the annual rate of 0.113% on the first $2.8 billion of net
assets, plus 0.103% on the next $2.2 billion of net assets, plus 0.101% on the
next $2.5 billion of net assets, plus 0.095% on the next $2.5 billion of net
assets, plus 0.080% on the next $2.5 billion of net assets, plus 0.070% on all
net assets in excess of $12.5 billion (with a $75,000 minimum fee per annum in
the aggregate for all portfolios with respect to the Administrator). If the
assets of the Framlington Funds do not exceed $120 million, the ultimate rate
charged the Framlington Funds will be reduced by their pro-rata portion of the
total fees if calculated at the rates of 0.062% of the first $2.8 billion of net
assets, plus 0.052% of the next $2.2 billion of net assets, plus 0.050% of all
net assets in excess of $5 billion.
State Street has entered into a Sub-Administration Agreement with the
Distributor under which the Distributor provides certain administrative services
with respect to the Funds. State Street pays the Distributor a fee for these
services out of its own resources at no cost to the Funds.
CUSTODIAN AND SUB-CUSTODIAN. Comerica Bank ("Comerica" or the
"Custodian"), whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, Michigan 48226, is the Funds' custodian. No
compensation is paid to the Custodian for its custodial services. Comerica
receives a fee of 0.01% of the aggregate average daily net assets of the Funds
beneficially owned by Comerica and its customers for certain shareholder
services provided by Comerica to the Funds. State Street serves as the Funds'
sub-custodian.
58
<PAGE>
DISTRIBUTOR. Funds Distributor, Inc. is the distributor of the Funds'
shares and is located at 60 State Street, Boston, Massachusetts 02109. It
markets and sells the Funds' shares.
For an additional description of the services performed by the
Administrator, the Transfer Agent, the Custodian, the Sub-Custodian and the
Distributor, see the SAI.
DISTRIBUTION SERVICES ARRANGEMENT
Under Rule 12b-1 of the 1940 Act, the Funds have adopted Service Plans with
respect to their Class A Shares and Service and Distribution Plans with respect
to their Class B and Class C Shares. Under the Plans, each Fund uses its assets
to finance activities relating to the distribution of its shares to investors
and the provision of certain shareholder services. The Distributor is paid a
service fee at an annual rate of up to 0.25% of the value of average daily net
assets of the Funds' Class A Shares. The Distributor also is paid a service fee
at an annual rate of 0.25% and a distribution fee at an annual rate of up to
0.75% of the value of the average daily net assets of the Funds' Class B and
Class C Shares. The Distributor uses the service fees primarily to pay ongoing
trail commissions to securities dealers (which may include the Distributor
itself) and other financial organizations which provide shareholder services for
the Funds. These services include, among other things, processing new
shareholder account applications, reporting to the Fund's Transfer Agent all
transactions by customers and serving as the primary information source to
customers concerning the Funds.
WHAT ARE MY RIGHTS AS A SHAREHOLDER?
All shareholders have equal voting, liquidation and other rights. You are
entitled to one vote for each share you hold and a fractional vote for each
fraction of a share you hold. You will be asked to vote on matters affecting
the Trust, the Company or Framlington as a whole and affecting your particular
Fund. You will not vote by Class unless expressly required by law or when the
Trustees or Directors determine the matter to be voted on affects only the
interests of the holders of a particular class of shares. The Trust, the
Company and Framlington will not hold annual shareholder meetings, but special
meetings may be held at the written request of shareholders owning more than 10%
of outstanding shares for the purpose of removing a Trustee or Director. Under
Massachusetts law, it is possible that a shareholder may be personally liable
for the Trust's or Framlington's obligations. If a shareholder were required to
pay a debt of a Fund, however, the Trust and Framlington have committed to
reimburse the shareholder in full from their assets. The SAI contains more
information regarding voting rights.
Comerica currently has the right to vote a majority of the outstanding
shares of the Funds as agent, custodian or trustee for its customers and
therefore it is considered to be a controlling person of the Trust, the Company
and Framlington.
DIVIDENDS, DISTRIBUTIONS AND TAXES
WHEN WILL I RECEIVE DISTRIBUTIONS FROM THE FUNDS?
As a shareholder, you are entitled to your share of net income and capital
gains, if any, on a Fund's investments. The Funds pass their earnings along to
investors in the form of dividends. Dividend distributions are the dividends or
interest earned on investments after expenses. The Accelerating Growth Fund,
Balanced Fund, Growth & Income Fund, Index 500 Fund and Small Company Growth
Fund pay dividends quarterly. The Framlington Emerging Markets Fund,
Framlington Healthcare Fund, Framlington International Growth Fund, Framlington
Global Financial Services Fund, International Equity Fund, Growth Opportunities
Fund, Micro-Cap Equity Fund, Multi-Season Growth Fund, NetNet Fund, Small-Cap
Value Fund and Value Fund pay dividends annually. The Real Estate Equity
Investment Fund pays dividends monthly. Each Fund distributes its net realized
capital gains (including net short-term capital gains), if any, at least
annually.
It is possible that a Fund may make a distribution in excess of the Fund's
current and accumulated earnings and profits. You will treat such a
distribution as a return of capital which is applied against and reduces your
basis
59
<PAGE>
in your shares. You will treat the excess of any such distribution over your
basis in your shares as gain from a sale or exchange of the shares.
HOW WILL DISTRIBUTIONS BE MADE?
The Funds will pay dividend and capital gains distributions in additional
shares of the same class of a Fund. If you wish to receive distributions in
cash, either indicate this request on your Account Application Form or notify
the Funds at (800) 438-5789.
ARE THERE TAX IMPLICATIONS OF MY INVESTMENTS IN THE FUNDS?
This section contains a brief summary of the tax implications of ownership
in the Funds' shares. A more detailed discussion of Federal income tax
considerations is contained in the SAI. You should consult your tax advisor
regarding the impact of owning the Funds' shares on your own personal tax
situation including the applicability of any state and local taxes.
In general, as long as each Fund meets the requirements to qualify as a
regulated investment company ("RIC") under Federal tax laws, it will not be
subject to Federal income tax on its income and capital gains that it
distributes in a timely manner to its shareholders. Each Fund intends to
qualify annually as a RIC. Even if it qualifies as a RIC, a Fund may still be
liable for an excise tax on income that is not distributed in accordance with a
calendar year requirement; the Funds intend to avoid the excise tax by making
timely distributions.
Generally, you will owe tax on the amounts distributed to you, regardless
of whether you receive these amounts in cash or reinvest them in additional Fund
shares. Shareholders not subject to tax on their income generally will not be
required to pay any tax on amounts distributed to them. Federal income tax on
distributions to an IRA or to a qualified retirement plan will generally be
deferred.
Capital gains derived from sales of portfolio securities held by a Fund
will generally be designated as long-term or short-term. Distributions from a
Fund's long-term capital gains are generally taxed at the long-term capital
gains rate regardless of how long you have owned shares in the Fund. Dividends
from other sources are generally taxed as ordinary income.
Dividends and capital gain distributions are generally taxable when you
receive them; however, if a distribution is declared in October, November or
December, but not paid until January of the following year, it will be
considered to be paid on December 31 in the year in which it was declared.
Shortly after the end of each year, you will receive from each Fund in which you
are a shareholder a statement of the amount and nature of the distributions made
to you during the year.
If you redeem, transfer or exchange Fund shares, you may have taxable gain
or a loss. If you hold Fund shares for six months or less, and during that time
you receive a capital gain dividend, any loss you realize on the sale of these
Fund shares will be treated as a long-term loss to the extent of the earlier
distribution.
Dividends and certain interest income earned from foreign securities by a
Fund may be subject to foreign withholding or other taxes. A Fund may be
permitted to pass on to its shareholders the right to a credit or deduction for
income or other tax credits earned from foreign investments and it intends to do
so if possible. These deductions or credits may be subject to tax law
limitations.
If a Fund invests in certain "passive foreign investment companies"
("PFICs"), it will be subject to Federal income tax (and possibly additional
interest charges) on a portion of any "excess distribution" or gain from the
disposition of such shares, even if it distributes such income to its
shareholders. If a Fund elects to treat PFIC as a "qualified electing fund"
("QEF") and the PFIC furnishes certain financial information in the required
form to such Fund, the Fund will instead be required to include in income each
year its allocable share of the ordinary earnings and net capital gains of the
QEF, regardless of whether received, and such amounts will be subject to the
various
60
<PAGE>
distribution requirements described above. The Funds may also elect to mitigate
the tax effects of owning PFIC stock by making an annual mark-to-market election
with respect to PFIC shares.
ADDITIONAL INFORMATION
SHAREHOLDER COMMUNICATIONS. You will receive unaudited Semi-Annual Reports
and Audited Annual Reports on a regular basis from the Funds. In addition, you
will also receive updated Prospectuses or Supplements to this Prospectus. In
order to eliminate duplicate mailings the Funds will only send one copy of the
above communications to (1) accounts with the same primary record owner, (2)
joint tenant accounts, (3) tenant in common accounts and (4) accounts which have
the same address.
YEAR 2000. The Funds' operations depend on the seamless functioning of
computer systems in the financial service industry, including those of its
service providers. Many computer software systems in use today cannot properly
process date-related information after December 31, 1999 because of the method
by which dates are encoded and calculated. This failure, commonly referred to
as the "Year 2000 Issue," could adversely affect the handling of securities
trades, pricing and account servicing for the Funds. The Funds have been
informed that their major service providers have made compliance with the Year
2000 Issue a high priority and are taking steps that they believe are reasonably
designed to address the Year 2000 Issue with respect to their computer systems.
There can be, however, no assurance that these steps will be successful, or that
interaction with other non-complying computer systems will not impair their
services at that time.
61
<PAGE>
CLASS K SHARES
Prospectus
OCTOBER 27, 1998
THE MUNDER EQUITY FUNDS
Accelerating Growth
Balanced
Growth & Income
Growth Opportunities
Index 500
International Equity
Micro-Cap Equity
Multi-Season Growth
Real Estate Equity Investment
Small-Cap Value
Small Company Growth
Value
THE MUNDER FRAMLINGTON FUNDS
Framlington Emerging Markets
Framlington Global Financial Services
Framlington Healthcare
Framlington International Growth
THE MUNDER INCOME FUNDS
Bond
Intermediate Bond
International Bond
U.S. Government Income
Michigan Triple Tax-Free Bond
Tax-Free Bond
Tax-Free Intermediate Bond
THE MUNDER MONEY MARKET FUNDS
Cash Investment
Tax-Free Money Market
U.S. Treasury Money Market
Prospectus begins on next page
<PAGE>
PROSPECTUS
CLASS K SHARES
The Munder Funds Trust (the "Trust"), The Munder Funds, Inc. (the
"Company") and The Munder Framlington Funds Trust ("Framlington") are open-end
investment companies. This Prospectus describes the investment portfolios
offered by the Trust (the "Trust Funds"), the Company (the "Company Funds") and
Framlington ("Framlington Funds") described below (referred to as the "Funds"):
<TABLE>
<S> <C>
Munder Accelerating Growth Fund* Munder Framlington Global Financial Services Fund
Munder Balanced Fund Munder Framlington Healthcare Fund
Munder Growth & Income Fund Munder Framlington International Growth Fund
Munder Growth Opportunities Fund Munder Bond Fund
Munder Index 500 Fund Munder Intermediate Bond Fund
Munder International Equity Fund Munder International Bond Fund
Munder Micro-Cap Equity Fund Munder U.S. Government Income Fund
Munder Multi-Season Growth Fund Munder Michigan Triple Tax-Free Bond Fund**
Munder Real Estate Equity Investment Fund Munder Tax-Free Bond Fund
Munder Small-Cap Value Fund Munder Tax-Free Intermediate Bond Fund
Munder Small Company Growth Fund Munder Cash Investment Fund
Munder Value Fund Munder Tax-Free Money Market Fund
Munder Framlington Emerging Markets Fund Munder U.S. Treasury Money Market Fund
</TABLE>
* The Accelerating Growth Fund is closed to new investors.
** The Michigan Triple Tax-Free Bond Fund is offered only in the State of
Michigan.
Munder Capital Management (the "Advisor") serves as the investment advisor
of the Funds.
This Prospectus explains the objectives, policies, risks and fees of each
Fund. You should read this Prospectus carefully before investing and retain it
for future reference. A Statement of Additional Information ("SAI") describing
each of the Funds has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated by reference into this Prospectus. You can
obtain the SAI free of charge by calling the Funds at (800) 438-5789. In
addition, the SEC maintains a Web site (http://www.sec.gov) that contains the
SAI and other information regarding the Funds.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED OR GUARANTEED. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF THE PRINCIPAL AMOUNT INVESTED.
ALTHOUGH EACH OF THE CASH INVESTMENT FUND, TAX-FREE MONEY MARKET FUND AND
U.S. TREASURY MONEY MARKET FUND SEEKS TO MAINTAIN A CONSTANT NET ASSET VALUE OF
$1.00 PER SHARE, THERE CAN BE NO ASSURANCE THAT EACH FUND CAN DO SO ON A
CONTINUING BASIS.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Call Toll-Free for Shareholder Services:
(800) 438-5789
The date of this Prospectus is October 27, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Highlights
What are the key facts regarding the Funds?.................. 3
Financial Information............................................. 6
Fund Choices
What Funds are offered?...................................... 31
Who may want to invest in the Funds?......................... 41
What are the Funds' investments and investment practices?.... 41
What are the risks of investing in the Funds?................ 51
Performance
How is the Funds' performance calculated?.................... 53
Where can I obtain performance data?......................... 54
Purchases of Shares
What price do I pay for shares?.............................. 54
When can I purchase shares?.................................. 54
How can I purchase shares?................................... 54
Redemptions of Shares
What price do I receive for redeemed shares?................. 55
When can I redeem shares?.................................... 55
How can I redeem shares?..................................... 55
When will I receive redemption amounts?...................... 55
Structure and Management of the Funds
How are the Funds structured?................................ 55
Who manages and services the Funds?.......................... 55
What are my rights as a shareholder?......................... 61
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?............ 62
How will distributions be made?.............................. 62
Are there tax implications of my investments in the Funds?... 62
Additional Information............................................ 63
Appendix A........................................................ A-1
</TABLE>
2
<PAGE>
FUND HIGHLIGHTS
WHAT ARE THE KEY FACTS REGARDING THE FUNDS?
Q: What are the Funds' goals?
A:
. The Accelerating Growth Fund, Framlington Emerging Markets Fund,
Framlington Global Financial Services Fund, Framlington Healthcare
Fund, Framlington International Growth Fund, Growth Opportunities
Fund, International Equity Fund, Micro-Cap Equity Fund, Multi-Season
Growth Fund, Small-Cap Value Fund, Small Company Growth Fund and Value
Fund primarily seek to provide long-term capital appreciation.
. The Index 500 Fund seeks to provide price performance and income that
is comparable to the Standard & Poor's 500 Composite Stock Price Index
("S&P 500").
. The Balanced Fund, Growth & Income Fund and Real Estate Equity
Investment Fund seek to provide capital appreciation and current
income.
. The Bond Fund seeks to provide a high level of current income with
capital appreciation as a secondary consideration.
. The Intermediate Bond Fund seeks to provide a competitive rate of
return which exceeds the inflation rate and the return provided by
money market instruments.
. The International Bond Fund seeks to provide a competitive total
return through a combination of current income and capital
appreciation.
. The U.S. Government Income Fund seeks to provide high current income.
. The Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund seek to
provide current interest income exempt from Federal income taxes.
. The Michigan Triple Tax-Free Bond Fund seeks to provide as high a
level of current interest income exempt from regular Federal income
taxes, Michigan state income tax and Michigan intangibles tax as is
consistent with prudent investment management and preservation of
capital.
. The Cash Investment Fund and U.S. Treasury Money Market Fund seek as
high a level of current interest income as is consistent with
maintaining liquidity and stability of principal.
. The Tax-Free Money Market Fund seeks to provide as high a level of
current interest income exempt from Federal income taxes as is
consistent with maintaining liquidity and stability of principal.
Q: What are the Funds' strategies?
A: BALANCED FUND
. This Fund allocates its assets primarily among three types of assets--
Equity Securities, Fixed Income Securities and Cash Equivalents.
"Equity Securities" include common stocks, preferred stocks, warrants
and other securities convertible into common stock. "Fixed Income
Securities" are securities which either pay interest at set times at
either fixed or variable rates, or which realize a discount upon
maturity. Fixed Income Securities include corporate bonds, debentures,
notes and other similar corporate debt instruments, zero coupon bonds
(discount debt obligations that do not make interest payments) and
variable amount master demand notes that permit the amount of
indebtedness to vary in addition to providing for periodic adjustments
in the interest rates. "Cash Equivalents" are instruments which are
highly liquid and virtually free of investment risk.
3
<PAGE>
ACCELERATING GROWTH FUND, FRAMLINGTON EMERGING MARKETS FUND, FRAMLINGTON GLOBAL
FINANCIAL SERVICES FUND, FRAMLINGTON HEALTHCARE FUND, FRAMLINGTON INTERNATIONAL
GROWTH FUND, GROWTH & INCOME FUND, GROWTH OPPORTUNITIES FUND, INDEX 500 FUND,
INTERNATIONAL EQUITY FUND, MICRO-CAP EQUITY FUND, MULTI-SEASON GROWTH FUND, REAL
ESTATE EQUITY INVESTMENT FUND, SMALL-CAP VALUE FUND, SMALL COMPANY GROWTH FUND
AND VALUE FUND (THE "EQUITY FUNDS")
. These Funds invest primarily in Equity Securities.
INDEX 500 FUND
. This Fund invests primarily in Equity Securities and it normally will
hold the securities of at least 80% of the issuers in the S&P 500. The
Fund is managed through a "quantitative" or "indexing" investment
approach, which attempts to duplicate the investment composition and
performance of the S&P 500 through statistical procedures.
BOND FUND, INTERMEDIATE BOND FUND, INTERNATIONAL BOND FUND AND U.S. GOVERNMENT
INCOME FUND (THE "BOND FUNDS")
. These Funds, other than the U.S. Government Income Fund, invest
primarily in Fixed Income Securities.
. The U.S. Government Income Fund invests primarily in obligations of
the U.S. government and its agencies and instrumentalities.
MICHIGAN TRIPLE TAX-FREE BOND FUND, TAX-FREE BOND FUND AND TAX-FREE INTERMEDIATE
BOND FUND (THE "TAX-FREE FUNDS")
. The Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund invest
primarily in Municipal Obligations. "Municipal Obligations" are
obligations of states, territories and possessions of the United
States and the District of Columbia, and their political subdivisions,
agencies, instrumentalities and authorities, the interest on which is
exempt from regular Federal income tax.
. The Michigan Triple Tax-Free Bond Fund invests primarily in Michigan
Municipal Obligations. "Michigan Municipal Obligations" are municipal
obligations issued by the State of Michigan and its political
subdivisions, the interest on which is exempt from Federal income
taxes, Michigan state income tax and Michigan intangibles tax.
CASH INVESTMENT FUND, TAX-FREE MONEY MARKET FUND AND U.S. TREASURY MONEY MARKET
FUND (THE "MONEY MARKET FUNDS")
. These Funds invest solely in dollar-denominated debt securities with
remaining maturities of 13 months or less and maintain an average
dollar-weighted portfolio maturity of 90 days or less.
Each Fund implements a different investment strategy which is described in
this Prospectus.
4
<PAGE>
Q: What are the Funds' risks?
A: The following table summarizes the primary risks of investing in the Funds:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
FUND RISK
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
Equity Funds and Balanced Fund Potential loss of investment due to changes in the stock
market in general, changes in the stock prices of particular
companies and perceptions about particular industries.
- --------------------------------------------------------------------------------------------------------------------
Bond Funds and Tax-Free Funds Potential loss of investment due to changes in the bond market
in general, in the prices of debt securities of particular
companies and in interest rates.
- --------------------------------------------------------------------------------------------------------------------
Money Market Funds Potential failure to maintain a $1.00 net asset value.
- --------------------------------------------------------------------------------------------------------------------
Framlington Emerging Markets Fund, Framlington Because of large investments in foreign securities, the Funds
Global Financial Services Fund, Framlington are riskier than domestic funds due to factors such as freezes
International Growth Fund, International Bond on convertibility of currency, changes in exchange rates,
Fund and International Equity Fund political instability and differences in accounting and
reporting standards.
- --------------------------------------------------------------------------------------------------------------------
Growth Opportunities Fund, Micro-Cap Equity Fund, Because of large investments in mid-capitalization,
Small Company Growth Fund and Small-Cap Value small-capitalization and/or emerging growth companies, the
Fund Funds are riskier than large-capitalization funds since such
companies typically have greater earnings fluctuations and
greater reliance on a few key customers than larger companies.
- --------------------------------------------------------------------------------------------------------------------
Real Estate Equity Investment Fund, Framlington These Funds concentrate their investments in single industries
Global Financial Services Fund and Framlington and could experience larger price fluctuations than funds
Healthcare Fund invested in a broader range of industries.
- --------------------------------------------------------------------------------------------------------------------
International Bond Fund, Michigan Triple Tax-Free These "non-diversified" Funds concentrate their investments in
Bond Fund and Tax-Free Intermediate Bond Fund fewer issuers than diversified funds, and could experience
larger price fluctuations than diversified funds.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Q: What are the options for investment in the Funds?
A: Each Equity, Bond and Tax-Free Fund offer five different investment options,
or classes: Class A, B, C, K and Y. The Money Market Funds offer Class A, K and
Y Shares. Class A, B, C and Y Shares are offered in other prospectuses.
Q: How do I buy and sell shares of the Funds?
A: Class K Shares of each Fund are available to customers ("Customers") of
banks and other institutions, and the immediate family members of such
Customers, that have entered into agreements with us to provide shareholder
services for Customers. You may purchase shares through such a bank or
financial institution.
Shares may be redeemed (sold back to the Fund) through your bank or
financial institution or, in some cases, through the free checkwriting
privilege.
You may also acquire the Funds' shares by exchanging shares of the same
class of other funds of the Trust, the Company and Framlington, and exchange
Fund shares for shares of the same class of other funds of the Trust, the
Company and Framlington.
Q: What shareholder privileges do the Funds offer?
A:
. Free Checkwriting (certain Funds only--See "Redemption of Shares").
5
<PAGE>
Q: When and how are distributions made?
A: Dividend distributions are made from the dividends and interest earned on
investments after expenses. Dividends paid at least annually: Framlington
Emerging Markets Fund, Framlington Global Financial Services Fund, Framlington
Healthcare Fund, Framlington International Growth Fund, Growth Opportunities
Fund, International Equity Fund, Micro-Cap Equity Fund, Multi-Season Growth
Fund, Small-Cap Value Fund and Value Fund.
Dividends paid at least quarterly (if income is available): Accelerating
Growth Fund, Balanced Fund, Growth & Income Fund, Index 500 Fund, Small Company
Growth Fund and International Bond Fund.
Dividends paid monthly: Real Estate Equity Investment Fund, Bond Fund,
Intermediate Bond Fund, U.S. Government Income Fund, Michigan Triple Tax-Free
Bond Fund, Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund.
Dividends declared daily and paid monthly: Cash Investment Fund, Tax-Free
Money Market Fund, and U.S. Treasury Money Market Fund.
The Funds distribute capital gains at least annually. Unless you elect to
receive distributions in cash, we will use all dividends and capital gain
distributions of a Fund to purchase additional shares of that Fund.
Q: Who manages the Funds' assets?
A: Munder Capital Management is the Funds' investment advisor. The Advisor is
responsible for all purchases and sales of the securities held by the Funds
other than the Framlington Funds. The Advisor provides overall investment
management services for the Framlington Funds. Framlington Overseas Investment
Management Limited (the "Sub-Advisor") is responsible for all purchases and
sales of securities held by the Framlington Emerging Markets, Healthcare and
International Growth Funds. The Advisor is responsible for purchases and sales
of domestic securities and the Sub-Advisor is responsible for sales of foreign
securities for the Framlington Global Financial Services Fund.
FINANCIAL INFORMATION
SHAREHOLDER TRANSACTION EXPENSES(1)
The purpose of this table is to assist you in understanding the expenses a
shareholder in the Funds will bear directly.
<TABLE>
<S> <C>
Maximum Sales Charge on Purchase (as a % of Offering Price)....................None
Sales Charges Imposed on Reinvested Dividends..................................None
Maximum Deferred Sales Charge..................................................None
Redemption Fees (2)............................................................None
Exchange Fees..................................................................None
</TABLE>
- ------------------
Notes:
(1) Does not include fees which institutions may charge for services they
provide to you.
(2) The Funds' transfer agent may charge a fee of $7.50 for wire redemptions
under $5,000.
6
<PAGE>
FUND OPERATING EXPENSES
The purpose of this table is to assist you in understanding the expenses
charged directly to each Fund, which investors in the Funds will bear indirectly
for the current fiscal year. Such expenses include payments to Trustees,
Directors, auditors, legal counsel and service providers (such as the Advisor)
and registration fees. The fees shown below are based on fees for the Funds'
past fiscal year, except (i) the fees for the Index 500 Fund, Mid-Cap Growth
Fund, Real Estate Equity Investment Fund and Value Fund have been restated to
reflect the discontinuation of voluntary expense reimbursements effective as of
the date of this Prospectus, (ii) the fees for the Index 500 Fund and the Multi-
Season Growth Fund reflect an anticipated voluntary advisory fee waiver for the
current fiscal year and (iii) the fees for the Micro-Cap Equity Fund, Small-Cap
Value Fund, Growth Opportunities Fund, International Bond Fund and the
Framlington Funds are based on estimated operating expenses for the current
fiscal year and reflect anticipated voluntary expense reimbursements for the
Micro-Cap Equity Fund, Framlington Healthcare Fund, Growth Opportunities Fund
and Framlington Global Financial Services Fund. [UPDATE]
<TABLE>
<CAPTION>
ACCELERATING GROWTH & GROWTH INDEX
ANNUAL FUND OPERATING EXPENSES GROWTH BALANCED INCOME OPPORTUNITIES 500
(AS A % OF AVERAGE NET ASSETS) FUND FUND FUND FUND FUND
- ------------------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Advisory Fees.............................. .75% .65% .75% .75% .07%*
Shareholder Servicing Fees................. .25% .25% .25% .25% .25%
Other Expenses+............................ .20% .32% .20% .40%++ .22%
---- ----- ----- ----- ----
Total Fund Operating Expenses+............. 1.20% 1.22% 1.30% 1.40%++ .54%*
---- ----- ----- ----- ----
<CAPTION>
MICRO- MULTI- REAL ESTATE SMALL-
INTERNATIONAL CAP SEASON EQUITY CAP
ANNUAL FUND OPERATING EXPENSES EQUITY EQUITY GROWTH INVESTMENT VALUE
(AS A % OF AVERAGE NET ASSETS) FUND FUND FUND FUND FUND
- ------------------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Advisory Fees.............................. .75% 1.00% .75%* .74% .75%
Shareholder Servicing Fees................. .25% .25% .25% .25% .25%
Other Expenses+............................ .26% .25%++ .25% .11% .38%
---- ------- ------ ---- ----
Total Fund Operating Expenses+............. 1.26% 1.50%++ 1.25%* 1.10% 1.38%
===== ===== ===== ===== =====
<CAPTION>
FRAMLINGTON
SMALL FRAMLINGTON GLOBAL
COMPANY EMERGING FINANCIAL FRAMLINGTON
ANNUAL FUND OPERATING EXPENSES GROWTH VALUE MARKETS SERVICES HEALTHCARE
(AS A % OF AVERAGE NET ASSETS) FUND FUND FUND FUND FUND
- ------------------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Advisory Fees.............................. .75% .74% 1.25% .75% 1.00%
Shareholder Servicing Fees................. .25% .25% .25% .25% .25%
Other Expenses+............................ .22% .28% .29% .50%++ .30%++
----- ---- ----- ----- -----
Total Fund Operating Expenses+............. 1.22% 1.27% 1.79% 1.50%++ 1.55%++
===== ===== ===== ===== =====
<CAPTION>
FRAMLINGTON U.S.
INTERNATIONAL INTERMEDIATE INTERNATIONAL GOVERNMENT
ANNUAL FUND OPERATING EXPENSES GROWTH BOND BOND BOND INCOME
(AS A % OF AVERAGE NET ASSETS) FUND FUND FUND FUND FUND
- ------------------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Advisory 1.00% .50% .50% .50% .50%
Fees.......................................
Shareholder Servicing .25% .25% .25% .25% .25%
Fees.......................................
Other Expenses.............................. .30% .21% .18% .35% .21%
----- ----- ----- ----- -----
Total Fund Operating Expenses............... 1.55% .96% .93% 1.10% .96%
===== ===== ===== ===== =====
<CAPTION>
MICHIGAN TAX-FREE TAX-FREE
TRIPLE TAX- TAX-FREE INTERMEDIATE CASH MONEY
ANNUAL FUND OPERATING EXPENSES FREE BOND BOND BOND INVESTMENT MARKET
(AS A % OF AVERAGE NET ASSETS) FUND FUND FUND FUND FUND
- ------------------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Advisory Fees.............................. .50% .50% .50% .35% .35%
Shareholder Servicing Fees................. .25% .25% .25% .15% .15%
Other Expenses............................. .13% .20% .18% .20% .18%
----- ----- ----- ----- -----
Total Fund Operating Expenses.............. .88% .95% .93% .70% .68%
===== ===== ===== ===== =====
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES U.S. TREASURY MONEY
(AS A % OF AVERAGE NET ASSETS) MARKET FUND
- ------------------------------ -----------
<S> <C>
Advisory Fees............................................ .35%
Shareholder Servicing Fees............................... .15%
Other Expenses........................................... .19%
---
Total Fund Operating Expenses............................ .69%
</TABLE> ===
- ---------------
* The Advisor expects to voluntarily waive a portion of its advisory fees for
the current fiscal year. Without waiver, the ratio of advisory fees to
average net assets would be 1.00% for the Multi-Season Growth Fund and .15%
for the Index 500 Fund and total fund operating expenses would be at 1.50%
for the Multi-Season Growth Fund and .62% for the Index 500 Fund.
+ After expense reimbursements, if any.
++ The Advisor expects to voluntarily reimburse the Funds for certain operating
expenses. In the absence of such expense reimbursements, it is estimated
that total fund operating expenses would be as follows: 1.76% for the
Framlington Healthcare Fund, 1.67% for the Framlington Global Financial
Services Fund, 1.53% for the Growth Opportunities Fund and 1.60% for the
Micro-Cap Equity Fund.
EXAMPLE
This example shows the amount of expenses you would pay (directly or
indirectly) on a $1,000 investment in the Fund assuming (1) a 5% annual return
and (2) redemption at the end of the time periods. THIS EXAMPLE IS NOT A
REPRESENTATION OF PAST OR FUTURE PERFORMANCE OR OPERATING EXPENSES; ACTUAL
PERFORMANCE OR OPERATING EXPENSES MAY BE LARGER OR SMALLER THAN THOSE SHOWN.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ -------- ------- --------
<S> <C> <C> <C> <C>
Accelerating Growth Fund $12 $38 $66 $145
Balanced Fund $12 $39 $67 $148
Growth & Income Fund $12 $38 $66 $145
Growth Opportunities Fund $14 $45
Index 500 Fund $ 6 $17 $30 $ 68
International Equity Fund $13 $40 $69 $152
Micro-Cap Equity Fund $15 $47 $82 $179
Multi-Season Growth Fund $13 $40 $69 $151
Real Estate Equity Investment Fund $14 $43 $74 $162
Small-Cap Value Fund $14 $44 $76 $166
Small Company Growth Fund $12 $39 $67 $148
Value Fund $13 $40 $70 $153
Framlington Emerging Markets Fund $18 $56 $97 $211
Framlington Global Financial Services Fund $15 $48
Framlington Healthcare Fund $16 $49 $84 $185
Framlington International Growth Fund $16 $49 $84 $185
Bond Fund $10 $31 $53 $118
Intermediate Bond Fund $ 9 $30 $51 $114
International Bond Fund $11 $35 $61 $134
U.S. Government Income Fund $10 $31 $53 $118
Michigan Triple Tax-Free Bond Fund $ 9 $28 $49 $108
Tax-Free Bond Fund $10 $30 $53 $117
Tax-Free Intermediate Bond Fund $ 9 $30 $51 $114
Cash Investment Fund $ 7 $22 $39 $ 87
Tax-Free Money Market Fund $ 7 $22 $38 $ 85
U.S. Treasury Money Market Fund $ 7 $22 $38 $ 86
</TABLE>
8
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights were audited by Ernst & Young LLP,
independent auditors, except that, for periods ended prior to June 30, 1995 for
the Multi-Season Growth Fund, such financial highlights were audited by another
independent auditor. This information should be read in conjunction with the
Funds' most recent Annual Reports, which are incorporated by reference into the
SAI. You may obtain the Annual Reports without charge by calling (800) 438-5789.
<TABLE>
<CAPTION>
ACCELERATING GROWTH FUND(A)
-----------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(H) 6/30/96 6/30/95(D) 2/28/95(D) 2/28/94 2/28/93
------- ------- ------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............
Income from investment operations:
Net investment income/(loss)...................
Net realized and unrealized gain/(loss)
on investments................................
Total from investment operations...............
Less distributions:
Dividends from net investment income...........
Distributions from net realized gains..........
Total distributions............................
Net asset value, end of period.................
Total return (b)...............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)...........
Ratio of operating expenses to
average net assets ...........................
Ratio of net investment income/(loss) to
average net assets............................
Portfolio turnover rate........................
Ratio of operating expenses to average net
assets w/o waivers............................
Average commission rate paid(f)................
</TABLE>
_________________________________________
(a) The Munder Accelerating Growth Fund Class K Shares commenced operations on
November 23, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Amount represents less than $0.01 per share.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately represents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
9
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND(A)
----------------------------------------------------------------------------------
YEAR YEAR PERIOD PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(g) 6/30/96(g) 6/30/95(d) 2/28/95(e) 2/28/94
-------- ---------- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............
Income from investment operations:
Net investment income.........................
Net realized and unrealized gain/(loss) on
investments..................................
Total from investment operations..............
Less distributions:
Dividends from net investment income..........
Distributions from net realized gains.........
Total distributions...........................
Net asset value, end of period..................
Total return (b)..............................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)..........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment income to average
net assets...................................
Portfolio turnover rate.......................
Ratio of operating expenses to average net
assets w/o waivers...........................
Average commission paid rate(f)...............
</TABLE>
- ---------------------------------------------
(a) The Munder Balanced Fund Class K Shares commenced operations on April 16,
1993.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
10
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND (a)
------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(D) 2/28/95(E)
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period...................
Income from investment operations:
Net investment income................................
Net realized and unrealized gain on investments......
Total from investment operations.....................
Less distributions:
Dividends from net investment income.................
Distributions from net realized gains................
Total distributions..................................
Net asset value, end of period.........................
Total return(b)......................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).................
Ratio of operating expenses to average net assets....
Ratio of net investment income to average net assets.
Portfolio turnover rate..............................
Ratio of operating expenses to average net assets
w/o waivers.........................................
Average commission rate paid(g)......................
</TABLE>
_________________________________
(a) The Munder Growth & Income Fund Class K Shares commenced operations on July
5, 1994.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Amount represents less than $0.01 per share.
11
<PAGE>
<TABLE>
<CAPTION>
GROWTH
OPPORTUNITIES FUND(A)
-----------------------------
PERIOD
ENDED
6/30/98
-----------------------------
<S> <C>
Net asset value, beginning of period...........................
Income from investment operations:
Net investment income........................................
Net realized and unrealized gain on investments..............
Total from investment operations.............................
Less distributions:
Dividends from net investment income.........................
Distributions from net realized gains........................
Total distributions..........................................
Net asset value, end of period.................................
Total return (b).............................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........................
Ratio of operating expenses to average net assets ...........
Ratio of net investment income to average net assets.........
Portfolio turnover rate......................................
Ratio of operating expenses to average net assets w/o
waivers and/or expenses reimbursed.........................
Average commission rate paid(g)..............................
</TABLE>
__________________________
12
<PAGE>
<TABLE>
<CAPTION>
INDEX 500 FUND(A)
-------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96(D) 6/30/95(E) 2/28/95(D,F) 2/28/94 2/28/93
-------- -------- ----------- ----------- ------------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........
Income from investment operations:
Net investment income.....................
Net realized and unrealized gain on
investments...............................
Total from investment operations..........
Less distributions:
Dividends from net investment income......
Distributions from net realized gains.....
Total distributions.......................
Net asset value, end of period..............
Total return(b)...........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)......
Ratio of operating expenses to average
net assets ...............................
Ratio of net investment income to average
net assets................................
Portfolio turnover rate...................
Ratio of operating expenses to average net
assets w/o waivers and/or expenses
reimbursed................................
Average commission rate paid(g)...........
</TABLE>
- --------------------------------------------
(a) The Munder Index 500 Fund Class K Shares commenced operations on December 7,
1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(e) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Average commission rate paid per share of securities purchased and sold by
the fund.
13
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND(a)
-------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(d) 6/30/96(d) 6/30/95(e) 2/28/95(d,f) 2/28/94 2/28/93
-------- ----------- ----------- ----------- ------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period.....................................
Income from investment operations:
Net investment income....................
Net realized and unrealized
gain/(loss)on investments..............
Total from investment operations.........
Less distributions:
Dividends from net investment
income.................................
Distributions from net realized
gains..................................
Distributions from capital...............
Total distributions......................
Net asset value, end of period.............
Total return (b).........................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in 100's).....
Ratio of operating expenses to
average net assets.....................
Ratio of net investment income to
average net assets.....................
Portfolio turnover rate..................
Ratio of operating expenses to average
net assets w/o waivers.................
Average commission rate paid(g)..........
</TABLE>
______________________________
(a) The Munder International Equity Fund Class K Shares commenced operations on
November 23, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(e) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
14
<PAGE>
<TABLE>
<CAPTION>
MICRO-CAP
EQUITY FUND
------------------
YEAR PERIOD
ENDED ENDED
6/30/98 6/30/97
------- -------
<S> <C> <C>
Net asset value, beginning of period..........................................
Income from investment operation:
Net investment loss.........................................................
Net realized and unrealized gain on investments.............................
Total from investment operations............................................
Less distributions:
Dividends from net investment income........................................
Distributions from net realized gains.......................................
Total distributions.........................................................
Net asset value, end of period................................................
Total return (b)............................................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)........................................
Ratio of operating expenses to average net assets ..........................
Ratio of net investment loss to average net assets..........................
Portfolio turnover rate.....................................................
Ratio of operating expenses to average net assets w/o
expenses reimbursed.........................................................
Average commission rate paid(d).............................................
</TABLE>
_______________________________
(a) The Munder Micro-Cap Equity Fund Class K Shares commenced operations on
December 31, 1996. The Munder Mid-Cap Growth Funvd Class K Shares commenced
operations on October 2, 1995.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
15
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND(a)
----------------------------------------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/98 6/30/97(e) 6/30/96(e) 6/30/95(d,g)
---------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period......................
Income from investment operations:
Net investment income...................................
Net realized and unrealized gain/(loss) on investments..
Total from investment operations........................
Less distributions:
Dividends from net investment income....................
Distributions from net realized gains...................
Total distributions.....................................
Net asset value, end of period............................
Total return (b)........................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)....................
Ratio of operating expenses to average net assets.......
Ratio of net investment income to average net assets....
Portfolio turnover rate.................................
Ratio of operating expenses to average net assets w/o
waivers................................................
Average commission rate paid(f).........................
</TABLE>
________________________________________
(a) The Munder Multi-Season Growth Fund Class K Shares commenced operations on
June 23, 1995.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(f) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
(h) Amount represents less than $0.01 per share.
16
<PAGE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY SMALL-CAP
INVESTMENT FUND(A) VALUE FUND(A)
------------------------------------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/98 6/30/97(e)
---------- --------- --------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period..................
Income from investment operations:
Net investment income...............................
Net realized and unrealized gain
on investments......................................
Total from investment operations....................
Less distributions:
Dividends from net investment income................
Distributions from net realized gains...............
Distributions from paid-in capital..................
Total distributions.................................
Net asset value, end of period........................
Total return(b).....................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)................
Ratio of operating expenses to average
net assets .........................................
Ratio of net investment income to average
net assets..........................................
Portfolio turnover rate.............................
Ratio of operating expenses to average
net assets w/o waivers and/or expenses reimbursed...
Average commission rate paid(g).....................
</TABLE>
____________________________________
<TABLE>
<S> <C>
(a) The Munder Real Estate Equity Investment Fund Class K Shares commenced
operations on October 3, 1996. The Munder Small-Cap Value Fund Class K Shares
commenced operations on December 31, 1996.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND(a)
--------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(g) 6/30/96(g) 6/30/95(d) 2/28/95(e) 2/28/94 2/28/93
------- --------- --------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......
Income from investment operations:
Net investment loss.....................
Net realized and unrealized
gain/(loss) on investments..............
Total from investment operations........
Less distributions:
Dividends from net investment income....
Distributions from net realized gains...
Total distributions.....................
Net asset value, end of period.............
Total return(b).........................
Ratios to average net assets/supplemental
data:
Ratio of net investment loss to average
net assets..............................
Portfolio turnover rate.................
Ratio of operating expenses to average
net assets w/o waivers..................
Average commission rate paid(f).........
</TABLE>
____________________________
(a) The Munder Small Company Growth Fund Class K Shares commenced operations on
November 23, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
18
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND(a)
-----------------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/96(E)
----------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period...........................
Income from investment operations:
Net investment income........................................
Net realized and unrealized gain on investments..............
Total from investment operations.............................
Less distributions:
Dividends from net investment income.........................
Distributions from net realized gains........................
Total distributions..........................................
Net asset value, end of period.................................
Total return (b).............................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........................
Ratio of operating expenses to average net assets............
Ratio of net investment income to average net assets.........
Portfolio turnover rate......................................
Ratio of operating expenses to average net assets
w/o waivers and/or expenses reimbursed......................
Average commission rate paid(d)..............................
</TABLE>
_______________________________________
(a) The Munder Value Fund Class K Shares commenced operations on November 30,
1995.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
19
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON FRAMLINGTON FRAMLINGTON FRAMLINGTON
EMERGING HEALTHCARE INTERNATIONAL GROWTH GLOBAL FINANCIAL
MARKETS FUND(A) FUND(A) FUND(A) SERVICES FUND
------------------------------------------------------------------------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/98 6/30/97 6/30/98 6/30/97(E) 6/30/98
------- ---------- ------- ------- ------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period.................................
Income from investment operations:
Net investment income/(loss).........
Net realized and unrealized
gain on investments.................
Total from investment operations.....
Less distributions:
Dividends from net investment
income..............................
Distributions from net realized
gains...............................
Total distributions..................
Net asset value, end of period..........
Total return (b).....................
Ratios to average net assets/
supplemental data:
Net assets, end of period (in
000's)..............................
Ratio of operating expenses to
average net assets..................
Ratio of net investment income/
(loss) to average net assets........
Portfolio turnover rate..............
Ratio of operating expenses to
average net assets w/o expenses
reimbursed..........................
Average commission rate paid(d)......
</TABLE>
_______________________________________
(a) The Munder Framlington Emerging Markets Fund Class K Shares commenced
operations on January 10, 1997. The Munder Framlington Healthcare Fund Class K
Shares commenced operations on April 1, 1997. The Munder Framlington
International Growth Fund Class K Shares commenced operations on January 10,
1997.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
20
<PAGE>
<TABLE>
<CAPTION>
BOND FUND(A)
----------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(e) 2/28/95(d,f) 2/28/94 2/28/93(e)
---------- --------- --------- ----------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........
Income from investment operations:
Net investment income.....................
Net realized and unrealized gain/(loss)
on investments............................
Total from investment operations..........
Less distributions:
Dividends from net investment income......
Distributions from net realized gains.....
Total distributions.......................
Net asset value, end of period..............
Total return(b)...........................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in 000's)......
Ratio of operating expenses to
average net assets........................
Ratio of net investment income to
average net assets........................
Portfolio turnover rate...................
Ratio of operating expenses to average
net assets w/o waivers....................
</TABLE>
__________________________________________
(a) The Munder Bond Fund Class K Shares commenced operations on November 23,
1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(e) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
21
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND(A)
------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93
---------- ---------- --------- ---------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period......
Income from investment operations:
Net investment income..................
Net realized and unrealized gain/(loss)
on investments.........................
Total from investment operations.......
Less distributions:
Dividends from net investment income...
Distributions from net realized gains..
Total distributions....................
Net asset value, end of period.........
Total return(b)........................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's).................................
Ratio of operating expenses to
average net assets.....................
Ratio of net investment income to
average net assets.....................
Portfolio turnover rate................
Ratio of operating expenses to
average net assets w/o waivers.........
</TABLE>
______________________________________
(a) The Munder Intermediate Bond Fund Class K Shares commenced operations on
November 20, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
22
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL US GOVERNMENT
BOND FUND(A) INCOME FUND(A)
--------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/98 6/30/97 6/30/96(F) 6/30/95(D) 2/28/95(E)
--------- ------- ------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period......
Income from investment operations:
Net investment income...................
Net realized and unrealized gain/(loss)
on investments..........................
Total from investment operations........
Less distributions:
Dividends from net investment income....
Distributions from net realized gains...
Total distributions.....................
Net asset value, end of period............
Total return (b)........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)....
Ratio of operating expenses to average
net assets..............................
Ratio of net investment income to
average net assets......................
Portfolio turnover rate.................
Ratio of operating expenses to average
net assets w/o waivers..................
</TABLE>
_________________________________________
(a) The Munder International Bond Fund Class K Shares commenced operations on
March 25, 1997. The Munder U.S. Government Income Fund Class K Shares commenced
operations on July 5, 1994.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(g) Amount represents less than $0.01 per share.
23
<PAGE>
<TABLE>
<CAPTION>
MICHIGAN TRIPLE TAX-FREE BOND FUND(A)
--------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(d) 6/30/96(d) 6/30/95(d,e) 2/28/95(d,f) 2/28/94
------- ---------- ---------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............
Income from investment operations:
Net investment income.........................
Net realized and unrealized gain/(loss)
on investments................................
Total from investment operations..............
Less distributions:
Dividends from net investment income..........
Distributions from net realized gains.........
Total distributions...........................
Net asset value, end of period..................
Total return (b)..............................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in 000's)..........
Ratio of operating expenses to
average net assets............................
Ratio of net investment income to
average net assets............................
Portfolio turnover rate.......................
Ratio of operating expenses to average
net assets w/o waivers and/or expenses
reimbursed....................................
</TABLE>
____________________________________________
(a) The Munder Michigan Triple Tax-Free Bond Fund Class K Shares commenced
operations on January 3, 1994.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(e) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Amount represents less than $0.01 per share.
24
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE BOND FUND(A)
--------------------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(f) 6/30/96(f) 6/30/95(d,f) 2/28/95(e)
------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......................
Income from investment operations:
Net investment income...................................
Net realized and unrealized gain on investments.........
Total from investment operations........................
Less distributions:
Dividends from net investment income....................
Distributions from net realized gains...................
Total distributions.....................................
Net asset value, end of period............................
Total return (b)........................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)....................
Ratio of operating expenses to average net assets ......
Ratio of net investment income to average net assets....
Portfolio turnover rate.................................
Ratio of operating expenses to average net assets w/o
waivers and/or expenses reimbursed......................
</TABLE>
____________________________________________
(a) The Munder Tax-Free Bond Fund Class K Shares commenced operations on July 5,
1994.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the monthly average shares
method, which more appropriately presents the per share data for the period
since the use of the undistributed net investment income method did not accord
with the results of operations.
25
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE BOND FUND(A)
----------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(f) 6/30/96(f) 6/30/95(d) 2/28/95(e) 2/28/94 2/28/93
---------- ----------- ----------- ------------ ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period..............................
Income from investment operations:
Net investment income..............
Net realized and unrealized
gain/(loss) on investments.........
Total from investment
operations.........................
Less distributions:
Dividends from net investment
income.............................
Distributions from net realized
gains..............................
Total distributions................
Net asset value, end of period.......
Total return (b)...................
Ratios to average net assets/
supplemental data:
Net assets, end of period (in
000's).............................
Ratio of operating expenses to
average net assets.................
Ratio of net investment income to
average net assets.................
Portfolio turnover rate............
Ratio of operating expenses to
average net assets w/o waivers.....
</TABLE>
____________________________________
(a) The Munder Tax-Free Intermediate Bond Fund Class K Shares commenced
operations on February 9, 1987.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations
26
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE BOND FUND(A)
---------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
7/31/92(g) 7/31/91(g) 7/31/90(g) 7/31/89(g) 7/31/88(g) 7/31/87(g)
----------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........
Income from investment operations:
Net investment income.....................
Net realized and unrealized
gain/(loss) on investments................
Total from investment operations..........
Less distributions:
Dividends from net investment income......
Distributions from net realized gains.....
Total distributions.......................
Net asset value, end of period............
Total return (b)..........................
Ratios to average net assets
/supplemental data:
Net assets, end of period (in 000's)......
Ratio of operating expenses to
average net assets........................
Ratio of net investment income to
average net assets........................
Portfolio turnover rate...................
Ratio of operating expenses to
average net assets w/o waivers............
</TABLE>
____________________________________________
(a) The Munder Tax-Free Intermediate Bond Fund Class K Shares commenced
operations on February 9, 1987.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
27
<PAGE>
<TABLE>
<CAPTION>
CASH INVESTMENT FUND(A)
---------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(d) 2/28/95(e) 2/28/94 2/28/93(e)
-------- -------- -------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period..............................
Income from investment operations:
Net investment income..............
Total from investment
operations.........................
Less distributions:
Dividends from net investment
income.............................
Total distributions................
Net asset value, end of period.......
Total return (b)...................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's).............................
Ratio of operating expenses to
average net assets.................
Ratio of net investment income to
average net assets.................
Ratio of operating expenses to
average net assets w/o waivers.....
</TABLE>
_________________________________________
(a) The Munder Cash Investment Fund Class K Shares commenced operations on
November 23, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
28
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND(a)
-------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(d) 2/28/95(e) 2/28/94 2/28/93
-------- -------- -------- ----------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......
Income from investment operations:
Net investment income....................
Total from investment operations.........
Less distributions:
Dividends from net investment income.....
Total distributions......................
Net asset value, end of period.............
Total return (b).........................
Ratios to average net assets
/supplemental data:
Net assets, end of period (in 000's).....
Ratio of operating expenses to
average net assets.......................
Ratio of net investment income to
average net assets.......................
Ratio of operating expenses to
average net assets w/o waivers...........
</TABLE>
________________________________________
(a) The Munder Tax-Free Money Market Fund Class K Shares commenced operations on
November 23, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
29
<PAGE>
<TABLE>
<CAPTION>
US TREASURY MONEY MARKET FUND(a)
--------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(d) 2/28/95(e) 2/28/94 2/28/93
------- ------- ------- ---------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........
Income from investment operations:
Net investment income.....................
Total from investment operations..........
Less distributions:
Dividends from net investment income......
Total distributions.......................
Net asset value, end of period..............
Total return (b)..........................
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's)......
Ratio of operating expenses to average
net assets................................
Ratio of net investment income to average
net assets................................
Ratio of operating expenses to average
net assets w/o waivers....................
</TABLE>
_____________________________________________
(a) The Munder U.S. Treasury Money Market Fund Class K Shares commenced
operations on November 25, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
30
<PAGE>
FUND CHOICES
WHAT FUNDS ARE OFFERED?
This Prospectus offers Class K Shares of the Funds described below. This
section summarizes each Fund's principal investments. The sections entitled
"What are the Funds' Investments and Investment Practices?" and "What are the
Risks of Investing in the Funds?" and the SAI give more information about the
Funds' investment techniques and risks. Capitalized terms are explained in the
section entitled "What are the Funds' Investments and Investment Practices?"
ACCELERATING GROWTH FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide
long-term capital appreciation; its secondary goal is to provide income. Under
normal conditions, the Fund will invest at least 65% of its assets in Equity
Securities.
In choosing Equity Securities, the Advisor considers, among other factors:
. the potential for accelerated earnings growth
. the maintenance of a substantial competitive advantage
. a focused management team
. a stable balance sheet.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
The Fund is closed to new investments.
BALANCED FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide an
attractive investment return through a combination of growth of capital and
current income. The Fund will allocate its assets among three asset groups:
Equity Securities, Fixed Income Securities and Cash Equivalents.
. The Fund normally will invest at least 25% of its assets in Fixed
Income Securities and no more than 75% of its assets in Equity
Securities. The Fund will notify shareholders at least 30 days before
changing this policy.
The Advisor will allocate the Fund's assets to the three asset groups based
on its view of the following factors, among others:
. general market and economic conditions and trends
. interest rates and inflation rates
. fiscal and monetary developments
. long-term corporate earnings growth.
The Advisor will try to take advantage of changing economic conditions by
adjusting the ratio of Equity Securities to Fixed Income Securities or Cash
Equivalents. For example, if the Advisor believes that rapid economic growth
will lead to better corporate earnings in the future, then it might increase the
Fund's Equity Securities holdings and reduce its Fixed Income Securities and
Cash Equivalents holdings.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
31
<PAGE>
GROWTH & INCOME FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide capital
appreciation and current income. It primarily invests in dividend-paying Equity
Securities and is designed for investors seeking current income and capital
appreciation from the equity markets.
. Under normal circumstances, the Fund will invest at least 65% of its
assets in income-producing common stocks and convertible preferred
stocks.
. The Fund may also purchase Fixed Income Securities which are
convertible into or exchangeable for common stock.
. The Fund may invest up to 35% of its assets in Fixed Income
Securities, including 20% of its assets in Fixed Income Securities
that are rated below investment grade.
The Advisor generally selects large, well-known companies that it believes
have favorable prospects for dividend growth and capital appreciation. The Fund
will seek to produce a current yield greater than the S&P 500.
The Fund focuses on dividend-paying Equity Securities because, over time,
dividend income has accounted for a significant portion of the total return of
the S&P 500. In addition, dividends are usually a more stable and predictable
source of return than capital appreciation. The Advisor believes that stocks
which distribute a high level of current income generally have more stable
prices than those which pay below average dividends.
PORTFOLIO MANAGEMENT. Otto Hinzmann, Jr. is the Fund's portfolio manager,
a position he has held since February 1995. Mr. Hinzmann has been a Vice
President and Director of Equity Management of the Advisor or Old MCM, Inc.
("MCM"), the predecessor to the Advisor, since January 1987.
GROWTH OPPORTUNITIES FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. The Fund invests at least 65% of its assets in the Equity
Securities of companies with market capitalizations between $500 million and $5
billion. Its style, which focuses on both growth prospects and valuation, is
known as GARP (Growth at a Reasonable Price) and seeks to produce attractive
returns during various market environments.
The Advisor chooses the Fund's investments as follows: The Advisor reviews
the earnings growth of approximately 10,000 companies over the past three years.
It invests in approximately 50 to 100 companies based on:
. superior earnings growth
. financial stability
. relative market value
. price changes compared to the Standard & Poor's MidCap 400 Index.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
INDEX 500 FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide performance
and income that is comparable to the S&P 500. The S&P 500 is an index of 500
stocks which emphasize large capitalization companies. See Appendix A for more
information on the S&P 500. The Fund will normally hold the securities of at
least 400 of the stocks in the S&P 500.
32
<PAGE>
The Fund will try to achieve a correlation between the performance of its
portfolio and that of the S&P 500 of at least .95. A correlation of 1.0 would
mean that changes in the Fund's price mirror exactly changes in the S&P 500.
The timing of purchases and redemptions, changes in securities markets, level of
the Fund's assets and other factors affect the Fund's ability to exactly track
the S&P 500's performance.
The Fund is managed through the use of a "quantitative" investment approach
and tries to mirror the composition and performance of the S&P 500 through
statistical procedures. The Advisor does not use traditional methods of fund
investment management, i.e., it does not select stocks on the basis of economic,
financial and market analysis. Because the Fund pays brokerage costs and other
fees, its return may be lower than that of the S&P 500.
PORTFOLIO MANAGEMENT. Todd B. Johnson and Kenneth A. Schluchter III
jointly manage the Fund. Mr. Johnson, a Chief Investment Officer of the
Advisor, has served as the portfolio manager of the Fund since July 1992. Mr.
Schluchter, who has managed the Fund since June 1997, was previously a Systems
Developer and Data Analyst for Compuware Incorporated (1993-1995) and a Business
Analyst for Central Transport Incorporated (1989-1993).
INTERNATIONAL EQUITY FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. The Fund invests primarily in Foreign Securities,
American Depositary Receipts ("ADRs") and European Depositary Receipts ("EDRs").
At least once a quarter, the Advisor creates a list of Foreign Securities, ADRs
and EDRs (the "Securities List") which the Fund may purchase based on the
country where the company is located, its competitive advantages, its past
financial record, its future prospects for growth and the market for its
securities. The Advisor updates the Securities List frequently (at least
quarterly), adds new securities to the Securities List if they are eligible and
sells securities not on the updated Securities List as soon as practicable.
After the Advisor creates the Securities List, it divides the list into two
sections. The first section is designed to provide broad coverage of
international markets. The second section increases exposure to securities that
the Advisor expects will perform better than other stocks in their industry
sectors and their markets as a whole. When the Advisor believes broader market
exposure will benefit the Fund, it will allocate up to 80% of the Fund's assets
in first section securities. When the Advisor identifies strong potential for
specific securities to perform well, the Fund may invest up to 50% of its assets
in second section securities.
. Under normal market conditions, at least 65% of the Fund's assets are
invested in Equity Securities in at least three foreign countries.
. The Fund emphasizes companies with a market capitalization of at least
$100 million.
PORTFOLIO MANAGEMENT. Todd B. Johnson and Theodore Miller jointly manage
the Fund. Mr. Johnson, a Chief Investment Officer of the Advisor, and Mr.
Miller, senior portfolio manager of the Fund, have managed the Fund since July
1992 and October 1996, respectively. Mr. Miller previously worked as the
primary analyst for the Fund (1996) and for Interacciones Global Inc. (1993-
1995) and McDonald & Co. Securities Inc. (1991-1993).
MICRO-CAP EQUITY FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. It invests primarily in Equity Securities of smaller
capitalization companies. The Fund attempts to provide investors with
potentially higher returns than a fund that invests primarily in larger more
established companies. Since smaller capitalization companies are generally not
as well known to investors and have less of an investor following than larger
companies, they may provide higher returns due to inefficiencies in the
marketplace.
. Under normal market conditions, the Fund will invest at least 65% of
its assets in Equity Securities of companies having a market
capitalization of $200 million or less, which is considerably less
than the market capitalization of S&P 500 companies.
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The Advisor will choose companies that:
. present the ability to grow significantly over the next several years
. may benefit from changes in technology, regulations and industry
sector trends
. are still in the developmental stage and may have limited product
lines.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
MULTI-SEASON GROWTH FUND
GOAL AND OBJECTIVES. The Fund's goal is to provide long-term capital
appreciation. This goal is "fundamental" and cannot be changed without
shareholder approval. Its style, which focuses on both growth prospects and
valuation, is known as GARP (Growth at a Reasonable Price) and seeks to produce
attractive returns during various market environments. The Fund invests at least
65% of its assets in Equity Securities. The Fund generally invests in Equity
Securities of companies with market capitalizations of over $1 billion.
The Advisor chooses the Fund's investments as follows: The Advisor reviews
the earnings growth of approximately 5,500 companies over the past five years.
It invests in approximately 50 to 100 companies based on:
. superior earnings growth
. financial stability
. relative market value
. price changes compared to the S&P 500.
PORTFOLIO MANAGEMENT. The portfolio managers of the Fund, Leonard J. Barr
II and Lee P. Munder, have managed the Fund since its inception in April 1993.
Mr. Barr is the Senior Vice President and Director of Research of the Advisor.
From April 1988 to April 1993 he held similar positions with MCM. Mr. Munder is
the Chairman of the Advisor.
REAL ESTATE EQUITY INVESTMENT FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide both capital
appreciation and current income. This goal is "fundamental" and cannot be
changed without shareholder approval. The Fund invests primarily in U.S.
companies which are principally engaged in the real estate industry or which own
significant real estate. A company is "principally engaged" in the real estate
industry if at least 50% of its assets, gross income or net profits are
attributable to ownership, construction, management or sale of residential,
commercial or industrial real estate. The Fund will not own real estate
directly.
Under normal conditions, the Fund invests at least 65% of its total assets
in Equity Securities of U.S. companies in the real estate industry including:
. equity real estate investment trusts ("REITS")
. brokers, home builders and real estate developers
. companies with substantial real estate holdings (for example, paper
and lumber producers, hotels and entertainment companies)
. manufacturers and distributors of building supplies
. mortgage REITS
. financial institutions which issue or service mortgages.
In addition, the Fund may invest:
. up to 35% of its assets in companies other than real estate industry
companies
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. in Fixed Income Securities including up to 5% of its assets in debt
securities rated below investment grade or unrated if secured by real
estate assets if the Advisor believes that the underlying collateral
is sufficient
. in REITS only if they are traded on a securities exchange or NASDAQ.
PORTFOLIO MANAGEMENT. Peter K. Hoglund and Robert E. Crosby jointly manage
the Fund. Mr. Hoglund has managed the Fund since October 1996. Mr. Hoglund
formerly was the primary analyst of the Fund (October 1994 to October 1996).
Mr. Crosby has managed the Fund since March 1998. Mr. Crosby formerly was the
primary analyst of the Fund (1996-1998). Mr. Crosby has been with the Advisor
since 1993, and also serves as portfolio manager for separately managed
institutional accounts.
SMALL-CAP VALUE FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation, with income as a secondary objective. It invests
primarily in Equity Securities of smaller capitalization companies. The Fund
attempts to provide investors with potentially higher returns than a fund that
invests primarily in larger more established companies. Since small companies
are generally not as well known to investors and have less of an investor
following than larger companies, they may provide higher returns due to
inefficiencies in the marketplace.
. Under normal market conditions, the Fund will invest at least 65% of
its assets in Equity Securities of companies with market
capitalizations below $750 million, which is less than the market
capitalization of S&P 500 companies.
The Advisor will concentrate on companies that it believes are undervalued.
A company's Equity Securities may be undervalued because the company is
temporarily overlooked or out of favor due to general economic conditions, a
market decline, industry conditions or developments affecting the particular
company. The Fund will usually invest in Equity Securities of companies with
low price/earnings ratios, low price/cash flow ratios and low price/book values
compared to the general market.
In addition to valuation, the Advisor considers these factors, among
others, in choosing companies:
. a stable or improving earnings record
. sound finances
. above-average growth prospects
. participation in a fast growing industry
. strategic niche position in a specialized market
. adequate capitalization.
PORTFOLIO MANAGEMENT. Gerald Seizert, Edward Eberle and Brian Wall jointly
manage the Fund. Mr. Seizert, a Chief Executive Officer of the Advisor, has
managed the Fund since it commenced operations. Prior to joining the Advisor in
1995, Mr. Seizert was a Director and Managing Partner of Loomis, Sayles &
Company, L.P. Mr. Eberle, who has managed the Fund since March 1997, was
formerly the primary analyst for the Fund. Prior to joining the Advisor in
1995, he was an Executive Vice President and Portfolio Manager for Westpointe
Financial Corporation. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge Capital Management, Inc. ("Woodbridge") (1994-1995) and an Assistant
Vice President in Equity Research for Merrill Lynch, Pierce Fenner & Smith in
New York (1992-1994).
SMALL COMPANY GROWTH FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. The Fund invests primarily in Equity Securities of
smaller capitalization companies. The Fund attempts to provide investors with
potentially higher returns than a fund that invests primarily in larger more
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established companies. Since smaller capitalization companies are generally not
as well-known to investors and have less of an investor following than larger
companies, they may provide higher returns due to inefficiencies in the
marketplace.
. Under normal market conditions, the Fund will invest at least 65% of
the Fund's assets in Equity Securities of companies with market
capitalizations below $750 million, which is less than the market
capitalization of S&P 500 companies.
The Advisor considers these factors, among others, in choosing companies:
. above-average growth prospects
. participation in a fast-growing industry
. strategic niche position in a specialized market
. adequate capitalization.
PORTFOLIO MANAGEMENT. Carl Wilk and Michael P. Gura jointly manage the
Fund. Mr. Wilk, a Senior Portfolio Manager of the Advisor, has managed the Fund
since October 1996 and was the Fund's primary analyst from 1995 to 1996. Prior
to joining the Advisor in 1995, Mr. Wilk was a Senior Equity Research Analyst
for the Fund at Woodbridge. Mr. Gura has managed the Fund since March 1997.
Prior to joining the Advisor in 1995, Mr. Gura was a Vice President and Senior
Equity Analyst for the Fund at Woodbridge (1994-1995) and an investment officer
for Manufacturers National Bank Trust Department (1989-1994).
VALUE FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide
long-term capital appreciation, its secondary goal is to provide income. The
Fund invests primarily in the Equity Securities of well-established companies
with intermediate to large capitalizations, which typically exceed $750 million.
. The Fund will invest at least 65% of its assets in Equity Securities.
The Advisor will concentrate on companies that it believes are undervalued.
A company's Equity Securities may be undervalued because the company is
temporarily overlooked or out of favor due to general economic conditions, a
market decline, industry conditions or developments affecting the particular
company. The Fund will usually invest in Equity Securities of companies with
low price/earnings ratios, low price/cash flow ratios and low price/book values
compared to the general market.
In addition to valuation, the Advisor considers these factors, among
others, in choosing companies:
. a stable or improving earnings record
. sound finances
. above-average growth prospects
. participation in a fast-growing industry
. strategic niche position in a specialized market
. adequate capitalization.
PORTFOLIO MANAGEMENT. Gerald Seizert, Edward Eberle and Brian Wall jointly
manage the Fund. Mr. Seizert, a Chief Executive Officer of the Advisor, has
managed the Fund since it commenced operations. Prior to joining the Advisor in
1995, Mr. Seizert was a Director and Managing Partner of Loomis, Sayles &
Company, L.P. Mr. Eberle, who has managed the Fund since March 1997, was
formerly the primary analyst for the Fund. Prior to joining the Advisor in
1995, he was an Executive Vice President and Portfolio Manager for Westpointe
Financial Corporation. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge (1994-1995) and an Assistant Vice President in Equity Research for
Merrill Lynch, Pierce Fenner & Smith in New York (1992-1994).
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FRAMLINGTON EMERGING MARKETS FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. The Fund invests at least 65% of its assets in companies
in emerging market countries, as defined by the World Bank, the International
Finance Corporation, the United Nations or the European Bank for Reconstruction
and Development.
A company will be considered to be in an emerging market country if:
. the company is organized under the laws of, or has a principal office
in, an emerging market country,
. the company's stock is traded primarily in an emerging market country,
. most of the company's assets are in an emerging market country, or
. most of the company's revenues or profits come from goods produced or
sold, investments made or services performed in an emerging market
country.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Sub-Advisor makes investment decisions for the Fund. William
Calvert heads the committee.
FRAMLINGTON GLOBAL FINANCIAL SERVICES FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. Under normal market conditions, the Fund invests at least
65% of its assets in Equity Securities of U.S. and foreign companies which are
principally engaged in the financial services industry and companies providing
services primarily within the financial services industry. The Fund focuses
specifically on companies which are likely to benefit from growth or
consolidation in the financial services industry.
Examples of companies in the financial services industry are:
. commercial, industrial and investment banks
. savings and loan associations
. brokerage companies
. consumer and industrial finance companies
. real estate and leasing companies
. insurance companies
. holding companies for each of the above.
A company is "principally engaged" in the financial services industry if at
least 50% of its gross income, net sales or net profits comes from activities in
the financial services industry or if the company dedicates more than 50% of its
assets to the production of revenues from the financial services industry.
Under normal market conditions, the Fund invests at least 65% of its assets
in at least three different countries, including the United States.
The Sub-Advisor allocates assets among countries based on its analysis of
the trends in the financial services industry in particular regions, the
relative valuation of financial services companies in different regions and its
assessment of the prospects for a particular equity market and its currency.
PORTFOLIO MANAGEMENT. A committee of professional managers employed by the
Advisor or the Sub-Advisor makes decisions for the Fund.
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FRAMLINGTON HEALTHCARE FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation by investing in companies providing healthcare and medical
services and products worldwide. Currently, most of these companies are located
in the United States.
The Fund will invest in:
. pharmaceutical producers
. biotechnology firms
. medical device and instrument manufacturers
. distributors of healthcare products
. healthcare providers and managers
. other healthcare service companies.
Under normal conditions, the Fund will invest at least 65% of its assets in
healthcare companies, which are companies for which at least 50% of sales,
earnings or assets arise from or are dedicated to health services or medical
technology activities.
PORTFOLIO MANAGEMENT. Antony Milford is the head of the Specialist Desk
for the Sub-Advisor. He is the Fund's primary portfolio manager, a position he
has held since the Fund's inception. Mr. Milford has managed funds for the Sub-
Advisor since 1971.
FRAMLINGTON INTERNATIONAL GROWTH FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. Under normal market conditions, at least 65% of the
Fund's assets will be invested in Equity Securities in at least three foreign
countries.
The Sub-Advisor will choose companies that demonstrate:
. above-average profitability
. high quality management
. the ability to grow significantly in their countries.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Sub-Advisor makes investment decisions for the Fund. Simon Key,
Chief Investment Officer of the Sub-Advisor, heads the committee.
BOND FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide a
high level of current income, its secondary goal is capital appreciation.
. Under normal market conditions, at least 65% of the Fund's assets will
be invested in Fixed Income Securities.
. The Fund's dollar-weighted average maturity will generally be between
six and fifteen years.
PORTFOLIO MANAGEMENT. James C. Robinson and Gregory A. Prost jointly
manage the Fund. Mr. Robinson and Mr. Prost have managed the Fund since March
1995 and May 1995, respectively. Mr. Robinson has been a Vice President and
Chief Investment Officer of the Advisor or MCM since 1987. Mr. Prost has been a
Senior Fixed Income Portfolio Manager of the Advisor or MCM since 1995. Prior to
joining the Advisor, he was a Vice President and Senior Fund Manager for First
of America Investment Corp.
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INTERMEDIATE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a
competitive rate of return which, over time, exceeds the rate of inflation and
the return provided by money market instruments.
. Under normal conditions, at least 65% of the Fund's assets will be
invested in Fixed Income Securities.
. The Fund's dollar-weighted average maturity will generally be between
three and eight years.
PORTFOLIO MANAGEMENT. Anne K. Kennedy and James C. Robinson jointly manage
the Fund. Ms. Kennedy, Vice President and Director of Corporate Bond Trading of
the Advisor or MCM since 1991, has managed the Fund since March 1995. Mr.
Robinson, Vice President and Chief Investment Officer of the Advisor or MCM
since 1987, has managed the Fund since March 1995.
INTERNATIONAL BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to realize a
competitive total return through a combination of current income and capital
appreciation. Under normal market conditions, at least 65% of the Fund's assets
will be invested in Foreign Securities of issuers in at least three countries
other than the United States. The Fund's dollar-weighted average maturity will
generally be between three and fifteen years. The Fund will invest mostly in:
. foreign debt obligations issued by foreign governments and their
agencies, instrumentalities or political subdivisions
. debt securities issued or guaranteed by supra-national organizations,
such as the World Bank
. debt securities of banks or bank holding companies
. corporate debt securities
. other debt securities, including those convertible into foreign stock.
PORTFOLIO MANAGEMENT. Gregory A. Prost and Sharon E. Fayolle jointly
manage the Fund. Mr. Prost, Senior Fixed Income Portfolio Manager of the
Advisor or MCM, has managed the Fund since October 1996. Prior to joining MCM
in 1995, he was a Vice President and Senior Fund Manager for First of America
Investment Corp. Ms. Fayolle, Vice President and Director of Money Market
Trading for the Advisor or MCM, has managed the Fund since October 1996. Prior
to joining MCM in 1996, she was a European Portfolio Manager for Ford Motor
Company.
U.S. GOVERNMENT INCOME FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide high current
income.
. Under normal market conditions, at least 65% of the Fund's assets will
be invested in U.S. Government Obligations.
. The Fund's dollar-weighted average maturity generally will be between
six and fifteen years.
PORTFOLIO MANAGEMENT. James C. Robinson and Peter G. Root jointly manage
the Fund. Mr. Robinson, Vice President and Chief Investment Officer of the
Advisor or MCM since 1987, and Mr. Root, Vice President and Director of
Government Securities Trading of the Advisor since March 1995, have managed the
Fund since March 1995. Mr. Root joined MCM in 1991.
MICHIGAN TRIPLE TAX-FREE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide as high a
level of current interest income exempt from regular Federal income taxes,
Michigan state income and Michigan intangibles tax as is consistent with prudent
investment management and preservation of capital.
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. Except during temporary defensive periods, at least 80% of the Fund's
net assets are invested in Michigan Municipal Obligations.
. The Fund will invest primarily in Michigan Municipal Obligations which
have remaining maturities of between three and thirty years.
. The Fund's dollar-weighted average maturity will generally be between
ten and twenty years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank
(1985-1993).
TAX-FREE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a high level
of current interest income exempt from Federal income taxes and to generate as
competitive a long-term rate of return as is consistent with prudent investment
management and preservation of capital.
. Under normal market conditions, at least 65% of the Fund's assets will
be invested in Municipal Obligations.
. Except during temporary defensive periods, at least 80% of the Fund's
net assets will be invested in Municipal Obligations whose interest is
exempt from regular Federal income tax. This fundamental policy may
only be changed with shareholder approval.
. The Fund invests primarily in intermediate-term and long-term
Municipal Obligations which have remaining maturities of between three
and thirty years.
. The Fund's dollar-weighted average maturity will generally be between
ten and twenty years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank
(1985-1993).
TAX-FREE INTERMEDIATE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a
competitive level of current interest income exempt from regular Federal income
taxes and a total return which, over time, exceeds the rate of inflation and the
return provided by tax-free money market instruments.
. Under normal market conditions, at least 65% of the Fund's net assets
will be invested in Municipal Obligations.
. Except during temporary defensive periods, at least 80% of the Fund's
assets will be invested in Municipal Obligations whose interest is
exempt from regular Federal income tax.
. The Fund invests in Michigan Municipal Obligations from time to time.
. The Fund generally buys obligations with remaining maturities of ten
years or less.
. The Fund's dollar-weighted average maturity will generally be between
three and eight years, but may be up to ten years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank
(1985-1993).
CASH INVESTMENT FUND
. The Fund's primary goal is to provide as high a level of current
interest income as is consistent with maintaining liquidity and
stability of principal.
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. The Fund invests in a broad range of short-term, high quality, U.S.
dollar-denominated instruments.
TAX-FREE MONEY MARKET FUND
. The Fund's goal is to provide as high a level of current interest
income exempt from Federal income taxes as is consistent with
maintaining liquidity and stability of principal.
. The Fund invests substantially all of its assets in short-term, U.S.
dollar-denominated Municipal Obligations, the interest on which is
exempt from regular Federal income tax.
. Under normal market conditions, the Fund will invest at least 80% of
its net assets in Municipal Obligations.
U.S. TREASURY MONEY MARKET FUND
. The Fund's goal is to provide as high a level of current interest
income as is consistent with maintaining liquidity and stability of
principal.
. The Fund invests its assets solely in short-term bonds, bills and
notes issued by the U.S. Treasury (including "stripped" securities),
and in repurchase agreements relating to such obligations.
WHO MAY WANT TO INVEST IN THE FUNDS?
Equity Funds
These Funds are designed for investors who desire potentially high capital
appreciation and who can accept short-term variations in return for potentially
greater returns over the long term. In general, the greater the risk, the
greater the potential reward. Investors who have a short time horizon, who
desire a high level of income or who are conservative in their investment
approach may wish to invest in other portfolios offered by the Trust and the
Company.
Bond Funds and Tax-Free Funds
These Funds are designed for investors who desire potentially higher
returns than more conservative fixed rate investments or money market funds and
who seek current income. The Tax-Free Funds may be desirable for investors who
seek primarily tax-exempt income. When you choose among the Funds, you should
consider both the expected yield of the Funds and potential changes in each
Fund's share price. The yield and potential price changes of a Fund's shares
depend on the quality and maturity of the obligations in its portfolio, as well
as on other market conditions.
Money Market Funds
These Funds are designed for investors who desire a high level of income
and liquidity and stability of principal.
WHAT ARE THE FUNDS' INVESTMENTS AND INVESTMENTS PRACTICES?
Each Equity Fund invests in EQUITY SECURITIES, which include common stocks,
preferred stocks, warrants and other securities convertible into common stocks.
Many of the common stocks the Funds (other than Growth & Income Fund) will buy
will not pay dividends; instead, stocks will be bought for the potential that
their prices will increase, providing capital appreciation for the Funds. The
value of Equity Securities will fluctuate due to many factors, including the
past and predicted earnings of the issuer, the quality of the issuer's
management, general market conditions, the forecasts for the issuer's industry
and the value of the issuer's assets. Holders of Equity Securities only have
rights to value in the company after all debts have been paid, and they could
lose their entire
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investment in a company that encounters financial difficulty. Warrants are
rights to purchase securities at a specified time at a specified price.
Each Fund may invest in MONEY MARKET INSTRUMENTS, which are high-quality,
short-term money market instruments including, among other things, commercial
paper, bankers' acceptances and negotiable certificates of deposit of banks or
savings and loan associations, short-term corporate obligations and short-term
securities issued by, or guaranteed by, the U.S. Government and its agencies or
instrumentalities. These instruments will be used primarily pending investment,
to meet anticipated redemptions or as a temporary defensive measure. If a Fund
is investing defensively, it may not be pursuing its investment objective.
All Funds may enter into REPURCHASE AGREEMENTS. Under a repurchase
agreement, a Fund agrees to purchase securities from a seller and the seller
agrees to repurchase the securities at a later time, typically within seven
days, at a set price. The seller agrees to set aside collateral at least equal
to the repurchase price. This ensures that the Fund will receive the purchase
price at the time it is due, unless the seller defaults or declares bankruptcy,
in which event the Fund will bear the risk of possible loss due to adverse
market action or delays in liquidating the underlying obligation. With respect
to the Money Market Funds, the securities held subject to a repurchase agreement
may have stated maturities exceeding 397 days provided the repurchase agreement
itself matures in 397 days.
The Equity Funds may purchase ADRS, EDRS and GLOBAL DEPOSITARY RECEIPTS
("GDRS"). ADRs are issued by U.S. financial institutions and EDRs and GDRs are
issued by European financial institutions. They are receipts evidencing
ownership of underlying Foreign Securities.
The Funds (other than the U.S. Treasury Money Market Fund) may buy shares
of registered MONEY MARKET FUNDS. The Funds will bear a portion of the expenses
of any investment company whose shares they purchase, including operating costs
and investment advisory, distribution and administration fees. These expenses
would be in addition to a Fund's own expenses. Each Fund may invest up to 10%
of its assets in other investment companies and no more than 5% of its assets in
any one investment company.
Each Fund may purchase FIXED INCOME SECURITIES. Fixed Income Securities
are securities which either pay interest at set times at either fixed or
variable rates, or which realize a discount upon maturity. Fixed Income
Securities include corporate bonds, debentures, notes and other similar
corporate debt instruments, zero coupon bonds (discount debt obligations that do
not make interest payments) and variable amount master demand notes that permit
the amount of indebtedness to vary in addition to providing for periodic
adjustments in the interest rate. Each Fund may purchase U.S. GOVERNMENT
SECURITIES, which are securities issued by, or guaranteed by, the U.S.
Government or its agencies or instrumentalities. Such securities include U.S.
Treasury bills, which have initial maturities of less than one year, U.S.
Treasury notes, which have initial maturities of one to ten years, U.S. Treasury
bonds, which generally have initial maturities of greater than ten years, and
obligations of the Federal Home Loan Mortgage Corporation, Federal National
Mortgage Association and Government National Mortgage Association. Under normal
market conditions, the Equity Funds will not invest to a significant extent, or
on a routine basis, in U.S. Government Securities.
Each Fund may BORROW MONEY in an amount up to 5% of its assets for
temporary purposes and in an amount up to 33 1/3% of its assets to meet
redemptions. This is a "fundamental" policy which can be changed only by
shareholders.
All of the Funds, other than the International Bond Fund, the Michigan
Triple Tax-Free Bond Fund and the Tax-Free Intermediate Bond Fund, are
classified as "diversified funds." With respect to 75% of each diversified
Fund's assets, each diversified fund cannot invest more than 5% of its assets in
one issuer (other than the U.S. Government and its agencies and
instrumentalities). In addition, each diversified fund cannot invest more than
25% of its assets in a single issuer. These restrictions do not apply to the
non-diversified funds.
The Tax-Free Funds will acquire long-term instruments only if they are
rated "A" or better by Moody's Investors Service Inc. ("Moody's") or Standard &
Poor's Rating Service ("S&P") or, if unrated, are of comparable
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quality. These Funds will acquire short-term instruments only if they (i) have
short-term debt ratings in the top two categories by at least one nationally
recognized statistical rating organization, (ii) are issued by an issuer with
such ratings or (iii), if unrated, are of comparable quality.
The Advisor does not intend to invest more than 25% of a Fund's assets in
securities whose issuers are in the same state, except that the Advisor may
invest more than 25% of the Michigan Triple Tax-Free Bond Fund's and the Tax-
Free Intermediate Bond Fund's assets in Michigan Municipal Obligations.
Each Tax-Free Fund may invest in short-term money market instruments on a
temporary basis or for temporary investment purposes. Short-term money market
instruments include U.S. government obligations, debt securities of issuers
having a rating within the two highest categories of either S&P or Moody's, and
certificates of deposit or bankers' acceptances of domestic branches of U.S.
banks with at least $1 billion in assets.
Each Money Market Fund will invest primarily in ELIGIBLE SECURITIES (as
defined by the SEC) with remaining maturities of 397 days or less as defined by
the SEC (although securities subject to repurchase agreements, variable and
floating rate securities and certain other securities may bear longer
maturities), and the dollar-weighted average portfolio maturity of each Money
Market Fund will not exceed 90 days. Eligible Securities consist of securities
that are determined by the Advisor, under guidelines established by the Boards
of Trustees and Directors, to present minimal credit risk. Each Money Market
Fund may also hold uninvested cash pending investment of late payments for
purchase orders or during temporary defensive periods.
INVESTMENT CHARTS
The following charts summarize the Funds' investments and investment
practices. The SAI contains more details. All percentages are based on a
Fund's total assets except where otherwise noted. See "What are the Risks of
Investing in the Funds?" for a description of the risks involved with the Funds'
investment practices.
43
<PAGE>
EQUITY FUNDS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
GROWTH INTER- MICRO-
INVESTMENTS AND ACCELERATING & GROWTH INDEX NATIONAL CAP
INVESTMENT PRACTICES GROWTH BALANCED INCOME OPPORTUNITIES 500 EQUITY EQUITY
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOREIGN SECURITIES. Includes securities 25% 25% 25% 25% 25% Y 25%
issued by non-U.S. companies. Present more
risks than U.S. securities.
- ---------------------------------------------------------------------------------------------------------------------------------
LOWER-RATED DEBT SECURITIES. Fixed income Y Y 20% Y Y Y Y
securities which are rated below investment
grade by Standard & Poor's ratings service,
Moody's Investors Service, Inc. or other
nationally recognized rating agency.
considered riskier than investment grade
securities.
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT-GRADE ASSET BACKED SECURITIES. N Y N N N N N
Includes debt securities backed by mortgages,
installment sales contracts and credit card
receivables.
- ---------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Includes participations N Y N N N N N
in trusts that hold U.S. treasury and agency
securities which represent either the
interest payments or principal payments on
the securities or combination of both.
- ---------------------------------------------------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Y Y Y Y Y Y Y
Obligations of a fund to purchase or sell a
specific currency at a future date at a set
price. May decrease a fund's loss due to a
change in a currency value, but also limits
gains from currency changes.
- ---------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Y Y Y Y Y Y Y
Agreement by a fund to purchase securities at
a set price, with delivery and payment in the
future. The value of securities may change
between the time the price is set and
payment. Not to be used for speculation.
- ---------------------------------------------------------------------------------------------------------------------------------
FUTURES AND OPTIONS ON FUTURES. (1) Contracts Y Y Y Y Y Y Y
in which a fund has the right or the
obligation, at maturity, to make delivery of
or receive securities, the cash value of an
index, or foreign currency. Used for hedging
purposes or to maintain liquidity.
- ---------------------------------------------------------------------------------------------------------------------------------
OPTIONS. A fund may buy options giving it the Y Y Y Y Y Y Y
right to require a buyer to buy a security
held by the fund (put options), buy options
giving it the right to require a seller to
sell securities to the fund (call options),
sell (write) options giving a buyer the right
to require the fund to buy securities from
the buyer or write options giving a buyer the
right to require the fund to sell securities
to the buyer, during a set time at a set
price. Options may relate to securities
indices, individual securities, foreign
currencies or futures contracts. See the SAI
for more details and additional limitations.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1) THE LIMITATION ON MARGINS AND PREMIUMS FOR FUTURES AND OPTIONS ON FUTURES
IS 5% OF A FUND'S ASSETS.
(2) BASED ON NET ASSETS.
44
<PAGE>
EQUITY FUNDS (CONTINUED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
MULTI- REAL ESTATE SMALL- SMALL FRAMLINGTON FRAMLINGTON FRAMLINGTON
SEASON EQUITY CAP COMPANY EMERGING GLOBAL FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
25% N 25% 25% 25% Y Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------------
Y 5% Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------------
N N N N N N Y N N
- ---------------------------------------------------------------------------------------------------------------------------------
N N N N N N Y N N
- ---------------------------------------------------------------------------------------------------------------------------------
Y N Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
EQUITY FUNDS (CONTINUED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND INTER- MICRO-
INVESTMENT PRACTICES ACCELERATING GROWTH & GROWTH INDEX NATIONAL CAP
GROWTH BALANCED INCOME OPPORTUNITIES 500 EQUITY EQUITY
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
REVERSE REPURCHASE AGREEMENTS. A fund sells Y Y Y Y Y Y Y
securities and agrees to buy them back
later at an agreed upon time and price. A
method to borrow money for temporary
purposes.
- -------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS. Companies, N N N N N N N
usually traded publicly, that manage a
portfolio of real estate. Risks involved
in such investments include vulnerability
to decline in real estate prices and new
construction rates.
- -------------------------------------------------------------------------------------------------------------------------------
SHORT SALES. A transaction in which the fund N N N N N N N
sells a security it does not own in
anticipation that the market price of that
security will decline. It must borrow the
security sold short and deliver it to the
broker-dealer through which it made the
short sale as collateral for its obligation
to deliver the security upon conclusion of
the sale. May also sell securities that it
owns or has the right to acquire at no
additional cost but does not intend to
deliver to the buyer, a practice known as
selling short "against the box."
- -------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
ready market for these securities, which
inhibits the ability to sell them for full
market value, or there are legal
restrictions on their resale by the fund.
- -------------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend 25% 25% 25% 25% 25% 25% 25%
securities to financial institutions which
pay for the use of the securities. May
increase return. Slight risk of borrower
failing financially.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y = INVESTMENT ALLOWED WITHOUT RESTRICTION
N = INVESTMENT NOT ALLOWED
(1) THE LIMITATION ON MARGINS AND PREMIUMS FOR FUTURES AND OPTIONS ON FUTURES
IS 5% OF A FUND'S ASSETS.
(2) BASED ON NET ASSETS.
46
<PAGE>
EQUITY FUNDS (CONTINUED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
MULTI- REAL ESTATE SMALL- SMALL FRAMLINGTON FRAMLINGTON FRAMLINGTON
SEASON EQUITY CAP COMPANY EMERGING GLOBAL FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Y Y Y Y Y Y Y Y Y
- -------------------------------------------------------------------------------------------------------------------------------
N N N N N N N N N
- -------------------------------------------------------------------------------------------------------------------------------
N N N N N N N N N
- -------------------------------------------------------------------------------------------------------------------------------
15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
- -------------------------------------------------------------------------------------------------------------------------------
25% 25% 25% 25% 25% 25% 25% 25% 25%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE>
BOND FUNDS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
U.S.
INVESTMENTS AND BOND INTERMEDIATE INTERNATIONAL GOVERNMENT
INVESTMENT PRACTICES FUND BOND FUND BOND FUND INCOME FUND
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOREIGN SECURITIES. Securities issued by foreign governments and their 25% 25% Y 25%
agencies, instrumentalities or political subdivisions, supranational
organizations, and foreign corporations. Does not include bank obligations.
- ----------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Includes debt securities backed by mortgages, Y Y Y Y
installment sales contracts and credit card receivables.
- ----------------------------------------------------------------------------------------------------------------------------------
INTEREST RATE AND CURRENCY SWAPS. Agreement to exchange payments calculated on Y(1) Y(1) Y Y(1)
the basis of relative interest or currency rates. Derivative instruments used
solely for hedging.
- ----------------------------------------------------------------------------------------------------------------------------------
INTEREST RATE CAPS AND FLOORS. Entitle purchaser to receive payments of N N Y N
interest to the extent that a specified reference rate exceeds or falls below
a predetermined level.
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS. Include securities issued by, or guaranteed by, Y Y Y Y
the U.S. Government or its agencies or instrumentalities.
- ----------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Include participations in trusts that hold U.S. Treasury Y Y Y Y
and agency securities which represent either the interest payments or
principal payments on the securities or combination of both.
- ----------------------------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund sells securities and agrees to buy them Y Y Y Y
back later at an agreed upon time and price. A method to borrow money for
temporary purposes.
- ----------------------------------------------------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Obligations of a fund to purchase Y Y Y Y
or sell a specific currency at a future date at a set price. May decrease a
fund's loss due to a change in a currency value, but also limits gains from
currency changes.
- ----------------------------------------------------------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. Dollar denominated bank obligations, including Y Y Y Y
certificates of deposit, bankers' acceptances, bank notes and time deposits,
issued by u.s. or foreign banks or savings institutions having total assets in
excess of $1 billion.
- ----------------------------------------------------------------------------------------------------------------------------------
SUPRANATIONAL ORGANIZATION OBLIGATIONS. Fixed income securities issued or N N Y N
guaranteed by supranational organizations such as the world bank.
- ----------------------------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS. Agreements by a fund to make payments to an Y Y Y Y
insurance company's general account in exchange for a minimum level of
interest based on an index.
- ----------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Agreements by a fund to purchase [25%] [25%] [25%] [25%]
securities at a set price, with delivery and payment in the future. The value
of securities may change between the time the price is set and payment. Not
to be used for speculation.
- ----------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready market for these securities, 15%(2) 15%(2) 15%(2) 15%(2)
which inhibits the ability to sell them for full market value, or there are
legal restrictions on their resale by the fund.
- ----------------------------------------------------------------------------------------------------------------------------------
FUTURES AND OPTIONS ON FUTURES. (3) Contracts in which a fund has the right or Y Y Y Y
the obligation, at maturity, to make delivery of, or receive securities, the
cash value of an index, or foreign currency. Used for hedging purposes or to
maintain liquidity.
- ----------------------------------------------------------------------------------------------------------------------------------
OPTIONS. A Fund may buy options giving it the right to require a buyer to buy a Y Y Y Y
security held by the fund (put options), buy options giving it the right to
require a seller to sell securities to the fund (call options), sell (write)
options giving a buyer the right to require the fund to buy securities from
the buyer or write options giving a buyer the right to require the fund to
sell securities to the buyer, during a set time at a set price. Options may
relate to securities indices, individual securities, foreign currencies or
futures contracts. See the SAI for more details and additional limitations.
- ----------------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend securities to financial institutions which 25% 25% 25% 25%
pay for the use of the securities. May increase return. Slight risk of
borrower failing financially.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y = INVESTMENT ALLOWED WITHOUT RESTRICTION
N = INVESTMENT NOT ALLOWED
(1) INTEREST RATE SWAPS ONLY.
(2) BASED ON NET ASSETS.
48
<PAGE>
TAX-FREE FUNDS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND MICHIGAN TRIPLE TAX-FREE BOND FUND TAX-FREE INTERMEDIATE
INVESTMENT PRACTICES TAX-FREE BOND FUND BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL OBLIGATIONS. Payable from the issuer's Y Y Y
general revenue, the revenue of a specific project,
current revenues or a reserve fund.
- -------------------------------------------------------------------------------------------------------------------------------
MICHIGAN MUNICIPAL OBLIGATIONS. Municipal Y Y Y
obligations issued by the state of michigan and its
political subdivisions.
- -------------------------------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Securities issued by foreign 10% 10% 10%
governments and their agencies, instrumentalities
or political subdivisions, supranational
organizations, and foreign corporations. Does not
include bank obligations.
- -------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. [25%] [25%] [25%]
Agreements by a fund to purchase securities at a
set price, with delivery and payment in the future.
the value of securities may change between the time
the price is set and payment. Not to be used for
speculation.
- -------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready 15%(1) 15%(1) 15%(1)
market for these securities, which inhibits the
ability to sell them for full market value, or
there are legal restrictions on their resale by the
fund.
- -------------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend securities to 25% 25% 25%
financial institutions which pay for the use of the
securities. may increase return. Slight risk of
borrower failing financially.
- -------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES. Includes U.S. Treasury Y Y Y
bills, notes and bonds.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y = INVESTMENT ALLOWED WITHOUT RESTRICTION
N = INVESTMENT NOT ALLOWED
(1) BASED ON NET ASSETS.
49
<PAGE>
MONEY MARKET FUNDS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND CASH TAX-FREE U.S. TREASURY
INVESTMENT PRACTICES INVESTMENT MONEY MONEY
- --------------------------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C>
CORPORATE OBLIGATIONS:
. Commercial paper (including paper of Canadian companies, Canadian Y N N
branches of U.S. companies, and Europaper)
. Corporate bonds Y N N
. Other short-term obligations Y N N
. Variable master demand notes Y N N
. Bond debentures Y N N
. Notes. Y N N
- --------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Include debt securities backed by mortgages, Y N N
installment sales contracts and credit card receivables.
- --------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS:
. Issued or guaranteed by U.S. Government Y N Y
. Issued or guaranteed by U.S. Government Agencies and Y N N
instrumentalities
- --------------------------------------------------------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. dollar denominated bank obligations, including Y N N
certificates of deposit, bankers' acceptances, bank notes, time
deposits issued by U.S. or foreign banks or savings institutions
having total assets in excess of $1 billion.
- --------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES:
. Participation in trusts that hold U.S. Treasury and agency securities Y Y N
. U.S. Treasury-issued receipts Y Y 35%
. Non-U.S. Treasury receipts. Y Y N
- --------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL REVENUE OBLIGATIONS. Obligations the interest on which is N Y N
paid solely from the revenues of similar projects.
- --------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS. Payable from the issuer's general revenue, the 5% No more than 25% in N
revenue of a specific project, current revenues or a reserve fund. any one state
- --------------------------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund sells securities and agrees to Y N Y
buy them back later at an agreed upon time and price. A method to
borrow money for temporary purposes.
- --------------------------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS. Agreements by a Fund to make payments
to an insurance company's general account in exchange for a minimum Y N N
level of interest based on an index.
- --------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Agreements by a Fund to
purchase securities at a set price, with delivery and payment in the [25%] [25%] [25%]
future. The value of securities may change between the time the price
is set and payment. Not to be used for speculation.
- --------------------------------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Debt obligations issued by foreign governments, 25% N N
and their agencies, instrumentalities or political subdivisions,
supranational organizations and foreign corporations. Does not
include Bank Obligations.
- --------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready market for these 10%(1) 10%(1) 10%(1)
securities, which inhibits the ability to sell them for full market
value, or there are legal restrictions on their resale by the Fund.
- --------------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend securities to financial 25% 25% 25%
institutions which pay for the use of the securities. May increase
return. Slight risk of borrower failing financially.
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Key:
Y = INVESTMENT ALLOWED WITHOUT RESTRICTION
N = INVESTMENT NOT ALLOWED
(1) BASED ON NET ASSETS.
50
<PAGE>
WHAT ARE THE RISKS OF INVESTING IN THE FUNDS?
All Funds
Consistent with a long-term investment approach, investors in a Fund should
be prepared and able to maintain their investments during periods of adverse
market conditions. By itself, no Fund is a balanced investment program and
there is no guarantee that any Fund will achieve its investment objective since
there is uncertainty in every investment.
A Fund's risk is mostly dependent on the types of securities it purchases
and its investment techniques. Certain Funds are authorized to use options,
futures, and forward foreign currency exchange contracts, which are types of
derivative instruments. Derivative instruments are instruments that derive
their value from a different underlying security, index or financial indicator.
The use of derivative instruments exposes a Fund to additional risks and
transaction costs. Risks inherent in the use of derivative instruments include:
(1) the risk that interest rates, securities prices and currency markets will
not move in the direction that a portfolio manager anticipates; (2) imperfect
correlation between the price of derivative instruments and movements in the
prices of the securities, interest rates or currencies being hedged; (3) the
fact that skills needed to use these strategies are different than those needed
to select portfolio securities; (4) the possible absence of a liquid secondary
market for any particular instrument and possible exchange imposed price
fluctuation limits, either of which may make it difficult or impossible to close
out a position when desired; (5) leverage risk, that is, the risk that adverse
price movements in an instrument can result in a loss substantially greater than
the Fund's initial investment in that instrument (in some cases, the potential
loss is unlimited); (6) particularly in the case of privately-negotiated
instruments, the risk that the counterparty will not perform its obligations,
which could leave the Fund worse off than if it had not entered into the
position and (7) inability to close out certain hedged positions to avoid
adverse tax consequences.
To the extent that a Fund invests in illiquid securities, the Fund risks
not being able to sell securities at the time and the price that it would like.
The Fund may therefore have to lower the price, sell substitute securities or
forego an investment opportunity, each of which might adversely affect the Fund.
The risks of the various investment techniques the Funds use are described
in more detail in the SAI.
Equity Funds
Investing in these Funds may be less risky than investing in individual
stocks due to the diversification of investing in a portfolio of many different
stocks; however, such diversification does not eliminate all risks. Because the
Funds invest mostly in Equity Securities, rises and falls in the stock market in
general, as well as in the value of particular Equity Securities held by the
Funds, can affect the Funds' performance. Your investment in the Funds is not
guaranteed. The net asset value of the Funds will change daily and you might
not recoup the amount you invest in the Funds.
Bond Funds and Tax-Free Funds
The value of each Fund's shares, like the value of most securities, will
rise and fall in response to changes in economic conditions, interest rates and
the market's perception of the underlying securities held by the Fund.
Investing in these Funds may be less risky than investing in individual Fixed
Income Securities due to the diversification of investing in a portfolio
containing many different Fixed Income Securities; however, such diversity does
not eliminate all risks. The Funds invest mostly in Fixed Income Securities,
whose values typically rise when interest rates fall and fall when interest
rates rise. Fixed Income Securities with shorter maturities (time period until
repayment) tend to be less affected by interest rate changes, but generally
offer lower yields than securities with longer maturities. Current yield levels
should not be considered representative of yields for any future time.
Securities with variable interest rates may exhibit greater price variations
than ordinary securities. Zero coupon bonds are subject to greater market
fluctuations from changing interest rates than debt obligations of comparable
maturities which make current distributions of interest.
51
<PAGE>
Money Market Funds
Each Money Market Fund attempts to maintain a constant net asset value of
$1.00 per share. However, your investment in these Funds is not guaranteed.
Although the Cash Investment Fund and U.S. Treasury Money Market Fund
expect under normal market conditions to be as fully invested as possible, each
Fund may hold uninvested cash pending investment of late payments for purchase
orders (or other payments) or during temporary defensive periods. Uninvested
cash will not earn income. In general, investments in the Cash Investment Fund
and U.S. Treasury Money Market Fund will not earn as high a level of current
income as longer-term or lower quality securities. Longer-term and lower
quality securities, however, generally have less liquidity, greater market risk
and more fluctuation in market value.
Although the Tax-Free Money Market Fund may invest more than 25% of its net
assets in municipal revenue obligations, the interest on which is paid solely
from revenues of similar projects, the Tax-Fee Money Market Fund does not intend
to do so on a regular basis. If it does, the Fund will be riskier than a fund
which does not concentrate to such an extent on similar projects.
Growth Opportunities Fund, Micro-Cap Equity Fund, Small-Cap Value Fund and Small
Company Growth Fund
The Advisor believes that smaller companies can provide greater growth
potential and potentially higher returns than larger firms. Investing in smaller
companies, however, is riskier than investing in larger companies. The stock of
smaller companies may trade infrequently and in lower volume, making it more
difficult for a Fund to sell the stocks of smaller companies when it chooses.
Smaller companies may have limited product lines, markets, financial resources
and distribution channels, which makes them more sensitive to changing economic
conditions. Stocks of smaller companies historically have had larger
fluctuations in price than stocks of larger companies included in the S&P 500.
Framlington Emerging Markets Fund, Framlington Global Financial Services Fund,
Framlington International Growth Fund, International Equity Fund and
International Bond Fund
Investing in any of these Funds, with their larger investment in Foreign
Securities, may involve more risk than investing in a U.S. fund for the
following reasons: (1) there may be less public information available about
foreign companies than is available about U.S. companies; (2) foreign companies
are not generally subject to the uniform accounting, auditing and financial
reporting standards and practices applicable to U.S. companies; (3) foreign
markets have less volume than U.S. markets, and the securities of some foreign
companies are less liquid and more volatile than the securities of comparable
U.S. companies; (4) there may be less government regulation of stock exchanges,
brokers, listed companies and banks in foreign countries than in the United
States; (5) the Fund may incur fees on currency exchanges when it changes
investments from one country to another; (6) the Fund's foreign investments
could be affected by expropriation, confiscatory taxation, nationalization of
bank deposits, establishment of exchange controls, political or social
instability or diplomatic developments; (7) fluctuations in foreign exchange
rates will affect the value of the Fund's portfolio securities, the value of
dividends and interest earned, gains and loses realized on the sale of
securities, net investment income and unrealized appreciation or depreciation of
investments; and (8) possible imposition of dividend or interest withholding by
a foreign country.
Framlington Global Financial Services Fund
Financial services companies are subject to extensive governmental
regulation which may limit both the amount and types of loans and other
financial commitments they can make, and the interest rates and fees they can
charge. Profitability is largely dependent on the availability and cost of
capital funds, and can fluctuate significantly when interest rates change.
Credit losses resulting from financial difficulties of borrowers can negatively
impact the industry. Insurance companies may be subject to severe price
competition. Legislation is currently being considered which would reduce the
separation between commercial and investment banking businesses. If enacted,
52
<PAGE>
this could significantly impact the industry and the Fund. The Fund may be
riskier than a fund investing in a broader range of industries.
Although securities of large and well-established companies in the
financial services industry will be held in the Fund's portfolio, the Fund also
will invest in medium, small and/or newly-public companies which may be subject
to greater share price fluctuations and declining growth, particularly in the
event of rapid changes in the industry and/or increased competition. Securities
of those smaller and/or less seasoned companies may, therefore, expose
shareholders of the Fund to above-average risk.
Framlington Healthcare Fund
The Fund will invest most of its assets in the healthcare industry, which
is particularly affected by rapidly changing technology and extensive government
regulation, including cost containment measures. The Fund may be riskier than a
fund investing in a broader range of industries.
Real Estate Equity Investment Fund
The Fund will invest primarily in the real estate industry and may invest
more than 25% of its assets in any one sector of the real estate industry. As a
result, the Fund will be particularly vulnerable to declines in real estate
prices and new construction rates. The Fund may be riskier than a fund
investing in a broader range of industries.
International Bond Fund, Michigan Triple Tax-Free Bond Fund and Tax-Free
Intermediate Bond Fund
These Funds are non-diversified and hold securities of a limited number of
issuers. The Funds may, therefore, pose a greater risk to investors than an
investment in a diversified fund. The Michigan Triple Tax-Free Bond Fund
invests primarily in Michigan Municipal Obligations. If Michigan issuers suffer
serious financial difficulties jeopardizing their ability to pay their
obligations, the value of such Fund may decline.
PERFORMANCE
HOW IS THE FUND'S PERFORMANCE CALCULATED?
There are various ways in which the Funds may calculate and report their
performance. Performance is calculated separately for each class of shares.
One method is to show a Fund's total return. Cumulative total return is the
percentage change in the value of an amount invested in a class of shares of a
Fund over a stated period of time and takes into account reinvested dividends.
Cumulative total return most closely reflects the actual performance of a Fund.
Average annual total return refers to the average annual compounded rates
of return over a specified period on an investment in shares of a Fund
determined by comparing the initial amount invested to the ending redeemable
value of the amount, taking into account reinvested dividends.
Each Fund may also publish its current yield. Yield is the net investment
income generated by a share of a Fund during a 30-day period divided by the
maximum offering price on the 30th day.
The current yield of shares in the Money Market Funds refers to the net
income generated by an investment in shares over a seven-day period (which
period will be stated in the advertisement). This income is then "annualized."
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. "Effective yield" is calculated similarly but,
when annualized, the income earned by an investment in a class is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment. The "tax-
equivalent yield" of shares of the Tax-Free Funds and the Tax-Free Money Market
Fund which may also be quoted from time to time, shows the level of taxable
yield needed to produce an after-tax
53
<PAGE>
equivalent to the tax-free yield of a particular class. This is done by
increasing the yield (calculated as above) by the amount necessary to reflect
the payment of Federal and/or state income taxes at a stated rate.
You should be aware that (i) past performance does not indicate how a Fund
will perform in the future; and (ii) each Fund's return and net asset value will
fluctuate, so you cannot necessarily use a Fund's performance data to compare it
to investment in certificates of deposit, savings accounts or other investments
that provide a fixed or guaranteed yield.
Each Fund may compare its performance to that of other mutual funds, such
as the performance of similar funds reported by Lipper Analytical Services, Inc.
or information reported in national financial publications (such as Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times) or
in local or regional publications. Each Fund may also compare its total return
to broad-based indices. These indices show the value of selected portfolios of
securities (assuming reinvestment of interest and dividends) which are not
managed by a portfolio manager. The Funds may report how they are performing in
comparison to the Consumer Price Index, an indication of inflation reported by
the U.S. Government.
WHERE CAN I OBTAIN PERFORMANCE DATA?
The Wall Street Journal and certain local newspapers report information on
the performance of mutual funds. In addition, performance information is
contained in the Funds' annual report dated June 30 of each year and semi-annual
report dated December 31 of each year, which will automatically be mailed to
shareholders. To obtain copies of financial reports or performance information,
call (800) 438-5789.
PURCHASES OF SHARES
Customers of banks and other institutions, and the immediate family members
of such Customers, that have entered into agreements with us to provide
shareholder services for Customers may purchase Class K Shares. Customers may
include individuals, trusts, partnerships and corporations. Each Fund also
issues other classes of shares, which have different sales charges, expense
levels and performance. Call (800) 438-5789 to obtain more information
concerning the Funds' other classes of shares.
WHAT PRICE DO I PAY FOR SHARES?
The purchase price for Class K Shares is the net asset value ("NAV") next
determined after we receive your order in proper form. Except in certain
limited circumstances, each Fund determines its NAV on each day the New York
Stock Exchange ("NYSE") is open for trading (a "Business Day") at the close of
such trading (normally 4:00 p.m. Eastern time). The Money Market Funds also
determine their NAVs at 2:45 p.m. (Eastern time). If we receive your purchase
order and payment for a Money Market Fund by 2:45 p.m. (Eastern time) on a
Business Day, you will receive dividends on that day. Each Fund calculates NAV
separately for each class of shares. NAV is calculated by totaling the value of
all of the assets of a Fund allocated to a particular class of shares,
subtracting the Fund's liabilities and expenses charged to that class and
dividing the result by the number of shares of that class outstanding.
WHEN CAN I PURCHASE SHARES?
Shares of each Fund are sold on a continuous basis and can be purchased on
any Business Day.
HOW CAN I PURCHASE SHARES?
All share purchases are effected through a Customer's account at an
institution and confirmations of share purchases will be sent to the institution
involved. Institutions (or their nominees) will normally be the holders of
record of Fund shares acting on behalf of their Customers, and will reflect
their Customers' beneficial ownership of shares in the account statements
provided by them to their Customers.
54
<PAGE>
We do not issue share certificates. We reserve the right to (i) reject any
purchase order if, in our opinion, it is in the Funds' best interest to do so
and (ii) suspend the offering of shares of any Class for any period of time.
You may pay for shares of each Fund, other than the Real Estate Equity
Investment Fund, with securities which the Fund is allowed to hold.
REDEMPTIONS OF SHARES
WHAT PRICE DO I RECEIVE FOR REDEEMED SHARES?
The redemption price is the NAV next determined after we receive the
redemption request in proper form.
WHEN CAN I REDEEM SHARES?
You can redeem shares on any Business Day, provided all required documents
have been received by the Transfer Agent. A Fund may temporarily stop redeeming
shares when the NYSE is closed or trading on the NYSE is restricted, when an
emergency exists and the Fund cannot sell its assets or accurately determine the
value of its assets or if the SEC orders the Fund to suspend redemptions.
HOW CAN I REDEEM SHARES?
Redemption orders are effected at the NAV per share next determined after
receipt of the order by the Transfer Agent. Shares held by an institution on
behalf of its Customers must be redeemed in accordance with instructions and
limitations pertaining to the account at that institution.
. FREE CHECKWRITING. Free checkwriting is available to holders of Class
K Shares of the Bond Funds (other than the International Bond Fund),
Tax-Free Funds and Money Market Funds who complete the Signature Card
Section of the Account Application Form. You may write checks in the
amount of $500 or more but you may not close a Fund account by writing
a check. We may change or terminate this program on 30 days' notice to
you.
WHEN WILL I RECEIVE REDEMPTION AMOUNTS?
If we receive a redemption order for a Fund before 4:00 p.m. (Eastern time)
on a Business Day, we will normally wire payment to the redeeming institution on
the next Business Day. With respect to a Money Market Fund, if we receive a
redemption order before noon (Eastern time) on a Business Day, we will normally
wire payment on the same Business Day. We may delay wiring redemption proceeds
for up to seven days if we feel an earlier payment would have a negative impact
on the Fund.
STRUCTURE AND MANAGEMENT OF THE FUNDS
HOW ARE THE FUNDS STRUCTURED?
The Trust, the Company and Framlington are each an open-end management
investment company, which is a mutual fund that sells and redeems shares every
day that it is open for business. They are managed under the direction of their
governing Boards of Trustees and Directors, which are responsible for the
overall management of the Trust, the Company and Framlington and supervise the
Funds' service providers. The Trust and Framlington are organized as
Massachusetts business trusts and the Company is a Maryland corporation.
WHO MANAGES AND SERVICES THE FUNDS?
Investment Advisor and Sub-Advisor. The Funds' investment advisor is
Munder Capital Management, a Delaware general partnership with its principal
offices at 480 Pierce Street, Birmingham, Michigan 48009. The
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<PAGE>
principal partners of the Advisor are MCM, Munder Group LLC and WAM Holdings,
Inc. ("WAM"). MCM was founded in April, 1985 as a Delaware corporation and was a
registered investment advisor. WAM is an indirect, wholly-owned subsidiary of
Comerica Incorporated which owns or controls approximately 88% of the
partnership interests in the Advisor. As of June 30, 1998, the Advisor and its
affiliates had approximately $48.2 billion in assets under management, of which
$25.4 billion were invested in equity securities, $8.1 billion were invested in
money market or other short-term instruments, $9.2 billion were invested in
other fixed income securities and $5.5 billion in non-discretionary assets.
The Advisor provides overall investment management and research and credit
analysis for each Fund and is responsible for all purchases and sales of
portfolio securities for each Fund other than the Framlington Funds.
Framlington Overseas Investment Management Limited is the sub-advisor of
the Framlington Funds. The Sub-Advisor is an indirect subsidiary of Framlington
Holdings Limited which is, in turn, owned 49% by the Advisor and 51% by Credit
Commercial de France S.A., a French banking corporation listed on the Societe
des Bourses Francaises.
The Sub-Advisor provides research and credit analysis for each of the
Framlington Funds and is responsible for all purchases and sales of portfolio
securities for each of the Framlington Funds other than the Framlington Global
Financial Services Fund. Each of the Advisor and Sub-Advisor manages a portion
of the assets of the Framlington Global Financial Services Fund. The Advisor is
responsible for all purchases and sales of domestic securities held by the Fund.
The Sub-Advisor is responsible for the allocation of the Fund's assets among
countries and for all purchases and sales of foreign securities held by the
Fund.
During the fiscal year ended June 30, 1998, the Advisor was paid an
advisory fee at an annual rate based on the average daily net assets of each
Fund (after waivers, if any) as follows:
<TABLE>
<S> <C> <C> <C>
Accelerating Growth Fund 0.75% Framlington Global Financial Services Fund 0.75%
Balanced Fund 0.65% Framlington Healthcare Fund 1.00%
Growth & Income Fund 0.75% Framlington International Growth Fund 1.00%
Growth Opportunities 0.75% Bond Fund 0.50%
Index 500 Fund 0.07% Intermediate Bond Fund 0.50%
International Equity Fund 0.75% International Bond Fund 0.50%
Micro-Cap Equity Fund 1.00% U.S. Government Income Fund 0.50%
Multi-Season Growth Fund 0.75% Michigan Triple Tax-Free Bond Fund 0.50%
Real Estate Equity Investment Fund 0.74% Tax-Free Bond Fund 0.50%
Small-Cap Value Fund 0.75% Tax-Free Intermediate Bond Fund 0.50%
Small Company Growth Fund 0.75% Cash Investment Fund 0.35%
Value Fund 0.74% Tax-Free Money Market Fund 0.35%
Framlington Emerging Markets Fund 1.25% U.S. Treasury Money Market Fund 0.35%
</TABLE>
The Advisor waived advisory fees during the past fiscal year for the Index
500 Fund and the Multi-Season Growth Fund. The Advisor is entitled to receive
an annual fee equal to .20% of the first $250 million of the Index 500 Fund's
average daily net assets, .12% of the next $250 million of the Fund's average
daily net assets and .07% of the Fund's average daily net assets over $500
million. The Advisor is also entitled to receive an annual fee equal to 1.00%
of the first $500 million of the Multi-Season Growth Fund's average daily net
assets and .75% of the Fund's average daily net assets over $500 million.
The Sub-Advisor is entitled to receive an advisory fee equal to one-half of
the fee paid to the Advisor by each of the Framlington Funds as compensation for
its services as Sub-Advisor. The Advisor pays fees to the Sub-Advisor and the
Framlington Funds pay no fees directly to the Sub-Advisor.
The Advisor may, from time to time, make payments to banks, broker-dealers
or other financial institutions for certain services to the Funds and/or their
shareholders, including sub-administration, sub-transfer agency and
56
<PAGE>
shareholder servicing. The Advisor may make such payments out of its own
resources and there are no additional costs to the Funds or their shareholders.
The Advisor selects broker-dealers to execute portfolio transactions for
the Funds based on best price and execution terms. The Advisor may consider as
a factor the number of shares sold by the broker-dealer.
PERFORMANCE INFORMATION. The tables below contain performance information
for certain Funds created through the conversion of a common or collective trust
fund which had investment objectives and policies materially equivalent to those
of the corresponding Funds. Immediately before and after the conversion, the
same person managed both the common or collective trust fund and the
corresponding Fund.
The table for each Fund:
. includes the average annual total returns of the common or collective
trust fund and the average annual total returns of the corresponding
Fund linked together;
. assumes that net investment income and dividends have been reinvested;
. assumes that the common or collective trust fund paid the same levels
of fees and expenses as the corresponding Fund currently pays;
. does not reflect any potential negative impact on the common and
collective trust funds' performance if they had been subjected to the
same regulatory restrictions (the Investment Company Act of 1940, as
amended (the "1940 Act") and the Internal Revenue
Code of 1986, as amended) as the corresponding Fund; and
. indicates past performance only and does not predict future results.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER ACCELERATING GROWTH
JUNE 30, 1998 FUND (CLASS K)* S&P 500**
------------- --------------- -------
<S> <C> <C>
1 Year...................................................... % %
3 Years..................................................... % %
5 Years..................................................... % %
Inception on January 1, 1990................................ % %
</TABLE>
- ----------------
* Converted from collective trust fund to mutual fund on November 23, 1992.
** S&P 500 performance shows total return in U.S. dollars but does not reflect
the deduction of fees, expenses and taxes. Source: Lipper Analytical Services,
Inc.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER SMALL COMPANY RUSSELL 2000
JUNE 30, 1998 GROWTH FUND (CLASS K)* INDEX**
------------- ---------------------- ------
<S> <C> <C>
1 Year...................................................... % %
3 Years..................................................... % %
5 Years..................................................... % %
10 Years.................................................... % %
Inception on December 31, 1982.............................. %
</TABLE>
- ----------------
* Converted from collective trust fund to mutual fund on November 23, 1992.
** Russell 2000 Index performance shows total return in U.S. dollars but does
not reflect the deduction of fees, expenses and taxes. Source: Lipper Analytical
Services, Inc.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER INTERNATIONAL FT/S&P ACTUARIES WORLD
JUNE 30, 1998 EQUITY FUND (CLASS K)* INDEX EX. US**
------------- -------------------- ------------
<S> <C> <C>
1 Year................................................ % %
3 Years............................................... % %
5 Years............................................... % %
Inception on September 30, 1990....................... % %
</TABLE>
- ----------------
57
<PAGE>
* Converted from collective trust fund to mutual fund on November 23, 1992.
** FT/S&P Actuaries World Index ex. U.S. performance shows total return in U.S.
dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Ibbotson Associates, Inc.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER INDEX 500 FUND S&P 500
JUNE 30, 1998 (CLASS K)* INDEX**
------------- --------- -----
<S> <C> <C>
1 Year........................................................... % %
3 Years.......................................................... % %
5 Years.......................................................... % %
10 Years......................................................... % %
Inception on January 27, 1988.................................... % %
</TABLE>
- -----------------
* Converted from collective trust fund to mutual fund on December 7, 1992.
** S&P 500 Index performance shows total return in U.S. dollars but does not
reflect the deduction of fees, expenses and taxes. Source: Lipper Analytical
Services, Inc.
<TABLE>
<CAPTION>
LEHMAN BROTHERS
PERIOD ENDED MUNDER BOND FUND GOV'T/CORP. BOND
JUNE 30, 1998 (CLASS K)* INDEX**
------------- --------- -----
<S> <C> <C>
1 Year...................................................... % %
3 Years..................................................... % %
5 Years..................................................... % %
10 Years.................................................... % %
</TABLE>
- -----------------
* Converted from collective trust fund to mutual fund on November 23, 1992.
** Lehman Brothers Government/Corporate Bond Index performance shows total
return in U.S. dollars but does not reflect the deduction of fees, expenses and
taxes. Source: Lipper Analytical Services, Inc.
<TABLE>
<CAPTION>
LEHMAN BROTHERS
MUNDER US GOVERNMENT GOV'T/CORP.
PERIOD ENDED INCOME FUND BOND
JUNE 30, 1998 (CLASS K)* INDEX**
------------- --------- -----
<S> <C> <C>
1 Year...................................................... % %
3 Years..................................................... % %
5 Years..................................................... % %
10 Years.................................................... % %
</TABLE>
- -----------------
*Converted from collective trust fund to mutual fund on July 5, 1994.
**Lehman Brothers Government/Corporate Bond Index performance shows total return
in U.S. dollars but does not reflect the deduction of fees, expenses and taxes.
Source: Lipper Analytical Services, Inc.
<TABLE>
<CAPTION>
MUNDER INTERMEDIATE LEHMAN BROTHERS
PERIOD ENDED BOND FUND INTERMEDIATE GOV'T/BOND
JUNE 30, 1998 (CLASS K)* INDEX**
------------- --------- -----
<S> <C> <C>
1 Year...................................................... % %
3 Years..................................................... % %
5 Years..................................................... % %
10 Years.................................................... % %
Inception on March 31, 1982................................. % %
</TABLE>
- -----------------
*Converted from collective trust fund to mutual fund on November 20, 1992.
**Lehman Brothers Intermediate Government/Corporate Bond Index performance shows
total return in U.S. dollars but does not reflect the deduction of fees,
expenses and taxes. Source: Lipper Analytical Services, Inc.
58
<PAGE>
<TABLE>
<CAPTION>
MUNDER TAX-FREE LEHMAN
PERIOD ENDED BOND FUND 20-YEAR MUNI
JUNE 30, 1998 (CLASS K)* BOND INDEX**
------------- --------- ----------
<S> <C> <C>
1 Year...................................................... % %
3 Years..................................................... % %
5 Years..................................................... % %
10 Years.................................................... % %
</TABLE>
- --------------
*Converted from common trust fund to mutual fund on July 5, 1994.
**Lehman 20-Year Municipal Bond Index performance shows total return in U.S.
dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Lipper Analytical Services, Inc.
INDICES
The S&P 500 is an unmanaged index of common stock prices, including
reinvestment of dividends.
The Russell 2000 Index is a capitalization weighted total return index
which is comprised of 2,000 of the smallest capitalized U.S. domiciled companies
whose stock is traded in the United States on the New York Stock Exchange,
American Stock Exchange and the NASDAQ.
The FT/S&P Actuaries World Index ex. U.S. is an unmanaged index used to
portray the global equity market excluding the U.S. The Index is weighted based
on the market capitalization of those stocks selected to represent each country
and includes gross reinvestment of dividends.
The Lehman Brothers Government/Corporate Bond Index is a weighted composite
of (i) Lehman Brothers Government Bond Index, which is comprised of all publicly
issued, non-convertible debt of the U.S. Government or any agency thereof,
quasi-Federal corporations, and corporate debt guaranteed by the U.S. Government
and (ii) Lehman Brothers Corporate Bond Index, which is comprised of all public
fixed-rate, non-convertible investment-grade domestic corporate debt, excluding
collateralized mortgage obligations.
The Lehman Brothers Intermediate Government/Corporate Bond Index is a
weighted composite of (i) Lehman Brothers Intermediate Government Bond Index,
which is comprised of all publicly issued, non-convertible debt of the U.S.
Government or any agency thereof, quasi-Federal corporations and corporate debt
guaranteed by the U.S. Government with a maturity of between one and ten years
and (ii) Lehman Brothers Corporate Bond Index.
The Lehman Brothers 20-Year Municipal Bond Index is a performance benchmark
for the long-term investment-grade tax-exempt bond market.
PERFORMANCE OF FRAMLINGTON ACCOUNTS MANAGED BY THE SUB-ADVISOR
The tables below contain certain performance information provided by the
Sub-Advisor relating to accounts managed by the Sub-Advisor and which have
investment objectives and policies similar to those of the corresponding
Framlington Funds. See "Fund Choices" and "What are the Funds' Investments and
Investment Practices?" In the case of the Healthcare portfolio performance, the
data relates to a unit trust organized under the laws of the United Kingdom
managed by the same personnel of the Sub-Advisor with similar investment
objectives and policies to the Framlington Healthcare Fund. In the case of
Emerging Markets portfolio performance, the data relates to a Canadian-based
institutional emerging markets portfolio managed by the same personnel of the
Sub-Advisor with similar investment objectives and policies to the Framlington
Emerging Markets Fund.
The trust account performance is provided by Micropal, an independent
research organization that is a recognized source of performance data in the UK
unit trust industry. The data is U.S. dollar adjusted on the basis of exchange
rates provided by Datastream using WM/Reuters closing rates. The performance
figures are net of brokerage commissions, actual investment advisory fees and
initial sales charges. The data assume the reinvestment
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<PAGE>
of net income and capital gain distributions. The trust account returns are
calculated using beginning offer and ending bid prices for periods ended
December 31, 1996.
You should not rely on the following performance data of the Sub-Advisor's
client accounts as an indication of future performance of the Framlington Funds.
It should be noted that the management of the Funds will be affected by
regulatory requirements under the 1940 Act and requirements of the Internal
Revenue Code of 1986, as amended, to qualify as a regulated investment company.
<TABLE>
<CAPTION>
S&P HEALTHCARE
PERIOD ENDED UK HEALTH COMPOSITE INDEX CAPITAL
DECEMBER 31, 1996 PORTFOLIO CHANGE
----------------- --------- ------
<S> <C> <C>
1 Year....................................... 10.75% 18.48%
3 Years...................................... 96.93% 100.49%
5 Years...................................... 99.43% 45.60%
Inception on April 30, 1987.................. 411.08% 239.64%
</TABLE>
Performance for the Health trust account is calculated on an offer-bid
basis; US Dollar adjusted total return net of all management fees but not
reflective of UK tax. Source: Micropal.
S&P Healthcare Composite Index performance shows capital change in U.S.
dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Datastream.
<TABLE>
<CAPTION>
PERIOD ENDED CANADIAN EMERGING MSCI EMERGING
DECEMBER 31, 1996 MARKETS ACCOUNT MARKETS FREE TOTAL RETURN
----------------- --------------- -------------------------
<S> <C> <C>
1 Year....................................... 5.16% 6.03%
Inception on November 1, 1994................ (3.68)% (12.37)%
</TABLE>
MSCI Emerging Markets Free Index performance shows total return in U.S.
dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Datastream.
The performance of the Canadian institutional account is measured by the
World Markets Company on a total return basis and has been re-calculated net of
the management fee charged the Canadian institutional account. The inception
date of the Canadian institutional account is November 1, 1994.
INDICES
The S&P Healthcare Composite Index is the composite Healthcare section of
the S&P 500 Index as defined and tracked by S&P. This index covers securities
listed in the United States only.
The MSCI Emerging Markets Free Index is maintained by Morgan Stanley
Capital International and covers 26 countries and represents the investment
opportunities in emerging markets available to foreign investors. Total return
is calculated using the prices of the companies tracked and assumes the
reinvestment of dividends.
TRANSFER AGENT. First Data Investor Services Group, Inc. is the Funds'
transfer agent. The Transfer Agent is a wholly-owned subsidiary of First Data
Corporation and is located at 53 State Street, Boston, Massachusetts 02109.
ADMINISTRATOR. State Street Bank and Trust Company ("State Street" or
"Administrator") is the Funds' administrator. State Street is located at 225
Franklin Street, Boston, Massachusetts 02110. State Street generally assists
the Company, the Trust and Framlington in all aspects of their administration
and operations including overseeing the maintenance of financial records and
fund accounting. As compensation for its services for the Company, the Trust
and Framlington, State Street is entitled to receive fees, based on the
aggregate daily net assets of the Funds and certain other investment portfolios
that are advised by the Advisor for which it provides services, computed daily
and payable monthly at the annual rate of 0.113% on the first $2.8 billion of
net assets, plus 0.103%
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<PAGE>
on the next $2.2 billion of net assets, plus 0.101% on the next $2.5 billion of
net assets, plus 0.095% on the next $2.5 billion of net assets, plus 0.080% on
the next $2.5 billion of net assets, plus 0.070% on all net assets in excess of
$12.5 billion (with a $75,000 minimum fee per annum in the aggregate for all
portfolios with respect to the Administrator). If the assets of the Framlington
Funds do not exceed $120 million, the ultimate rate charged the Framlington
Funds will be reduced by their pro-rata portion of the total fees if calculated
at the rates of 0.062% of the first $2.8 billion of net assets, plus 0.052% of
the next $2.2 billion of net assets, plus 0.050% of all net assets in excess of
$5 billion.
State Street has entered into a Sub-Administration Agreement with the
Distributor under which the Distributor provides certain administrative services
with respect to the Funds. State Street pays the Distributor a fee for these
services out of its own resources at no cost to the Funds.
CUSTODIAN AND SUB-CUSTODIAN. Comerica Bank ("Comerica" or the
"Custodian"), whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, Michigan 48226, is the Funds' custodian. No
compensation is paid to the Custodian for its custodial services. Comerica
receives a fee of 0.01% of the aggregate average daily net assets of the Funds
beneficially owned by Comerica and its customers for certain shareholder
services provided by Comerica to the Funds. State Street serves as the Funds'
sub-custodian.
DISTRIBUTOR. Funds Distributor, Inc. is the distributor of the Funds'
shares and is located at 60 State Street, Boston, Massachusetts 02109. It
markets and sells the Funds' shares.
The Funds have adopted a Shareholder Servicing Plan (the "Class K Plan")
under which Class K Shares are sold through institutions which enter into
shareholder servicing agreements with the Funds. The agreements require the
institutions to provide shareholder services to their Customers who from time to
time own of record or beneficially Class K Shares in return for payment by a
Fund at a rate not exceeding .25% (on an annualized basis) of the average daily
net asset value of the Class K Shares beneficially owned by the Customers. Class
K Shares bear all fees paid to institutions under the Class K Plan. Payments
under the Class K Plan are not tied exclusively to the shareholder expenses
actually incurred by the institutions and the payments may exceed service
expenses actually incurred.
The services provided by institutions under the Class K Plan may include
processing purchase, exchange and redemption requests from Customers and placing
orders with the Transfer Agent; processing dividend and distribution payments
from the Funds on behalf of Customers; providing information periodically to
Customers showing their positions in Class K Shares; providing sub-accounting
with respect to Class K Shares beneficially owned by Customers or the
information necessary for sub-accounting; responding to inquires from customers
concerning their investment in Class K Shares; arranging for bank wires; and
providing such other similar services as may be reasonably requested.
For an additional description of the services performed by the
Administrator, the Transfer Agent, the Custodian, the Sub-Custodian and the
Distributor, see the SAI.
WHAT ARE MY RIGHTS AS A SHAREHOLDER?
All shareholders have equal voting, liquidation and other rights. You are
entitled to one vote for each share you hold and a fractional vote for each
fraction of a share you hold. You will be asked to vote on matters affecting
the Trust, the Company or Framlington as a whole and affecting your particular
Fund. You will not vote by Class unless expressly required by law or when the
Trustees or Directors determine the matter to be voted on affects only the
interests of the holders of a particular class of shares. The Trust, the
Company and Framlington will not hold annual shareholder meetings, but special
meetings may be held at the written request of shareholders owning more than 10%
of outstanding shares for the purpose of removing a Trustee or Director. Under
Massachusetts law, it is possible that a shareholder may be personally liable
for the Trust's or Framlington's obligations. If a shareholder were required to
pay a debt of a Fund, however, the Trust and Framlington have committed to
reimburse the shareholder in full from their assets. The SAI contains more
information regarding voting rights.
61
<PAGE>
Comerica currently has the right to vote a majority of the outstanding
shares of the Funds as agent, custodian or trustee for its customers and
therefore it is considered to be a controlling person of the Trust, the Company
and Framlington.
DIVIDENDS, DISTRIBUTIONS AND TAXES
WHEN WILL I RECEIVE DISTRIBUTIONS FROM THE FUNDS?
As a shareholder, you are entitled to your share of net income and capital
gains, if any, on a Fund's investments. The Funds pass their earnings along to
investors in the form of dividends. Dividend distributions are the dividends or
interest earned on investments after expenses. The Accelerating Growth Fund,
Balanced Fund, Growth & Income Fund, Small Company Growth Fund and International
Bond Fund pay dividends quarterly. The Growth Opportunities Fund, Framlington
Emerging Markets Fund, Framlington Global Financial Services Fund, Framlington
Healthcare Fund, Framlington International Growth Fund, International Equity
Fund, Micro-Cap Equity Fund, Multi-Season Growth Fund, Small-Cap Value Fund and
Value Fund pay dividends at least annually. The Bond Funds (other than the
International Bond Fund) and the Tax-Free Funds pay dividends monthly.
Dividends for the Money Market Funds are declared daily and paid monthly.
Each Fund distributes its net realized capital gains (including net short-
term capital gains), if any, at least annually.
It is possible that a Fund may make a distribution in excess of the Fund's
current and accumulated earnings and profits. You will treat such a
distribution as a return of capital which is applied against and reduces your
basis in your shares. You will treat the excess of any such distribution over
your basis in your shares as gain from a sale or exchange of the shares.
HOW WILL DISTRIBUTIONS BE MADE?
The Funds will pay dividend and capital gains distributions in additional
shares of the same class of a Fund. If you wish to receive distributions in
cash, either indicate this request on your Account Application Form or notify
the Fund at (800) 438-5789.
ARE THERE TAX IMPLICATIONS OF MY INVESTMENTS IN THE FUNDS?
This section contains a brief summary of the tax implications of ownership
in the Funds' shares. A more detailed discussion of Federal income tax
considerations is contained in the SAI. You should consult your tax advisor
regarding the impact of owning the Funds' shares on your own personal tax
situation including the applicability of any state and local taxes.
In general, as long as each Fund meets the requirements to qualify as a
regulated investment company ("RIC") under Federal tax laws, it will not be
subject to Federal income tax on its income and capital gains that it
distributes in a timely manner to its shareholders. Each Fund intends to
qualify annually as a RIC. Even if it qualifies as a RIC, a Fund may still be
liable for any excise tax on income that is not distributed in accordance with a
calendar year requirement; the Funds intend to avoid the excise tax by making
timely distributions.
Generally, you will owe tax on the amounts distributed to you, regardless
of whether you receive these amounts in cash or reinvest them in additional Fund
shares. Shareholders not subject to tax on their income generally will not be
required to pay any tax on amounts distributed to them. Federal income tax on
distributions to an IRA or to a qualified retirement plan will generally be
deferred.
Capital gains derived from sales of portfolio securities held by a Fund
will generally be designated as long-term or short-term. Distributions from a
Fund's long-term capital gains are generally taxed at the long-term capital
gains rate regardless of how long you have owned shares in the Fund. Dividends
from other sources are generally taxed as ordinary income.
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<PAGE>
Dividends and capital gain distributions are generally taxable when you
receive them; however, if a distribution is declared in October, November or
December, but not paid until January of the following year, it will be
considered to be paid on December 31 in the year in which it was declared.
Shortly after the end of each year, you will receive from each Fund in which you
are a shareholder a statement of the amount and nature of the distributions made
to you during the year.
If you redeem, transfer or exchange Fund shares, you may have taxable gain
or a loss. If you hold Fund shares for six months or less, and during that time
you receive a capital gain dividend, any loss you realize on the sale of these
Fund shares will be treated as a long-term loss to the extent of the earlier
distribution.
Dividends and certain interest income earned from foreign securities by a
Fund may be subject to foreign withholding or other taxes. A Fund may be
permitted to pass on to its shareholders the right to a credit or deduction for
income or other tax credits earned from foreign investments and will do so if
possible. These deductions or credits may be subject to tax law limitations.
If a Fund invests in certain "passive foreign investment companies"
("PFICs"), it will be subject to Federal income tax (and possibly additional
interest charges) on a portion of any "excess distribution" or gain from the
disposition of such shares, even if it distributes such income to its
shareholders. If a Fund elects to treat a PFIC as a "qualified electing fund"
("QEF") and the PFIC furnishes certain financial information in the required
form to such Fund, the Fund will instead be required to include in income each
year its allocable share of the ordinary earnings and net capital gains of the
QEF, regardless of whether received, and such amounts will be subject to the
various distribution requirements described above. The Funds may also elect to
mitigate the tax effects of owning PFIC stock by making an annual mark-to-market
election with respect to PFIC shares.
ADDITIONAL INFORMATION
SHAREHOLDER COMMUNICATIONS. You will receive unaudited Semi-Annual Reports
and audited Annual Reports on a regular basis from the Funds. In addition, you
will also receive updated Prospectuses or Supplements to this Prospectus. In
order to eliminate duplicate mailings, the Funds will only send one copy of the
above communications to (1) accounts with the same primary record owner, (2)
joint tenant accounts, (3) tenant in common accounts and (4) accounts which have
the same address.
YEAR 2000. The Funds' operations depend on the seamless functioning of
computer systems in the financial service industry, including those of its
service providers. Many computer software systems in use today cannot properly
process date-related information after December 31, 1999 because of the method
by which dates are encoded and calculated. This failure, commonly referred to
as the "Year 2000 Issue," could adversely affect the handling of securities
trades, pricing and account servicing for the Funds. The Funds have been
informed that their major service providers have made compliance with the Year
2000 Issue a high priority and are taking steps that they believe are reasonably
designed to address the Year 2000 Issue with respect to their computer systems.
There can be, however, no assurance that these steps will be successful, or that
interaction with other non-complying computer systems will not impair their
services at that time.
63
<PAGE>
APPENDIX A
The Index 500 Fund is not sponsored, endorsed, sold or promoted by S&P. S&P
makes no representation or warranty, express or implied, to the owners of the
Index 500 Fund or any member of the public regarding the advisability of
investing in securities generally or in the Index 500 Fund particularly or the
ability of the S&P 500 Index to trace general stock market performance. S&P's
only relationship to the Trust is the licensing of certain trademarks and trade
names of S&P and of the S&P 500 Index which is determined, composed and
calculated by S&P without regard to the Trust or the Index 500 Fund. S&P has no
obligation to take the needs of the Trust or the owners of the Index 500 Fund
into consideration in determining, composing or calculating the S&P 500 Index.
S&P is not responsible for and has not participated in the determination of the
prices and amount of the Index 500 Fund or the timing of the issuance or sale of
the Index 500 Fund or in the determination or calculation of the equation by
which the Index 500 Fund is to be converted into cash. S&P has no obligation or
liability in connection with the administration, marketing or trading of the
Index 500 Fund.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500
Index or any data included therein and S&P shall have no liability for any
errors, omissions, or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the Trust, owners of the Index 500
Fund, or any other person or entity from the use of the S&P 500 Index or any
data included therein. S&P makes no express or implied warranties, and
expressly disclaims all warranties of merchantability of fitness for a
particular purpose or use with respect to the S&P 500 Index or any data included
therein. Without limiting any of the foregoing, in no event shall S&P have any
liability for any special, punitive, indirect, or consequential damages
(including lost profits), even if notified of the possibility of such damages.
"Standard & Poor's," "S&P," "S&P 500," "Standard & Poor's 500," and "500"
are trademarks of McGraw-Hill, Inc. and have been licensed for use by the Trust.
The Index 500 Fund is not sponsored, endorsed, sold or promoted by S&P and S&P
makes no representation regarding the advisability of investing in the Index 500
Fund.
A-1
<PAGE>
CLASS Y SHARES
PROSPECTUS
OCTOBER 27, 1998
THE MUNDER EQUITY FUNDS
Accelerating Growth
Balanced
Growth & Income
Growth Opportunities
International Equity
Micro-Cap Equity
Multi-Season Growth
NetNet
Real Estate Equity Investment
Small-Cap Value
Small Company Growth
Value
THE MUNDER FRAMLINGTON FUNDS
Framlington Emerging Markets
Framlington Global Financial Services
Framlington Healthcare
Framlington International Growth
THE MUNDER INCOME FUNDS
Bond
Intermediate Bond
International Bond
U.S. Government Income
Michigan Triple Tax-Free Bond
Tax-Free Bond
Tax-Free Intermediate Bond
Short Term Treasury
THE MUNDER MONEY MARKET FUNDS
Cash Investment
Money Market
Tax-Free Money Market
U.S. Treasury Money Market
Prospectus begins on next page
<PAGE>
PROSPECTUS
CLASS Y SHARES
The Munder Funds Trust (the "Trust"), The Munder Funds, Inc. (the
"Company") and The Munder Framlington Funds Trust ("Framlington") are open-end
investment companies. This Prospectus describes the investment portfolios
offered by the Trust (the "Trust Funds"), the Company (the "Company Funds") and
Framlington ("Framlington Funds") described below (referred to as the "Funds"):
<TABLE>
<S> <C>
Munder Accelerating Growth Fund* Munder Framlington Healthcare Fund
Munder Balanced Fund Munder Framlington International Growth Fund
Munder Growth & Income Fund Munder Bond Fund
Munder Growth Opportunities Fund Munder Intermediate Bond Fund
Munder International Equity Fund Munder International Bond Fund
Munder Micro-Cap Equity Fund Munder U.S. Government Income Fund
Munder Multi-Season Growth Fund Munder Michigan Triple Tax-Free Bond Fund**
Munder NetNet Fund Munder Tax-Free Bond Fund
Munder Real Estate Equity Investment Fund Munder Tax-Free Intermediate Bond Fund
Munder Small-Cap Value Fund Munder Short Term Treasury Fund
Munder Small Company Growth Fund Munder Cash Investment Fund
Munder Value Fund Munder Money Market Fund
Munder Framlington Emerging Markets Fund Munder Tax-Free Money Market Fund
Munder Framlington Global Financial Services Fund Munder U.S. Treasury Money Market Fund
* The Accelerating Growth Fund is closed to new investors.
** The Michigan Triple Tax-Free Bond Fund is offered only in the State of Michigan.
</TABLE>
Munder Capital Management (the "Advisor") serves as the investment advisor
of the Funds.
This Prospectus explains the objectives, policies, risks and fees of each
Fund. You should read this Prospectus carefully before investing and retain it
for future reference. A Statement of Additional Information ("SAI") describing
each of the Funds has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated by reference into this Prospectus. You can
obtain the SAI free of charge by calling the Funds at (800) 438-5789. In
addition, the SEC maintains a Web site (http://www.sec.gov) that contains the
SAI and other information regarding the Funds.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED OR GUARANTEED. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF THE PRINCIPAL AMOUNT INVESTED.
ALTHOUGH EACH OF THE CASH INVESTMENT FUND, MONEY MARKET FUND, TAX-FREE
MONEY MARKET FUND AND U.S. TREASURY MONEY MARKET FUND SEEKS TO MAINTAIN A
CONSTANT NET ASSET VALUE OF $1.00 PER SHARE, THERE CAN BE NO ASSURANCE THAT EACH
FUND CAN DO SO ON A CONTINUING BASIS.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS OCTOBER 27, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
Fund Highlights
<S> <C>
What are the key facts regarding the Funds?.................. 3
Financial Information............................................. 7
Fund Choices
What Funds are offered?...................................... 36
Who may want to invest in the Funds?......................... 46
What are the Funds' investments and investment practices?.... 47
What are the risks of investing in the Funds?................ 57
Performance
How is the Funds' performance calculated?.................... 59
Where can I obtain performance data?......................... 60
Purchases of Shares
What price do I pay for shares?.............................. 61
When can I purchase shares?.................................. 61
What is the minimum required investment?..................... 61
How can I purchase shares?................................... 61
How can I exchange shares?................................... 62
Redemptions of Shares
What price do I receive for redeemed shares?................. 62
When can I redeem shares?.................................... 62
How can I redeem shares?..................................... 62
When will I receive redemption amounts?...................... 63
Structure and Management of the Funds
How are the Funds structured?................................ 63
Who manages and services the Funds?.......................... 63
What are my rights as a shareholder?......................... 68
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?............ 69
How will distributions be made?.............................. 69
Are there tax implications of my investments in the Funds?... 69
Additional Information............................................ 70
</TABLE>
2
<PAGE>
FUND HIGHLIGHTS
WHAT ARE THE KEY FACTS REGARDING THE FUNDS?
Q: What are the Funds' goals?
A:
. The Accelerating Growth Fund, Framlington Emerging Markets Fund,
Framlington Global Financial Services Fund, Framlington Healthcare
Fund, Framlington International Growth Fund, Growth Opportunities
Fund, International Equity Fund, Micro-Cap Equity Fund, Multi-Season
Growth Fund, NetNet Fund, Small-Cap Value Fund, Small Company Growth
Fund and Value Fund primarily seek to provide long-term capital
appreciation.
. The Balanced Fund, Growth & Income Fund and Real Estate Equity
Investment Fund seek to provide capital appreciation and current
income.
. The Bond Fund seeks to provide a high level of current income with
capital appreciation as a secondary consideration.
. The Intermediate Bond Fund seeks to provide a competitive rate of
return which exceeds the inflation rate and the return provided by
money market instruments.
. The International Bond Fund seeks to provide a competitive total
return through a combination of current income and capital
appreciation.
. The U.S. Government Income Fund seeks to provide high current income.
. The Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund seek to
provide current interest income exempt from Federal income taxes.
. The Michigan Triple Tax-Free Bond Fund seeks to provide as high a
level of current interest income exempt from regular Federal income
taxes, Michigan state income tax and Michigan intangibles tax as is
consistent with prudent investment management and preservation of
capital.
. The Short Term Treasury Fund seeks to provide an enhanced money market
return consistent with the preservation of capital.
. The Cash Investment Fund and U.S. Treasury Money Market Fund seek as
high a level of current interest income as is consistent with
maintaining liquidity and stability of principal.
. The Money Market Fund seeks to provide current income consistent with
the preservation of capital and liquidity.
. The Tax-Free Money Market Fund seeks to provide as high a level of
current interest income exempt from Federal income taxes as is
consistent with maintaining liquidity and stability of principal.
Q: What are the Funds' strategies?
A: BALANCED FUND
. This Fund allocates its assets primarily among three types of assets -
Equity Securities, Fixed Income Securities and Cash Equivalents.
"Equity Securities" include common stocks, preferred stocks, warrants
and other securities convertible into common stock. "Fixed Income
Securities" are securities which either pay interest at set times at
either fixed or variable rates, or which realize a discount upon
maturity. Fixed Income Securities include corporate bonds, debentures,
notes and other similar corporate debt instruments, zero coupon bonds
(discount debt obligations that do not make interest payments) and
variable amount master demand notes that permit the amount of
indebtedness to vary in addition to providing for periodic adjustments
in the interest rates. "Cash Equivalents" are instruments which are
highly liquid and virtually free of investment risk.
3
<PAGE>
ACCELERATING GROWTH FUND, FRAMLINGTON EMERGING MARKETS FUND, FRAMLINGTON GLOBAL
FINANCIAL SERVICES FUND, FRAMLINGTON HEALTHCARE FUND, FRAMLINGTON INTERNATIONAL
GROWTH FUND, GROWTH & INCOME FUND, GROWTH OPPORTUNITIES FUND, INTERNATIONAL
EQUITY FUND, MICRO-CAP EQUITY FUND, MULTI-SEASON GROWTH FUND, NETNET FUND, REAL
ESTATE EQUITY INVESTMENT FUND, SMALL-CAP VALUE FUND, SMALL COMPANY GROWTH FUND
AND VALUE FUND (THE "EQUITY FUNDS")
. These Funds invest primarily in Equity Securities.
BOND FUND, INTERMEDIATE BOND FUND, INTERNATIONAL BOND FUND AND U.S. GOVERNMENT
INCOME FUND (THE "BOND FUNDS")
. These Funds, other than the U.S. Government Income Fund, invest
primarily in Fixed Income Securities.
. The U.S. Government Income Fund invests primarily in obligations of
the U.S. government and its agencies and instrumentalities.
SHORT TERM TREASURY FUND
. The Short Term Treasury Fund invests only in U.S. Treasury securities
and repurchase agreements relating to U.S. Treasury securities.
MICHIGAN TRIPLE TAX-FREE BOND FUND, TAX-FREE BOND FUND AND TAX-FREE INTERMEDIATE
BOND FUND (THE "TAX-FREE FUNDS")
. The Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund invest
primarily in Municipal Obligations. "Municipal Obligations" are
obligations of states, territories and possessions of the United
States and the District of Columbia, and their political subdivisions,
agencies, instrumentalities and authorities, the interest on which is
exempt from regular Federal income tax.
. The Michigan Triple Tax-Free Bond Fund invests primarily in Michigan
Municipal Obligations. "Michigan Municipal Obligations" are municipal
obligations issued by the State of Michigan and its political
subdivisions, the interest on which is exempt from Federal income
taxes, Michigan state income tax and Michigan intangibles tax.
CASH INVESTMENT FUND, MONEY MARKET FUND, TAX-FREE MONEY MARKET FUND AND U.S.
TREASURY MONEY MARKET FUND (THE "MONEY MARKET FUNDS")
. These Funds invest solely in dollar-denominated debt securities with
remaining maturities of 13 months or less and maintain an average
dollar-weighted portfolio maturity of 90 days or less.
Each Fund implements a different investment strategy which is described in
this Prospectus.
4
<PAGE>
Q: What are the Funds' risks?
A: The following table summarizes the primary risks of investing in the Funds:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FUND RISK
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Equity Funds and Balanced Fund Potential loss of investment due to changes in the stock
market in general, changes in the stock prices of particular
companies and perceptions about particular industries.
- -------------------------------------------------------------------------------------------------------------------
Bond Funds, Tax-Free Funds and Short Term Potential loss of investment due to changes in the bond
Treasury Fund market in general, in the prices of debt securities of
particular companies and in interest rates.
- -------------------------------------------------------------------------------------------------------------------
Money Market Funds Potential failure to maintain a $1.00 net asset value.
- -------------------------------------------------------------------------------------------------------------------
Framlington Emerging Markets Fund, Because of large investments in foreign securities, the
Framlington Global Financial Services Fund, Funds are riskier than domestic funds due to factors such as
Framlington International Growth Fund, freezes on convertibility of currency, changes in exchange
International Bond Fund and International Equity rates, political instability and differences in accounting
Fund and reporting standards.
- -------------------------------------------------------------------------------------------------------------------
Growth Opportunities Fund, Micro-Cap Equity Because of large investments in mid-capitalization,
Fund, NetNet Fund, Small Company Growth Fund small-capitalization and/or emerging growth companies, the
and Small-Cap Value Fund Funds are riskier than large-capitalization funds since such
companies typically have greater earnings fluctuations and
greater reliance on a few key customers than larger
companies.
- -------------------------------------------------------------------------------------------------------------------
Real Estate Equity Investment Fund, Framlington These Funds concentrate their investments in single
Global Financial Services Fund, Framlington industries and could experience larger price fluctuations
Healthcare Fund and NetNet Fund than funds invested in a broader range of industries.
- -------------------------------------------------------------------------------------------------------------------
International Bond Fund, Michigan Triple Tax-Free These "non-diversified" Funds concentrate their investments
Bond Fund and Tax-Free Intermediate Bond Fund in fewer issuers than diversified funds, and could
experience larger price fluctuations than diversified funds.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Q: What are the options for investment in the Funds?
A: Each Equity Fund, other than the NetNet Fund offers five different
investment options, or classes: Class A, B, C, K and Y. The NetNet Fund offers
four different investment options, or classes: Class A, B, C and Y. Each Bond
and Tax-Free Fund offers five different investment options, or classes: Class A,
B, C, K and Y. The Short Term Treasury Fund offers Class Y Shares and Michigan
Municipal League Shares. The Money Market Fund offers Class A, B, C and Y
Shares and Cash Investment Fund, Tax-Free Money Market Fund and U.S. Treasury
Money Market Fund offer Class A, K and Y Shares. Class A, B, C, K and Michigan
Municipal Shares are offered in other prospectuses.
Q: How do I buy and sell shares of the Funds?
A: Funds Distributor, Inc. (the "Distributor") sells shares of the Funds. You
may purchase shares from the Distributor through broker-dealers or other
financial institutions or from the Funds' transfer agent, First Data
5
<PAGE>
Investor Services Group, Inc. (the "Transfer Agent"), by mailing an Account
Application Form with a check to the Transfer Agent. Fiduciary and discretionary
accounts of institutions and institutional investors must invest at least
$500,000 for all Funds except Real Estate Equity Investment Fund which requires
an initial investment of $250,000. Other types of investors are not subject to
any required minimum investment.
Shares may be redeemed (sold back to the Fund) through your bank or financial
institution or, in some cases, through the free checkwriting privilege.
You may also acquire the Funds' shares by exchanging shares of the same class
of other funds of the Trust, the Company and Framlington, and exchange Fund
shares for shares of the same class of other funds of the Trust, the Company and
Framlington.
Q: What shareholder privileges do the Funds offer?
A:
. Automatic Investment Plan
. Reinvestment privilege
. Free Checkwriting (certain Funds only--See "Redemption of Shares")
Q: When and how are distributions made?
A: Dividend distributions are made from the dividends and interest earned on
investments after expenses. Dividends paid at least annually: Framlington
Emerging Markets Fund, Framlington Global Financial Services Fund, Framlington
Healthcare Fund, Framlington International Growth Fund, Growth Opportunities
Fund, International Equity Fund, Micro-Cap Equity Fund, Multi-Season Growth
Fund, NetNet Fund, Small-Cap Value Fund and Value Fund.
Dividends paid at least quarterly (if income is available): Accelerating
Growth Fund, Balanced Fund, Growth & Income Fund, Small Company Growth Fund and
International Bond Fund.
Dividends paid monthly: Real Estate Equity Investment Fund, Bond Fund,
Intermediate Bond Fund, U.S. Government Income Fund, Michigan Triple Tax-Free
Bond Fund, Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund.
Dividends declared daily and paid monthly: Short Term Treasury Fund, Cash
Investment Fund, Money Market Fund, Tax-Free Money Market Fund, and U.S.
Treasury Money Market Fund.
The Funds distribute capital gains at least annually. Unless you elect to
receive distributions in cash, we will use all dividends and capital gain
distributions of a Fund to purchase additional shares of that Fund.
Q: Who manages the Funds' assets?
A: Munder Capital Management is the Funds' investment advisor. The Advisor is
responsible for all purchases and sales of the securities held by the Funds
other than the Framlington Funds. The Advisor provides overall investment
management services for the Framlington Funds. Framlington Overseas Investment
Management Limited (the "Sub-Advisor") is responsible for all purchases and
sales of securities held by the Framlington Emerging Markets, Healthcare and
International Growth Funds. The Advisor is responsible for purchases and sales
of domestic securities and the Sub-Advisor is responsible for sales of foreign
securities for the Framlington Global Financial Services Funds.
6
<PAGE>
FINANCIAL INFORMATION
SHAREHOLDER TRANSACTION EXPENSES(1)
The purpose of this table is to assist you in understanding the expenses a
shareholder in the Funds will bear directly.
<TABLE>
<S> <C>
Maximum Sales Charge on Purchase (as a % of Offering Price)................................................... None
Sales Charges Imposed on Reinvested Dividends................................................................. None
Maximum Deferred Sales Charge................................................................................. None
Redemption Fees (2)........................................................................................... None
Exchange Fees................................................................................................. None
</TABLE>
_______________________
Notes:
(1) Does not include fees which institutions may charge for services they
provide to you.
(2) The Transfer Agent may charge a fee of $7.50 for wire redemptions under
$5,000.
FUND OPERATING EXPENSES
The purpose of this table is to assist you in understanding the expenses
charged directly to each Fund, which investors in the Funds will bear indirectly
for the current fiscal year. Such expenses include payments to Trustees,
Directors, auditors, legal counsel and service providers (such as the Advisor),
registration fees and distribution fees. The fees shown below are based on fees
for the Funds' past fiscal year, except (i) the fees for the Multi-Season Growth
Fund reflect an anticipated voluntary advisory fee waiver for the current fiscal
year and (ii) the fees for the Framlington Global Financial Services Fund, the
Growth Opportunities Fund, NetNet Fund, (Micro-Cap Equity Fund and Framlington
Healthcare Fund) are based on estimated operating expenses for the current
fiscal year and reflect anticipated voluntary expense reimbursements for the
Growth Opportunities Fund, NetNet Fund, Framlington Global Financial Services
Fund, (Micro-Cap Equity Fund and Framlington Healthcare Fund).
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING
EXPENSES ACCELERATING BALANCED GROWTH & GROWTH INTERNATIONAL
(AS A % OF AVERAGE NET ASSETS) GROWTH FUND FUND INCOME FUND OPPORTUNITIES FUND EQUITY FUND
- ------------------------------ ------------ -------- ----------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
Advisory Fees........................... .75% .65% .75% .75% .75%
Other Expenses+......................... .20% .32% .20% .40%++ .26%
--- --- --- ---- ---
Total Fund Operating Expenses+.......... .95% .97% .95% 1.15%++ 1.01%
=== === === ===== ====
<CAPTION>
SMALL
ANNUAL FUND MICRO-CAP REAL ESTATE SMALL-CAP COMPANY
OPERATING EXPENSES EQUITY MULTI-SEASON EQUITY NETNET VALUE GROWTH
(AS A % OF AVERAGE NET ASSETS) FUND GROWTH FUND INVESTMENT FUND FUND FUND FUND
- ------------------------------ ---- ----------- --------------- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees..................... 1.00% .75%* .74% 1.00% .75% .75%
Other Expenses+................... .25%++ .25% .11% .28%++ .38% .22%
------- ------ --- ------- ---- ---
Total Fund Operating 1.25%++ 1.00%* .85% 1.28%++ 1.13% .97%
Expenses+......................... ======= ====== === ======= ==== ===
<CAPTION>
ANNUAL FUND OPERATING FRAMLINGTON FRAMLINGTON FRAMLINGTON FRAMLINGTON
EXPENSES VALUE GLOBAL FINANCIAL EMERGING HEALTHCARE INTERNATIONAL
(AS A % OF AVERAGE NET ASSETS) FUND SERVICES FUND MARKETS FUND FUND GROWTH FUND
- ------------------------------ ---- ------------- ------------ ---- -----------
<S> <C> <C> <C> <C> <C>
Advisory Fees........................ .74% .75% 1.25% 1.00% 1.00%
Other Expenses+...................... .28% .50%++ .29% .30%++ .30%
---- ------- ---- ------- ----
Total Fund Operating Expenses+....... 1.02% 1.25%++ 1.54% 1.30%++ 1.30%
==== ======= ==== ======= ====
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING INTERMEDIATE INTERNATIONAL U.S. MICHIGAN TRIPLE
EXPENSES BOND BOND BOND GOVERNMENT TAX-FREE BOND
(AS A % OF AVERAGE NET ASSETS) FUND FUND FUND INCOME FUND FUND
- ------------------------------ ---- ---- ---- ----------- ----
<S> <C> <C> <C> <C> <C>
Advisory Fees...................... .50% .50% .50% .50% .50%
Other Expenses..................... .21% .18% .35% .21% .13%
--- --- --- --- ---
Total Fund Operating Expenses...... .71% .68% .85% .71% .63%
=== === === === ===
<CAPTION>
SHORT TAX-FREE
ANNUAL FUND OPERATING TAX-FREE TAX-FREE TERM CASH MONEY MONEY
EXPENSES BOND INTERMEDIATE TREASURY INVESTMENT MARKET MARKET
(AS A % OF AVERAGE NET ASSETS) FUND BOND FUND FUND FUND FUND FUND
- ------------------------------ ---- --------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees......................... .50% .50% .25% .35% .40% .35%
Other Expenses........................ .20% .18% .27% .20% .24% .18%
--- --- --- --- --- ---
Total Fund Operating Expenses......... .70% .68% .52% .55% .64% .53%
=== === === === === ===
<CAPTION>
ANNUAL FUND OPERATING U.S. TREASURY
EXPENSES MONEY
(AS A % OF AVERAGE NET ASSETS) MARKET FUND
- ------------------------------ -----------
<S> <C>
Advisory Fees............................. .35%
Other Expenses............................ .19%
---
Total Fund Operating Expenses............. .54%
===
</TABLE>
- -------------------
* The Advisor expects to voluntarily waive a portion of its advisory fees for
the current fiscal year. Without waiver, the ratio of advisory fees to average
net assets would be 1.00% and total fund operating expenses would be at 1.25%.
+ After expense reimbursements, if any.
++ The Advisor expects to voluntarily reimburse the Funds for certain operating
expenses. In the absence of such expense reimbursements, it is estimated that
total fund operating expenses would be 1.28% for Growth Opportunities Fund,
1.42% for the Framlington Global Financial Services Fund, 1.51% for the
Framlington Healthcare Fund, 1.35% for the Micro-Cap Equity Fund and 2.09% for
the NetNet Fund.
8
<PAGE>
EXAMPLE
This example shows the amount of expenses you would pay (directly or
indirectly) on a $1,000 investment in the Funds assuming (1) a 5% annual return
and (2) redemption at the end of the time periods. THIS EXAMPLE IS NOT A
REPRESENTATION OF PAST OR FUTURE PERFORMANCE OR OPERATING EXPENSES; ACTUAL
PERFORMANCE OR OPERATING EXPANSES MAY BE LARGER OR SMALLER THAN SHOWN.
<TABLE>
<CAPTION>
1 YEAR 3 YEAR 5 YEAR 10 YEARS
------ ------ ------ --------
<S> <C> <C> <C> <C>
Accelerating Growth Fund $10 $30 $53 $117
Balanced Fund $10 $31 $54 $119
Growth & Income Fund $10 $30 $53 $117
Growth Opportunities Fund $14 $45
International Equity Fund $10 $32 $56 $124
Micro-Cap Equity Fund $13 $40 $69 $151
Multi-Season Growth Fund $10 $32 $55 $122
NetNet Fund $13 $41 $71 $155
Real Estate Equity Investment Fund $11 $35 $61 $134
Small-Cap Value Fund $12 $36 $62 $137
Small Company Growth Fund $10 $31 $54 $119
Value Fund $10 $32 $56 $125
Framlington Emerging Markets Fund $16 $49 $84 $183
Framlington Global Financial Services Fund $15 $48
Framlington Healthcare Fund $13 $41 $71 $157
Framlington International Growth Fund $13 $41 $71 $157
Bond Fund $ 7 $23 $40 $ 88
Intermediate Bond Fund $ 7 $22 $38 $ 85
International Bond Fund $ 9 $27 $47 $105
U.S. Government Income Fund $ 7 $23 $40 $ 88
Michigan Triple Tax-Free Bond Fund $ 6 $20 $35 $ 79
Tax-Free Bond Fund $ 7 $22 $39 $ 87
Tax-Free Intermediate Bond Fund. $ 7 $22 $39 $ 85
Short Term Treasury Fund $ 5 $17 $29 $ 65
Cash Investment Fund $ 6 $18 $31 $ 69
Money Market Fund $ 7 $20 $36 $ 80
Tax-Free Money Market Fund $ 5 $17 $30 $ 66
U.S. Treasury Money Market Fund $ 6 $17 $30 $ 68
</TABLE>
9
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights were audited by Ernst & Young LLP,
independent auditors, except that, for periods ended prior to June 30, 1995 for
the Multi-Season Growth Fund and Money Market Fund, such financial highlights
were audited by another independent auditor. This information should be read in
conjunction with the Funds' most recent Annual Reports, which are incorporated
by reference into the SAI. You may obtain the Annual Reports without charge by
calling (800) 438-5789.
<TABLE>
<CAPTION>
ACCELERATING GROWTH FUND(a)
-----------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(i) 6/30/96 6/30/95(d) 2/28/95(e) 2/28/94 2/28/93 2/29/92
------- ---------- ------- ---------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........
Income from investment operations:
Net investment income ....................
Net realized and unrealized gain on
investments ..............................
Total from investment operations .........
Less distributions:
Dividends from net investment income .....
Distributions from net realized gains ....
Total distributions ......................
Net asset value, end of period ..............
Total return (b) .........................
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) .....
Ratio of operating expenses to average
net assets ...............................
Ratio of net investment income/loss to
average net assets ......................
Portfolio turnover rate...................
Ratio of operating expenses to average
net assets w/o waivers ..................
Average commission rate (g) ..............
</TABLE>
- -----------------
(a) The Munder Accelerating Growth Fund Class Y Shares commenced operations on
December 1, 1991.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Amount rounds to less than 0.01%. (i) Per share numbers have been calculated
using the average shares method, which more appropriately presents the per share
data for the period since the use of the undistributed net investment income
method did not accord with the results of operations.
10
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND(a)
-------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(g) 6/30/96(g) 6/30/95(d) 2/28/95(e) 2/28/94
------- ---------- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .............
Income from investment operations:
Net investment income .........................
Net realized and unrealized gain/(loss) on
investments ...................................
Total from investment operations ..............
Less distributions:
Dividends from net investment income ..........
Distributions from net realized gains .........
Total distributions ...........................
Net asset value at end of period .................
Total return (b) ..............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) ..........
Ratio of operating expenses to average net
assets ........................................
Ratio of net investment income to average net
assets ........................................
Portfolio turnover rate .......................
Ratio of operating expenses to average net
assets w/o waivers ............................
Average commission rate (f) ...................
</TABLE>
- ----------------
(a) The Munder Balanced Fund Class Y Shares commenced operations on April 13,
1993.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
11
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND(a)
------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(h) 6/30/96(h) 6/30/95(d) 2/28/95(e)
------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .....................
Income from investment operations:
Net investment income .................................
Net realized and unrealized gain on investments.......
Total from investment operations ......................
Less distributions:
Dividends from net investment income ..................
Distributions from net realized gains .................
Total distributions ...................................
Net asset value at end of period .........................
Total return (b) ......................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) ..................
Ratio of operating expenses to average net
assets ................................................
Ratio of net investment income to average net
assets ................................................
Portfolio turnover rate ...............................
Ratio of operating expenses to average net
assets w/o waivers ....................................
Average commission rate (g) ...........................
</TABLE>
- ---------------
(a) The Munder Growth & Income Fund Class Y Shares commenced operations on July
5, 1994.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
12
<PAGE>
<TABLE>
<CAPTION>
GROWTH
OPPORTUNITIES FUND (a)
----------------------
PERIOD
ENDED
6/30/98
----------------------
<S> <C>
Net asset value, beginning of period .........................................
Income from investment operations:
Net investment income ......................................................
Net realized and unrealized gain on investments ............................
Total from investment operations ............................................
Less distributions:
Dividends from net investment income ........................................
Distributions from net realized gains .......................................
Total distributions .........................................................
Net asset value at end of period .............................................
Total return (b) ............................................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) ........................................
Ratio of operating expenses to average net assets ...........................
Ratio of net investment income to average net assets ........................
Portfolio turnover rate .....................................................
Ratio of operating expenses to average net assets w/o waivers ..............
Average commission rate (d) .................................................
</TABLE>
- ----------------
(a) The Growth Opportunities Fund commenced operations on June 3, 1998.
13
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND (a)
-------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(f) 6/30/96(f) 6/30/95(f) 2/28/95(e,f) 2/28/94 2/28/93 2/29/92
------- ---------- ---------- ---------- ------------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.....
Income from investment operations:
Net investment income.................
Net realized and unrealized
gain/(loss) on investments............
Total from investment
operations............................
Less distributions:
Dividends from net investment
income ...............................
Distributions from net realized
gains ................................
Distributions from capital............
Total distributions ..................
Net asset value at end of period.........
Total return (b)......................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's) ...............................
Ratio of operating expenses to
average net assets ...................
Ratio of net investment loss to
average net assets ...................
Portfolio turnover rate...............
Ratio of operating expenses to
average net assets w/o waivers........
Average commission rate (h)...........
</TABLE>
- ---------------
(a) The Munder International Equity Fund Class Y Shares commenced operations on
December 1, 1991.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(g) Amount represents less than $0.01 per share.
(h) Average commission rate paid per share of securities purchased and sold by
the Fund.
14
<PAGE>
<TABLE>
<CAPTION>
MICRO-CAP
EQUITY FUND(a)
-----------------------------
YEAR PERIOD
ENDED ENDED
6/30/98 6/30/97(e)
------------- --------------
<S> <C> <C>
Net asset value, beginning of period......................
Income from investment operations:
Net investment income.................................
Net realized and unrealized gain on investments.......
Total from investment operations......................
Less distributions:
Dividends from net investment income .................
Total distributions ..................................
Net asset value at end of period.........................
Total return (b)......................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) .................
Ratio of operating expenses to average net assets ....
Ratio of net investment loss to average net assets ...
Portfolio turnover rate...............................
Ratio of operating expenses to average net assets w/o
waivers...............................................
Average commission rate (d)...........................
</TABLE>
- -----------------
(a) The munder Micro-Cap Equity Fund Class Y Shares commenced operations on
December 36, 1996.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Average Commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
15
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND(a)
-------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(h) 6/30/96(h) 6/30/95(d,e,f) 12/31/94 12/31/93
-------- ----------- ------------ ---------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning od period..................
Income from investment operations:
Net investment income..............................
Net realized and unrealized gain/(loss) on
investments .......................................
Total from investment operations ..................
Less distributions:
Dividends from net investment income ............
Distributions from net realized gains .............
Total distributions ...............................
Net asset value at end of period .....................
Total return (b) ..................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) ..............
Ratio of operating expenses to average net
assets ............................................
Ratio of net investment income to average net
assets ............................................
Portfolio turnover rate ...........................
Ratio of operating expenses to average net assets
w/o waivers .......................................
Average commission rate (g) .......................
</TABLE>
- -------------------
(a) The Munder Multi-Season Growth Fund Class Y Shares commenced operations on
August 16, 1993.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
December 31.
(e) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
(f) On February 1, 1995, the Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(i) Amount represents less than $0.01 per share.
16
<PAGE>
<TABLE>
<CAPTION>
NETNET FUND (a)
-----------------------
PERIOD
ENDED
6/30/98
-------
<S> <C>
Net asset value, beginning of period .........................................
Income from investment operations:
Net investment income ......................................................
Net realized and unrealized gain on investments ............................
Total from investment operations ............................................
Less distributions:
Dividends from net investment income ........................................
Distributions from net realized gains .......................................
Total distributions .........................................................
Net asset value at end of period .............................................
Total return (b) ............................................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) ........................................
Ratio of operating expenses to average net assets ...........................
Ratio of net investment income to average net assets ........................
Portfolio turnover rate .....................................................
Ratio of operating expenses to average net assets w/o waivers ...............
Average commission rate (d) .................................................
</TABLE>
- ----------------
(a) The NetNet Fund commenced operations on June 1, 1998.
17
<PAGE>
<TABLE>
<CAPTION>
SMALL-CAP VALUE
REAL ESTATE EQUITY INVESTMENT FUND(a) FUND(a)
---------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96(f) 6/30/95(d) 6/30/98 6/30/97(f)
-------- -------- --------- ----------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.....
Income from investment operations:
Net investment income.................
Net realized and unrealized
gain/(loss) on investments............
Total from investment
operations............................
Less distributions:
Dividends from net investment
income ...............................
Distributions from net realized
gains ................................
Distributions from capital............
Total distributions ..................
Net asset value at end of period.........
Total return (b)......................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in 000's) .
Ratio of operating expenses to
average net assets ...................
Ratio of net investment loss to
average net assets ...................
Portfolio turnover rate...............
Ratio of operating expenses to
average net assets w/o waivers........
Average commission rate (h)...........
</TABLE>
- ---------------
(a) The Munder Real Estate Equity Investment Fund Class Y Shares commenced
operations on October 3, 1994. The Munder Small-Cap Value Fund Class Y Shares
commenced operations on December 26, 1996.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Average commission rate paid per share of securities purchased and sold by
the Fund.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
18
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND(a)
----------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(f) 6/30/96(f) 6/30/95(e) 2/28/95(d) 2/28/94 2/28/93 2/29/92
------- ---------- ---------- ---------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.....
Income from investment operations:
Net investment income.................
Net realized and unrealized
gain/(loss) on investments............
Total from investment
operations............................
Less distributions:
Dividends from net investment
income ...............................
Distributions from net realized
gains ................................
Distributions from capital............
Total distributions ..................
Net asset value at end of period.........
Total return (b)......................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in 000's) .
Ratio of operating expenses to
average net assets ...................
Ratio of net investment loss to
average net assets ...................
Portfolio turnover rate...............
Ratio of operating expenses to
average net assets w/o waivers........
Average commission rate (g)...........
</TABLE>
- -----------------
(a) The Munder Small Company Growth Fund Class Y Shares commenced operations on
December 1, 1991.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(g) Average commissions rate paid per share of securities purchased and sold by
the Fund.
19
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND(a)
-------------------------------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
6/30/98 6/30/97(e) 6/30/96(e)
-------------- --------------- ------------
<S> <C> <C> <C>
Net asset value, beginning of period ........................
Income from investment operations:
Net investment income .....................................
Net realized and unrealized gain on investments ...........
Total from investment operations ...........................
Less distributions:
Dividends from net investment income .......................
Distributions from net realized gains ......................
Total distributions ........................................
Net asset value at end of period ............................
Total return (b) ...........................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) .......................
Ratio of operating expenses to average net assets ..........
Ratio of net investment income/loss to average net assets ..
Portfolio turnover rate ....................................
Ratio of operating expenses to average net assets w/o
waivers ....................................................
Average commission rate (d) ................................
</TABLE>
- ------------------
(a) The Munder Value Fund Class Y Shares commenced operations on August 18,
1995.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
20
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON
GLOBAL
FRAMLINGTON FINANCIAL FRAMLINGTON FRAMLINGTON
EMERGING MARKETS SERVICES HEALTHCARE INTERNATIONAL GROWTH
FUND(a) FUND(a) FUND(a) FUND(a)
---------------------------------------------------------------------------
YEAR PERIOD PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(e) 6/30/98 6/30/98 6/30/97 6/30/98 6/30/97(e)
------- ----------- ------- ------- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..................
Income from investment operations:
Net investment income ...............................
Net realized and unrealized gain on investments .....
Total from investment operations .....................
Less distributions:
Dividends from net investment income .................
Distributions from net realized gains ................
Total distributions ..................................
Net asset value at end of period ......................
Total return (b) .....................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) .................
Ratio of operating expenses to average net assets ....
Ratio of net investment income/loss to average net
assets ..
Portfolio turnover rate ..............................
Ratio of operating expenses to average net assets
w/o waivers .........................................
Average commission rate (d) ..........................
</TABLE>
________________________________
(a) The Munder Framlington Emerging Markets Fund, The Munder Framlington
Healthcare Fund and The Munder Framlington International Growth Fund Class Y
Shares all commenced operations on December 31, 1996. The Munder Framlington
Global Financial Services Fund commenced operations on June 15, 1998.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
21
<PAGE>
<TABLE>
<CAPTION>
BOND FUND(a)
-----------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(d) 2/28/95(e,f) 2/28/94 2/28/93 2/29/92
------- ------- ------- ---------- ------------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...............
Income from investment operations:
Net investment income............................
Net realized and unrealized gain/(loss) on
investments......................................
Total from investment operations.................
Less distributions:
Dividends from net investment income.............
Distributions from net realized gains............
Total distributions..............................
Net asset value at end of period...................
Total return (b).................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).............
Ratio of operating expenses to average
net assets.......................................
Ratio of net investment income to
average net assets...............................
Portfolio turnover rate..........................
Ratio of operating expenses to average
net assets w/o waivers...........................
</TABLE>
- ------------------
(a) The Munder Bond Fund Class Y Shares commenced operations on December 1,
1991.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
22
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND(a)
--------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(f) 6/30/96 6/30/95(d) 2/28/95(e) 2/28/94 2/28/93 2/29/92
------- ---------- ------- ---------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..............
Income from investment operations:
Net investment income ...........................
Net realized and unrealized gain/(loss) on
investments ......................................
Total from investment operations .................
Less distributions:
Dividends from net investment income .............
Distributions from net realized gains ............
Total distributions ..............................
Net asset value at end of period ..................
Total return (b) .................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) .............
Ratio of operating expenses to average
net assets .......................................
Ratio of net investment income to
average net assets ...............................
Portfolio turnover rate ..........................
Ratio of operating expenses to average
net assets w/o waivers ...........................
</TABLE>
- -----------------
(a) The Munder Intermediate Bond Fund Class Y Shares commenced operations on
December 1, 1991.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
23
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL US GOVERNMENT INCOME FUND(a)
BOND FUND(a)
------------------------------------------------------------------------------
YEAR PERIOD YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/98 6/30/97 6/30/96(f) 6/30/95(d) 2/28/95(e)
------- ------- ------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..............
Income from investment operations:
Net investment income ...........................
Net realized and unrealized gain/(loss) on
investments ......................................
Total from investment operations .................
Less distributions:
Dividends from net investment income .............
Distributions from net realized gains ............
Total distributions ..............................
Net asset value at end of period ..................
Total return (b) .................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) .............
Ratio of operating expenses to average
net assets .......................................
Ratio of net investment income to
average net assets ...............................
Portfolio turnover rate ..........................
Ratio of operating expenses to average
net assets w/o waivers ...........................
</TABLE>
- -----------------
(a) The Munder International Bond Fund Class Y Shares commenced operations on
October 2, 1996 and the U.S. Government Income Fund Class Y Shares commenced
operations on July 5, 1994.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
24
<PAGE>
<TABLE>
<CAPTION>
MICHIGAN TRIPLE-TAX-FREE BOND FUND(a)
-------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(e) 6/30/96(e) 6/30/95(d,e) 2/28/95(e,f) 2/28/94
--------- ----------- ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..............
Income from investment operations:
Net investment income ...........................
Net realized and unrealized gain/(loss) on
investments ......................................
Total from investment operations .................
Less distributions:
Dividends from net investment income .............
Distributions from net realized gains ............
Total distributions ..............................
Net asset value at end of period ..................
Total return (b) .................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) .............
Ratio of operating expenses to average
net assets .......................................
Ratio of net investment income to
average net assets ...............................
Portfolio turnover rate ..........................
Ratio of operating expenses to average net assets
w/o waivers ......................................
</TABLE>
- ------------------
(a) The Munder Michigan Triple Tax-Free Bond Fund Class Y Shares commenced
operations on January 3, 1994.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Amount represents less than $0.01 per share.
25
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE BOND FUND(a)
---------------------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(e) 6/30/96(e) 6/30/95(d,e) 2/28/95(f)
---------- ------------ ------------ -------------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..............
Income from investment operations:
Net investment income ...........................
Net realized and unrealized gain on
investments .....................................
Total from investment operations ................
Less distributions:
Dividends from net investment income ............
Distributions from net realized gains ...........
Total distributions .............................
Net asset value at end of period...................
Total return (b) ................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) ............
Ratio of operating expenses to average
net assets ......................................
Ratio of net investment income to
average net assets ..............................
Portfolio turnover rate .........................
Ratio of operating expenses to average net assets
w/o waivers .....................................
</TABLE>
- -------------------
(a) The Munder Tax-Free Bond Fund Class Y Shares commenced operations on July
21, 1994.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
26
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE BOND FUND(a)
--------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(f) 6/30/96(f) 6/30/95(d) 2/28/95(e) 2/28/94 2/28/93
-------- ----------- ----------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...............
Income from investment operations:
Net investment income ...........................
Net realized and unrealized gain/(loss) on
investments .....................................
Total from investment operations ................
Less distributions:
Dividends from net investment income ............
Distributions from net realized gains ...........
Total distributions .............................
Net asset value at end of period ..................
Total return (b) ................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) ............
Ratio of operating expenses to average
net assets ......................................
Ratio of net investment income to
average net assets ..............................
Portfolio turnover rate .........................
Ratio of operating expenses to
average net assets w/o waivers ..................
</TABLE>
_______________________________
(a) The Munder Tax-Free Intermediate Bond Fund Class Y Shares commenced
operations on December 17, 1992.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
27
<PAGE>
<TABLE>
<CAPTION>
SHORT TERM TREASURY FUND(a)
----------------------------------
YEAR YEAR
ENDED ENDED
6/30/98 6/30/97
--------------- ---------------
<S> <C> <C>
Net asset value, beginning of period ...............
Income from investment operations:
Net investment income ...........................
Net realized and unrealized gain/(loss) on
investments .....................................
Total from investment operations ................
Less distributions:
Dividends from net investment income ............
Distributions from net realized gains ...........
Total distributions .............................
Net asset value at end of period ..................
Total return (b) ................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) ............
Ratio of operating expenses to average
net assets ......................................
Ratio of net investment income to
average net assets ..............................
Portfolio turnover rate .........................
Ratio of operating expenses to average net assets
w/o waivers .....................................
</TABLE>
- ------------------
(a) The Munder Short Term Treasury Fund Class Y Shares commenced operations on
January 29, 1997.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
28
<PAGE>
<TABLE>
<CAPTION>
CASH INVESTMENT FUND(a)
--------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(d) 2/28/95(e)
---------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............
Income from investment operations:
Net investment income........................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Total distributions..........................
Net asset value at end of period ...............
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to
average net assets ..........................
Ratio of net investment income to
average net assets...........................
Ratio of operating expenses to
average net assets w/o waivers...............
</TABLE>
- ------------------
(a) The Munder Cash Investment Fund Class Y Shares commenced operations on March
14, 1990.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
29
<PAGE>
<TABLE>
<CAPTION>
CASH INVESTMENT FUND(A)
--------------------------------------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
2/28/94 2/28/93 2/29/92 2/28/91
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.............
Income from investment operations:
Net investment income.........................
Total from investment operations..............
Less distributions:
Dividends from net investment income..........
Total distributions..........................
Net asset value at end of period ...............
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to
average net assets ..........................
Ratio of net investment income to
average net assets...........................
Ratio of operating expenses to
average net assets w/o waivers...............
</TABLE>
- ------------------
(a) The Munder Cash Investment Fund Class Y Shares commenced operations on March
14, 1990.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
30
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND(a)
--------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(d,e) 12/31/94 12/31/93
------------ ---------- --------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...............
Income from investment operations:
Net investment income...........................
Total from investment operations................
Less distributions:
Dividends from net investment income...........
Total distributions............................
Net asset value at end of period..................
Total return (b)...............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)...........
Ratio of operating expenses to average net
assets .........................................
Ratio of net investment income to average net
assets..........................................
Ratio of operating expenses to average net
assets w/o waivers..............................
</TABLE>
- --------------------
(a) The Munder Money Market Fund Class Y Shares commenced operations on August
18, 1993.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
December 31.
(e) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
31
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND(a)
-------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(d,e) 2/28/95(e)
-------- -------- --------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............................
Income from investment operations:
Net investment income.........................................
Total from investment operations..............................
Less distributions:
Dividends from net investment income..........................
Total Distributions...........................................
Net asset value at end of period.................................
Total Return (b)..............................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)..........................
Ratio of operating expenses to average net assets ............
Ratio of net investment income to average net assets..........
Ratio of operating expenses to average net assets w/o
waivers.......................................................
</TABLE>
- ---------------
(a) The Munder Tax-Free Money Market Fund Class Y Shares commenced operations on
March 14, 1990.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year changed to June 30. Prior to this, the fiscal year end was the
last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management.
32
<PAGE>
TAX-FREE MONEY MARKET FUND(a)
- --------------------------------------------------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
2/28/94 2/28/93 2/29/92 2/28/91
- ----------- ---------- ---------- -----------
33
<PAGE>
<TABLE>
<CAPTION>
US TREASURY MONEY MARKET FUND(a)
----------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(d) 2/28/95(e)
--------- -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period..............
Income from investment operations:
Net investment income..........................
Total from investment operations...............
Less distributions:
Dividends from net investment income...........
Total distributions............................
Net asset value at end of period..................
Total return (b)...............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)...........
Ratio of operating expenses to average net
assets ........................................
Ratio of net investment income to average net
assets.........................................
Ratio of operating expenses to average net
assets w/o waivers.............................
</TABLE>
- ------------------
(a) The Munder U.S. Treasury Money Market Fund Class Y Shares commenced
operations on March 14, 1990.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
34
<PAGE>
U.S. TREASURY MONEY MARKET FUND(a)
- ------------------------------------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
2/28/94 2/28/93 2/29/92 2/28/91
- -------------- ----------- ---------- -----------
35
<PAGE>
FUND CHOICES
WHAT FUNDS ARE OFFERED?
This Prospectus offers Class Y Shares of the Funds described below. This
section summarizes each Fund's principal investments. The sections entitled
"What are the Funds' Investments and Investment Practices?" and "What are the
Risks of Investing in the Funds?" and the SAI give more information about the
Funds' investment techniques and risks. Capitalized terms are explained in the
section entitled "What are the Funds' Investments and Investment
Practices?"
ACCELERATING GROWTH FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide
long-term capital appreciation; its secondary goal is to provide income. Under
normal conditions, the Fund will invest at least 65% of its assets in Equity
Securities.
In choosing Equity Securities, the Advisor considers, among other factors:
. the potential for accelerated earnings growth
. the maintenance of a substantial competitive advantage
. a focused management team
. a stable balance sheet.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
The Fund is closed to new investments.
BALANCED FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide an
attractive investment return through a combination of growth of capital and
current income. The Fund will allocate its assets among three asset groups:
Equity Securities, Fixed Income Securities and Cash Equivalents.
. The Fund normally will invest at least 25% of its assets in Fixed
Income Securities and no more than 75% of its assets in Equity Securities. The
Fund will notify shareholders at least 30 days before changing this policy.
The Advisor will allocate the Fund's assets to the three asset groups based
on its view of the following factors, among others:
. general market and economic conditions and trends
. interest rates and inflation rates
. fiscal and monetary developments
. long-term corporate earnings growth.
The Advisor will try to take advantage of changing economic conditions by
adjusting the ratio of Equity Securities to Fixed Income Securities or Cash
Equivalents. For example, if the Advisor believes that rapid economic growth
will lead to better corporate earnings in the future, then it might increase the
Fund's Equity Securities holdings and reduce its Fixed Income Securities and
Cash Equivalents holdings.
36
<PAGE>
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
GROWTH & INCOME FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide capital
appreciation and current income. It primarily invests in dividend-paying Equity
Securities and is designed for investors seeking current income and capital
appreciation from the equity markets.
. Under normal circumstances, the Fund will invest at least 65% of its
assets in income-producing common stocks and convertible preferred
stocks.
. The Fund may also purchase Fixed Income Securities which are
convertible into or exchangeable for common stock.
. The Fund may invest up to 35% of its assets in Fixed Income
Securities, including 20% of its assets in Fixed Income Securities
that are rated below investment grade.
The Advisor generally selects large, well-known companies that it believes
have favorable prospects for dividend growth and capital appreciation. The Fund
will seek to produce a current yield greater than the Standard and Poor's 500
Composite Price Index ("S&P 500").
The Fund focuses on dividend-paying Equity Securities because, over time,
dividend income has accounted for a significant portion of the total return of
the S&P 500. In addition, dividends are usually a more stable and predictable
source of return than capital appreciation. The Advisor believes that stocks
which distribute a high level of current income generally have more stable
prices than those which pay below average dividends.
PORTFOLIO MANAGEMENT. Otto Hinzmann, Jr. is the Fund's portfolio manager,
a position he has held since February 1995. Mr. Hinzmann has been a Vice
President and Director of Equity Management of the Advisor or Old MCM, Inc.
("MCM"), the predecessor to the Advisor, since January 1987.
GROWTH OPPORTUNITIES FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. The Fund invests at least 65% of its assets in the Equity
Securities of companies with market capitalizations between $500 million and $5
billion. Its style, which focuses on both growth prospects and valuation, is
known as GARP (Growth at a Reasonable Price) and seeks to produce attractive
returns during various market environments.
The Advisor chooses the Fund's investments as follows: The Advisor reviews
the earnings growth of approximately 10,000 companies over the past three years.
It invests in approximately 50 to 100 companies based on:
. superior earnings growth
. financial stability
. relative market value
. price changes compared to the Standard & Poor's MidCap 400 Index.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
INTERNATIONAL EQUITY FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. The Fund invests primarily in Foreign Securities,
American Depositary Receipts ("ADRs") and
37
<PAGE>
European Depositary Receipts ("EDRs"). At least once a quarter, the Advisor
creates a list of Foreign Securities, ADRs and EDRs (the "Securities List")
which the Fund may purchase based on the country where the company is located,
its competitive advantages, its past financial record, its future prospects for
growth and the market for its securities. The Advisor updates the Securities
List frequently (at least quarterly), adds new securities to the Securities List
if they are eligible and sells securities not on the updated Securities List as
soon as practicable.
After the Advisor creates the Securities List, it divides the list into two
sections. The first section is designed to provide broad coverage of
international markets. The second section increases exposure to securities that
the Advisor expects will perform better than other stocks in their industry
sectors and their markets as a whole. When the Advisor believes broader market
exposure will benefit the Fund, it will allocate up to 80% of the Fund's assets
in first section securities. When the Advisor identifies strong potential for
specific securities to perform well, the Fund may invest up to 50% of its assets
in second section securities.
. Under normal market conditions, at least 65% of the Fund's assets are
invested in Equity Securities in at least three foreign countries.
. The Fund emphasizes companies with a market capitalization of at least
$100 million.
PORTFOLIO MANAGEMENT. Todd B. Johnson and Theodore Miller jointly manage
the Fund. Mr. Johnson, a Chief Investment Officer of the Advisor, and Mr.
Miller, senior portfolio manager of the Fund, have managed the Fund since July
1992 and October 1996, respectively. Mr. Miller previously worked as the
primary analyst for the Fund (1996) and for Interacciones Global Inc. (1993-
1995) and McDonald & Co. Securities Inc. (1991-1993).
MICRO-CAP EQUITY FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. It invests primarily in Equity Securities of smaller
capitalization companies. The Fund attempts to provide investors with
potentially higher returns than a fund that invests primarily in larger more
established companies. Since smaller capitalization companies are generally not
as well known to investors and have less of an investor following than larger
companies, they may provide higher returns due to inefficiencies in the
marketplace.
. Under normal market conditions, the Fund will invest at least 65% of
its assets in Equity Securities of companies having a market
capitalization of $200 million or less, which is considerably less
than the market capitalization of S&P 500 companies.
The Advisor will choose companies that:
. present the ability to grow significantly over the next several years
. may benefit from changes in technology, regulations and industry
sector trends
. are still in the developmental stage and may have limited product
lines.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
MULTI-SEASON GROWTH FUND
GOAL AND OBJECTIVES. The Fund's goal is to provide long-term capital
appreciation. This goal is "fundamental" and cannot be changed without
shareholder approval. Its style, which focuses on both growth prospects and
valuation, is known as GARP (Growth at a Reasonable Price) and seeks to produce
attractive returns during various market environments. The Fund invests at
least 65% of its assets in Equity Securities. The Fund generally invests in
Equity Securities of companies with market capitalizations of over $1
billion.
38
<PAGE>
The Advisor chooses the Fund's investments as follows: The Advisor reviews
the earnings growth of approximately 5,500 companies over the past five years.
It invests in approximately 50 to 100 companies based on:
. superior earnings growth
. financial stability
. relative market value
. price changes compared to the S&P 500.
PORTFOLIO MANAGEMENT. The portfolio managers of the Fund, Leonard J. Barr
II and Lee P. Munder, have managed the Fund since its inception in April 1993.
Mr. Barr is the Senior Vice President and Director of Research of the Advisor.
From April 1988 to April 1993 he held similar positions with MCM. Mr. Munder is
the Chairman of the Advisor.
NETNET FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. Under normal conditions, the Fund will invest at least
65% of its assets in Equity Securities.
In choosing which companies' stock the Fund should purchase, the Advisor
invests in those companies listed on a U.S. securities exchange or NASDAQ
which are engaged in the research, design, development or manufacturing, or
engaged to a significant extent in the business of distributing products,
processes or services for use with Internet or Intranet related businesses. The
Internet is a world-wide network of computers designed to permit users to share
information and transfer data quickly and easily. The World Wide Web ("WWW"),
which is a means of graphically interfacing with the Internet, is a hyper-text
based publishing medium containing text, graphics, interactive feedback
mechanisms and links within WWW documents and to other WWW documents. An
Intranet is the application of WWW tools and concepts to a company's internal
documents and databases.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
REAL ESTATE EQUITY INVESTMENT FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide both capital
appreciation and current income. This goal is "fundamental" and cannot be
changed without shareholder approval. The Fund invests primarily in U.S.
companies which are principally engaged in the real estate industry or which own
significant real estate. A company is "principally engaged" in the real estate
industry if at least 50% of its assets, gross income or net profits are
attributable to ownership, construction, management or sale of residential,
commercial or industrial real estate. The Fund will not own real estate
directly.
Under normal conditions, the Fund invests at least 65% of its total assets
in Equity Securities of U.S. companies in the real estate industry
including:
. equity real estate investment trusts ("REITS")
. brokers, home builders and real estate developers
. companies with substantial real estate holdings (for example, paper
and lumber producers, hotels and entertainment companies)
. manufacturers and distributors of building supplies
. mortgage REITS
. financial institutions which issue or service mortgages.
In addition, the Fund may invest:
. up to 35% of its assets in companies other than real estate industry
companies
39
<PAGE>
. in Fixed Income Securities including up to 5% of its assets in debt
securities rated below investment grade or unrated if secured by real estate
assets if the Advisor believes that the underlying collateral is sufficient
. in REITS only if they are traded on a securities exchange or NASDAQ.
PORTFOLIO MANAGEMENT. Peter K. Hoglund and Robert E. Crosby jointly manage
the Fund. Mr. Hoglund has managed the Fund since October 1996. Mr. Hoglund was
formerly the primary analyst of the Fund (October 1994 to October 1996). Mr.
Crosby has managed the Fund since March 1998. Mr. Crosby was formerly the
primary analyst of the Fund (October 1996 to March 1998). Mr. Crosby has been
with the Advisor since 1993, and also serves as portfolio manager for separately
managed institutional accounts.
SMALL-CAP VALUE FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation, with income as a secondary objective. It invests
primarily in Equity Securities of smaller capitalization companies. The Fund
attempts to provide investors with potentially higher returns than a fund that
invests primarily in larger more established companies. Since small companies
are generally not as well known to investors and have less of an investor
following than larger companies, they may provide higher returns due to
inefficiencies in the marketplace.
. Under normal market conditions, the Fund will invest at least 65% of
its assets in Equity Securities of companies with market
capitalizations below $750 million, which is less than the market
capitalization of S&P 500 companies.
The Advisor will concentrate on companies that it believes are undervalued.
A company's Equity Securities may be undervalued because the company is
temporarily overlooked or out of favor due to general economic conditions, a
market decline, industry conditions or developments affecting the particular
company. The Fund will usually invest in Equity Securities of companies with
low price/earnings ratios, low price/cash flow ratios and low price/book values
compared to the general market.
In addition to valuation, the Advisor considers these factors, among
others, in choosing companies:
. a stable or improving earnings record
. sound finances
. above-average growth prospects
. participation in a fast growing industry
. strategic niche position in a specialized market
. adequate capitalization.
PORTFOLIO MANAGEMENT. Gerald Seizert, Edward Eberle and Brian Wall jointly
manage the Fund. Mr. Seizert, a Chief Executive Officer of the Advisor, has
managed the Fund since it commenced operations. Prior to joining the Advisor in
1995, Mr. Seizert was a Director and Managing Partner of Loomis, Sayles &
Company, L.P. Mr. Eberle, who has managed the Fund since March 1997, was
formerly the primary analyst for the Fund. Prior to joining the Advisor in
1995, he was an Executive Vice President and Portfolio Manager for Westpointe
Financial Corporation. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge Capital Management, Inc. ("Woodbridge") (1994-1995) and an Assistant
Vice President in Equity Research for Merrill Lynch, Pierce Fenner & Smith in
New York (1992-1994).
SMALL COMPANY GROWTH FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. The Fund invests primarily in Equity Securities of
smaller capitalization companies. The Fund attempts to provide investors with
potentially higher returns than a fund that invests primarily in larger more
40
<PAGE>
established companies. Since smaller capitalization companies are generally not
as well-known to investors and have less of an investor following than larger
companies, they may provide higher returns due to inefficiencies in the
marketplace.
. Under normal market conditions, the Fund will invest at least 65% of
the Fund's assets in Equity Securities of companies with market
capitalizations below $750 million, which is less than the market
capitalization of S&P 500 companies.
The Advisor considers these factors, among others, in choosing companies:
. above-average growth prospects
. participation in a fast-growing industry
. strategic niche position in a specialized market
. adequate capitalization.
PORTFOLIO MANAGEMENT. Carl Wilk and Michael P. Gura jointly manage the
Fund. Mr. Wilk, a Senior Portfolio Manager of the Advisor, has managed the Fund
since October 1996 and was the Fund's primary analyst from 1995 to 1996. Prior
to joining the Advisor in 1995, Mr. Wilk was a Senior Equity Research Analyst
for the Fund at Woodbridge. Mr. Gura has managed the Fund since March 1997.
Prior to joining the Advisor in 1995, Mr. Gura was a Vice President and Senior
Equity Analyst for the Fund at Woodbridge (1994-1995) and an investment officer
for Manufacturers National Bank Trust Department (1989-1994).
VALUE FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide
long-term capital appreciation, its secondary goal is to provide income. The
Fund invests primarily in the Equity Securities of well-established companies
with intermediate to large capitalizations, which typically exceed $750
million.
. The Fund will invest at least 65% of its assets in Equity Securities.
The Advisor will concentrate on companies that it believes are undervalued.
A company's Equity Securities may be undervalued because the company is
temporarily overlooked or out of favor due to general economic conditions, a
market decline, industry conditions or developments affecting the particular
company. The Fund will usually invest in Equity Securities of companies with
low price/earnings ratios, low price/cash flow ratios and low price/book values
compared to the general market.
In addition to valuation, the Advisor considers these factors, among
others, in choosing companies:
. a stable or improving earnings record
. sound finances
. above-average growth prospects
. participation in a fast growing industry
. strategic niche position in a specialized market
. adequate capitalization.
PORTFOLIO MANAGEMENT. Gerald Seizert, Edward Eberle and Brian Wall jointly
manage the Fund. Mr. Seizert, a Chief Executive Officer of the Advisor, has
managed the Fund since it commenced operations. Prior to joining the Advisor in
1995, Mr. Seizert was a Director and Managing Partner of Loomis, Sayles &
Company, L.P. Mr. Eberle, who has managed the Fund since March 1997, was
formerly the primary analyst for the Fund. Prior to joining the Advisor in
1995, he was an Executive Vice President and Portfolio Manager for Westpointe
Financial Corporation. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge (1994-1995) and an Assistant Vice President in Equity Research for
Merrill Lynch, Pierce Fenner & Smith in New York (1992-1994).
41
<PAGE>
FRAMLINGTON EMERGING MARKETS FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. The Fund invests at least 65% of its assets in companies
in emerging market countries, as defined by the World Bank, the International
Finance Corporation, the United Nations or the European Bank for Reconstruction
and Development.
A company will be considered to be in an emerging market country if:
. the company is organized under the laws of, or has a principal office
in, an emerging market country
. the company's stock is traded primarily in an emerging market country,
. most of the company's assets are in an emerging market country, or
. most of the company's revenues or profits come from goods produced or
sold, investments made or services performed in an emerging market
country.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Sub-Advisor makes investment decisions for the Fund. William
Calvert heads the committee.
FRAMLINGTON GLOBAL FINANCIAL SERVICES FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. Under normal market conditions, the Fund invests at least
65% of its assets in Equity Securities of U.S. and foreign companies which are
principally engaged in the financial services industry and companies providing
services primarily within the financial services industry. The Fund focuses
specifically on companies which are likely to benefit from growth or
consolidation in the financial services industry.
Examples of companies in the financial services industry are:
. commercial, industrial and investment banks
. savings and loan associations
. brokerage companies
. consumer and industrial finance companies
. real estate and leasing companies
. insurance companies
. holding companies for each of the above.
A company is "principally engaged" in the financial services industry if at
least 50% of its gross income, net sales or net profits comes from activities in
the financial services industry or if the company dedicates more than 50% of its
assets to the production of revenues from the financial services industry.
Under normal market conditions, the Fund invests at least 65% of its assets
in at least three different countries, including the United States.
The Sub-Advisor allocates assets among countries based on its analysis of
the trends in the financial services industry in particular regions, the
relative valuation of financial services companies in different regions and its
assessment of the prospects for a particular equity market and its
currency.
PORTFOLIO MANAGEMENT. A committee of professional managers employed by the
Advisor or the Sub-Advisor makes decisions for the Fund.
42
<PAGE>
FRAMLINGTON HEALTHCARE FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation by investing in companies providing healthcare and medical
services and products worldwide. Currently, most of these companies are located
in the United States.
The Fund will invest in:
. pharmaceutical producers
. biotechnology firms
. medical device and instrument manufacturers
. distributors of healthcare products
. healthcare providers and managers
. other healthcare service companies.
Under normal conditions, the Fund will invest at least 65% of its assets in
healthcare companies, which are companies for which at least 50% of sales,
earnings or assets arise from or are dedicated to health services or medical
technology activities.
PORTFOLIO MANAGEMENT. Antony Milford is the head of the Specialist Desk
for the Sub-Advisor. He is the Fund's primary portfolio manager, a position he
has held since the Fund's inception. Mr. Milford has managed funds for the Sub-
Advisor since 1971.
FRAMLINGTON INTERNATIONAL GROWTH FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. Under normal market conditions, at least 65% of the
Fund's assets will be invested in Equity Securities in at least three foreign
countries.
The Sub-Advisor will choose companies that demonstrate:
. above-average profitability
. high quality management
. the ability to grow significantly in their countries.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Sub-Advisor makes investment decisions for the Fund. Simon Key,
Chief Investment Officer of the Sub-Advisor, heads the committee.
BOND FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide a
high level of current income, its secondary goal is capital appreciation.
. Under normal market conditions, at least 65% of the Fund's assets will
be invested in Fixed Income Securities.
. The Fund's dollar-weighted average maturity will generally be between
six and fifteen years.
PORTFOLIO MANAGEMENT. James C. Robinson and Gregory A. Prost jointly manage
the Fund. Mr. Robinson and Mr. Prost have managed the Fund since March 1995 and
May 1995, respectively. Mr. Robinson has been a Vice President and Chief
Investment Officer of the Advisor or MCM since 1987. Mr. Prost has been a Senior
Fixed Income Portfolio Manager of the Advisor or MCM since 1995. Prior to
joining the Advisor, he was a Vice President and Senior Fund Manager for First
of America Investment Corp.
43
<PAGE>
INTERMEDIATE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a competitive
rate of return which, over time, exceeds the rate of inflation and the return
provided by money market instruments.
. Under normal conditions, at least 65% of the Fund's assets will be
invested in Fixed Income Securities.
. The Fund's dollar-weighted average maturity will generally be between
three and eight years.
PORTFOLIO MANAGEMENT. Anne K. Kennedy and James C. Robinson jointly manage
the Fund. Ms. Kennedy, Vice President and Director of Corporate Bond Trading of
the Advisor or MCM since 1991, has managed the Fund since March 1995. Mr.
Robinson, Vice President and Chief Investment Officer of the Advisor or MCM
since 1987, has managed the Fund since March 1995.
INTERNATIONAL BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to realize a
competitive total return through a combination of current income and capital
appreciation. Under normal market conditions, at least 65% of the Fund's assets
will be invested in Foreign Securities of issuers in at least three countries
other than the United States. The Fund's dollar-weighted average maturity will
generally be between three and fifteen years. The Fund will invest mostly
in:
. foreign debt obligations issued by foreign governments and their
agencies, instrumentalities or political subdivisions
. debt securities issued or guaranteed by supra-national organizations,
such as the World Bank
. debt securities of banks or bank holding companies
. corporate debt securities
. other debt securities, including those convertible into foreign stock.
PORTFOLIO MANAGEMENT. Gregory A. Prost and Sharon E. Fayolle jointly
manage the Fund. Mr. Prost, Senior Fixed Income Portfolio Manager of the
Advisor or MCM, has managed the Fund since October 1996. Prior to joining MCM in
1995, he was a Vice President and Senior Fund Manager for First of America
Investment Corp. Ms. Fayolle, Vice President and Director of Money Market
Trading for the Advisor or MCM, has managed the Fund since October 1996. Prior
to joining MCM in 1996, she was a European Portfolio Manager for Ford Motor
Company.
U.S. GOVERNMENT INCOME FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide high current
income.
. Under normal market conditions, at least 65% of the Fund's assets will
be invested in U.S. Government Obligations.
. The Fund's dollar-weighted average maturity generally will be between
six and fifteen years.
PORTFOLIO MANAGEMENT. James C. Robinson and Peter G. Root jointly manage
the Fund. Mr. Robinson, Vice President and Chief Investment Officer of the
Advisor or MCM since 1987, and Mr. Root, Vice President and Director of
Government Securities Trading of the Advisor since March 1995, have managed the
Fund since March 1995. Mr. Root joined MCM in 1991.
MICHIGAN TRIPLE TAX-FREE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide as high a
level of current interest income exempt from regular Federal income taxes,
Michigan state income and Michigan intangibles tax as is consistent with prudent
investment management and preservation of capital.
44
<PAGE>
. Except during temporary defensive periods, at least 80% of the Fund's
net assets are invested in Michigan Municipal Obligations.
. The Fund will invest primarily in Michigan Municipal Obligations which
have remaining maturities of between three and thirty years.
. The Fund's dollar-weighted average maturity will generally be between
ten and twenty years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank
(1985-1993).
TAX-FREE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a high level
of current interest income exempt from Federal income taxes and to generate as
competitive a long-term rate of return as is consistent with prudent investment
management and preservation of capital.
. Under normal market conditions, at least 65% of the Fund's assets will
be invested in Municipal Obligations.
. Except during temporary defensive periods, at least 80% of the Fund's
net assets will be invested in Municipal Obligations whose interest is
exempt from regular Federal income tax. This fundamental policy may
only be changed with shareholder approval.
. The Fund invests primarily in intermediate-term and long-term
Municipal Obligations which have remaining maturities of between three
and thirty years.
. The Fund's dollar-weighted average maturity will generally be between
ten and twenty years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank
(1985-1993).
TAX-FREE INTERMEDIATE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a
competitive level of current interest income exempt from regular Federal income
taxes and a total return which, over time, exceeds the rate of inflation and the
return provided by tax-free money market instruments.
. Under normal market conditions, at least 65% of the Fund's net assets
will be invested in Municipal Obligations.
. Except during temporary defensive periods, at least 80% of the Fund's
net assets will be invested in Municipal Obligations whose interest is
exempt from regular Federal income tax.
. The Fund invests in Michigan Municipal Obligations from time to time.
. The Fund generally buys obligations with remaining maturities of ten
years or less.
. The Fund's dollar-weighted average maturity will generally be between
three and eight years, but may be up to ten years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank.
SHORT TERM TREASURY FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide investors
with an enhanced money market return consistent with capital preservation.
Under normal conditions, the Fund invests all of its assets
45
<PAGE>
in U.S. Treasury securities and repurchase agreements fully collateralized by
U.S. Treasury securities. The Fund's dollar-weighted average portfolio maturity
usually will not exceed two years.
The Fund seeks to generate a total return which exceeds money market
instruments while minimizing the fluctuation of its net asset value. The Fund,
however, is not a money market fund and its net asset value may fluctuate.
PORTFOLIO MANAGEMENT. Sharon E. Fayolle, Vice President and Director of
Money Market Trading for the Advisor, has managed the Fund since October 1996.
Prior to joining the Advisor in 1996, she was a European Portfolio Manager for
Ford Motor Company.
CASH INVESTMENT FUND
. The Fund's primary goal is to provide as high a level of current
interest income as is consistent with maintaining liquidity and
stability of principal.
. The Fund invests in a broad range of short-term, high quality, U.S.
dollar-denominated instruments.
TAX-FREE MONEY MARKET FUND
. The Fund's goal is to provide as high a level of current interest
income exempt from Federal income taxes as is consistent with
maintaining liquidity and stability of principal.
. The Fund invests substantially all of its assets in short-term, U.S.
dollar-denominated Municipal Obligations, the interest on which is
exempt from regular Federal income tax.
. Under normal market conditions, the Fund will invest at least 80% of
its net assets in Municipal Obligations.
U.S. TREASURY MONEY MARKET FUND
. The Fund's goal is to provide as high a level of current interest
income as is consistent with maintaining liquidity and stability of
principal.
. The Fund invests its assets solely in short-term bonds, bills and
notes issued by the U.S. Treasury (including "stripped" securities),
and in repurchase agreements relating to such obligations.
WHO MAY WANT TO INVEST IN THE FUNDS?
Equity Funds
These Funds are designed for investors who desire potentially high capital
appreciation and who can accept short-term variations in return for potentially
greater returns over the long term. In general, the greater the risk, the
greater the potential reward. Investors who have a short time horizon, who
desire a high level of income or who are conservative in their investment
approach may wish to invest in other portfolios offered by the Trust and the
Company.
Bond Funds and Tax-Free Funds
These Funds are designed for investors who desire potentially higher
returns than more conservative fixed rate investments or money market funds and
who seek current income. The Tax-Free Funds may be desirable for investors who
seek primarily tax-exempt income. When you choose among the Funds, you should
consider both the expected yield of the Funds and potential changes in each
Fund's share price. The yield and potential price changes of a Fund's shares
depend on the quality and maturity of the obligations in its portfolio, as well
as on other market conditions.
46
<PAGE>
Short Term Treasury Fund and Money Market Funds
These Funds are designed for investors who desire a high level of income
and liquidity and, in the case of the Money Market Funds, stability of
principal.
WHAT ARE THE FUNDS' INVESTMENTS AND INVESTMENTS PRACTICES?
Each Equity Fund invests in EQUITY SECURITIES, which include common stocks,
preferred stocks, warrants and other securities convertible into common stocks.
Many of the common stocks the Funds (other than Growth & Income Fund) will buy
will not pay dividends; instead, stocks will be bought for the potential that
their prices will increase, providing capital appreciation for the Funds. The
value of Equity Securities will fluctuate due to many factors, including the
past and predicted earnings of the issuer, the quality of the issuer's
management, general market conditions, the forecasts for the issuer's industry
and the value of the issuer's assets. Holders of Equity Securities only have
rights to value in the company after all debts have been paid, and they could
lose their entire investment in a company that encounters financial difficulty.
Warrants are rights to purchase securities at a specified time at a specified
price.
Each Fund (other than the Short Term Treasury Fund) may invest in MONEY
MARKET INSTRUMENTS, which are high-quality, short-term money market instruments
including, among other things, commercial paper, bankers' acceptances and
negotiable certificates of deposit of banks or savings and loan associations,
short-term corporate obligations and short-term securities issued by, or
guaranteed by, the U.S. Government and its agencies or instrumentalities. These
instruments will be used primarily pending investment, to meet anticipated
redemptions or as a temporary defensive measure. If a Fund is investing
defensively, it may not be pursuing its investment objective.
All Funds may enter into REPURCHASE AGREEMENTS. Under a repurchase
agreement, a Fund agrees to purchase securities from a seller and the seller
agrees to repurchase the securities at a later time, typically within seven
days, at a set price. The seller agrees to set aside collateral at least equal
to the repurchase price. This ensures that the Fund will receive the purchase
price at the time it is due, unless the seller defaults or declares bankruptcy,
in which event the Fund will bear the risk of possible loss due to adverse
market action or delays in liquidating the underlying obligation. With respect
to the Money Market Funds, the securities held subject to a repurchase agreement
may have stated maturities exceeding 397 days provided the repurchase agreement
itself matures in 397 days.
The Equity Funds may purchase ADRs, EDRs and GLOBAL DEPOSITARY RECEIPTS
("GDRs"). ADRs are issued by U.S. financial institutions and EDRs and GDRs are
issued by European financial institutions. They are receipts evidencing
ownership of underlying Foreign Securities.
The Funds (other than the U.S. Treasury Money Market Fund and Short Term
Treasury Fund) may buy shares of registered MONEY MARKET FUNDS. The Funds will
bear a portion of the expenses of any investment company whose shares they
purchase, including operating costs and investment advisory, distribution and
administration fees. These expenses would be in addition to a Fund's own
expenses. Each Fund may invest up to 10% of its assets in other investment
companies and no more than 5% of its assets in any one investment company.
Each Fund (other than the Short Term Treasury Fund) may purchase FIXED
INCOME SECURITIES. Fixed Income Securities are securities which either pay
interest at set times at either fixed or variable rates, or which realize a
discount upon maturity. Fixed Income Securities include corporate bonds,
debentures, notes and other similar corporate debt instruments, zero coupon
bonds (discount debt obligations that do not make interest payments) and
variable amount master demand notes that permit the amount of indebtedness to
vary in addition to providing for periodic adjustments in the interest rate.
Each Fund (other than the Short Term Treasury Fund) may purchase U.S. GOVERNMENT
SECURITIES, which are securities issued by, or guaranteed by, the U.S.
Government or its agencies or instrumentalities. Such securities include U.S.
Treasury bills, which have initial maturities of less than one year, U.S.
Treasury notes, which have initial maturities of one to ten years, U.S. Treasury
bonds, which generally have initial maturities of greater than ten years, and
obligations of the Federal Home Loan Mortgage Corporation, Federal National
Mortgage Association and Government National Mortgage Association.
47
<PAGE>
Under normal market conditions, the Equity Funds will not invest to a
significant extent, or on a routine basis, in U.S. Government Securities.
Each Fund may BORROW MONEY in an amount up to 5% of its assets for
temporary purposes and in an amount up to 33 1/3% of its assets to meet
redemptions. This is a "fundamental" policy which can be changed only by
shareholders.
All of the Funds, other than the International Bond Fund, the Michigan
Triple Tax-Free Bond Fund and the Tax-Free Intermediate Bond Fund, are
classified as "diversified funds." With respect to 75% of each diversified
Fund's assets, each diversified fund cannot invest more than 5% of its assets in
one issuer (other than the U.S. Government and its agencies and
instrumentalities). In addition, each diversified fund cannot invest more than
25% of its assets in a single issuer. These restrictions do not apply to the
non-diversified funds.
The Tax-Free Funds will acquire long-term instruments only if they are
rated "A" or better by Moody's Investors Service Inc. ("Moody's") or Standard &
Poor's Rating Service ("S&P") or, if unrated, are of comparable quality. These
Funds will acquire short-term instruments only if they (i) have short-term debt
ratings in the top two categories by at least one nationally recognized
statistical rating organization, (ii) are issued by an issuer with such ratings
or (iii), if unrated, are of comparable quality.
The Advisor does not intend to invest more than 25% of a Fund's assets in
securities whose issuers are in the same state, except that the Advisor may
invest more than 25% of the Michigan Triple Tax-Free Bond Fund's and the Tax-
Free Intermediate Bond Fund's assets in Michigan Municipal Obligations.
Each Tax-Free Fund may invest in short-term money market instruments on a
temporary basis or for temporary investment purposes. Short-term money market
instruments include U.S. government obligations, debt securities of issuers
having a rating within the two highest categories of either S&P or Moody's, and
certificates of deposit or bankers' acceptances of domestic branches of U.S.
banks with at least $1 billion in assets.
Each Money Market Fund will invest primarily in ELIGIBLE SECURITIES (as
defined by the SEC) with remaining maturities of 397 days or less as defined by
the SEC (although securities subject to repurchase agreements, variable and
floating rate securities and certain other securities may bear longer
maturities), and the dollar-weighted average portfolio maturity of each Money
Market Fund will not exceed 90 days. Eligible Securities consist of securities
that are determined by the Advisor, under guidelines established by the Boards
of Trustees and Directors, to present minimal credit risk. Each Money Market
Fund may also hold uninvested cash pending investment of late payments for
purchase orders or during temporary defensive periods.
INVESTMENT CHARTS
The following charts summarize the Funds' investments and investment
practices. The SAI contains more details. All percentages are based on a Fund's
total assets except where otherwise noted. See "What are the Risks of Investing
in the Funds?" for a description of the risks involved with the Funds'
investment practices.
48
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49
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND ACCELERATING GROWTH & GROWTH INTERNATIONAL MICRO-CAP
INVESTMENT PRACTICES GROWTH BALANCED INCOME OPPORTUNITIES EQUITY EQUITY
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOREIGN SECURITIES. Includes securities issued by
non-U.S. companies. Present more risks than U.S. 25% 25% 25% 25% Y 25%
securities.
- ---------------------------------------------------------------------------------------------------------------------------------
LOWER-RATED DEBT SECURITIES. Fixed income securities
which are rated below investment grade by Standard &
Poor's ratings service, Moody's investors service,
inc. or other nationally recognized rating agency.
Considered riskier than investment grade securities. Y Y 20% Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT-GRADE ASSET BACKED SECURITIES. Includes
debt securities backed by mortgages, installment
sales contracts and credit card receivables. N Y N N N N
- ---------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Includes participations in
trusts that hold U.S. treasury and agency securities
which represent either the interest payments or
principal payments on the securities or combination N Y N N N N
of both.
- ---------------------------------------------------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS.
Obligations of a fund to purchase or sell a specific
currency at a future date at a set price. May
decrease a fund's loss due to a change in a currency
value, but also limits gains from currency changes. Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS.
Agreement by a fund to purchase securities at a set
price, with delivery and payment in the future. The
value of securities may change between the time the
price is set and payment. Not to be used for Y Y Y Y Y Y
speculation.
- ---------------------------------------------------------------------------------------------------------------------------------
FUTURES AND OPTIONS ON FUTURES. (1) Contracts in
which a fund has the right or the obligation, at
maturity, to make delivery of, or receive
securities, the cash value of an index, or foreign
currency. Used for hedging purposes or to maintain Y Y Y Y Y Y
liquidity.
- ---------------------------------------------------------------------------------------------------------------------------------
OPTIONS. A fund may buy options giving it the right
to require a buyer to buy a security held by the
fund (put options), buy options giving it the right
to require a seller to sell securities to the fund
(call options), sell (write) options giving a buyer
the right to require the fund to buy securities from
the buyer or write options giving a buyer the right
to require the fund to sell securities to the buyer,
during a set time at a set price. Options may
relate to securities indices, individual securities,
foreign currencies, or futures contracts. See the Y Y Y Y Y Y
SAI for more details and additional limitations.
- ---------------------------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A fund sells
securities and agrees to buy them back later at an
agreed upon time and price. A method to borrow
money for temporary purposes. Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y = INVESTMENT ALLOWED WITHOUT RESTRICTION
N = INVESTMENT NOT ALLOWED
(1) THE LIMITATION ON MARGINS AND PREMIUMS FOR FUTURES AND OPTIONS ON FUTURES
IS 5% OF A FUND'S ASSETS.
(2) BASED ON NET ASSETS.
50
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<TABLE>
<CAPTION>
EQUITY FUNDS (CONTINUED)
- --------------------------------------------------------------------------------------------------------------------------------
MULTI- REAL ESTATE SMALL- SMALL FRAMLINGTON FRAMLINGTON FRAMLINGTON
SEASON EQUITY CAP COMPANY EMERGING GLOBAL FINANCIAL FRAMLINGTON INTRTNATIONAL
GROWTH NETNET INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
25% Y N 25% 25% 25% Y Y Y Y
- -------------------------------------------------------------------------------------------------------------------------------
Y N 5% Y Y Y Y Y Y Y
- -------------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- -------------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- -------------------------------------------------------------------------------------------------------------------------------
Y Y N Y Y Y Y Y Y Y
- -------------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- -------------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- -------------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- -------------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
MICRO-
INVESTMENTS AND ACCELERATING GROWTH & GROWTH INTERNATIONAL CAP
INVESTMENT PRACTICES GROWTH BALANCED INCOME OPPORTUNITIES EQUITY EQUITY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REAL ESTATE INVESTMENT TRUSTS. Companies, usually
traded publicly, that manage a portfolio of real
estate. Risks involved in such investments include
vulnerability to decline in real estate prices and
new construction rates. N N N N N N
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT SALES. A transaction in which the fund sells a
security it does not own in anticipation that the
market price of that security will decline. It must
borrow the security sold short and deliver it to the
broker-dealer through which it made the short sale as
collateral for its obligation to deliver the security
upon conclusion of the sale. May also sell
securities that it owns or has the right to acquire
at no additional cost but does not intend to deliver
to the buyer, a practice known as selling short N N N N N N
"Against the box."
- ------------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready
market for these securities, which inhibits the
ability to sell them for full market value, or there
are legal restrictions on their resale by the fund. 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
- ------------------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A fund may lend securities to
financial institutions which pay for the use of the
securities. May increase return. Slight risk of
borrower failing financially. 25% 25% 25% 25% 25% 25%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
MULTI- REAL ESTATE SMALL- SMALL FRAMLINGTON FRAMLINGTON
SEASON EQUITY CAP COMPANY EMERGING GLOBAL FINANCIAL FRAMLINGTON INTRTNATIONAL
GROWTH NETNET INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Y Y Y Y Y Y Y Y Y Y
- -----------------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ----------------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ----------------------------------------------------------------------------------------------------------------------------------
15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
- -----------------------------------------------------------------------------------------------------------------------------------
25% 25% 25% 25% 25% 25% 25% 25% 25% 25%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1)THE LIMITATION ON MARGINS AND PREMIUMS FOR FUTURES AND OPTIONS ON FUTURES
IS 5% OF A FUND'S ASSETS.
(2) BASED ON NET ASSETS.
53
<PAGE>
<TABLE>
<CAPTION>
BOND FUNDS
- -----------------------------------------------------------------------------------------------------------------------------------
U.S.
GOVERNMENT
INVESTMENT AND BOND INTERMEDIATE INTERNATIONAL INCOME
INVESTMENT PRACTICES FUND BOND FUND BOND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOREIGN SECURITIES. Securities issued by foreign governments and their 25% 25% Y 25%
agencies, instrumentalities or political subdivisions, supranational
organizations, and foreign corporations. Does not include bank obligations.
- -----------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Includes debt securities backed by mortgages, Y Y Y Y
installment sales contracts and credit card receivables.
- -----------------------------------------------------------------------------------------------------------------------------------
INTEREST RATE AND CURRENCY SWAPS. Agreement to exchange payments calculated on Y(1) Y(1) Y Y(1)
the basis of relative interest or currency rates. Derivative instruments used
solely for hedging.
- -----------------------------------------------------------------------------------------------------------------------------------
INTEREST RATE CAPS AND FLOORS. Entitle purchaser to receive payments of N N Y N
interest to the extent that a specified reference rate exceeds or falls below
a predetermined level.
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Government obligations. Include securities issued by, or guaranteed by, Y Y Y Y
the U.S. government or its agencies or instrumentalities.
- -----------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Include participations in trusts that hold U.S. treasury Y Y Y Y
and agency securities which represent either the interest payments or
principal payments on the securities or combination of both.
- -----------------------------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A fund sells securities and agrees to buy them Y Y Y Y
back later at an agreed upon time and price. A method to borrow money for
temporary purposes.
- -----------------------------------------------------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Obligations of a fund to purchase Y Y Y Y
or sell a specific currency at a future date at a set price. May decrease a
fund's loss due to a change in a currency value, but also limits gains from
currency changes.
- ------------------------------------------------------------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. dollar denominated bank obligations, including Y Y Y Y
certificates of deposit, bankers' acceptances, bank notes and time deposits,
issued by U.S. or foreign banks or savings institutions having total assets in
excess of $1 billion.
- -----------------------------------------------------------------------------------------------------------------------------------
SUPRANATIONAL ORGANIZATION OBLIGATIONS. Fixed income securities issued or N N Y N
guaranteed by supranational organizations such as the world bank.
- -----------------------------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS. Agreements by a fund to make payments to an
insurance company's general account in exchange for a minimum level of
interest based on an index. Y Y Y Y
-----------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Agreements by a fund to [25%] [25%] [25%] [25%]
purchase securities at a set price, with delivery and payment in the
future. The value of securities may change between the time the price
is set and payment. Not to be used for speculation.
- -----------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready market for these 15%(2) 15%(2) 15%(2) 15%(2)
securities, which inhibits the ability to sell them for full market
value, or there are legal restrictions on their resale by the fund.
- ----------------------------------------------------------------------------------------------------------------------------------
FUTURES AND OPTIONS ON FUTURES. (3) Contracts in which a fund has the right Y Y Y Y
or the obligation, at maturity, to make delivery of, or receive securities,
the cash value of an index, or foreign currency. Used for hedging purposes
or to maintain liquidity.
- -----------------------------------------------------------------------------------------------------------------------------------
OPTIONS. A fund may buy options giving it the right to require a buyer to Y Y Y Y
buy a security held by the fund (put options), buy options giving it the
right to require a seller to sell securities to the fund (call options),
sell (write) options giving a buyer the right to require the fund to buy
securities from the buyer or write options giving a buyer the right to
require the fund to sell securities to the buyer, during a set time at a
set price. Options may relate to securities indices, individual securities,
foreign currencies or futures contracts. See the sai for more details and
additional limitations.
- -----------------------------------------------------------------------------------------------------------------------------------
Lending securities. A fund may lend securities to financial institutions 25% 25% 25% 25%
which pay for the use of the securities. May increase return. Slight risk
of borrower failing financially.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y = INVESTMENT ALLOWED WITHOUT RESTRICTION
N = INVESTMENT NOT ALLOWED
(1) INTEREST RATE SWAPS ONLY.
(2) BASED ON NET ASSETS.
54
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE FUNDS
- ------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN SHORT
TRIPLE TERM TAX-FREE
INVESTMENTS AND TAX-FREE TAX-FREE TREASURY INTERMEDIATE
INVESTMENT PRACTICES BOND FUND BOND FUND FUND BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL OBLIGATIONS. Payable from the issuer's general Y Y N Y
revenue, the revenue of a specific project, current revenues
or a reserve fund.
- ------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN MUNICIPAL OBLIGATIONS. Municipal obligations issued by Y Y N Y
the state of michigan and its political subdivisions.
- ------------------------------------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Securities issued by foreign governments 10% 10% N 10%
and their agencies, instrumentalities or political
subdivisions, supranational organizations, and foreign
corporations. Does not include bank obligations.
- ------------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Agreements by a [25%] [25%] N [25%]
fund to purchase securities at a set price, with delivery and
payment in the future. The value of securities may change
between the time the price is set and payment. Not to be used
for speculation.
- ------------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready market for 15%(1) 15%(1) N 15%(1)
these securities, which inhibits the ability to sell them for
full market value, or there are legal restrictions on their
resale by the fund.
- ------------------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A fund may lend securities to financial 25% 25% 25% 25%
institutions which pay for the use of the securities. May
increase return. Slight risk of borrower failing financially.
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES. Includes U.S. treasury bills, notes Y Y Y Y
and bonds.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1) BASED ON NET ASSETS.
55
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUNDS
- -----------------------------------------------------------------------------------------------------------------------------------
U.S.
INVESTMENTS CASH MONEY TAX-FREE TREASURY
AND INVESTMENT PRACTICES INVESTMENT MARKET MONEY MONEY
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CORPORATE OBLIGATIONS:
. Commercial paper (including paper of Canadian companies,
Canadian branches of U.S. companies, and Europaper) Y Y N N
. Corporate bonds Y Y N N
. Other short-term obligations Y Y N N
. Variable master demand notes Y Y N N
. Bond debentures Y Y N N
. Notes. Y Y N N
----------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Include debt securities backed by Y Y N N
mortgages, installment sales contracts and credit card
receivables.
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS:
. Issued or guaranteed by U.S. Government Y Y N Y
. Issued or guaranteed by U.S. Government Agencies and Y Y N N
instrumentalities.
- -----------------------------------------------------------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. dollar-denominated bank obligations, Y Y N N
including certificates of deposit, bankers' acceptances, bank
notes, time deposits issued by U.S. or foreign banks or savings
institutions having total assets in excess of $1 billion.
- -----------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES:
. Participation in trusts that hold U.S. Treasury and agency Y Y Y N
Securities
. U.S. Treasury-issued receipts Y Y Y 35%
. Non-U.S. Treasury receipts. Y Y Y N
- -----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL REVENUE OBLIGATIONS. Obligations the interest on which N N Y N
is paid solely from the revenues of similar projects.
- -----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS. Payable from the issuer's general revenue, 5% 5% no more than N
the revenue of a specific project, current revenues or a reserve 25% in any
fund. one state
- -----------------------------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund sells securities and agrees Y Y N Y
to buy them back later at an agreed upon time and price. A
method to borrow money for temporary purposes.
- -----------------------------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS. Agreements by a Fund to make Y Y N N
Payments to an insurance company's general account in exchange
for a minimum level of interest based on an index.
- -----------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Agreements by a [25%] [25%] [25%] [25%]
Fund to purchase securities at a set price, with delivery and
payment in the future. The value of securities may change
between the time the price is set and payment. Not to be used
for speculation.
- -----------------------------------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Debt obligations issued by foreign 25% 25% N N
governments, and their agencies, instrumentalities or
political subdivisions, supranational organizations and
foreign corporations. Does not include Bank Obligations.
- ----------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready market for 10%(1) 10%(1) 10%(1) 10%(1)
these securities, which inhibits the ability to sell
them for full market value, or there are legal
restrictions on their resale by the Fund.
- -----------------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend securities to financial 25% 331/3% 25% 25%
institutions which pay for the use of the securities. May
increase return. Slight risk of borrower failing financially.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Key:
Y = INVESTMENT ALLOWED WITHOUT RESTRICTION
N = INVESTMENT NOT ALLOWED
(1) BASED ON NET ASSETS.
56
<PAGE>
WHAT ARE THE RISKS OF INVESTING IN THE FUNDS?
All Funds
Consistent with a long-term investment approach, investors in a Fund should
be prepared and able to maintain their investments during periods of adverse
market conditions. By itself, no Fund is a balanced investment program and
there is no guarantee that any Fund will achieve its investment objective since
there is uncertainty in every investment.
A Fund's risk is mostly dependent on the types of securities it purchases
and its investment techniques. Certain Funds are authorized to use options,
futures, and forward foreign currency exchange contracts, which are types of
derivative instruments. Derivative instruments are instruments that derive
their value from a different underlying security, index or financial indicator.
The use of derivative instruments exposes a Fund to additional risks and
transaction costs. Risks inherent in the use of derivative instruments include:
(1) the risk that interest rates, securities prices and currency markets will
not move in the direction that a portfolio manager anticipates; (2) imperfect
correlation between the price of derivative instruments and movements in the
prices of the securities, interest rates or currencies being hedged; (3) the
fact that skills needed to use these strategies are different than those needed
to select portfolio securities; (4) the possible absence of a liquid secondary
market for any particular instrument and possible exchange imposed price
fluctuation limits, either of which may make it difficult or impossible to close
out a position when desired; (5) leverage risk, that is, the risk that adverse
price movements in an instrument can result in a loss substantially greater than
the Fund's initial investment in that instrument (in some cases, the potential
loss is unlimited); (6) particularly in the case of privately-negotiated
instruments, the risk that the counterparty will not perform its obligations,
which could leave the Fund worse off than if it had not entered into the
position and (7) inability to close out certain hedged positions to avoid
adverse tax consequences.
To the extent that a Fund invests in illiquid securities, the Fund risks
not being able to sell securities at the time and the price that it would like.
The Fund may therefore have to lower the price, sell substitute securities or
forego an investment opportunity, each of which might adversely affect the Fund.
The risks of the various investment techniques the Funds use are described
in more detail in the SAI.
Equity Funds
Investing in these Funds may be less risky than investing in individual
stocks due to the diversification of investing in a portfolio of many different
stocks; however, such diversification does not eliminate all risks. Because the
Funds invest mostly in Equity Securities, rises and falls in the stock market in
general, as well as in the value of particular Equity Securities held by the
Funds, can affect the Funds' performance. Your investment in the Funds is not
guaranteed. The net asset value of the Funds will change daily and you might
not recoup the amount you invest in the Funds.
Bond Funds, Tax-Free Funds and Short Term Treasury Fund
The value of each Fund's shares, like the value of most securities, will
rise and fall in response to changes in economic conditions, interest rates and
the market's perception of the underlying securities held by the Fund.
Investing in these Funds may be less risky than investing in individual Fixed
Income Securities due to the diversification of investing in a portfolio
containing many different Fixed Income Securities; however, such diversity does
not eliminate all risks. The Funds invest mostly in Fixed Income Securities,
whose values typically rise when interest rates fall and fall when interest
rates rise. Fixed Income Securities with shorter maturities (time period until
repayment) tend to be less affected by interest rate changes, but generally
offer lower yields than securities with longer maturities. Current yield levels
should not be considered representative of yields for any future time.
Securities with variable interest rates may exhibit greater price variations
than ordinary securities. Zero
57
<PAGE>
coupon bonds are subject to greater market fluctuations from changing interest
rates than debt obligations of comparable maturities which make current
distributions of interest.
Money Market Funds
Each Money Market Fund attempts to maintain a constant net asset value of $1.00
per share. However, your investment in these Funds is not guaranteed.
Although the Cash Investment Fund, Money Market Fund and U.S. Treasury
Money Market Fund expect under normal market conditions to be as fully invested
as possible, each Fund may hold uninvested cash pending investment of late
payments for purchase orders (or other payments) or during temporary defensive
periods. Uninvested cash will not earn income. In general, investments in the
Cash Investment Fund, Money Market Fund and U.S. Treasury Money Market Fund will
not earn as high a level of current income as longer-term or lower quality
securities. Longer-term and lower quality securities, however, generally have
less liquidity, greater market risk and more fluctuation in market value.
Although the Tax-Free Money Market Fund may invest more than 25% of its net
assets in municipal revenue obligations, the interest on which is paid solely
from revenues of similar projects, the Tax-Fee Money Market Fund does not intend
to do so on a regular basis. If it does, the Fund will be riskier than a fund
which does not concentrate to such an extent on similar projects.
Growth Opportunities Fund, Micro-Cap Equity Fund, Small-Cap Value Fund and Small
Company Growth Fund
The Advisor believes that smaller companies can provide greater growth
potential and potentially higher returns than larger firms. Investing in smaller
companies, however, is riskier than investing in larger companies. The stock of
smaller companies may trade infrequently and in lower volume, making it more
difficult for a Fund to sell the stocks of smaller companies when it chooses.
Smaller companies may have limited product lines, markets, financial resources
and distribution channels, which makes them more sensitive to changing economic
conditions. Stocks of smaller companies historically have had larger
fluctuations in price than stocks of larger companies included in the S&P 500.
Framlington Emerging Markets Fund, Framlington Global Financial Services Fund,
Framlington International Growth Fund, International Equity Fund and
International Bond Fund
Investing in any of these Funds, with their larger investment in Foreign
Securities, may involve more risk than investing in a U.S. fund for the
following reasons: (1) there may be less public information available about
foreign companies than is available about U.S. companies; (2) foreign companies
are not generally subject to the uniform accounting, auditing and financial
reporting standards and practices applicable to U.S. companies; (3) foreign
markets have less volume than U.S. markets, and the securities of some foreign
companies are less liquid and more volatile than the securities of comparable
U.S. companies; (4) there may be less government regulation of stock exchanges,
brokers, listed companies and banks in foreign countries than in the United
States; (5) the Fund may incur fees on currency exchanges when it changes
investments from one country to another; (6) the Fund's foreign investments
could be affected by expropriation, confiscatory taxation, nationalization of
bank deposits, establishment of exchange controls, political or social
instability or diplomatic developments; (7) fluctuations in foreign exchange
rates will affect the value of the Fund's portfolio securities, the value of
dividends and interest earned, gains and loses realized on the sale of
securities, net investment income and unrealized appreciation or depreciation of
investments; and (8) possible imposition of dividend or interest withholding by
a foreign country.
Framlington Global Financial Services Fund
Financial services companies are subject to extensive governmental
regulation which may limit both the amount and types of loans and other
financial commitments they can make, and the interest rates and fees they can
charge. Profitability is largely dependent on the availability and cost of
capital funds, and can fluctuate significantly when interest rates change.
Credit losses resulting from financial difficulties of borrowers can negatively
impact the
58
<PAGE>
industry. Insurance companies may be subject to severe price competition.
Legislation is currently being considered which would reduce the separation
between commercial and investment banking businesses. If enacted, this could
significantly impact the industry and the Fund. The Fund may be riskier than a
fund investing in a broader range of industries.
Although securities of large and well-established companies in the
financial services industry will be held in the Fund's portfolio, the Fund also
will invest in medium, small and/or newly-public companies which may be subject
to greater share price fluctuations and declining growth, particularly in the
event of rapid changes in the industry and/or increased competition. Securities
of those smaller and/or less seasoned companies may, therefore, expose
shareholders of the Fund to above-average risk.
Framlington Healthcare Fund
The Fund will invest most of its assets in the healthcare industry, which
is particularly affected by rapidly changing technology and extensive government
regulation, including cost containment measures. The Fund may be riskier than a
fund investing in a broader range of industries.
NetNet Fund
The Fund will invest primarily in companies engaged in Internet and
Intranet related activities. The value of such companies is particularly
vulnerable to rapidly changing technology, extensive government regulation and
relatively high risks of obsolescence caused by scientific and technological
advances. The value of the Fund's shares may fluctuate more than shares of a
fund investing in a broader range of industries.
Real Estate Equity Investment Fund
The Fund will invest primarily in the real estate industry and may invest
more than 25% of its assets in any one sector of the real estate industry. As a
result, the Fund will be particularly vulnerable to declines in real estate
prices and new construction rates. The Fund may be riskier than a fund
investing in a broader range of industries.
International Bond Fund, Michigan Triple Tax-Free Bond Fund and Tax-Free
Intermediate Bond Fund
These Funds are non-diversified and hold securities of a limited number of
issuers. The Funds may, therefore, pose a greater risk to investors than an
investment in a diversified fund. The Michigan Triple Tax-Free Bond Fund
invests primarily in Michigan Municipal Obligations. If Michigan issuers suffer
serious financial difficulties jeopardizing their ability to pay their
obligations, the value of such Fund may decline.
PERFORMANCE
HOW IS THE FUND'S PERFORMANCE CALCULATED?
There are various ways in which the Funds may calculate and report their
performance. Performance is calculated separately for each class of shares.
One method is to show a Fund's total return. Cumulative total return is
the percentage change in the value of an amount invested in a class of shares of
a Fund over a stated period of time and takes into account reinvested dividends.
Cumulative total return most closely reflects the actual performance of a Fund.
Average annual total return refers to the average annual compounded rates
of return over a specified period on an investment in shares of a Fund
determined by comparing the initial amount invested to the ending redeemable
value of the amount, taking into account reinvested dividends.
Each Fund may also publish its current yield. Yield is the net investment
income generated by a share of a Fund during a 30-day period divided by the
maximum offering price on the 30th day.
59
<PAGE>
The current yield of shares in the Money Market Funds refers to the net
income generated by an investment in shares over a seven-day period (which
period will be stated in the advertisement). This income is then "annualized."
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. "Effective yield" is calculated similarly but,
when annualized, the income earned by an investment in a class is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment. The "tax-
equivalent yield" of shares of the Tax-Free Funds and the Tax-Free Money Market
Fund which may also be quoted from time to time, shows the level of taxable
yield needed to produce an after-tax equivalent to the tax-free yield of a
particular class. This is done by increasing the yield (calculated as above) by
the amount necessary to reflect the payment of Federal and/or state income taxes
at a stated rate.
You should be aware that (i) past performance does not indicate how a Fund
will perform in the future; and (ii) each Fund's return and net asset value will
fluctuate, so you cannot necessarily use a Fund's performance data to compare it
to investment in certificates of deposit, savings accounts or other investments
that provide a fixed or guaranteed yield.
Each Fund may compare its performance to that of other mutual funds, such
as the performance of similar funds reported by Lipper Analytical Services, Inc.
or information reported in national financial publications (such as Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times) or
in local or regional publications. Each Fund may also compare its total return
to broad-based indices. These indices show the value of selected portfolios of
securities (assuming reinvestment of interest and dividends) which are not
managed by a portfolio manager. The Funds may report how they are performing in
comparison to the Consumer Price Index, an indication of inflation reported by
the U.S. Government.
WHERE CAN I OBTAIN PERFORMANCE DATA?
The Wall Street Journal and certain local newspapers report information on
the performance of mutual funds. In addition, performance information is
contained in the Funds' annual report dated June 30 of each year and semi-annual
report dated December 31 of each year, which will automatically be mailed to
shareholders. To obtain copies of financial reports or performance information,
call (800) 438-5789.
PURCHASES AND EXCHANGES OF SHARES
The following persons may purchase Class Y Shares:
. fiduciary and discretionary accounts of institutions
. institutional investors (including banks, savings institutions,
credit unions and other financial institutions, pension, profit
sharing and employee benefit plans and trusts, insurance companies,
investment companies, investment advisors and broker-dealers acting
either for their own accounts or for the accounts of institutional
investors)
. directors, trustees, officers and employees of the Trust, the
Company, Framlington, the Advisor and the Distributor
. the Advisor's investment advisory clients
. family members of employees of the Advisor
Each Fund also issues other classes of shares, which have different sales
charges, expense levels and performance. Call (800) 438-5789 to obtain more
information concerning the Funds' other classes of shares.
60
<PAGE>
WHAT PRICE DO I PAY FOR SHARES?
The purchase price for Class Y Shares is the net asset value ("NAV") next
determined after we receive your order in proper form. You should be aware that
broker-dealers (other than the Funds' Distributor) may charge investors
additional fees if shares are purchased through them.
Except in certain limited circumstances, each Fund determines its NAV on
each day the New York Stock Exchange ("NYSE") is open for trading (a "Business
Day") at the close of such trading (normally 4:00 p.m. Eastern time). The Money
Market Funds also determine their NAVs at 2:45 p.m. (Eastern time). If we
receive your purchase order and payment for a Money Market Fund by 2:45 p.m.
(Eastern time) on a Business Day, you will receive dividends on that day. Each
Fund calculates NAV separately for each class of shares. NAV is calculated by
totaling the value of all of the assets of a Fund allocated to a particular
class of shares, subtracting the Fund's liabilities and expenses charged to that
class and dividing the result by the number of shares of that class outstanding.
WHEN CAN I PURCHASE SHARES?
Shares of each Fund are sold on a continuous basis and can be purchased on
any Business Day.
WHAT IS THE MINIMUM REQUIRED INVESTMENT?
The minimum initial investment by fiduciary and discretionary accounts of
institutions and institutional investors for Class Y Shares of the Real Estate
Equity Investment Fund is $250,000 and $500,000 for Class Y Shares of all other
Funds. Other types of investors are not subject to any minimum required
investment.
HOW CAN I PURCHASE SHARES?
You can purchase Class Y Shares in a number of different ways. You may
place orders for Class Y Shares directly through the Transfer Agent or the
Distributor or through arrangements with a financial institution.
. THROUGH A FINANCIAL INSTITUTION. You may purchase shares through a
financial institution through procedures established with that
institution. Confirmations of share purchases will be sent to the
institution.
. BY MAIL. You may open an account by completing, signing and mailing
an Account Application Form and a check or other negotiable bank
draft (payable to The Munder Funds) to: THE MUNDER FUNDS, C/O FIRST
DATA INVESTOR SERVICES GROUP, P.O. BOX 5130, WESTBOROUGH,
MASSACHUSETTS 01581- 5130. You can obtain an Account Application
Form by calling (800) 438-5789. For additional investments, send a
letter stating the Fund and share class you wish to purchase, your
name and your account number with a check to the address listed
above.
. BY WIRE. You may make additional investments in the Funds by wire.
Wire instructions must state the Fund name, share class, your
registered name and your account number. Your bank wire should be
sent through the Federal Reserve Bank Wire System to:
Boston Safe Deposit and Trust Company
Boston, MA
ABA# 011001234
DDA# 16-798-3
Account No.:
Note that banks may charge fees for transmitting wires.
61
<PAGE>
. AUTOMATIC INVESTMENT PLAN ("AIP"). Under the AIP, you may arrange
for periodic investments in a Fund through automatic deductions from
a checking or savings account. To enroll in the AIP you should
complete the AIP Application Form or call the Funds at
(800) 438-5789. The minimum pre-authorized investment amount is
$50. You may discontinue the AIP at any time. We may discontinue
the AIP on 30 days' written notice to you.
The Transfer Agent will send you confirmations of the opening of an account
and of all subsequent purchases, exchanges or redemptions in the account. If
your account has been set up by a broker or other investment professional,
account activity will be detailed in their statements to you.
We do not issue share certificates. We reserve the right to (i) reject any
purchase order if, in our opinion, it is in the Funds' best interest to do so
and (ii) suspend the offering of shares of any Class for any period of time.
You may pay for shares of each Fund, other than the Real Estate Equity
Investment Fund, with securities which the Fund is allowed to hold.
See the SAI for further information regarding purchases of the Funds'
shares.
HOW CAN I EXCHANGE SHARES?
You may exchange Class Y Shares of the Funds for Class Y Shares of other
funds of the Trust, the Company or Framlington based on their relative net asset
values.
You must meet the minimum purchase requirements for the fund of the Trust,
the Company or Framlington that you purchase by exchange. Please note that a
share exchange may be a taxable event and accordingly, you may realize a taxable
gain or loss. Before making an exchange request, read the Prospectus of the
fund you wish to purchase by exchange. You can obtain a Prospectus for any fund
of the Trust, the Company or Framlington by contacting your broker or the Funds
at (800) 438-5789. Brokers may charge a fee for handling exchanges.
We may modify or terminate the exchange privilege at any time. You will be
given notice of any material modifications except where notice is not required.
REDEMPTIONS OF SHARES
WHAT PRICE DO I RECEIVE FOR REDEEMED SHARES?
The redemption price is the NAV next determined after we receive the
redemption request in proper form.
WHEN CAN I REDEEM SHARES?
You can redeem shares on any Business Day, provided all required documents
have been received by the Transfer Agent. A Fund may temporarily stop redeeming
shares when the NYSE is closed or trading on the NYSE is restricted, when an
emergency exists and the Fund cannot sell its assets or accurately determine the
value of its assets or if the SEC orders the Fund to suspend redemptions.
HOW CAN I REDEEM SHARES?
Shares held by an institution on behalf of its Customers must be redeemed
in accordance with instructions and limitations pertaining to the account at
that institution.
. INVOLUNTARY REDEMPTION. We may redeem your account if its value
falls below $250 as a result of redemptions (but not as a result of
a decline in NAV). You will be notified in writing and allowed 60
days to increase the value of your account to the minimum investment
level.
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<PAGE>
. FREE CHECKWRITING. Free checkwriting is available to holders of
Class Y Shares of the Bond Funds (other than the
International Bond Fund), Tax-Free Funds and Money Market Funds who
complete the Signature Card Section of the Account Application Form.
You may write checks in the amount of $500 or more but you may not
close a Fund account by writing a check. We may change or terminate
this program on 30 days' notice to you.
WHEN WILL I RECEIVE REDEMPTION AMOUNTS?
If we receive a redemption order for a Fund before 4:00 p.m. (Eastern time)
on a Business Day, we will normally wire payment to the redeeming institution on
the next Business Day. With respect to a Money Market Fund, if we receive a
redemption order before noon (Eastern time) on a Business Day, we will normally
wire payment on the same Business Day. We may delay wiring redemption proceeds
for up to seven days if we feel an earlier payment would have a negative impact
on the Fund.
STRUCTURE AND MANAGEMENT OF THE FUNDS
HOW ARE THE FUNDS STRUCTURED?
The Trust, the Company and Framlington are each an open-end management
investment company, which is a mutual fund that sells and redeems shares every
day that it is open for business. They are managed under the direction of their
governing Boards of Trustees and Directors, which are responsible for the
overall management of the Trust, the Company and Framlington and supervise the
Funds' service providers. The Trust and Framlington are organized as
Massachusetts business trusts and the Company is a Maryland corporation.
WHO MANAGES AND SERVICES THE FUNDS?
INVESTMENT ADVISOR AND SUB-ADVISOR. The Funds' investment advisor is
Munder Capital Management, a Delaware general partnership with its principal
offices at 480 Pierce Street, Birmingham, Michigan 48009. The principal
partners of the Advisor are MCM, Munder Group LLC and WAM Holdings, Inc.
("WAM"). MCM was founded in April, 1985 as a Delaware corporation and was a
registered investment advisor. WAM is an indirect, wholly-owned subsidiary of
Comerica Incorporated which owns or controls approximately 88% of the
partnership interests in the Advisor. As of June 30, 1998, the Advisor and its
affiliates had approximately $48.2 billion in assets under management, of which
$25.4 billion were invested in equity securities, $8.1 billion were invested in
money market or other short-term instruments, $9.2 billion were invested in
other fixed income securities and $5.5 billion in non-discretionary assets.
The Advisor provides overall investment management and research and
credit analysis for each Fund and is responsible for all purchases and sales of
portfolio securities for each Fund other than the Framlington Funds.
Framlington Overseas Investment Management Limited is the sub-advisor
of the Framlington Funds. The Sub-Advisor is an indirect subsidiary of
Framlington Holdings Limited which is, in turn, owned 49% by the Advisor and 51%
by Credit Commercial de France S.A., a French banking corporation listed on the
Societe des Bourses Francaises.
The Sub-Advisor provides research and credit analysis for each of the
Framlington Funds and is responsible for all purchases and sales of portfolio
securities for each of the Framlington Funds other than the Framlington Global
Financial Services Fund. Each of the Advisor and Sub-Advisor manages a portion
of the assets of the Framlington Global Financial Services Fund. The Advisor is
responsible for all purchases and sales of domestic securities held by the Fund.
The Sub-Advisor is responsible for the allocation of the Fund's assets among
countries and for all purchases and sales of foreign securities held by the
Fund.
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<PAGE>
During the fiscal year ended June 30, 1998, the Advisor was paid an
advisory fee at an annual rate based on the average daily net assets of each
Fund (after waivers, if any) as follows:
<TABLE>
<S> <C> <C> <C>
Accelerating Growth Fund 0.75% Framlington Healthcare Fund 1.00%
Balanced Fund 0.65% Framlington International Growth Fund 1.00%
Growth & Income Fund 0.75% Bond Fund 0.50%
Growth Opportunities 0.75% Intermediate Bond Fund 0.50%
International Equity Fund 0.75% International Bond Fund 0.50%
Micro-Cap Equity Fund 1.00% U.S. Government Income Fund 0.50%
Multi-Season Growth Fund 0.75% Michigan Triple Tax-Free Bond Fund 0.50%
NetNet 1.00% Tax-Free Bond Fund 0.50%
Real Estate Equity Investment Fund 0.74% Tax-Free Intermediate Bond Fund 0.50%
Small-Cap Value Fund 0.75% Short Term Treasury Fund 0.25%
Small Company Growth Fund 0.75% Money Market Fund 0.40%
Value Fund 0.74% Cash Investment Fund 0.35%
Framlington Emerging Markets Fund 1.25% Tax-Free Money Market Fund 0.35%
Framlington Global Financial Services Fund 0.75% U.S. Treasury Money Market Fund 0.35%
</TABLE>
The Advisor waived advisory fees during the past fiscal year for the Multi-
Season Growth Fund. The Advisor is also entitled to receive an annual fee equal
to 1.00% of the first $500 million of the Multi-Season Growth Fund's average
daily net assets and .75% of the Fund's average daily net assets over $500
million.
The Sub-Advisor is entitled to receive an advisory fee equal to one-half of
the fee paid to the Advisor by each of the Framlington Funds as compensation for
its services as Sub-Advisor. The Advisor pays fees to the Sub-Advisor and the
Framlington Funds pay no fees directly to the Sub-Advisor.
The Advisor may, from time to time, make payments to banks, broker-dealers
or other financial institutions for certain services to the Funds and/or their
shareholders, including sub-administration, sub-transfer agency and shareholder
servicing. The Advisor may make such payments out of its own resources and
there are no additional costs to the Funds or their shareholders.
The Advisor selects broker-dealers to execute portfolio transactions for
the Funds based on best price and execution terms. The Advisor may consider as
a factor the number of shares sold by the broker-dealer.
PERFORMANCE INFORMATION. The tables below contain performance information
for certain Funds created through the conversion of a common or collective trust
fund which had investment objectives and policies materially equivalent to those
of the corresponding Funds. Immediately before and after the conversion, the
same person managed both the common or collective trust fund and the
corresponding Fund.
The table for each Fund:
. includes the average annual total returns of the common or
collective trust fund and the average annual total returns of the
corresponding Fund linked together;
. assumes that net investment income and dividends have been
reinvested;
. assumes that the common or collective trust fund paid the same
levels of fees and expenses as the corresponding Fund currently
pays;
. does not reflect any potential negative impact on the common and
collective trust funds' performance if they had been subjected to
the same regulatory restrictions (the Investment Company Act of
1940, as amended (the "1940 Act") and the Internal Revenue Code of
1986, as amended) as the corresponding Fund; and
. indicates past performance only and does not predict future results.
64
<PAGE>
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER ACCELERATING GROWTH FUND
June 30, 1998 (Class Y )* S&P 500**
---------------- ------------------------------ -----------
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
Inception on January 1, 1990% % %
</TABLE>
_______________________________________
* Converted from collective trust fund to mutual fund on December 1, 1991.
** S&P 500 performance shows total return in U.S. dollars but does not reflect
the deduction of fees, expenses and taxes. Source: Lipper Analytical Services,
Inc.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER SMALL COMPANY RUSSELL 2000
June 30, 1998 GROWTH FUND (CLASS Y )* INDEX**
---------------- -------------------------- ---------------
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
10 Years % %
Inception on December 31, 1982% % %
</TABLE>
_______________________________________
* Converted from collective trust fund to mutual fund on December 1, 1991.
** Russell 2000 Index performance shows total return in U.S. dollars but does
not reflect the deduction of fees, expenses and taxes. Source: Lipper Analytical
Services, Inc.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER INTERNATIONAL EQUITY FUND FT/S&P ACTUARIES
June 30, 1998 (CLASS Y )* WORLD INDEX EX. U.S.**
- -------------------------------------- ---------------------------------- ------------------------
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
Inception on September 30, 1990% % %
</TABLE>
_______________________________________________________________________________
* Converted from collective trust fund to mutual fund on December 1, 1991.
** FT/S&P Actuaries World Index ex. U.S. performance shows total return in U.S.
dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Ibbotson Associates, Inc.
<TABLE>
<CAPTION>
PERIOD ENDED
June 30, 1998 MUNDER INDEX 500 FUND (CLASS Y )* S&P 500 INDEX**
---------------- --------------------------------- ------------------
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
10 Years % %
Inception on January 27, 1988% % %
</TABLE>
_______________________________________
* Converted from collective trust fund to mutual fund on December 1, 1991.
** S&P 500 Index performance shows total return in U.S. dollars but does not
reflect the deduction of fees, expenses and taxes. Source: Lipper Analytical
Services, Inc.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER BOND FUND LEHMAN BROTHERS
June 30, 1998 (CLASS Y )* GOV'T/CORP. BOND INDEX**
----------------- ------------------- ---------------------------
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
10 Years % %
</TABLE>
_______________________________________
* Converted from collective trust fund to mutual fund on December 1, 1991.
** Lehman Brothers Government/Corporate Bond Index performance shows total
return in U.S. dollars but does not reflect the deduction of fees, expenses and
taxes. Source: Lipper Analytical Services, Inc.
65
<PAGE>
<TABLE>
<CAPTION>
MUNDER U.S. GOVERNMENT
PERIOD ENDED INCOME FUND LEHMAN BROTHERS
June 30, 1998 (CLASS Y)* GOV'T/CORP. BOND INDEX**
----------------- -------------------------- ----------------------------
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
10 Years % %
</TABLE>
______________________________________
*Converted from collective trust fund to mutual fund on July 5, 1994.
**Lehman Brothers Government/Corporate Bond Index performance shows total return
in U.S. dollars but does not reflect the deduction of fees, expenses and taxes.
Source: Lipper Analytical Services, Inc.
<TABLE>
<CAPTION>
MUNDER INTERMEDIATE LEHMAN BROTHERS
PERIOD ENDED BOND FUND INTERMEDIATE GOV'T/BOND
June 30, 1998 (CLASS Y)* INDEX**
---------------- ----------------------------- ------------------------------
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
10 Years % %
Inception on March 31, 1982% % %
</TABLE>
______________________________________
*Converted from collective trust fund to mutual fund on December 1, 1991.
**Lehman Brothers Intermediate Government/Corporate Bond Index performance shows
total return in U.S. dollars but does not reflect the deduction of fees,
expenses and taxes. Source: Lipper Analytical Services, Inc.
<TABLE>
<CAPTION>
MUNDER TAX-FREE LEHMAN
PERIOD ENDED BOND FUND 20-YEAR MUNI
June 30, 1998 (CLASS Y)* BOND INDEX**
------------------- --------------------- -----------------
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
10 Years % %
</TABLE>
_____________________________________
*Converted from common trust fund to mutual fund on July 21, 1994.
**Lehman 20-Year Municipal Bond Index performance shows total return in U.S.
dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Lipper Analytical Services, Inc.
Indices
The S&P 500 is an unmanaged index of common stock prices, including
reinvestment of dividends.
The Russell 2000 Index is a capitalization weighted total return index
which is comprised of 2,000 of the smallest capitalized U.S. domiciled companies
whose stock is traded in the United States on the New York Stock Exchange,
American Stock Exchange and the NASDAQ.
The FT/S&P Actuaries World Index ex. U.S. is an unmanaged index used to
portray the global equity market excluding the U.S. The Index is weighted based
on the market capitalization of those stocks selected to represent each country
and includes gross reinvestment of dividends.
The Lehman Brothers Government/Corporate Bond Index is a weighted composite
of (i) Lehman Brothers Government Bond Index, which is comprised of all publicly
issued, non-convertible debt of the U.S. Government or any agency thereof,
quasi-Federal corporations, and corporate debt guaranteed by the U.S. Government
and (ii) Lehman Brothers Corporate Bond Index, which is comprised of all public
fixed-rate, non-convertible investment-grade domestic corporate debt, excluding
collateralized mortgage obligations.
66
<PAGE>
The Lehman Brothers Intermediate Government/Corporate Bond Index is a
weighted composite of (i) Lehman Brothers Intermediate Government Bond Index,
which is comprised of all publicly issued, non-convertible debt of the U.S.
Government or any agency thereof, quasi-Federal corporations and corporate debt
guaranteed by the U.S. Government with a maturity of between one and ten years
and (ii) Lehman Brothers Corporate Bond Index.
The Lehman Brothers 20-Year Municipal Bond Index is a performance benchmark
for the long-term investment-grade tax-exempt bond market.
PERFORMANCE OF FRAMLINGTON ACCOUNTS MANAGED BY THE SUB-ADVISOR
The tables below contain certain performance information provided by the
Sub-Advisor relating to accounts managed by the Sub-Advisor and which have
investment objectives and policies similar to those of the corresponding
Framlington Funds. See "Fund Choices" and "What are the Funds' Investments and
Investment Practices?" In the case of the Healthcare portfolio performance, the
data relates to a unit trust organized under the laws of the United Kingdom
managed by the same personnel of the Sub-Advisor with similar investment
objectives and policies to the Framlington Healthcare Fund. In the case of
Emerging Markets portfolio performance, the data relates to a Canadian-based
institutional emerging markets portfolio managed by the same personnel of the
Sub-Advisor with similar investment objectives and policies to the Framlington
Emerging Markets Fund.
The trust account performance is provided by Micropal, an independent
research organization that is a recognized source of performance data in the UK
unit trust industry. The data is U.S. dollar adjusted on the basis of exchange
rates provided by Datastream using WM/Reuters closing rates. The performance
figures are net of brokerage commissions, actual investment advisory fees and
initial sales charges. The data assume the reinvestment of net income and
capital gain distributions. The trust account returns are calculated using
beginning offer and ending bid prices for periods ended December 31, 1996.
You should not rely on the following performance data of the Sub-Advisor's
client accounts as an indication of future performance of the Framlington Funds.
It should be noted that the management of the Funds will be affected by
regulatory requirements under the 1940 Act and requirements of the Internal
Revenue Code of 1986, as amended, to qualify as a regulated investment company.
<TABLE>
<CAPTION>
S&P HEALTHCARE
PERIOD ENDED COMPOSITE INDEX CAPITAL
December 31, 1996 U.K. HEALTH PORTFOLIO CHANGE
----------------------- --------------------------- ------------------------------
<S> <C> <C>
1 Year 10.75% 18.48%
3 Years 96.93% 100.49%
5 Years 99.43% 45.60%
Inception on April 30, 1987 411.08% 239.64%
</TABLE>
Performance for the Health trust account is calculated on an offer-bid
basis; U.S. Dollar adjusted total return net of all management fees but not
reflective of U.K. tax. Source: Micropal.
S&P Healthcare Composite Index performance shows capital change in U.S.
dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Datastream.
<TABLE>
<CAPTION>
MSCI EMERGING
PERIOD ENDED CANADIAN EMERGING MARKETS FREE TOTAL
December 31, 1996 MARKETS ACCOUNT RETURN
--------------------- -------------------------- ----------------------
<S> <C> <C>
1 Year 5.16% 6.03%
Inception on November 1, 1994 (3.68)% (12.37)%
</TABLE>
MSCI Emerging Markets Free Index performance shows total return in U.S.
Dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Datastream.
67
<PAGE>
The performance of the Canadian institutional account is measured by the
World Markets Company on a total return basis and has been re-calculated net of
the management fee charged the Canadian institutional account. The inception
date of the Canadian institutional account is November 1, 1994.
INDICES
The S&P Healthcare Composite Index is the composite Healthcare section of
the S&P 500 Index as defined and tracked by S&P. This index covers securities
covers securities listed in the United States only.
The MSCI Emerging Markets Free Index is maintained by Morgan Stanley
Capital International, and covers 26 countries and represents the investment
opportunities in emerging markets available to foreign investors. Total return
is calculated using the prices of the companies tracked and assumes the
reinvestment of dividends.
TRANSFER AGENT. First Data Investor Services Group, Inc. is the Funds'
transfer agent. The Transfer Agent is a wholly-owned subsidiary of First Data
Corporation and is located at 53 State Street, Boston, Massachusetts 02109.
ADMINISTRATOR. State Street Bank and Trust Company ("State Street" or
"Administrator") is the Funds' administrator. State Street is located at 225
Franklin Street, Boston, Massachusetts 02110. State Street generally assists
the Company, the Trust and Framlington in all aspects of their administration
and operations including overseeing the maintenance of financial records and
fund accounting. As compensation for its services for the Company, the Trust
and Framlington, State Street is entitled to receive fees, based on the
aggregate daily net assets of the Funds and certain other investment portfolios
that are advised by the Advisor for which it provides services, computed daily
and payable monthly at the annual rate of 0.113% on the first $2.8 billion of
net assets, plus 0.103% on the next $2.2 billion of net assets, plus 0.101% on
the next $2.5 billion of net assets, plus 0.095% on the next $2.5 billion of net
assets, plus 0.080% on the next $2.5 billion of net assets, plus 0.070% on all
net assets in excess of $12.5 billion (with a $75,000 minimum fee per annum in
the aggregate for all portfolios with respect to the Administrator). If the
assets of the Framlington Funds do not exceed $120 million, the ultimate rate
charged the Framlington Funds will be reduced by their pro-rata portion of the
total fees if calculated at the rates of 0.062% of the first $2.8 billion of net
assets, plus 0.052% of the next $2.2 billion of net assets, plus 0.050% of all
net assets in excess of $5 billion.
State Street has entered into a Sub-Administration Agreement with the
Distributor under which the Distributor provides certain administrative services
with respect to the Funds. State Street pays the Distributor a fee for these
services out of its own resources at no cost to the Funds.
CUSTODIAN AND SUB-CUSTODIAN. Comerica Bank ("Comerica" or the
"Custodian"), whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, Michigan 48226, is the Funds' custodian. No
compensation is paid to the Custodian for its custodial services. Comerica
receives a fee of 0.01% of the aggregate average daily net assets of the Funds
beneficially owned by Comerica and its customers for certain shareholder
services provided by Comerica to the Funds. State Street serves as the Funds'
sub-custodian.
DISTRIBUTOR. Funds Distributor, Inc. is the distributor of the Funds'
shares and is located at 60 State Street, Boston, Massachusetts 02109. It
markets and sells the Funds' shares.
For an additional description of the services performed by the
Administrator, the Transfer Agent, the Custodian, the Sub-Custodian and the
Distributor, see the SAI.
WHAT ARE MY RIGHTS AS A SHAREHOLDER?
All shareholders have equal voting, liquidation and other rights. You are
entitled to one vote for each share you hold and a fractional vote for each
fraction of a share you hold. You will be asked to vote on matters affecting
the Trust, the Company or Framlington as a whole and affecting your particular
Fund. You will not vote by Class unless expressly required by law or when the
Trustees or Directors determine the matter to be voted on affects only
68
<PAGE>
the interests of the holders of a particular class of shares. The Trust, the
Company and Framlington will not hold annual shareholder meetings, but special
meetings may be held at the written request of shareholders owning more than 10%
of outstanding shares for the purpose of removing a Trustee or Director. Under
Massachusetts law, it is possible that a shareholder may be personally liable
for the Trust's or Framlington's obligations. If a shareholder were required to
pay a debt of a Fund, however, the Trust and Framlington have committed to
reimburse the shareholder in full from their assets. The SAI contains more
information regarding voting rights.
Comerica currently has the right to vote a majority of the outstanding
shares of the Funds as agent, custodian or trustee for its customers and
therefore it is considered to be a controlling person of the Trust, the Company
and Framlington.
DIVIDENDS, DISTRIBUTIONS AND TAXES
WHEN WILL I RECEIVE DISTRIBUTIONS FROM THE FUNDS?
As a shareholder, you are entitled to your share of net income and capital
gains, if any, on a Fund's investments. The Funds pass their earnings along to
investors in the form of dividends. Dividend distributions are the dividends or
interest earned on investments after expenses. The Accelerating Growth Fund,
Balanced Fund, Growth & Income Fund, Small Company Growth Fund and International
Bond Fund pay dividends quarterly. The Framlington Emerging Markets Fund,
Framlington Global Financial Services Fund, Framlington Healthcare Fund,
Framlington International Growth Fund, Growth Opportunities Fund, International
Equity Fund, Micro-Cap Equity Fund, Multi-Season Growth Fund, NetNet Fund,
Small-Cap Value Fund and Value Fund pay dividends at least annually. The Bond
Funds (other than the International Bond Fund) pay dividends monthly. Dividends
for the Cash Investment Fund, Money Market Fund, U.S. Treasury Money Market Fund
and Tax-Free Money Market Fund are declared daily and paid monthly.
Each Fund distributes its net realized capital gains (including net
short-term capital gains), if any, at least annually.
It is possible that a Fund may make a distribution in excess of the Fund's
current and accumulated earnings and profits. You will treat such a
distribution as a return of capital which is applied against and reduces your
basis in your shares. You will treat the excess of any such distribution over
your basis in your shares as gain from a sale or exchange of the shares.
HOW WILL DISTRIBUTIONS BE MADE?
The Funds will pay dividend and capital gains distributions in additional
shares of the same class of a Fund. If you wish to receive distributions in
cash, either indicate this request on your Account Application Form or notify
the Fund at (800) 438-5789.
ARE THERE TAX IMPLICATIONS OF MY INVESTMENTS IN THE FUNDS?
This section contains a brief summary of the tax implications of
ownership in the Funds' shares. A more detailed discussion of Federal income
tax considerations is contained in the SAI. You should consult your tax advisor
regarding the impact of owning the Funds' shares on your own personal tax
situation including the applicability of any state and local taxes.
In general, as long as each Fund meets the requirements to qualify as a
regulated investment company ("RIC") under Federal tax laws, it will not be
subject to Federal income tax on its income and capital gains that it
distributes in a timely manner to its shareholders. Each Fund intends to
qualify annually as a RIC. Even if it qualifies as a RIC, a Fund may still be
liable for any excise tax on income that is not distributed in accordance with a
calendar year requirement; the Funds intend to avoid the excise tax by making
timely distributions.
69
<PAGE>
Generally, you will owe tax on the amounts distributed to you, regardless
of whether you receive these amounts in cash or reinvest them in additional Fund
shares. Shareholders not subject to tax on their income generally will not be
required to pay any tax on amounts distributed to them. Federal income tax on
distributions to an IRA or to a qualified retirement plan will generally be
deferred.
Capital gains derived from sales of portfolio securities held by a Fund
will generally be designated as long-term or short-term. Distributions from a
Fund's long-term capital gains are generally taxed at the long-term capital
gains rate regardless of how long you have owned shares in the Fund. Dividends
from other sources are generally taxed as ordinary income.
Dividends and capital gain distributions are generally taxable when you
receive them; however, if a distribution is declared in October, November or
December, but not paid until January of the following year, it will be
considered to be paid on December 31 in the year in which it was declared.
Shortly after the end of each year, you will receive from each Fund in which you
are a shareholder a statement of the amount and nature of the distributions made
to you during the year.
If you redeem, transfer or exchange Fund shares, you may have taxable gain
or a loss. If you hold Fund shares for six months or less, and during that time
you receive a capital gain dividend, any loss you realize on the sale of these
Fund shares will be treated as a long-term loss to the extent of the earlier
distribution.
Dividends and certain interest income earned from foreign securities by a
Fund may be subject to foreign withholding or other taxes. A Fund may be
permitted to pass on to its shareholders the right to a credit or deduction for
income or other tax credits earned from foreign investments and will do so if
possible. These deductions or credits may be subject to tax law limitations.
If a Fund invests in certain "passive foreign investment companies"
("PFICs"), it will be subject to Federal income tax (and possibly additional
interest charges) on a portion of any "excess distribution" or gain from the
disposition of such shares, even if it distributes such income to its
shareholders. If a Fund elects to treat a PFIC as a "qualified electing fund"
("QEF") and the PFIC furnishes certain financial information in the required
form to such Fund, the Fund will instead be required to include in income each
year its allocable share of the ordinary earnings and net capital gains of the
QEF, regardless of whether received, and such amounts will be subject to the
various distribution requirements described above. The Funds may also elect to
mitigate the tax effects of owning PFIC stock by making an annual mark-to-market
election with respect to PFIC shares.
ADDITIONAL INFORMATION
SHAREHOLDER COMMUNICATIONS. You will receive unaudited Semi-Annual Reports
and audited Annual Reports on a regular basis from the Funds. In addition, you
will also receive updated Prospectuses or Supplements to this Prospectus. In
order to eliminate duplicate mailings, the Funds will only send one copy of the
above communications to (1) accounts with the same primary record owner, (2)
joint tenant accounts, (3) tenant in common accounts and (4) accounts which have
the same address.
YEAR 2000. The Funds' operations depend on the seamless functioning of
computer systems in the financial service industry, including those of its
service providers. Many computer software systems in use today cannot properly
process date-related information after December 31, 1999 because of the method
by which dates are encoded and calculated. This failure, commonly referred to
as the "Year 2000 Issue," could adversely affect the handling of securities
trades, pricing and account servicing for the Funds. The Funds have been
informed that their major service providers have made compliance with the Year
2000 Issue a high priority and are taking steps that they believe are reasonably
designed to address the Year 2000 Issue with respect to their computer systems.
There can be, however, no assurance that these steps will be successful, or that
interaction with other non-complying computer systems will not impair their
services at that time.
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<PAGE>
CLASS A, B & C SHARES
[LOGO FOR MUNDER]
PROSPECTUS
October 27, 1998
THE MUNDER INCOME FUNDS
Bond
Intermediate Bond
International Bond
U.S. Government Income
Michigan Triple Tax-Free Bond
Tax-Free Bond
Tax-Free Intermediate Bond
Prospectus begins on next page
<PAGE>
PROSPECTUS
CLASS A, CLASS B AND CLASS C SHARES
The Munder Funds Trust (the "Trust") and The Munder Funds, Inc. (the
"Company") are open-end investment companies. This Prospectus describes six
investment portfolios offered by the Trust (the "Trust Funds") and two
investment portfolios offered by the Company (referred to as the "Funds"):
Munder Bond Fund
Munder Intermediate Bond Fund
Munder International Bond Fund
Munder U.S. Government Income Fund
Munder Michigan Triple Tax-Free Bond Fund*
Munder Tax-Free Bond Fund
Munder Tax-Free Intermediate Bond Fund
* The Michigan Triple Tax-Free Bond Fund is offered only in the State of
Michigan.
Munder Capital Management (the "Advisor") serves as the investment advisor
of the Funds.
This Prospectus explains the objectives, policies, risks and fees of each
Fund. You should read this Prospectus carefully before investing and retain it
for future reference. A Statement of Additional Information ("SAI") describing
each of the Funds has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated by reference into this Prospectus. You can
obtain the SAI free of charge by calling the Funds at (800) 438-5789. In
addition, the SEC maintains a Web site (http://www.sec.gov) that contains the
SAI and other information regarding the Funds.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED OR GUARANTEED. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF THE PRINCIPLE AMOUNT INVESTED.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES:
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS OCTOBER 27, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
----
Fund Highlights
What are the key facts regarding the Funds?.................. 3
Financial Information............................................. 6
Fund Choices
What Funds are offered?...................................... 24
Who may want to invest in the Funds?......................... 26
What are the Funds' investments and investment practices?.... 26
What are the risks of investing in the Funds?................ 30
Performance
How is the Funds' performance calculated?.................... 31
Where can I obtain performance data?......................... 31
Purchases and Exchanges of Shares
What share class should I choose for my investment?.......... 32
What price do I pay for shares?.............................. 32
When can I purchase shares?.................................. 34
What is the minimum required investment?..................... 35
How can I purchase shares?................................... 35
How can I exchange shares?................................... 36
Redemptions of Shares
What price do I receive for redeemed shares?................. 36
When can I redeem shares?.................................... 37
How can I redeem shares?..................................... 38
When will I receive redemption amounts?...................... 39
Structure and Management of the Funds
How are the Funds structured?................................ 39
Who manages and services the Funds?.......................... 39
What are my rights as a shareholder?......................... 40
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?............ 41
How will distributions be made?.............................. 41
Are there tax implications of my investments in the Funds?... 41
Additional Information............................................ 42
2
<PAGE>
FUND HIGHLIGHTS
WHAT ARE THE KEY FACTS REGARDING THE FUNDS?
Q: What are the Funds' goals?
A:
. The Bond Fund seeks to provide a high level of current income with
capital appreciation as a secondary consideration.
. The Intermediate Bond Fund seeks to provide a competitive rate of
return which exceeds the inflation rate and the return provided by
money market instruments.
. The International Bond Fund seeks to provide a competitive total
return through a combination of current income and capital
appreciation.
. The U.S. Government Income Fund seeks to provide high current income.
. The Tax-Free Intermediate Bond Fund and Tax-Free Bond Fund seek to
provide current interest income exempt from Federal income taxes.
. The Michigan Triple Tax-Free Bond Fund seeks to provide as high a
level of current interest income exempt from regular Federal income
taxes, Michigan state income tax and Michigan intangibles tax as is
consistent with prudent investment management and preservation of
capital.
Q: What are the Funds' strategies?
A:
. The Funds, other than the Michigan Triple Tax-Free Bond Fund, the Tax-
Free Bond Fund and the Tax-Free Intermediate Bond Fund (together, the
"Tax-Free Funds"), and the U.S. Government Income Fund, invest
primarily in Fixed Income Securities. "Fixed Income Securities" are
securities which either pay interest at set times at either fixed or
variable rates, or which realize a discount upon maturity. Fixed
Income Securities include corporate bonds, debentures, notes and other
similar corporate debt instruments, zero coupon bonds (discount debt
obligations that do not make interest payments) and variable amount
master demand notes that permit the amount of indebtedness to vary in
addition to providing for periodic adjustments in the interest rates.
. The U.S. Government Income Fund invests primarily in obligations of
the U.S. government and its agencies and instrumentalities.
. The Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund invest
primarily in Municipal Obligations. "Municipal Obligations" are
obligations of states, territories and possessions of the United
States and the District of Columbia and their political subdivisions,
agencies, instrumentalities and authorities, the interest on which is
exempt from regular Federal income tax.
. The Michigan Triple Tax-Free Bond Fund invests primarily in Michigan
Municipal Obligations. "Michigan Municipal Obligations" are municipal
obligations issued by the State of Michigan and its political
subdivisions, the interest on which is exempt from Federal income
taxes, Michigan state income tax and Michigan intangibles tax.
3
<PAGE>
Q: What are the Funds' risks?
A: The following table summarizes the primary risks of investing in the Funds:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
FUND RISK
- -------------------------------------------------------------------------------------------------
<S> <C>
All Funds Potential loss of investment due to changes in
the bond market in general, in the prices of debt
securities of particular companies and in
interest rates.
- -------------------------------------------------------------------------------------------------
International Bond Fund Because of large investments in foreign
securities, the Fund is riskier than domestic
funds due to factors such as freezes on
convertibility of currency, changes in exchange
rates, political instability and differences in
accounting and reporting standards.
- -------------------------------------------------------------------------------------------------
International Bond Fund, Michigan Triple These "non-diversified" Funds concentrate their
Tax-Free Bond Fund and Tax-Free investments in fewer issuers than diversified
Intermediate Bond Fund funds, and could experience larger price
fluctuations than diversified funds.
- -------------------------------------------------------------------------------------------------
</TABLE>
Q: What are the options for investment in the Funds?
A: Each Fund offers five different investment options, or classes: Class A, B,
C, K and Y. Class K and Y Shares, which are only offered to institutional and
other qualified investors, are offered in other prospectuses.
<TABLE>
<CAPTION>
MAXIMUM FRONT MAXIMUM
CLASS RULE 12B-1 FEES* END SALES LOAD** CDSC***
- ----- ---------------- ---------------- --------
<S> <C> <C> <C>
Class A 0.25% 4.0% None+
Class B 1% None 5%
Class C 1% None 1%, if redeemed within
1 year of purchase
</TABLE>
_____________________________________
* An annual fee for distributing shares and servicing shareholder accounts
paid based on the Fund's average daily net assets.
** A one-time fee charged at the time of purchase of shares. The fee declines
based on the amount you invest.
*** A contingent deferred sales charge ("CDSC") is a one-time fee charged at
the time of redemption. The fee declines based on the length of time you
hold the shares.
+ A CDSC of 1% is imposed on certain redemptions of Class A Shares if
redeemed within one year of purchase.
(i) If you invest over $250,000, you must buy Class A or Class C Shares. (ii)
Class B Shares convert automatically to Class A Shares after six years. Due to
the level of Rule 12b-1 fees and the CDSC on Class B Shares versus Class A or
Class C Shares, both (i) and (ii) are to your economic benefit.
Q: How do I buy and sell shares of the Funds?
A: Funds Distributor, Inc. (the "Distributor") sells shares of the Funds. You
may purchase shares from the Distributor through broker-dealers or other
financial institutions or from the Funds' transfer agent, First Data Investor
Services Group, Inc. ("Transfer Agent"), by mailing the attached Account
Application Form with a check to the Transfer Agent. You must invest at least
$250 ($50 through the Automatic Investment Plan) initially and at least $50 for
subsequent purchases.
Shares may be redeemed (sold back to the Fund) by mail or by telephone.
4
<PAGE>
You may also acquire the Funds' shares by exchanging shares of the same
class of other funds of the Trust, the Company and The Munder Framlington Funds
Trust ("Framlington"), and exchange Fund shares for shares of the same class of
other funds of the Trust, the Company and Framlington.
Q: What shareholder privileges do the Funds offer?
A:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------- -------------- --------------
<S> <C> <C>
Automatic Investment Plan Automatic Investment Plan Automatic Investment Plan
Automatic Withdrawal Plan Automatic Withdrawal Plan Automatic Withdrawal Plan
Retirement Plans Retirement Plans Retirement Plans
Telephone Exchanges Telephone Exchanges Telephone Exchanges
Rights of Accumulation Reinvestment Privilege Reinvestment Privilege
Free Checkwriting*
Letter of Intent
Quantity Discounts
Reinvestment Privilege
</TABLE>
___________________
* Excluding the International Bond Fund
Q: When and how are distributions made?
A: Dividend distributions are made from the dividends and interest earned on
investments after expenses.
Dividends paid quarterly (if income is available): International Bond Fund.
Dividends paid monthly: Bond Fund, Intermediate Bond Fund, U.S. Government
Income Fund and the Tax-Free Funds.
The Funds distribute capital gains at least annually. Unless you elect to
receive distributions in cash, we will use all dividends and capital gain
distributions of a Fund to purchase additional shares of that Fund.
Q: Who manages the Funds' assets?
A: Munder Capital Management is the Funds' investment advisor. The Advisor is
responsible for all purchases and sales of the securities held by the Funds.
5
<PAGE>
FINANCIAL INFORMATION
SHAREHOLDER TRANSACTION EXPENSES(1)
The purpose of this table is to assist you in understanding the expenses a
shareholder in the Funds will bear directly.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C>
Maximum Sales Charge on Purchase (as a % of Offering Price).......... 4%(2) None None
Sales Charge Imposed on Reinvested Dividends......................... None None None
Maximum Deferred Sales Charge(3)..................................... None(4) 5%(3) None(5)
Redemption Fees(6)................................................... None None None
Exchange Fees........................................................ None None None
</TABLE>
____________________________________
Notes:
(1) Does not include fees which institutions may charge for services they
provide to you.
(2) The sales charge declines as the amount invested increases.
(3) The contingent deferred sales charge ("CDSC") payable upon redemption of
Class B Shares declines over time.
(4) A 1% CDSC applies to redemptions of Class A Shares within one year of
investment that were purchased with no initial sales charge as part of an
investment of $1,000,000 or more.
(5) A 1% CDSC applies to redemptions of Class C Shares within one year of
purchase.
(6) The Transfer Agent may charge a fee of $7.50 for wire redemptions under
$5,000.
6
<PAGE>
FUND OPERATING EXPENSES
The purpose of this table is to assist you in understanding the expenses
charged directly to each Fund, which investors in the Funds will bear indirectly
for the current fiscal year. Such expenses include payments to Trustees,
Directors, auditors, legal counsel and service providers (such as the Advisor),
registration fees and distribution fees. The fees shown below are based on fees
for the Funds' past fiscal year. Because of the 12b-1 fee, you may over the
long term pay more than the amount of the maximum permitted front-end sales
charge.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING
EXPENSES
(AS A % OF AVERAGE NET ASSETS) BOND FUND INTERMEDIATE BOND FUND
______________________________ _____________________________ _____________________________
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- -------
<S> <C> <C> <C>
Advisory Fees................................ .50% .50% .50% .50% .50% .50%
12b-1 Fees................................... .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses............................... .21% .21% .21% .18% .18% .18%
---- ----- ----- ---- ---- ----
Total Fund Operating Expenses................ .96% 1.71% 1.71% .93% 1.68% 1.68%
==== ===== ===== ==== ===== =====
ANNUAL FUND OPERATING
EXPENSES INTERNATIONAL U.S. GOVERNMENT
(AS A % OF AVERAGE NET ASSETS) BOND FUND INCOME FUND
______________________________ _____________________________ _____________________________
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- -------
Advisory Fees................................ .50% .50% .50% .50% .50% .50%
12b-1 Fees................................... .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses............................... .35% .35% .35% .21% .21% .21%
----- ----- ----- ---- ----- -----
Total Fund Operating Expenses................ 1.10% 1.85% 1.85% .96% 1.71% 1.71%
===== ===== ===== ==== ===== =====
ANNUAL FUND OPERATING
EXPENSES MICHIGAN TRIPLE TAX-FREE
(AS A % OF AVERAGE NET ASSETS) TAX-FREE BOND FUND BOND FUND
______________________________ _____________________________ _____________________________
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- -------
Advisory Fees................................ .50% .50% .50% .50% .50% .50%
2b-1 Fees.................................... .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses............................... .13% .13% .13% .20% .20% .20%
---- ----- ----- ---- ----- -----
Total Fund Operating Expenses................ .88% 1.63% 1.63% .95% 1.70% 1.70%
==== ===== ===== ==== ===== =====
ANNUAL FUND OPERATING
EXPENSES TAX-FREE INTERMEDIATE
(AS A % OF AVERAGE NET ASSETS) BOND FUND
______________________________ _____________________________
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
Advisory Fees............................... .50% .50% .50%
12b-1 Fees................................... .25% 1.00% 1.00%
Other Expenses............................... .18% .18% .18%
---- ----- -----
Total Fund Operating Expenses................ .93% 1.68% 1.68%
==== ===== =====
</TABLE>
7
<PAGE>
EXAMPLE
This example shows the amount of expenses you would pay (directly or
indirectly) on a $1,000 investment in the Fund assuming (1) a 5% annual return,
(2) redemption at the end of the time period (including the deduction of the
deferred sales charge, if any) and (3) no redemption at the end of the time
period. THIS EXAMPLE IS NOT A REPRESENTATION OF PAST OR FUTURE PERFORMANCE OR
OPERATING EXPENSES; ACTUAL PERFORMANCE OR OPERATING EXPENSES MAY BE LARGER OR
SMALLER THAN THOSE SHOWN.
<TABLE>
<CAPTION>
BOND FUND INTERMEDIATE BOND FUND
----------------------------------------- ---------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1 Year
. Redemption............ $ 49 $ 67 $ 27 $ 49 $ 67 $ 27
. No Redemption......... $ 49 $ 17 $ 17 $ 49 $ 17 $ 17
3 Years
. Redemption............ $ 69 $ 84 $ 54 $ 68 $ 83 $ 53
. No Redemption......... $ 69 $ 54 $ 54 $ 68 $ 53 $ 53
5 Years
. Redemption............ $ 91 $113 $ 93 $ 89 $111 $ 91
. No Redemption......... $ 91 $ 93 $ 93 $ 89 $ 91 $ 91
10 Years
. Redemption............ $153 $202 $202 $150 $199 $199
. No Redemption......... $153 $202 $202 $150 $199 $199
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL U.S. GOVERNMENT MICHIGAN TRIPLE
BOND FUND INCOME FUND TAX-FREE BOND FUND
----------------------------- ----------------------------- -----------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year
. Redemption.......... $ 51 $ 69 $ 29 $ 49 $ 67 $ 27 $ 49 $ 67 $ 27
. No Redemption....... $ 51 $ 19 $ 19 $ 49 $ 17 $ 17 $ 49 $ 17 $ 17
3 Years
. Redemption.......... $ 74 $ 88 $ 58 $ 69 $ 84 $ 54 $ 67 $ 81 $ 51
. No Redemption....... $ 74 $ 58 $ 58 $ 69 $ 54 $ 54 $ 67 $ 51 $ 51
5 Years
. Redemption.......... $ 98 $120 $102 $ 91 $113 $ 93 $ 87 $109 $ 89
. No Redemption....... $ 98 $100 $100 $ 91 $ 93 $ 93 $ 87 $ 89 $ 89
10 Years
. Redemption.......... $169 $217 $217 $153 $202 $202 $144 $193 $193
. No Redemption....... $169 $217 $217 $153 $202 $202 $144 $193 $193
</TABLE>
<TABLE>
<CAPTION>
TAX-FREE TAX-FREE
BOND FUND INTERMEDIATE BOND FUND
----------------------------------------- ---------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1 Year
. Redemption.......... $ 49 $ 67 $ 27 $ 48 $ 65 $ 25
. No Redemption...... $ 49 $ 17 $ 17 $ 48 $ 15 $ 15
3 Years
. Redemption.......... $ 68 $ 83 $ 53 $ 64 $ 78 $ 48
. No Redemption....... $ 68 $ 53 $ 53 $ 64 $ 48 $ 48
5 Years
. Redemption.......... $ 89 $111 $ 91 $ 81 $103 $ 83
. No Redemption....... $ 89 $ 91 $ 91 $ 81 $ 83 $ 83
10 Years
. Redemption.......... $150 $199 $199 $132 $181 $181
. No Redemption....... $150 $199 $199 $132 $181 $181
</TABLE>
8
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
9
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights were audited by Ernst & Young LLP,
independent auditors. Class B Shares were not offered prior to March 1, 1994.
Class C Shares of the Tax-Free Intermediate Bond Fund was not offered during the
periods shown. This information should be read in conjunction with the Funds'
most recent Annual Reports, which are incorporated by reference into the SAI.
You may obtain the Annual Reports without charge by calling (800) 438-5789.
<TABLE>
<CAPTION>
BOND FUND(A)
--------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D)
CLASS A CLASS A CLASS A CLASS A
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period................................
Income from investment operations:
Net investment income...........................................
Net realized and unrealized gain/(loss) on investments..........
Total from investment operations................................
Less distributions:
Dividends from net investment income............................
Distributions from net realized gains...........................
Total distributions.............................................
Net asset value at end of period....................................
Total return (b)................................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)................................
Ratio of operating expenses to average net assets ..............
Ratio of net investment income to average net assets............
Portfolio turnover rate.........................................
Ratio of operating expenses to average net assets w/o waivers...
</TABLE>
- --------------------------------------
(a) The Munder Bond Fund Class A Shares, Class B Shares and Class C Shares
commenced operations on December 9, 1992, March 13, 1996 and March 25, 1996,
respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
10
<PAGE>
<TABLE>
<CAPTION>
BOND FUND(A)
- ------------------------------------------------------------------------------------------------
YEAR YEAR PERIOD YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/95(E,F) 2/28/94 2/28/93 6/30/98 6/30/97 6/30/96 6/30/98 6/30/97 6/30/96
CLASS A CLASS A CLASS A CLASS B CLASS B CLASS B CLASS C CLASS C CLASS C
- --------------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND(a)
----------------------------------------------------------------------------
YEAR Year YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED Ended
6/30/98 6/30/97(f) 6/30/96 6/30/95(d) 2/28/95(e)
CLASS A CLASS A CLASS A CLASS A CLASS A
---------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period..................
Income from investment operations:
Net investment income...............................
Net realized and unrealized gain/(loss) on
investments........................................
Total from investment operations....................
Less distributions:
Dividends from net investment income................
Distributions from net realized gains...............
Total distributions.................................
Net asset value at end of period......................
Total return(b).....................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)................
Ratio of operating expenses to average net assets...
Ratio of net investment income to average net
assets.............................................
Portfolio turnover rate.............................
Ratio of operating expenses to average net assets
w/o waivers........................................
</TABLE>
- ------------
(a) The Munder Intermediate Bond Fund Class A Shares, Class B Shares and Class
C Shares commenced operations on November 24, 1992, October 25, 1994 and
April 19, 1996, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
12
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND(a)
- --------------------------------------------------------------------------------
YEAR PERIOD YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/94 2/28/93 6/30/98 6/30/97(f) 6/30/96 6/30/95(d) 2/28/95(e)
CLASS A CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B
- --------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND(A)
------------------------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96
CLASS C CLASS C CLASS C
------------ ------------- --------------
<S> <C> <C> <C>
Net asset value, beginning of period.................
Income from investment operations:
Net investment income.............................
Net realized and unrealized gain/(loss) on
investments......................................
Total from investment operations..................
Less distributions:
Dividends from net investment income..............
Distributions from net realized gains.............
Total distributions...............................
Net asset value at end of period.....................
Total return (b)..................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)..............
Ratio of operating expenses to average net
assets...........................................
Ratio of net investment income to average net
assets...........................................
Portfolio turnover rate...........................
Ratio of operating expenses
to average net assets w/o waivers................
</TABLE>
- -----------------------
(a) The Munder Intermediate Bond Fund Class A Shares, Class B Shares and Class
C Shares commenced operations on November 24, 1992, October 25, 1994 and
April 19, 1996, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
14
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL BOND FUND(a)
---------------------------------------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/98 6/30/97
CLASS A CLASS A CLASS B CLASS B
-------------- ------------- ------------ ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period..........
Income from investment operations:
Net investment income.......................
Net realized and unrealized gain/(loss) on
investments................................
Total from investment operations............
Less distributions:
Dividends from net investment income........
Distributions from net realized gains.......
Total distributions.........................
Net asset value at end of period..............
Total return (b)............................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)........
Ratio of operating expenses to average
net assets.................................
Ratio of net investment income to average
net assets................................
Portfolio turnover rate.....................
Ratio of operating expenses to average
net assets w/o waivers or expenses
reimbursed................................
</TABLE>
- ---------------------
(a) The Munder International Bond Fund Class A Shares and Class B Shares
commenced operations on October 17, 1996 and June 9, 1997, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(g) Amount represents less than $0.01 per share.
15
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME FUND (a)
----------------------------------------------------------
PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96(f) 6/30/95(d)
CLASS A CLASS A CLASS A CLASS A
------------ ------------- ----------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period..........
Income from investment operations:
Net investment income.......................
Net realized and unrealized gain/(loss) on
investments................................
Total from investment operations............
Less distributions:
Dividends from net investment income........
Distributions from net realized gains.......
Total Distributions.........................
Net asset value at end of period..............
Total Return (b)............................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)........
Ratio of operating expenses to average net
assets.....................................
Ratio of net investment income to average
net assets.................................
Portfolio turnover rate.....................
Ratio of operating expenses to average net
assets w/o waivers or expenses
reimbursed.................................
</TABLE>
- ----------------------
(a) The Munder U.S. Government Income Fund Class A Shares, Class B Shares and
Class C Shares commenced operations on July 28, 1994, September 6, 1995 and
August 12, 1996, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(g) Amount represents less than $0.01 per share.
16
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME FUND (a)
- -----------------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD PERIOD
ENDED Ended ENDED ENDED ENDED ENDED
2/28/95(e) 6/30/98 6/30/97 6/30/96(f) 6/30/98 6/30/97
CLASS A CLASS B CLASS B CLASS B CLASS C CLASS C
- ------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
MICHIGAN TRIPLE TAX-FREE BOND FUND(a)
-----------------------------------------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/98 6/30/97(e) 6/30/96(e) 6/30/95(d,e)
CLASS A CLASS A CLASS A CLASS A
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period..........
Income from investment operations:
Net investment income.......................
Net realized and unrealized gain/(loss) on
investments................................
Total from investment operations............
Less distributions:
Dividends from net investment income........
Distributions from net realized gains.......
Total distributions.........................
Net asset value at end of period..............
Total return (b)............................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)........
Ratio of operating expenses to average net
assets.....................................
Ratio of net investment income to average
net assets.................................
Portfolio turnover rate.....................
Ratio of operating expenses to average net
assets w/o waivers........................
</TABLE>
- -------------------
(a) The Munder Michigan Triple Tax-Free Bond Fund Class A Shares, Class B
Shares and Class C Shares commenced operations on February 15, 1994, July 5,
1994, and October 4, 1996, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Amount represents less than $0.01 per share.
18
<PAGE>
<TABLE>
<CAPTION>
MICHIGAN TRIPLE TAX-FREE BOND FUND(a)
- ------------------------------------------------------------------------------------------------------------------
YEAR PERIOD YEAR YEAR YEAR PERIOD PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/95(e,f) 2/28/94 6/30/98 6/30/97(e) 6/30/96(e) 6/30/95(d,e) 2/28/95(e,f) 6/30/98 6/30/97(e)
CLASS A CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B CLASS C CLASS C
- ------------ -------- ------- ---------- ---------- ------------ ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE BOND FUND(a)
-------------------------------------------------------------
YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/96(E) 6/30/98
CLASS A CLASS A CLASS A CLASS B
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period..........
Income from investment operations:
Net investment income.......................
Net realized and unrealized gain/(loss)
on investments.............................
Total from investment operations............
Less distributions:
Dividends from net investment income........
Distributions from net realized gains.......
Total distributions.........................
Net asset value at end of period..............
Total return (b)............................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)........
Ratio of operating expenses to average net
assets.....................................
Ratio of net investment income to average
net assets.................................
Portfolio turnover rate.....................
Ratio of operating expenses to average net
assets w/o waivers........................
</TABLE>
- -----------------
(a) The Munder Tax-Free Bond Fund Class A Shares and Class B Shares commenced
operations on October 9, 1995 and December 6, 1994, respectively. The Fund
is authorized to issue Class C Shares. As of June 30, 1997, the Fund had
not commenced selling Class C Shares.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Total net assets for Class B Shares were $164 at February 28, 1995.
20
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE BOND FUND(a)
-------------------------------------------------------
YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED
6/30/97(e) 6/30/96(e) 6/30/95(d,e) 2/28/95(f)
CLASS B CLASS B CLASS B CLASS B
----------- ----------- ------------ ----------
<S> <C> <C> <C>
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE BOND FUND(a)
-----------------------------------------------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/98 6/30/97(f) 6/30/96(f) 6/30/95(d)
CLASS A CLASS A CLASS A CLASS A
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income.......................
Net realized and unrealized
gain/(loss) on investments..................
Total from investment operations............
Less distributions:
Dividends from net investment income........
Distributions from net realized gains.......
Total distributions.........................
Net asset value at end of period...............
Total return (b)............................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)........
Ratio of operating expenses to average net
assets......................................
Ratio of net investment income to average
net assets..................................
Portfolio turnover rate.....................
Ratio of operating expenses to average net
assets w/o waivers or expenses reimbursed...
</TABLE>
- ------------------
(a) The Munder Tax-Free Intermediate Bond Fund Class A Shares and Class B
Shares commenced operations on November 30, 1992 and May 16, 1996,
respectively. The Fund is authorized to issue Class C Shares. As of June
30, 1998, the Fund had not commenced selling Class C Shares.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
22
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE BOND FUND(a)
- -----------------------------------------------------------------------
YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
2/28/95(e) 2/28/94 2/28/93 6/30/98 6/30/97(f) 6/30/96(f)
CLASS A CLASS A CLASS A CLASS B CLASS B CLASS B
- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
</TABLE>
23
<PAGE>
FUND CHOICES
WHAT FUNDS ARE OFFERED?
This Prospectus offers Class A, Class B and Class C Shares of the Funds
described below. This section summarizes each Fund's goal and principal
investments. The sections entitled "What are the Funds' Investments and
Investment Practices?" and "What are the Risks of Investing in the Funds?" and
the SAI give more information about the Funds' investment techniques and risks.
Capitalized terms are explained in the section entitled "What are the Fund's
Investments and Investment Practices?"
BOND FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide a
high level of current income, its secondary goal is capital appreciation.
. Under normal market conditions, at least 65% of the Fund's assets will
be invested in Fixed Income Securities.
. The Fund's dollar-weighted average maturity will generally be between
six and fifteen years.
PORTFOLIO MANAGEMENT. James C. Robinson and Gregory A. Prost jointly
manage the Fund. Mr. Robinson and Mr. Prost have managed the Fund since March
1995 and May 1995, respectively. Mr. Robinson has been a Vice President and
Chief Investment Officer of the Advisor or Old MCM, Inc. ("MCM"), the
predecessor to the Advisor, since 1987. Mr. Prost has been a Senior Fixed
Income Portfolio of the Advisor or MCM since 1995. Prior to joining the
Advisor, he was a Vice President and Senior Fund Manager for First of America
Investment Corp.
INTERMEDIATE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a
competitive rate of return which, over time, exceeds the rate of inflation and
the return provided by money market instruments.
. Under normal conditions, at least 65% of the Fund's assets will be
invested in Fixed Income Securities.
. The Fund's dollar-weighted average maturity will generally be between
three and eight years.
PORTFOLIO MANAGEMENT. Anne K. Kennedy and James C. Robinson jointly manage
the Fund. Ms. Kennedy, Vice President and Director of Corporate Bond Trading of
the Advisor or MCM since 1991, has managed the Fund since March 1995. Mr.
Robinson, Vice President and Chief Investment Officer of the Advisor or MCM
since 1987, has managed the Fund since March 1995.
INTERNATIONAL BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to realize a
competitive total return through a combination of current income and capital
appreciation. Under normal market conditions, at least 65% of the Fund's assets
will be invested in Foreign Securities of issuers in at least three countries
other than the United States. The Fund's dollar-weighted average maturity will
generally be between three and fifteen years. The Fund will invest mostly in:
. foreign debt obligations issued by foreign governments and their
agencies, instrumentalities or political subdivisions
. debt securities issued or guaranteed by supra-national organizations,
such as the World Bank
. debt securities of banks or bank holding companies
. corporate debt securities
. other debt securities, including those convertible into foreign stock.
24
<PAGE>
PORTFOLIO MANAGEMENT. Gregory A. Prost and Sharon E. Fayolle jointly
manage the Fund. Mr. Prost, Senior Fixed Income Portfolio Manager of the
Advisor or MCM, has managed the Fund since October 1996. Prior to joining MCM
in 1995, he was a Vice President and Senior Fund Manager for First of America
Investment Corp. Ms. Fayolle, Vice President and Director of Money Market
Trading for the Advisor or MCM, has managed the Fund since October 1996. Prior
to joining MCM in 1996, she was a European Portfolio Manager for Ford Motor
Company.
U.S. GOVERNMENT INCOME FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide high current
income.
. Under normal market conditions, at least 65% of the Fund's assets will
be invested in U.S. Government Obligations.
. The Fund's dollar-weighted average maturity will generally be between
six and fifteen years.
PORTFOLIO MANAGEMENT. James C. Robinson and Peter G. Root jointly manage
the Fund. Mr. Robinson, Vice President and Chief Investment Officer of the
Advisor or MCM since 1987, and Mr. Root, Vice President and Director of
Government Securities Trading of the Advisor since March 1995, have managed the
Fund since March 1995. Mr. Root joined MCM in 1991.
MICHIGAN TRIPLE TAX-FREE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide as high a
level of current interest income exempt from regular Federal income taxes,
Michigan state income and Michigan intangibles tax as is consistent with prudent
investment management and preservation of capital.
. Except during temporary defensive periods, at least 80% of the Fund's
net assets are invested in Michigan Municipal Obligations.
. The Fund will invest primarily in Michigan Municipal Obligations which
have remaining maturities of between three and thirty years.
. The Fund's dollar-weighted average maturity will generally be between
ten and twenty years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank
(1985-1993).
TAX-FREE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a high level
of current interest income exempt from Federal income taxes and to generate as
competitive a long-term rate of return as is consistent with prudent investment
management and preservation of capital.
. Under normal market conditions, at least 65% of the Fund's assets will
be invested in Municipal Obligations.
. Except during temporary defensive periods, at least 80% of the Fund's
net assets will be invested in Municipal Obligations whose interest is
exempt from regular Federal income tax. This fundamental policy may only
be changed with shareholder approval.
. The Fund invests primarily in intermediate-term and long-term Municipal
Obligations which have remaining maturities of between three and thirty
years.
. The Fund's dollar-weighted average maturity will generally be between
ten and twenty years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank.
25
<PAGE>
TAX-FREE INTERMEDIATE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a
competitive level of current interest income exempt from regular Federal income
taxes and a total return which, over time, exceeds the rate of inflation and the
return provided by tax-free money market instruments.
. Under normal market conditions, at least 65% of the Fund's assets will
be invested in Municipal Obligations.
. Except during temporary defensive periods, at least 80% of the Fund's
net assets will be invested in Municipal Obligations whose interest is
exempt from regular Federal income tax.
. The Fund invests in Michigan Municipal Obligations from time to time.
. The Fund generally buys obligations with remaining maturities of ten
years or less.
. The Funds dollar-weighted average maturity will generally be between
three and eight years, but may be up to ten years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank.
WHO MAY WANT TO INVEST IN THE FUNDS?
The Funds are designed for investors who desire potentially higher returns
than more conservative fixed rate investments or money market funds and who seek
current income. The Tax-Free Funds may be desirable for investors who seek
primarily tax-exempt income. When you choose among the Funds, you should
consider both the expected yield of the Funds and potential changes in each
Fund's share price. The yield and potential price changes of a Fund's shares
depend on the quality and maturity of the obligations in its portfolio, as well
as on other market conditions.
WHAT ARE THE FUNDS' INVESTMENTS AND INVESTMENT PRACTICES?
All of the Funds, other than the International Bond Fund, the Michigan
Triple Tax-Free Bond Fund and the Tax-Free Intermediate Bond Fund, are
classified as "diversified funds." With respect to 75% of each diversified
Fund's assets, each diversified fund cannot invest more than 5% of its assets in
one issuer (other than the U.S. Government and its agencies and
instrumentalities). In addition, each diversified fund cannot invest more than
25% of its assets in a single issuer. These restrictions do not apply to the
non-diversified funds.
The Tax-Free Funds will acquire long-term instruments only which are rated
A or better by Moody's Investors Service Inc. ("Moody's") or Standard & Poor's
Rating Service ("S&P") or, if unrated, are of comparable quality. These Funds
will acquire short-term instruments only which (i) have short-term debt ratings
in the top two categories by at least one nationally recognized statistical
rating organization, (ii) are issued by an issuer with such ratings or (iii), if
unrated, are of comparable quality.
The Advisor does not intend to invest more than 25% of a Fund's assets in
securities whose issuers are in the same state, except that the Advisor may
invest more than 25% of the Michigan Triple Tax-Free Bond Fund's and the Tax-
Free Intermediate Bond Fund's assets in Michigan Municipal Obligations.
Each Tax-Free Fund may invest in short term money market instruments on a
temporary basis or for temporary investment purposes. Short term money market
instruments include U.S. government obligations, debt securities of issuers
having a rating within the two highest categories of either S&P or Moody's, and
certificates of deposit or bankers' acceptances of domestic branches of U.S.
banks with at least $1 billion in assets.
26
<PAGE>
Investment Charts
The following charts summarize the Funds' investments and investment
practices. The SAI contains more details. All percentages are based on a
Fund's total assets except where otherwise noted. See "What are the Risks of
Investing in the Funds?" for a description of the risks involved with the Funds'
investment practices.
BOND FUNDS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
BOND INTERMEDIATE INTERNATIONAL U.S. GOVERNMENT INCOME FUND
INVESTMENTS AND INVESTMENT PRACTICES FUND BOND FUND BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIXED INCOME SECURITIES. Either pay interest at set
times at either fixed or variable rates, or realize
a discount at maturity. Includes corporate bonds,
debentures, notes and other similar corporate debt
instruments, zero coupon bonds (discount debt
obligations that do not make interest payments) and Y Y Y Y
variable master demand notes (permit the amount of
debt to vary and provide for periodic adjustments
in interest rates).
- -------------------------------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Securities issued by foreign
governments and their agencies, instrumentalities 25% 25% Y 25%
or political subdivisions, supranational
organizations, and foreign corporations. Does not
include Bank Obligations.
- -------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Includes debt securities
backed by mortgages, installment sales contracts Y Y Y Y
and credit card receivables.
- -------------------------------------------------------------------------------------------------------------------------------
INTEREST RATE AND CURRENCY SWAPS. Agreement to
exchange payments calculated on the basis of Y(1) Y(1) Y Y(1)
relative interest or currency rates. Derivative
instruments used solely for hedging.
- -------------------------------------------------------------------------------------------------------------------------------
INTEREST RATE CAPS AND FLOORS. Entitle purchaser to
receive payments of interest to the extent that a
specified reference rate exceeds or falls below a N N Y N
predetermined level.
- -------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS. Include securities
issued by, or guaranteed by, the U.S. Government or Y Y Y Y
its agencies or instrumentalities.
- -------------------------------------------------------------------------------------------------------------------------------
SHORT TERM MONEY MARKET INSTRUMENTS. High quality
short-term instruments including, among other
things, commercial paper, bankers' acceptances, Y Y Y Y
certificates of deposit and short-term corporate
obligations.
- -------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Include participations in
trusts that hold U.S. Treasury and agency
securities which represent either the interest Y Y Y Y
payments or principal payments on the securities or
combination of both.
- -------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. A Fund buys securities and
agrees to sell them back at a later time at a set Y Y Y Y
price.
- -------------------------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund sells
securities and agrees to buy them back later at an
agreed upon time and price. A method to borrow Y Y Y Y
money for temporary purposes.
- -------------------------------------------------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS.
Obligations of a Fund to purchase or sell a
specific currency at a future date at a set price. Y Y Y Y
May decrease a Fund's loss due to a change in a
currency value, but also limits gains from currency
changes.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
BOND FUNDS (CONTINUED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
BOND INTERMEDIATE INTERNATIONAL U.S. GOVERNMENT INCOME FUND
INVESTMENTS AND INVESTMENT PRACTICES FUND BOND FUND BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BANK OBLIGATIONS. U.S. dollar denominated Bank
Obligations including certificates of deposit,
bankers' acceptances, bank notes and time deposits, Y Y Y Y
issued by U.S. or foreign banks or savings
institutions having total assets in excess of $1
billion.
- ------------------------------------------------------------------------------------------------------------------------------
SUPRANATIONAL ORGANIZATION OBLIGATIONS. Fixed
Income Securities issued or guaranteed by N N Y N
supranational organizations such as the World Bank.
- ------------------------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS. Agreements by a
Fund to make payments to an insurance company's
general account in exchange for a minimum level of Y Y Y Y
interest based on an index.
- ------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS. A Fund would bear the expenses 10%/5% 10%/5% 10%/5% 10%/5%
of money market funds whose shares it purchased, in in any in any in any in any
addition to the Fund's own expenses. 1 Fund 1 Fund 1 Fund 1 Fund
- -----------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS.
Agreements by a Fund to purchase securities at a
set price, with delivery and payment in the future.
The value of securities may change between the time [25%] [25%] [25%] [25%]
the price is set and payment. Not to be used for
speculation.
- -----------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready
market for these securities, which inhibits the
ability to sell them for full market value, or 15%(2) 15%(2) 15%(2) 15%(2)
there are legal restrictions on their resale by the
Fund.
- -----------------------------------------------------------------------------------------------------------------------------
FUTURES AND OPTIONS ON FUTURES. (3) Contracts in
which a Fund has the right or the obligation, at
maturity, to make delivery of, or receive Y Y Y Y
securities, the cash value of an index, or foreign
currency. Used for hedging purposes or to maintain
liquidity.
- -----------------------------------------------------------------------------------------------------------------------------
OPTIONS. A Fund may buy options giving it the right
to require a buyer to buy a security held by the
Fund (put options), buy options giving it the right
to require a seller to sell securities to the Fund
(call options), sell (write) options giving a buyer
the right to require the Fund to buy securities
from the buyer or write options giving a buyer the Y Y Y Y
right to require the Fund to sell securities to the
buyer, during a set time at a set price. Options
may relate to securities indices, individual
securities, foreign currencies or futures
contracts. See the SAI for more details and
additional limitations.
- -----------------------------------------------------------------------------------------------------------------------------
BORROWING. Borrowing for temporary purposes/
borrowing to meet redemptions. Fundamental policy
that can only be changed by shareholders. 5%/331/3 5%/331/3 5%/331/3 5%/331/3
- -----------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend securities to
financial institutions which pay for the use of the
securities. May increase return. Slight risk of 25% 25% 25% 25%
borrower failing financially.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Key:
Y = INVESTMENT ALLOWED WITHOUT RESTRICTION
N = INVESTMENT NOT ALLOWED
(1) INTEREST RATE SWAPS ONLY.
(2) BASED ON NET ASSETS.
28
<PAGE>
TAX-FREE FUNDS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
TAX-FREE
MICHIGAN TRIPLE INTERMEDIATE
INVESTMENTS AND INVESTMENT PRACTICES TAX-FREE BOND FUND TAX-FREE BOND FUND BOND FUND
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL OBLIGATIONS. Payable from the
issuer's general revenue, the revenue of Y Y Y
a specific project, current revenues or
a reserve fund.
- --------------------------------------------------------------------------------------------------------------------
MICHIGAN MUNICIPAL OBLIGATIONS.
Municipal Obligations issued by the Y Y Y
State of Michigan and its political
subdivisions.
- --------------------------------------------------------------------------------------------------------------------
FIXED INCOME SECURITIES. Either pay
interest at set times at either fixed or
variable rates, or realize a discount at
maturity. Includes corporate bonds,
debentures, notes and other similar
corporate debt instruments, zero coupon Y Y Y
bonds (discount debt obligations that do
not make interest payments) and variable
master demand notes (permit the amount
of debt to vary and provide for periodic
adjustments in interest rates).
- --------------------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Securities issued by
foreign governments and their agencies, 10% 10% 10%
instrumentalities or political
subdivisions, supranational
organizations, and foreign corporations.
Does not include Bank Obligations.
- -------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. A Fund buys
securities and agrees to sell them back Y Y Y
at a later time at a set price.
- -------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS. A Fund would bear
the expenses of money market funds whose
shares it purchased, in addition to the Y Y Y
Fund's own expenses.
- --------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD
COMMITMENTS. Agreements by a Fund to [25%] [25%] [25%]
purchase securities at a set price, with
delivery and payment in the future. The
value of securities may change between
the time the price is set and payment.
Not to be used for speculation.
- --------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is
no ready market for these securities,
which inhibits the ability to sell them 15%(1) 15%(1) 15%(1)
for full market value, or there are
legal restrictions on their resale by
the Fund.
- --------------------------------------------------------------------------------------------------------------------
BORROWING. Borrowing for temporary 5%/331/3% 5%/331/3% 5%/331/3%
purposes/ borrowing to meet redemptions.
Fundamental policy that can be changed
only by shareholders.
- -------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend
securities to financial institutions
which pay for the use of the securities. 25% 25% 25%
May increase return. Slight risk of
borrower failing financially.
- --------------------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES. Includes U.S.
Treasury bills, notes and bonds. Y Y Y
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Key:
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1) BASED ON NET ASSETS.
29
<PAGE>
WHAT ARE THE RISKS OF INVESTING IN THE FUNDS?
The value of each Fund's shares, like the value of most securities, will
rise and fall in response to changes in economic conditions, interest rates and
the market's perception of the underlying securities held by the Fund.
Investing in the Funds may be less risky than investing in individual Fixed
Income Securities due to the diversification of investing in a portfolio
containing many different Fixed Income Securities; however, such diversity does
not eliminate all risks. The Funds invest mostly in Fixed Income Securities,
whose values typically rise when interest rates fall and fall when interest
rates rise. Fixed Income Securities with shorter maturities (time period until
repayment) tend to be less affected by interest rate changes, but generally
offer lower yields than securities with longer maturities. Current yield levels
should not be considered representative of yields for any future time.
Securities with variable interest rates may exhibit greater price variations
than ordinary securities. Zero coupon bonds are subject to greater market
fluctuations from changing interest rates than debt obligations of comparable
maturities which make current distributions of interest.
Consistent with a long-term investment approach, investors in a Fund should
be prepared and able to maintain their investments during periods of adverse
market conditions. By itself, no Fund is a balanced investment program and
there is no guarantee that any Fund will achieve its investment objective since
there is uncertainty in every investment.
A Fund's risk is mostly dependent on the types of securities it purchases
and its investment techniques. Some Funds are authorized to use options,
futures, currency swaps, interest rate swaps and/or forward foreign currency
exchange contracts, which are types of derivative instruments. Derivative
instruments are instruments that derive their value from a different underlying
security, index or financial indicator. The use of derivative instruments
exposes a Fund to additional risks and transaction costs. Risks inherent in the
use of derivative instruments include: (1) the risk that interest rates,
securities prices and currency markets will not move in the direction that a
portfolio manager anticipates; (2) imperfect correlation between the price of
derivative instruments and movements in the prices of the securities, interest
rates or currencies being hedged; (3) the fact that skills needed to use these
strategies are different than those needed to select portfolio securities; (4)
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 the 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 not perform its obligations, which could leave the
Fund worse off than if it had not entered into the position.
International Bond Fund, Michigan Triple Tax-Free Bond Fund and Tax-Free
Intermediate Bond Fund
These Funds are non-diversified and hold securities of a limited number of
issuers. The Funds may, therefore, pose a greater risk to investors than an
investment in a diversified fund. The Michigan Triple Tax-Free Bond Fund
invests primarily in Michigan Municipal Securities. If Michigan issuers suffer
serious financial difficulties jeopardizing their ability to pay their
obligations, the net asset value of such Fund may decline.
Investing in the International Bond Fund, with its larger investment in
Foreign Securities, may involve more risk than investing in a U.S. fund for the
following reasons: (1) there may be less public information available about
foreign companies than is available about U.S. companies; (2) foreign companies
are not generally subject to the uniform accounting, auditing and financial
reporting standards and practices applicable to U.S. companies; (3) foreign
markets have less volume than the U.S. market, and the securities of some
foreign companies are less liquid and more volatile than the securities of
comparable U.S. companies; (4) there may be less government regulation of
exchanges, brokers, listed companies and banks in foreign countries than in the
United States; (5) the Fund may incur fees on currency exchanges when it changes
investments from one country to another; (6) the Fund's foreign investments
could be affected by expropriation, confiscatory taxation, nationalization of
bank deposits, establishment of exchange controls, political or social
instability or diplomatic developments; (7) fluctuations in foreign exchange
rates will affect the value of the Fund's portfolio securities, the value of
dividends and interest
30
<PAGE>
earned, gains and losses realized on the sale of securities, net investment
income and unrealized appreciation or depreciation of investments; and (8) the
possible imposition of dividend or interest withholding by a foreign country.
The risks of the various investment techniques the Funds use are described
in more detail in the SAI.
PERFORMANCE
HOW IS THE FUNDS' PERFORMANCE CALCULATED?
There are various ways in which the Funds may calculate and report their
performance. Performance is calculated separately for each class of shares.
One method is to show a Fund's total return. Cumulative total return is
the percentage change in the value of an amount invested in a class of shares of
a Fund over a stated period of time and takes into account reinvested dividends
plus in the case of Class A Shares, the payment of the maximum sales charge and,
in the case of Class B and Class C Shares, the maximum CDSC. Cumulative total
return most closely reflects the actual performance of a Fund. However, a
shareholder who opts to receive dividends in cash, a Class A shareholder who
paid a sales charge lower than 4.0%, or a Class B or C shareholder who paid
lower than the maximum CDSC will have a different return than the reported
performance.
Average annual total return refers to the average annual compounded rates
of return over a specified period on an investment in shares of a Fund
determined by comparing the initial amount invested to the ending redeemable
value of the amount, taking into account reinvested dividends, the payment of
the maximum sales charge on Class A Shares, and the payment of the maximum CDSC
on Class B and Class C Shares.
Each Fund may also publish its current yield. Yield is the net investment
income generated by a share of a Fund during a 30-day period divided by the
maximum offering price on the 30th day. "Maximum offering price" includes the
sales charge for Class A Shares.
The Funds may sometimes publish total returns that do not take into account
sales charges and such returns will be higher than returns which include sales
charges. You should be aware that (i) past performance does not indicate how a
Fund will perform in the future and (ii) each Fund's return and net asset value
will fluctuate, so you cannot necessarily use a Fund's performance data to
compare it to investment in certificates of deposit, savings accounts or other
investments that provide a fixed or guaranteed yield.
Each Fund may compare its performance to that of other mutual funds, such
as the performance of similar funds reported by Lipper Analytical Services, Inc.
or information reported in national financial publications (such as Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times) or
in local or regional publications. Each Fund may also compare its total return
to broad-based indices. These indices show the value of selected portfolios of
securities (assuming reinvestment of interest and dividends) which are not
managed by a portfolio manager. The Funds may report how they are performing in
comparison to the Consumer Price Index, an indication of inflation reported by
the U.S. Government.
WHERE CAN I OBTAIN PERFORMANCE DATA?
The Wall Street Journal and certain local newspapers report information on
the performance of mutual funds. In addition, performance information is
contained in the Funds' annual report dated June 30 of each year and semi-annual
report dated December 31 of each year, which will automatically be mailed to
shareholders. To obtain copies of financial reports or performance information,
call (800) 438-5789.
31
<PAGE>
PURCHASES AND EXCHANGES OF SHARES
WHICH SHARE CLASS SHOULD I CHOOSE FOR MY INVESTMENT?
Each of the Funds offers Class A, Class B and Class C Shares. Each Class
has its own cost structure, allowing you to choose the one that best meets your
requirements given the amount of your purchase and the intended length of your
investment. You should consider both ongoing annual expenses and initial or
contingent deferred sales charges in estimating the costs of investing in a
particular class of shares.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ----------------------------------- --------------------------------------- ------------------------------------
<S> <C> <C>
. Front end sales charge. There . No front end sales charge. All . No front end sales charge or
are several ways to reduce these your money goes to work for you right CDSC, except for a CDSC for
sale charges. away. redemptions made within the first
. Lower annual expenses than . Higher annual expenses than Class A year after investing. All your
Class B and Class C Shares. Shares. money goes to work for you right
. A CDSC on shares you sell within away.
six years of purchase. . Shares do not convert to another
. Automatic conversion to Class A class.
Shares approximately six years after . Higher annual expenses than
issuance, thus reducing future annual Class A Shares.
expenses.
. CDSC is waived for certain
redemptions.
</TABLE>
Each Fund also issues Class K and Class Y Shares, which have different
sales charges, expense levels and performance. Class K and Class Y Shares are
available to limited types of investors. Call (800) 438-5789 to obtain more
information concerning Class K and Class Y Shares.
WHAT PRICE DO I PAY FOR SHARES?
The purchase price for Class A Shares is the net asset value ("NAV") next
determined after we receive your order in proper form PLUS any applicable sales
charge. The purchase price for Class B and Class C Shares is the NAV next
determined after we receive your order in proper form. You should be aware that
broker-dealers (other than the Funds' Distributor) may charge investors
additional fees if shares are purchased through them.
Except in certain limited circumstances, each Fund determines its NAV on
each day the New York Stock Exchange ("NYSE") is open for trading (a "Business
Day") at the close of such trading on the NYSE (normally 4:00 p.m. Eastern
time). Each Fund calculates NAV separately for each class of shares. NAV is
calculated by totaling the value of all of the assets of a Fund allocated to a
particular class of shares, subtracting the Fund's liabilities and expenses
charged to that class and dividing the result by the number of shares of that
class outstanding.
APPLICABLE SALES CHARGE. Except in the circumstances described below, you
must pay a sales charge at the time of purchase of Class A Shares. The sales
charge as a percentage of your investment decreases as the amount you invest
increases. The current sales charge rates and commissions paid to selected
dealers are as follows:
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF DISCOUNT TO SELECTED
---------------------------------------- DEALERS AS A PERCENTAGE
YOUR INVESTMENT NET ASSET VALUE OF INVESTMENT
------------------ ------------------- ------------------------
<S> <C> <C> <C>
Less than $100,000................. 4.00% 4.17% 3.75%
$100,000 but less than $250,000.... 3.00% 3.09% 2.75%
$250,000 but less than $500,000... 2.00% 2.04% 1.75%
$500,000 but less than $1,000,000.. 1.25% 1.27% 1.00%
$1,000,000 or more................. None* None* (see below)**
</TABLE>
32
<PAGE>
____________________
* No initial sales charge applies on investments of $1 million or more.
However, a CDSC of 1% is imposed on certain redemptions within one year of
purchase. Class A Shares of the Trust Funds purchased on or before June 27,
1995 are subject to a different CDSC, which is described in the SAI.
** The Distributor will pay 1% commission to dealers who initiate and are
responsible for purchases of $1 million or more.
The Distributor may pay the entire commission to dealers. If that occurs,
the dealer may be considered an "underwriter" under Federal securities laws.
SALES CHARGE WAIVERS. We will waive the initial sales charge on sales of
Class A Shares to the following types of purchasers:
(1) individuals with an investment account or relationship with the
Advisor;
(2) full-time employees and retired employees of the Advisor, employees of
the Funds' service providers and immediate family members of such
persons;
(3) registered broker-dealers that have entered into selling agreements
with the Distributor, for their own accounts or for retirement plans
for their employees or sold to registered representatives for full-
time employees (and their families) that certify to the Distributor at
the time of purchase that such purchase is for their own account (or
for the benefit of their families);
(4) certain qualified employee benefit plans as described below;
(5) individuals who reinvest a distribution from a qualified retirement
plan for which the Advisor serves as investment advisor;
(6) individuals who reinvest the proceeds of redemptions from Class Y
Shares of the Funds of the Trust, the Company or Framlington, within
60 days of redemption;
(7) banks and other financial institutions that have entered into
agreements with the Trust, the Company or Framlington to provide
shareholder services for customers (including customers of such banks
and other financial institutions, and the immediate family members of
such customers);
(8) fee-based financial planners or employee benefit plan consultants
acting for the accounts of their clients;
(9) employer sponsored retirement plans which are administered by
Universal Pensions, Inc. ("UPI Plans");
(10) employer sponsored 401(k) plans which are administered by Merrill
Lynch Group Employee Services ("Merrill Lynch Plans") which meet the
criteria described below under "Qualified Employer Sponsored
Retirement Plans"; and
(11) individuals who reinvest proceeds of redemptions from Class A, Class B
or Class C Shares of the Munder Short Term Treasury Fund, provided,
such individuals were shareholders of the Munder Short Term Treasury
Fund on June 2, 1998.
QUALIFIED EMPLOYER SPONSORED RETIREMENT PLANS
We will waive the initial sales charge on purchases of Class A Shares by
employer sponsored retirement plans that are qualified under Section 401(a) or
Section 403(b) of the Code (each, a "Qualified Employee Benefit Plan") and that
(1) invest $1,000,000 or more in Class A Shares of investment portfolios offered
by the Trust, the Company or Framlington or (2) have at least 75 eligible plan
participants. In addition, we will waive the CDSC of 1% charged on certain
redemptions within one year of purchase for Qualified Employee Benefit Plan
purchases that meet the above criteria. A 1% commission will be paid by the
Distributor to dealers and other entities (as permitted by applicable Federal
and state law) who initiate and are responsible for Qualified Employee Benefit
Plan purchases that meet the above criteria. For purposes of this sales charge
waiver, Simplified Employee Pension Plans ("SEPs"), Individual Retirement
Accounts ("IRAs"), UPI Plans and Merrill Lynch Plans are not considered to be
Qualified Employee Benefit Plans.
We also will waive (i) the initial sales charge on Class A Shares on
purchases by UPI Plans for employees participating in an employer-sponsored or
administered retirement program operating under Section 408A of the Code and
(ii) the CDSC of 1% imposed on certain redemptions within one year of purchase
for these accounts. The
33
<PAGE>
Distributor will pay a 1% commission to dealers and others (as permitted by
applicable Federal and state law) who initiate and are responsible for UPI Plan
purchases.
We will waive the initial sales charge for all the investments by Merrill
Lynch Plans if (i) the Plan is recordkept on a daily valuation basis by Merrill
Lynch Group Employee Services ("Merrill Lynch") and, on the date the plan
sponsor ("the Plan Sponsor") signs the Merrill Lynch Recordkeeping Service
Agreement, the Plan has $3 million or more in assets invested in broker/dealer
funds not advised or managed by Merrill Lynch Asset Management, L.P. ("MLAM")
that are made available pursuant to a Services Agreement between Merrill Lynch
and the Funds' principal underwriter or distributor and in funds advised or
managed by MLAM (collectively, the "Applicable Investments"); or (ii) the Plan
is recordkept on a daily valuation basis by an independent recordkeeper whose
services are provided through a contract or alliance arrangement with Merrill
Lynch, and on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping
Service Agreement, the Plan has $3 million or more in assets, excluding money
market funds, invested in Applicable Investments; or (iii) the Plan has 500 or
more eligible employees, as determined by the Merrill Lynch plan conversion
manager, on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping
Service Agreement.
SALES CHARGE REDUCTIONS. You may qualify for reduced sales charges in the
following cases:
. LETTER OF INTENT. If you intend to purchase at least $100,000 of Class
A, Class B and Class C Shares of the Funds you may wish to complete the
letter of Intent Section of your Account Application Form. By doing so,
you agree to invest a certain amount over a 13-month period. You would
pay a sales charge on any Class A Shares you purchase during the 13
months based on the total amount to be invested under the Letter of
Intent. You can apply any investments you made in any of the funds
during the preceding 90-day period toward fulfillment of the Letter of
Intent (although there will be no refund of sales charges you paid
during the 90-day period). You should inform the Transfer Agent that you
have a Letter of Intent each time you make an investment.
You are not obligated to purchase the amount specified in the Letter
of Intent. If you purchase less than the amount specified, however, you
must pay the difference between the sales charge paid and the sales
charge applicable to the purchases actually made. The Custodian will
hold such amount in escrow. The Custodian will pay the escrowed funds to
your account at the end of the 13 months unless you do not complete your
intended investment.
. QUANTITY DISCOUNTS. You may combine purchases of Class A Shares that
are made by you, your spouse, your children under age 21 and your IRA
when calculating the sales charge. You must notify your broker or the
Transfer Agent to qualify.
. RIGHT OF ACCUMULATION. You may add the value of any shares of non-money
market funds of the Trust, the Company or Framlington you already own to
the amount of your next Class A Share investment for purposes of
calculating the sales charge at the time of current purchase. You must
notify your broker or the Transfer Agent to qualify.
Certain brokers may not offer these programs or may impose conditions on
use of these programs. You should consult with your broker prior to purchasing
the Funds' shares.
For further information on sales charge waivers and reductions call the
Funds at (800) 438-5789.
WHEN CAN I PURCHASE SHARES?
Shares of each Fund are sold on a continuous basis and can be purchased on
any Business Day.
34
<PAGE>
WHAT IS THE MINIMUM REQUIRED INVESTMENT?
The minimum initial investment for Class A, Class B and Class C Shares of a
Fund is $250 and subsequent investments must be at least $50. Purchases in
excess of $250,000 must be for Class A or Class C Shares.
HOW CAN I PURCHASE SHARES?
You can purchase Class A, Class B and Class C Shares in a number of
different ways. You may place orders directly through the Transfer Agent or the
Distributor or through arrangements with your authorized broker.
. BY BROKER. Any broker authorized by the Distributor can sell you shares
of the Funds. Please note that brokers may charge you fees for their
services.
. BY MAIL. You may open an account by completing, signing and mailing the
attached Account Application Form and a check or other negotiable bank
draft (payable to The Munder Funds) for $250 or more to: THE MUNDER
FUNDS, C/O FIRST DATA INVESTOR SERVICES GROUP, P.O. BOX 5130,
WESTBOROUGH, MASSACHUSETTS 01581-5130. Be sure to specify on your
Account Application Form the class of shares being purchased. If the
class is not specified, your purchase will automatically be invested in
Class A Shares. For additional investments send a letter stating the
Fund and share class you wish to purchase, your name and your account
number with a check for $50 or more to the address listed above.
. BY WIRE. To open a new account, you should call the Funds at (800) 438-
5789 to obtain an account number and complete wire instructions prior to
wiring any funds. Within seven days of purchase, you must send a
completed Account Application Form containing your certified taxpayer
identification number to the Transfer Agent at the address provided
above. Wire instructions must state the Fund name, share class, your
registered name and your account number. Your bank wire should be sent
through the Federal Reserve Bank Wire System to:
Boston Safe Deposit and Trust Company
Boston, MA
ABA# 011001234
DDA# 16-798-3
Account No.:
You may make additional investments at any time using the wire
procedures described above. Note that banks may charge fees for
transmitting wires.
. AUTOMATIC INVESTMENT PLAN ("AIP"). Under the AIP, you may arrange for
periodic investments in a Fund through automatic deductions from a
checking or savings account. To enroll in the AIP you should complete
the AIP Application Form or call the Funds at (800) 438-5789. The
minimum pre-authorized investment amount is $50. You may discontinue the
AIP at any time. We may discontinue the AIP on 30 days' written notice
to you.
. REINVESTMENT PRIVILEGE. Once a year you may reinvest redemption
proceeds from Class A, B and C Shares of a Fund (or Class A, B and C
Shares of another non-money market fund of the Trust, the Company or
Framlington) in shares of the same class of the same Fund without any
sales charges, if the reinvestment is made within 60 days of redemption.
You or your broker must notify the Transfer Agent in writing at the time
of reinvestment in order to eliminate the sales charge.
The Transfer Agent will send you confirmations of the opening of an account
and of all subsequent purchases, exchanges or redemptions in the account. If
your account has been set up by a broker or other investment professional,
account activity will be detailed in their statements to you. We do not issue
share
35
<PAGE>
certificates. We reserve the right to (i) reject any purchase order if,
in our opinion, it is in the Funds' best interest to do so and (ii) suspend the
offering of shares of any Class for any period of time.
See the SAI for further information regarding purchases of the Funds'
shares.
HOW CAN I EXCHANGE SHARES?
You may exchange shares of the Funds for shares of the same class of other
Funds of the Trust, the Company or Framlington based on their relative net asset
values. Class A Shares of a money market fund of the Trust or the Company that
were (1) acquired through the use of the exchange privilege and (2) can be
traced back to a purchase of shares in one or more investment portfolios of the
Trust or the Company for which a sales charge was paid, can be exchanged for
Class A Shares of a fund of the Trust, the Company or Framlington. Class B and
Class C Shares will continue to age from the date of the original purchase and
will retain the same CDSC rate as they had before the exchange.
You must meet the minimum purchase requirements for the fund of the Trust,
the Company or Framlington that you purchase by exchange. If you are exchanging
into shares of a Fund with a higher sales charge, you must pay the difference at
the time of the exchange. Please note that a share exchange is a taxable event
and accordingly, you may realize a taxable gain or loss. Before making an
exchange request, read the Prospectus of the Fund you wish to purchase by
exchange. You can obtain a Prospectus for any Fund of the Trust, the Company or
Framlington by contacting your broker or the Funds at (800) 438-5789. Brokers
may charge a fee for handling exchanges.
. EXCHANGES BY TELEPHONE. You may give exchange instructions by telephone to
the Funds at (800) 438-5789. You may not exchange shares by telephone if you
hold share certificates. We reserve the right to reject any telephone exchange
request and to place restrictions on telephone exchanges.
. EXCHANGES BY MAIL. You may send exchange orders to your broker or to the
Transfer Agent at The Munder Funds c/o First Data Investor Services Group, P.O.
Box 5130, Westborough, Massachusetts 01581-5130.
We may modify or terminate the exchange privilege at any time. You will be
given notice of any material modifications except where notice is not required.
REDEMPTIONS OF SHARES
WHAT PRICE DO I RECEIVE FOR REDEEMED SHARES?
The redemption price is the NAV next determined after we receive the
redemption request in proper form. We will reduce the amount you receive by the
amount of any applicable CDSC. See "Purchases of Shares--What Price Do I Pay for
Shares?" for an explanation of how the net asset value next determined is
calculated.
CONTINGENT DEFERRED SALES CHARGES. You pay a CDSC when you redeem:
. Class A Shares that are part of an investment of at least $1 million
within one year of buying them
. Class B Shares within six years of buying them
. Class C Shares within one year of buying them.
These time periods include the time you held Class B or Class C Shares
which you may have exchanged for Class B or Class C Shares of the Funds.
The CDSC schedule for Class B shares purchased after June 27, 1995 is set
forth below. See the SAI for the CDSC schedule for Class B Shares purchased
before that time. The CDSC is based on the original net asset value at the time
of your investment or the net asset value at the time of redemption, whichever
is lower.
36
<PAGE>
CLASS B SHARES
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE CDSC
- -------------------- ----
<S> <C>
First....................................................................................................... 5.00%
Second...................................................................................................... 4.00%
Third....................................................................................................... 3.00%
Fourth...................................................................................................... 3.00%
Fifth....................................................................................................... 2.00%
Sixth....................................................................................................... 1.00%
Seventh and thereafter...................................................................................... 0.00%
</TABLE>
The Distributor pays sales commissions of 4.00% of the purchase price of
Class B Shares of the Funds to brokers at the time of sale that initiate and are
responsible for purchases of such Class B Shares of the Funds.
You will not pay a CDSC to the extent that the value of the redeemed shares
represents:
. reinvestment of dividends or capital gains distributions
. capital appreciation of shares redeemed.
When you redeem shares, we will assume that you are redeeming first shares
representing reinvestment of dividends and capital gains distributions, then any
appreciation on shares redeemed, and then remaining shares held by you for the
longest period of time. We will calculate the holding period of shares of a
Fund acquired through an exchange of shares of the Munder Money Market Fund from
the date that the shares of the Fund were initially purchased.
CDSC WAIVERS. We will waive the CDSC payable upon redemptions of shares
which you purchased after June 27, 1995 for:
. redemptions made within one year after the death of a shareholder or
registered joint owner
. minimum required distributions made from an IRA or other retirement
plan account after you reach age 70 1/2
. involuntary redemptions made by the Fund
. redemptions limited to 10% per year of an account's NAV. For example,
if you maintain an annual balance of $10,000 you can redeem up to
$1,000 annually free of charge.
Consult the SAI for Class B Share CDSC waivers which apply when you redeem
shares purchased on or before June 27, 1995.
We will waive the CDSC for Class B Shares for all redemptions by Merrill
Lynch Plans if: (i) the Plan is record kept on a daily valuation basis by
Merrill Lynch; or (ii) the Plan is record kept on a daily valuation basis by an
independent record keeper whose services are provided through a contract or
alliance arrangement with Merrill Lynch; or (iii) the Plan has less than 500
eligible employees, as determined by the Merrill Lynch plan conversion manager,
on the date the Plan Sponsor signs the Merrill Lynch Record keeping Service
Agreement.
WHEN CAN I REDEEM SHARES?
You can redeem shares on any Business Day, provided all required documents
have been received by the Transfer Agent. A Fund may temporarily stop redeeming
shares when the NYSE is closed or trading on the NYSE is restricted, when an
emergency exists and the Fund cannot sell its assets or accurately determine the
value of its assets or if the SEC orders the Fund to suspend redemptions.
37
<PAGE>
HOW CAN I REDEEM SHARES?
You may redeem shares of the Funds in several ways:
. BY MAIL. You may mail your redemption request to: THE MUNDER FUNDS C/O
FIRST DATA INVESTOR SERVICES GROUP, P.O. BOX 5130, WESTBOROUGH,
MASSACHUSETTS 01581-5130. The redemption request should state the name
of the Fund, share class, account number, amount of redemption, account
name and where to send the proceeds. All account owners must sign. If a
stock certificate has been issued to you, you must endorse the stock
certificate and return it together with the written redemption request.
A SIGNATURE GUARANTEE is required for the following redemption
requests: (a) redemptions proceeds greater than $50,000; (b) redemption
proceeds not being made payable to the owner of the account; (c)
redemption proceeds not being mailed to the address of record on the
account or (d) if the redemption proceeds are being transferred to
another Munder Funds account with a different registration. You can
obtain a signature guarantee from a financial institution such as a
commercial bank, trust company, savings association or from a securities
firm having membership on a recognized securities exchange.
. BY TELEPHONE. You can redeem your shares by calling your broker or the
Funds at (800) 438-5789. There is no minimum requirement for telephone
redemptions paid by check. The Transfer Agent may deduct a wire fee
(currently $7.50) for wire redemptions under $5,000.
If you are redeeming at least $1,000 of shares and you have
authorized expedited redemption on your Account Application Form, simply
call the Fund prior to 4:00 p.m. (Eastern Time), and request the funds
be mailed to the commercial bank or registered broker-dealer you
designated on your Account Application Form. We will send your
redemption amount to you on the next Business Day. We reserve the right
at any time to change or impose fees for this expedited redemption
procedure.
We record all telephone calls for your protection and take measures
to identify the caller. If the Transfer Agent properly acts on telephone
instructions and follows the reasonable procedures to ensure against
unauthorized transactions, neither the Trust, the Company, the
Distributor nor the Transfer Agent will be responsible for any losses.
If these procedures are not followed, the Transfer Agent may be liable
to you for losses resulting from unauthorized instructions.
During periods of unusual economic or market activity, you may
experience difficulties or delays in effecting telephone redemptions. In
such cases you should consider placing your redemption request by mail.
. AUTOMATIC WITHDRAWAL PLAN ("AWP"). If you have an account value of
$2,500 or more in a Fund, you may redeem shares on a monthly, quarterly,
semi-annual or annual basis. The minimum withdrawal is $50. We usually
process withdrawals on the 20th day of the month and promptly send you
your redemption amount. You may enroll in the AWP by completing the AWP
Application Form available through the Transfer Agent. To participate in
the AWP you must have your dividends automatically reinvested and may
not hold share certificates. You may change or cancel the AWP at any
time upon notice to the Transfer Agent. You should not buy Class A
Shares (and pay a sales charge) while you participate in the AWP and you
must pay any applicable CDSC's when you redeem shares.
. INVOLUNTARY REDEMPTION. We may redeem your account if its value falls
below $250 as a result of redemptions (but not as a result of a decline
in net asset value). You will be notified in writing and allowed 60 days
to increase the value of your account to the minimum investment level.
38
<PAGE>
. FREE CHECKWRITING. Free checkwriting is available to holders of Class A
Shares of the Funds (other than the International Bond Fund) who
complete the Signature Card Section of the Account Application Form. You
may write checks in the amount of $500 or more but you may not close a
Fund account by writing a check. We may change or terminate this program
on 30 days' notice to you.
WHEN WILL I RECEIVE REDEMPTION AMOUNTS?
We will typically send redemption amounts to you within seven Business Days
after you redeem shares. We may hold redemption amounts from the sale of shares
you purchased by check until the purchase check has cleared, which may be as
long as 15 days.
STRUCTURE AND MANAGEMENT OF THE FUNDS
HOW ARE THE FUNDS STRUCTURED?
The Trust and the Company are each an open-end management investment
company, which is a mutual fund that sells and redeems shares every day that it
is open for business. They are managed under the direction of their governing
Boards of Trustees and Directors, which are responsible for the overall
management of the Trust and the Company supervise the Funds' service providers.
The Trust is organized as Massachusetts business trust and the Company is a
Maryland corporation.
WHO MANAGES AND SERVICES THE FUNDS?
INVESTMENT ADVISOR. The Funds' investment advisor is Munder Capital
Management, a Delaware general partnership with its principal offices at 480
Pierce Street, Birmingham, Michigan 48009. The principal partners of the
Advisor are MCM, Munder Group LLC and WAM Holdings, Inc. ("WAM"). MCM was
founded in April, 1985 as a Delaware corporation and was a registered investment
advisor. WAM is an indirect, wholly-owned subsidiary of Comerica Incorporated
which owns or controls approximately 88% of the partnership interests in the
Advisor. As of June 30, 1998, the Advisor and its affiliates had approximately
$48.2 billion in assets under management, of which $25.4 billion were invested
in equity securities, $8.1 billion were invested in money market or other short-
term instruments, $9.2 billion were invested in other fixed income securities
and $5.5 billion in non-discretionary assets.
During the fiscal year ended June 30, 1998, the Advisor was paid an
advisory fee at an annual rate based on the average daily net assets of each
Fund (after waivers, if any) as follows:
<TABLE>
<S> <C>
Bond Fund...................................................................... 0.50%
Intermediate Bond Fund......................................................... 0.50%
International Bond Fund........................................................ 0.50%
U.S. Government Income Fund.................................................... 0.50%
Michigan Triple Tax-Free Fund.................................................. 0.50%
Tax-Free Bond Fund............................................................. 0.50%
Tax-Free Intermediate Bond Fund................................................ 0.50%
</TABLE>
The Advisor may, from time to time, make payments to banks, broker-dealers
or other financial institutions for certain services to the Funds and/or their
shareholders, including sub-administration, sub-transfer agency and shareholder
servicing. The Advisor makes such payments out of its own resources and there
are no additional costs to the Funds or their shareholders.
The Advisor selects broker-dealers to execute portfolio transactions for
the Funds based on best price and execution terms. The Advisor may consider as
a factor the number of shares sold by the broker-dealer.
39
<PAGE>
TRANSFER AGENT. First Data Investor Services Group, Inc. is the Funds'
transfer agent. The Transfer Agent is a wholly-owned subsidiary of First Data
Corporation and is located at 53 State Street, Boston, Massachusetts 02109.
ADMINISTRATOR. State Street Bank and Trust Company ("State Street" or
"Administrator") is the Funds' administrator. State Street is located at 225
Franklin Street, Boston, Massachusetts 02110. State Street generally assists
the Company and the Trust in all aspects of its administration and operations
including overseeing the maintenance of financial records and fund accounting.
As compensation for its services, State Street is entitled to receive fees,
based on the aggregate daily net assets of the Funds and certain other
investment portfolios that are advised by the Advisor for which it provides
services, computed daily and payable monthly at the annual rate of 0.113% on the
first $2.8 billion of net assets, plus 0.103% on the next $2.2 billion of net
assets, plus 0.101% on the next $2.5 billion of net assets, plus 0.095% on the
next $2.5 billion of net assets, plus 0.080% on the next $2.5 billion of net
assets, plus 0.070% on all net assets in excess of $12.5 billion (with a $75,000
minimum fee per annum in the aggregate for all portfolios with respect to the
Administrator).
State Street has entered into a Sub-Administration Agreement with the
Distributor under which the Distributor provides certain administrative services
with respect to the Funds. State Street pays the Distributor a fee for these
services out of its own resources at no cost to the Funds.
CUSTODIAN AND SUB-CUSTODIAN. Comercia Bank ("Comerica" or the
"Custodian"), whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, Michigan 48226, is the Funds' custodian. No
compensation is paid to the Custodian for its custodial services. Comerica
receives a fee of 0.01% of the aggregate average daily net assets of the Funds
beneficially owned by Comerica and its customers for certain shareholder
services provided by Comerica to the Funds. State Street serves as the Funds'
sub-custodian.
DISTRIBUTOR. Funds Distributor, Inc. is the distributor of the Funds'
shares and is located at 60 State Street, Boston, Massachusetts 02109. It
markets and sells the Funds' shares.
For an additional description of the services performed by the
Administrator, the Transfer Agent, the Custodian, the Sub-Custodian and the
Distributor, see the SAI.
DISTRIBUTION SERVICES ARRANGEMENT
Under Rule 12b-1 of the Investment Company Act of 1940, as amended, the
Funds have adopted Service Plans with respect to their Class A Shares and
Service and Distribution Plans with respect to their Class B and Class C Shares.
Under the Plans, each Fund uses its assets to finance activities relating to the
distribution of its shares to investors and the provision of certain shareholder
services. The Distributor is paid a service fee at an annual rate of up to
0.25% of the value of average daily net assets of the Funds' Class A Shares.
The Distributor also is paid a service fee at an annual rate of 0.25% and a
distribution fee at an annual rate of up to 0.75% of the value of the average
daily net assets of the Funds' Class B and Class C Shares. The Distributor uses
the service fees primarily to pay ongoing trail commissions to securities
dealers (which may include the Distributor itself) and other financial
organizations which provide shareholder services for the Funds. These services
include, among other things, processing new shareholder account applications,
reporting to the Fund's Transfer Agent all transactions by customers and serving
as the primary information source to customers concerning the Funds.
WHAT ARE MY RIGHTS AS A SHAREHOLDER?
All shareholders have equal voting, liquidation and other rights. You are
entitled to one vote for each share you hold and a fractional vote for each
fraction of a share you hold. You will be asked to vote on matters affecting
the Trust and the Company as a whole and affecting your particular Fund. You
will not vote by Class unless expressly required by law or when the Trustees or
Directors determine the matter to be voted on affects only the interests of the
holders of a particular class of shares. The Trust and the Company will not
hold annual shareholder meetings, but special meetings may be held at the
written request of shareholders owning more than 10% of outstanding shares for
the purpose of removing a Trustee or Director. Under Massachusetts law, it is
possible that a
40
<PAGE>
shareholder may be personally liable for the Trust's obligations. If a
shareholder were required to pay a debt of a Fund, however, the Trust has
committed to reimburse the shareholder in full from its assets. The SAI contains
more information regarding voting rights .
Comerica currently has the right to vote a majority of the outstanding
shares of the Funds as agent, custodian or trustee for its customers and
therefore it is considered to be a controlling person of the Trust and the
Company.
DIVIDENDS, DISTRIBUTIONS AND TAXES
WHEN WILL I RECEIVE DISTRIBUTIONS FROM THE FUNDS?
As a shareholder, you are entitled to your share of net income and capital
gains, if any, on a Fund's investments. The Funds pass their earnings along to
investors in the form of dividends. Dividend distributions are the dividends or
interest earned on investments after expenses. The International Bond Fund pays
dividends quarterly. The other Funds pay dividends monthly. Each Fund
distributes its net realized capital gains (including net short-term capital
gains), if any, at least annually.
HOW WILL DISTRIBUTIONS BE MADE?
The Funds will pay dividend and capital gains distributions in additional
shares of the same class of a Fund. If you wish to receive distributions in
cash, either indicate this request on your Account Application Form or notify
the Funds at (800) 438-5789.
ARE THERE TAX IMPLICATIONS OF MY INVESTMENTS IN THE FUNDS?
This section contains a brief summary of the tax implications of ownership
in the Funds' shares. A more detailed discussion of Federal income tax
considerations is contained in the SAI. You should consult your tax advisor
regarding the impact of owning the Funds' shares on your own personal tax
situation including the applicability of any state and local taxes.
In general, as long as each Fund meets the requirements to qualify as a
regulated investment company ("RIC") under Federal tax laws, it will not be
subject to Federal income tax on its income and capital gains that it
distributes in a timely manner to its shareholders. Each Fund intends to
qualify annually as a RIC. Even if it qualifies as a RIC, a Fund may still be
liable for an excise tax on income that is not distributed in accordance with a
calendar year requirement; the Funds intend to avoid the excise tax by making
timely distributions.
Generally, you will owe tax on the amounts distributed to you, regardless
of whether you receive these amounts in cash or reinvest them in additional Fund
shares. Shareholders not subject to tax on their income generally will not be
required to pay any tax on amounts distributed to them. Federal income tax on
distributions to an IRA or to a qualified retirement plan will generally be
deferred.
Capital gains derived from sales of portfolio securities held by a Fund
will generally be designated as long-term or short-term. Distributions from a
Fund's long-term capital gains are generally taxed at the long-term capital
gains rate regardless of how long you have owned shares in the Fund. Dividends
from other sources are generally taxed as ordinary income.
Dividends and capital gain distributions are generally taxable when you
receive them; however, if a distribution is declared in October, November or
December, but not paid until January of the following year, it will be
considered to be paid on December 31 in the year in which it was declared.
Shortly after the end of each year, you will receive from each Fund in which you
are a shareholder a statement of the amount and nature of the distributions made
to you during the year.
41
<PAGE>
If you redeem, transfer or exchange Fund shares, you may have taxable gain
or a loss. If you hold Fund shares for six months or less, and during that time
you receive a capital gain dividend, any loss you realize on the sale of these
Fund shares will be treated as a long-term loss to the extent of the earlier
distribution.
Dividends and certain interest income earned from foreign securities by a
Fund may be subject to foreign withholding or other taxes. A Fund may be
permitted to pass on to its shareholders the right to a credit or deduction for
income or other tax credits earned from foreign investments and will do so if
possible. These deductions or credits may be subject to tax law limitations.
If a Fund invests in certain "passive foreign investment companies"
("PFICs"), it will be subject to Federal income tax (and possibly additional
interest charges) on a portion of any "excess distribution" or gain from the
disposition of such shares, even if it distributes such income to its
shareholders. If a Fund elects to treat a PFIC as a "qualified electing fund"
("QEF") and the PFIC furnishes certain financial information in the required
form to such Fund, the Fund will instead be required to include in income each
year its allocable share of the ordinary earnings and net capital gains on the
QEF, regardless of whether received, and such amounts will be subject to the
various distribution requirements described above. The Funds may also elect to
mitigate the tax effects of owning PFIC stock by making an annual mark-to-
market election with respect to PFIC shares.
ADDITIONAL INFORMATION
SHAREHOLDER COMMUNICATIONS. You will receive unaudited Semi-Annual Reports
and Audited Annual Reports on a regular basis from the Funds. In addition, you
will also receive updated Prospectuses or Supplements to this Prospectus. In
order to eliminate duplicate mailings the Funds will only send one copy of the
above communications to (1) accounts with the same primary record owner, (2)
joint tenant accounts, (3) tenant in common accounts and (4) accounts which have
the same address.
YEAR 2000. The Funds' operations depend on the seamless functioning of
computer systems in the financial service industry, including those of its
service providers. Many computer software systems in use today cannot properly
process date-related information after December 31, 1999 because of the method
by which dates are encoded and calculated. This failure, commonly referred to as
the "Year 2000 Issue," could adversely affect the handling of securities trades,
pricing and account servicing for the Funds. The Funds have been informed that
their major service providers have made compliance with the Year 2000 Issue a
high priority and are taking steps that they believe are reasonably designed to
address the Year 2000 Issue with respect to their computer systems. There can
be, however, no assurance that these steps will be successful, or that
interaction with other non-complying computer systems will not impair their
services at that time.
42
<PAGE>
CLASS A, B & C SHARES
Prospectus
October 27, 1998
THE MUNDER MONEY MARKET FUNDS
Cash Investment
Money Market
Tax-Free Money Market
U.S. Treasury Money Market
Prospectus begins on next page
<PAGE>
PROSPECTUS
CLASS A, CLASS B AND CLASS C SHARES
The Munder Funds Trust (the "Trust") and The Munder Funds, Inc. (the
"Company") are open-end investment companies. This Prospectus describes three
investment portfolios offered by the Trust (the "Trust Funds") and the Money
Market Fund offered by the Company (collectively, the "Funds"):
Munder Cash Investment Fund
Munder Money Market Fund
Munder Tax-Free Money Market Fund
Munder U.S. Treasury Money Market Fund
Munder Capital Management (the "Advisor") serves as the investment advisor
of the Funds. Only Class A Shares of the Trust Funds are currently offered for
sale to retail investors. Class A, Class B and Class C Shares of the Money
Market Fund may be acquired only through an exchange of shares from the
corresponding classes of other funds of the Company, the Trust or Munder
Framlington Funds Trust ("Framlington").
This Prospectus explains the objectives, policies, risks and fees of each
Fund. You should read this Prospectus carefully before investing and retain it
for future reference. A Statement of Additional Information ("SAI") describing
each of the Funds has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated by reference into this Prospectus. You can
obtain the SAI free of charge by calling the Funds at (800) 438-5789. In
addition, the SEC maintains a Web site (http://www.sec.gov) that contains the
SAI and other information regarding the Funds.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED OR GUARANTEED. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF THE PRINCIPLE AMOUNT INVESTED.
ALTHOUGH THE FUNDS SEEK TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1.00 PER
SHARE, THERE CAN BE NO ASSURANCE THAT THE FUNDS CAN DO SO ON A CONTINUING BASIS.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES:
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS OCTOBER 27, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Highlights
What are the key facts regarding the Funds?.................. 3
Financial Information............................................. 5
Fund Choices
What Funds are offered?...................................... 13
Who may want to invest in the Funds?......................... 13
What are the Funds' investments and investment practices?.... 14
What are the risks of investing in the Funds?................ 16
Performance
How is the Funds' performance calculated?.................... 16
Where can I obtain performance data?......................... 17
Purchases and Exchanges of Shares
What price do I pay for shares?.............................. 17
When can I purchase shares?.................................. 17
What is the minimum required investment?..................... 17
How can I purchase shares?................................... 17
How can I exchange shares?................................... 18
Redemptions of Shares
What price do I receive for redeemed shares?................. 19
When can I redeem shares?.................................... 20
How can I redeem shares?..................................... 20
When will I receive redemption amounts?...................... 21
Structure and Management of the Funds
How are the Funds structured?................................ 21
Who manages and services the Funds?.......................... 21
What are my rights as a shareholder?......................... 22
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?............ 23
How will distributions be made?.............................. 23
Are there tax implications of my investments in the Funds?... 23
Additional Information............................................ 24
</TABLE>
2
<PAGE>
FUND HIGHLIGHTS
WHAT ARE THE KEY FACTS REGARDING THE FUNDS?
Q: What are the Funds' goals?
A:
. The Cash Investment Fund and U.S. Treasury Money Market Fund seek as high a
level of current interest income as is consistent with maintaining
liquidity and stability of principal.
. The Money Market Fund seeks to provide current income consistent with the
preservation of capital and liquidity.
. The Tax-Free Money Market Fund seeks to provide as high a level of current
interest income exempt from Federal income taxes as is consistent with
maintaining liquidity and stability of principal.
Q: What are the Funds' strategies?
A: The Funds invest solely in dollar-denominated debt securities with remaining
maturities of 13 months or less and maintain an average dollar-weighted
portfolio maturity of 90 days or less.
Q: What are the Funds' risks?
A: It is expected that the Funds will maintain a net asset value of $1.00 per
share, although there is no assurance that they will be able to do so on a
continuous basis. A Fund's performance per share may change daily based on many
factors, including interest rate levels, the quality of the instruments in the
Fund's investment portfolio, national and international economic conditions and
general market conditions.
Q: What are the options for investment in the Funds?
A: The Money Market Fund offers four different investment options, or classes:
Class A, B, C and Y. The Trust Funds offer only Class A, Class K and Class Y
Shares. Class K and Class Y Shares, which are offered only to institutional and
other qualified investors, are offered in other prospectuses.
<TABLE>
<CAPTION>
Maximum Front Maximum
CLASS RULE 12b-1 FEES* END SALES LOAD** CDSC***
- ----- ----------------- ---------------- --------
<S> <C> <C> <C>
Class A 0.25% None None
Class B 1% None 5%
Class C 1% None 1%, if redeemed within 1
year of purchase
</TABLE>
____________
* An annual fee for distributing shares and servicing shareholder accounts
based on the Fund's average daily net assets.
** A one-time fee charged at the time of purchase of shares.
*** A contingent deferred sales charge ("CDSC") is a one-time fee charged at
the time of redemption. The fee declines based on the length of time you
hold the shares.
Class B Shares convert automatically to Class A Shares after six years. Due
to the level of Rule 12b-1 fees on Class B Shares versus Class A or Class C
Shares, this conversion is to your economic benefit.
Q: How do I buy and sell shares of the Funds?
A: This Prospectus offers to investors one class of shares of the Trust Funds,
Class A Shares. The Money Market Fund offers Class A, Class B and Class C
Shares which may be acquired only through an exchange of shares of the
corresponding classes of another fund of the Company, the Trust or Framlington.
Funds Distributor, Inc. (the "Distributor") sells shares of the Funds. You may
purchase Class A Shares from the Distributor through broker- dealers or other
financial institutions or from the Funds' transfer agent, First Data Investor
Services Group, Inc. (the
3
<PAGE>
"Transfer Agent"), by mailing the attached Account Application Form with a
check to the Transfer Agent. You must invest at least $250 through the Automatic
Investment Plan) initially and at least $50 for subsequent purchases.
Shares may be redeemed (sold back to the Fund) by mail.
You may also acquire the Funds' shares by exchanging shares of the same class
of other funds of the Company, Munder and Framlington, and exchange Fund shares
for shares of the same class of other funds of the Company, Munder and
Framlington.
Q: What shareholder privileges do the Funds offer?
<TABLE>
<S> <C> <C> <C>
A: Class A Shares Class B Shares Class C Shares
------------------------------------ --------------------------------- -------------------------------------
Automatic Investment Plan Automatic Investment Plan Automatic Investment Plan
Automatic Withdrawal Plan Automatic Withdrawal Plan Automatic Withdrawal Plan
Telephone Exchanges Telephone Exchanges Telephone Exchanges
Free Checkwriting
</TABLE>
Q: When and how are distributions made?
A: Dividend distributions are made from the dividends and interest earned on
investments after expenses. The Funds declare dividends daily and pay them
monthly. The Funds distribute capital gains at least annually. Unless you
elect to receive distributions in cash, we will use all dividends and capital
gain distributions of a Fund to purchase additional shares of that Fund.
Q: Who manages the Funds' assets?
A: Munder Capital Management is the Funds' investment advisor. The Advisor is
responsible for all purchases and sales of the securities held by the Funds.
4
<PAGE>
FINANCIAL INFORMATION
SHAREHOLDER TRANSACTION EXPENSES(1)
The purpose of this table is to assist you in understanding the expenses a
shareholder in the Funds will bear directly.
<TABLE>
<CAPTION>
CASH INVESTMENT FUND
TAX-FREE MONEY MARKET FUND
U.S. TREASURY MONEY MARKET FUND MONEY MARKET FUND
------------------------------- -----------------
CLASS A CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES
------------------------------- -------- -------- --------
<S> <C> <C> <C> <C>
Maximum Sales Charge
on Purchase (as a % of Offering
Price)............................... None None None None
Sales Charge Imposed on
Reinvested Dividends.................. None None None None
Maximum Deferred Sales Charge(3)...... None None(2) 5%(3) 1%(4)
Redemption Fees(6)................... None None None None
Exchange Fees......................... None None None None
_____________
</TABLE>
Notes:
(1) Does not include fees which institutions may charge for services they
provide to you.
(2) A 1% CDSC applies to redemptions of shares acquired through the exchange
of Class A Shares of other funds purchased on or after June 27, 1995 as
part of an investment of $1,000,000 or more. See the SAI for a description
of Class A Shares acquired before June 27, 1995.
(3) The CDSC payable on redemption of Class B Shares declines over time.
(4) A 1% CDSC applies to redemptions within one year after the initial
investment in Class C Shares.
(5) The Transfer Agent may deduct a redemption fee of $7.50 for wire
redemptions under $5,000.
FUND OPERATING EXPENSES
The purpose of this table is to assist you in understanding the expenses
charged directly to each Fund, which investors in the Funds will bear indirectly
for the current fiscal year. Such expenses include payments to Trustees,
Directors, auditors, legal counsel and service providers (such as the Advisor),
registration fees, and distribution fees. The fees shown are based on fees for
the Funds' past fiscal year. Because of the 12b-1 fee, you may over the long
term pay more than the amount of the maximum permitted front-end sales charge.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING CLASS A SHARES
-----------------------------------------------------------------------------------
EXPENSES TAX-FREE MONEY U.S. TREASURY MONEY
(AS A % OF AVERAGE NET ASSETS) CASH INVESTMENT FUND MARKET FUND MARKET FUND
- ------------------------------ --------------------- ----------- -----------
<S> <C> <C> <C>
ADVISORY FEES..................... .35% .35% .35%
12B-1 FEES....................... .25% .25% .25%
OTHER EXPENSES................... .20% .18% .19%
---- ---- ----
TOTAL FUND OPERATING EXPENSES..... .80% .78% .79%
==== ==== ====
MONEY MARKET FUND
-----------------------------------------------------------------------------------
EXPENSES
(AS A % OF AVERAGE NET ASSETS) CLASS A SHARES CLASS B SHARES CLASS C SHARES
- ------------------------------ --------------- --------------- ---------------
<S> <C> <C> <C>
ADVISORY FEES..................... .40% .40% .40%
12B-1 FEES....................... .25% 1.00% 1.00%
OTHER EXPENSES.................... .24% .24% .24%
---- ----- ----
TOTAL FUND OPERATING EXPENSES............. .89% 1.64% 1.64%
==== ===== =====
</TABLE>
5
<PAGE>
EXAMPLE
This example shows the amount of expenses you would pay (directly or
indirectly) on a $1,000 investment in the fund assuming (1) a 5% annual return
and (2) redemption at the end of the time periods. THIS EXAMPLE IS NOT A
REPRESENTATION OF PAST OR FUTURE PERFORMANCE OR OPERATING EXPENSES; ACTUAL
OPERATING PERFORMANCE OR EXPENSES MAY BE LARGER OR SMALLER THAN THOSE SHOWN.
<TABLE>
<CAPTION>
CLASS A SHARES
- ------------------------------------------------------------------------------------------------------------------------
TAX-FREE MONEY U.S. TREASURY MONEY
CASH INVESTMENT FUND MONEY MARKET FUND MARKET FUND MARKET FUND
-------------------- ----------------- ----------- -----------
<S> <C> <C> <C> <C>
1 YEAR............... $ 8 $ 9 $ 8 $ 8
3 YEARS.............. $26 $ 28 $25 $25
5 YEARS.............. $44 $ 49 $43 $44
10 YEARS............. $99 $110 $97 $98
</TABLE>
This example shows the amount of expenses you would pay (directly or
indirectly) on a $1,000 investment in Class B Shares, assuming (1) a
hypothetical 5% annual return, (2) redemption at the end of the following time
period and (3) no redemption at the end of the following time periods:
<TABLE>
<CAPTION>
MONEY MARKET FUND
CLASS B SHARES
- --------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS*
------ ------- -------- ---------
NO NO NO NO
REDEMPTION REDEMPTION REDEMPTION REDEMPTION REDEMPTION REDEMPTION REDEMPTION REDEMPTION
- ------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$67 $17 $82 $52 $109 $89 $204 $194
______________________
</TABLE>
* REFLECTS CONVERSION OF CLASS B SHARES TO CLASS A SHARES (WHICH PAY LOWER
ONGOING EXPENSES) APPROXIMATELY SIX YEARS AFTER DATE OF ORIGINAL PURCHASE.
The following example shows the amount of expenses you would pay (directly
or indirectly) on a $1,000 investment in Class C Shares, assuming (1) a
hypothetical 5% annual return, (2) redemption at the end of the following time
periods and (3) no redemption at the end of one year:
<TABLE>
<CAPTION>
MONEY MARKET FUND
CLASS C SHARES
- ------------------------------------------------------------------------------------------------------------------------
1 YEAR
- ----------------------------------
REDEMPTION NO REDEMPTION 3 YEARS 5 YEARS 10 YEARS*
- ------------- ------------------ ---------------------------- --------------------------- ----------------------
<S> <C> <C> <C> <C>
$27 $17 $52 $89 $194
</TABLE>
6
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
7
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights were audited by Ernst & Young LLP,
independent auditors, except that, for the periods ended prior to June 30, 1995
for the Money Market Fund, such financial highlights were audited by another
independent auditor. This information should be read in conjunction with the
funds' most recent annual reports, which are incorporated by referenced into the
SAI. You may obtain the annual reports without charge by calling (800) 438-
5789.
<TABLE>
<CAPTION>
CASH INVESTMENT FUND(a)
--------------------------------------------------
<S> <C> <C> <C> <C>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(d)
CLASS A CLASS A CLASS A CLASS A
----------- ---------- ----------- ------------
Net asset value, beginning of period............................
Income from investment operations:
Net investment income......................................
Total from investment operations...........................
Less distributions:
Dividends from net investment income.......................
Total distributions........................................
Net asset value at end of period................................
Total return (B)...........................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).......................
Ratio of operating expenses to average net assets ..............
Ratio of net investment income to average net assets............
Ratio of operating expenses to average net assets w/o waivers...
- -------------------
</TABLE>
(a) The Munder Cash Investment Fund Class A Shares commenced operations on
December 1, 1992. The Munder Money Market Fund Class A Shares, Class B
Shares and Class C Shares commenced operations on July 3, 1995, February
16, 1994 and October 17, 1996, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February and the fiscal year end for Money Market Fund was
December 31.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Cash Investment Fund as a
result of the consolidation of the investment advisory businesses of
Woodbridge Capital Management, Inc. and Munder Capital Management, Inc.
(f) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Money Market Fund as a
result of the consolidation of the investment advisory businesses of
Woodbridge Capital Management, Inc. and Munder Capital Management, Inc.
8
<PAGE>
<TABLE>
<CAPTION>
CASH INVESTMENT FUND(a) MONEY MARKET FUND(a)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
YEAR YEAR PERIOD YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/95(E) 2/28/94 2/28/93 6/30/98 6/30/97 6/30/96 6/30/98 6/30/97 6/30/96
CLASS A CLASS A CLASS A CLASS A CLASS A CLASS A CLASS B CLASS B CLASS B
- ---------- -------- ------- ------- ------- ------- ------- ------- -------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND(a)
-------------------------------------------------------
<S> <C> <C> <C> <C>
PERIOD PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/95(D,F) 12/31/94 6/30/98 6/30/97
CLASS B CLASS B CLASS C CLASS C
----------- ---------- ------------ -----------
Net asset value, beginning of period......................................
Income from investment operations:
Net investment income.................................................
Total from investmentoperations.......................................
Less distributions:
Dividends from net investment income..................................
Total distributions.......................................................
Net asset value at end of period..........................................
Total return (b)......................................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)..................................
Ratio of operating expenses to average net assets ....................
Ratio of net investment income to average net assets..................
Ratio of operating expenses to average net assets w/o waivers.............
- ----------------
</TABLE>
(a) The Munder Money Market Fund Class A Shares, Class B Shares and Class C
Shares commenced operations on July 3, 1995, February 16, 1994 and October
17, 1996, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February and the fiscal year end for Money Market Fund was
December 31.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Cash Investment Fund as a
result of the consolidation of the investment advisory businesses of
Woodbridge Capital Management, Inc. and Munder Capital Management, Inc.
(f) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Money Market Fund as a
result of the consolidation of the investment advisory businesses of
Woodbridge Capital Management, Inc. and Munder Capital Management, Inc.
10
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND(a)
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98) 6/30/97 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93
CLASS A CLASS A CLASS A CLASS A CLASS A CLASS A CLASS A
--------- -------- -------- -------- --------- --------- --------
Net asset value, beginning of period...............
Income from investment operations:
Net investment income..........................
Total from investment operations...................
Less distributions:
Dividends from net investment income...........
Total distributions............................
Net asset value at end of period...................
Total return (b)...............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)...........
Ratio of operating expenses to average net
assets ........................................
Ratio of net investment income to average
net assets.....................................
Ratio of operating expenses to average
net assets w/o waivers.........................
- --------------------
</TABLE>
(a) The Munder Tax-Free Money Market Fund Class A Shares commenced operations
on November 29, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
11
<PAGE>
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND (a)
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93
CLASS A CLASS A CLASS A CLASS A CLASS A CLASS A CLASS A
---------- ---------- -------- ----------- --------- ----------- -------
Net asset value, beginning of
period...............................
Income from investment
operations:
Net investment income............
Total from investment operations.
Less distributions:
Dividends from net
investment income................
Total distributions..............
Net asset value at end of period.....
Total return (b).................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's)...........................
Ratio of operating expenses
to average net assets ...........
Ratio of net investment
income to average net assets.....
Ratio of operating expenses
to average net assets w/o
waivers..........................
- ------------
</TABLE>
(a) The Munder U.S. Treasury Money Market Fund Class A Shares commenced
operations on November 24, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
12
<PAGE>
FUND CHOICES
WHAT FUNDS ARE OFFERED?
This Prospectus describes Class A Shares of the Cash Investment Fund, U.S.
Treasury Money Market Fund and Tax-Free Money Market Fund and Class A, B and C
Shares of the Money Market Fund. This section summarizes each Fund's goal and
principal investments. The sections entitled "What are the Funds' Investments
and Investment Practices?" and "What are the Risks of Investing in the Funds?"
and the SAI give more information about the Funds' investment techniques and
risks. Capitalized terms are explained in the section entitled "What are the
Funds' Investments and Investment Practices?"
CASH INVESTMENT FUND
. The Fund's primary goal is to provide as high a level of current
interest income as is consistent with maintaining liquidity and
stability of principal.
. The Fund invests in a broad range of short-term, high quality, U.S.
dollar-denominated instruments.
U.S. TREASURY MONEY MARKET FUND
. The Fund's goal is to provide as high a level of current interest
income as is consistent with maintaining liquidity and stability of
principal.
. The Fund invests its assets solely in short-term bonds, bills and
notes issued by the U.S. Treasury (including "stripped" securities),
and in repurchase agreements relating to such obligations.
TAX-FREE MONEY MARKET FUND
. The Fund's goal is to provide as high a level of current interest
income exempt from Federal income taxes as is consistent with
maintaining liquidity and stability of principal.
. The Fund invests substantially all of its assets in short-term, U.S.
dollar-denominated Municipal Obligations, the interest on which is
exempt from regular Federal income tax.
. Under normal market conditions, the Fund will invest at least 80% of
its net assets in Municipal Obligations.
MONEY MARKET FUND
. The Fund's goal is to provide current income consistent with the
preservation of capital and liquidity.
. The Fund invests its assets in a broad range of short-term, high
quality, U.S. dollar-denominated instruments, such as bank,
commercial and other obligations (including Federal, state and local
government obligations) that are available in the money markets.
WHO MAY WANT TO INVEST IN THE FUNDS?
The Funds are designed for investors who desire a high level of income and
liquidity, and stability of principal. The Munder Money Market Fund is also
designed to be acquired by the exchange of shares of other Munder Funds for
investors who: (1) own other Munder Funds; (2) wish to be out of the market
temporarily; and (3) do not desire to incur redemption fees or sales charges.
The Funds invest their assets conservatively and as a result, they will not earn
as high a level of current income as funds that invest in longer-term or lower
quality debt securities or equity securities. Investors who are more aggressive
in their investment approach or who desire a higher rate of return may wish to
invest in other funds offered by the Trust, the Company and Framlington.
13
<PAGE>
WHAT ARE THE FUNDS' INVESTMENTS AND INVESTMENT PRACTICES?
Each Fund will invest primarily in ELIGIBLE SECURITIES (as defined by the
SEC) with remaining maturities of 397 days or less as defined by the SEC
(although securities subject to repurchase agreements, variable and floating
rate securities and certain other securities may bear longer maturities), and
the dollar-weighted average portfolio maturity of each Fund will not exceed 90
days. Eligible Securities consist of securities that are determined by the
Advisor, under guidelines established by the Boards of Trustees and Directors,
to present minimal credit risk. Each Fund may also hold uninvested cash pending
investment of late payments for purchase orders or during temporary defensive
periods.
Each Fund may BORROW MONEY in an amount up to 5% of its assets for
temporary purposes and in an amount up to 33 1/3% of its assets to meet
redemptions. This is a "fundamental" policy which can be changed only by
shareholders.
Each of the Funds may LEND SECURITIES to broker-dealers and other
financially sound institutional investors who will pay the Funds for the use of
the securities, thus increasing the Funds' returns. The borrower must set aside
cash or liquid securities equal to the value of the securities borrowed at all
times during the term of the loan. Loans may not exceed 25% of each Fund's
(except the Money Market Funds) total assets and 33 1/3% of the Money Market
Funds total assets. Risks involved in such transactions include possible delay
in recovering the loaned securities and possible loss of the securities or the
collateral if the borrower declares bankruptcy.
Investment Chart
The following chart summarizes the Funds' investments and investment
practices. The SAI contains more details. All percentages are based on a
Fund's total assets except where otherwise noted. See "What are the Risks of
Investing in the Funds?" for a description of the risks involved with the Funds'
investment practices.
14
<PAGE>
MONEY MARKET FUNDS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY
INVESTMENTS AND CASH MONEY TAX-FREE MONEY
INVESTMENT PRACTICES INVESTMENT MARKET MONEY MARKET MARKET
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL REVENUE OBLIGATIONS. Obligations the interest on
which is paid solely from the revenues of similar projects. N N Y N
- ------------------------------------------------------------------------------------------------------------------------------------
CORPORATE OBLIGATIONS.
. Commercial paper (including paper of Canadian
companies, Y Y N N
Canadian branches of U.S. companies, and Europaper)
. Corporate bonds Y Y N N
. Other short-term obligations Y Y N N
. Variable master demand notes Y Y N N
. Bond debentures Y Y N N
. Notes. Y Y N N
- ------------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Include debt securities backed by mortgages,
installment sales contracts and credit card receivables. Y Y N N
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS.
. Issued or guaranteed by U.S. Government Y Y N Y
. Issued or guaranteed by U.S. Government Agencies and Y Y N N
instrumentalities.
- ------------------------------------------------------------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. dollar denominated bank obligations, including
certificates of deposit, bankers' acceptances, bank notes, time Y Y N N
deposits issued by U.S. or foreign banks or savings institutions having
total assets in excess of $1 billion.
- ------------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES.
. Participation in trusts that hold U.S. Treasury and agency Y Y Y N
securities
. U.S. Treasury-issued receipts Y Y Y 35%
. Non-U.S. Treasury receipts. Y Y Y N
- ------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS. Payable from the issuer's general revenue, the No more than
revenue of a specific project, current revenues or a reserve fund. 5% 5% 25% in any one N
state
- ------------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. A Fund agrees to purchase securities from a
seller and the seller agrees to repurchase the securities at a later Y Y N Y
time at a set price (maturities less than 397 days).
- ------------------------------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund sells securities and agrees to buy
them back later at an agreed upon time and price. A method to borrow Y Y N Y
money for temporary purposes.
- ------------------------------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS. Agreements by a Fund to make payments
to an insurance company's general account in exchange for a minimum Y Y N N
level of interest based on an index.
- -----------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS. Securities issued by other investment Y Y Y Y
companies which invest in short-term debt securities and (1940 Act (1940 Act (1940 Act (1940 Act limits)
seek to maintain $1.00 net asset vale per share used only limits) limits) limits)
to manage daily cash portions.
- ------------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Agreements
by a Fund to purchase securities at a set price, with delivery [25%] [25%] [25%] [25%]
and payment in the future. The value of securities may change between
the time the price is set and payment. Not to be used for speculation.
- ------------------------------------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Debt obligations issued by foreign governments,
and their agencies, instrumentalities or political subdivisions, 25% 25% N N
supranational organizations and foreign corporations. Does not
include Bank Obligations.
- ------------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready market for these
securities, which inhibits the ability to sell them for full market 10%(1) 10%(1) 10%(1) 10%(1)
value, or there are legal restrictions on their resale by the Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend securities to financial institutions
which pay for the use of the securities. May increase return. Slight 25% 331/3% 25% 25%
risk of borrower failing financially.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Key:
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1) BASED ON NET ASSETS.
15
<PAGE>
WHAT ARE THE RISKS OF INVESTING IN THE FUNDS?
Each Fund attempts to maintain a constant net asset value of $1.00 per
share. However, your investment in the Funds is not guaranteed. By itself, no
Fund is a balanced investment program and there is no guarantee that any Fund
will achieve its investment objective since there is uncertainty in every
investment.
A Fund's risk is mostly dependent on the types of securities it purchases
and its investment techniques. Because the Funds invest mostly in debt
instruments, rises and falls in interest rate levels in general, as well as in
the value of the instruments in the Funds' portfolios, can affect the Funds'
performance.
The Cash Investment Fund and Money Market Fund may invest in securities of
foreign issuers. Foreign securities are generally considered to be riskier than
securities issued by U.S. companies due to factors such as freezes on
convertibility of currency, the rise and fall of foreign currency exchange
rates, political instability and differences in accounting and reporting
standards.
Although the Cash Investment Fund, Money Market Fund and U.S. Treasury
Money Market Fund expect under normal market conditions to be as fully invested
as possible, each Fund may hold uninvested cash pending investment of late
payments for purchase orders (or other payments) or during temporary defensive
periods. Uninvested cash will not earn income. In general, investments in the
Cash Investment Fund, Money Market Fund and U.S. Treasury Money Market Fund will
not earn as high a level of current income as longer-term or lower quality
securities. Longer-term and lower quality securities, however, generally have
less liquidity, greater market risk and more fluctuation in market value.
Although the Tax-Free Money Market Fund may invest more than 25% of its net
assets in municipal revenue obligations, the interest on which is paid solely
from revenues of similar projects, the Tax-Free Money Market Fund does not
intend to do so on a regular basis. If it does, the Fund will be riskier than a
fund which does not concentrate to such an extent on similar projects.
The risks of the various investment techniques the Funds use are described
in more detail in the SAI.
PERFORMANCE
HOW IS THE FUNDS' PERFORMANCE CALCULATED?
The current yield of shares in the Funds refers to the net income generated
by an investment in shares over a seven-day period (which period will be stated
in the advertisement). This income is then "annualized." That is, the amount of
income generated by the investment during that week is assumed to be generated
each week over 52-week period and is shown as a percentage of the investment.
"Effective yield" is calculated similarly but, when annualized, the income
earned by an investment in a class is assumed to be reinvested. The "effective
yield" will be slightly higher than the "yield" because of the compounding
effect of this assumed reinvestment. The "tax-equivalent yield" of shares of
the Tax-Free Money Market Fund which may also be quoted from time to time, shows
the level of taxable yield needed to produce an after-tax equivalent to the tax-
free yield of a particular class. This is done by increasing the yield
(calculated as above) by the amount necessary to reflect the payment of Federal
and/or state income taxes at a stated rate.
Each Fund may compare its performance to that of other mutual funds, such
as the performance of similar funds reported by Lipper Analytical Services, Inc.
or information reported in national financial publications (such as Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times) or
in local or regional publications. The Funds may report how they are performing
in comparison to the Consumer Price Index, an indication of inflation reported
by the U.S. Government.
16
<PAGE>
WHERE CAN I OBTAIN PERFORMANCE DATA?
The Wall Street Journal and certain local newspapers report information on
the performance of mutual funds. In addition, performance information is
contained in the Funds' annual report dated June 30 of each year and semi-annual
report dated December 31 of each year, which will automatically be mailed to
shareholders. To obtain copies of financial reports or performance information,
call (800) 438-5789.
PURCHASES AND EXCHANGES OF SHARES
WHAT PRICE DO I PAY FOR SHARES?
The purchase price for Class A Shares is the Fund's net asset value ("NAV")
next determined after a purchase order in proper form and payment are received.
You should be aware that broker-dealers (other than the Funds' Distributor) may
charge investors additional fees if shares are purchased through them.
Except in certain limited circumstances, each Fund determines its NAV on
each day the New York Stock Exchange ("NYSE") is open for trading (a "Business
Day") at 2:45 p.m. (Eastern time) and at the close of trading on the NYSE
(normally 4:00 p.m. Eastern time). If we receive your purchase order and
payment by 2:45 p.m. on a Business Day, you will receive dividends on that day.
Each Fund calculates NAV separately for each class of shares. NAV is calculated
by totaling the value of all of the assets of a Fund allocated to a particular
class of shares, subtracting the Fund's liabilities and expenses charged to that
class and dividing the result by the number of shares of that class outstanding.
WHEN CAN I PURCHASE SHARES?
Shares of each Fund are sold on a continuous basis and can be purchased on
any Business Day.
WHAT IS THE MINIMUM REQUIRED INVESTMENT?
The minimum initial investment for Class A Shares of a Trust Fund is $250
and subsequent investments must be at least $50.
HOW CAN I PURCHASE SHARES?
You can purchase Class A Shares in a number of different ways. You may
place orders for Class A Shares directly through the Transfer Agent or the
Distributor or through arrangements with your authorized broker. Class A, Class
B and Class C Shares of the Money Market Fund may be acquired only through an
exchange of shares from the corresponding class of another Fund of the Company,
the Trust or Framlington.
. BY BROKER. Any broker authorized by the Distributor can sell you Class
A Shares of the Funds. Please note that brokers may charge you fees for
their services.
. BY MAIL. You may open an account by completing, signing and mailing the
attached Account Application Form and a check or other negotiable bank
draft (payable to The Munder Funds) for $250 or more to: THE MUNDER
FUNDS, C/O FIRST DATA INVESTOR SERVICES GROUP, P.O. BOX 5130,
WESTBOROUGH, MASSACHUSETTS 01581-5130. For additional investments send a
letter stating the Fund and share class you wish to purchase, your name
and your account number with a check for $50 or more to the address
listed above.
. BY WIRE. To open a new account, you should call the Funds at (800) 438-
5789 to obtain an account number and complete wire instructions prior to
wiring any funds. Within seven days of purchase, you must send a
completed Account Application Form containing your certified taxpayer
identification number to the Transfer Agent at the address provided
above. Wire instructions must state the Fund
17
<PAGE>
name, share class, your registered name and your account number. Your
bank wire should be sent through the Federal Reserve Bank Wire System
to:
Boston Safe Deposit and Trust Company
Boston, MA
ABA# 011001234
DDA# 16-798-3
Account No.:
You may make additional investments at any time using the wire
procedures described above. Note that banks may charge fees for
transmitting wires.
. AUTOMATIC INVESTMENT PLAN ("AIP"). Under the AIP you may arrange for
periodic investments in a Fund through automatic deductions from a
checking or savings account. To enroll in the AIP you should complete
the AIP Application Form or call the Funds at (800) 438-5789. The
minimum pre-authorized investment amount is $50. You may discontinue the
AIP at any time. We may discontinue the AIP on 30 days' written notice
to you.
The Transfer Agent will send you confirmations of the opening of an account
and of all subsequent purchases, exchanges or redemptions in the account. If
your account has been set up by a broker or other investment professional,
account activity will be detailed in their statements to you.
We do not issue share certificates. We reserve the right to (i) reject any
purchase order if, in our opinion, it is in the Funds' best interest to do so
and (ii) suspend the offering of shares of any class for any period of
time.
See the SAI for further information regarding purchases of the Funds'
shares.
HOW CAN I EXCHANGE SHARES?
You may exchange Class A Shares of the Funds for Class A Shares of other
Funds of the Trust, the Company or Framlington based on their relative net asset
values and you may exchange Class B and C Shares of the Money Market Fund for
the corresponding class of shares of the other funds of the Company, the Trust
or Framlington. Class A Shares of the Funds that were (1) acquired through
exchange and (2) can be traced back to a purchase of shares in one or more funds
of the Trust, the Company or Framlington for which a sales charge was paid, can
be exchanged for Class A Shares of a fund of the Trust, the Company or
Framlington. Class B and Class C Shares of the Money Market Fund will continue
to age from the date of the original purchase and will retain the same CDSC rate
as they had before the exchange.
You must meet the minimum purchase requirements for the fund of the Trust,
the Company or Framlington that you purchase by exchange. If you are exchanging
into shares of a fund with a higher sales charge, you must pay the difference at
the time of the exchange. Please note that a share exchange is a taxable event
and accordingly, you may realize a taxable gain or loss. Before making an
exchange request, read the Prospectus of the fund you wish to purchase by
exchange. You can obtain a Prospectus for any fund of the Trust, the Company or
Framlington by contacting your broker or the Funds at (800) 438-5789. Brokers
may charge a fee for handling exchanges.
. EXCHANGES BY TELEPHONE. You may give exchange instructions by telephone
to the Funds at (800) 438-5789. You may not exchange shares by telephone
if you hold share certificates. We reserve the right to reject any
telephone exchange request and to place restrictions on telephone
exchanges.
. EXCHANGES BY MAIL. You may send exchange orders to your broker or to us
at the Munder Funds c/o First Data Investor Services Group, P.O. Box
5130, Westborough, Massachusetts 01581-5130.
We may modify or terminate the exchange privilege at any time. You will be
given notice of any material modifications except where notice is not required.
18
<PAGE>
REDEMPTIONS OF SHARES
WHAT PRICE DO I RECEIVE FOR REDEEMED SHARES?
The redemption price is the NAV next determined after we receive the
redemption request in proper form. If we receive your redemption request by
2:45 p.m. (Eastern time), you will not receive dividends for that day. The
amount you receive will be reduced by the amount of any applicable CDSC. See
"Purchases of Shares--What Price Do I Pay for Shares?" for an explanation of how
the net asset value next determined is calculated.
CONTINGENT DEFERRED SALES CHARGES. You pay a CDSC when you redeem:
. Class A Shares of the Money Market Fund within one year
. Class A Shares of the Money Market Fund acquired through the exchange of
Class A Shares of other funds purchased before June 27, 1995 as part of
an investment of $500,000 or more
. Class B Shares of the Money Market Fund within six years
. Class C Shares of the Money Market Fund within one year.
These time periods include the time you held the shares you exchanged to
acquire Money Market Fund shares.
You pay a 1% CDSC when you redeem Class A Shares of the Money Market Fund:
. that you acquired through the exchange of initial Class A Shares of
other Funds of the Company, the Trust or Framlington;
. if you acquired the initial Class A Shares after June 27, 1995; and
. if the initial shares were purchased without a sales charge in
connection with an investment of $1,000,000 or more.
You pay a CDSC of 1% when you redeem Class C Shares of the Money Market
Fund within one year of the date you purchased the initial Class C Shares that
you exchanged to acquire Money Market Fund Shares.
The CDSC schedule for Class B Shares of the Money Market Fund purchased
after June 27, 1995 is set forth below. See the SAI for the CDSC schedule for
Class B Shares purchased before that time. The CDSC is based on the original
purchase price of your investment or the net asset value at the time of
redemption, whichever is lower.
<TABLE>
<CAPTION>
MONEY MARKET FUND
CLASS B SHARES
YEARS SINCE PURCHASE CDSC
- -------------------- -----------
<S> <C>
First.............................................................................................. 5.00%
Second............................................................................................. 4.00%
Third.............................................................................................. 3.00%
Fourth............................................................................................. 3.00%
Fifth.............................................................................................. 2.00%
Sixth.............................................................................................. 1.00%
Seventh and thereafter............................................................................. 0.00%
</TABLE>
Redeemed shares will not pay a CDSC to the extent that the value of such
shares represents:
. reinvestment of dividends or capital gains distributions
. capital appreciation of shares redeemed.
19
<PAGE>
When you redeem shares, we will assume that you are redeeming first shares
representing reinvestment of dividends and capital gains distributions, then any
appreciation on shares redeemed, and then remaining shares held by you for the
longest period of time.
CDSC WAIVERS. We will waive the CDSC payable upon redemptions of Class B
Shares of the Money Market Fund which you purchased after June 27, 1995 for
. redemptions made within one year after the death of a shareholder or
registered joint owner
. minimum required distributions made from an IRA or other retirement plan
account after you reach age 70 1/2
. involuntary redemptions made by the Fund
. redemptions limited to 10% per year of the account's NAV. For example,
if you maintain an annual balance of $10,000 you can redeem up to $1,000
annually free of charge.
Consult the SAI for Class A Share CDSC waivers and Class B Share CDSC
waivers which apply when you redeem shares of the Money Market Fund purchased on
or before June 27, 1995.
WHEN CAN I REDEEM SHARES?
You can redeem shares on any Business Day, provided all required documents
have been received by the Transfer Agent. A Fund may temporarily stop redeeming
shares when the NYSE is closed or trading on the NYSE is restricted, when an
emergency exists and the Fund cannot sell its assets or accurately determine the
value of its assets or if the SEC orders the Fund to suspend redemptions.
HOW CAN I REDEEM SHARES?
You may redeem shares of the Funds in several ways:
. BY MAIL. You may mail your redemption request to: THE MUNDER FUNDS C/O
FIRST DATA INVESTOR SERVICES GROUP, P.O. BOX 5130, WESTBOROUGH,
MASSACHUSETTS 01581-5130. The redemption request should state the name
of the Fund, share class, account number, amount of redemption, account
name and where to send the proceeds. All account owners must sign. If a
stock certificate has been issued to you, you must endorse the stock
certificate and return it together with the written redemption request.
A SIGNATURE GUARANTEE is required for the following redemption
requests: (a) redemptions proceeds greater than $50,000; (b) redemption
proceeds not being made payable to the owner of the account; (c)
redemption proceeds not being mailed to the address of record on the
account or (d) if the redemption proceeds are being transferred to
another Munder Funds account with a different registration. You can
obtain a signature guarantee from a financial institution such as a
commercial bank, trust company, savings association or from a securities
firm having membership on a recognized securities exchange.
. BY TELEPHONE. You can redeem your shares by calling your broker or the
Funds at (800) 438-5789. There is no minimum requirement for telephone
redemptions paid by check. The Transfer Agent may deduct a wire fee
(currently $7.50) for wire redemptions under $5,000.
If you are redeeming at least $1,000 of shares and you have
authorized expedited redemption on your Account Application Form, simply
call the Fund prior to 4:00 p.m. (Eastern Time), and request the funds
be mailed to the commercial bank or registered broker-dealer you
designated on your Account Application Form. We will send your
redemption amount to you on the next Business Day. We reserve the right
at any time to change or impose fees for this expedited redemption
procedure.
We record all telephone calls for your protection and take measures
to identify the caller. If the Transfer Agent properly acts on telephone
instructions and follows the reasonable procedures to ensure against
unauthorized transactions, neither the Trust, the Company, the
Distributor nor the
20
<PAGE>
Transfer Agent will be responsible for any losses. If these procedures
are not followed, the Transfer Agent may be liable to you for losses
resulting from unauthorized instructions.
During periods of unusual economic or market activity, you may
experience difficulties or delays in effecting telephone redemptions.
In such cases you should consider placing your redemption request by
mail.
. AUTOMATIC WITHDRAWAL PLAN ("AWP"). If you have an account value of
$2,500 or more in a Fund, you may redeem shares on a monthly, quarterly,
semi-annual or annual basis. The minimum withdrawal is $50. We usually
process withdrawals on the 20th day of the month and promptly send you
your redemption amount. You may enroll in the AWP by completing the AWP
Application Form available through the Transfer Agent. To participate in
the AWP you must have your dividends automatically reinvested and may
not hold share certificates. You may change or cancel the AWP at any
time upon notice to the Transfer Agent. You should not buy Class A
Shares (and pay a sales charge) while you participate in the AWP and you
must pay any applicable CDSC's when you redeem shares.
. INVOLUNTARY REDEMPTION. We may redeem your account if its value falls
below $250 as a result of redemptions (but not as a result of a decline
in net asset value). You will be notified in writing and allowed 60 days
to increase the value of your account to the minimum investment level.
. FREE CHECKWRITING. Free checkwriting is available to holders of Class A
Shares of the Money Market Funds who complete the Signature Card Section
of the Account Application Form. You may write checks in the amount of
$500 or more but you may not close a Fund account by writing a check. We
may change or terminate this program on 30 days' notice to you.
WHEN WILL I RECEIVE REDEMPTION AMOUNTS?
We will typically send redemption amounts to you within seven Business Days
after you redeem shares. We may hold redemption amounts from the sale of shares
you purchased by check until the purchase check has cleared, which may be as
long as 15 days.
STRUCTURE AND MANAGEMENT OF THE FUNDS
HOW ARE THE FUNDS STRUCTURED?
The Trust and the Company are each an open-end management investment
company, which is a mutual fund that sells and redeems shares every day that it
is open for business. They are managed under the direction of their governing
Board of Trustees and Directors, which are responsible for the overall
management of the Trust and the Company and supervise the Funds' service
providers. The Trust is organized as a Massachusetts business trust and the
Company is a Maryland corporation.
WHO MANAGES AND SERVICES THE FUNDS?
INVESTMENT ADVISOR. The Funds' investment advisor is Munder Capital
Management, a Delaware general partnership with its principal offices at 480
Pierce Street, Birmingham, Michigan 48009. The principal partners of the
Advisor are Old MCM, Inc. ("MCM"), Munder Group LLC and WAM Holdings, Inc.
("WAM"). MCM was founded in April, 1985 as a Delaware corporation and was a
registered investment advisor. WAM is an indirect, wholly-owned subsidiary of
Comerica Incorporated which owns or controls approximately 88% of the
partnership interests in the Advisor. As of June 30, 1998, the Advisor and its
affiliates had approximately $48.2 billion in assets under management, of which
$25.4 billion were invested in equity securities, $8.1 billion were invested in
money market or other short-term instruments, $9.2 billion were invested in
other fixed income securities and $5.5 billion in non-discretionary assets.
21
<PAGE>
The Advisor provides overall investment management for each Fund, provides
research and credit analysis, and is responsible for all purchases and sales of
portfolio securities.
During the fiscal year ended June 30, 1998, the Advisor was paid an
advisory fee at an annual rate based on the average daily net assets of each
Fund (after waivers, if any) as follows:
<TABLE>
<CAPTION>
TAX-FREE MONEY U.S. TREASURY MONEY
Cash Investment Fund Market Fund MARKET FUND Money Market Fund
-------------------- ----------- ------------ -----------------
<S> <C> <C> <C>
.35% .35% .35% .40%
</TABLE>
The Advisor may, from time to time, make payments to banks, broker-dealers
or other financial institutions for certain services to the Funds and/or their
shareholders, including sub-administration, sub-transfer agency and shareholder
servicing. The Advisor makes such payments out of its own resources and there
are no additional costs to the Funds or their shareholders.
The Advisor selects broker-dealers to execute portfolio transactions for
the Funds based on best price and execution terms. The Advisor may consider as
a factor the number of shares sold by the broker-dealer.
TRANSFER AGENT. First Data Investor Services Group, Inc. is the Funds'
transfer agent. The Transfer Agent is a wholly-owned subsidiary of First Data
Corporation and is located at 53 State Street, Boston, Massachusetts 02109.
ADMINISTRATOR. State Street Bank and Trust Company ("State Street" or
"Administrator") is the Funds' administrator. State Street is located at 225
Franklin Street, Boston, Massachusetts 02110. State Street generally assists
the Company and the Trust in all aspects of their administration and operations
including overseeing the maintenance of financial records and fund accounting.
As compensation for its services for the Company and the Trust, State Street is
entitled to receive fees, based on the aggregate daily net assets of the Funds
and certain other investment portfolios that are advised by the Advisor for
which it provides services, computed daily and payable monthly at the annual
rate of 0.113% on the first $2.8 billion of net assets, plus 0.103% on the next
$2.2 billion of net assets, plus 0.101% on the next $2.5 billion of net assets,
plus 0.095% on the next $2.5 billion of net assets, plus 0.080% on the next $2.5
billion of net assets, plus 0.070% on all net assets in excess of $12.5 billion
(with a $75,000 minimum fee per annum in the aggregate for all portfolios with
respect to the Administrator).
State Street has entered into a Sub-Administration Agreement with the
Distributor under which the Distributor provides certain administrative services
with respect to the Funds. State Street pays the Distributor a fee for these
services out of its own resources at no cost to the Funds.
CUSTODIAN AND SUB-CUSTODIAN. Comerica Bank ("Comerica" or the
"Custodian"), whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, Michigan 48226, is the Funds' custodian. No
compensation is paid to the Custodian for its custodial services. Comerica
receives a fee of 0.01% of the aggregate average daily net assets of the Funds
beneficially owned by Comerica and its customers for certain shareholder
services provided by Comerica to the Funds. State Street serves as the Funds'
sub-custodian.
DISTRIBUTOR. Funds Distributor, Inc. is the distributor of the Funds'
shares and is located at 60 State Street, Boston, Massachusetts 02109. It
markets and sells the Funds' shares.
For an additional description of the services performed by the
Administrator, the Transfer Agent, the Custodian, the Sub-Custodian and the
Distributor, see the SAI.
DISTRIBUTION SERVICES ARRANGEMENT
Under Rule 12b-1 of the Investment Company Act of 1940, as amended, the
Funds have adopted Service Plans with respect to their Class A Shares and the
Money Market Fund has adopted Service and Distribution Plans
22
<PAGE>
with respect to its Class B and Class C Shares. Under the Plans, each Fund uses
its assets to finance activities relating to the distribution of its shares to
investors and the provision of certain shareholder services. The Distributor is
paid a service fee at an annual rate of up to 0.25% of the value of average
daily net assets of the Fund's Class A Shares. The Distributor is also paid a
service fee at an annual rate of 0.25% and a distribution fee at an annual rate
of up to 0.75% of the value of the average daily net assets of the Money Market
Funds' Class B and Class C Shares. The Distributor uses the service fees
primarily to pay ongoing trail commissions to securities dealers (which may
include the Distributor itself) and other financial organizations which provide
shareholder services for the Funds and the distribution fees to finance
activities relating to the distribution of Money Market Fund's Shares. These
services include, among other things, processing new shareholder account
applications, reporting to the Fund's Transfer Agent all transactions by
customers and serving as the primary information source to customers concerning
the Funds.
WHAT ARE MY RIGHTS AS A SHAREHOLDER?
All shareholders have equal voting, liquidation and other rights. You are
entitled to one vote for each share you hold and a fractional vote for each
fraction of a share you hold. You will be asked to vote on matters affecting
the Trust or the Company as a whole and affecting your particular Fund. You
will not vote by Class unless expressly required by law or when the Trustees or
Directors determine the matter to be voted on affects only the interests of the
holders of a particular class of shares. The Trust and the Company will not
hold annual shareholder meetings, but special meetings may be held at the
written request of shareholders owning more than 10% of outstanding shares for
the purpose of removing a Trustee or Director. Under Massachusetts law, it is
possible that a shareholder may be personally liable for the Trust's
obligations. If a shareholder were required to pay a debt of a Fund, however,
the Trust is committed to reimburse the shareholder in full from their assets.
The SAI contains more information regarding voting rights.
Comerica Bank currently has the right to vote a majority of the outstanding
shares of the Funds as agent, custodian or trustee for its customers and
therefore it is considered to be a controlling person of the Company and the
Trust.
DIVIDENDS, DISTRIBUTIONS AND TAXES
WHEN WILL I RECEIVE DISTRIBUTIONS FROM THE FUNDS?
As a shareholder, you are entitled to your share of net income and capital
gains, if any, on a Fund's investments. The Funds pass their earnings along to
investors in the form of dividends. Dividend distributions are the dividends or
interest earned on investments after expenses. The net income of the Funds is
declared daily and paid monthly. Each Fund distributes its net realized capital
gains (including net short-term capital gains), if any, at least annually.
HOW WILL DISTRIBUTIONS BE MADE?
The Funds will pay dividend and capital gains distributions in additional
shares of the same class of a Fund. If you wish to receive distributions in
cash, either indicate this request on your Account Application Form or notify
the Funds at (800) 438-5789.
ARE THERE TAX IMPLICATIONS OF MY INVESTMENTS IN THE FUNDS?
This section contains a brief summary of the tax implications of ownership
in the Funds' shares. A more detailed discussion of Federal income tax
considerations is contained in the SAI. You should consult your tax advisor
regarding the impact of owning the Funds' shares on your own personal tax
situation including the applicability of any state and local taxes.
In general, as long as each Fund meets the requirements to qualify as a
regulated investment company ("RIC") under Federal tax laws, it will not be
subject to Federal income tax on its income and capital gains that it
23
<PAGE>
distributes in a timely manner to its shareholders. Each Fund intends to
qualify annually as a RIC. Even if it qualifies as a RIC, a Fund may still be
liable for an excise tax on income that is not distributed in accordance with a
calendar year requirement; the Funds intend to avoid the excise tax by making
timely distributions.
Generally, you will owe tax on the amounts distributed to you, regardless
of whether you receive these amounts in cash or reinvest them in additional Fund
shares. Shareholders not subject to tax on their income generally will not be
required to pay any tax on amounts distributed to them. Federal income tax on
distributions to an IRA or to a qualified retirement plan will generally be
deferred.
Capital gains, if any, derived from sales of portfolio securities held by a
Fund will generally be designated as long-term or short-term. Distributions
from a Fund's long-term capital gains are generally taxed at the long-term
capital gains rate regardless of how long you have owned shares in the Fund.
Dividends from other sources are generally taxed as ordinary income.
Dividends and capital gain distributions are generally taxable when you
receive them; however, if a distribution is declared in October, November or
December, but not paid until January of the following year, it will be
considered to be paid on December 31 in the year in which it was declared.
Shortly after the end of each year, you will receive from each Fund in which you
are a shareholder a statement of the amount and nature of the distributions made
to you during the year.
ADDITIONAL INFORMATION
SHAREHOLDER COMMUNICATIONS. You will receive unaudited Semi-Annual Reports
and Audited Annual Reports on a regular basis from the Funds. In addition, you
will also receive updated Prospectuses or Supplements to this Prospectus. In
order to eliminate duplicate mailings the Funds will only send one copy of the
above communications to (1) accounts with the same primary record owner, (2)
joint tenant accounts, (3) tenant in common accounts and (4) accounts which have
the same address.
YEAR 2000. The Funds' operations depend on the seamless functioning of
computer systems in the financial service industry, including those of its
service providers. Many computer software systems in use today cannot properly
process date-related information after December 31, 1999 because of the method
by which dates are encoded and calculated. This failure, commonly referred to
as the "Year 2000 Issue," could adversely affect the handling of securities
trades, pricing and account servicing for the Funds. The Funds have been
informed that their major service providers have made compliance with the Year
2000 Issue a high priority and are taking steps that they believe are reasonably
designed to address the Year 2000 Issue with respect to their computer systems.
There can be, however, no assurance that these steps will be successful, or that
interaction with other non-complying computer systems will not impair their
services at that time.
24
<PAGE>
CLASS A, B & C SHARES
[Munder Logo]
PROSPECTUS
October 27, 1998
THE MUNDER INDEX 500 FUND
Prospectus begins on next page
<PAGE>
PROSPECTUS
CLASS A, CLASS B AND CLASS C SHARES*
The Munder Index 500 Fund (the "Fund") is a mutual fund that seeks to
provide price performance and income that is comparable to the Standard & Poor's
500 Composite Stock Price Index. The Fund invests primarily in equity
securities. The Fund is a portfolio of The Munder Funds Trust (the "Trust"), an
open-end investment company.
____________
*Class C Shares of the Fund are not currently available for purchase.
Munder Capital Management (the "Advisor") serves as the investment advisor
of the Fund.
This Prospectus explains the objectives, policies, risks and fees of the
Fund. You should read this Prospectus carefully before investing and retain it
for future reference. A Statement of Additional Information ("SAI") describing
the Fund has been filed with the Securities and Exchange Commission (the "SEC")
and is incorporated by reference into this Prospectus. You can obtain the SAI
free of charge by calling the Fund at (800) 438-5789. In addition, the SEC
maintains a Web site (http://www.sec.gov) that contains the SAI and other
information regarding the Fund.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED OR GUARANTEED. AN
INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
THE PRINCIPAL AMOUNT INVESTED.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES:
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS OCTOBER 27, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Fund Highlights
What are the key facts regarding the Fund?.................. 3
Financial Information............................................ 4
Fund Information
Who may want to invest in the Fund?......................... 8
What are the Fund's investments and investment practices?... 8
What are the risks of investing in the Fund?................ 10
Performance
How is the Fund's performance calculated?................... 11
Where can I obtain performance data?........................ 11
Purchases and Exchanges of Shares
What share class should I choose for my investment?......... 12
What price do I pay for shares?............................. 12
When can I purchase shares?................................. 15
What is the minimum required investment?.................... 15
How can I purchase shares?.................................. 15
How can I exchange shares?.................................. 16
Redemptions of Shares
What price do I receive for redeemed shares?................ 17
When can I redeem shares?................................... 18
How can I redeem shares?.................................... 18
When will I receive redemption amounts?..................... 19
Structure and Management of the Fund
How is the Fund structured?................................. 19
Who manages and services the Fund?.......................... 19
What are my rights as a shareholder?........................ 21
Dividends, Distributions and Taxes
When will I receive distributions from the Fund?............ 21
How will distributions be made?............................. 21
Are there tax implications of my investments in the Fund?... 21
Additional Information........................................... 22
Appendix A....................................................... A-1
</TABLE>
2
<PAGE>
FUND HIGHLIGHTS
WHAT ARE THE KEY FACTS REGARDING THE FUND?
Q: What is the Fund's goal?
A: The Fund seeks to provide price performance and income that is comparable to
the Standard & Poor's 500 Composite Stock Price Index ("S&P 500").
Q: What is the Fund's strategy?
A: The Fund invests primarily in equity securities and it normally will hold
the securities of at least 80% of the issuers in the S&P 500. The Fund is
managed through a "quantitative" or "indexing" investment approach, which
attempts to duplicate the investment composition and performance of the S&P 500
through statistical procedures.
Q: What are the Fund's risks?
A: The Fund's net asset value, which is determined on every business day, will
change daily. The net asset value changes are due to changes in the price of
securities owned by the Fund as a result of rises and falls in the stock market
in general, perceptions about the stocks of particular companies and perceptions
about particular industries. You should note that you could lose a portion of
the amount you invest in the Fund.
Q: What are the options for investment in the Fund?
A: The Fund has registered five classes of shares: Class A, B, C, K and Y.
Class K and Y Shares, which are only offered to institutional and other
qualified investors, are offered in other prospectuses. Class C Shares are not
currently offered for sale.
<TABLE>
<CAPTION>
Maximum Front MAXIMUM
CLASS RULE 12B-1 FEES* End Sales Load** CDSC***
----- ---------------- ----------------- -------
<S> <C> <C> <C>
Class A 0.20% 2.5% None+
Class B 0.45% None 3%
Class C 1% None 1%, if redeemed within 1
year of purchase
</TABLE>
_________________
* An annual fee for distributing shares and servicing shareholder accounts
paid based on the Fund's average daily net assets.
** A one-time fee charged at the time of purchase of shares. The fee declines
based on the amount you invest.
*** A contingent deferred sales charge ("CDSC") is a one-time fee charged at
the time of redemption. The fee declines based on the length of time you
old the shares.
+ A CDSC of 1% is imposed on certain redemptions of Class A Shares if
redeemed within 1 year of purchase.
(i) If you invest over $250,000, you must buy Class A or Class C Shares. (ii)
Class B Shares convert automatically to Class A Shares after six years. Due to
the level of Rule 12b-1 fees and the CDSC on Class B Shares versus Class A or
Class C Shares, both (i) and (ii) above are to your economic benefit.
Q: How do I buy and sell shares of the Fund?
A: Funds Distributor, Inc. (the "Distributor") sells shares of the Fund. You
may purchase shares from the Distributor through broker-dealers or other
financial institutions or from the Fund's transfer agent, First Data Investor
Services Group, Inc. (the "Transfer Agent"), by mailing the attached Account
Application Form with a check to the Transfer Agent. You must invest at least
$500 ($50 through the Automatic Investment Plan) initially and at least $50 for
subsequent purchases.
3
<PAGE>
Shares may be redeemed (sold back to the Fund) by mail or by telephone.
You may also acquire the Fund's shares by exchanging shares of the same class
of other funds of the Trust, The Munder Funds, Inc. (the "Company") and The
Munder Framlington Funds Trust ("Framlington"), and exchange Fund shares for
shares of the same class of other funds of the Trust, the Company and
Framlington.
Q: What shareholder privileges does the Fund offer?
A:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
--------------- -------------- --------------
<S> <C> <C>
Automatic Investment Plan Automatic Investment Plan Automatic Investment Plan
Automatic Withdrawal Plan Automatic Withdrawal Plan Automatic Withdrawal Plan
Retirement Plans Retirement Plans Retirement Plans
Telephone Exchanges Telephone Exchanges Telephone Exchanges
Rights of Accumulation Reinvestment Privilege Reinvestment Privilege
Letter of Intent
Quantity Discounts
Reinvestment Privilege
</TABLE>
Q: When and how are distributions made?
A: Dividend distributions are made from the dividends and interest earned on
investments after expenses. The Fund pays dividends at least quarterly (if
income is available) and distributes capital gains at least annually. Unless
you elect to receive distributions in cash, all dividends and capital gain
distributions will be automatically used to purchase additional shares of the
Fund.
Q: Who manages the Fund's assets?
A: Munder Capital Management is the Fund's investment advisor. The Advisor is
responsible for all purchases and sales of the securities held by the Fund.
FINANCIAL INFORMATION
SHAREHOLDER TRANSACTION EXPENSES(1)
The purpose of this table is to assist you in understanding the expenses a
shareholder in the Fund will bear directly.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
<S> <C> <C> <C>
Maximum Sales Charge on Purchase (as a % of Offering Price)............ 2.5% (2) None None
Sales Charge Imposed on Reinvested Dividends........................... None None None
Maximum Deferred Sales Charge.......................................... None (3) 3%(4) 1%(5)
Redemption Fees(6)..................................................... None None None
Exchange Fees.......................................................... None None None
</TABLE>
________________
Notes:
(1) Does not include fees which institutions may charge for services they
provide to you.
(2) The sales charge declines as the amount invested increases.
(3) A 0.20% deferred sales charge applies to redemptions of Class A Shares that
were purchased with no initial sales charge as part of an investment of $500,000
or more and are redeemed within one year of purchase.
(4) The contingent deferred sales charge ("CDSC") payable upon redemption of
Class B Shares declines over time.
(5) Payable on redemptions of Class C Shares within one year of purchase.
(6) The Transfer Agent may deduct a charge of $7.50 for wire redemptions under
$5,000.
4
<PAGE>
FUND OPERATING EXPENSES
The purpose of this table is to assist you in understanding the expenses
charged directly to the Fund, which investors in the Fund will bear indirectly
for the current fiscal year. Such expenses include payments to Trustees,
auditors, legal counsel and service providers (such as the Advisor),
registration fees, and distribution fees. The fees shown below have been
restated to reflect an anticipated waiver of advisory fees and the
discontinuation of voluntary expense reimbursements effective as of the date of
this Prospectus. Because of the 12b-1 fee, you may over the long term pay more
than the amount of the maximum permitted front-end sales charge.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES CLASS A CLASS B CLASS C
(AS A % OF AVERAGE NET ASSETS) SHARES SHARES SHARES
- ------------------------------ ------ ------ ------
<S> <C> <C> <C>
Advisory Fees (after waivers)............................... .07%+ .07%+ .07%+
12b-1 Fees (after waivers)................................. .20%+ .45%+ 1.00%
Other Expenses.............................................. .22% .22% .22%
----- ----- -----
Total Fund Operating Expenses............................... .49%+ .74%+ 1.29%+
===== ===== =====
</TABLE>
______________
+ The Advisor expects to voluntarily waive a portion of its advisory fee during
the current fiscal year and the Distributor expects to voluntarily waive a
portion of its Rule 12b-1 fees with respect to Class A Shares and Class B
Shares. Class A Shares of the Fund pay a Rule 12b-1 fee up to .25% of the value
of average daily net assets and Class B Shares of the Fund pay a Rule 12b-1 fee
of up to 1.00% of the value of average daily net assets. The Advisor and/or the
Distributor may discontinue such waivers at any time in their sole discretion.
Without waivers the ratio of advisory fees to average daily net assets would be
__% and the ratio of 12b-1 fees to average daily net assets would be .25% for
Class A Shares and 1.00% for Class B Shares. Without waivers total operating
expenses would be __% for Class A Shares and 1.37% for Class B Shares.
EXAMPLE
This example shows the amount of expenses you would pay (directly or
indirectly) on a $1,000 investment in the Fund assuming (1) a 5% annual return,
(2) redemption at the end of the time periods (including the deduction of the
deferred sales charge, if any) and (3) no redemption at the end of the time
periods. THIS EXAMPLE IS NOT A REPRESENTATION OF PAST OR FUTURE PERFORMANCE OR
OPERATING EXPENSES; ACTUAL PERFORMANCE OR OPERATING EXPENSES MAY BE LARGER OR
SMALLER THAN THOSE SHOWN.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
<S> <C> <C> <C>
1 Year
. Redemption............................................. $29 $38 $23
. No Redemption.......................................... $29 $ 8 $13
3 YEARS
. Redemption............................................. $37 $44 $41
. No Redemption.......................................... $37 $24 $41
5 YEARS
. Redemption............................................. $46 $61 $71
. No Redemption.......................................... $46 $41 $71
10 YEARS
. Redemption............................................. $73 $97 $156
. No Redemption.......................................... $73 $92 $156
</TABLE>
5
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights were audited by Ernst & Young LLP,
independent auditors. Class C Shares of the Fund were not offered during the
periods shown. This information should be read in conjunction with the Fund's
most recent Annual Report, which is incorporated by reference into the SAI. You
may obtain the Annual Reports without charge by calling (800) 438-5789.
<TABLE>
<CAPTION>
INDEX 500 FUND (a)
--------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96(F) 6/30/95(D) 2/28/95(E,F)
CLASS A CLASS A CLASS A CLASS A CLASS A
-------- --------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.....................
Income from investment operations:
Net investment income.................................
Net realized and unrealized gain on investments.......
Total from investment operations......................
Less distributions:
Dividends from net investment income..................
Distributions from net realized gains.................
Total distributions...................................
Net asset value, end of period...........................
Total return (b)......................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)..................
Ratio of operating expenses to average net assets.....
Ratio of net investment income to average net assets..
Portfolio turnover rate...............................
Ratio of operating expenses to average net assets w/o
waivers and/or expense reimbursement..................
Average commission rate(g)............................
</TABLE>
__________________________________
(a)The Munder Index 500 Fund Class A Shares and Class B Shares commenced
operations on December 9, 1992 and October 31, 1995, respectively. As of June
30, 1997, the Fund had not begun selling Class C Shares.
(b)Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year changed to June 30. Prior to this, the fiscal year end was the
last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
6
<PAGE>
<TABLE>
<CAPTION>
INDEX 500 FUND(a)
--------------------------------------------------------------------------------------------
YEAR PERIOD YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
2/28/94 2/28/93 6/30/98 6/30/97 6/30/96(F)
CLASS A CLASS A CLASS B CLASS B CLASS B
------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
</TABLE>
7
<PAGE>
FUND INFORMATION
This Prospectus describes Class A, Class B and Class C Shares of the Fund.
This section summarizes the Fund's principal investments. The section entitled
"What are the Fund's Investments and Investment Practices?" and "What are the
Risks of Investing in the Fund?" and the SAI give more information about the
Fund's investment techniques and risks.
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide performance
and income that is comparable to the S&P 500. The S&P 500 is an index of 500
stocks which emphasize large capitalization companies. See Appendix A for more
information on the S&P 500. The Fund will normally hold the securities of at
least 400 of the stocks in the S&P 500.
The Fund will try to achieve a correlation between the performance of its
portfolio and that of the S&P 500 of at least .95. A correlation of 1.0 would
mean that the changes in the Fund's price mirror exactly changes in the S&P 500.
The timing of purchases and redemptions, changes in securities markets, level of
the Fund's assets and other factors affect the Fund's ability to exactly track
the S&P 500's performance.
The Fund is managed through the use of a "quantitative" investment approach
and tries to mirror the composition and performance of the S&P 500 through
statistical procedures. The Advisor does not use traditional methods of fund
investment management, i.e., it does not select stocks on the basis of economic,
financial and market analysis. Because the Fund pays brokerage costs and other
fees, its return may be lower than that of the S&P 500.
PORTFOLIO MANAGEMENT. Todd B. Johnson and Kenneth A. Schluchter III
jointly manage the Fund. Mr. Johnson, a Chief Investment Officer of the
Advisor, has served as the portfolio manager of the Fund since July 1992. Mr.
Schluchter, who has managed the Fund since June 1997, was previously a Systems
Developer and Data Analyst for Compuware Incorporated (1993-1995) and a Business
Analyst for Central Transport Incorporated (1989-1993).
WHO MAY WANT TO INVEST IN THE FUND?
The Fund is designed for investors who desire potentially high capital
appreciation and who can accept short-term variations in return for potentially
greater returns over the long term. In general, the greater the risk, the
greater the potential reward. Investors who have a short time horizon, who
desire a high level of income or who are conservative in their investment
approach may wish to invest in other portfolios offered by the Trust.
WHAT ARE THE FUND'S INVESTMENTS AND INVESTMENT PRACTICES?
The Fund will invest in EQUITY SECURITIES, which includes common stocks,
preferred stocks, warrants and other securities convertible into common stocks,
including convertible bonds and convertible preferred stocks. Many of the common
stocks the Fund will buy will not pay dividends; instead, stocks will be bought
for the potential that their prices will increase, providing capital
appreciation for the Fund. The value of Equity Securities will fluctuate due to
many factors, including the past and predicted earnings of the issuer, the
quality of the issuer's management, general market conditions, the forecasts for
the issuer's industry and the value of the issuer's assets. Holders of Equity
Securities only have rights to value in the company after all debts have been
paid, and they could lose their entire investment in a company that encounters
financial difficulty. Warrants are rights to purchase securities at a specified
time at a specified price.
The Fund may invest in FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS, which
are obligations of the Fund to purchase or sell a specific currency at a future
date at a set price. These contracts may decrease the Fund's loss due to a
change in currency value, but also limits gains from currency exchanges.
The Fund may invest in MONEY MARKET INSTRUMENTS, which are high-quality,
short-term instruments including, among other things, commercial paper, bankers'
acceptances and negotiable certificates of deposit of
8
<PAGE>
banks or savings and loan associations, short-term corporate obligations and
short-term securities issued by, or guaranteed by, the U.S. Government and its
agencies or instrumentalities. These instruments will be used primarily pending
investment, to meet anticipated redemptions or as a temporary defensive measure.
The Fund may invest in FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS.
Futures contracts are contracts in which the Fund agrees, at maturity, to make
delivery of or receive securities, the cash value of an index, or foreign
currency. Futures contracts and options on futures contracts are used for
hedging purposes or to maintain liquidity. The 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 Fund will set aside cash or other liquid securities to "cover" the Fund's
position in futures.
The Fund may purchase or sell OPTIONS. The Fund may buy options giving it
the right to require a buyer to buy a security held by the Fund (put options),
buy options giving it the right to require a seller to sell securities to the
Fund (call options), sell (write) options giving a buyer the right to require
the Fund to buy securities from the buyer or write options giving a buyer the
right to require the Fund to sell securities to the buyer during a set time at a
set price. Options may relate to stock indices or individual securities. See
the SAI for more details and additional limitations.
The Fund may purchase securities on a "WHEN-ISSUED" basis and may purchase
or sell securities on a "FORWARD COMMITMENT" basis. Although the price to be
paid by the Fund is set at the time of the agreement, the Fund usually does not
pay for securities until they are received. The value of the securities may
change between the time the price is set and the time the price is paid. When
the Fund purchases securities for future delivery, the Fund's custodian will set
aside cash or other liquid securities to "cover" the Fund's position. The Fund
does not intend to purchase securities for future delivery for speculative
purposes.
The Fund may enter into REPURCHASE AGREEMENTS. Under a repurchase
agreement, the Fund agrees to purchase securities from a seller and the seller
agrees to repurchase the securities at a later time, typically within seven
days, at a set price. The seller agrees to set aside collateral equal to the
price it has to pay during the term of the agreement. This ensures that the
Fund will receive the purchase price at the time it is due, unless the seller
defaults or declares bankruptcy, in which event the Fund will bear the risk of
possible loss due to adverse market action or delays in liquidating the
underlying obligation.
The Fund may invest in REVERSE REPURCHASE AGREEMENTS. Under a reverse
repurchase agreement, the Fund sells securities and agrees to buy them back
later at an agreed upon time and price. Reverse repurchase agreements are used
to borrow money for temporary purposes.
The Fund may LEND SECURITIES to broker-dealers and other financially sound
institutional investors who will pay the Fund for the use of the securities,
thus potentially increasing the Fund's returns. The borrower must set aside
cash or liquid securities equal to the value of the securities borrowed at all
times during the terms of the loan. Loans may not exceed 25% of the value of the
Fund's total assets. Risks involved in such transactions include possible delay
in recovering the loaned securities and possible loss of the securities or the
collateral if the borrower fails financially.
The Fund may purchase AMERICAN DEPOSITARY RECEIPTS ("ADRS"), EUROPEAN
DEPOSITARY RECEIPTS ("EDRS") AND GLOBAL DEPOSITARY RECEIPTS ("GDRS"). ADRs are
issued by U.S. financial institutions and GDRs and EDRs are issued by European
financial institutions. They are receipts evidencing ownership of underlying
foreign securities.
The Fund may buy shares of registered MONEY MARKET FUNDS. The Fund will
bear a portion of the expenses of any investment company whose shares they
purchase, including operating costs and investment advisory, distribution and
administration fees. These expenses would be in addition to the Fund's own
expenses. The Fund may invest up to 10% of its assets in other investment
companies and no more than 5% of its assets in any one investment company.
9
<PAGE>
The Fund may invest up to 15% of the value of its net assets in ILLIQUID
SECURITIES. Illiquid Securities are securities for which there is no ready
market, which inhibits the ability to sell them and obtain their full market
value, or which are legally restricted as to their resale by the Fund.
The Fund may purchase FIXED INCOME SECURITIES. Fixed Income Securities are
securities which either pay interest at set times at either fixed or variable
rates, or which realize a discount upon maturity. Fixed Income Securities
include corporate bonds, debentures, notes and other similar corporate debt
instruments, zero coupon bonds (discount debt obligations that do not make
interest payments) and variable amount master demand notes that permit the
amount of indebtedness to vary in addition to providing for periodic adjustments
in the interest rate. The Fund may purchase U.S. GOVERNMENT SECURITIES, which
are securities issued by, or guaranteed by, the U.S. Government or its agencies
or instrumentalities. Such securities include U.S. Treasury bills, which have
initial maturities of less than one year, U.S. Treasury notes, which have
initial maturities of one to ten years, U.S. Treasury bonds, which generally
have initial maturities of greater than ten years, and obligations of the
Federal Home Loan Mortgage Corporation, Federal National Mortgage Association
and Government National Mortgage Association. Under normal market conditions,
the Fund will not invest to a significant extent, or on a routine basis, in U.S.
Government Securities.
The Fund may BORROW MONEY in an amount up to 5% of its assets for temporary
purposes and in an amount up to 33 1/3% of its assets to meet redemptions. This
is a "fundamental" policy which can be changed only by shareholders.
The Fund may invest up to 25% of its assets in FOREIGN SECURITIES. Foreign
Securities are securities issued by non-U.S. companies. Investments in Foreign
Securities are riskier than investments in U.S. companies because (i) foreign
companies may be subject to different accounting, auditing and financial
reporting standards than U.S. companies, (ii) there is generally less public
information available about foreign companies, (iii) there may be less
governmental regulation and supervision of foreign stock exchanges, securities
markets and companies and (iv) foreign securities markets may be less liquid and
more volatile than U.S. securities markets.
WHAT ARE THE RISKS OF INVESTING IN THE FUND?
The Fund is not meant to provide a vehicle for playing short-term swings in
the stock market. Consistent with a long-term investment approach, investors in
the Fund should be prepared and able to maintain their investments during
periods of adverse market conditions. By itself, no Fund is a balanced
investment program and there is no guarantee that any Fund will achieve its
investment objective since there is uncertainty in every investment.
Investing in the Fund may be less risky than investing in individual stocks
due to the diversification of investing in a portfolio of many different stocks;
however, such diversification does not eliminate all risks. Because the Fund
invests mostly in Equity Securities, rises and falls in the stock market in
general, as well as in the value of particular Equity Securities held by the
Fund, can affect the Fund's performance. Your investment in the Fund is not
guaranteed. The net asset value of the Fund will change daily and you might not
recoup the amount you invest in the Fund.
A Fund's risk is mostly dependent on the types of securities it purchases
and its investment techniques. The Fund is authorized to use options, futures
and forward foreign currency exchange contracts, which are types of derivative
instruments. Derivative instruments are instruments that derive their value
from a different underlying security, index or financial indicator. The use of
derivative instruments exposes the Fund to additional risks and transaction
costs. Risks inherent in the use of derivative instruments include: (1) the risk
that interest rates, securities prices and currency markets will not move in the
direction that a portfolio manager anticipates; (2) imperfect correlation
between the price of derivative instruments and movements in the prices of the
securities, interest rates or currencies being hedged; (3) the fact that skills
needed to use these strategies are different than those needed to select
portfolio securities; (4) the possible absence of a liquid secondary market for
any particular instrument and possible exchange-imposed price fluctuation
limits, either of which may make it difficult or impossible to close out
10
<PAGE>
a position when desired; (5) leverage risk, that is, the risk that adverse price
movements in an instrument can result in a loss substantially greater than the
Fund's initial investment in that instrument (in some cases, the potential loss
is unlimited); and (6) particularly in the case of privately-negotiated
instruments, the risk that the counterparty will fail to perform its
obligations, which could leave the Fund worse off than if it had not entered
into the position.
To the extent that a Fund invests in illiquid securities, the Fund risks
not being able to sell securities at the time and the price that it would like.
The Fund may therefore have to lower the price, sell substitute securities or
forego an investment opportunity, each of which might adversely affect the Fund.
The risks of the various investment techniques the Fund uses are described
in more detail in the SAI.
PERFORMANCE
HOW IS THE FUND'S PERFORMANCE CALCULATED?
There are various ways in which the Fund may calculate and report its
performance. Performance is calculated separately for each class of shares.
One method is to show the Fund's total return. Cumulative total return is
the percentage change in the value of an amount invested in a class of shares of
the Fund over a stated period of time and takes into account reinvested
dividends plus in the case of Class A Shares, the payment of the maximum sales
charge and, in the case of Class B and Class C Shares, the maximum CDSC.
Cumulative total return most closely reflects the actual performance of the
Fund. However, a shareholder who opts to receive dividends in cash, a Class A
shareholder who paid a sales charge lower than the maximum sales charge, or a
Class B or C shareholder who paid lower than the maximum CDSC will have a
different return than the reported performance.
Average annual total return refers to the average annual compounded rates
of return over a specified period on an investment in shares of the Fund
determined by comparing the initial amount invested to the ending redeemable
value of the amount, taking into account reinvested dividends, the payment of
the maximum sales charge on Class A Shares, and the payment of the maximum CDSC
on Class B and Class C Shares.
The Fund may also publish its current yield. Yield is the net investment
income generated by a share of the Fund during a 30-day period divided by the
maximum offering price on the 30th day. "Maximum offering price" includes the
sales charge for Class A Shares.
The Fund may sometimes publish total returns that do not take into account
sales charges and such returns will be higher than returns which include sales
charges. You should be aware that (i) past performance does not indicate how
the Fund will perform in the future and (ii) the Fund's return and net asset
value will fluctuate, so you cannot necessarily use the Fund's performance data
to compare it to investment in certificates of deposit, savings accounts or
other investments that provide a fixed or guaranteed yield.
The Fund may compare its performance to that of other mutual funds, such as
the performance of similar funds reported by Lipper Analytical Services, Inc. or
information reported in national financial publications (such as Money Magazine,
Forbes, Barron's, The Wall Street Journal and The New York Times) or in local or
regional publications. The Fund may also compare its total return to the S&P
500 and other broad-based indices. These indices show the value of selected
portfolios of securities (assuming reinvestment of interest and dividends) which
are not managed by a portfolio manager. The Fund may report how it is
performing in comparison to the Consumer Price Index, an indication of inflation
reported by the U.S. Government.
WHERE CAN I OBTAIN PERFORMANCE DATA?
The Wall Street Journal and certain local newspapers report information on
the performance of mutual funds. In addition, performance information is
contained in the Fund's annual report dated June 30 of each year and
11
<PAGE>
semi-annual report dated December 31 of each year, which will automatically be
mailed to shareholders. To obtain copies of financial reports or performance
information, call (800) 438-5789.
PURCHASES AND EXCHANGES OF SHARES
WHICH SHARE CLASS SHOULD I CHOOSE FOR MY INVESTMENT?
The Fund has registered Class A, Class B and Class C Shares and currently
offers Class A and Class B Shares. Each Class has its own cost structure,
allowing you to choose the one that best meets your requirements given the
amount of your purchase and the intended length of your investment. You should
consider both ongoing annual expenses and initial or contingent deferred sales
charges in estimating the costs of investing in a particular class of shares.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C>
. Front end sales charge. There are . No front end sales charge. All . No front end sales charge
several ways to reduce these sale your money goes to work for you or CDSC, except for a CDSC for
charges. right away. redemptions made within the
. Lower annual expenses than Class B and . Higher annual expenses than Class first year after investing.
Class C Shares. A Shares. All your money goes to work
. A CDSC on shares you sell within for you right away.
six years of purchase. . Shares do not convert to
. Automatic conversion to Class A another class.
Shares approximately six years after
issuance, thus reducing future
annual expenses.
. CDSC is waived for certain
redemptions.
</TABLE>
The Fund also issues Class K and Class Y Shares, which have different sales
charges, expense levels and performance. Class K and Class Y Shares are
available to limited types of investors. Call (800) 438-5789 to obtain more
information concerning Class K and Class Y Shares.
WHAT PRICE DO I PAY FOR SHARES?
The purchase price for Class A Shares is the net asset value ("NAV") next
determined after we receive your order in proper form PLUS any applicable sales
charge. The purchase price for Class B and Class C Shares is the NAV next
determined. You should be aware that broker-dealers (other than the Fund's
Distributor) may charge investors additional fees if shares are purchased
through them.
Except in certain limited circumstances, the Fund determines its NAV on
each day the New York Stock Exchange ("NYSE") is open for trading (a "Business
Day") at the close of such trading (normally 4:00 p.m. Eastern time). The Fund
calculates NAV separately for each class of shares. NAV is calculated by
totaling the value of all of the assets of the Fund allocated to a particular
class of shares, subtracting the Fund's liabilities and expenses charged to that
class and dividing the result by the number of shares of that class outstanding.
APPLICABLE SALES CHARGE. Except in the circumstances described below, you
must pay a sales charge at the time of purchase of Class A Shares. The sales
charge as a percentage of your investment decreases as the amount you invest
increases. The current sales charge rates and commissions paid to selected
dealers are as follows:
12
<PAGE>
<TABLE>
<CAPTION>
SALES CHARGE DISCOUNT TO
AS A PERCENTAGE OF SELECTED DEALERS
------------------ AS A PERCENTAGE OF
YOUR INVESTMENT NET ASSET VALUE INVESTMENT
--------------- --------------- ----------
<S> <C> <C> <C>
Less than $100,000....................... 2.50% 2.56% 2.25%
$100,000 but less than $250,000.......... 2.00% 2.04% 1.75%
$250,000 but less than $500,000.......... 1.50% 1.52% 1.25%
$500,000 but less than $1,000,000........ 1.00% 1.01% .75%
$1,000,000 but less than $3,000,000...... None* None* .10%
$3,000,000 but less than $5,000,000...... None* None* .05%
$5,000,000 or more....................... None* None* None
</TABLE>
__________________
* There is no initial sales charge on purchases of $1 million or more of
Class A Shares of the Fund; however, a CDSC in the amount of the Discount to
Selected Dealers shown above will be imposed on the lower of the original
purchase price or the net asset value of the shares at the time of redemption if
such shares are redeemed within one year after the date of purchase.
The Distributor may pay the entire commission to dealers. If that occurs,
the dealer may be considered an "underwriter" under Federal securities
laws.
SALES CHARGE WAIVERS. We will waive the initial sales charge on sales of
Class A Shares to the following types of purchasers:
(1) individuals with an investment account or relationship with the
Advisor;
(2) full-time employees and retired employees of the Advisor, employees of
the Fund's service providers and immediate family members of such
persons;
(3) registered broker-dealers that have entered into selling agreements
with the Distributor, for their own accounts or for retirement plans
for their employees or sold to registered representatives for full-
time employees (and their families) that certify to the Distributor at
the time of purchase that such purchase is for their own account (or
for the benefit of their families);
(4) certain qualified employee benefit plans as described below;
(5) individuals who reinvest a distribution from a qualified retirement
plan for which the Advisor serves as investment advisor;
(6) individuals who reinvest the proceeds of redemptions from Class Y
Shares of the Funds of the Trust, the Company or Framlington, within 60
days of redemption;
(7) banks and other financial institutions that have entered into
agreements with the Trust, the Company or Framlington to provide
shareholder services for customers (including customers of such banks
and other financial institutions, and the immediate family members of
such customers);
(8) fee-based financial planners or employee benefit plan consultants
acting for the accounts of their clients;
(9) employer sponsored retirement plans which are administered by Universal
Pensions, Inc. ("UPI Plans");
(10) employer sponsored 401(k) plans that are administered by Merrill Lynch
Group Employee Services ("Merrill Lynch") which meet the criteria
described below under "Qualified Employer Sponsored Retirement Plans";
and
(11) individuals who reinvest proceeds of redemptions from Class A, Class B
or Class C Shares of the Short Term Treasury Fund, provided, such
individuals were shareholders of the Short Term Treasury Fund on June
2, 1998.
13
<PAGE>
QUALIFIED EMPLOYER SPONSORED RETIREMENT PLANS
We will waive the initial sales charge on Class A Shares of the Fund for
all investments by: (i) employer sponsored retirement plans that are qualified
under Section 401(a) or Section 403(b) of the Code; (ii) employees participating
in an employer-sponsored or administered retirement program operating under
Section 408A of the Code and (iii) UPI Plans. In addition, the CDSC of up to
0.20% imposed on certain redemptions of Class A Shares of the Fund within one
year of purchase will be waived for such accounts. The Distributor will pay the
following commissions to dealers and other entities (as permitted by applicable
Federal and state law) who initiate and are responsible for purchases of Class A
Shares of the Fund by such accounts:
<TABLE>
<CAPTION>
DISCOUNT TO DEALER OR ENTITY
AMOUNT OF PURCHASE AS A PERCENTAGE OF OFFERING PRICE
- ------------------ ---------------------------------
<S> <C> <C>
Less than $1,000,000..................................................... 0.15%
$1,000,000 but less than $3,000,000...................................... 0.10%
$3,000,000 but less than $5,000,000...................................... 0.05%
$5,000,000 or more....................................................... None
</TABLE>
The initial sales charge will be waived for all the investments by Merrill
Lynch Plans if (i) the Plan is recordkept on a daily valuation basis by Merrill
Lynch Group Employee Services ("Merrill Lynch") and, on the date the plan
sponsor ("the Plan Sponsor") signs the Merrill Lynch Recordkeeping Service
Agreement, the Plan has $3 million or more in assets invested in broker/dealer
funds not advised or managed by Merrill Lynch Asset Management, L.P. ("MLAM")
that are made available pursuant to a Services Agreement between Merrill Lynch
and the Funds' principal underwriter or distributor and in funds advised or
managed by MLAM (collectively, the "Applicable Investments"); or (ii) the Plan
is recordkept on a daily valuation basis by an independent recordkeeper whose
services are provided through a contract or alliance arrangement with Merrill
Lynch, and on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping
Service Agreement, the Plan has $3 million or more in assets, excluding money
market funds, invested in Applicable Investments; or (iii) the Plan has 500 or
more eligible employees, as determined by the Merrill Lynch plan conversion
manager, on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping
Service Agreement.
SALES CHARGE REDUCTIONS. You may qualify for reduced sales charges in the
following cases:
. LETTER OF INTENT. If you intend to purchase at least $500,000 of Class
A, Class B and Class C Shares of the Fund and other non-money market
funds of the Trust, the Company or Framlington, you may wish to
complete the Letter of Intent Section of your Account Application
Form. By doing so, you agree to invest a certain amount over a 13-
month period. You would pay a sales charge on any Class A Shares you
purchase during the 13 months based on the total amount to be invested
under the Letter of Intent. You can apply any investments you made in
any of the funds during the preceding 90-day period toward fulfillment
of the Letter of Intent (although there will be no refund of sales
charges you paid during the 90-day period). You should inform the
Transfer Agent that you have a Letter of Intent each time you make an
investment.
You are not obligated to purchase the amount specified in the
Letter of Intent. If you purchase less than the amount specified,
however, you must pay the difference between the sales charge paid and
the sales charge applicable to the purchases actually made. The
Custodian will hold such amount in escrow. The Custodian will pay the
escrowed funds to your account at the end of the 13 months unless you
do not complete your intended investment.
. QUANTITY DISCOUNTS. You may combine purchases of Class A Shares that
are made by you, your spouse, your children under age 21 and your IRA
when calculating the sales charge. You must notify your broker or the
Transfer Agent to qualify.
14
<PAGE>
. RIGHT OF ACCUMULATION. You may add the value of any Class A, Class B
and Class C Shares of non-money market funds of the Trust, the Company
or Framlington you already own to the amount of your next Class A
Share investment for purposes of calculating the sales charge at the
time of current purchase. You must notify your broker or the Transfer
Agent to qualify.
Certain brokers may not offer these programs or may impose conditions on
use of these programs. You should consult with your broker prior to purchasing
the Fund's shares.
For further information on sales charge waivers and reductions call the
Fund at (800) 438-5789.
WHEN CAN I PURCHASE SHARES?
Shares of the Fund are sold on a continuous basis and can be purchased on
any Business Day.
WHAT IS THE MINIMUM REQUIRED INVESTMENT?
The minimum initial investment for Class A, Class B and Class C Shares of
the Fund is $250 and subsequent investments must be at least $50. Purchases in
excess of $250,000 must be for Class A or Class C Shares.
HOW CAN I PURCHASE SHARES?
You can purchase Class A, Class B and Class C Shares in a number of
different ways. You may place orders directly through the Transfer Agent or the
Distributor or through arrangements with your authorized broker.
. BY BROKER. Any broker authorized by the Distributor can sell you
shares of the Fund. Please note that brokers may charge you fees for
their services.
. BY MAIL. You may open an account by completing, signing and mailing
the attached Account Application Form and a check or other negotiable
bank draft (payable to The Munder Funds) for $250 or more to: THE
MUNDER FUNDS, C/O FIRST DATA INVESTOR SERVICES GROUP, PO BOX 5130,
WESTBOROUGH, MASSACHUSETTS 01581-5130. Be sure to specify on your
Account Application Form the class of shares being purchased. If the
class is not specified, your purchase will automatically be invested
in Class A Shares. For additional investments send a letter stating
the Fund and share class you wish to purchase, your name and your
account number with a check for $50 or more to the address listed
above.
. BY WIRE. To open a new account, you should call the Fund at (800) 438-
5789 to obtain an account number and complete wire instructions prior
to wiring any funds. Within seven days of purchase, you must send a
completed Account Application Form containing your certified taxpayer
identification number to the Transfer Agent at the address provided
above. Wire instructions must state the Fund name, share class, your
registered name and your account number. Your bank wire should be sent
through the Federal Reserve Bank Wire System to:
Boston Safe Deposit and Trust Company
Boston, MA
ABA# 011001234
DDA# 16-798-3
Account No:
You may make additional investments at any time using the wire procedures
described above. Note that banks may charge fees for transmitting wires.
15
<PAGE>
. AUTOMATIC INVESTMENT PLAN ("AIP"). Under the AIP, you may arrange for
periodic investments in the Fund through automatic deductions from a
checking or savings account. To enroll in the AIP you should complete
the AIP Application Form or call the Fund at (800) 438-5789. The
minimum pre- authorized investment amount is $50. You may discontinue
the AIP at any time. We may discontinue the AIP on 30 days' written
notice to you.
. REINVESTMENT PRIVILEGE. Once a year you may reinvest redemption
proceeds from Class A and B Shares of the Fund in shares of the same
class of the Fund without any sales charges, if the reinvestment is
made within 60 days of redemption. You or your broker must notify the
Transfer Agent in writing at the time of reinvestment in order to
eliminate the sales charge.
The Transfer Agent will send you confirmations of the opening of an account
and of all subsequent purchases, exchanges or redemptions in the account. If
your account has been set up by a broker or other investment professional,
account activity will be detailed in their statements to you.
We do not issue share certificates. We reserve the right to (i) reject any
purchase order if, in its opinion, it is in the Fund's best interest to do so
and (ii) suspend the offering of shares of any class for any period of
time.
You may pay for shares of the Fund with securities which the Fund is
allowed to hold.
See the SAI for further information regarding purchases of the Fund's
shares.
HOW CAN I EXCHANGE SHARES?
You may exchange shares of the Fund for shares of the same class of other
funds of the Trust, the Company or Framlington based on their relative net asset
values. Class A Shares of a money market fund of the Trust or the Company that
were (1) acquired through an exchange and (2) can be traced back to a purchase
of shares in one or more funds of the Trust or the Company for which a sales
charge was paid, can be exchanged for Class A Shares of a fund of the Trust, the
Company or Framlington. Class B and Class C Shares will continue to age from
the date of the original purchase and will retain the same CDSC rate as they had
before the exchange.
You must meet the minimum purchase requirements for the fund of the Trust,
the Company or Framlington that you purchase by exchange. If you are exchanging
into shares of a fund with a higher sales charge, you must pay the difference at
the time of exchange. Please note that a share exchange is a taxable event and
accordingly, you may realize a taxable gain or loss. Before making an exchange
request, read the Prospectus of the fund you wish to purchase by exchange. You
can obtain a Prospectus for any fund of the Trust, the Company or Framlington by
contacting your broker or the Funds at (800) 438-5789. Brokers may charge a fee
for handling exchanges.
. EXCHANGES BY TELEPHONE. You may give exchange instructions by
telephone to the Fund at (800) 438-5789. You may not exchange shares
by telephone if you hold share certificates. We reserve the right to
reject any telephone exchange request and to place restrictions on
telephone exchanges.
. EXCHANGES BY MAIL. You may send exchange orders to your broker or to
the Transfer Agent at The Munder Funds c/o First Data Investor
Services Group, P.O. Box 5130, Westborough, Massachusetts, 01581-5130.
We may modify or terminate the exchange privilege at any time. You will be
given notice of any material modifications except where notice is not required.
16
<PAGE>
REDEMPTIONS OF SHARES
WHAT PRICE DO I RECEIVE FOR REDEEMED SHARES?
The redemption price is the NAV next determined after we receive the
redemption request in proper form. We will reduce the amount you receive by the
amount of any applicable CDSC. See "Purchases of Shares--What Price Do I Pay
for Shares?" for an explanation of how the net asset value next determined is
calculated.
CONTINGENT DEFERRED SALES CHARGES. You pay a CDSC when you redeem:
. Class A Shares that are part of an investment of at least $500,000
within one year of buying them
. Class B Shares within six years of buying them
. Class C Shares within one year of buying them.
These time periods include the time you held Class B or Class C Shares
which you may have exchanged for Class B or Class C Shares of the Fund.
The CDSC schedule for Class B Shares purchased after June 27, 1995 is set
forth below. See the SAI for the CDSC schedule for Class B Shares purchased
before that time. The CDSC is based on the original net asset value at the time
of purchase of your investment or the net asset value at the time of redemption,
whichever is lower.
<TABLE>
<CAPTION>
CLASS B SHARES
YEARS SINCE PURCHASE CDSC
- -------------------- ----
<S> <C>
First................................................................. 3.00%
Second................................................................ 2.50%
Third................................................................. 2.00%
Fourth................................................................ 1.50%
Fifth................................................................. 1.00%
Sixth................................................................. 0.50%
Seventh and thereafter................................................ 0.00%
</TABLE>
The Distributor pays sales commissions of 2.00% of the purchase price of
Class B Shares of the Fund to brokers at the time of sale that initiate and are
responsible for purchases of such Class B Shares of the Fund.
You will not pay a CDSC to the extent that the value of the redeemed shares
represents:
. reinvestment of dividends or capital gains distributions
. capital appreciation of shares redeemed.
When you redeem shares, we will assume that you are redeeming first shares
representing reinvestment of dividends and capital gains distributions, then any
appreciation on shares redeemed, and then remaining shares held by you for the
longest period of time. We will calculate the holding period of shares of a
Fund acquired through an exchange of shares of the Munder Money Market Fund from
the date that the shares of the Fund were initially purchased.
CDSC WAIVERS. We will waive the CDSC payable upon redemptions of shares
which you purchased after June 27, 1995 for:
. redemptions made within one year after the death of a shareholder or
registered joint owner
17
<PAGE>
. minimum required distributions made from an IRA or other retirement plan
account after you reach age 70 1/2
. involuntary redemptions made by the Fund
. redemptions limited to 10% per year of the account's NAV. For example,
if you maintain an annual balance of $10,000 you can redeem up to $1,000
annually free of charge.
Consult the SAI for Class B Share CDSC waivers which apply when you redeem
shares acquired in an exchange of shares of another Fund of the Company or the
Trust that were purchased on or before June 27, 1995.
We will waive the CDSC for Class B Shares for all redemptions by Merrill
Lynch Plans if: (i) the Plan is recordkept on a daily valuation basis by Merrill
Lynch; or (ii) the Plan is recordkept on a daily valuation basis by an
independent recordkeeper whose services are provided through a contract or
alliance arrangement with Merrill Lynch; or (iii) the Plan has less than 500
eligible employees, as determined by the Merrill Lynch plan conversion manager,
on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service
Agreement.
WHEN CAN I REDEEM SHARES?
You can redeem shares on any Business Day, provided all required documents
have been received by the Transfer Agent. The Fund may temporarily stop
redeeming shares when the NYSE is closed or trading on the NYSE is restricted,
when an emergency exists and the Fund cannot sell its assets or accurately
determine the value of its assets or if the SEC orders the Fund to suspend
redemptions.
HOW CAN I REDEEM SHARES?
You may redeem shares of the Fund in several ways.
. BY MAIL. You may mail your redemption request to: THE MUNDER FUNDS, C/O
FIRST DATA INVESTOR SERVICES GROUP P.O. BOX 5130, WESTBOROUGH,
MASSACHUSETTS 01581-5130. The redemption request should state the name
of the Fund, share class, account number, amount of redemption, account
name and where to send the proceeds. All account owners must sign. If a
stock certificate has been issued to you, you must endorse the stock
certificate and return it together with the written redemption request.
A SIGNATURE GUARANTEE is required for the following redemption
requests: (a) redemption proceeds greater than $50,000; (b) redemption
proceeds not being made payable to the owner of the account; (c)
redemption proceeds not being mailed to the address of record on the
account or (d) if the redemption proceeds are being transferred to
another Munder Funds account with a different registration. You can
obtain a signature guarantee from a financial institution such as a
commercial bank, trust company, savings association or from a securities
firm having membership on a recognized securities exchange.
. BY TELEPHONE. You can redeem your shares by calling your broker or the
Fund at (800) 438-5789. There is no minimum requirement for telephone
redemptions paid by check. The Transfer Agent may deduct a wire fee
(currently $7.50) for wire redemptions under $5,000.
If you are redeeming at least $1,000 of shares and you have authorized
expedited redemption on your Account Application Form, simply call the
Fund prior to 4:00 p.m. (Eastern time), and request the funds be mailed
to the commercial bank or registered broker-dealer you designated on your
Account Application Form. We will send your redemption amount to you on
the next business day. We reserve the right at any time to change or
impose fees for this expedited redemption procedure.
We record all telephone calls for your protection and take measures to
identify the caller. If the Transfer Agent properly acts on telephone
instructions and follows the reasonable procedures to
18
<PAGE>
ensure against unauthorized transactions, neither the Trust, the
Distributor nor the Transfer Agent will be responsible for any losses. If
these procedures are not followed, the Transfer Agent may be liable to you
for losses resulting from unauthorized instructions.
During periods of unusual economic or market activity, you may
experience difficulties or delays in effecting telephone redemptions. In
such cases you should consider placing your redemption request by mail.
. AUTOMATIC WITHDRAWAL PLAN ("AWP"). If you have an account value of $2,500
or more in the Fund, you may redeem shares on a monthly, quarterly, semi-
annual or annual basis. The minimum withdrawal is $50. We usually process
withdrawals on the 20th day of the month and promptly send you your
redemption amount. You may enroll in the AWP by completing the AWP
Application Form available through the Transfer Agent. To participate in
the AWP you must have your dividends automatically reinvested and may not
hold share certificates. You may change or cancel the AWP at any time upon
notice to the Transfer Agent. You should not buy Class A Shares (and pay a
sales charge) while you participate in the AWP and you must pay any
applicable CDSC's when you redeem shares.
. INVOLUNTARY REDEMPTION. We may redeem your account if its value falls below
$250 as a result of redemptions (but not as a result of a decline in net
asset value). You will be notified in writing and allowed 60 days to
increase the value of your account to the minimum investment level.
WHEN WILL I RECEIVE REDEMPTION AMOUNTS?
We will typically send redemption amounts to you within seven Business Days
after you redeem shares. We may hold redemption amounts from the sale of shares
you purchased by check until the purchase check has cleared, which may be as
long as 15 days.
STRUCTURE AND MANAGEMENT OF THE FUND
HOW IS THE FUND STRUCTURED?
The Trust is an open-end management investment company, which is a mutual
fund that sells and redeems shares every day that it is open for business. The
Trust is managed under the direction of its Board of Trustees which is
responsible for the overall management of the Trust and supervises the Fund's
service providers. The Trust is organized as a Massachusetts business trust.
WHO MANAGES AND SERVICES THE FUND?
INVESTMENT ADVISOR. The Fund's investment advisor is Munder Capital
Management, a Delaware general partnership with its principal offices at 480
Pierce Street, Birmingham, Michigan 48009. The principal partners of the
Advisor are Old MCM, Inc. ("MCM"), Munder Group LLC and WAM Holdings, Inc.
("WAM"). MCM was founded in April, 1985 as a Delaware corporation and was a
registered investment advisor. WAM is an indirect, wholly-owned subsidiary of
Comerica Incorporated which owns or controls approximately 88% of the
partnership interests in the Advisor. As of June 30, 1998, the Advisor and its
affiliates had approximately $48.2 billion in assets under management, of which
$25.4 billion were invested in equity securities, $8.1 billion were invested in
money market or other short-term instruments, $9.2 billion were invested in
other fixed income securities and $5.5 billion in non-discretionary assets.
The Advisor provides overall investment management for the Fund, provides
research and credit analysis, and is responsible for all purchases and sales of
portfolio securities. During the fiscal year ended June 30, 1998, the Advisor
was paid an advisory fee at an annual rate of .07% of the average daily net
assets of the Fund (after waivers and/or expense reimbursements). The Advisor
waived advisory fees during the past fiscal year for the Fund. The
19
<PAGE>
Advisor is entitled to receive an annual fee equal to .20% of the first $250
million of the Fund's average daily net assets, .12% of the next $250 million of
the Fund's average daily net assets and .07% of the Fund's average daily net
assets over $500 million.
The Advisor may, from time to time, make payments to banks, broker-dealers
or other financial institutions for certain services to the Fund and/or its
shareholders, including sub-administration, sub-transfer agency and shareholder
servicing. The Advisor makes such payments out of its own resources and there
are no additional costs to the Fund or its shareholders.
The Advisor selects broker-dealers to execute portfolio transactions for
the Fund based on best price and execution terms. The Advisor may consider as a
factor the number of shares sold by the broker-dealer.
TRANSFER AGENT. First Data Investor Services Group, Inc. is the Fund's
transfer agent. The Transfer Agent is a wholly-owned subsidiary of First Data
Corporation and is located at 53 State Street, Boston, Massachusetts 02109.
ADMINISTRATOR. State Street Bank and Trust Company ("State Street" or
"Administrator") is the Fund's administrator. State Street is located at 225
Franklin Street, Boston, Massachusetts 02110. State Street generally assists
the Trust in all aspects of its administration and operations including
overseeing the maintenance of financial records and fund accounting. As
compensation for its services, State Street is entitled to receive fees, based
on the aggregate daily net assets of the Fund and certain other investment
portfolios that are advised by the Advisor for which it provides services,
computed daily and payable monthly at the annual rate of 0.113% on the first
$2.8 billion of net assets, plus 0.103% on the next $2.2 billion of net assets,
plus 0.101% on the next $2.5 billion of net assets, plus 0.095% on the next $2.5
billion of net assets, plus 0.080% on the next $2.5 billion of net assets, plus
0.070% on all net assets in excess of $12.5 billion (with a $75,000 minimum fee
per annum in the aggregate for all portfolios with respect to the
Administrator).
State Street has entered into a Sub-Administration Agreement with the
Distributor under which the Distributor provides certain administrative services
with respect to the Fund. State Street pays the Distributor a fee for these
services out of its own resources at no cost to the Fund.
CUSTODIAN AND SUB-CUSTODIAN. Comerica Bank ("Comerica" or the
"Custodian"), whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, Michigan 48226, is the Fund's custodian. No
compensation is paid to the Custodian for its custodial services. Comerica
receives a fee of 0.01% of the aggregate average daily net assets of the Fund
beneficially owned by Comerica and its customers for certain shareholder
services provided by Comerica to the Fund. State Street serves as the Fund's
sub-custodian.
DISTRIBUTOR. Funds Distributor, Inc. is the distributor of the Fund's
shares and is located at 60 State Street, Boston, Massachusetts 02109. It
markets and sells the Fund's shares.
For an additional description of the services performed by the
Administrator, the Transfer Agent, the Custodian, the Sub-Custodian and the
Distributor, see the SAI.
DISTRIBUTION SERVICES ARRANGEMENT
Under Rule 12b-1 of the Investment Company Act of 1940, as amended, the
Fund has adopted Service Plans with respect to its Class A Shares and Service
and Distribution Plans with respect to its Class B and Class C Shares. Under
the Plans, the Fund uses its assets to finance activities relating to the
distribution of its shares to investors and the provision of certain shareholder
services. The Distributor is entitled to receive a service fee at an annual
rate of up to 0.25% of the value of average daily net assets of the Fund's Class
A Shares. The Distributor also is entitled to receive a service fee at an
annual rate of up to 0.25% and a distribution fee at an annual rate of up to
0.75% of the value of the average daily net assets of the Fund's Class B and
Class C Shares. The Distributor uses the service fees primarily to pay ongoing
trail commissions to securities dealers (which may include the Distributor
itself) and other financial organizations which provide shareholder services for
the Fund. These services include,
20
<PAGE>
among other things, processing new shareholder account applications, reporting
to the Transfer Agent all transactions by customers and serving as the primary
information source to customers concerning the Fund.
WHAT ARE MY RIGHTS AS A SHAREHOLDER?
All shareholders have equal voting, liquidation and other rights. You are
entitled to one vote for each share you hold and a fractional vote for each
fraction of a share you hold. You will be asked to vote on matters affecting
the Trust as a whole and affecting the Fund. The Trust will not hold annual
shareholder meetings, but special meetings may be held at the written request of
shareholders owning more than 10% of outstanding shares for the purpose of
removing a Trustee. Under Massachusetts law, it is possible that a shareholder
may be personally liable for the Trust's obligations. If a shareholder were
required to pay a debt of the Fund, however, the Trust has committed to
reimburse the shareholder in full from its assets. The SAI contains more
information regarding voting rights.
Comerica currently has the right to vote a majority of the outstanding
shares of the Fund as agent, custodian or trustee for its customers and
therefore it is considered to be a controlling person of the Trust.
DIVIDENDS, DISTRIBUTIONS AND TAXES
WHEN WILL I RECEIVE DISTRIBUTIONS FROM THE FUND?
As a shareholder, you are entitled to your share of net income and capital
gains, if any, on the Fund's investments. The Fund passes its earnings along to
investors in the form of dividends. Dividend distributions are the dividends or
interest earned on investments after expenses. The net income of the Fund, if
any, is paid quarterly as a dividend.
The Fund distributes its net realized capital gains (including net short-
term capital gains), if any, at least annually.
HOW WILL DISTRIBUTIONS BE MADE?
The Fund will pay dividend and capital gains distributions in additional
shares of the same class of the Fund. If you wish to receive distributions in
cash, either indicate this request on your Account Application Form or notify
the Fund at (800) 438-5789.
ARE THERE TAX IMPLICATIONS OF MY INVESTMENTS IN THE FUND?
This section contains a brief summary of the tax implications of ownership
in the Fund's shares. A more detailed discussion of Federal income tax
considerations is contained in the SAI. You should consult your tax advisor
regarding the impact of owning the Fund's shares on your own personal tax
situation including the applicability of any state and local taxes.
In general, as long as the Fund meets the requirements to qualify as a
regulated investment company ("RIC") under Federal tax laws, it will not be
subject to Federal income tax on its income and capital gains that it
distributes in a timely manner to its shareholders. The Fund intends to qualify
annually as a RIC. Even if it qualifies as a RIC, the Fund may still be liable
for an excise tax on income that is not distributed in accordance with a
calendar year requirement; the Fund intends to avoid the excise tax by making
timely distributions.
Generally, you will owe tax on the amounts distributed to you, regardless
of whether you receive these amounts in cash or reinvest them in additional Fund
shares. Shareholders not subject to tax on their income generally will not be
required to pay any tax on amounts distributed to them. Federal income tax on
distributions to an IRA or to a qualified retirement plan will generally be
deferred.
21
<PAGE>
Capital gains derived from sales of portfolio securities held by the Fund
will generally be designated as long-term or short-term. Distributions from the
Fund's long-term capital gains are generally taxed at the long-term capital
gains rate regardless of how long you have owned shares in the Fund. Dividends
from other sources are generally taxed as ordinary income.
Dividends and capital gain distributions are generally taxable when you
receive them; however, if a distribution is declared in October, November or
December, but not paid until January of the following year, it will be
considered to be paid on December 31 in the year in which it was declared.
Shortly after the end of each year, you will receive from the Fund a statement
of the amount and nature of the distributions made to you during the year.
If you redeem, transfer or exchange Fund shares, you may have taxable gain
or a loss. If you hold Fund shares for six months or less, and during that time
you receive a capital gain dividend, any loss you realize on the sale of these
Fund shares will be treated as a long-term loss to the extent of the earlier
distribution.
Dividends and certain interest income earned from foreign securities by the
Fund may be subject to foreign withholding or other taxes. The Fund may be
permitted to pass on to its shareholders the right to a credit or deduction for
income or other tax credits earned from foreign investments and it intends to do
so if possible. These deductions or credits may be subject to tax law
limitations.
If the Fund invests in certain "passive foreign investment companies"
("PFICs"), it will be subject to Federal income tax (and possibly additional
interest charges) on a portion of any "excess distribution" or gain from the
disposition of such shares, even if it distributes such income to its
shareholders. If the Fund elects to treat a PFIC as a "qualified electing fund"
("QEF") and the PFIC furnishes certain financial information in the required
form to the Fund, the Fund will instead be required to include in income each
year its allocable share of the ordinary earnings and net capital gains of the
QEF, regardless of whether received, and such amounts will be subject to the
various distribution requirements described above. The Fund may also elect to
mitigate the tax effects of owning PFIC stock by making an annual mark-to-market
election with respect to PFIC shares.
ADDITIONAL INFORMATION
SHAREHOLDER COMMUNICATIONS. You will receive unaudited Semi-Annual Reports
and audited Annual Reports on a regular basis from the Fund. In addition, you
will also receive updated Prospectuses or Supplements to this Prospectus. In
order to eliminate duplicate mailings the Fund will only send one copy of the
above communications to (1) accounts with the same primary record owner,
(2)joint tenant accounts, (3) tenant in common accounts and (4) accounts which
have the same address.
YEAR 2000. The Fund's operations depend on the seamless functioning of
computer systems in the financial service industry, including those of its
service providers. Many computer software systems in use today cannot properly
process date-related information after December 31, 1999 because of the method
by which dates are encoded and calculated. This failure, commonly referred to
as the "Year 2000 Issue," could adversely affect the handling of securities
trades, pricing and account servicing for the Fund. The Fund has been informed
that its major service providers have made compliance with the Year 2000 Issue a
high priority and are taking steps that they believe are reasonably designed to
address the Year 2000 Issue with respect to their computer systems. There can
be, however, no assurance that these steps will be successful, or that
interaction with other non-complying computer systems will not impair their
services at that time.
22
<PAGE>
APPENDIX A
The Index 500 Fund is not sponsored, endorsed, sold or promoted by Standard
& Poor's Ratings Service, a division of McGraw-Hill Companies, Inc. ("S&P").
S&P makes no representation or warranty, express or implied, to the owners of
the Index 500 Fund or any member of the public regarding the advisability of
investing in securities generally or in the Index 500 Fund particularly or the
ability of the S&P 500 Index to trace general stock market performance. S&P's
only relationship to the Trust is the licensing of certain trademarks and trade
names of S&P and of the S&P 500 Index which is determined, composed and
calculated by S&P without regard to the Trust or the Index 500 Fund. S&P has no
obligation to take the needs of the Trust or the owners of the Index 500 Fund
into consideration in determining, composing or calculating the S&P 500 Index.
S&P is not responsible for and has not participated in the determination of the
prices and amount of the Index 500 Fund or the timing of the issuance or sale of
the Index 500 Fund or in the determination or calculation of the equation by
which the Index 500 Fund is to be converted into cash. S&P has no obligation or
liability in connection with the administration, marketing or trading of the
Index 500 Fund.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500
Index or any data included therein and S&P shall have no liability for any
errors, omissions, or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the Trust, owners of the Index 500
Fund, or any other person or entity from the use of the S&P 500 Index or any
data included therein. S&P makes no express or implied warranties, and
expressly disclaims all warranties of merchantability of fitness for a
particular purpose or use with respect to the S&P 500 Index or any data included
therein. Without limiting any of the foregoing, in no event shall S&P have any
liability for any special, punitive, indirect, or consequential damages
(including lost profits), even if notified of the possibility of such damages.
"Standard & Poor's", "S&P", "S&P 500", "Standard & Poor's 500", and "500"
are trademarks of McGraw-Hill, Inc. and have been licensed for use by the Trust.
The Index 500 Fund is not sponsored, endorsed, sold or promoted by S&P and S&P
makes no representation regarding the advisability of investing in the Index 500
Fund.
A-1
<PAGE>
CLASS Y SHARES
[Munder Logo]
Prospectus
October 27, 1998
THE MUNDER INDEX 500 FUND
Prospectus begins on next page
<PAGE>
PROSPECTUS
CLASS Y SHARES
The Munder Index 500 Fund (the "Fund") is a mutual fund that seeks to
provide price performance and income that is comparable to the Standard & Poor's
500 Composite Stock Price Index. The Fund invests primarily in equity
securities. The Fund is a portfolio of The Munder Funds Trust (the "Trust"), an
open-end investment company.
Munder Capital Management (the "Advisor") serves as the investment advisor
of the Fund.
This Prospectus explains the objectives, policies, risks and fees of the
Fund. You should read this Prospectus carefully before investing and retain it
for future reference. A Statement of Additional Information ("SAI") describing
the Fund has been filed with the Securities and Exchange Commission (the "SEC")
and is incorporated by reference into this Prospectus. You can obtain the SAI
free of charge by calling the Fund at (800) 438-5789. In addition, the SEC
maintains a Web site (http://www.sec.gov) that contains the SAI and other
information regarding the Fund.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED OR GUARANTEED. AN
INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
THE PRINCIPAL AMOUNT INVESTED.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES:
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS OCTOBER 27, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Fund Highlights
What are the key facts regarding the Fund?.................. 3
Financial Information............................................ 4
Fund Information
Who may want to invest in the Fund?......................... 7
What are the Fund's investments and investment practices?... 7
What are the risks of investing in the Fund?................ 9
Performance
How is the Fund's performance calculated?................... 10
Where can I obtain performance data?........................ 10
Purchases and Exchanges of Shares
What price do I pay for shares?............................. 11
When can I purchase shares?................................. 11
What is the minimum required investment?.................... 11
How can I purchase shares?.................................. 11
How can I exchange shares?.................................. 12
Redemptions of Shares
What price do I receive for redeemed shares?................ 12
When can I redeem shares?................................... 13
How can I redeem shares?.................................... 13
When will I receive redemption amounts?..................... 13
Structure and Management of the Fund
How is the Fund structured?................................. 13
Who manages and services the Fund?.......................... 13
What are my rights as a shareholder?........................ 14
Dividends, Distributions and Taxes
When will I receive distributions from the Fund?............ 15
How will distributions be made?............................. 15
Are there tax implications of my investments in the Fund?... 15
Additional Information........................................... 16
Appendix A....................................................... A-1
</TABLE>
2
<PAGE>
FUND HIGHLIGHTS
WHAT ARE THE KEY FACTS REGARDING THE FUND?
Q: What is the Fund's goal?
A: The Fund seeks to provide price performance and income that is comparable to
the Standard & Poor's 500 Composite Stock Price Index ("S&P 500").
Q: What is the Fund's strategy?
A: The Fund invests primarily in equity securities and it normally will hold
the securities of at least 80% of the issuers in the S&P 500. The Fund is
managed through a "quantitative" or "indexing" investment approach, which
attempts to duplicate the investment composition and performance of the S&P 500
through statistical procedures.
Q: What are the Fund's risks?
A: The Fund's net asset value, which is determined on every business day, will
change daily. The net asset value changes are due to changes in the price of
securities owned by the Fund as a result of rises and falls in the stock market
in general, perceptions about the stocks of particular companies and perceptions
about particular industries. You should note that you could lose a portion of
the amount you invest in the Fund.
Q: What are the options for investment in the Fund?
A: The Fund has registered five classes of shares: Class A, B, C, K and Y.
Class A, B, C and K Shares are described in other prospectuses. Class C Shares
are not currently offered for sale.
Q: How do I buy and sell shares of the Fund?
A: Funds Distributor, Inc. (the "Distributor") sells shares of the Fund. You
may purchase shares from the Distributor through broker-dealers or other
financial institutions or from the Fund's transfer agent, First Data Investor
Services Group, Inc. (the "Transfer Agent"), by mailing the Account Application
Form with a check to the Transfer Agent. Fiduciary and discretionary accounts
of institutions and institutional investors must invest at least $500,000
initially. Other types of investors are not subject to any minimum required
investment.
Shares may be redeemed (sold back to the Fund) by mail or by telephone.
You may also acquire the Fund's shares by exchanging shares of the same class
of other funds of the Trust, The Munder Funds, Inc. (the "Company") and The
Munder Framlington Funds Trust ("Framlington"), and exchange Fund shares for
shares of the same class of other funds of the Trust, the Company and
Framlington.
Q: What shareholder privileges does the Fund offer?
A:
. Automatic Investment Plan
. Retirement Plan
. Telephone Exchanges
. Reinvestment Privilege
. Redemption By Check
3
<PAGE>
Q: When and how are distributions made?
A: Dividend distributions are made from the dividends and interest earned on
investments after expenses. The Fund pays dividends at least quarterly (if
income is available) and distributes capital gains at least annually. Unless
you elect to receive distributions in cash, all dividends and capital gain
distributions will be automatically used to purchase additional shares of the
Fund.
Q: Who manages the Fund's assets?
A: Munder Capital Management is the Fund's investment advisor. The Advisor is
responsible for all purchases and sales of the securities held by the Fund.
FINANCIAL INFORMATION
SHAREHOLDER TRANSACTION EXPENSES(1)
The purpose of this table is to assist you in understanding the expenses a
shareholder in the Fund will bear directly.
<TABLE>
<S> <C>
Maximum Sales Charge on Purchase (as a % of Offering Price).................................. None
Sales Charge Imposed on Reinvested Dividends................................................. None
Maximum Deferred Sales Charge................................................................ None
Redemption Fees(2)........................................................................... None
Exchange Fees................................................................................ None
</TABLE>
________________________
Notes:
(1)Does not include fees which institutions may charge for services they provide
to you.
(2)The Transfer Agent may charge a fee of $7.50 for wire redemptions under
$5,000.
FUND OPERATING EXPENSES
The purpose of this table is to assist you in understanding the expenses
charged directly to the Fund, which investors in the Fund will bear indirectly
for the current fiscal year. Such expenses include payments to Trustees,
auditors, legal counsel and service providers (such as the Advisor),
registration fees, and distribution fees. The fees shown below have been
restated to reflect an anticipated waiver of advisory fees and the
discontinuation of voluntary expense reimbursements effective as of the date of
this Prospectus.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
- ------------------------------
<S> <C>
Advisory Fees................................................................................................. .07%*
Other Expenses................................................................................................ .22%
----
Total Fund Operating Expenses................................................................................. .29%*
=====
</TABLE>
______________________
* The Advisor expects to voluntarily waive a portion of its advisory fee during
the current fiscal year. The Advisor may discontinue such waiver at any time in
its sole discretion. Without waivers the ratio of advisory fees to average
daily net assets would be .15% and total fund operating expenses would be .37%.
4
<PAGE>
EXAMPLE
This example shows the amount of expenses you would pay (directly or
indirectly) on a $1,000 investment in the Fund assuming (1) a 5% annual return,
(2) redemption at the end of the time periods (including the deduction of the
deferred sales charge, if any) and (3) no redemption at the end of the time
periods. THIS EXAMPLE IS NOT A REPRESENTATION OF PAST OR FUTURE PERFORMANCE OR
OPERATING EXPENSES; ACTUAL PERFORMANCE OR OPERATING EXPENSES MAY BE LARGER OR
SMALLER THAN THOSE SHOWN.
<TABLE>
<CAPTION>
1 Year 3 YEAR 5 YEAR 10 YEAR
------ ------ ------ -------
<S> <C> <C> <C>
$3 $9 $16 $37
</TABLE>
FINANCIAL HIGHLIGHTS
The following financial highlights were audited by Ernst & Young LLP,
independent auditors. This information should be read in conjunction with the
Fund's most recent Annual Report, which is incorporated by reference into the
SAI. You may obtain the Annual Reports without charge by calling (800) 438-
5789.
<TABLE>
<CAPTION>
INDEX 500 FUND(a)
------------------------------------------------------
<S> <C> <C> <C> <C>
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96(F) 6/30/95(D)
------- ------- ------- -------
Net asset value, beginning of period..................
Income from investment operations:
Net investment income...............................
Net realized and unrealized gain on investments.....
Total from investment operations....................
Less distributions:
Dividends from net investment income................
Distributions from net realized gains...............
Total distributions.................................
Net asset value at end of period......................
Total return (b)....................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)................
Ratio of operating expenses to average net assets...
Ratio of net investment income to average net assets
Portfolio turnover rate.............................
Ratio of operating expenses to average net assets
w/o waivers and/or expense reimbursement..........
Average commission rate(g)..........................
</TABLE>
___________________________
(a) The Munder Index 500 Fund Class Y Shares commenced operations on December 1,
1991.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year changed to June 30. Prior to this, the fiscal year end was the
last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
5
<PAGE>
<TABLE>
<CAPTION>
INDEX 500 FUND(a)
---------------------------------------------------
<S> <C> <C> <C> <C>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
2/28/95(E,F) 2/28/94 2/28/93 2/29/92
------- ------- ------- -------
Net asset value, beginning of period..................
Income from investment operations:
Net investment income...............................
Net realized and unrealized gain on investments.....
Total from investment operations....................
Less distributions:
Dividends from net investment income................
Distributions from net realized gains...............
Total distributions.................................
Net asset value at end of period......................
Total return (b)....................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)................
Ratio of operating expenses to average net assets...
Ratio of net investment income to average net assets
Portfolio turnover rate.............................
Ratio of operating expenses to average net assets
w/o waivers and/or expense reimbursement..........
Average commission rate(g)..........................
</TABLE>
___________________________
(a) The Munder Index 500 Fund Class Y Shares commenced operations on December 1,
1991.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year changed to June 30. Prior to this, the fiscal year end was the
last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
6
<PAGE>
FUND INFORMATION
This Prospectus describes Class Y Shares of the Fund. This section
summarizes the Fund's principal investments. The section entitled "What are the
Fund's Investments and Investment Practices?" and "What are the Risks of
Investing in the Fund?" and the SAI give more information about the Fund's
investment techniques and risks.
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide performance
and income that is comparable to the S&P 500. The S&P 500 is an index of 500
stocks which emphasize large capitalization companies. See Appendix A for more
information on the S&P 500. The Fund will normally hold the securities of at
least 400 of the stocks in the S&P 500.
The Fund will try to achieve a correlation between the performance of its
portfolio and that of the S&P 500 of at least .95. A correlation of 1.0 would
mean that the changes in the Fund's price mirror exactly changes in the S&P 500.
The timing of purchases and redemptions, changes in securities markets, level of
the Fund's assets and other factors affect the Fund's ability to exactly track
the S&P 500's performance.
The Fund is managed through the use of a "quantitative" investment approach
and tries to mirror the composition and performance of the S&P 500 through
statistical procedures. The Advisor does not use traditional methods of fund
investment management, i.e., it does not select stocks on the basis of economic,
financial and market analysis. Because the Fund pays brokerage costs and other
fees, its return may be lower than that of the S&P 500.
PORTFOLIO MANAGEMENT. Todd B. Johnson and Kenneth A. Schluchter III
jointly manage the Fund. Mr. Johnson, a Chief Investment Officer of the
Advisor, has served as the portfolio manager of the Fund since July 1992. Mr.
Schluchter, who has managed the Fund since June 1997, was previously a Systems
Developer and Data Analyst for Compuware Incorporated (1993-1995) and a Business
Analyst for Central Transport Incorporated (1989-1993).
WHO MAY WANT TO INVEST IN THE FUND?
The Fund is designed for investors who desire potentially high capital
appreciation and who can accept short-term variations in return for potentially
greater returns over the long term. In general, the greater the risk, the
greater the potential reward. Investors who have a short time horizon, who
desire a high level of income or who are conservative in their investment
approach may wish to invest in other portfolios offered by the Trust.
WHAT ARE THE FUND'S INVESTMENTS AND INVESTMENT PRACTICES?
The Fund will invest in EQUITY SECURITIES, which includes common stocks,
preferred stocks, warrants and other securities convertible into common stocks,
including convertible bonds and convertible preferred stocks. Many of the
common stocks the Fund will buy will not pay dividends; instead, stocks will be
bought for the potential that their prices will increase, providing capital
appreciation for the Fund. The value of Equity Securities will fluctuate due to
many factors, including the past and predicted earnings of the issuer, the
quality of the issuer's management, general market conditions, the forecasts for
the issuer's industry and the value of the issuer's assets. Holders of Equity
Securities only have rights to value in the company after all debts have been
paid, and they could lose their entire investment in a company that encounters
financial difficulty. Warrants are rights to purchase securities at a specified
time at a specified price.
The Fund may invest in FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS, which
are obligations of the Fund to purchase or sell a specific currency at a future
date at a set price. These contracts may decrease the Fund's loss due to a
change in currency value, but also limits gains from currency exchanges.
7
<PAGE>
The Fund may invest in MONEY MARKET INSTRUMENTS, which are high-quality,
short-term instruments including, among other things, commercial paper, bankers'
acceptances and negotiable certificates of deposit of banks or savings and loan
associations, short-term corporate obligations and short-term securities issued
by, or guaranteed by, the U.S. Government and its agencies or instrumentalities.
These instruments will be used primarily pending investment, to meet anticipated
redemptions or as a temporary defensive measure.
The Fund may invest in FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS.
Futures contracts are contracts in which the Fund agrees, at maturity, to make
delivery of or receive securities, the cash value of an index, or foreign
currency. Futures contracts and options on futures contracts are used for
hedging purposes or to maintain liquidity. The 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 Fund will set aside cash or other liquid securities to "cover" the Fund's
position in futures.
The Fund may purchase or sell OPTIONS. The Fund may buy options giving it
the right to require a buyer to buy a security held by the Fund (put options),
buy options giving it the right to require a seller to sell securities to the
Fund (call options), sell (write) options giving a buyer the right to require
the Fund to buy securities from the buyer or write options giving a buyer the
right to require the Fund to sell securities to the buyer during a set time at a
set price. Options may relate to stock indices or individual securities. See
the SAI for more details and additional limitations.
The Fund may purchase securities on a "WHEN-ISSUED" basis and may purchase
or sell securities on a "FORWARD COMMITMENT" basis. Although the price to be
paid by the Fund is set at the time of the agreement, the Fund usually does not
pay for securities until they are received. The value of the securities may
change between the time the price is set and the time the price is paid. When
the Fund purchases securities for future delivery, the Fund's custodian will set
aside cash or other liquid securities to "cover" the Fund's position. The Fund
does not intend to purchase securities for future delivery for speculative
purposes.
The Fund may enter into REPURCHASE AGREEMENTS. Under a repurchase
agreement, the Fund agrees to purchase securities from a seller and the seller
agrees to repurchase the securities at a later time, typically within seven
days, at a set price. The seller agrees to set aside collateral equal to the
price it has to pay during the term of the agreement. This ensures that the
Fund will receive the purchase price at the time it is due, unless the seller
defaults or declares bankruptcy, in which event the Fund will bear the risk of
possible loss due to adverse market action or delays in liquidating the
underlying obligation.
The Fund may invest in REVERSE REPURCHASE AGREEMENTS. Under a reverse
repurchase agreement, the Fund sells securities and agrees to buy them back
later at an agreed upon time and price. Reverse repurchase agreements are used
to borrow money for temporary purposes.
The Fund may LEND SECURITIES to broker-dealers and other financially sound
institutional investors who will pay the Fund for the use of the securities,
thus potentially increasing the Fund's returns. The borrower must set aside
cash or liquid securities equal to the value of the securities borrowed at all
times during the terms of the loan. Loans may not exceed 25% of the value of
the Fund's total assets. Risks involved in such transactions include possible
delay in recovering the loaned securities and possible loss of the securities or
the collateral if the borrower fails financially.
The Fund may purchase AMERICAN DEPOSITARY RECEIPTS ("ADRS"), EUROPEAN
DEPOSITARY RECEIPTS ("EDRS") AND GLOBAL DEPOSITARY RECEIPTS ("GDRS"). ADRs are
issued by U.S. financial institutions and GDRs and EDRs are issued by European
financial institutions. They are receipts evidencing ownership of underlying
foreign securities.
The Fund may buy shares of registered MONEY MARKET FUNDS. The Fund will
bear a portion of the expenses of any investment company whose shares they
purchase, including operating costs and investment advisory, distribution and
administration fees. These expenses would be in addition to the Fund's own
expenses.
8
<PAGE>
The Fund may invest up to 10% of its assets in other investment
companies and no more than 5% of its assets in any one investment company.
The Fund may invest up to 15% of the value of its net assets in ILLIQUID
SECURITIES. Illiquid Securities are securities for which there is no ready
market, which inhibits the ability to sell them and obtain their full market
value, or which are legally restricted as to their resale by the Fund.
The Fund may purchase FIXED INCOME SECURITIES. Fixed Income Securities are
securities which either pay interest at set times at either fixed or variable
rates, or which realize a discount upon maturity. Fixed Income Securities
include corporate bonds, debentures, notes and other similar corporate debt
instruments, zero coupon bonds (discount debt obligations that do not make
interest payments) and variable amount master demand notes that permit the
amount of indebtedness to vary in addition to providing for periodic adjustments
in the interest rate. The Fund may purchase U.S. GOVERNMENT SECURITIES, which
are securities issued by, or guaranteed by, the U.S. Government or its agencies
or instrumentalities. Such securities include U.S. Treasury bills, which have
initial maturities of less than one year, U.S. Treasury notes, which have
initial maturities of one to ten years, U.S. Treasury bonds, which generally
have initial maturities of greater than ten years, and obligations of the
Federal Home Loan Mortgage Corporation, Federal National Mortgage Association
and Government National Mortgage Association. Under normal market conditions,
the Fund will not invest to a significant extent, or on a routine basis, in U.S.
Government Securities.
The Fund may BORROW MONEY in an amount up to 5% of its assets for temporary
purposes and in an amount up to 33 1/3% of its assets to meet redemptions. This
is a "fundamental" policy which can be changed only by shareholders.
The Fund may invest up to 25% of its assets in FOREIGN SECURITIES. Foreign
Securities are securities issued by non-U.S. companies. Investments in Foreign
Securities are riskier than investments in U.S. companies because (i) foreign
companies may be subject to different accounting, auditing and financial
reporting standards than U.S. companies, (ii) there is generally less public
information available about foreign companies, (iii) there may be less
governmental regulation and supervision of foreign stock exchanges, securities
markets and companies and (iv) foreign securities markets may be less liquid and
more volatile than U.S. securities markets.
WHAT ARE THE RISKS OF INVESTING IN THE FUND?
The Fund is not meant to provide a vehicle for playing short-term swings in
the stock market. Consistent with a long-term investment approach, investors in
the Fund should be prepared and able to maintain their investments during
periods of adverse market conditions. By itself, no Fund is a balanced
investment program and there is no guarantee that any Fund will achieve its
investment objective since there is uncertainty in every investment.
Investing in the Fund may be less risky than investing in individual stocks
due to the diversification of investing in a portfolio of many different stocks;
however, such diversification does not eliminate all risks. Because the Fund
invests mostly in Equity Securities, rises and falls in the stock market in
general, as well as in the value of particular Equity Securities held by the
Fund, can affect the Fund's performance. Your investment in the Fund is not
guaranteed. The net asset value of the Fund will change daily and you might not
recoup the amount you invest in the Fund.
A Fund's risk is mostly dependent on the types of securities it purchases
and its investment techniques. The Fund is authorized to use options, futures
and forward foreign currency exchange contracts, which are types of derivative
instruments. Derivative instruments are instruments that derive their value
from a different underlying security, index or financial indicator. The use of
derivative instruments exposes the 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
9
<PAGE>
select portfolio securities; (4) the possible absence of a liquid secondary
market for any particular instrument and possible exchange-imposed price
fluctuation limits, either of which may make it difficult or impossible to close
out a position when desired; (5) leverage risk, that is, the risk that adverse
price movements in an instrument can result in a loss substantially greater than
the Fund's initial investment in that instrument (in some cases, the potential
loss is unlimited); and (6) particularly in the case of privately-negotiated
instruments, the risk that the counterparty will fail to perform its
obligations, which could leave the Fund worse off than if it had not entered
into the position.
To the extent that a Fund invests in illiquid securities, the Fund risks
not being able to sell securities at the time and the price that it would like.
The Fund may therefore have to lower the price, sell substitute securities or
forego an investment opportunity, each of which might adversely affect the Fund.
The risks of the various investment techniques the Fund uses are described
in more detail in the SAI.
PERFORMANCE
HOW IS THE FUND'S PERFORMANCE CALCULATED?
There are various ways in which the Fund may calculate and report its
performance. Performance is calculated separately for each class of shares.
One method is to show the Fund's total return. Cumulative total return is
the percentage change in the value of an amount invested in a class of shares of
the Fund over a stated period of time and takes into account reinvested
dividends. Cumulative total return most closely reflects the actual performance
of the Fund.
Average annual total return refers to the average annual compounded rates
of return over a specified period on an investment in shares of the Fund
determined by comparing the initial amount invested to the ending redeemable
value of the amount, taking into account reinvested dividends.
The Fund may also publish its current yield. Yield is the net investment
income generated by a share of the Fund during a 30-day period divided by the
maximum offering price on the 30th day.
You should be aware that (i) past performance does not indicate how the
Fund will perform in the future and (ii) the Fund's return and net asset value
will fluctuate, so you cannot necessarily use the Fund's performance data to
compare it to investment in certificates of deposit, savings accounts or other
investments that provide a fixed or guaranteed yield.
The Fund may compare its performance to that of other mutual funds, such as
the performance of similar funds reported by Lipper Analytical Services, Inc. or
information reported in national financial publications (such as Money Magazine,
Forbes, Barron's, The Wall Street Journal and The New York Times) or in local or
regional publications. The Fund may also compare its total return to the S&P
500 and other broad-based indices. These indices show the value of selected
portfolios of securities (assuming reinvestment of interest and dividends) which
are not managed by a portfolio manager. The Fund may report how it is
performing in comparison to the Consumer Price Index, an indication of inflation
reported by the U.S. Government.
WHERE CAN I OBTAIN PERFORMANCE DATA?
The Wall Street Journal and certain local newspapers report information on
the performance of mutual funds. In addition, performance information is
contained in the Fund's annual report dated June 30 of each year and semi-annual
report dated December 31 of each year, which will automatically be mailed to
shareholders. To obtain copies of financial reports or performance information,
call (800) 438-5789.
10
<PAGE>
PURCHASES AND EXCHANGES OF SHARES
The following persons may purchase Class Y Shares:
. fiduciary and discretionary accounts of institutions
. institutional investors (including banks, savings institutions, credit
unions and other financial institutions, pension, profit sharing and
employee benefit plans and trusts, insurance companies, investment
companies, investment advisors and broker-dealers acting either for
their own accounts or for the accounts of institutional investors)
. directors, trustees, officers and employees of the Trust, the Company,
Framlington, the Advisor and the Distributor
. the Advisor's investment advisory clients
. family members of employees of the Advisor.
The Fund also has registered Class A, B, C and K Shares, which have
different sales charges, expense levels and performance. Class K Shares are
available to limited types of investors. Call (800) 438-5789 to obtain more
information concerning the Fund's other classes of shares.
WHAT PRICE DO I PAY FOR SHARES?
The purchase price for Class Y Shares is the net asset value ("NAV") next
determined after we receive your order in proper form without any sales charge.
You should be aware that broker-dealers (other than the Fund's Distributor) may
charge investors additional fees if shares are purchased through them.
Except in certain limited circumstances, the Fund determines its NAV on
each day the New York Stock Exchange ("NYSE") is open for trading (a "Business
Day") at the close of such trading (normally 4:00 p.m. Eastern time). The Fund
calculates NAV separately for each class of shares. NAV is calculated by
totaling the value of all of the assets of the Fund allocated to a particular
class of shares, subtracting the Fund's liabilities and expenses charged to that
class and dividing the result by the number of shares of that class outstanding.
WHEN CAN I PURCHASE SHARES?
Shares of the Fund are sold on a continuous basis and can be purchased on
any Business Day.
WHAT IS THE MINIMUM REQUIRED INVESTMENT?
The minimum initial investment by fiduciary and discretionary accounts of
institutions and institutional investors for Class Y Shares of the Fund is
$500,000. Other types of investors are not subject to any minimum required
investment.
HOW CAN I PURCHASE SHARES?
You can purchase Class Y Shares in a number of different ways. You may
place orders for Class Y Shares directly through the Transfer Agent or the
Distributor or through arrangements with a financial institution.
. THROUGH A FINANCIAL INSTITUTION. You may purchase shares through a
financial institution through procedures established with that
institution. Confirmations of share purchases will be sent to the
institution.
. BY MAIL. You may open an account by completing, signing and mailing an
Account Application Form and a check or other negotiable bank draft
(payable to The Munder Funds) to: THE MUNDER FUNDS,
11
<PAGE>
C/O FIRST DATA INVESTOR SERVICES GROUP, P.O. BOX 5130, WESTBOROUGH,
MASSACHUSETTS 01581- 5130. You can obtain an Account Application Form
by calling (800) 438-5789. For additional investments, send a letter
stating the Fund and share class you wish to purchase, your name and
your account number with a check to the address listed above.
. BY WIRE. You may make additional investments in the Fund by wire. Wire
instructions must state the Fund name, share class, your registered
name and your account number. Your bank wire should be sent through
the Federal Reserve Bank Wire System to:
Boston Safe Deposit and Trust Company
Boston, MA
ABA#011001234
DDA#16-798-3
Account No.:
Note that banks may charge fees for transmitting wires.
. AUTOMATIC INVESTMENT PLAN ("AIP"). Under the AIP, you may arrange for
periodic investments in the Fund through automatic deductions from a
checking or savings account. To enroll in the AIP, you should complete
the AIP Application Form or call the Fund at (800) 438-5789. The
minimum pre-authorized investment amount is $50. You may discontinue
the AIP at any time. We may discontinue the AIP on 30 days' written
notice to you.
The Transfer Agent will send you confirmations of the opening of an account
and of all subsequent purchases, exchanges or redemptions in the account. If
your account has been set up by a broker or other investment professional,
account activity will be detailed in their statements to you.
We do not issue share certificates. We reserve the right to (i) reject any
purchase order if, in our opinion, it is in the Fund's best interest to do so
and (ii) suspend the offering of shares of any Class for any period of time.
You may pay for shares of the Fund with securities which the Fund is
allowed to hold.
See the SAI for further information regarding purchases of the Fund's
shares.
HOW CAN I EXCHANGE SHARES?
You may exchange Class Y Shares of the Fund for Class Y Shares of other
funds of the Trust, the Company or Framlington based on their relative net asset
values.
You must meet the minimum purchase requirements for the fund of the Trust,
the Company or Framlington that you purchase by exchange. Please note that a
share exchange is a taxable event and accordingly, you may realize a taxable
gain or loss. Before making an exchange request, read the Prospectus of the
fund you wish to purchase by exchange. You can obtain a Prospectus for any fund
of the Trust, the Company or Framlington by contacting your broker or the Funds
at (800) 438-5789. Brokers may charge a fee for handling exchanges.
We may modify or terminate the exchange privilege at any time. You will be
given notice of any material modifications except where notice is not required.
REDEMPTIONS OF SHARES
WHAT PRICE DO I RECEIVE FOR REDEEMED SHARES?
The redemption price is the NAV next determined after we receive the
redemption request in proper form.
12
<PAGE>
WHEN CAN I REDEEM SHARES?
You can redeem shares on any Business Day, provided all required documents
have been received by the Transfer Agent. The Fund may temporarily stop
redeeming shares when the NYSE is closed or trading on the NYSE is restricted,
when an emergency exists and the Fund cannot sell its assets or accurately
determine the value of its assets or if the SEC orders the Fund to suspend
redemptions.
HOW CAN I REDEEM SHARES?
Shares held by an institution on behalf of its Customers must be redeemed
in accordance with instructions and limitations pertaining to the account at the
institution.
. INVOLUNTARY REDEMPTION. We may redeem your account if its value falls
below $250 as a result of redemptions (but not as a result of a
decline in net asset value). You will be notified in writing and
allowed 60 days to increase the value of your account to the minimum
investment level.
WHEN WILL I RECEIVE REDEMPTION AMOUNTS?
If we receive a redemption order for the Fund before 4:00 p.m. (Eastern
time) on a Business Day, we will normally wire payment to the redeeming
institution on the next Business Day. We may delay wiring redemption proceeds
for up to seven days if we feel an earlier payment would have a negative impact
on the Fund.
STRUCTURE AND MANAGEMENT OF THE FUND
HOW IS THE FUND STRUCTURED?
The Trust is an open-end management investment company, which is a mutual
fund that sells and redeems shares every day that it is open for business. The
Trust is managed under the direction of its Board of Trustees which is
responsible for the overall management of the Trust and supervises the Fund's
service providers. The Trust is organized as a Massachusetts business trust.
WHO MANAGES AND SERVICES THE FUND?
INVESTMENT ADVISOR. The Fund's investment advisor is Munder Capital
Management, a Delaware general partnership with its principal offices at 480
Pierce Street, Birmingham, Michigan 48009. The principal partners of the
Advisor are Old MCM, Inc. ("MCM"), Munder Group LLC and WAM Holdings, Inc.
("WAM"). MCM was founded in April, 1985 as a Delaware corporation and was a
registered investment advisor. WAM is an indirect, wholly-owned subsidiary of
Comerica Incorporated which owns or controls approximately 88% of the
partnership interests in the Advisor. As of June 30, 1998, the Advisor and its
affiliates had approximately $48.2 billion in assets under management, of which
$25.4 billion were invested in equity securities, $8.1 billion were invested in
money market or other short-term instruments, $9.2 billion were invested in
other fixed income securities and $5.5 billion in non-discretionary assets.
The Advisor provides overall investment management or the Fund, provides
research and credit analysis, and is responsible for all purchases and sales of
portfolio securities. During the fiscal year ended June 30, 1998, the Advisor
was paid an advisory fee at an annual rate of .07% of the average daily net
assets of the Fund (after waivers and/or expense reimbursements). The Advisor
waived advisory fees during the past fiscal year for the Fund. The Advisor is
entitled to receive an annual fee equal to .20% of the first $250 million of the
Fund's average daily net assets, .12% of the next $250 million of the Fund's
average daily net assets and .07% of the Fund's average daily net assets over
$500 million.
13
<PAGE>
The Advisor may, from time to time, make payments to banks, broker-dealers
or other financial institutions for certain services to the Fund and/or its
shareholders, including sub-administration, sub-transfer agency and shareholder
servicing. The Advisor makes such payments out of its own resources and there
are no additional costs to the Fund or its shareholders.
The Advisor selects broker-dealers to execute portfolio transactions for
the Fund based on best price and execution terms. The Advisor may consider as a
factor the number of shares sold by the broker-dealer.
TRANSFER AGENT. First Data Investor Services Group, Inc. is the Fund's
transfer agent. The Transfer Agent is a wholly-owned subsidiary of First Data
Corporation and is located at 53 State Street, Boston, Massachusetts 02109.
ADMINISTRATOR. State Street Bank and Trust Company ("State Street" or
"Administrator") is the Fund's administrator. State Street is located at 225
Franklin Street, Boston, Massachusetts 02110. State Street generally assists
the Trust in all aspects of its administration and operations including
overseeing the maintenance of financial records and fund accounting. As
compensation for its services, State Street is entitled to receive fees, based
on the aggregate daily net assets of the Fund and certain other investment
portfolios that are advised by the Advisor for which it provides services,
computed daily and payable monthly at the annual rate of 0.113% on the first
$2.8 billion of net assets, plus 0.103% on the next $2.2 billion of net assets,
plus 0.101% on the next $2.5 billion of net assets, plus 0.095% on the next $2.5
billion of net assets, plus 0.080% on the next $2.5 billion of net assets, plus
0.070% on all net assets in excess of $12.5 billion (with a $75,000 minimum fee
per annum in the aggregate for all portfolios with respect to the
Administrator).
State Street has entered into a Sub-Administration Agreement with the
Distributor under which the Distributor provides certain administrative services
with respect to the Fund. State Street pays the Distributor a fee for these
services out of its own resources at no cost to the Fund.
CUSTODIAN AND SUB-CUSTODIAN. Comerica Bank ("Comerica" or the
"Custodian"), whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, Michigan 48226, is the Fund's custodian. No
compensation is paid to the Custodian for its custodial services. Comerica
receives a fee of 0.01% of the aggregate average daily net assets of the Fund
beneficially owned by Comerica and its customers for certain shareholder
services provided by Comerica to the Fund. State Street serves as the Fund's
sub-custodian.
DISTRIBUTOR. Funds Distributor, Inc. is the distributor of the Fund's
shares and is located at 60 State Street, Boston, Massachusetts 02109. It
markets and sells the Fund's shares.
For an additional description of the services performed by the
Administrator, the Transfer Agent, the Custodian, the Sub-Custodian and the
Distributor, see the SAI.
WHAT ARE MY RIGHTS AS A SHAREHOLDER?
All shareholders have equal voting, liquidation and other rights. You are
entitled to one vote for each share you hold and a fractional vote for each
fraction of a share you hold. You will be asked to vote on matters affecting
the Trust as a whole and affecting the Fund. The Trust will not hold annual
shareholder meetings, but special meetings may be held at the written request of
shareholders owning more than 10% of outstanding shares for the purpose of
removing a Trustee. Under Massachusetts law, it is possible that a shareholder
may be personally liable for the Trust's obligations. If a shareholder were
required to pay a debt of the Fund, however, the Trust has committed to
reimburse the shareholder in full from its assets. The SAI contains more
information regarding voting rights.
Comerica currently has the right to vote a majority of the outstanding
shares of the Fund as agent, custodian or trustee for its customers and
therefore it is considered to be a controlling person of the Trust.
14
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
WHEN WILL I RECEIVE DISTRIBUTIONS FROM THE FUND?
As a shareholder, you are entitled to your share of net income and capital
gains, if any, on the Fund's investments. The Fund passes its earnings along to
investors in the form of dividends. Dividend distributions are the dividends or
interest earned on investments after expenses. The net income of the Fund, if
any, is paid quarterly as a dividend.
The Fund distributes its net realized capital gains (including net short-
term capital gains), if any, at least annually.
HOW WILL DISTRIBUTIONS BE MADE?
The Fund will pay dividend and capital gains distributions in additional
shares of the same class of the Fund. If you wish to receive distributions in
cash, either indicate this request on your Account Application Form or notify
the Fund at (800) 438-5789.
ARE THERE TAX IMPLICATIONS OF MY INVESTMENTS IN THE FUND?
This section contains a brief summary of the tax implications of ownership
in the Fund's shares. A more detailed discussion of Federal income tax
considerations is contained in the SAI. You should consult your tax advisor
regarding the impact of owning the Fund's shares on your own personal tax
situation including the applicability of any state and local taxes.
In general, as long as the Fund meets the requirements to qualify as a
regulated investment company ("RIC") under Federal tax laws, it will not be
subject to Federal income tax on its income and capital gains that it
distributes in a timely manner to its shareholders. The Fund intends to qualify
annually as a RIC. Even if it qualifies as a RIC, the Fund may still be liable
for an excise tax on income that is not distributed in accordance with a
calendar year requirement; the Fund intends to avoid the excise tax by making
timely distributions.
Generally, you will owe tax on the amounts distributed to you, regardless
of whether you receive these amounts in cash or reinvest them in additional Fund
shares. Shareholders not subject to tax on their income generally will not be
required to pay any tax on amounts distributed to them. Federal income tax on
distributions to an IRA or to a qualified retirement plan will generally be
deferred.
Capital gains derived from sales of portfolio securities held by the Fund
will generally be designated as long-term or short-term. Distributions from the
Fund's long-term capital gains are generally taxed at the long-term capital
gains rate regardless of how long you have owned shares in the Fund. Dividends
from other sources are generally taxed as ordinary income.
Dividends and capital gain distributions are generally taxable when you
receive them; however, if a distribution is declared in October, November or
December, but not paid until January of the following year, it will be
considered to be paid on December 31 in the year in which it was declared.
Shortly after the end of each year, you will receive from the Fund a statement
of the amount and nature of the distributions made to you during the year.
If you redeem, transfer or exchange Fund shares, you may have taxable gain
or a loss. If you hold Fund shares for six months or less, and during that time
you receive a capital gain dividend, any loss you realize on the sale of these
Fund shares will be treated as a long-term loss to the extent of the earlier
distribution.
Dividends and certain interest income earned from foreign securities by the
Fund may be subject to foreign withholding or other taxes. The Fund may be
permitted to pass on to its shareholders the right to a credit or
15
<PAGE>
deduction for income or other tax credits earned from foreign investments and it
intends to do so if possible. These deductions or credits may be subject to tax
law limitations.
If the Fund invests in certain "passive foreign investment companies"
("PFICs"), it will be subject to Federal income tax (and possibly additional
interest charges) on a portion of any "excess distribution" or gain from the
disposition of such shares, even if it distributes such income to its
shareholders. If the Fund elects to treat a PFIC as a "qualified electing fund"
("QEF") and the PFIC furnishes certain financial information in the required
form to the Fund, the Fund will instead be required to include in income each
year its allocable share of the ordinary earnings and net capital gains of the
QEF, regardless of whether received, and such amounts will be subject to the
various distribution requirements described above. The Fund may also elect to
mitigate the tax effects of owning PFIC stock by making an annual mark-to-market
election with respect to PFIC shares.
ADDITIONAL INFORMATION
SHAREHOLDER COMMUNICATIONS. You will receive unaudited Semi-Annual Reports
and audited Annual Reports on a regular basis from the Fund. In addition, you
will also receive updated Prospectuses or Supplements to this Prospectus. In
order to eliminate duplicate mailings, the Fund will only send one copy of the
above communications to (1) accounts with the same primary record owner, (2)
joint tenant accounts, (3) tenant in common accounts and (4) accounts which have
the same address.
YEAR 2000. The Fund's operations depend on the seamless functioning of
computer systems in the financial service industry, including those of its
service providers. Many computer software systems in use today cannot properly
process date-related information after December 31, 1999 because of the method
by which dates are encoded and calculated. This failure, commonly referred to
as the "Year 2000 Issue," could adversely affect the handling of securities
trades, pricing and account servicing for the Fund. The Fund has been informed
that its major service providers have made compliance with the Year 2000 Issue a
high priority and are taking steps that they believe are reasonably designed to
address the Year 2000 Issue with respect to their computer systems. There can
be, however, no assurance that these steps will be successful, or that
interaction with other non-complying computer systems will not impair their
services at that time.
16
<PAGE>
APPENDIX A
The Index 500 Fund is not sponsored, endorsed, sold or promoted by Standard
& Poor's Ratings Service, a division of McGraw-Hill Companies, Inc. ("S&P").
S&P makes no representation or warranty, express or implied, to the owners of
the Index 500 Fund or any member of the public regarding the advisability of
investing in securities generally or in the Index 500 Fund particularly or the
ability of the S&P 500 Index to trace general stock market performance. S&P's
only relationship to the Trust is the licensing of certain trademarks and trade
names of S&P and of the S&P 500 Index which is determined, composed and
calculated by S&P without regard to the Trust or the Index 500 Fund. S&P has no
obligation to take the needs of the Trust or the owners of the Index 500 Fund
into consideration in determining, composing or calculating the S&P 500 Index.
S&P is not responsible for and has not participated in the determination of the
prices and amount of the Index 500 Fund or the timing of the issuance or sale of
the Index 500 Fund or in the determination or calculation of the equation by
which the Index 500 Fund is to be converted into cash. S&P has no obligation or
liability in connection with the administration, marketing or trading of the
Index 500 Fund.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500
Index or any data included therein and S&P shall have no liability for any
errors, omissions, or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the Trust, owners of the Index 500
Fund, or any other person or entity from the use of the S&P 500 Index or any
data included therein. S&P makes no express or implied warranties, and expressly
disclaims all warranties of merchantability of fitness for a particular purpose
or use with respect to the S&P 500 Index or any data included therein. Without
limiting any of the foregoing, in no event shall S&P have any liability for any
special, punitive, indirect, or consequential damages (including lost profits),
even if notified of the possibility of such damages.
"Standard & Poor's", "S&P", "S&P 500", "Standard & Poor's 500", and "500"
are trademarks of McGraw-Hill, Inc. and have been licensed for use by the Trust.
The Index 500 Fund is not sponsored, endorsed, sold or promoted by S&P and S&P
makes no representation regarding the advisability of investing in the Index 500
Fund.
A-1
<PAGE>
<TABLE>
<S> <C>
Munder Accelerating Growth Fund* Munder Framlington Healthcare Fund
Munder Balanced Fund Munder Framlington International Growth Fund
Munder Growth Opportunities Fund Munder Bond Fund
Munder Index 500 Fund Munder Intermediate Bond Fund
Munder Growth & Income Fund Munder International Bond Fund
Munder International Equity Fund Munder Short Term Treasury Fund
Munder Micro-Cap Equity Fund Munder U.S. Government Income Fund
Munder Multi-Season Growth Fund Munder Michigan Triple Tax-Free Bond Fund
Munder Real Estate Equity Investment Fund Munder Tax-Free Bond Fund
Munder Small-Cap Value Fund Munder Tax-Free Intermediate Bond Fund
Munder Small Company Growth Fund Munder Cash Investment Fund
Munder Value Fund Munder Money Market Fund
Munder NetNet Fund Munder Tax-Free Money Market Fund
Munder Framlington Emerging Markets Fund Munder U.S. Treasury Money Market Fund
Munder Framlington Global Financial Services Fund
</TABLE>
* The Munder Accelerating Growth Fund is close to new investments.
(collectively, the "Funds")
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information, which has been filed with the
Securities and Exchange Commission (the "SEC"), provides supplementary
information pertaining to all classes of shares representing interests in each
of the investment portfolios listed above. The Munder Funds, Inc. (the
"Company") currently offers a selection of fourteen investment portfolios, ten
of which are described in this Statement of Additional Information; The Munder
Funds Trust (the "Trust") currently offers a selection of fifteen investment
portfolios, each of which is described in this Statement of Additional
Information; and The Munder Framlington Funds Trust ("Framlington") currently
offers a selection of four investment portfolios, each of which is described in
this Statement of Additional Information. This Statement of Additional
Information is not a prospectus, and should be read only in conjunction with the
Company's, the Trust's, and Framlington's Prospectuses dated October 27, 1998.
A copy of each Prospectus may be obtained through Funds Distributor, Inc. (the
"Distributor"), or by calling (800) 438-5789. This Statement of Additional
Information is dated October 27, 1998.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
General............................................................................................................. 3
Fund Investments.................................................................................................... 4
Risk Factors and Special Considerations -- Index 500 Fund........................................................... 20
Risk Factors and Special Considerations -- Michigan Triple Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund... 21
Investment Limitations.............................................................................................. 23
Trustees, Directors and Officers.................................................................................... 27
Investment Advisory and Other Service Arrangements.................................................................. 32
Portfolio Transactions.............................................................................................. 47
Additional Purchase and Redemption Information...................................................................... 50
Net Asset Value..................................................................................................... 52
Performance Information............................................................................................. 53
Taxes............................................................................................................... 63
Additional Information Concerning Shares............................................................................ 70
Miscellaneous....................................................................................................... 72
Registration Statement.............................................................................................. 72
Financial Statements................................................................................................ 73
Appendix A.......................................................................................................... A-1
Appendix B.......................................................................................................... B-1
</TABLE>
No person has been authorized to give any information or to make any
representations not contained in this Statement of Additional Information or in
each Prospectus in connection with the offering made by each Prospectus and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Funds or the Distributor. The Prospectuses do not
constitute an offering by the Funds or by the Distributor in any jurisdiction in
which such offering may not lawfully be made.
2
<PAGE>
GENERAL
The following Funds are described in this Statement of Additional
Information:
THE MUNDER FUNDS TRUST
- ----------------------
Munder Accelerating Growth Fund ("Accelerating Growth Fund")*
Munder Balanced Fund ("Balanced Fund")
Munder Growth & Income Fund ("Growth & Income Fund")
Munder Index 500 Fund ("Index 500 Fund")
Munder International Equity Fund ("International Equity Fund")
Munder Small Company Growth Fund ("Small Company Growth Fund")
Munder Bond Fund ("Bond Fund")
Munder Intermediate Bond Fund ("Intermediate Bond Fund")
Munder U.S. Government Income Fund ("U.S. Income Fund")
Munder Michigan Triple Tax-Free Bond Fund ("Michigan Bond Fund")
Munder Tax-Free Bond Fund ("Tax-Free Bond Fund")
Munder Tax-Free Intermediate Bond Fund ("Tax-Free Intermediate Bond Fund")
Munder Cash Investment Fund ("Cash Investment Fund")
Munder Tax-Free Money Market Fund ("Tax-Free Money Market Fund")
Munder U.S. Treasury Money Market Fund ("U.S. Treasury Money Market Fund")
THE MUNDER FUNDS, INC.
- ----------------------
Munder Growth Opportunities Fund ("Growth Opportunities Fund")
Munder Micro-Cap Equity Fund ("Micro-Cap Fund")
Munder Multi-Season Growth Fund ("Multi-Season Fund")
Munder NetNet Fund ("NetNet Fund")
Munder Real Estate Equity Investment Fund ("Real Estate Fund")
Munder Small-Cap Value Fund ("Small-Cap Value Fund")
Munder Value Fund ("Value Fund")
Munder International Bond Fund ("International Bond Fund")
Munder Short Term Treasury Fund ("Short Term Treasury Fund")
Munder Money Market Fund ("Money Market Fund")
THE MUNDER FRAMLINGTON FUNDS TRUST
- ----------------------------------
Munder Framlington Emerging Markets Fund ("Emerging Markets Fund")
Munder Framlington Global Financial Services Fund ("Global Financial Services
Fund")
Munder Framlington Healthcare Fund ("Healthcare Fund")
Munder Framlington International Growth Fund ("International Growth Fund")
* The Accelerating Growth Fund is closed to new investors.
The Trust was organized on August 30, 1989 under the name "PDB Fund," which
was changed in November 1989 to "Opportunity Funds," in February 1990 to
"Ambassador Funds" and in June 1995 to "The Munder Funds Trust." The Tax-Free
Intermediate Bond Fund originally commenced operations on February 9, 1987 as a
separate portfolio of the St. Clair Tax-Free Fund, Inc. On November 20, 1992,
the St. Clair Tax-Free Intermediate Bond Fund was reorganized as the Ambassador
Tax-Free Intermediate Bond Fund. The Company was organized as a Maryland
corporation on November 18, 1992. Framlington was organized as a Massachusetts
business trust on October 30, 1996.
As stated in each Prospectus, the investment advisor of each Fund is Munder
Capital Management (the "Advisor"). The principal partners of the Advisor are
Old MCM, Inc. ("MCM"), Munder Group LLC and WAM
3
<PAGE>
Holdings, Inc. ("WAM"). MCM was founded in April 1985 as a Delaware corporation
and was a registered investment advisor. WAM is an indirect, wholly-owned
subsidiary of Comerica Incorporated which owns or controls approximately 88% of
the partnership interests in the Advisor.
Framlington Overseas Investment Management Limited (the "Sub-Advisor")
serves as sub-advisor for the four Framlington Funds. The Sub-Advisor is a
subsidiary of Framlington Group Limited, incorporated in England and Wales
which, through its subsidiaries, provides a wide range of investment services.
Framlington Group Limited is a wholly owned subsidiary of Framlington Holdings
Limited which is, in turn, owned 49% by the Advisor and 51% by Credit Commercial
de France S.A., a French banking corporation listed on the Societe des Bourses
Francaises.
Capitalized terms used in this Statement of Additional Information and not
otherwise defined have the same meanings as are given to them in each
Prospectus.
FUND INVESTMENTS
The following supplements the information contained in each Prospectus
concerning the investment objectives and policies of the Funds. With the
exception of the investment objectives of Multi-Season Fund, Real Estate Fund
and Money Market Fund, each Fund's investment objective is a non-fundamental
policy and may be changed without the authorization of the holders of a majority
of the Fund's outstanding shares. The Tax-Free Bond Fund and Tax-Free Money
Market Fund each have a fundamental policy to invest at least 80% of its
respective assets in municipal obligations bearing tax-exempt interest; all
other investment policies, other than those specifically designated as
fundamental, are non-fundamental policies and may be changed without the
authorization of the holders of a majority of a Fund's outstanding shares.
There can be no assurance that a Fund will achieve its objective. A description
of applicable credit ratings is set forth in Appendix A to this Statement of
Additional Information. For purposes of this Statement of Additional
Information, the Accelerating Growth Fund, Global Financial Services Fund,
Growth & Income Fund, Growth Opportunities Fund, Index 500 Fund, International
Equity Fund, Micro-Cap Fund, Multi-Season Fund, NetNet Fund, Real Estate Fund,
Small-Cap Value Fund, Small Company Growth Fund, Value Fund, International
Growth Fund, Emerging Markets Fund and Healthcare Fund are referred to as the
"Equity Funds"; the Bond Fund, Intermediate Bond Fund and U.S. Income Fund are
referred to as the "Bond Funds"; the Michigan Bond Fund, Tax-Free Bond Fund,
Tax-Free Intermediate Bond Fund and Short Term Treasury Fund are referred to as
the "Tax-Free Bond Funds" and Cash Investment Fund, Money Market Fund, Tax-Free
Money Fund and U.S. Treasury Money Market Fund are referred to as the "Money
Market Funds."
BORROWING. The Funds are authorized to borrow money in amounts up to 5% of
the value of their total assets at the time of such borrowings for temporary
purposes, and are authorized to borrow money in excess of the 5% limit as
permitted by the Investment Company Act of 1940, as amended (the "1940 Act"), to
meet redemption requests. This borrowing may be unsecured. The 1940 Act
requires the Funds to maintain continuous asset coverage of 300% of the amount
borrowed. If the 300% asset coverage should decline as a result of market
fluctuations or other reasons, the Funds may be required to sell some of their
portfolio holdings within three days to reduce the debt and restore the 300%
asset coverage, even though it may be disadvantageous from an investment
standpoint to sell securities at that time. Borrowed funds are subject to
interest costs that may or may not be offset by amounts earned on the borrowed
funds. A Fund may also be required to maintain minimum average balances in
connection with such borrowing or to pay a commitment or other fees to maintain
a line of credit; either of these requirements would increase the cost of
borrowing over the stated interest rate. Each Fund may, in connection with
permissible borrowings, transfer as collateral securities owned by the Funds.
FOREIGN SECURITIES. Each Equity Fund (except Global Financial Services
Fund, Real Estate Fund, International Equity Fund, International Growth Fund,
Emerging Markets Fund and Healthcare Fund), each Bond Fund, each Tax-Free Bond
Fund, the Balanced Fund, the Cash Investment Fund and the Money Market Fund may
invest up to 25% of its assets in foreign securities. Under normal market
conditions, the International Equity Fund, International Bond Fund and
International Growth Fund will each invest at least 65% of its assets in
securities of issuers located in at least three countries other than the United
States. The Global Financial Services Fund will invest at least 65 % of its
assets in securities of issuers located in at least three countries, one of
which may be the
4
<PAGE>
United States. The Emerging Markets Fund will invest at least 65% of its assets
in emerging market countries. There is no limit on the Healthcare Fund's
investments in foreign securities. The Multi-Season Fund and NetNet Fund
typically will only purchase foreign securities which are represented by
American Depositary Receipts ("ADRs") listed on a domestic securities exchange
or included in the NASDAQ National Market System, or foreign securities listed
directly on a domestic securities exchange or included in the NASDAQ National
Market System. ADRs are receipts typically issued by a United States bank or
trust company evidencing ownership of the underlying foreign securities. Certain
institutions issuing ADRs may not be sponsored by the issuer. A non-sponsored
depositary may not provide the same shareholder information that a sponsored
depositary is required to provide under its contractual arrangements with the
issuer.
The Funds may also purchase Global Depositary Receipts ("GDRs") or European
Depositary Receipts ("EDRs"), which are receipts issued by European financial
institutions evidencing ownership of the underlying foreign securities.
The International Bond Fund will primarily invest in foreign debt
obligations denominated in foreign currencies, including the European Currency
Unit ("ECU"), which are issued by foreign governments and governmental agencies,
instrumentalities or political subdivisions; debt securities issued or
guaranteed by supranational organizations (as defined below); corporate debt
securities; bank or bank holding company debt securities and other debt
securities including those convertible into foreign stock. For the purposes of
the 65% minimum with respect to the International Bond Fund's designation as an
international bond fund, the securities described in this paragraph are
considered "international bonds." Income and gains on foreign securities may be
subject to foreign withholding taxes. Investors should consider carefully the
substantial risks involved in securities of companies and governments of foreign
nations, which are in addition to the usual risks inherent in domestic
investments.
There may be less publicly available information about foreign companies
comparable to the reports and ratings published about companies in the United
States. Foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards, and auditing practices and
requirements may not be comparable to those applicable to United States
companies. Foreign markets have substantially less volume than the New York
Stock Exchange and securities of some foreign companies are less liquid and more
volatile than securities of comparable United States companies. Commission
rates in foreign countries, which are generally fixed rather than subject to
negotiation as in the United States, are likely to be higher. In many foreign
countries there is less government supervision and regulation of stock
exchanges, brokers, and listed companies than in the United States. Such
concerns are particularly heightened for emerging markets and Eastern European
countries.
Investments in companies domiciled in developing countries may be subject
to potentially higher risks than investments in developed countries. These
risks include (i) less social, political and economic stability; (ii) the small
current size of the markets for such securities and the currently low or
nonexistent volume of trading, which result in a lack of liquidity and in
greater price volatility; (iii) certain national policies which may restrict a
Fund's investment opportunities, including restrictions on investment in issuers
or industries deemed sensitive to national interest; (iv) foreign taxation; (v)
the absence of developed legal structures governing private or foreign
investment or allowing for judicial redress for injury to private property; (vi)
the absence, until recently in certain Eastern European countries, of a capital
market structure or market-oriented economy; and (vii) the possibility that
recent favorable economic developments in Eastern Europe may be slowed or
reversed by unanticipated political or social events in such countries.
Investments in Eastern European countries may involve risks of
nationalization, expropriation and confiscatory taxation. The Communist
governments of a number of Eastern European countries expropriated large amounts
of private property in the past, in many cases without adequate compensation,
and there can be no assurance that such expropriation will not occur in the
future. In the event of such expropriation, the Fund could lose a substantial
portion of any investments it has made in the affected countries. Further, no
accounting standards exist in Eastern European countries. Finally, even though
certain Eastern European currencies may be convertible into United States
dollars, the conversion rates may be artificial to the actual market values and
may be adverse to a Fund.
5
<PAGE>
The Advisor (Sub-Advisor with respect to the Framlington Funds) endeavors
to buy and sell foreign currencies on as favorable a basis as practicable. Some
price spread on currency exchange (to cover service charges) may be incurred,
particularly when the Fund changes investments from one country to another or
when proceeds of the sale of Fund shares in U.S. dollars are used for the
purchase of securities in foreign countries. Also, some countries may adopt
policies which would prevent the Fund from transferring cash out of the country
or withhold portions of interest and dividends at the source. There is the
possibility of expropriation, nationalization or confiscatory taxation,
withholding and other foreign taxes on income or other amounts, foreign exchange
controls (which may include suspension of the ability to transfer currency from
a given country), default in foreign government securities, political or social
instability or diplomatic developments that could affect investments in
securities of issuers in foreign nations.
Foreign securities markets have different clearance and settlement
procedures, and in certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when assets of a Fund are uninvested and no return is earned
thereon. The inability of a Fund to make intended security purchases due to
settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of portfolio securities due to settlement
problems could result either in losses to a Fund due to subsequent declines in
value of the portfolio security or, if the fund has entered into a contract to
sell the security, could result in possible liability to the purchaser.
A Fund may be affected either unfavorably or favorably by fluctuations in
the relative rates of exchange between the currencies of different nations, by
exchange control regulations and by indigenous economic and political
developments. Changes in foreign currency exchange rates will influence values
within a Fund from the perspective of U.S. investors, and may also affect the
value of dividends and interest earned, gains and losses realized on the sale of
securities, and net investment income and gains, if any, to be distributed to
shareholders by a Fund. The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand in the foreign
exchange markets. These forces are affected by the international balance of
payments and other economic and financial conditions, government intervention,
speculation and other factors. The Advisor (Sub-Advisor with respect to the
Framlington Fund), will attempt to avoid unfavorable consequences and to take
advantage of favorable developments in particular nations where, from time to
time, it places a Fund's investments.
The exercise of this flexible policy may include decisions to purchase
securities with substantial risk characteristics and other decisions such as
changing the emphasis on investments from one nation to another and from one
type of security to another. Some of these decisions may later prove profitable
and others may not. No assurance can be given that profits, if any, will exceed
losses.
FORWARD FOREIGN CURRENCY TRANSACTIONS. In order to protect against a
possible loss on investments resulting from a decline or appreciation in the
value of a particular foreign currency against the U.S. dollar or another
foreign currency, the Equity Funds (excluding the Real Estate Fund), the
Balanced Fund, the Bond Funds and the International Bond Fund are authorized to
enter into forward foreign currency exchange contracts ("forward currency
contracts"). These contracts involve an obligation to purchase or sell a
specified currency at a future date at a price set at the time of the contract.
Forward currency contracts do not eliminate fluctuations in the values of
portfolio securities but rather allow a Fund to establish a rate of currency
exchange for a future point in time.
When entering into a contract for the purchase or sale of a security, a
Fund may enter into a forward currency exchange contract for the amount of the
purchase or sale price to protect against variations, between the date the
security is purchased or sold and the date on which payment is made or received,
in the value of the foreign currency relative to the U.S. dollar or other
foreign currency.
When the Advisor (Sub-Advisor with respect to the Framlington Funds)
anticipates that a particular foreign currency may decline substantially
relative to the U.S. dollar or other leading currencies, in order to reduce
risk, a Fund may enter into a forward contract to sell, for a fixed amount, the
amount of foreign currency approximating the value of some or all of the Fund's
securities denominated in such foreign currency. Similarly, when the
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obligations held by a Fund create a short position in a foreign currency, the
Fund may enter into a forward contract to buy, for a fixed amount, an amount of
foreign currency approximating the short position. With respect to any forward
currency contract, it will not generally be possible to match precisely the
amount covered by that contract and the value of the securities involved due to
the changes in the values of such securities resulting from market movements
between the date the forward contract is entered into and the date it matures.
In addition, while forward contracts may offer protection from losses resulting
from declines or appreciation in the value of a particular foreign currency,
they also limit potential gains which might result from changes in the value of
such currency. A Fund will also incur costs in connection with forward currency
contracts and conversions of foreign currencies and U.S. dollars.
Cash or liquid securities equal to the amount of a Fund's assets that could
be required to consummate forward contracts will be designated on the records of
the Fund or the Funds' sub-custodian except to the extent the contracts are
otherwise "covered." For the purpose of determining the adequacy of the
securities in the account, the deposited securities will be valued at market or
fair value. If the market or fair value of such securities declines, additional
cash or securities will be placed in the account daily so that the value of the
account will equal the amount of such commitments by the Fund. A forward
contract to sell a foreign currency is "covered" if a Fund owns the currency (or
securities denominated in the currency) underlying the contract, or holds a
forward contract (or call option) permitting the Fund to buy the same currency
at a price no higher than the Fund's price to sell the currency. A forward
contract to buy a foreign currency is "covered" if a Fund holds a forward
contract (or put option) permitting the Fund to sell the same currency at a
price as high as or higher than the Fund's price to buy the currency.
FUTURES CONTRACTS AND RELATED OPTIONS. The Equity Funds, the Balanced
Fund, the Bond Funds, the Tax-Free Bond Funds and the International Bond Fund
may purchase and sell futures contracts on interest-bearing securities or
securities indices, and may purchase and sell call and put options on futures
contracts. For a detailed description of futures contracts and related options,
see Appendix B to this Statement of Additional Information.
ILLIQUID SECURITIES. Each of the Equity Funds and the Bond Funds (except
Short Term Treasury Fund) may invest up to 15%, and each of the Money Market
Funds may invest up to 10%, of the value of its net assets (determined at time
of acquisition) in securities that are illiquid. Illiquid securities would
generally include securities for which there is a limited trading market,
repurchase agreements and time deposits with notice/termination dates in excess
of seven days, and certain securities that are subject to trading restrictions
because they are not registered under the Securities Act of 1933, as amended
(the "Act"). If, after the time of acquisition, events cause this limit to be
exceeded, the Fund will take steps to reduce the aggregate amount of illiquid
securities as soon as reasonably practicable in accordance with the policies of
the SEC.
Each Fund (except U.S. Treasury Money Market Fund and Short Term Treasury
Fund) may invest in commercial obligations issued in reliance on the "private
placement" exemption from registration afforded by Section 4(2) of the Act
("Section 4(2) paper"). A Fund may also purchase securities that are not
registered under the Act, but which can be sold to qualified institutional
buyers in accordance with Rule 144A under the Act, ("Rule 144A securities").
Section 4(2) paper is restricted as to disposition under the Federal securities
laws, and generally is sold to institutional investors who agree that they are
purchasing the paper for investment and not with a view to public distribution.
Any resale by the purchaser must be in an exempt transaction. Section 4(2)
paper normally is resold to other institutional investors through or with the
assistance of the issuer or investment dealers which make a market in the
Section 4(2) paper, thus providing liquidity. Rule 144A securities generally
must be sold only to other qualified institutional buyers. If a particular
investment in Section 4(2) paper or Rule 144A securities is not determined to be
liquid, that investment will be included within the Fund's limitation on
investment in illiquid securities. The Advisor will determine the liquidity of
such investments pursuant to guidelines established by the Boards of
Directors/Trustees. It is possible that unregistered securities purchased by
the Fund in reliance upon Rule 144A could have the effect of increasing the
level of the Fund's illiquidity to the extent that qualified institutional
buyers become, for a period, uninterested in purchasing these securities.
INTEREST RATE SWAP TRANSACTIONS. Each of the Bond Funds and the
International Bond Fund may enter into interest rate swap agreements for
purposes of attempting to obtain a particular desired return at a lower cost to
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the Funds than if the Funds had invested directly in an instrument that yielded
that desired return. Interest rate swap transactions involve the exchange by a
Bond Fund or the International Bond Fund with another party of its commitments
to pay or receive interest, such as an exchange of fixed rate payments for
floating rate payments. Typically, the parties with which the Bond Funds and
the International Bond Fund will enter into interest rate swap transactions will
be brokers, dealers or other financial institutions known as "counterparties."
Certain Federal income tax requirements may, however, limit the Bond Funds' and
the International Bond Fund's ability to engage in certain interest rate
transactions. Gains from transaction in interest rate swaps distributed to
shareholders of the Bond Funds and the International Bond Fund will be taxable
as ordinary income or, in certain circumstances, as long-term capital gains to
the shareholders.
Each of the Bond Funds' and the International Bond Fund's obligations (or
rights) under a swap agreement will generally be equal only to the net amount to
be paid or received under the agreement based on the relative values of the
positions held by each party to the agreement (the "net amount"). Each of the
Bond Funds' and the International Bond Fund's obligations under a swap agreement
will be accrued daily (offset against any amounts owed to the Fund). Accrued
but unpaid net amounts owed to a swap counterparty will be covered by earmarking
cash, U.S. Government securities or other high-grade liquid securities on the
books of the Fund or the Fund's sub-custodian, to avoid any potential leveraging
of a Fund's portfolio.
The Bond Funds and the International Bond Fund will not enter into any
interest rate swap transaction unless the credit quality of the unsecured senior
debt or the claims-paying ability of the other party to the transaction is rated
in one of the highest four rating categories by at least one nationally-
recognized statistical rating organization ("NRSRO") or is believed by the
Advisor to be equivalent to that rating. If the other party to a transaction
defaults, the Bond Funds and the International Bond Fund will have contractual
remedies pursuant to the agreements related to the transactions.
The use of interest rate swaps is a highly specialized activity that
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If the Advisor is incorrect in its
forecasts of market values, interest rates and other applicable factors, the
investment performance of each of the Bond Funds and the International Bond Fund
would be lower than it would have been if interest rate swaps were not used.
The swaps market has grown substantially in recent years with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. As a result, the swaps market has
become relatively liquid in comparison with other similar instruments traded in
the interbank market. The swaps market is a relatively new market and is
largely unregulated. It is possible that developments in the swaps market,
including potential government regulation, could adversely affect the Bond
Funds' and the International Bond Fund's ability to terminate existing swap
agreements or to realize amounts to be received under such agreements.
INVESTMENT COMPANY SECURITIES. The Funds (other than the Short Term
Treasury Fund) may invest in securities issued by other investment companies.
As a shareholder of another investment company, a Fund would bear its pro rata
portion of the other investment company's expenses, including advisory fees.
These expenses would be in addition to the expenses each Fund bears directly in
connection with its own operations. Each Fund currently intends to limit its
investments in securities issued by other investment companies so that, as
determined immediately after a purchase of such securities is made: (i) not more
than 5% of the value of the Fund's total assets will be invested in the
securities of any one investment company; (ii) not more than 10% of the value of
its total assets will be invested in the aggregate in securities of investment
companies as a group; and (iii) not more than 3% of the outstanding voting stock
of any one investment company will be owned by the Fund.
LENDING OF PORTFOLIO SECURITIES. To enhance the return on its portfolio,
each of the Funds may lend securities in its portfolio (subject to a limit of
25% of each Fund's, other than the Money Market Fund's, total assets; and 33
1/3% of the Money Market Fund's total assets) to securities firms and financial
institutions, provided that each loan is secured continuously by collateral in
the form of cash, high quality money market instruments or short-term U.S.
Government securities adjusted daily to have a market value at least equal to
the current market value of the securities loaned. These loans are terminable
at any time, and the Funds will receive any interest or dividends paid on the
loaned securities. In addition, it is anticipated that a Fund may share with
the borrower some
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of the income received on the collateral for the loan or the Fund will be paid a
premium for the loan. The risk in lending portfolio securities, as with other
extensions of credit, consists of possible delay in recovery of the securities
or possible loss of rights in the collateral should the borrower fail
financially. In determining whether the Funds will lend securities, the Advisor
(Sub-Advisor with respect to the Framlington Funds) will consider all relevant
facts and circumstances. The Funds will only enter into loan arrangements with
broker-dealers, banks or other institutions which the Advisor (Sub-Advisor with
respect to the Framlington Funds) has determined are creditworthy under
guidelines established by the Boards of Directors/Trustees.
LOWER-RATED DEBT SECURITIES. It is expected that each Fund (other than the
Money Market Funds, Index 500 Fund and Growth & Income Fund) will invest not
more than 5% of its total assets in securities that are rated below investment
grade by Standard & Poor's Rating Service, a division of McGraw-Hill Companies,
Inc. ("S&P"), or Moody's Investors Service, Inc. ("Moody's"), or in comparable
unrated securities. The Growth & Income Fund may invest up to 20% of the value
of its total assets in such securities. Such securities are also known as junk
bonds. The yields on lower-rated debt and comparable unrated securities
generally are higher than the yields available on higher-rated securities.
However, investments in lower-rated debt and comparable unrated securities
generally involve greater volatility of price and risk of loss of income and
principal, including the possibility of default by or bankruptcy of the issuers
of such securities. Lower-rated debt and comparable unrated securities (a) will
likely have some quality and protective characteristics that, in the judgment of
the rating organization, are outweighed by large uncertainties or major risk
exposures to adverse conditions and (b) are predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. Accordingly, it is possible that
these types of factors could, in certain instances, reduce the value of
securities held in each Fund's portfolio, with a commensurate effect on the
value of each of the Fund's shares. Therefore, an investment in the Funds
should not be considered as a complete investment program and may not be
appropriate for all investors.
While the market values of lower-rated debt and comparable unrated
securities tend to react more to fluctuations in interest rate levels than the
market values of higher-rated securities, the market values of certain lower
rated debt and comparable unrated securities also tend to be more sensitive to
individual corporate developments and changes in economic conditions than
higher-rated securities. In addition, lower-rated debt securities and
comparable unrated securities generally present a higher degree of credit risk.
Issuers of lower-rated debt and comparable unrated securities often are highly
leveraged and may not have more traditional methods of financing available to
them so that their ability to service their debt obligations during an economic
downturn or during sustained periods of rising interest rates may be impaired.
The risk of loss due to default by such issuers is significantly greater because
lower-rated debt and comparable unrated securities generally are unsecured and
frequently are subordinated to the prior payment of senior indebtedness. The
Funds may incur additional expenses to the extent that they are required to seek
recovery upon a default in the payment of principal or interest on their
portfolio holdings. The existence of limited markets for lower-rated debt and
comparable unrated securities may diminish each of the Fund's ability to (a)
obtain accurate market quotations for purposes of valuing such securities and
calculating its net asset value and (b) sell the securities at fair value either
to meet redemption requests or to respond to changes in the economy or in
financial markets.
Lower-rated debt securities and comparable unrated securities may have call
or buy-back features that permit their issuers to call or repurchase the
securities from their holders. If an issuer exercises these rights during
periods of declining interest rates, the Funds may have to replace the security
with a lower yielding security, thus resulting in a decreased return to the
Funds. A description of applicable credit ratings is set forth in Appendix A
hereto.
MONEY MARKET INSTRUMENTS. As described in their Prospectuses, the Equity
Funds, the Balanced Fund, the Bond Funds, the International Bond Fund, the Tax-
Free Bond Funds, and the Money Market Funds may invest from time to time in
"money market instruments," a term that includes, among other things, bank
obligations, commercial paper, variable amount master demand notes and corporate
bonds with remaining maturities of 397 days or less.
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Bank obligations include bankers' acceptances, negotiable certificates of
deposit and non-negotiable time deposits, including U.S. dollar-denominated
instruments issued or supported by the credit of U.S. or foreign banks or
savings institutions. Although the Funds will invest in obligations of foreign
banks or foreign branches of U.S. banks only where the Advisor (Sub-Advisor with
respect to the Framlington Funds) deems the instrument to present minimal credit
risks, such investments may nevertheless entail risks that are different from
those of investments in domestic obligations of U.S. banks due to differences in
political, regulatory and economic systems and conditions. All investments in
bank obligations are limited to the obligations of financial institutions having
more than $1 billion in total assets at the time of purchase.
Investments by a Fund in commercial paper will consist of issues rated at
the time A-1 and/or P-1 by S&P or Moody's. In addition, the Funds may acquire
unrated commercial paper and corporate bonds that are determined by the Advisor
(Sub-Advisor with respect to the Framlington Funds) at the time of purchase to
be of comparable quality to rated instruments that may be acquired by such Fund
as previously described.
The Funds may also purchase variable amount master demand notes which are
unsecured instruments that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate. Although the notes are
not normally traded and there may be no secondary market in the notes, a Fund
may demand payment of the principal of the instrument at any time. The notes
are not typically rated by credit rating agencies, but issuers of variable
amount master demand notes must satisfy the same criteria as set forth above for
issuers of commercial paper. If an issuer of a variable amount master demand
note defaulted on its payment obligation, a Fund might be unable to dispose of
the note because of the absence of a secondary market and might, for this or
other reasons, suffer a loss to the extent of the default. The Funds invest in
variable amount master notes only when the Advisor deems the investment to
involve minimal credit risk.
MORTGAGE-RELATED SECURITIES. There are a number of important differences
among the agencies and instrumentalities of the U.S. Government that issue
mortgage-related securities and among the securities that they issue. Mortgage-
related securities guaranteed by the Government National Mortgage Association
("GNMA") include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie
Maes") which are guaranteed as to the timely payment of principal and interest
by GNMA and such guarantee is backed by the full faith and credit of the United
States. GNMA is a wholly-owned U.S. Government corporation within the
Department of Housing and Urban Development. GNMA certificates also are
supported by the authority of GNMA to borrow funds from the U.S. Treasury to
make payments under its guarantee. Mortgage-related securities issued by the
Federal National Mortgage Association ("FNMA") include FNMA Guaranteed Mortgage
Pass-Through Certificates (also known as "Fannie Maes") which are solely the
obligations of the FNMA and are not backed by or entitled to the full faith and
credit of the United States, but are supported by the right of the issuer to
borrow from the Treasury. FNMA is a government-sponsored organization owned
entirely by private stockholders. Fannie Maes are guaranteed as to timely
payment of the principal and interest by FNMA. Mortgage-related securities
issued by the Federal Home Loan Mortgage Corporation ("FHLMC") include FHLMC
Mortgage Participation Certificates (also known as "Freddie Macs" or "PCs").
FHLMC is a corporate instrumentality of the United States, created pursuant to
an Act of Congress, which is owned entirely by Federal Home Loan Banks. Freddie
Macs are not guaranteed by the United States or by any Federal Home Loan Banks
and do not constitute a debt or obligation of the United States or of any
Federal Home Loan Bank. Freddie Macs entitle the holder to timely payment of
interest, which is guaranteed by the FHLMC. FHLMC guarantees either ultimate
collection or timely payment of all principal payments on the underlying
mortgage loans. When FHLMC does not guarantee timely payment of principal,
FHLMC may remit the amount due on account of its guarantee of ultimate payment
of principal at any time after default on an underlying mortgage, but in no
event later than one year after it becomes payable.
MUNICIPAL OBLIGATIONS. Opinions relating to the validity of municipal
obligations and to the exemption of interest thereon from regular Federal income
tax are rendered by bond counsel or counsel to the respective issuers at the
time of issuance. Neither the Trust nor the Advisor will review the proceedings
relating to the issuance of municipal obligations or the bases for such
opinions.
An issuer's obligations under its municipal obligations are subject to the
provisions of bankruptcy, insolvency and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code,
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and laws, if any, which may be enacted by Federal or state legislatures
extending the time for payment of principal or interest, or both, or imposing
other constraints upon enforcement of such obligations or upon the ability of
municipalities to levy taxes. The power or ability of an issuer to meet its
obligations for the payment of interest on and principal of its municipal
obligations may be materially adversely affected by litigation or other
conditions.
From time to time proposals have been introduced before Congress for the
purpose of restricting or eliminating the Federal income tax exemption for
interest on municipal obligations. For example, under the Tax Reform Act of
1986 interest on certain private activity bonds must be included in an
investor's Federal alternative minimum taxable income, and corporate investors
must include all tax-exempt interest in their Federal alternative minimum
taxable income. The Trust cannot predict what legislation, if any, may be
proposed in Congress in the future as regards the Federal income tax status of
interest on municipal obligations in general, or which proposals, if any, might
be enacted. Such proposals, if enacted, might materially adversely affect the
availability of municipal obligations for investment by the Tax-Free Bond Funds
and the Tax-Free Money Market Fund and the liquidity and value of such Funds.
In such an event the Board of Trustees would reevaluate the Fund's investment
objective and policies and consider changes in its structure or possible
dissolution.
The Cash Investment Fund and the Money Market Fund each may, when deemed
appropriate by the Advisor in light of the Fund's investment objective, invest
in high quality municipal obligations issued by state and local governmental
issuers, the interest on which may be taxable or tax-exempt for Federal income
tax purposes, provided that such obligations carry yields that are competitive
with those of other types of money market instruments of comparable quality.
The Cash Investment Fund and the Money Market Fund each do not expect to invest
more than 5% of its net assets in such municipal obligations during the current
fiscal year.
NON-DOMESTIC BANK OBLIGATIONS. Non-domestic bank obligations include
Eurodollar Certificates of Deposit ("ECDs"), which are U.S. dollar-denominated
certificates of deposit issued by offices of foreign and domestic banks located
outside the United States; Eurodollar Time Deposits ("ETDs"), which are U.S.
dollar-denominated deposits in a foreign branch of a U.S. bank or a foreign
bank; Canadian Time Deposits ("CTDs"), which are essentially the same as ETDs
except they are issued by Canadian offices of major Canadian banks; Schedule Bs
which are obligations issued by Canadian branches of foreign or domestic banks;
Yankee Certificates of Deposit ("Yankee CDs"), which are U.S. dollar-denominated
certificates of deposit issued by a U.S. branch of a foreign bank and held in
the United States; and Yankee Bankers' Acceptances ("Yankee BAs"), which are
U.S. dollar denominated bankers' acceptances issued by a U.S. branch of a
foreign bank and held in the United States.
OPTIONS. The Equity Funds, Balanced Fund, Bond Funds, International Bond
Fund and Tax-Free Bond Funds (other than Tax-Free Intermediate Bond Fund) may
write covered call options, buy put options, buy call options and write secured
put options. Such options may relate to particular securities and may or may
not be listed on a national securities exchange and issued by the Options
Clearing Corporation. Options trading is a highly specialized activity which
entails greater than ordinary investment risk. Options on particular securities
may be more volatile than the underlying securities, and therefore, on a
percentage basis, an investment in options may be subject to greater fluctuation
than an investment in the underlying securities themselves. For risks
associated with options on foreign currencies, see Appendix B to this Statement
of Additional Information.
A call option for a particular security gives the purchaser of the option
the right to buy, and a writer the obligation to sell, the underlying security
at the stated exercise price at any time prior to the expiration of the option,
regardless of the market price of the security. The premium paid to the writer
is in consideration for undertaking the obligations under the option contract.
A put option for a particular security gives the purchaser the right to sell the
underlying security at the stated exercise price at any time prior to the
expiration date of the option, regardless of the market price of the security.
The writer of an option that wishes to terminate its obligation may effect
a "closing purchase transaction." This is accomplished by buying an option of
the same series as the option previously written. The effect of the purchase is
that the writer's position will be canceled by the clearing corporation.
However, a writer may not effect a closing purchase transaction after being
notified of the exercise of an option. Likewise, an investor who is the holder
of an option may liquidate its position by effecting a "closing sale
transaction." The cost of such a closing
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purchase plus transaction costs may be greater than the premium received upon
the original option, in which event each Fund will have incurred a loss in the
transaction. There is no guarantee that either a closing purchase or a closing
sale transaction can be effected.
Effecting a closing transaction in the case of a written call option will
permit the Funds to write another call option on the underlying security with
either a different exercise price or expiration date or both, or in the case of
a written put option, will permit the Funds to write another put option to the
extent that the exercise price thereof is secured by deposited cash or short-
term securities. Also, effecting a closing transaction will permit the cash or
proceeds from the concurrent sale of any securities subject to the option to be
used for other Fund investments. If a Fund desires to sell a particular
security from its portfolio on which it has written a call option, it will
effect a closing transaction prior to or concurrent with the sale of the
security.
The Equity Funds, Balanced Fund, Bond Funds, Tax-Free Bond Funds (other
than the Tax-Free Intermediate Bond Fund) and International Bond Fund may write
options in connection with buy-and-write transactions; that is, the Funds may
purchase a security and then write a call option against that security. The
exercise price of the call the Funds determine to write will depend upon the
expected price movement of the underlying security. The exercise price of a
call option may be below ("in-the-money"), equal to ("at-the-money") or above
("out-of-the-money") the current value of the underlying security at the time
the option is written. Buy-and-write transactions using in-the-money call
options may be used when it is expected that the price of the underlying
security will remain flat or decline moderately during the option period. Buy-
and-write transactions using out-of-the-money call options may be used when it
is expected that the premiums received from writing the call option plus the
appreciation in the market price of the underlying security up to the exercise
price will be greater than the appreciation in the price of the underlying
security alone. If the call options are exercised in such transactions, the
maximum gain to the relevant Fund will be the premium received by it for writing
the option, adjusted upwards or downwards by the difference between the Fund's
purchase price of the security and the exercise price. If the options are not
exercised and the price of the underlying security declines, the amount of such
decline will be offset in part, or entirely, by the premium received.
In the case of a call option on a security, the option is "covered" if a
Fund owns the security underlying the call or has an absolute and immediate
right to acquire that security without additional cash consideration (or, if
additional cash consideration is required, cash or liquid securities in such
amount as are earmarked on the books of the Fund or the Fund's sub-custodian)
upon conversion or exchange of other securities held by it. For a call option
on an index, the option is covered if a Fund maintains with its custodian cash
or liquid securities equal to the contract value. A call option is also covered
if a Fund holds a call on the same security or index as the call written where
the exercise price of the call held is (i) equal to or less than the exercise
price of the call written, or (ii) greater than the exercise price of the call
written provided the difference in cash or liquid securities is earmarked on
the books of the Fund or the Fund's sub-custodian. Each of the Funds will limit
its investment in uncovered call options purchased or written by the Fund to 33
1/3% of the Fund's total assets. Each of the Funds will write put options only
if they are "secured" by cash or liquid securities earmarked on the books of the
Fund or the Fund's sub-custodian in an amount not less than the exercise price
of the option at all times during the option period.
The writing of covered put options is similar in terms of risk/return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and the relevant Fund's gain will be limited to the
premium received. If the market price of the underlying security declines or
otherwise is below the exercise price, the Fund may elect to close the position
or take delivery of the security at the exercise price and the Fund's return
will be the premium received from the put option minus the amount by which the
market price of the security is below the exercise price.
Each of the Funds may purchase put options to hedge against a decline in
the value of its portfolio. By using put options in this way, each Fund will
reduce any profit it might otherwise have realized in the underlying security by
the amount of the premium paid for the put option and by transaction costs.
Each of the Funds may purchase call options to hedge against an increase in the
price of securities that it anticipates purchasing in the future. The premium
paid for the call option plus any transaction costs will reduce the benefit, if
any, realized by
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the Funds upon exercise of the option, and, unless the price of the underlying
security rises sufficiently, the option may expire worthless to the Fund.
When a Fund purchases an option, the premium paid by it is recorded as an
asset of the Fund. When the Fund writes an option, an amount equal to the net
premium (the premium less the commission) received by the Fund is included in
the liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of this asset or deferred credit will be
subsequently marked-to-market to reflect the current value of the option
purchased or written. The current value of the traded option is the last sale
price or, in the absence of a sale, the average of the closing bid and asked
prices. If an option purchased by the Fund expires unexercised the Fund
realizes a loss equal to the premium paid. If the Fund enters into a closing
sale transaction on an option purchased by it, the Fund will realize a gain if
the premium received by the Fund on the closing transaction is more than the
premium paid to purchase the option, or a loss if it is less. If an option
written by the Fund expires on the stipulated expiration date or if the Fund
enters into a closing purchase transaction, it will realize a gain (or loss if
the cost of a closing purchase transaction exceeds the net premium received when
the option is sold) and the deferred credit related to such option will be
eliminated. If an option written by the Fund is exercised, the proceeds of the
sale will be increased by the net premium originally received and the Fund will
realize a gain or loss.
There are several risks associated with transactions in options on
securities and indices. For example, there are significant differences between
the securities and options markets that could result in an imperfect correlation
between these markets, causing a given transaction not to achieve its
objectives. An option writer, unable to effect a closing purchase transaction,
will not be able to sell the underlying security (in the case of a covered call
option) or liquidate the earmarked securities (in the case of a secured put
option) until the option expires or the optioned security is delivered upon
exercise with the result that the writer in such circumstances will be subject
to the risk of market decline or appreciation in the security during such
period.
There is no assurance that a Fund will be able to close an unlisted option
position. Furthermore, unlisted options are not subject to the protections
afforded purchasers of listed options by the Options Clearing Corporation, which
performs the obligations of its members who fail to do so in connection with the
purchase or sale of options.
In addition, a liquid secondary market for particular options, whether
traded over-the-counter or on a national securities exchange ("Exchange") may be
absent for reasons which include the following: there may be insufficient
trading interest in certain options; restrictions may be imposed by an Exchange
on opening transactions or closing transactions or both; trading halts,
suspensions or other restrictions may be imposed with respect to particular
classes or series of options or underlying securities; unusual or unforeseen
circumstances may interrupt normal operations on an Exchange; the facilities of
an Exchange or the Options Clearing Corporation may not at all times be adequate
to handle current trading value; or one or more Exchanges could, for economic or
other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that Exchange (or in that class or series of options)
would cease to exist, although outstanding options that had been issued by the
Options Clearing Corporation as a result of trades on that Exchange would
continue to be exercisable in accordance with their terms.
Currency transactions, including options on currencies and currency
futures, are subject to risks different from those of other portfolio
transactions. Because currency control is of great importance to the issuing
governments and influences economic planning and policy, purchases and sales of
currency and related instruments can be negatively affected by government
exchange controls, blockages, and manipulations or exchange restrictions imposed
by governments. These can result in losses to the Fund if it is unable to
deliver or receive currency or funds in settlement of obligations and could also
cause hedges it has entered into to be rendered useless, resulting in full
currency exposure as well as the incurring of transaction costs. Buyers and
sellers of currency futures are subject to the same risks that apply to the use
of futures generally. Further, settlement of a currency futures contract for
the purchase of most currencies must occur at a bank based in the issuing
nation. Trading options on currency futures is relatively new, and the ability
to establish and close out positions on such options is subject to the
maintenance of a liquid market which may not always be available. Currency
exchange rates may fluctuate based on factors extrinsic to that country's
economy.
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REAL ESTATE SECURITIES. The Real Estate Fund may invest without limit in
shares of real estate investment trusts ("REITs"). REITs pool investors' funds
for investment primarily in income producing real estate or real estate loans or
interests. A REIT is not taxed on income distributed to shareholders if it
complies with several requirements relating to its organization, ownership,
assets, and income and a requirement that it distribute to its shareholders at
least 95% of it taxable income (other than net capital gains) for each taxable
year. REITs can generally be classified as Equity REITs, Mortgage REITs and
Hybrid REITs. Equity REITs, which invest the majority of their assets directly
in real property, derive their income primarily from rents. Equity REITs can
also realize capital gains by selling properties that have appreciated in value.
Mortgage REITs, which invest the majority of their assets in real estate
mortgages, derive their income primarily from interest payments. Hybrid REITs
combine the characteristics of both Equity REITs and Mortgage REITs. The Real
Estate Fund will not invest in real estate directly, but only in securities
issued by real estate companies. However, the Real Estate Fund may be subject
to risks similar to those associated with the direct ownership of real estate
(in addition to securities markets risks) because of its policy of concentration
in the securities of companies in the real estate industry. These include
declines in the value of real estate, risks related to general and local
economic conditions, dependency on management skill, heavy cash flow dependency,
possible lack of availability of mortgage funds, overbuilding, extended
vacancies of properties, increased competition, increases in property taxes and
operating expenses, changes in zoning laws, losses due to costs resulting from
the clean-up of environmental problems, liability to third parties for damages
resulting from environmental problems, casualty or condemnation losses,
limitations on rents, changes in neighborhood values, the appeal of properties
to tenants and changes in interest rates.
In addition to these risks, Equity REITs may be affected by changes in the
value of the underlying property owned by the trusts, while Mortgage REITs may
be affected by the quality of any credit extended. Further, Equity and Mortgage
REITs are dependent upon management skills and generally may not be diversified.
Equity and Mortgage REITs are also subject to heavy cash flow dependency,
defaults by borrowers and self-liquidation. In addition, Equity and Mortgage
REITs could possibly fail to qualify for the beneficial tax treatment available
to real estate investment trusts under the Internal Revenue Code of 1986, as
amended (the "Code"), or to maintain their exemptions from registration under
the 1940 Act. The above factors may also adversely affect a borrower's or a
lessee's ability to meet its obligations to the REIT. In the event of a default
by a borrower or lessee, the REIT may experience delays in enforcing its rights
as a mortgagee or lessor and may incur substantial costs associated with
protecting investments.
REPURCHASE AGREEMENTS. The Funds may agree to purchase securities from
financial institutions such as member banks of the Federal Reserve System, any
foreign bank or any domestic or foreign broker/dealer that is recognized as a
reporting government securities dealer, subject to the seller's agreement to
repurchase them at an agreed-upon time and price ("repurchase agreements"). The
Short Term Treasury Fund will only invest in repurchase agreements fully
collateralized by U.S. Treasury securities. The Advisor (Sub-Advisor with
respect to the Framlington Funds) will review and continuously monitor the
creditworthiness of the seller under a repurchase agreement, and will require
the seller to maintain liquid assets earmarked on the books of the Fund or the
Fund's sub-custodian in an amount that is greater than the repurchase price.
Default by, or bankruptcy of, the seller would, however, expose a Fund to
possible loss because of adverse market action or delays in connection with the
disposition of underlying obligations except with respect to repurchase
agreements secured by U.S. Government securities. With respect to the Money
Market Funds, the securities held subject to a repurchase agreement may have
stated maturities exceeding thirteen months, provided the repurchase agreement
itself matures in 397 days or less.
The repurchase price under repurchase agreements generally equals the price
paid by a Fund plus interest negotiated on the basis of current short-term rates
(which may be more or less than the rate on the securities underlying the
repurchase agreement).
Securities subject to repurchase agreements will be held, as applicable,
by the Trust's, Framlington's or the Company's custodian (or sub-custodian) in
the Federal Reserve/Treasury book-entry system or by another authorized
securities depositary. Repurchase agreements are considered to be loans by a
Fund under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS. Each Fund (except the Tax-Free Money Market
Fund and Tax-Free Bond Funds) may borrow funds for temporary or emergency
purposes by selling portfolio securities to financial
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institutions such as banks and broker/dealers and agreeing to repurchase them at
a mutually specified date and price ("reverse repurchase agreements"). Reverse
repurchase agreements involve the risk that the market value of the securities
sold by a Fund may decline below the repurchase price. A Fund will pay interest
on amounts obtained pursuant to a reverse repurchase agreement. While reverse
repurchase agreements are outstanding, a Fund will maintain cash, U.S.
Government securities or other liquid high-grade securities earmarked on the
books of the Fund or the Fund's sub-custodian in an amount at least equal to the
market value of the securities, plus accrued interest, subject to the
agreement.
RIGHTS AND WARRANTS. As stated in their Prospectuses, the Equity Funds and
the Balanced Fund may purchase warrants, which are privileges issued by
corporations enabling the owners to subscribe to and purchase a specified number
of shares of the corporation at a specified price during a specified period of
time. Subscription rights normally have a short life span to expiration. The
purchase of warrants involves the risk that a Fund could lose the purchase value
of a warrant if the right to subscribe to additional shares is not exercised
prior to the warrant's expiration. Also, the purchase of warrants involves the
risk that the effective price paid for the warrant added to the subscription
price of the related security may exceed the value of the subscribed security's
market price such as when there is no movement in the level of the underlying
security.
SHORT SALES. The Global Financial Services Fund may make short sales of
securities. A short sale is a transaction in which the Fund sells a security it
does not own in anticipation that the market price of that security will
decline. When the Fund makes a short sale, it must borrow the security sold
short and deliver it to the broker-dealer through which it made the short sale
as collateral for its obligation to deliver the security upon conclusion of the
sale. The Fund may also sell securities that it owns or has the right to
acquire at no additional cost but does not intend to deliver to the buyer, a
practice known as selling short "against-the-box." The Fund may have to pay a
fee to borrow particular securities and is often obligated to pay over any
payments received on such borrowed securities. The Fund's obligation to replace
the borrowed security will be secured by collateral deposited with the broker-
dealers, usually cash, U.S. Government securities or other highly liquid
securities similar to those borrowed. The Fund will also be required to deposit
similar collateral with its custodian or sub-custodian to the extent necessary
so that the value of both collateral deposits in the aggregate is at all times
equal to as least 100% of the current market value of the security sold short.
Depending on arrangements made with the broker-dealer from which it borrowed the
security regarding payment over any received by the Fund on such security, the
Fund may not received any payments (including interest) on its collateral
deposited with such broker-dealer. The Fund will incur transaction costs,
including interest expenses, in connection with opening, maintaining, and
closing short sales.
If the price of the security sold short increases between the time of the
short sale and the time the Fund replaces the borrowed security, the Fund will
incur a loss; conversely, if the price declines, the Fund will realize a capital
gain. Any gain is limited to the price at which it sold the security short; its
potential loss is theoretically unlimited.
STAND-BY COMMITMENTS. The Balanced Fund, the Cash Investment Fund, the
Money Market Fund, the Tax-Free Bond Funds and the Tax-Free Money Market Fund
may each enter into stand-by commitments with respect to municipal obligations
held by it. Under a stand-by commitment, a dealer agrees to purchase at the
Fund's option a specified municipal obligation at its amortized cost value to
the Fund plus accrued interest, if any. Stand-by commitments may be exercisable
by a Fund at any time before the maturity of the underlying municipal
obligations and may be sold, transferred or assigned only with the instruments
involved.
The Trust expects that stand-by commitments will generally be available
without the payment of any direct or indirect consideration. However, if
necessary or advisable, a Fund may pay for a stand-by commitment either
separately in cash or by paying a higher price for municipal obligations which
are acquired subject to the commitment (thus reducing the yield to maturity
otherwise available for the same securities). The total amount paid in either
manner for outstanding stand-by commitments held by a Fund will not exceed 1/2
of 1% of the value of such Fund's total assets calculated immediately after each
stand-by commitment is acquired.
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The Balanced Fund, Cash Investment Fund, Money Market Fund, Tax-Free Bond
Funds and the Tax-Free Money Market Fund intend to enter into stand-by
commitments only with dealers, banks and broker/dealers which, in the Advisor's
opinion, present minimal credit risks. The Tax-Free Bond Funds and the Tax-Free
Money Market Fund will acquire stand-by commitments solely to facilitate
portfolio liquidity and do not intend to exercise their rights thereunder for
trading purposes. The acquisition of a stand-by commitment will not affect the
valuation of the underlying municipal obligation. The actual stand-by
commitment will be valued at zero in determining net asset value. Accordingly,
where a Fund pays directly or indirectly for a stand-by commitment, its cost
will be reflected as an unrealized loss for the period during which the
commitment is held by such Fund and will be reflected in realized gain or loss
when the commitment is exercised or expires.
STOCK INDEX FUTURES, OPTIONS ON STOCK AND BOND INDICES AND OPTIONS ON STOCK
AND BOND INDEX FUTURES CONTRACTS. The Equity Funds, the Balanced Fund, the Bond
Funds and the Tax-Free Bond Funds (other than the Tax-Free Intermediate Bond
Fund) may purchase and sell stock index futures, options on stock and bond
indices and options on stock index futures contracts as a hedge against
movements in the equity and bond markets. The Tax-Free Intermediate Bond Fund
may purchase and sell bond index futures contracts. The International Bond Fund
may purchase and sell options on bond index futures contracts as a hedge against
movements in the bond markets.
A stock index futures contract is an agreement in which one party agrees to
deliver to the other an amount of cash equal to a specific dollar amount times
the difference between the value of a specific stock index at the close of the
last trading day of the contract and the price at which the agreement is made.
No physical delivery of securities is made.
Options on stock and bond indices are similar to options on specific
securities, described above, except that, rather than the right to take or make
delivery of the specific security at a specific price, an option on a stock or
bond index gives the holder the right to receive, upon exercise of the option,
an amount of cash if the closing level of that stock or bond index is greater
than, in the case of a call option, or less than, in the case of a put option,
the exercise price of the option. This amount of cash is equal to such
difference between the closing price of the index and the exercise price of the
option expressed in dollars times a specified multiple. The writer of the
option is obligated, in return for the premium received, to make delivery of
this amount. Unlike options on specific securities, all settlements of options
on stock or bond indices are in cash, and gain or loss depends on general
movements in the stocks included in the index rather than price movements in
particular stocks.
If the Advisor (Sub-Advisor with respect to the Framlington Funds) expects
general stock or bond market prices to rise, it might purchase a stock index
futures contract, or a call option on that index, as a hedge against an increase
in prices of particular securities it ultimately wants to buy. If in fact the
index does rise, the price of the particular securities intended to be purchased
may also increase, but that increase would be offset in part by the increase in
the value of the futures contract or index option resulting from the increase in
the index. If, on the other hand, the Advisor or Sub-Advisor, as the case may
be, expects general stock or bond market prices to decline, it might sell a
futures contract, or purchase a put option, on the index. If that index does in
fact decline, the value of some or all of the securities in the Funds' portfolio
may also be expected to decline, but that decrease would be offset in part by
the increase in the value of the Fund's position in such futures contract or put
option.
The Equity Funds, the Balanced Fund, the Bond Funds and the Tax-Free Bond
Funds (other than Tax-Free Intermediate Bond Fund) may purchase and write call
and put options on stock index futures contracts and each such Fund and the
International Bond Fund may purchase and write call and put options on bond
index futures contracts. Each such Fund may use such options on futures
contracts in connection with its hedging strategies in lieu of purchasing and
selling the underlying futures or purchasing and writing options directly on the
underlying securities or indices. For example, such Funds may purchase put
options or write call options on stock and bond index futures (only bond index
futures in the case of the International Bond Fund), rather than selling futures
contracts, in anticipation of a decline in general stock or bond market prices
or purchase call options or write put options on stock or bond index futures,
rather than purchasing such futures, to hedge against possible increases in the
price of securities which such Funds intend to purchase.
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In connection with transactions in stock or bond index futures, stock or
bond index options and options on stock or bond index futures, such Funds will
be required to deposit as "initial margin" an amount of cash and short-term U.S.
Government securities equal to between 5% to 8% of the contract amount.
Thereafter, subsequent payments (referred to as "variation margin") are made to
and from the broker to reflect changes in the value of the option or futures
contract. No such Fund may at any time commit more than 5% of its total assets
to initial margin deposits on futures contracts, index options and options on
futures contracts.
STRIPPED SECURITIES. Certain Funds may acquire U.S. Government obligations
and their unmatured interest coupons that have been separated ("stripped") by
their holder, typically a custodian bank or investment brokerage firm. Having
separated the interest coupons from the underlying principal of the U.S.
Government obligations, the holder will resell the stripped securities in
custodial receipt programs with a number of different names, including "Treasury
Income Growth Receipts" ("TIGRs") and "Certificate of Accrual on Treasury
Securities" ("CATS"). The stripped coupons are sold separately from the
underlying principal, which is usually sold at a deep discount because the buyer
receives only the right to receive a future fixed payment on the security and
does not receive any rights to periodic interest (cash) payments. The
underlying U.S. Treasury bonds and notes themselves are held in book-entry form
at the Federal Reserve Bank or, in the case of bearer securities (i.e.,
unregistered securities which are ostensibly owned by the bearer or holder), in
trust on behalf of the owners. Counsel to the underwriters of these
certificates or other evidences of ownership of U.S. Treasury securities have
stated that, in their opinion, purchasers of the stripped securities most likely
will be deemed the beneficial holders of the underlying U.S. Government
obligations for federal tax and securities purposes. The Company, the Trust and
Framlington are not aware of any binding legislative, judicial or administrative
authority on this issue.
Only instruments which are stripped by the issuing agency will be
considered U.S. Government obligations. Securities such as CATS and TIGRs which
are stripped by their holder do not qualify as U.S. Government obligations.
Within the past several years the Treasury Department has facilitated
transfers of ownership of zero coupon securities by accounting separately for
the beneficial ownership of particular interest coupon and principal payments on
Treasury securities through the Federal Reserve book-entry record-keeping
system. The Federal Reserve program as established by the Treasury Department
is known as "STRIPS" or "Separate Trading of Registered Interest and Principal
of Securities." Under the STRIPS program, a Fund is able to have its beneficial
ownership of zero coupon securities recorded directly in the book-entry record-
keeping system in lieu of having to hold certificates or other evidences of
ownership of the underlying U.S. Treasury securities.
In addition, the Bond Fund, Intermediate Bond Fund, International Bond Fund
and U.S. Government Income Fund may invest in stripped mortgage-backed
securities ("SMBS"), which represent beneficial ownership interests in the
principal distributions and/or the interest distributions on mortgage assets.
SMBS are usually structured with two classes that receive different proportions
of the interest and principal distributions on a pool of mortgage assets. One
type of SMBS will have one class receiving some of the interest and most of the
principal from the mortgage assets, while the other class will receive most of
the interest and the remainder of the principal. In the most common case, one
class of SMBS will receive all of the interest (the interest-only or "IO"
class), while the other class will receive all of the principal (the principal-
only or "PO" class). SMBS may be issued by FNMA or FHLMC.
The original principal amount, if any, of each SMBS class represents the
amount payable to the holder thereof over the life of such SMBS class from
principal distributions of the underlying mortgage assets, which will be zero in
the case of an IO class. Interest distributions allocable to a class of SMBS,
if any, consist of interest at a specified rate on its principal amount, if any,
or its notional principal amount in the case of an IO class. The notional
principal amount is used solely for purposes of the determination of interest
distributions and certain other rights of holders of such IO class and does not
represent an interest in principal distributions of the mortgage assets.
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Yields on SMBS will be extremely sensitive to the prepayment experience on
the underlying mortgage loans, and there are other associated risks. For IO
classes of SMBS and SMBS that were purchased at prices exceeding their principal
amounts there is a risk that a Fund may not fully recover its initial
investment.
The determination of whether a particular government-issued IO or PO backed
by fixed-rate mortgages is liquid may be made under guidelines and standards
established by the Boards of Directors/Trustees. Such securities may be deemed
liquid if they can be disposed of promptly in the ordinary course of business at
a value reasonably close to that used in the calculation of a Fund's net asset
value per share.
SUPRANATIONAL BANK OBLIGATIONS. Supranational banks are international
banking institutions designed or supported by national governments to promote
economic reconstruction, development or trade between nations (e.g., The World
Bank). Obligations of supranational banks may be supported by appropriated but
unpaid commitments of their member countries and there is no assurance these
commitments will be undertaken or met in the future.
U.S. GOVERNMENT OBLIGATIONS. The Funds may purchase obligations issued or
guaranteed by the U.S. Government and, except in the case of the U.S. Treasury
Money Market Fund, U.S. Government agencies and instrumentalities. Obligations
of certain agencies and instrumentalities of the U.S. Government, such as those
of the GNMA, are supported by the full faith and credit of the U.S. Treasury.
Others, such as those of the Export-Import Bank of the United States, are
supported by the right of the issuer to borrow from the U.S. Treasury; and still
others, such as those of the Student Loan Marketing Association, are supported
only by the credit of the agency or instrumentality issuing the obligation. No
assurance can be given that the U.S. Government would provide financial support
to U.S. government-sponsored instrumentalities if it is not obligated to do so
by law. Examples of the types of U.S. Government obligations that may be
acquired by the Funds include U.S. Treasury Bills, Treasury Notes and Treasury
Bonds and the obligations of Federal Home Loan Banks, Federal Farm Credit Banks,
Federal Land Banks, the Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration, FNMA, Government National Mortgage Association, General
Services Administration, Student Loan Marketing Association, Central Bank
for Cooperatives, FHLMC, Federal Intermediate Credit Banks and Maritime
Administration.
VARIABLE AND FLOATING RATE INSTRUMENTS. Debt instruments may be structured
to have variable or floating interest rates. Variable and floating rate
obligations purchased by a Fund may have stated maturities in excess of a Fund's
maturity limitation if the Fund can demand payment of the principal of the
instrument at least once during such period on not more than thirty days' notice
(this demand feature is not required if the instrument is guaranteed by the U.S.
Government or an agency thereof). These instruments may include variable amount
master demand notes that permit the indebtedness to vary in addition to
providing for periodic adjustments in the interest rates. The Advisor or Sub-
Advisor, as the case may be, will consider the earning power, cash flows and
other liquidity ratios of the issuers and guarantors of such instruments and, if
the instrument is subject to a demand feature, will continuously monitor their
financial ability to meet payment on demand. Where necessary to ensure that a
variable or floating rate instrument is equivalent to the quality standards
applicable to a Fund, the issuer's obligation to pay the principal of the
instrument will be backed by an unconditional bank letter or line of credit,
guarantee or commitment to lend. The Money Market Funds will invest in variable
and floating rate instruments only when the Advisor deems the investment to
involve minimal credit risk.
In determining average weighted portfolio maturity of the Funds, an
instrument will usually be deemed to have a maturity equal to the longer of the
period remaining until the next interest rate adjustment or the time the Fund
involved can recover payment of principal as specified in the instrument.
Variable rate U.S. Government obligations held by the Funds, however, will be
deemed to have maturities equal to the period remaining until the next interest
rate adjustment.
The absence of an active secondary market for certain variable and floating
rate notes could make it difficult to dispose of the instruments, and a Fund
could suffer a loss if the issuer defaulted or during periods that a Fund is not
entitled to exercise its demand rights.
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Variable and floating rate instruments held by a Fund will be subject to
the Fund's limitation on illiquid investments when the Fund may not demand
payment of the principal amount within seven days absent a reliable trading
market.
GUARANTEED INVESTMENT CONTRACTS. The Bond Funds, the International Bond
Fund, the Cash Investment Fund and the Money Market Fund may make limited
investments in guaranteed investment contracts ("GICs") issued by U.S. insurance
companies. Pursuant to such contracts, a Fund makes cash contributions to a
deposit fund of the insurance company's general account. The insurance company
then credits to the Fund on a monthly basis interest which is based on an index
(in most cases this index is expected to be the Salomon Brothers CD Index), but
is guaranteed not to be less than a certain minimum rate. A GIC is normally a
general obligation of the issuing insurance company and not funded by a separate
account. The purchase price paid for a GIC becomes part of the general assets
of the insurance company, and the contract is paid from the company's general
assets. A Fund will only purchase GICs from insurance companies which, at the
time of purchase, have assets of $1 billion or more and meet quality and credit
standards established by the Advisor pursuant to guidelines approved by the
Boards of Directors/Trustees. Generally, GICs are not assignable or
transferable without the permission of the issuing insurance companies, and an
active secondary market in GICs does not currently exist. Therefore, GICs will
normally be considered illiquid investments, and will be acquired subject to the
limitation on illiquid investments.
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS (DELAYED-DELIVERY
TRANSACTIONS). When-issued purchases and forward commitments (delayed-delivery
transactions) are commitments by a Fund to purchase or sell particular
securities with payment and delivery to occur at a future date (perhaps one or
two months later). These transactions permit the Fund to lock-in a price or
yield on a security, regardless of future changes in interest rates.
When a Fund agrees to purchase securities on a when-issued or forward
commitment basis, the Fund will earmark cash or liquid portfolio securities
equal to the amount of the commitment. Normally, the Fund will earmark
portfolio securities to satisfy a purchase commitment, and in such a case the
Fund may be required subsequently to earmark additional assets in order to
ensure that the value of the account remains equal to the amount of the Fund's
commitments. It may be expected that the market value of the Fund's net assets
will fluctuate to a greater degree when it earmarks portfolio securities to
cover such purchase commitments than when it earmarks cash. Because a Fund's
liquidity and ability to manage its portfolio might be affected when it earmarks
cash or portfolio securities to cover such purchase commitments, the Advisor
(Sub-Advisor with respect to the Framlington Funds) expects that its commitments
to purchase when-issued securities and forward commitments will not exceed 25%
of the value of a Fund's total assets absent unusual market conditions.
A Fund will purchase securities on a when-issued or forward commitment
basis only with the intention of completing the transaction and actually
purchasing the securities. If deemed advisable as a matter of investment
strategy, however, a Fund may dispose of or renegotiate a commitment after it is
entered into, and may sell securities it has committed to purchase before those
securities are delivered to the Fund on the settlement date. In these cases the
Fund may realize a taxable capital gain or loss.
When a Fund engages in when-issued and forward commitment transactions, it
relies on the other party to consummate the trade. Failure of such party to do
so may result in the Fund's incurring a loss or missing an opportunity to obtain
a price considered to be advantageous.
The market value of the securities underlying a when-issued purchase or a
forward commitment to purchase securities, and any subsequent fluctuations in
their market value, are taken into account when determining the market value of
a Fund starting on the day the Fund agrees to purchase the securities. The Fund
does not earn interest on the securities it has committed to purchase until they
are paid for and delivered on the settlement date.
YIELDS AND RATINGS. The yields on certain obligations, including the money
market instruments in which each Fund may invest (such as commercial paper and
bank obligations), are dependent on a variety of factors, including general
money market conditions, conditions in the particular market for the obligation,
the financial condition of the issuer, the size of the offering, the maturity of
the obligation and the ratings of the issue. The ratings of S&P, Moody's, Duff
& Phelps Credit Rating Co., Thomson Bank Watch, Inc., and other nationally
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recognized statistical rating organizations ("NRSROs") represent their
respective opinions as to the quality of the obligations they undertake to rate.
Ratings, however, are general and are not absolute standards of quality.
Consequently, obligations with the same rating, maturity and interest rate may
have different market prices.
With respect to each of the Money Market Funds, securities (other than U.S.
Government securities) must be rated (generally, by at least two NRSROs) within
the two highest rating categories assigned to short-term debt securities. In
addition, each of the Cash Investment Fund and the Money Market Fund will not
invest more than 5% of its total assets in securities rated in the second
highest rating category by such NRSROs and will not invest more than 1% of its
total assets in such securities of any one issuer. Each of the Cash Investment
Fund, the Money Market Fund and the Tax-Free Money Market Fund intends to limit
investments in the securities of any single issuer (other than securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities) to not
more than 5% of the Fund's total assets at the time of purchase, provided that
the Fund may invest up to 25% of its total assets in the securities of any one
issuer rated in the highest rating category by an NRSRO for a period of up to
three business days. Unrated and certain single rated securities (other than
U.S. Government securities) may be purchased by the Money Market Funds, but are
subject to a determination by the Advisor, in accordance with procedures
established by the Boards of Trustees and Directors, that the unrated and single
rated securities are of comparable quality to the appropriate rated
securities.
OTHER. Subsequent to its purchase by a Fund, a rated security may cease to
be rated or its rating may be reduced below the minimum rating required for
purchase by the Fund. The Boards of Trustees and Directors or the Advisor (Sub-
Advisor with respect to the Framlington Funds), pursuant to guidelines
established by the Boards, will consider such an event in determining whether
the Fund involved should continue to hold the security in accordance with the
interests of the Fund and applicable regulations of the SEC.
RISK FACTORS AND SPECIAL CONSIDERATIONS -- INDEX 500 FUND
Traditional methods of fund investment management typically involve
relatively frequent changes in a portfolio of securities on the basis of
economic, financial and market analysis. Index funds such as the Index 500 Fund
are not managed in this manner. Instead, with the aid of a computer program,
the Advisor purchases and sells securities for the Fund in an attempt to produce
investment results that substantially duplicate the performance of the common
stocks included in the S&P 500 Composite Stock Price Index ("S&P 500"), taking
into account redemptions, sales of additional Fund shares, and other adjustments
as described below.
The Fund does not expect to hold at any particular time all of the stocks
included in the S&P 500. The Advisor believes, however, that through the
application of capitalization weighing and sector balancing techniques it will
be able to construct and maintain the Fund's investment portfolio so that it
reasonably tracks the performance of the S&P 500. The Advisor will compare the
industry sector diversification of the stocks the Fund would acquire solely on
the basis of their weighted capitalizations with the industry sector
diversification of all issuers included in the S&P 500. This comparison is made
because the Advisor believes that, unless the Fund holds all stocks included in
the S&P 500, the selection of stocks for purchase by the Fund solely on the
basis of their weighted market capitalizations would tend to place heavier
concentration in certain industry sectors that are dominated by the larger
corporations, such as communications, automobile, oil and energy. As a result,
events disproportionately affecting such industries could affect the performance
of the Fund differently than the performance of the S&P 500. Conversely, if
smaller companies were not purchased by the Fund, the representation of
industries included in the S&P 500 that are not dominated by the most heavily
market-capitalized companies would be reduced or eliminated.
For these reasons, the Advisor will identify the sectors which are (or,
except for sector balancing, would be) most underrepresented in the Fund's
portfolio and will purchase balancing securities in these sectors until the
portfolio's sector weightings closely match those of the S&P 500. This process
continues until the portfolio is fully invested (except for cash holdings).
Redemptions of a substantial number of shares of the Fund could reduce the
number of issuers represented in the Fund's investment portfolio, which could,
in turn, adversely affect the accuracy with which the Fund tracks the
performance of the S&P 500.
20
<PAGE>
If an issuer drops in ranking, or is eliminated entirely from the S&P 500,
the Advisor may be required to sell some or all of the common stock of such
issuer then held by the Fund. Sales of portfolio securities may be made at times
when, if the Advisor were not required to effect purchases and sales of
portfolio securities in accordance with the S&P 500, such securities might not
be sold. Such sales may result in lower prices for such securities than may have
been realized or in losses that may not have been incurred if the Advisor were
not required to effect the purchases and sales. The failure of an issuer to
declare or pay dividends, the institution against an issuer of potentially
materially adverse legal proceedings, the existence or threat of defaults
materially and adversely affecting an issuer's future declaration and payment of
dividends, or the existence of other materially adverse credit factors will not
necessarily be the basis for the disposition of portfolio securities, unless
such event causes the issuer to be eliminated entirely from the S&P 500.
However, although the Advisor does not intend to screen securities for
investment by the Fund by traditional methods of financial and market analysis,
the Advisor will monitor the Fund's investment with a view towards removing
stocks of companies which exhibit extreme financial distress or which may impair
for any reason the Fund's ability to achieve its investment objective.
The Fund will invest primarily in the common stocks that constitute the S&P
500 in accordance with their relative capitalization and sector weightings as
described above. It is possible, however, that the Fund will from time to time
receive, as part of a "spin-off" or other corporate reorganization of an issuer
included in the S&P 500, securities that are themselves outside the S&P 500.
Such securities will be disposed of by the Fund in due course consistent with
the Fund's investment objective.
In addition, the Index 500 Fund may invest in Standard & Poor's Depository
Receipts ("SPDRs"). SPDRs are securities that represent ownership in the SPDR
Trust, a long-term unit investment trust which is intended to provide investment
results that generally correspond to the price and yield performance of the S&P
500. SPDR holders are paid a "Dividend Equivalent Amount" that corresponds to
the amount of cash dividends accruing to the securities in the SPDR Trust, net
of certain fees and expenses charged to the Trust. Because of these fees and
expenses, the dividend yield for SPDRs may be less than that of the S&P 500.
SPDRs are traded on the American Stock Exchange.
The Fund may also purchase put and call options on the S&P 500 and S&P 100
stock indices, which are traded on national securities exchanges. In addition,
the Fund may enter into transactions involving futures contracts (and futures
options) on these two stock indices and may purchase securities of other
investment companies that are structured to seek a similar correlation to the
S&P 500. These transactions are effected in an effort to have fuller exposure to
price movements in the S&P 500 pending investment of purchase orders or while
maintaining liquidity to meet potential shareholder redemptions. Transactions in
option and stock index futures contracts may be desirable to hedge against a
price movement in the S&P 500 at times when the Fund is not fully invested in
stocks that are included in the S&P 500. For example, by purchasing a futures
contract, the Fund may be able to reduce the potential that cash inflows will
disrupt its ability to track the S&P 500, since the futures contracts may serve
as a temporary substitute for stocks which may then be purchased in an orderly
fashion. Similarly, because futures contracts only require a small initial
margin deposit, the Fund may be able, as an effective matter, to be fully
invested in the S&P 500 while keeping a cash reserve to meet potential
redemptions. See Appendix B to this Statement of Additional Information.
RISK FACTORS AND SPECIAL CONSIDERATIONS -- MICHIGAN BOND FUND AND
TAX-FREE INTERMEDIATE BOND FUND
The information set forth below is derived in substantial part from the
official statements prepared in connection with the issuance of Michigan
municipal bonds and similar obligations and other sources that are generally
available to investors. The information is provided as general information
intended to give a recent historical description and is not intended to indicate
future or continuing trends in the financial or other positions of the State of
Michigan (the "State"). The Company has not independently verified this
information.
The State's Constitution limits the amount of total State revenues raised
from taxes and other sources. State revenues (excluding federal aid and revenues
for payment of principal and interest on general obligation
21
<PAGE>
bonds) in any fiscal year are limited to a specified percentage of State
personal income in the prior calendar year or average of the prior three
calendar years, whichever is greater. The percentage is based upon the ratio of
the 1978-79 fiscal year revenues to total 1977 State personal income. If any
fiscal year revenues exceed the revenue limitation by 1%, the entire amount
exceeding the limitation must be rebated in the following fiscal year's personal
income tax or single business tax. Annual excesses of less than 1% may be
transferred into the State's Budget Stabilization Fund. The State may raise
taxes in excess of the limit in emergency situations.
The State Constitution limits the purposes for which State general
obligation debt may be issued. Such debt is limited to short-term debt for
State operating purposes, short and long-term debt for the purpose of making
loans to school districts and long-term debt for voter approved purposes. The
State's Constitution also directs or restricts the use of certain revenues.
The State finances its operations through the State's General Fund and
special revenue funds. The General Fund receives revenues of the State that are
not specifically required to be included in the special revenue funds. General
Fund revenues are obtained approximately 55% from the payment of State taxes and
45% from federal and non-tax revenue sources. Tax revenues credited to the
General Fund include the personal income tax, the single business tax and
approximately 15% of the sales tax collections.
Expenditures are not permitted by the State Constitution to exceed
available revenues. The State Constitution requires that the Governor, with the
approval of the appropriating committees of the State House and Senate, reduce
expenditures whenever it appears that the actual revenues will be less than the
originally projected revenues upon which the budget was based.
In 1994, a ballot proposal ("Proposal A") to implement extensive property
tax and school finance reform measures was subject to voter approval and in fact
approved on March 15, 1994. Under Proposal A as approved, effective May 1,
1994, the State sales and use tax increased from 4% to 6%, the State income tax
decreased from 4.6% to 4.4%, the cigarette tax increased from $.25 to $.75 per
pack, and an additional tax of 16% of the wholesale price is imposed on certain
other tobacco products. As of January 1, 1995, a 0.75% real estate transfer tax
also became effective. In 1994, a State education property tax of 6 mills was
imposed on all real property and personal property currently subject to the
general property tax. In addition, all school boards can now, with voter
approval, levy up to the lesser of 18 mills or the number of mills levied in
1993 for school operating purposes, on non-homestead property. Proposal A
contained additional provisions regarding the ability of local school districts
to levy taxes as well as a limit on assessment increases for each parcel of
property, beginning in 1995 to the lesser of 5% or the rate of inflation. When
property is subsequently sold, its assessed value is adjusted equal to 50% of
true cash value. Under Proposal A, much of the additional revenue generated by
these taxes is dedicated to the State School Aid Fund.
Proposal A shifts significant portions of the cost of local school
operations from local school districts to the State and raises additional State
revenues to fund these additional State expenses. These additional revenues
will be included within the State's constitutional revenue limitations and may
impact the State's ability to raise additional revenues in the future.
The State is a party to various legal proceedings seeking damages or
injunctive or other relief. In addition to routine litigation, certain of these
proceedings could, if unfavorably resolved from the point of view of the State,
substantially affect State programs or finances. These lawsuits involve
programs generally in the areas of corrections, highway maintenance, social
services, tax collection, commerce and budgetary reductions to school
districts and governmental units and court funding.
The principal sectors of Michigan's diversified economy are manufacturing
of durable goods (including automobiles and components and office equipment),
tourism and agriculture. The health of the State's economy, and in particular
its durable goods manufacturing industry, is susceptible to a long-term increase
in the cost of energy and energy related products. As reflected in historical
employment figures, the State's economy has lessened its dependence upon durable
foods manufacturing. In 1960, employment in such industry accounted for 33% of
the State's work force. By 1996, this figure had fallen to 15%. However,
manufacturing (including auto-
22
<PAGE>
related manufacturing) continues to be an important part of the State's economy.
The particular industries are highly cyclical and in the period 1996-1997 are
expected to operate at somewhat less than full capacity, but at higher levels
than in the immediate prior years. This factor can usually adversely affect the
revenue streams of the State and its political subdivisions because it adversely
impacts tax sources, particularly sales, income taxes and single business taxes.
As of the date of this Statement of Additional Information, the State's
general obligation bonds are rated "A2" by Moody's and "AA" by Fitch. To the
extent that either the Michigan Bond Fund or the Tax-Free Intermediate Bond Fund
is comprised of revenue or general obligations of local governments or
authorities, rather than general obligations of the State of Michigan itself,
ratings on such Michigan obligations will be different from those given to the
State of Michigan and their value may be independently affected by economic
matters not directly impacting the State.
INVESTMENT LIMITATIONS
Each Fund is subject to the investment limitations enumerated in this
section which may be changed with respect to a particular Fund only by a vote of
the holders of a majority of such Fund's outstanding shares (as defined under
"Miscellaneous Shareholder Approvals").
No Fund of the Trust may:
1. Purchase securities of any one issuer (other than securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities
or certificates of deposit for any such securities) if more than 5% of
the value of the Fund's total assets (taken at current value) would be
invested in the securities of such issuer, or more than 10% of the
issuer's outstanding voting securities would be owned by the Fund or
the Trust, except that (a) with respect to each Fund, other than the
Michigan Bond Fund and the Tax-Free Intermediate Bond Fund, up to 25%
of the value of the Fund's total assets (taken at current value) may
be invested without regard to these limitations and (b) with respect
to the Michigan Bond Fund and the Tax-Free Intermediate Bond Fund, up
to 50% of the value of the Fund's total assets may be invested without
regard to these limitations so long as no more than 25% of the value
of the Fund's total assets are invested in the securities of any one
issuer. For purposes of this limitation, a security is considered to
be issued by the entity (or entities) whose assets and revenues back
the security. A guarantee of a security is not deemed to be a
security issued by the guarantor when the value of all securities
issued and guaranteed by the guarantor, and owned by the Fund, does
not exceed 10% of the value of the Fund's total assets;
2. Borrow money or issue senior securities except that each Fund may
borrow from banks and enter into reverse repurchase agreements for
temporary purposes in amounts up to one-third of the value of its
total assets at the time of such borrowing; or mortgage, pledge or
hypothecate any assets, except in connection with any such borrowing
and then in amounts not in excess of one-third of the value of the
Fund's total assets at the time of such borrowing. No Fund will
purchase securities while its aggregate borrowings (including reverse
repurchase agreements and borrowing from banks) in excess of 5% of its
total assets are outstanding. Securities held in escrow or earmarked
on the books of the Fund or the Fund's sub-custodian in connection
with a Fund's investment practices are not deemed to be pledged for
purposes of this limitation;
3. Purchase any securities which would cause 25% or more of the value of
the Fund's total assets at the time of purchase to be invested in the
securities of one or more issuers conducting their principal business
activities in the same industry, provided that (a) there is no
limitation with respect to (i) instruments that are issued (as defined
in investment limitation 1 above) or guaranteed by the United States,
any state, territory or possession of the United States, the District
of Columbia or any of their authorities, agencies, instrumentalities
or political subdivisions, (ii) with respect to the Money Market Funds
only, instruments issued by domestic branches of U.S. banks and (iii)
repurchase agreements secured by the instruments described in clauses
(i) and,
23
<PAGE>
with respect to the Money Market Funds, (ii); (b) wholly-owned finance
companies will be considered to be in the industries of their parents
if their activities are primarily related to financing the activities
of the parents; and (c) utilities will be divided according to their
services, for example, gas, gas transmission, electric and gas,
electric and telephone will each be considered a separate industry;
4. Purchase or sell real estate, except that each Fund may purchase
securities of issuers which deal in real estate and may purchase
securities which are secured by interests in real estate;
5. Acquire any other investment company or investment company security
except in connection with a merger, consolidation, reorganization or
acquisition of assets or where otherwise permitted by the 1940 Act;
6. Act as an underwriter of securities within the meaning of the
Securities Act of 1933, as amended, except to the extent that the
purchase of obligations directly from the issuer thereof, or the
disposition of securities, in accordance with the Fund's investment
objective, policies and limitations may be deemed to be underwriting;
7. Write or sell put options, call options, straddles, spreads, or any
combination thereof except for transactions in options on securities,
securities indices, futures contracts, options on futures contracts
and transactions in securities on a when-issued or forward commitment
basis, and except that each Equity and Bond Fund may enter into
forward currency contracts in accordance with its investment
objectives and policies. Notwithstanding the above, the Tax-Free
Intermediate Bond Fund may not write or purchase options, including
puts, calls, straddles, spreads, or any combination thereof;
8. Purchase securities of companies for the purpose of exercising
control;
9. Purchase securities on margin, make short sales of securities or
maintain a short position, except that (a) this investment limitation
shall not apply to a Fund's transactions in futures contracts and
related options, a Fund's sale of securities short against the box or
a Fund's transactions in securities on a when-issued or forward
commitment basis, and (b) a Fund may obtain short-term credit as may
be necessary for the clearance of purchases and sales of portfolio
securities;
10. Purchase or sell commodity contracts, or invest in oil, gas or
mineral exploration or development programs, except that each Fund
may, to the extent appropriate to its investment policies, purchase
publicly traded securities of companies engaging in whole or in part
in such activities, may enter into futures contracts and related
options, and may engage in transactions in securities on a when-issued
or forward commitment basis, and except that each Equity and Bond Fund
may enter into forward currency contracts in accordance with its
investment objectives and policies; or
11. Make loans, except that each Fund may purchase and hold debt
instruments (whether such instruments are part of a public offering or
privately negotiated), may enter into repurchase agreements and may
lend portfolio securities in accordance with its investment objective
and policies.
In addition, the Tax-Free Intermediate Bond Fund may not:
1. Purchase or retain securities of any issuer if the officers or
Trustees of the Trust or its Advisor own beneficially more than one-
half of 1% of the securities of such issuer together own beneficially
more than 5% of such securities;
2. Invest more than 10% of its total assets in the securities of issuers
which together with any predecessors have a record of less than three
years continuous operation; or
24
<PAGE>
3. Participate on a joint or joint and several basis in any securities
trading account.
No Fund of Framlington may:
1. Purchase securities (except U.S. Government securities) if more than
5% of its total assets will be invested in the securities of any one
issuer, except that up to 25% of the assets of the Fund may be
invested without regard to this 5% limitation;
2. Invest 25% or more of its total assets in securities issued by one or
more issuers conducting their principal business activities in the
same industry (except that the Healthcare Fund will invest more than
25% of its total assets in securities of issuers conducting their
principal business activities in healthcare industries and the Global
Financial Services Fund will invest more than 25% of its total assets
in securities of issuers conducting their principal business
activities in the financial services industry);
3. Borrow money or enter into reverse repurchase agreement except that
the Fund may (i) borrow money or enter into reverse repurchase
agreements for temporary purposes in amounts not exceeding 5% of its
total assets and (ii) borrow money for the purpose of meeting
redemption requests, in amounts (when aggregated with amounts borrowed
under clause (i)) not exceeding 33 1/3% of its total assets;
4. Pledge, mortgage or hypothecate its assets other than to secure
borrowings permitted by investment limitation 3 above (collateral
arrangements with respect to margin requirements for options and
futures transactions are not deemed to be pledges or hypothecations
for this purpose);
5. Make loans of securities to other persons in excess of 25% of the
Fund's total assets; provided the Fund may invest without limitation
in short-term debt obligations (including repurchase agreements) and
publicly distributed debt obligations;
6. Underwrite securities of other issuers, except insofar as the Fund may
be deemed an underwriter under the Securities Act of 1933, as amended,
in selling portfolio securities;
7. Purchase or sell real estate or any interest therein, including
interests in real estate limited partnerships, except securities
issued by companies (including real estate investment trusts) that
invest in real estate or interests therein;
8. Purchase securities on margin, or make short sales of securities
(except that the Global Financial Services Fund may make short sales
of securities), except for the use of short-term credit necessary for
the clearance of purchases and sales of portfolio securities, but the
Fund may make margin deposits in connection with transactions in
options, futures and options of futures;
9. Make investments for the purpose of exercising control or management;
10. Invest in commodities or commodity futures contracts, provided that
this limitation shall not prohibit the purchase or sale by the Fund of
forward foreign currency exchange contracts, financial futures
contracts and options on financial futures contracts, foreign currency
futures contracts, and options on securities, foreign currencies and
securities indices, as permitted by the Fund's Prospectus; or
11. Issue senior securities, except as permitted by the 1940 Act.
Additional investment restrictions adopted by each Fund of Framlington
which may be changed by the Board of Trustees, provide that each Fund may
not:
25
<PAGE>
1. Invest more than 15% of its net assets in illiquid securities;
2. Own more than 10% (taken at market value at the time of purchase) of
the outstanding voting securities of any single issuer; or
3. Invest in other investment companies except as permitted under the
1940 Act.
No Fund of the Company may:
1. Invest more than 25% of its total assets in any one industry
(securities issued or guaranteed by the United States Government, its
agencies or instrumentalities are not considered to represent
industries) (except that the Real Estate Fund will invest more than
25% of its assets in securities of issuers in the real estate
industry);
2. (For each Fund except the International Bond Fund) with respect to 75%
of the Fund's assets, invest more than 5% of the Fund's assets (taken
at a market value at the time of purchase) in the outstanding
securities of any single issuer or own more than 10% of the
outstanding voting securities of any one issuer, in each case other
than securities issued or guaranteed by the United States Government,
its agencies or instrumentalities;
3. (For each Fund except Short Term Treasury Fund) borrow money or issue
senior securities (as defined in the 1940 Act) except that the Funds
may borrow (i) for temporary purposes in amounts not exceeding 5% of
its total assets and (ii) to meet redemption requests, in amounts
(when aggregated with amounts borrowed under clause (i)) not exceeding
33 1/3% of its total assets;
4. Pledge, mortgage or hypothecate its assets other than to secure
borrowings permitted by investment limitation 3 above (collateral
arrangements with respect to margin requirements for options and
futures transactions are not deemed to be pledges or hypothecations
for this purpose);
5. Make loans of securities to other persons in excess of 25% of a Fund's
total assets and 33 1/3% of the Money Market Fund's total assets;
provided the Funds may invest without limitation in short-term debt
obligations (including repurchase agreements) and publicly
distributed debt obligations;
6. Underwrite securities of other issuers, except insofar as a Fund may
be deemed an underwriter under the Securities Act of 1933, as amended,
in selling portfolio securities;
7. (For each Fund except the Real Estate Fund) purchase or sell real
estate or any interest therein, including interests in real estate
limited partnerships, except securities issued by companies (including
real estate investment trusts) that invest in real estate or interests
therein. The Real Estate Fund may not buy or sell real estate;
however, this prohibition does not apply to the purchase or sale of
(i) securities which are secured by real estate, (ii) securities
representing interests in real estate, (iii) securities of companies
operating in the real estate industry including real estate investment
trusts, and (iv) the holding and sale of real estate acquired as a
result of the ownership of securities;
8. Purchase securities on margin, or make short sales of securities,
except for the use of short-term credit necessary for the clearance of
purchases and sales of portfolio securities, but the Funds (with the
exception of the Money Market Fund and Short Term Treasury Fund) may
make margin deposits in connection with transactions in options,
futures and options on futures;
9. Make investments for the purpose of exercising control or management;
or
26
<PAGE>
10. Invest in commodities or commodity futures contracts, provided that
this limitation shall not prohibit the purchase or sale by the Growth
Opportunities, Multi-Season, NetNet, Real Estate, Value and
International Bond Funds of forward foreign currency exchange
contracts, financial futures contracts and options on financial
futures contracts, and options on securities and on securities,
foreign currencies and on securities indices, as permitted by each
Fund's prospectus.
In addition, the Short Term Treasury Fund may not:
1. Borrow money or enter into reverse repurchase agreements except that
the Fund may (i) borrow money or enter into reverse repurchase
agreements for temporary purposes in amounts exceeding 5% of its total
assets and (ii) borrow money for the purpose of meeting redemption
requests, in amounts (when aggregated with amounts borrowed under
clause (i)) not exceeding 33 1/3% of its total assets;
2. Pledge, mortgage or hypothecate its assets other than to secure
borrowings permitted by investment limitation 1 above; or
3. Issue any senior securities (as such term is defined in Section 18(f)
of the 1940 Act) except to the extent the activities permitted by
other enumerated investment limitations for the Company above may be
deemed to give rise to a senior security.
Additional investment restrictions adopted by each Fund of the Company,
which may be changed by the Board of Directors, provide that a Fund may not:
1. Invest more than 15% of its net assets (10% of net assets for the
Money Market Fund) (taken at market value at the time of purchase) in
securities which cannot be readily resold because of legal or
contractual restrictions and (in the case of International Bond Fund
and Short Term Treasury Fund only) which are not otherwise marketable;
2. (For each Fund except the International Bond Fund and Short Term
Treasury Fund) own more than 10% (taken at market value at the time of
purchase) of the outstanding voting securities of any single issuer;
3. (For each Fund except Short Term Treasury Fund) purchase or sell
interests in oil, gas or other mineral exploration or development
plans or leases); or
4. Invest in other investment companies except as permitted under the 1940
Act.
In addition, the International Bond Fund may not with respect to 50% of the
Fund's assets, invest more than 5% of the Fund's assets (taken at a market value
at the time of purchase) in the outstanding securities of any single issuer or
own more than 10% of the outstanding voting securities of any one issuer, in
each case other than securities issued or guaranteed by the United States
Government, its agencies or instrumentalities, at the close of each quarter of
its taxable year.
If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in the value of
a Fund's investments will not constitute a violation of such limitation, except
that any borrowing by a Fund that exceeds the fundamental investment limitations
stated above must be reduced to meet such limitations within the period required
by the 1940 Act (currently three days). Otherwise, a Fund may continue to hold
a security even though it causes the Fund to exceed a percentage limitation
because of fluctuation in the value of the Fund's assets.
27
<PAGE>
TRUSTEES, DIRECTORS AND OFFICERS
The trustees, directors and executive officers of the Trust, Framlington
and the Company, and their business addresses and principal occupations during
the past five years, are:
<TABLE>
<CAPTION>
POSITIONS WITH TRUST, COMPANY AND PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE FRAMLINGTON DURING PAST FIVE YEARS
- --------------------- --------------------------------- --------------------------
<S> <C> <C>
Charles W. Elliott Chairman of the Board of Senior Advisor to the President -
1024 Essex Circle Trustees and Directors Western Michigan University since July
Kalamazoo, MI 49008 1995; Executive Vice President -
Age: 66 Administration & Chief Financial
Officer, Kellogg Company from January
1987 through June 1995; before that Price
Waterhouse. Board of Directors, Steelcase
Financial Corporation; and Board of
Directors, Enesco Group.
John Rakolta, Jr. Trustee/Director and Vice Chairman Chairman and Chief Executive Officer,
1876 Rathmor of the Boards of Trustees and Walbridge Aldinger Company
Bloomfield Hills, MI 48304 Directors (construction company).
Age: 51
Thomas B. Bender Trustee/Director Investment Advisor, Financial &
7 Wood Ridge Road Investment Management Group (since
Glen Arbor, MI 49636 April, 1991).
Age 65
David J. Brophy Trustee/Director Professor, University of Michigan;
1025 Martin Place Director, River Place Financial Corporation.
Ann Arbor, MI 48104
Age: 62
Dr. Joseph E. Champagne Trustee/Director Dean, University Center, Macomb
319 East Snell Road College since September 1997;
Rochester, MI 48306 Corporate and Executive Consultant
Age: 60 since September 1995; prior to that
Chancellor Lamar University from
September 1994 until September 1995;
before that Consultant to Management;
President and Chief Executive Officer,
Crittenton Corporation (holding
company that owns healthcare
facilities) and Crittenton Development
Corporation
until August 1993; before that
President, Oakland University of
Rochester, MI, until August 1991;
Chairman, Board of Directors Ross
Operating Valve of Troy, MI.
</TABLE>
28
<PAGE>
<TABLE>
<S> <C> <C>
Thomas D. Eckert Trustee/Director President and Chief Executive Officer,
10726 Falls Pointe Drive Capital Automotive REIT from November
Great Falls, VA 22066 1997 to present (real estate
Age: 51 investment trust specializing in
retail automotive properties); prior
to that President and COO,
Mid-Atlantic Group of Pulte Home
Corporation (developer of residential
land and construction of housing
units) from 1983 until 1997.
Lee P. Munder* Trustee/Director and President Chairman of the Advisor since February
1029 N. Ocean Blvd. 1998; Chief Executive Officer of
Palm Beach, FL 33480 World Asset Management since January
Age 53 1995; Chief Executive Officer of Old
MCM (predecessor of Advisor) since
1985; and Director, LPM Investment
Services, Inc. ("LPM").
Terry H. Gardner Vice President, Vice President and Chief Financial
480 Pierce Street Chief Financial Officer Officer of the Advisor, Vice President
Suite 300 and Treasurer and Chief Financial Officer of Old MCM
Birmingham, MI 48009 (February 1993 to present); Secretary
Age: 38 of LPM
Paul Tobias Vice President Chief Executive Officer of the Advisor
480 Pierce Street (since February 1998); Chief Operating
Suite 300 Officer of the Advisor (since April
Birmingham, MI 48009 1995); Executive Vice President (April
Age: 46 1995 to February 1998) and Executive
Vice President of Comercia, Inc.
Gerald Seizert Vice President Chief Executive Officer of the Advisor
480 Pierce Street (since February 1998); Chief
Suite 300 Investment Officer/Equities of the
Birmingham, MI 48009 Advisor (since April 1995); Executive
Age: 45 Vice President (April 1995 to February
1998); Managing Director (1991-1995),
Director (1992-1995) and Vice
President (1984-1991) of Loomis,
Sayles and Company, L.P.
Elyse G. Essick Vice President Vice President and Director of
480 Pierce Street Marketing for the Advisor; Vice
Suite 300 President and Director of Client
Birmingham, MI 48009 Services of Old MCM (August 1988 to
Age: 40 December 1994).
</TABLE>
29
<PAGE>
<TABLE>
<S> <C> <C>
James C. Robinson Vice President Vice President and Chief Investment
480 Pierce Street Officer/Fixed Income for the Advisor;
Suite 300 Vice President and Director of Fixed
Birmingham, MI 48009 Income of Old MCM (1987-1994).
Age: 36
Leonard J. Barr Vice President Vice President and Director of Core
480 Pierce Street Equity Research of the Advisor;
Suite 300 Director and Senior Vice President of
Birmingham, MI 48009 Old MCM (since 1988); Director of LPM.
Age: 53
Ann F. Putallaz Vice President Vice President and Director of
480 Pierce Street Fiduciary Services of the Advisor
Suite 300 (since January 1995); Director of
Birmingham, MI 48009 Client and Marketing Services of
Age: 52 Woodbridge.
Lisa A. Rosen Secretary, Assistant Treasurer General Counsel of the Advisor (since
480 Pierce Street May, 1996); formerly, Counsel, First
Suite 300 Data Investor Services Group, Inc.;
Birmingham, MI 48009 Assistant Vice President and Counsel
Age: 31 with The Boston Company Advisors,
Inc.; Associate with Hutchins, Wheeler
& Dittmar.
Therese Hogan Assistant Secretary Director, State Regulation Department,
53 State Street First Data Investor Services Group
Boston, MA 02109 (June 1994-present); formerly Senior
Age: 36 Legal Assistant, Palmer & Dodge
(October 1993-June 1994); Blue Sky
Paralegal, Robinson & Cole (February
1984-October 1993).
</TABLE>
* Trustee/Director is an "Interested person" of the Trust, Framlington or
the Company as defined in the 1940 Act.
Trustees of the Trust and Framlington and Directors of the Company receive
an aggregate fee from the Trust, Framlington the Company and St. Clair Funds,
Inc. ("St. Clair") for service on those organizations' respective Boards,
comprised of an annual retainer fee of $30,000, and a fee of $2,500 for each
Board meeting attended; and are reimbursed for all out-of-pocket expenses
relating to attendance at meetings.
The following table summarizes the compensation paid by the Trust,
Framlington, the Company and St. Clair to their respective Trustees/Directors
for the year ended June 30, 1998.
30
<PAGE>
<TABLE>
<CAPTION>
Aggregate Dr. Joseph E.
Compensation Charles W. John Rakolta, Thomas B. Bender, Champagne, Thomas D. Eckert,
from a Fund Elliot, Chairman Jr., Trustee and Trustee and Trustee and
Vice Chairman Director Director Director
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Accelerating
Growth Fund
- ---------------------------------------------------------------------------------------------------------------------------
Balanced Fund
- ---------------------------------------------------------------------------------------------------------------------------
Index 500 Fund
- ---------------------------------------------------------------------------------------------------------------------------
Growth & Income
Fund
- ---------------------------------------------------------------------------------------------------------------------------
International Equity
Fund
- ---------------------------------------------------------------------------------------------------------------------------
Small Company
Growth Fund
- ---------------------------------------------------------------------------------------------------------------------------
Bond Fund
- ---------------------------------------------------------------------------------------------------------------------------
Intermediate Bond
Fund
- ---------------------------------------------------------------------------------------------------------------------------
U.S. Income Fund
- ---------------------------------------------------------------------------------------------------------------------------
Michigan Bond
Fund
- ---------------------------------------------------------------------------------------------------------------------------
Tax-Free Bond
Fund
- ---------------------------------------------------------------------------------------------------------------------------
Cash Investment
Fund
- ---------------------------------------------------------------------------------------------------------------------------
Tax-Free Money
Market Fund
- ---------------------------------------------------------------------------------------------------------------------------
U.S. Treasury
Money Market
Fund
- ---------------------------------------------------------------------------------------------------------------------------
Growth
Opportunities Fund
- ---------------------------------------------------------------------------------------------------------------------------
Micro-Cap Equity
Fund
- ---------------------------------------------------------------------------------------------------------------------------
Multi-Season
Growth Fund
- ---------------------------------------------------------------------------------------------------------------------------
NetNet Fund
- ---------------------------------------------------------------------------------------------------------------------------
Real Estate Equity
Investment Fund
- ---------------------------------------------------------------------------------------------------------------------------
Small-Cap
Value Fund
- ---------------------------------------------------------------------------------------------------------------------------
Value Fund
- ---------------------------------------------------------------------------------------------------------------------------
International
Bond Fund
- ---------------------------------------------------------------------------------------------------------------------------
Short Term
Treasury Fund
- ---------------------------------------------------------------------------------------------------------------------------
Money Market
Fund
- ---------------------------------------------------------------------------------------------------------------------------
Emerging Markets
Fund
- ---------------------------------------------------------------------------------------------------------------------------
Global Financial
Services Fund
- ---------------------------------------------------------------------------------------------------------------------------
Healthcare Fund
- ---------------------------------------------------------------------------------------------------------------------------
All-Season
Conservative Fund
- ---------------------------------------------------------------------------------------------------------------------------
All-Season
Moderate Fund
- ---------------------------------------------------------------------------------------------------------------------------
All-Season
Aggressive Fund
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL COMPENSATION
FROM THE
FUND COMPLEX
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE>
No officer, director or employee of the Advisor, Sub-Advisor, Comerica
Incorporated ("Comerica"), the Sub-Custodian, the Distributor, the Administrator
or the Transfer Agent currently receives any compensation from the Trust,
Framlington or the Company. As of October __, 1998, the Trustees and officers
of the Trust, as a group, owned less than 1% of all classes of outstanding
shares of the Funds of the Trust, the Trustees and officers of Framlington, as a
group, owned less than 1% of all classes of outstanding shares of the Funds of
Framlington except the Healthcare Fund in which Trustees and officers, as a
group, owned ________% of Class _________. [Update]
Gerald Seizert, Paul Tobias and Terry H. Gardner are administrators of a
pension plan for employees of Munder Capital Management, which as of October
__, 1998, owned ____________ Class ___ shares [update].
As of October __, 1998, Munder Capital Management and affiliates of Munder
Capital Management, through common ownership, owned beneficially ________ Class
____ shares of ________. [Update]
SHAREHOLDER AND TRUSTEE LIABILITY. Under Massachusetts law, shareholders
of a business trust may, under certain circumstances, be held personally liable
as partners for the obligations of the trust. However, the Trust's and
Framlington's Declaration of Trust, as amended, each provide that shareholders
shall not be subject to any personal liability in connection with the assets of
the Trust or Framlington for the acts or obligations of the Trust or
Framlington, and that every note, bond, contract, order or other undertaking
made by the Trust or Framlington shall contain a provision to the effect that
the shareholders are not personally liable thereunder. Each Declaration of
Trust, as amended, provides for indemnification out of the trust property of any
shareholder held personally liable solely by reason of his or her being or
having been a shareholder and not because of his or her acts or omissions or
some other reason. Each Declaration of Trust, as amended, also provides that
the Trust and Framlington shall, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of the Trust or
Framlington, and shall satisfy any judgment thereon. Thus, the risk of a
shareholder's incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust or Framlington itself would be
unable to meet its obligations.
Each Declaration of Trust, as amended, further provides that all persons
having any claim against the Trustees, the Trust or Framlington shall look
solely to the trust property for payment; that no Trustee of the Trust or
Framlington shall be personally liable for or on account of any contract, debt,
tort, claim, damage, judgment or decree arising out of or connected with the
administration or preservation of the trust property or the conduct of any
business of the Trust or Framlington; and that no Trustee shall be personally
liable to any person for any action or failure to act except by reason of his
own bad faith, willful misfeasance, gross negligence or reckless disregard of
his duties as a trustee. With the exception stated, each Declaration of Trust,
as amended, provides that a Trustee is entitled to be indemnified against all
liabilities and expenses reasonably incurred by him in connection with the
defense or disposition of any proceeding in which he may be involved or with
which he may be threatened by reason of being or having been a Trustee, and that
the Trustees will indemnify officers, representatives and employees of the Trust
and Framlington to the same extent that Trustees are entitled to
indemnification.
INVESTMENT ADVISORY AND OTHER SERVICE ARRANGEMENTS
INVESTMENT ADVISOR AND SUB-ADVISOR. The Advisor of each Fund is Munder
Capital Management, a Delaware general partnership. The Advisor replaced
Woodbridge Capital Management, Inc. ("Woodbridge") as investment advisor to the
investment portfolios of the Trust and replaced Munder Capital Management, Inc.
as the investment advisor to the investment portfolios of the Company on January
31, 1995, upon the closing agreement (the "Joint Venture Agreement") among MCM,
Comerica, Woodbridge and WAM, pursuant to which MCM contributed its investment
advisory business and Comerica contributed the investment advisor business of
its indirect subsidiaries, Woodbridge and World Asset Management, to the
Advisor. The general partners of the Advisor are WAM, MCM and Munder Group LLC.
WAM is a wholly-owned subsidiary of Comerica Bank - Ann Arbor, which in turn is
a wholly-owned subsidiary of Comerica Incorporated, a publicly-held bank holding
company.
32
<PAGE>
The Funds have entered into new Investment Advisory Agreements (the
"Advisory Agreements"), dated July 2, 1998, with the Advisor pursuant to terms
of an Exemptive Order (the "Order") granted by the Securities and Exchange
Commission. Under the terms of the Order, the Advisory Agreements must be
approved by the shareholders within one hundred and fifty (150) days but no
later than November 30, 1998. The Funds will call a special meeting of the
shareholders to approve the Advisory Agreements. Until shareholder approval,
the fees paid to the Advisor will be paid into an escrow account. If the
Advisory Agreements are not approved by the shareholders, the Board of Directors
and/or the Board of Trustees will consider appropriate action.
Once the Advisory Agreements are approved by shareholders, they will
continue in effect for a period of two years from their effective dates. If not
sooner terminated, each Advisory Agreement will continue in effect for
successive one year periods thereafter, provided that each continuance is
specifically approved annually by (a) the vote of a majority of the Boards of
Directors/Trustees who are not parties to the Advisory Agreement or interested
persons (as defined in the 1940 Act), cast in person at a meeting called for the
purpose of voting on approval, and (b) either (i) the vote of a majority of the
outstanding voting securities of the affected Fund, or (ii) the vote of a
majority of the Boards of Directors/Trustees. Each Advisory Agreement is
terminable with respect to a Fund by vote of the Boards of Directors/Trustees,
or by the holders of a majority of the outstanding voting securities of the
Fund, at any time without penalty, on 60 days' written notice to the Advisor.
The Advisor may also terminate its advisory relationship with respect to a Fund
without penalty on 90 days' written notice to the Trust, Framlington or the
Company, as applicable. Each Advisory Agreement terminates automatically in the
event of its assignment (as defined in the 1940 Act).
The Sub-Advisor is a subsidiary of Framlington Group Limited, which is
incorporated in England and Wales and, through its subsidiaries, provides a wide
range of investment services. Framlington Group Limited is a wholly owned
subsidiary of Framlington Holdings Limited which is, in turn, owned 49% by the
Advisor and 51% by Credit Commercial de France S.A., a French banking
corporation listed on the Societe des Bourses Francaises.
The Sub-Advisory Agreements between Advisor and the Sub-Advisor on behalf
of the Emerging Markets Fund, the Healthcare Fund and the International Growth
Fund were approved by the Board of Trustees of Framlington on November 7, 1996
and by shareholders on December 31, 1996. The Sub-Advisory Agreement between
the Advisor and the Sub-Advisor on behalf of the Global Financial Services Fund
was approved by the Board of Trustees of Framlington on February 24, 1998.
Under the terms of the Sub-Advisory Agreement, the Sub-Advisor provides sub-
advisory services to the International Growth, Emerging Markets, Global
Financial Services and Healthcare Funds. Subject to supervision of the Advisor,
the Sub-Advisor is responsible for the management of each Fund's portfolio,
including decisions regarding purchases and sales of portfolio securities by the
Funds. The Sub-Advisor is also responsible for arranging the execution of
portfolio management decisions, including the selection of brokers to execute
trades and the negotiation of brokerage commissions in connection therewith.
The Sub-Advisory Agreement, with respect to each Fund, will continue in
effect with respect to each Fund for a period of two years from its effective
date. If not sooner terminated, the Sub-Advisory Agreement will continue in
effect for successive one year periods thereafter, provided that each
continuance is specifically approved annually by (a) the vote of a majority of
the Board of Trustees who are not parties to the Sub-Advisory Agreement or
interested persons (as defined in the 1940 Act), cast in person at a meeting
called for the purpose of voting on approval, and (b) either (i) with respect to
a Fund, the vote of a majority of the outstanding voting securities of that
Fund, or (ii) the vote of a majority of the Board of Trustees. The Sub-Advisory
Agreement is terminable by vote of the Board of Trustees, or, with respect to a
Fund, by the holders of a majority of the outstanding voting securities of that
Fund, at any time without penalty, on 60 days' written notice to the Sub-
Advisor, or by the Advisor on 90 days' written notice to the Sub-Advisor. The
Sub-Advisor may also terminate its sub-advisory relationship with a Fund without
penalty on 90 days' written notice to Framlington. The Sub-Advisory Agreement
terminates automatically in the event of its assignment (as defined in the 1940
Act).
33
<PAGE>
For the advisory services provided and expenses assumed by it, the Advisor
has agreed to a fee from each Fund computed daily and payable monthly at the
rates set forth below:
<TABLE>
<CAPTION>
FUND MANAGEMENT FEE
- ---- --------------
<S> <C>
Accelerating Growth Fund .75% of average daily net assets
Balanced Fund .65% of average daily net assets
Bond Fund .50% of average daily net assets
Cash Investment Fund .25% of average daily net assets
Emerging Markets Fund 1.25% of average daily net assets
Global Financial Services Fund .75% of average daily net assets
Growth & Income Fund .75% of average daily net assets
Growth Opportunities Fund .75% of average daily net assets
Income Fund .50% of average daily net assets
Index 500 Fund* .20% of the first $250 million of average daily net
assets; .12% of the next $250 million of net assets and
.07% of net assets in excess of $500
Intermediate Bond Fund .50% of average daily net assets
International Bond Fund .50% of average daily net assets
International Equity Fund .75% of average daily net assets
International Growth Fund 1.00% of the first $250 million of average daily net
assets and .75% of net assets in excess of $250 million
Healthcare Fund** 1.00% of the first $250 million of average daily net
assets and .75% of net assets in excess of $250 million
Michigan Bond Fund .50% of average daily net assets
Micro-Cap Fund 1.00% of average daily net assets
Money Market Fund .40% of average daily net assets
Multi-Season Fund 1.00% of the first $500 million of average daily net
assets and .75% of net assets in excess of $500 million
NetNet Fund 1.00% of average daily net assets
Real Estate Fund .74% of average daily net assets
Small-Cap Value Fund .75% of average daily net assets
Small Company Growth Fund .75% of average daily net assets
Short Term Treasury Fund .25% of average daily net assets
Tax-Free Bond Fund .50% of average daily net assets
Tax-Free Intermediate Bond Fund .50% of average daily net assets
Tax-Free Money Market Fund .40% of average daily net assets
Treasury Fund .35% of average daily net assets
Value Fund .74% of average daily net assets
</TABLE>
_________________________________
* The Advisor expects to receive, after waivers, an advisory fee at the annual
rate of .75% of average daily net assets of Multi-Season Fund and .07% of
average daily net assets of the Index 500 Fund during the current fiscal
year.
** The Advisor expects to voluntarily reimburse expenses during the current
fiscal year with respect to the Micro-Cap Fund and the Healthcare Fund.
The Advisor may discontinue such fee waivers and/or expense reimbursements
at any time, in its sole discretion.
The Advisor pays the Sub-Advisor a monthly fee equal on an annual basis to
up to 0.50% of average daily net assets up to $250 million, reduced to .375% of
average daily net assets in excess of $250 million for the International Growth
Fund and the Healthcare Fund, up to .625% of average daily net assets for the
Emerging Markets Fund and .375% of average daily net assets for the Global
Financial Services Fund.
34
<PAGE>
For the fiscal year ended June 30, 1998 (and for the period from
commencement of operations to June 30, 1998 for the Global Financial Services
Fund, Growth Opportunities Fund and NetNet Fund), the Advisor received fees
after waivers, if any, of $____________ for the Accelerating Growth Fund,
$_____________ for the Balanced Fund, $_____________ for the Growth & Income
Fund, $_____________ for the Index 500 Fund, $_____________ for the
International Equity Fund, $_____________ for the Small Company Growth Fund,
$_____________ for the Bond Fund, $_____________ for the Intermediate Bond Fund,
$_____________ for the U.S. Government Fund, $_____________ for the Michigan
Bond Fund, $_____________ for the Tax-Free Bond Fund, $_____________ for the
Tax-Free Intermediate Fund, $_____________ for the Cash Investment Fund,
$_____________ for the Tax-Free Money Market Fund, $_____________ for the U.S.
Treasury Money Market Fund, $_____________ for the Multi-Season Fund,
$_____________ for the Real Estate Fund, $_____________ for the Money Market
Fund, $_____________ for the Value Fund, $_____________ for the International
Growth Fund, $_____________ for the Emerging Markets Fund, $_____________ for
the Healthcare Fund, $_____________ for the Micro-Cap Equity Fund,
$_____________ for the Small-Cap Value Fund, $_____________ for the Short Term
Treasury Fund, $_____________ for the International Bond Fund, $_____________
for NetNet Fund, $_____________ for the Global Financial Services Fund and
$_____________ for the Growth Opportunities Fund.
For the fiscal year ended June 30, 1997 (and for the period from
commencement of operations to June 30, 1997 for the International Growth,
Emerging Markets, Healthcare, Micro-Cap, Small-Cap Value, Short Term Treasury
and International Bond Funds), the Advisor received fees after waivers, if any,
of $2,040,543 for the Accelerating Growth Fund, $445,259 for the Balanced Fund,
$1,650,704 for the Growth & Income Fund, $249,764 for the Index 500 Fund,
$1,720,496 for the International Equity Fund, $1,884,242 for the Small Company
Growth Fund, $751,954 for the Bond Fund, $2,554,647 for the Intermediate Bond
Fund, $1,175,733 for the U.S. Government Fund, $132,451 for the Michigan Bond
Fund, $1,006,688 for the Tax-Free Bond Fund, $1,584,769 for the Tax-Free
Intermediate Fund, $3,454,159 for the Cash Investment Fund, $879,155 for the
Tax-Free Money Market Fund, $1,101,183 for the U.S. Treasury Money Market Fund,
$3,189,742 for the Multi-Season Fund, $259,015 for the Real Estate Fund,
$599,286 for the Money Market Fund, $401,505 for the Value Fund, $71,843 for the
International Growth Fund, $25,210 for the Emerging Markets Fund, $11,440 for
the Healthcare Fund, $6,479 for the Micro-Cap Equity Fund, $20,442 for the
Small-Cap Value Fund, $51,885 for the Short Term Treasury Fund and $143,476 for
the International Bond Fund.
For the fiscal year ended June 30, 1996 (and for the period from
commencement of operations to June 30, 1996 for the Value Fund) the Advisor
received fees after waivers, if any, of $2,275,469 for the Multi-Season Fund,
$114,330 for the Real Estate Fund, $1,025,924 for the Money Market Fund and
$189,909 for the Value Fund.
For the period ended June 30, 1998, the Advisor voluntarily reimbursed
expenses in the amounts of $_____________ for the ________ Fund. [Update]
For the fiscal year ended June 30, 1997 the Advisor voluntarily waived
advisory fees and/or reimbursed expenses in the amounts of $1,063,248 for the
Multi-Season Fund, $10,143 for the Real Estate Fund, $17,688 for the Value Fund,
$360,721 for the Index 500 Fund and $51,815 for the Michigan Bond Fund.
For the fiscal year ended June 30, 1996, the Advisor voluntarily reimbursed
expenses in the following amounts: $34,671 for the Real Estate Fund, $70,016 for
the Value Fund and $21,376 for the Index 500 Fund.
DISTRIBUTION AGREEMENTS. The Trust, Framlington and the Company have
entered into distribution agreements, under which the Distributor, as agent,
sells shares of each Fund on a continuous basis. The Distributor has agreed to
use appropriate efforts to solicit orders for the purchase of shares of each
Fund, although it is not obligated to sell any particular amount of shares. The
Distributor pays the cost of printing and distributing prospectuses to persons
who are not holders of shares of the Funds (excluding preparation and printing
expenses necessary for the continued registration of the shares) and of printing
and distributing all sales literature. The Distributor's principal offices are
located at 60 State Street, Boston, Massachusetts 02109.
35
<PAGE>
DISTRIBUTION SERVICES ARRANGEMENTS - CLASS A, CLASS B AND CLASS C SHARES.
Each Fund has adopted a Service and Distribution Plan with respect to its Class
A Shares pursuant to which it uses its assets to finance activities relating to
the provision of certain shareholder services. Under the Service and
Distribution Plans for Class A Shares, the Distributor is paid an annual service
fee at the rate of up to 0.25% of the value of average daily net assets of the
Class A Shares of each Fund. Each Fund has also adopted a Service and
Distribution Plan with respect to its Class B and Class C Shares, pursuant to
which it uses its assets to finance activities relating to the distribution of
its shares to investors and provision of certain shareholder services. Under
the Service and Distribution Plans for Class B and Class C Shares, the
Distributor is paid an annual service fee of up to 0.25% of the value of average
daily net assets of the Class B and Class C Shares of each Fund and an annual
distribution fee at the rate of up to 0.75% of the value of average daily net
assets of the Class B and Class C Shares of each Fund.
Under the terms of the Service and Distribution Plans (collectively, the
"Plans"), each Plan continues from year to year, provided such continuance is
approved annually by vote of the Boards of Directors/Trustees, including a
majority of the Boards of Directors/Trustees who are not interested persons of
the Trust, Framlington or the Company, as applicable, and who have no direct or
indirect financial interest in the operation of that Plan (the "Non-Interested
Plan Directors"). The Plans may not be amended to increase the amount to be
spent for the services provided by the Distributor without shareholder approval,
and all amendments of the Plans also must be approved by the Trustees/Directors
in the manner described above. Each Plan may be terminated at any time, without
penalty, by vote of a majority of the Non-Interested Plan Directors or by a vote
of a majority of the outstanding voting securities of the relevant class of the
respective Fund (as defined in the 1940 Act) on not more than 30 days' written
notice to any other party to the Plan. Pursuant to each Plan, the Distributor
will provide the Boards of Trustees and Directors periodic reports of amounts
expended under the Plan and the purpose for which such expenditures were made.
The Trustees/Directors have determined that the Plans will benefit the
Trust, Framlington, the Company and their respective shareholders by (i)
providing an incentive for broker or bank personnel to provide continuous
shareholder servicing after the time of sale; (ii) retention of existing
accounts; (iii) facilitating portfolio management flexibility through continued
cash flow into the Funds; and (iv) maintaining a competitive sales structure in
the mutual fund industry.
With respect to Class B and Class C Shares of each Fund, the Distributor
expects to pay sales commissions to dealers authorized to sell a Fund's Class B
and Class C Shares at the time of sale. The Distributor will use its own funds
(which may be borrowed) to pay such commissions pending reimbursement by the
relevant Service and Distribution Plan. In addition, the Advisor may use its
own resources to make payments to the Distributor or dealers authorized to sell
the Funds' shares to support their sales efforts.
36
<PAGE>
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS A SERVICE PLANS
<TABLE>
<CAPTION>
FISCAL FISCAL FISCAL
YEAR YEAR YEAR
ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Accelerating Growth Fund $ $ 16,419 $ 1,916.29
Balanced Fund $ $ 981 $ 136.95
Growth & Income Fund $ $ 5,324 $ 268.00
Index 500 Fund $ $ 48,763 $23,640.45
International Equity Fund $ $ 13,505 $ 1,946.82
Small Company Growth Fund $ $ 17,843 $ 1,158.43
Bond Fund $ $ 2,203 $ 29.40
Intermediate Bond Fund $ $ 13,919 $ 345.66
Michigan Triple Tax-Free Bond Fund $ $ 1,206 $ 23.32
Tax-Free Bond Fund $ $ 4,973 $ 0.03
Tax-Free Intermediate Bond Fund $ $ 14,678 $ 85.26
Growth Opportunities Fund $ + N/A N/A
Multi-Season Fund $ $ 30,811 $ 1,945.49
Real Estate Fund $ $ 1,559 $ 179.10
Value Fund $ $ 2,347 $ 41.77
Money Market Fund $ $ 1,198* N/A
NetNet Fund $ + N/A N/A
Micro-Cap Fund $ $ 79* N/A
Small-Cap Value Fund $ $ 558* N/A
International Bond Fund $ $ 39* N/A
International Growth Fund $ $ 759 N/A
Emerging Markets Fund $ $ 285 N/A
Global Financial Services Fund $$ + N/A N/A
Healthcare Fund $ $ 241 N/A
</TABLE>
- -----------------------------------
* Figures reflect period from commencement of operations to June 30, 1997.
+ Figures reflect period from commencement of operations to June 30, 1998.
37
<PAGE>
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS B SERVICE AND DISTRIBUTION PLANS
FOR THE FISCAL YEAR ENDED JUNE 30, 1998.
<TABLE>
<CAPTION>
DISTRIBUTION
AND SERVICER FEES CDSC'S
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Accelerating Growth Fund $ $
Balanced Fund $ $
Growth Opportunities Fund $ + $ +
Growth & Income Fund $ $
Index 500 Fund $ $
International Equity Fund $ $
Micro-Cap Fund* $ $
Multi-Season Fund $ $
NetNet Fund $ + $ +
Real Estate Fund $ $
Small-Cap Value Fund* $ $
Small Company Growth Fund $ $
Value Fund $ $
Global Financial Services Fund $ + $ +
International Growth Fund* $ $
Emerging Markets Fund* $ $
Healthcare Fund* $ $
Bond Fund $ $
International Bond Fund* $ $
Intermediate Bond Fund $ $
Short Term Treasury Fund*++ $ $
US Government Income Fund $ $
Michigan Bond Fund $ $
Tax-Free Bond Fund $ $
Tax-Free Intermediate Bond Fund $ $
Money Market Fund $ $
</TABLE>
- ------------------------------------
* Figures reflect period from commencement of operations to June 30, 1997.
+ Figures reflect period from commencement of operations to June 30, 1998.
As of June 2, 1998 Class A, Class B and Class C Shares of Short Term Treasury
++ Fund were closed to all investments.
38
<PAGE>
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS B SERVICE AND DISTRIBUTION PLANS
FOR THE FISCAL YEAR ENDED JUNE 30, 1997.
<TABLE>
<CAPTION>
DISTRIBUTION
AND SERVICER FEES CDSC'S
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Accelerating Growth Fund $ 3,607 $ 150.00
Balanced Fund $ 1,249 $ 0.00
Growth & Income Fund $ 3,519 $ 535.41
Index 500 Fund $153,426 $ 0.00
International Equity Fund $ 10,398 $ 318.86
Micro-Cap Fund* $ 513 $ 0.00
Multi-Season Fund $731,958 $26,020.64
Real Estate Fund $ 27,446 $ 0.00
Small-Cap Value Fund* $ 648 $ 0.00
Small Company Growth Fund $ 21,679 $ 930.13
Value Fund $ 2,689 $ 0.00
International Growth Fund* $ 175 $ 0.00
Emerging Markets Fund* $ 95 $ 0.00
Healthcare Fund* $ 1,240 $ 0.00
Bond Fund $ 5,482 $ 447.26
International Bond Fund* $ 11 $ 0.00
Intermediate Bond Fund $ 2,627 $ 0.00
Short Term Treasury Fund* $ 116 $ 0.00
US Government Income Fund $ 13,452 $ 0.00
Michigan Bond Fund $ 2,779 $ 0.00
Tax-Free Bond Fund $ 566 $ 0.00
Tax-Free Intermediate Bond Fund $ 1,782 $ 0.00
Money Market Fund $ 1,925 $ 711.20
</TABLE>
_____________________________________
* Figures reflect period from commencement of operations to June 30, 1997.
39
<PAGE>
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS B SERVICE AND DISTRIBUTION PLANS
FOR THE FISCAL YEAR ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
DISTRIBUTION SERVICER
FEES FEES CDSC'S
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Accelerating Growth Fund $ 1,268.42 $ 422.83 $ 238.16
Balanced Fund $ 400.45 $ 133.48 $ 199.11
Growth & Income Fund $ 1,147.15 $ 382.37 $ 300.00
Index 500 Fund $ 15,750.66 $ 4,500.20 $ 1,207.75
International Equity Fund $ 3,131.06 $ 1,043.68 $ 1,008.01
Mid-Cap Growth Fund $ 88.71 $ 29.54 $ 0.00
Multi-Season Fund $454,197.35 $151,399.12 $155,014.33
Real Estate Fund $ 12,014.27 $ 4,004.75 $ 4,278.33
Small Company Growth Fund $ 2,247.94 $ 749.31 $ 100.00
Value Fund $ 424.07 $ 141.36 $ 181.56
Bond Fund $ 590.01 $ 196.67 $ 861.49
Intermediate Bond Fund $ 206.34 $ 68.79 $ 0.00
US Government Income Fund $ 3,656.37 $ 1,218.79 $ 199.27
Michigan Bond Fund $ 1,923.70 $ 641.24 $ 405.63
Tax-Free Bond Fund $ 131.90 $ 43.96 $ 979.34
Tax-Free Intermediate Bond Fund $ 298.44 $ 99.48 $ 0.53
Money Market Fund $ 1,496.13 $ 498.72 $ 0.00
</TABLE>
40
<PAGE>
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS C SERVICE AND DISTRIBUTION PLANS
FOR THE FISCAL YEAR ENDED JUNE 30, 1998*
<TABLE>
<CAPTION>
DISTRIBUTION
AND SERVICER FEES CDSC's
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Accelerating Growth Fund $ $
Balanced Fund $ $
Growth & Income Fund $ $
Growth Opportunities Fund $ + $ +
Global Financial Services Fund $ + $ +
International Growth Fund $ $
Emerging Markets Fund $ $
Healthcare Fund $ $
International Equity Fund $ $
Index 500* N/A N/A
Multi-Season Fund $ $
Real Estate Fund $ $
Micro-Cap Fund $ + $ +
NetNet Fund* N/A N/A
Small-Cap Value Fund $ $
Small Company Growth Fund $ $
Value Fund $ $
Bond Fund $ $
Intermediate Bond Fund $ $
US Government Income Fund $ $
Michigan Bond Fund $ $
Money Market Fund
</TABLE>
- ----------------------------------
* As of June 30, 1998 the following funds had not commenced selling Class C
shares: NetNet Fund and Index 500. As of June 2, 1998, Class C Shares of
Short Term Treasury were closed to all investments.
+ Figures reflect period from commencement of operations to June 30, 1998.
41
<PAGE>
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS C SERVICE AND DISTRIBUTION PLANS
FOR THE FISCAL YEAR ENDED JUNE 30, 1997*
<TABLE>
<CAPTION>
DISTRIBUTION
AND SERVICER FEES CDSC'S
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accelerating Growth Fund $ 2,146 $ 0.00
Balanced Fund $ 337 $ 0.00
Growth & Income Fund $ 2,683 $ 0.00
International Growth Fund** $ 63 $ 0.00
Emerging Markets Fund** $ 49 $ 0.00
Healthcare Fund** $ 125 $ 0.00
International Equity Fund $18,452 $ 0.00
Multi-Season Fund $73,808 $391.84
Real Estate Fund $ 1,829 $ 2.38
Micro-Cap Fund** $ 48 $ 0.00
Small-Cap Value Fund** $ 223 $ 0.00
Small Company Growth Fund $13,938 $212.00
Value Fund $ 4,397 $ 0.00
Bond Fund $ 787 $ 0.00
Intermediate Bond Fund $ 1,136 $ 0.00
US Government Income Fund $ 93 $ 0.00
Michigan Bond Fund $ 568 $ 0.00
Money Market Fund $ 5,932 $ 0.00
</TABLE>
___________________________________
* As of June 30, 1997, the following funds had not commenced selling Class C
Shares: Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund, International
Bond Fund and Short Term Treasury Fund.
**Figures reflect period from commencement of operations to June 30, 1997.
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS C SERVICE AND DISTRIBUTION PLANS
FOR THE FISCAL YEAR ENDED JUNE 30, 1996*
<TABLE>
<CAPTION>
DISTRIBUTION
FEES AND SERVICER
FEES CDSC'S
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accelerating Growth Fund $ 351.28 $188.66
Balanced Fund $ 4.9 $100.01
Growth & Income Fund $ 119.64 $ 0.00
International Equity Fund $ 4,780.52 $293.87
Multi-Season Fund $42,836.64 $798.25
Real Estate Fund $ 17.76 $ 7.50
Small Company Growth Fund $ 228.27 $149.87
Value Fund $ 1,141.17 $ 0.00
Bond Fund $ 123.26 $ 0.00
Intermediate Bond Fund $ 98.38 $ 0.00
</TABLE>
- ------------------------------------
* As of June 30, 1996, the following funds had not commenced selling Class C
Shares: Index 500 Fund, US Government Income Fund, Michigan Bond Fund, Tax-
Free Bond Fund, Tax-Free Intermediate Bond Fund and Money Market Fund
42
<PAGE>
The following amounts were paid by each Fund under its Class B Service and
Distribution Plans during the fiscal year ended June 30, 1998.
<TABLE>
<CAPTION>
PRINTING AND
MAILING OF INTEREST
PROSPECTUSES TO CARRYING
OTHER THAN OR OTHER
CURRENT COMPENSATION TO COMPENSATION TO COMPENSATION TO FINANCING
ADVERTISING SHAREHOLDERS UNDERWRITERS DEALERS PERSONNEL CHARGES
----------- ------------ ------------ ------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Accelerating Growth Fund $ $ $ $ $ $
Balanced Fund $ $ $ $ $ $
Index 500 Fund $ $ $ $ $ $
Global Financial Services $ $ $ $ $ $
Fund*
International Growth Fund $ $ $ $ $ $
Emerging Markets Fund $ $ $ $ $ $
Healthcare Fund $ $ $ $ $ $
Growth & Income Fund $ $ $ $ $ $
Growth Opportunities Fund* $ $ $ $ $ $
International Equity Fund $ $ $ $ $ $
Micro-Cap Equity Fund $ $ $ $ $ $
Multi-Season Growth Fund $ $ $ $ $ $
NetNet Fund* $ $ $ $ $ $
Real Estate Equity $ $ $ $ $ $
Investment Fund
Short Term Treasury Fund+ $ $ $ $ $ $
Small-Cap Value Fund $ $ $ $ $ $
Small Company Growth Fund $ $ $ $ $ $
Value Fund $ $ $ $ $ $
Bond Fund $ $ $ $ $ $
Intermediate Bond Fund $ $ $ $ $ $
International Bond Fund $ $ $ $ $ $
U.S. Government Income Fund $ $ $ $ $ $
Michigan Bond Fund $ $ $ $ $ $
Tax-Free Bond Fund $ $ $ $ $ $
Tax-Free Intermediate Bond $ $ $ $ $ $
Fund
Money Market Fund $ $ $ $ $ $
</TABLE>
- -------------------------------------
* Figures reflect period from commencement of operations to June 30, 1998.
As of June 2, 1998 Class A, Class B and Class C Shares of Short Term Treasury
+ Fund were closed to all investments.
43
<PAGE>
The following amounts were paid by each Fund under its Class C Service and
Distribution Plans during the fiscal year ended June 30, 1998.
<TABLE>
<CAPTION>
PRINTING AND
MAILING OF INTEREST
PROSPECTUSES CARRYING OR
TO OTHER THAN OTHER
CURRENT COMPENSATION TO COMPENSATION COMPENSATION FINANCING
ADVERTISING SHAREHOLDERS UNDERWRITERS TO DEALERS TO PERSONNEL CHARGES
----------- ------------ ------------ ---------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Accelerating Growth Fund $ $ $ $ $ $
Balanced Fund $ $ $ $ $ $
Index 500 Fund $ $ $ $ $ $
Global Financial $ $ $ $ $ $
Services Fund*
International Growth Fund $ $ $ $ $ $
Emerging Markets Fund $ $ $ $ $ $
Healthcare Fund $ $ $ $ $ $
Growth & Income Fund $ $ $ $ $ $
Growth Opportunities $ $ $ $ $ $
Fund*
International Equity Fund $ $ $ $ $ $
Micro-Cap Equity Fund $ $ $ $ $ $
Multi-Season Growth Fund $ $ $ $ $ $
NetNet Fund** N/A N/A N/A N/A N/A N/A
Real Estate Equity $ $ $ $ $ $
Investment Fund
Short Term Treasury Fund+ $ $ $ $ $ $
Small-Cap Value Fund $ $ $ $ $ $
Small Company Growth Fund $ $ $ $ $ $
Value Fund $ $ $ $ $ $
Bond Fund $ $ $ $ $ $
Intermediate Bond Fund $ $ $ $ $ $
International Bond Fund $ $ $ $ $ $
U.S. Government Income $ $ $ $ $ $
Fund
Michigan Bond Fund $ $ $ $ $ $
Tax-Free Bond Fund $ $ $ $ $ $
Tax-Free Intermediate $ $ $ $ $ $
Bond Fund
Money Market Fund $ $ $ $ $ $
</TABLE>
- ----------------------------------------
* Figures reflect period from commencement of operations to June 30, 1998.
**As of June 30, 1998, the fund had not commenced selling Class C Shares.
As of June 2, 1998 Class A, Class B and Class C Shares of Short Term
Treasury Fund were closed to all investments.
SHAREHOLDER SERVICING ARRANGEMENTS - CLASS K SHARES. As stated in each
Fund's Prospectus, Class K Shares are sold to investors through institutions
which enter into Shareholder Servicing Agreements with the Trust,
44
<PAGE>
Framlington or the Company to provide support services to their Customers who
beneficially own Class K Shares in consideration of the Funds' payment of not
more than 0.25% (on an annualized basis) of the average daily net asset value of
the Class K Shares beneficially owned by the Customers.
Services provided by institutions under their service agreements may
include: (i) aggregating and processing purchase and redemption requests for
Class K Shares from Customers and placing net purchase and redemption orders
with the Distributor; (ii) providing Customers with a service that invests the
assets of their accounts in Class K Shares pursuant to specific or pre-
authorized instructions; (iii) processing dividend payments on behalf of
Customers; (iv) providing information periodically to Customers showing their
positions in Class K Shares; (v) arranging for bank wires; (vi) responding to
Customer inquiries relating to the services performed by the institutions; (vii)
providing subaccounting with respect to Class K Shares beneficially owned by
Customers or the information necessary for subaccounting; (viii) if required by
law, forwarding shareholder communications from the Trust, the Framlington Trust
or the Company (such as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices) to Customers;
(ix) forwarding to Customers proxy statements and proxies containing any
proposals regarding the Trust's or Framlington's or the Company's arrangements
with institutions; and (x) providing such other similar services as the Trust,
Framlington or the Company may reasonably request to the extent the institutions
are permitted to do so under applicable statutes, rules and regulations.
Pursuant to the Trust's, Framlington's and the Company's agreements with
such institutions, the Boards of Trustees and Directors will review, at least
quarterly, a written report of the amounts expended under Trust's, the
Framlington's and the Company's agreements with Institutions and the purposes
for which the expenditures were made. In addition, the arrangements with
Institutions must be approved annually by a majority of the Boards of Trustees
and Directors, including a majority of the Trustees/Directors who are not
"interested persons" as defined in the 1940 Act, and have no direct or indirect
financial interest in such arrangements.
The Boards of Trustees and Directors have approved the arrangements with
Institutions based on information provided by the service contractors that there
is a reasonable likelihood that the arrangements will benefit the Funds and
their shareholders by affording the Funds greater flexibility in connection with
the servicing of the accounts of the beneficial owners of their shares in an
efficient manner.
ADMINISTRATION AGREEMENT. State Street Bank and Trust Company ("State
Street"), whose principal business address is 225 Franklin Street, Boston,
Massachusetts, 02110, serves as administrator for the Trust, Framlington and the
Company pursuant to administration agreements (each, an "Administration
Agreement"). State Street has agreed to maintain office facilities for the
Trust, Framlington and the Company; oversee the computation of each Fund's net
asset value, net income and realized capital gains, if any; furnish statistical
and research data, clerical services, and stationery and office supplies;
prepare and file various reports with the appropriate regulatory agencies; and
prepare various materials required by the SEC. State Street may enter into an
agreement with one or more third parties pursuant to which such third parties
will provide administrative services on behalf of the Funds.
Each Administration Agreement provides that the Administrator performing
services thereunder shall not be liable under the Agreement except for its bad
faith, negligence or willful misconduct in the performance of its duties and
obligations thereunder.
For the period November 1, 1997 through June 30, 1998, administration fees of
State Street accrued were: $--------------- [list all funds].
Prior to November 1, 1997, First Data Investor Services Group, Inc.
("Investor Services Group") located at 53 State Street, Boston, Massachusetts
02109 served as administrator to the Funds.
For the period of July 1, 1997 through October 31, 1997, administration
fees to Investor Services Group accrued were: $_____________ (list funds)
45
<PAGE>
For the fiscal years ended June 30, 1997, the administration fees of
Investor Services Group accrued as follows: Accelerating Growth Fund - $307,521;
Balanced Fund - $77,364; Growth & Income Fund - $248,644; Index 500 Fund -
$405,016; International Equity Fund - $259,162; Small Company Growth Fund -
$283,755; Bond Fund - $169,932; Intermediate Bond Fund - $577,425; U.S.
Government Income Fund - $265,637; Michigan Bond Fund - $41,620; Tax-Free Bond
Fund - $227,508; Tax-Free Intermediate Bond Fund - $358,214; Cash Investment
Fund - $1,115,110; Tax-Free Money Market Fund - $283,803; $480,310-Multi-Season
Fund; $39,493-Real Estate Fund, $169,405-Money Market Fund, $61,224-Value Fund
and U.S. Treasury Money Market Fund - $355,592, respectively.
For the period ended June 30, 1997, administration fees of Investor
Services Group accrued were $9,644- Emerging Markets Fund; $9,644-Healthcare
Fund, $9,644-International Growth Fund, $730-Micro-Cap Fund; $14,220-Small-Cap
Value Fund; $32,343-International Bond Fund and $23,349-Short Term Treasury
Fund.
For the fiscal year ended June 30, 1996, administration fees of Investor
Services Group accrued were: $322,120 - Accelerating Growth Fund, $62,095 -
Balanced Fund, $202,655 - Growth & Income Fund, $188,416 - Index 500 Fund,
$201,299 - International Equity Fund, $194,176 - Small Company Growth Fund,
$190,967 - Bond Fund, $587,790 - Intermediate Bond Fund, $216,970 - U.S.
Government Income Fund, $31,899 - Michigan Bond Fund, $245,271 - Tax-Free Bond
Fund, $400,485 - Tax-Free Intermediate Bond Fund, $1,183,419 - Cash Investment
Fund, $378,955 - U.S. Treasury Money Market Fund, $285,214 - Tax-Free Money
Market Fund, $345,388 - Multi-Season Fund, $19,120 - Real Estate Fund and
$292,172 - Money Market Fund.
For the period ended June 30, 1996, administration fees of the
Administrator accrued were: $29,705 - Value Fund.
CUSTODIAN, SUB-CUSTODIAN AND TRANSFER AGENCY AGREEMENTS. Comerica Bank (the
"Custodian"), whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, MI 48226, is the custodian of each Fund pursuant to
custodian agreements (each, a "Custody Agreement") with each of the Trust,
Framlington and the Company. The Custodian receives no compensation for such
services. State Street serves as the sub-custodian to the Funds pursuant to a
sub-custodian agreements (each a "Sub-Custodian Contract") among the Company,
Trust, Framlington, Comerica Bank and State Street. State Street is also the
sub-custodian with respect to the custody of foreign securities held by the
Funds. State Street has in turn entered into additional agreements with
financial institutions and depositaries located in foreign countries with
respect to the custody of such securities. Under the Sub-Custodian Contracts,
the Sub-Custodian (i) maintains a separate account in the name of each Fund,
(ii) holds and transfers portfolio securities on account of each Fund, (iii)
accepts receipts and makes disbursements of money on behalf of each Fund, (iv)
collects and receives all income and other payments and distributions on account
of each Fund's securities and (v) makes periodic reports to the Board of
Directors concerning the Funds' operations. Prior to November 1, 1997, the
Custodian was compensated for its services as custodian. For the period July 1,
1997 to October 31, 1997 the Custodian earned $___________.
For the fiscal year ended June 30, 1998, the Sub-Custodian earned
$__________.
Investor Services Group serves as the transfer and dividend disbursing
agent for the Funds pursuant to transfer agency agreements (the "Transfer Agency
Agreement") with each of the Trust, Framlington and the Company, under which
Investor Services Group (i) issues and redeems shares of each Fund, (ii)
addresses and mails all communications by each Fund to its record owners,
including reports to shareholders, dividend and distribution notices and proxy
materials for its meetings of shareholders, (iii) maintains shareholder
accounts, (iv) responds to correspondence by shareholders of the Funds and (v)
makes periodic reports to the Boards of Trustees and Directors concerning the
operations of each Fund.
COMERICA. As stated in the Funds' Class K Shares Prospectus, Class K
Shares of the Funds are sold to customers of banks and other institutions. Such
banks and institutions may include Comerica Incorporated (a publicly-held bank
holding company), its affiliates and subsidiaries ("Comerica") and other
institutions that have
46
<PAGE>
entered into agreements with the Company, the Trust and Framlington providing
for shareholder services for their customers.
Banking laws and regulations currently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from underwriting securities, but such banking laws and regulations do not
prohibit such a holding company or affiliate or banks generally from acting as
investment advisor, administrator, transfer agent or custodian to such an
investment company, or from purchasing shares of such a company as agent for and
upon the order of customers. The Advisor and the Custodian are subject to such
banking laws and regulations.
The Advisor and the Custodian believe they may perform the services for the
Trust, Framlington and the Company contemplated by their respective agreements
with each of them without violation of applicable banking laws and regulations.
It should be noted, however, that there have been no cases deciding whether bank
and non-bank subsidiaries of a registered bank holding company may perform
services comparable to those that are to be performed by these companies, and
future changes in either Federal or state statutes and regulations relating to
permissible activities of banks and their subsidiaries or affiliates, as well as
future judicial or administrative decisions or interpretations of current and
future statutes and regulations, could prevent these companies from continuing
to perform certain services for the Funds.
Should future legislative, judicial or administrative action prohibit or
restrict the activities of such companies in connection with the provision of
services on behalf of the Trust, Framlington or the Company, the Trust,
Framlington or the Company might be required to alter materially or discontinue
the arrangements with the institutions and change the method of operations. It
is not anticipated, however, that any change in the Funds' method of operations
would affect the net asset value per share of the Funds or result in a financial
loss to any shareholder of the Funds.
It should be noted that future changes in either Federal or state statutes
and regulations relating to permissible activities of banks and their
subsidiaries or affiliates, as well as future judicial or administrative
decisions or interpretations of current and future statutes and regulations,
could prevent Comerica and certain other institutions from continuing to perform
certain services for Class K shares of the Funds.
Should future legislative, judicial or administrative action prohibit or
restrict the activities of Comerica and/or other institutions in connection with
the provision of services on behalf of Class K shares of the Fund, the Trust,
Framlington or the Company might be required to alter materially or discontinue
the arrangements with the institutions and change the method of operations with
respect to Comerica and certain other institutions. It is not anticipated,
however, that any change in the Funds' method of operations would affect the net
asset value per share of the Funds or result in a financial loss to any holder
of Class K shares of the Funds.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board Members, the Advisor or the
Sub-Advisor, as the case may be, makes decisions with respect to and places
orders for all purchases and sales of portfolio securities for the Funds.
Transactions on U.S. stock exchanges involve the payment of negotiated
brokerage commissions. On exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers. Transactions on foreign
stock exchanges involve payment for brokerage commissions which are generally
fixed.
For the fiscal year ended June 30, 1996, the Funds paid brokerage
commissions as follows: $474,252 - Accelerating Growth Fund, $52,376-Balanced
Fund, $202,292 - Growth & Income Fund, $41,009 - Index 500 Fund, $428,699 -
International Equity Fund, $424,580 - Multi-Season Fund, $40,182 - Real Estate
Fund and
47
<PAGE>
$203,936 - Small Company Growth Fund. The other Funds of the Company
and the Trust did not pay brokerage commissions during the fiscal year ended
June 30, 1996.
For the period ended June 30, 1996, the Value Fund paid brokerage
commissions of $169,335.
For the fiscal year ended June 30, 1997, the Funds paid brokerage
commissions as follows: $506,861-Accelerating Growth Fund, $54,221-Balanced
Fund, $336,161-Growth & Income Fund, $61,393 - Index 500 Fund,
$155,081-International Equity Fund, $366,346-Multi-Season Fund, $66,879-Real
Estate Fund and $355,997-Small Company Growth Fund. The other Funds of the
Company and the Trust did not pay brokerage commissions during the fiscal year
ended June 30, 1997.
For the period ended June 30, 1997, the Funds paid brokerage commissions as
follows: $2,045-Micro-Cap Fund, $82,304-Small-Cap Value Fund, $228,545-Value
Fund, $0-International Bond Fund, $0-Short Term Treasury Fund., $43,256-Emerging
Markets Fund, $87,694-International Growth Fund and $3,325-Healthcare Fund.
For the fiscal year ended June 30, 1998, the Funds paid brokerage commission as
follows: $_______.
For the period ended June 30, 1998, the Funds paid brokerage commission as
follows: $___________.
Over-the-counter issues, including corporate debt and government
securities, are normally traded on a "net" basis (i.e., without commission)
through dealers, or otherwise involve transactions directly with the issuer of
an instrument. With respect to over-the-counter transactions, the Advisor or
the Sub-Advisor, as the case may be, will normally deal directly with dealers
who make a market in the instruments involved except in those circumstances
where more favorable prices and execution are available elsewhere. The cost of
foreign and domestic securities purchased from underwriters includes an
underwriting commission or concession, and the prices at which securities are
purchased from and sold to dealers include a dealer's mark-up or mark-down.
The Funds may participate, if and when practicable, in bidding for the
purchase of portfolio securities directly from an issuer in order to take
advantage of the lower purchase price available to members of a bidding group.
The Funds will engage in this practice, however, only when the Advisor or Sub-
Advisor, as the case may be, believes such practice to be in the Funds'
interests.
Since the Money Market Funds will invest only in short-term debt
instruments, their annual portfolio turnover rates will be relatively high, but
brokerage commissions are normally not paid on money market instruments, and
portfolio turnover is not expected to have a material effect on the net
investment income of a Money Market Fund. The portfolio turnover rate of a Fund
is calculated by dividing the lesser of a Fund's annual sales or purchases of
portfolio securities (exclusive of purchases or sales of securities whose
maturities at the time of acquisition were thirteen months or less for the Money
Market Funds or one year or less for the Equity and Bond Funds) by the monthly
average value of the securities held by the Fund during the year. The Equity
and Bond Funds may engage in short-term trading to achieve their investment
objectives. Portfolio turnover may vary greatly from year to year as well as
within a particular year.
Each Fund's portfolio turnover rate is included in the prospectuses under
the section entitled "Financial Highlights." For the fiscal year ended June 30,
1998, the portfolio turnover rate for the Bond Fund and the Intermediate Bond
Fund was ____% and ____%, respectively. The portfolio turnover of the Bond Fund
and the Intermediate Bond Fund was affected by fluctuating interest rate
conditions which at times required increased dispositions and acquisitions of
securities to maintain each Fund's maturity structure.
In its Advisory Agreements, the Advisor (and, in the case of the Funds of
Framlington, the Sub-Advisor pursuant to the Sub-Advisory Agreement) agrees to
select broker-dealers in accordance with guidelines established by the Boards of
Trustees and Directors from time to time and in accordance with applicable law.
In assessing the terms available for any transaction, the Advisor or Sub-
Advisor, as the case may be, shall consider all factors it deems relevant,
including the breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker-dealer, and the
reasonableness of the commission, if any, both for the specific
48
<PAGE>
transaction and on a continuing basis. In addition, the Advisory and Sub-
Advisory Agreements authorize the Advisor or Sub-Advisor, as the case may be,
subject to the prior approval of the Boards of Trustees and Directors, to cause
the Funds to pay a broker-dealer which furnishes brokerage and research services
a higher commission than that which might be charged by another broker-dealer
for effecting the same transaction, provided that the Advisor or Sub-Advisor, as
the case may be, determines in good faith that such commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either the particular transaction or the
overall responsibilities of the Advisor to the Funds. Such brokerage and
research services might consist of reports and statistics on specific companies
or industries, general summaries of groups of bonds and their comparative
earnings and yields, or broad overviews of the securities markets and the
economy.
Supplementary research information so received is in addition to, and not
in lieu of, services required to be performed by the Advisor or Sub-Advisor, as
the case may be, and does not reduce the advisory fees payable to the Advisor or
Sub-Advisor by the Funds. It is possible that certain of the supplementary
research or other services received will primarily benefit one or more other
investment companies or other accounts for which investment discretion is
exercised. Conversely, a Fund may be the primary beneficiary of the research or
services received as a result of portfolio transactions effected for such other
account or investment company.
Portfolio securities will not be purchased from or sold to the Advisor,
Sub-Advisor, Distributor or any affiliated person (as defined in the 1940 Act)
of the foregoing entities except to the extent permitted by SEC exemptive order
or by applicable law.
Investment decisions for each Fund and for other investment accounts
managed by the Advisor and Sub-Advisor are made independently of each other in
the light of differing conditions. However, the same investment decision may be
made for two or more of such accounts. In such cases, simultaneous transactions
are inevitable. Purchases or sales are then averaged as to price and allocated
as to amount in a manner deemed equitable to each such account. While in some
cases this practice could have a detrimental effect on the price or value of the
security as far as a Fund is concerned, in other cases it is believed to be
beneficial to a Fund. To the extent permitted by law, the Advisor or Sub-
Advisor, as the case may be, may aggregate the securities to be sold or
purchased for a Fund with those to be sold or purchased for other investment
companies or accounts in executing transactions.
A Fund will not purchase securities during the existence of any
underwriting or selling group relating to such securities of which the Advisor,
Sub-Advisor or any affiliated person (as defined in the 1940 Act) thereof is a
member except pursuant to procedures adopted by the Trust's or Framlington Board
of Trustees and the Company's Board of Directors in accordance with Rule 10f-3
under the 1940 Act.
[UPDATE The Trust and the Company are required to identify the securities
of their regular brokers or dealers (as defined in Rule 10b-1 under the 1940)
Act or their parent companies held by them as of the close of their most recent
fiscal year and state the value of such holdings. As of June 30, 1998, ________
Fund held securities of _______________ [list all brokers holdings]
Except as noted in the Prospectuses and this Statement of Additional
Information the Funds' service contractors bear all expenses in connection with
the performance of their services and the Funds bear the expenses incurred in
their operations. These expenses include, but are not limited to, fees paid to
the Advisor, Sub-Advisor, Administrator, Custodian, Sub-Custodian and Transfer
Agent; fees and expenses of officers and Boards of Directors/Trustees; taxes;
interest; legal and auditing fees; brokerage fees and commissions; certain fees
and expenses in registering and qualifying the Fund and its shares for
distribution under Federal and state securities laws; expenses of preparing
prospectuses and statements of additional information and of printing and
distributing prospectuses and statements of additional information to existing
shareholders; the expense of reports to shareholders, shareholders' meetings and
proxy solicitations; fidelity bond and directors' and officers' liability
insurance premiums; the expense of using independent pricing services; and other
expenses which are not assumed by the Administrator. Any general expenses of
the Trust, Framlington or the Company that are not readily identifiable as
belonging to a particular investment portfolio of the Trust, Framlington or the
Company are allocated among all investment portfolios of the Trust, Framlington
or the Company by or under the direction of the Boards of Trustees and Directors
in a manner that the Boards of Trustees and Directors determine to be fair and
equitable.
49
<PAGE>
The Advisor, Sub-Advisor, Administrator, Custodian, Sub-Custodian and Transfer
Agent may voluntarily waive all or a portion of their respective fees from time
to time.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Purchases and redemptions are discussed in the Funds' Prospectuses and such
information is incorporated herein by reference.
PURCHASES. As described in the Prospectuses, shares of the Funds may be
purchased in a number of different ways. Such alternative sales arrangements
permit an investor to choose the method of purchasing shares that is more
beneficial depending on the amount of the purchase, the length of time the
investor expects to hold shares and other relevant circumstances. An investor
may place orders directly through the Transfer Agent or the Distributor or
through arrangements with his/her authorized broker.
RETIREMENT PLANS. Shares of any of the Funds may be purchased in
connection with various types of tax deferred retirement plans, including
individual retirement accounts ("IRAs"), qualified plans, deferred compensation
for public schools and charitable organizations (403(b) plans) and simplified
employee pension IRAs. An individual or organization considering the
establishment of a retirement plan should consult with an attorney and/or an
accountant with respect to the terms and tax aspects of the plan. A $10.00
annual custodial fee is also charged on IRAs. This custodial fee is due by
December 15 of each year and may be paid by check or shares liquidated from a
shareholder's account.
REDEMPTIONS. As described in the Fund's Prospectuses, shares of the Funds
may be redeemed in a number of different ways:
. By Mail
. By Telephone
. Automatic Withdrawal Plan
The redemption price for Fund shares is the net asset value next determined
after receipt of the redemption request in proper order. The redemption
proceeds will be reduced by the amount of any applicable contingent deferred
sales charge ("CDSC").
CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES. Class B Shares redeemed
within six years of purchase are subject to a CDSC. The CDSC is based on the
original net asset value at the time of investment or the net asset value at the
time of redemption, whichever is lower.
The CDSC Schedule for Class B Shares of the Trust Funds purchased before
June 27, 1995 is set forth below. The Prospectuses describe the CDSC Schedule
for Class B Shares of Funds of the Trust, the Company and Framlington purchased
after June 27, 1995.
CLASS B SHARES OF THE TRUST FUNDS
PURCHASED ON OR BEFORE JUNE 27, 1995
<TABLE>
<CAPTION>
REDEMPTION DURING CDSC
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
1st Year Since Purchase............................................................................... 4.00%
2nd Year Since Purchase............................................................................... 4.00%
3rd Year Since Purchase............................................................................... 3.00%
4th Year Since Purchase............................................................................... 3.00%
5th Year Since Purchase............................................................................... 2.00%
6th Year Since Purchase............................................................................... 1.00%
</TABLE>
50
<PAGE>
CDSC WAIVERS - CLASS B SHARES OF THE TRUST FUNDS PURCHASED ON OR BEFORE
JUNE 27, 1995. The CDSC will be waived with respect to Class B Shares of the
Trust Funds purchased on or before June 27, 1995 in the following circumstances:
(1) total or partial redemptions made within one year following the death
or disability of a shareholder or registered joint owner;
(2) minimum required distributions made in connection with an IRA or other
retirement plan following attainment of age 59 1/2; and
(3) redemptions pursuant to a Fund's right to liquidate a shareholder's
account involuntarily.
CDSC WAIVERS - CLASS B SHARES OF THE COMPANY FUNDS PURCHASED ON OR BEFORE
JUNE 27, 1995. The CDSC will be waived on the following types of redemptions
with respect to Class B Shares of the Company Funds purchased on or before June
27, 1995:
(1) redemptions by investors who have invested a lump sum amount of $1
million or more in the Fund;
(2) redemptions by the officers, directors, and employees of the Advisor
or the Distributor and such persons' immediate families;
(3) dealers or brokers who have a sales agreement with the Distributor,
for their own accounts, or for retirement plans for their employees or
sold to registered representatives or full time employees (and their
families) that certify to the Distributor at the time of purchase that
such purchase is for their own account (or for the benefit of their
families);
(4) involuntary redemptions effected pursuant to the Fund's right to
liquidate shareholder accounts having an aggregate net asset value of
less than $250; and
(5) redemptions the proceeds of which are reinvested in the Fund within 90
days of the redemption.
Contingent Deferred Sales Charge - Class A and Class C Shares. The
Prospectuses describe the CDSC for Class A or C Shares of the Funds of the
Trust, the Company and Framlington purchased after June 27, 1995.
Class A Shares of the Trust Funds purchased on or before June 27, 1995
without a sales charge by reason of a purchase of $500,000 or more are subject
to a CDSC of 1.00% of the lower of the original purchase price or the net asset
value at the time of redemption if such shares are redeemed within two years of
the date of purchase. Class A Shares of the Trust Funds purchased on or before
June 27, 1995 that are redeemed will not be subject to the CDSC to the extent
that the value of such shares represents: (1) reinvestment of dividends or other
distributions; (2) Class A Shares redeemed more than two years after their
purchase; (3) a minimum required distribution made in connection with IRA or
other retirement plans following attainment of age 59 1/2; or (4) total or
partial redemptions made within one year following the death or disability of a
shareholder or registered joint owner.
No CDSC is imposed to the extent that the current net asset value of the
shares redeemed does not exceed (a) the current net asset value of shares
purchased through reinvestment of dividends or capital gain distributions plus
(b) the current net asset value of shares purchased more than one year prior to
the redemption, plus (c) increases in the net asset value of the shareholder's
shares above the purchase payments made during the preceding one year.
The holding period of Class A or Class C Shares of a Fund acquired through
an exchange of the corresponding class of shares of the Munder Money Market Fund
(which are available only by exchange of Class A or Class C Shares of the Fund,
as the case may be) and the Company Funds and the non-money market funds of the
Trust will be calculated from the date that the Class A or Class C Shares of the
Fund were initially purchased.
In determining whether a CDSC is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible rate.
It will be assumed that the redemption is made first of amounts representing all
Class A Shares on which a front-end sales charge has been assessed; then of
shares acquired pursuant to the reinvestment of dividends and distributions; and
then of amounts representing the cost of shares purchased one year or more prior
to the redemption.
51
<PAGE>
OTHER INFORMATION. Redemption proceeds are normally paid in cash; however,
each Fund may pay the redemption price in whole or part by a distribution in
kind of securities from the portfolio of the particular Fund, in lieu of cash,
in conformity with applicable rules of the SEC. If shares are redeemed in kind,
the redeeming shareholder might incur transaction costs in converting the assets
into cash. The Funds are obligated to redeem shares solely in cash up to the
lesser of $250,000 or 1% of its net assets during any 90-day period for any one
shareholder.
The Funds reserve the right to suspend or postpone redemptions during any
period when: (i) trading on the New York Stock Exchange (the "NYSE") is
restricted by applicable rules and regulations of the SEC; (ii) the NYSE is
closed for other than customary weekend and holiday closings; (iii) the SEC has
by order permitted such suspension or postponement for the protection of the
shareholders; or (iv) an emergency, as determined by the SEC, exists, making
disposal of portfolio securities or valuation of net assets of a Fund not
reasonably practicable.
The Funds may involuntarily redeem an investor's shares if the net asset
value of such shares is less than $250; provided that involuntary redemptions
will not result from fluctuations in the value of an investor's shares. A
notice of redemption, sent by first-class mail to the investor's address of
record, will fix a date not less than 30 days after the mailing date, and shares
will be redeemed at the net asset value at the close of business on that date
unless sufficient additional shares are purchased to bring the aggregate account
value up to $250 or more. A check for the redemption proceeds payable to the
investor will be mailed to the investor at the address of record.
EXCHANGES. In addition to the method of exchanging shares described in the
Funds' Prospectuses, a shareholder exchanging at least $1,000 of shares (for
which certificates have not been issued) and who has authorized expedited
exchanges on the application form filed with the Transfer Agent may exchange
shares by telephoning the Funds at (800) 438-5789. Telephone exchange
instructions must be received by the Transfer Agent by 4:00 p.m., Eastern time.
The Funds, Distributor and Transfer Agent reserve the right at any time to
suspend or terminate the expedited exchange procedure or to impose a fee for
this service. During periods of unusual economic or market changes,
shareholders may experience difficulties or delays in effecting telephone
exchanges. Neither the Funds nor the Transfer Agent will be responsible for any
loss, damages, expense or cost arising out of any telephone exchanges effected
upon instructions believed by them to be genuine. The Transfer Agent has
instituted procedures that it believes are reasonably designed to insure that
exchange instructions communicated by telephone are genuine, and could be liable
for losses caused by unauthorized or fraudulent instructions in the absence of
such procedures. The procedures currently include a recorded verification of
the shareholder's name, social security number and account number, followed by
the mailing of a statement confirming the transaction, which is sent to the
address of record.
NET ASSET VALUE
MONEY MARKET FUNDS. The value of the portfolio securities of the Money
Market Funds is calculated using the amortized cost method of valuation. Under
this method the market value of an instrument is approximated by amortizing the
difference between the acquisition cost and value at maturity of the instrument
on a straight-line basis over the remaining life of the instrument. The effect
of changes in the market value of a security as a result of fluctuating interest
rates is not taken into account. The market value of debt securities usually
reflects yields generally available on securities of similar quality. When such
yields decline, market values can be expected to increase, and when yields
increase, market values can be expected to decline.
As indicated, the amortized cost method of valuation may result in the
value of a security being higher or lower than its market price, the price a
Fund would receive if the security were sold prior to maturity. The Boards of
Trustees and Directors have established procedures reasonably designed, taking
into account current market conditions and the Funds' investment objectives, for
the purpose of maintaining a stable net asset value of $1.00 per share for each
Fund for purposes of sales and redemptions. These procedures include a review
by the Boards of Directors/Trustees, at such intervals as they deem appropriate,
of the extent of any deviation of net asset value per share, based on available
market quotations, from the $1.00 amortized cost per share. Should that
deviation exceed 1/2 of 1% for a Fund, the Boards of Trustees and Directors will
promptly consider whether any and, if any, what
52
<PAGE>
action should be initiated. If the Board of Trustees or Directors believes that
the extent of any deviation from a Fund's $1.00 amortized cost price per share
may result in material dilution of other unfair results to new or existing
investors, it will take such steps as it considers appropriate to eliminate or
reduce any such dilution or unfair results to the extent reasonably practicable.
Such action may include redeeming shares in kind, selling portfolio securities
prior to maturity, reducing or withholding dividends, shortening the average
portfolio maturity, reducing the number of outstanding shares without monetary
consideration, and utilizing a net asset value per share as determined by using
available market quotations.
Pursuant to Rule 2a-7, each of the Money Market Funds will maintain a
dollar-weighted average portfolio maturity appropriate to its objective of
maintaining a stable net asset value per share, provided that such Funds will
not purchase any security with a remaining maturity (within the meaning of Rule
2a-7 under the 1940 Act) greater than 397 days (securities subject to repurchase
agreements, variable and floating rate securities, and certain other securities
may bear longer maturities), nor maintain a dollar-weighted average portfolio
maturity which exceeds 90 days. In addition, the Funds may acquire only U.S.
dollar denominated obligations that present minimal credit risks and that are
"First Tier Securities" at the time of investment. First Tier Securities are
those that are rated in the highest rating category by at least two nationally
recognized security rating organizations NRSROs or by one if it is the only
NRSRO rating such obligation or, if unrated, determined to be of comparable
quality. A security is deemed to be rated if the issuer has any security
outstanding of comparable priority and security which has received a short-term
rating by an NRSRO. The Advisor will determine that an obligation presents
minimal credit risks or that unrated investments are of comparable quality, in
accordance with guidelines established by the Board of Directors or Trustees.
There can be no assurance that a constant net asset value will be maintained for
each Money Market Fund.
ALL FUNDS. In determining the approximate market value of portfolio
investments, the Trust, Framlington or the Company may employ outside
organizations, which may use matrix or formula methods that take into
consideration market indices, matrices, yield curves and other specific
adjustments. This may result in the securities being valued at a price
different from the price that would have been determined had the matrix or
formula methods not been used. All cash, receivables and current payables are
carried on the Trust's, Framlington's or the Company's books at their face
value. Other assets, if any, are valued at fair value as determined in good
faith under the supervision of the Board Members.
IN-KIND PURCHASES
With the exception of the Real Estate Fund, payment for shares may, in the
discretion of the Advisor, be made in the form of securities that are
permissible investments for the Funds as described in the Prospectuses. Shares
of the Real Estate Fund will not be issued for consideration other than cash.
For further information about this form of payment please contact the Transfer
Agent. In connection with an in-kind securities payment, a Fund will require,
among other things, that the securities (a) meet the investment objectives and
policies of the Funds; (b) are acquired for investment and not for resale; (c)
are liquid securities that are not restricted as to transfer either by law or
liquidity of markets; (d) have a value that is readily ascertainable by a
listing on a nationally recognized securities exchange; and (e) are valued on
the day of purchase in accordance with the pricing methods used by the Fund and
that the Fund receive satisfactory assurances that (i) it will have good and
marketable title to the securities received by it; (ii) that the securities are
in proper form for transfer to the Fund; and (iii) adequate information will be
provided concerning the basis and other tax matters relating to the securities.
PERFORMANCE INFORMATION
YIELD OF THE MONEY MARKET FUNDS
The Money Market Funds' current and effective yields are computed using
standardized methods required by the SEC. The annualized yield is computed by:
(a) determining the net change in the value of a hypothetical account having a
balance of one share at the beginning of a seven-calendar day period; (b)
dividing the net change by the value of the account at the beginning of the
period to obtain the base period return; and (c) annualizing the results (i.e.,
multiplying the base period return by 365/7). The net change in the value of
the account reflects the
53
<PAGE>
value of additional shares purchased with dividends declared and all dividends
declared on both the original share and such additional shares, but does not
include realized gains and losses or unrealized appreciation and depreciation.
Compound effective yields are computed by adding1 to the base period return
(calculated as described above), raising the sum to a power equal to 365/7 and
subtracting 1. Based on the foregoing computations, the table below shows, the
annualized yields for all share classes of the Cash Investment, Money Market,
Tax-Free Money Market and U.S. Treasury Money Market Funds for the seven-day
period ended June 30, 1998.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS K CLASS Y
- ----------------------------------------------------------------------------------------------------------------------------------
Tax- Tax- Tax- Tax-
Equivalent Equivalent Equivalent Equivalent
Yield Yield Yield Yield Yield Yield Yield Yield
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash Investment
Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Money Market
Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Tax-Free Money
Market Fund
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury
Fund
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
In addition, a standardized "tax-equivalent yield" may be quoted for the
Tax-Free Money Market Fund, which is computed by: (a) dividing the portion of
the Fund's yield (as calculated above) that is exempt from Federal income tax by
one minus a stated Federal income tax rate; and (b) adding the figure resulting
from (a) above to that portion, if any, of the yield that is not exempt from
Federal income tax. For the seven-day period ended June 30, 1998, the tax-
equivalent yield for Class Y, Class K and Class A Shares of the Tax-Free Money
Market Fund was ______% (Class Y), ______% (Class K) and _____% (Class A)
calculated for all share classes based on a stated tax rate of 31%. The fees
which may be imposed by institutions on their Customers are not reflected in the
calculations of yields for the Funds.
Yield may fluctuate daily and does not provide a basis for determining
future yields. Because the yields of each Fund will fluctuate, they cannot be
compared with yields on savings accounts or other investment alternatives that
provide an agreed to or guaranteed fixed yield for a stated period of time.
However, yield information may be useful to an investor considering temporary
investments in money market instruments. In comparing the yield of one money
market fund to another, consideration should be given to each Fund's investment
policies including the types of investments made, lengths of maturities of the
portfolio securities, and whether there are any special account charges which
may reduce the effective yield.
YIELD AND PERFORMANCE OF THE NON-MONEY MARKET FUNDS
The Bond Funds', International Bond Fund's and Short Term Treasury Fund's
30-day (or one month) standard yield described in the applicable Prospectus is
calculated for each Fund in accordance with the method prescribed by the SEC for
mutual funds:
YIELD = 2 [( a-b + 1)/6/ - 1]
----
cd
Where:
a =dividends and interest earned by a Fund during the period;
b =expenses accrued for the period (net of reimbursements and waivers);
c =average daily number of shares outstanding during the period entitled to
receive dividends;
d =maximum offering price per share on the last day of the period.
For the purpose of determining interest earned on debt obligations
purchased by a Fund at a discount or premium (variable "a" in the formula), each
Fund computes the yield to maturity of such instrument based on the market value
of the obligation (including actual accrued interest) at the close of business
on the last business day of
54
<PAGE>
each month, or, with respect to obligations purchased during the month, the
purchase price (plus actual accrued interest). Such yield is then divided by 360
and the quotient is multiplied by the market value of the obligation (including
actual accrued interest) in order to determine the interest income on the
obligation for each day of the subsequent month that the obligation is in the
portfolio. It is assumed in the above calculation that each month contains 30
days. The maturity of a debt obligation with a call provision is deemed to be
the next call date on which the obligation reasonably may be expected to be
called or, if none, the maturity date. For the purpose of computing yield on
equity securities held by a Fund, dividend income is recognized by accruing
1/360 of the stated dividend rate of the security for each day that the security
is held by the Fund.
Interest earned on tax-exempt obligations that are issued without original
issue discount and have a current market discount is calculated by using the
coupon rate of interest instead of the yield to maturity. In the case of tax-
exempt obligations that are issued with original issue discount but which have
discounts based on current market value that exceed the then-remaining portion
of the original issue discount (market discount), the yield to maturity is the
imputed rate based on the original issue discount calculation. On the other
hand, in the case of tax-exempt obligations that are issued with original issue
discount but which have the discounts based on current market value that are
less than the then-remaining portion of the original issue discount (market
premium), the yield to maturity is based on the market value.
With respect to mortgage or other receivables-backed debt obligations
purchased at a discount or premium, the formula generally calls for amortization
of the discount or premium. The amortization schedule will be adjusted monthly
to reflect changes in the market value of such debt obligations. Expenses
accrued for the period (variable "b" in the formula) include all recurring fees
charged by a Fund to all shareholder accounts in proportion to the length of the
base period and the Fund's mean (or median) account size. Undeclared earned
income will be subtracted from the offering price per share (variable "d" in the
formula). A Fund's maximum offering price per share for purposes of the formula
includes the maximum sales charge imposed -- currently 5.50% of the per share
offering price for Class A Shares of the Equity Funds (with the exception of the
Index 500 Fund, currently 2.50% of the per share offering price for Class A) and
the Balanced Fund and 4.00% of the per share offering price for Class A Shares
of the Bond Fund, International Bond Fund, Short Term Treasury Fund and Tax-Free
Bond Funds. The tax-equivalent yield for each Fund below is based on a stated
federal tax rate of 31% and, with respect to Michigan Bond Fund, a Michigan
state tax rate of 4%.
CLASS A SHARES
- --------------
The standard yields and/or tax-equivalent yields of the Class A Shares of
the following Funds for the 30-day period ended June 30, 1998 were:
<TABLE>
<CAPTION>
30-DAY YIELD TAX-EQUIVALENT 30-DAY YIELD
------------ ---------------------------
<S> <C> <C>
Bond Fund % %
Intermediate Bond Fund % %
US Government Income Fund % %
International Bond Fund % %
Short Term Treasury Fund+ % %
Michigan Bond Fund % %
Tax-Free Bond Fund % %
Tax-Free Intermediate Bond Fund % %
</TABLE>
+ As of June 2, 1998, Class A, Class B and Class C Shares of Short Term
Treasury Fund were closed to all investments.
55
<PAGE>
CLASS B SHARES
- --------------
The standard yields and/or tax-equivalent yields of the Class B Shares of
the following Funds for the 30-day period ended June 30, 1998 were:
<TABLE>
<CAPTION>
30-DAY YIELD TAX-EQUIVALENT 30-DAY YIELD
------------ ---------------------------
<S> <C> <C>
Bond Fund % %
Intermediate Bond Fund % %
US Government Income Fund % %
International Bond Fund % %
Short Term Treasury Fund+ % %
Michigan Bond Fund % %
Tax-Free Bond Fund % %
Tax-Free Intermediate Bond Fund % %
</TABLE>
+ As of June 2, 1998, Class A, Class B and Class C Shares of Short Term Treasury
Fund were closed to all investments.
CLASS C SHARES
- --------------
The standard yields and/or tax-equivalent yields of the Class C Shares of
the following Funds for the 30-day period ended June 30, 1998 were:
<TABLE>
<CAPTION>
30-Day Yield TAX-EQUIVALENT 30-DAY YIELD
------------ ---------------------------
<S> <C> <C>
Bond Fund % %
Intermediate Bond Fund % %
US Government Income Fund % %
International Bond Fund % %
Short Term Treasury Fund+ % %
Michigan Bond Fund % %
Tax-Free Bond Fund % %
Tax-Free Intermediate Bond Fund % %
</TABLE>
+ As of June 2, 1998, Class A, Class B and Class C Shares of Short Term Treasury
Fund were closed to all investments.
CLASS K SHARES
- --------------
The standard yields and/or tax-equivalent yields of the Class K Shares of
the following Funds for the 30-day period ended June 30, 1998 were:
<TABLE>
<CAPTION>
30-DAY YIELD TAX-EQUIVALENT 30-DAY YIELD
------------ ---------------------------
<S> <C> <C>
Bond Fund % %
Intermediate Bond Fund % %
US Government Income Fund % %
International Bond Fund % %
Short Term Treasury Fund+ % %
Michigan Bond Fund % %
Tax-Free Bond Fund % %
Tax-Free Intermediate Bond Fund % %
</TABLE>
+ As of June 15, 1998, Class K Shares of Short Term Treasury Fund were renamed
the Michigan Municipal Shares and the 0.25% shareholder servicing fee was
terminated.
56
<PAGE>
CLASS Y SHARES
- --------------
The standard yields and/or tax-equivalent yields of the Class Y Shares of
the following Funds for the 30-day period ended June 30, 1998 were:
<TABLE>
<CAPTION>
30-Day Yield TAX-EQUIVALENT 30-DAY YIELD
------------- ----------------------------
<S> <C> <C>
Bond Fund % %
Intermediate Bond Fund % %
US Government Income Fund % %
International Bond Fund % %
Short Term Treasury Fund % %
Michigan Bond Fund % %
Tax-Free Bond Fund % %
Tax-Free Intermediate Bond Fund % %
</TABLE>
Each Fund that advertises its "average annual total return" computes such
return by determining the average annual compounded rate of return during
specified periods that equates the initial amount invested to the ending
redeemable value of such investment according to the following formula:
P (1 + T)/n/ = ERV
Where:
T = average annual total return
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the 1, 5 or 10 year (or other) periods at the end of the
applicable period (or a fractional portion thereof)
P = hypothetical initial payment of $1,000
n = period covered by the computation, expressed in years.
Each Fund that advertises its "aggregate total return" computes such
returns by determining the aggregate compounded rates of return during specified
periods that likewise equate the initial amount invested to the ending
redeemable value of such investment. The formula for calculating aggregate
total return is as follows:
(ERV) - 1
-----
Aggregate Total Return = P
The calculations are made assuming that (1) all dividends and capital gain
distributions are reinvested on the reinvestment dates at the price per share
existing on the reinvestment date, (2) all recurring fees charged to all
shareholder accounts are included, and (3) for any account fees that vary with
the size of the account, a mean (or median) account size in the Fund during the
periods is reflected. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment after deduction of all non-recurring charges at the end of the
measuring period. The Funds' average annual total return and load adjusted
aggregate total return quotations for Class A Shares will reflect the deduction
of the maximum sales charge charged in connection with the purchase of such
shares - currently 5.50% of the per share offering price for Class A Shares of
the Equity Funds (with the exception of the Index 500 Fund, currently 2.50% of
the per share offering price for Class A) and the Balanced Fund and 4.00% of the
per share offering price for Class A Shares of the Bond Fund, International Bond
Fund and Tax-Free Bond Funds; and the Funds' load adjusted average annual total
return and load adjusted aggregate total return quotations for Class B Shares
will reflect any applicable CDSC; provided that the Funds may also advertise
total return data without reflecting any applicable CDSC sales charge imposed on
the purchase of Class A Shares or Class B Shares in accordance with the views of
the SEC. Quotations which do not reflect the sales charge will, of course, be
higher than quotations which do.
57
<PAGE>
Based on the foregoing calculation, set forth below are the average annual
total return figures for the Class A, B, C, K and Y Shares of each of the
following Funds for the 12 month and 5 year periods ended June 30, 1998 and
since commencement of operations.
FUND-INCEPTION DATE
- -------------------
<TABLE>
<CAPTION>
ACCELERATING 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
GROWTH FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-11/23/92
Class B-4/25/94
Class C-9/26/95
Class K-11/23/92
Class Y-12/1/91
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCED 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-4/30/93
Class B-6/21/94
Class C-1/24/96
Class K-4/16/93
Class Y-4/13/93
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GROWTH & INCOME 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-8/8/94
Class B-8/9/94
Class C-12/5/95
Class K-7/5/94
Class Y-7/5/94
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INDEX 500 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-12/9/92
Class B-10/31/95
Class C+ N/A N/A N/A N/A N/A N/A
Class K12/7/92
Class Y-12/1/91
- ------------------------------------------------------------------------------------------------------------------------------------
+ As of June 30, 1998, Class C had not commenced operations.
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
EQUITY PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
FUND 6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-11/30/92
Class B-3/9/94
Class C-9/29/95
Class K-11/23/92
Class Y-12/1/91
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
58
<PAGE>
<TABLE>
INTERNATIONAL 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
GROWTH FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-2/20/97
Class B-3/19/97
Class C-2/13/97
Class K-1/10/97
Class Y-12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
EMERGING 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
MARKETS FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-1/14/97
Class B-2/25/97
Class C-3/3/97
Class K-1/10/97
Class Y-12/31/96
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-2/14/97
Class B-1/31/97
Class C-1/13/97
Class K-4/1/97
Class Y-12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MICRO-CAP 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-12/26/96
Class B-2/24/97
Class C-3/31/97
Class K-12//31/96
Class Y-12/26/96
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SMALL-CAP 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-1/10/97
Class B-2/11/97
Class C-1/13/97
Class K-12/31/96
Class Y-12/26/96
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
59
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
NETNET FUND 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-8/19/96 N/A N/A N/A N/A
Class B-6/1/98 N/A N/A N/A N/A
Class C N/A N/A N/A N/A N/A N/A
Class Y-6/1/98 N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
As of June 30, 1998, Class C had not commenced operations.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
GROWTH 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
OPPORTUNITIES PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
FUND 6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A N/A N/A N/A N/A
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class K N/A N/A N/A N/A
Class Y-6/24/98 N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
As of June 30, 1998, Class A, B, C and K had not commenced operations.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
GLOBAL FINANCIAL 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
SERVICES FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A N/A N/A N/A N/A
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class K N/A N/A N/A N/A
Class Y-6/24/98 N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
As of June 30, 1998, Class A, B, C and K had not commenced operations.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
BOND FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-10/17/96
Class B-6/9/97
Class C-6/3/98
Class K-3/24/97
Class Y-10/2/96
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
MULTI-SEASON 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-8/4/93
Class B-4/29/93
Class C-9/20/93
Class K-6/23/95
Class Y-8/16/93
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
60
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE FUND 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-9/30/94
Class B-10/3/94
Class C-1/5/96
Class K-10/3/96
Class Y-10/3/94
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
SMALL COMPANY 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
GROWTH FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-11/23/92
Class B-4/28/94
Class C-9/26/95
Class K-11/23/92
Class Y-12/1/91
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
VALUE FUND 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-9/14/95
Class B-9/19/95
Class C-2/9/96
Class K-11/30/95
Class Y-8/18/95
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
BOND FUND 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-12/9/92
Class B-3/13/96
Class C-3/25/96
Class K-11/23/92
Class Y-12/1/91
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
BOND FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-11/24/92
Class B-10/25/94
Class C-4/19/96
Class K-11/20/92
Class Y-12/1/91
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
61
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
INCOME FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-7/28/94
Class B-9/6/95
Class C-8/12/96
Class K-7/5/94
Class Y-7/5/94
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
SHORT TERM 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
TREASURY FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class B-4/4/97
Michigan
Municipal
Shares-4/2/97
Class Y-1/29/97
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
As of June 2, 1998, Class B Shares of Short Term Treasury Fund were closed to
all investments.
As of June 15, 1998, Class K Shares of Short Term Treasury Fund were renamed
the Michigan Municipal Shares.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
MICHIGAN BOND 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-2/15/94
Class B-7/5/94
Class C-10/4/96
Class K-1/3/94
Class Y-1/3/94
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
TAX-FREE BOND 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-10/9/95
Class B-12/6/94
Class C-7/7/97
Class K-7/5/94
Class Y-7/21/94
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
TAX-FREE 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
INTERMEDIATE PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
BOND FUND 6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-11/30/92
Class B-5/16/96
Class C-7/8/98
Class K-2/9/87
Class Y-12/17/92
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
________________________________________________________________
* Figures do not include the effect of the sales charge.
** Figures include the effect of the applicable sales charge.
62
<PAGE>
As of June 30, 1998, the following Classes had not commenced operations:
Class A Shares of Global Financial Services Fund and Growth Opportunities Fund;
Class B Shares of Global Financial Services Fund, Growth Opportunities Fund,
Cash Investment Fund, International Bond Fund, Global Financial Services Fund,
Growth Opportunities Fund, NetNet Fund, Tax-Free Money Market Fund and U.S.
Treasury Money Market Fund; Class C Shares of Global Financial Services Fund,
Growth Opportunities Fund, Cash Investment Fund, Tax-Free Money Market Fund,
Index 500 Fund, Tax-Free Intermediate Bond Fund and NetNet Fund and U.S.
Treasury Money Market Fund; and Class K Shares of Global Financial Services
Fund, Growth Opportunities Fund and NetNet Fund.
The Equity Selection Fund and Financial Services Fund were not available
for purchase as of the date of this Statement of Additional Information.
The foregoing performance data reflects the imposition of the maximum sales
load on Class A Shares but does not reflect payments under the Trust's Class K
Plan or Class A Plan, which were not imposed before December 31, 1993.
ALL FUNDS. The performance of any investment is generally a function of
portfolio quality and maturity, type of investment and operating expenses.
From time to time, in advertisements or in reports to shareholders, a
Fund's yields or total returns may be quoted and compared to those of other
mutual funds with similar investment objectives and to stock or other relevant
indices. For example, a Fund's yield may be compared to the IBC/Donoghue's
Money Fund Average, which is an average compiled by Donoghue's MONEY FUND REPORT
of Holliston, MA 01746, a widely recognized independent publication that
monitors the performance of money market funds, or to the data prepared by
Lipper Analytical Services, Inc., a widely recognized independent service that
monitors the performance of mutual funds. In addition, as stated in the Funds'
Prospectuses, the tax-equivalent yield (and hypothetical examples illustrating
the effect of tax-equivalent yields) of a Fund may be quoted in advertisements
or reports to shareholders. Hypothetical examples showing the difference
between a taxable and a tax-free investment may also be provided to
shareholders.
TAXES
The following summarizes certain additional federal and state income tax
considerations generally affecting the Funds and their shareholders that are not
described in the Funds' Prospectuses. No attempt is made to present a detailed
explanation of the tax treatment of the Funds or their shareholders, and the
discussion here and in the applicable Prospectus is not intended as a substitute
for careful tax planning. This discussion is based upon present provisions of
the Code, the regulations promulgated thereunder, and judicial and
administrative ruling authorities, all of which are subject to change, which
change may be retroactive. Prospective investors should consult their own tax
advisors with regard to the federal tax consequences of the purchase, ownership
and disposition of Fund shares, as well as the tax consequences arising under
the laws of any state, foreign country, or other taxing jurisdiction.
GENERAL. Each Fund intends to elect and qualify to be taxed separately as
a regulated investment company under the Code. As a regulated investment
company, each Fund generally is exempt from federal income tax on its net
investment income and realized capital gains which it distributes to
shareholders, provided that it distributes an amount equal to the sum of (a) at
least 90% of its investment company taxable income (net investment income and
the excess of net short-term capital gain over net long-term capital loss), if
any, for the year and (b) at least 90% of its net tax-exempt interest income, if
any, for the year (the "Distribution Requirement") and satisfies certain other
requirements of the Code that are described below. Distributions of investment
company taxable income and net tax-exempt interest income made during the
taxable year or, under specified circumstances, within twelve months after the
close of the taxable year will satisfy the Distribution Requirement.
In addition to satisfaction of the Distribution Requirement, each Fund must
derive with respect to a taxable year at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans and gains
from the sale or other disposition of stock or securities or foreign currencies,
or from other income derived
63
<PAGE>
with respect to its business of investing in such stock, securities, or
currencies (the "Income Requirement"). Interest (including original issue
discount and "accrued market discount") received by a Fund at maturity or on
disposition of a security held for less than three months will not be treated
(in contrast to other income which is attributable to realized market
appreciation) as gross income from the sale or other disposition of securities
held for less than three months for this purpose.
In addition to the foregoing requirements, at the close of each quarter of
its taxable year, at least 50% of the value of each Fund's assets must consist
of cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and securities of other issuers (as to which a
Fund has not invested more than 5% of the value of its total assets in
securities of such issuer and as to which a Fund does not hold more than 10% of
the outstanding voting securities of such issuer) and no more than 25% of the
value of each Fund's total assets may be invested in the securities of any one
issuer (other than U.S. Government securities and securities of other regulated
investment companies), or in two or more issuers which such Fund controls and
which are engaged in the same or similar trades or businesses.
Distributions of net investment income received by a Fund from investments
in debt securities (other than interest on tax-exempt municipal obligations held
by the Tax-Free Bond Funds and Tax-Free Money Market Fund) and any net realized
short-term capital gains distributed by a Fund will be taxable to shareholders
as ordinary income and will not be eligible for the dividends received deduction
for corporations.
Each Fund intends to distribute to shareholders any excess of net long-term
capital gain over net short-term capital loss ("net capital gain") for each
taxable year. Such gain is distributed as a capital gain dividend and is taxable
to shareholders as gain from the sale or exchange of a capital asset held for
more than one year, regardless of the length of time a shareholder has held his
or her Fund shares and regardless of whether the distribution is paid in cash or
reinvested in shares. The Funds expect that capital gain dividends will be
taxable to shareholders as long-term gain. Capital gain dividends are not
eligible for the dividends received deduction.
In the case of corporate shareholders, distributions of a Fund for any
taxable year generally qualify for the dividends received deduction to the
extent of the gross amount of "qualifying dividends" received by such Fund for
the year and if certain holding period requirements are met. Generally, a
dividend will be treated as a "qualifying dividend" if it has been received from
a domestic corporation.
If for any taxable year any Fund does not qualify as a regulated investment
company, all of its taxable income will be subject to tax at regular corporate
rates without any deduction for distributions to shareholders. In such event,
all distributions (whether or not derived from exempt-interest income) would be
taxable as ordinary income and would be eligible for the dividends received
deduction in the case of corporate shareholders to the extent of such Fund's
current and accumulated earnings and profits.
Shareholders will be advised annually as to the federal income tax
consequences of distributions made by the Funds each year.
Amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a nondeductible 4% excise tax. To
prevent imposition of the excise tax, a Fund must distribute during each
calendar year an amount equal to the sum of (1) at least 98% of its ordinary
income (not taking into account any capital gains or losses) for the calendar
year, (2) at least 98% of its capital gains in excess of its capital losses
(adjusted for certain ordinary losses, as prescribed by the Code) for the one-
year period ending on October 31 of the calendar year, and (3) any ordinary
income and capital gains for previous years that was not distributed during
those years. A distribution will be treated as paid on December 31 of the
current calendar year if it is declared by a Fund in October, November or
December with a record date in such a month and paid by a Fund during January of
the following calendar year. Such distributions will be taxable to shareholders
in the calendar year in which the distributions are declared, rather than the
calendar year in which the distributions are received. To prevent application
of the excise tax, a Fund intends to make its distributions in accordance with
the calendar year distribution requirement.
64
<PAGE>
Although a Fund expects to qualify as a "regulated investment company" and to
be relieved of all or substantially all Federal income taxes, depending upon the
extent of its activities in states and localities in which its offices are
maintained, in which its agents or independent contractors are located or in
which it is otherwise deemed to be conducting business, a Fund may be subject to
the tax laws of such states or localities.
The Trust, the Framlington Trust and the Company will be required in
certain cases to withhold and remit to the United States Treasury 31% of taxable
distributions, including gross proceeds realized upon sale or other dispositions
paid to any shareholder (i) who has provided an incorrect tax identification
number or no number at all, (ii) who is subject to backup withholding by the
Internal Revenue Service for failure to report the receipt of taxable interest
or dividend income properly, or (iii) who has failed to certify that he is not
subject to backup withholding or that he is an "exempt recipient."
DISPOSITION OF SHARES. Upon a redemption, sale or exchange of his or her
shares, a shareholder will realize a taxable gain or loss depending upon his or
her basis in the shares. Such gain or loss will be treated as capital gain or
loss if the shares are capital assets in the shareholder's hands and will be
long-term or short-term, generally, depending upon the shareholder's holding
period for the shares. Any loss realized on a redemption, sale or exchange will
be disallowed to the extent the shares disposed of are replaced (including
through reinvestment of dividends) within a period of 61 days beginning 30 days
before and ending 30 days after the shares are disposed of. In such a case, the
basis of the shares acquired will be adjusted to reflect the disallowed loss.
Any loss realized by a shareholder on the sale of Fund shares held by the
shareholder for six months or less will be treated as a long-term capital loss
to the extent of any distributions of net capital gains received or treated as
having been received by the shareholder with respect to such shares and treated
as long-term capital gains. Furthermore, a loss realized by a shareholder on the
redemption, sale or exchange of shares of a Fund with respect to which exempt-
interest dividends have been paid will, to the extent of such exempt-interest
dividends, be disallowed if such shares have been held by the shareholder for
six months or less.
In some cases, shareholders will not be permitted to take sales charges
into account for purposes of determining the amount of gain or loss realized on
the disposition of their stock. This prohibition generally applies where (1)
the shareholder incurs a sales charge in acquiring the stock of a Fund, (2) the
stock is disposed of before the 91st day after the date on which it was
acquired, and (3) the shareholder subsequently acquires the stock of the same or
another fund and the otherwise applicable sales charge is reduced under a
"reinvestment right" received upon the initial purchase of regulated investment
company shares. The term "reinvestment right" means any right to acquire stock
of one or more funds without the payment of a sales charge or with the payment
of a reduced sales charge. Sales charges affected by this rule are treated as
if they were incurred with respect to the stock acquired under the reinvestment
right. This provision may be applied to successive acquisitions of Fund shares.
Although each Fund expects to qualify as a "regulated investment company"
and to be relieved of all or substantially all federal income taxes, depending
upon the extent of its activities in states and localities in which its offices
are maintained, in which its agents or independent contractors are located or in
which it is otherwise deemed to be conducting business, each Fund may be subject
to the tax laws of such states or localities.
TAX-FREE BOND FUNDS AND TAX-FREE MONEY MARKET FUND. The Michigan Bond
Fund, Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund, and Tax-Free Money
Market Fund are designed to provide investors with current tax-exempt interest
income. Shares of the Funds would not be suitable for tax-exempt institutions
and may not be suitable for retirement plans qualified under Section 401 of the
Code, H.R. 10 plans and individual retirement accounts since such plans and
accounts are generally tax-exempt and, therefore, not only would not gain any
additional benefit from the Funds' dividends being tax-exempt but also such
dividends would be taxable when distributed to the beneficiary. In addition,
the Funds may not be an appropriate investment for entities which are
"substantial users" of facilities financed by private activity bonds or "related
persons" thereof. "Substantial user" is defined under U.S. Treasury Regulations
to include a non-exempt person who regularly uses a part of such facilities in
his trade or business and (a) whose gross revenues derived with respect to the
facilities financed by the issuance of bonds are more than 5% of the total
revenues derived by all users of such facilities, (b) who occupies more than 5%
of the entire usable area of such facilities, or (c) for whom such facilities or
a part thereof were specifically
65
<PAGE>
constructed, reconstructed or acquired. "Related persons" generally include
certain related natural persons, affiliated corporations, a partnership and its
partners and an S corporation and its shareholders.
In order for the Funds to pay exempt-interest dividends with respect to any
taxable year, at the close of each quarter of each Fund's taxable year at least
50% of the value of the Fund's assets must consist of tax-exempt municipal
obligations. Exempt-interest dividends distributed to shareholders are not
included in the shareholder's gross income for regular federal income tax
purposes. However, all shareholders required to file a federal income tax
return are required to report the receipt of exempt-interest dividends and other
tax-exempt interest on their returns. Moreover, while such dividends and
interest are exempt from regular federal income tax, they may be subject to
alternative minimum tax in two circumstances. First, exempt-interest dividends
derived from certain "private activity" bonds issued after August 7, 1986 will
generally constitute an item of tax preference for both corporate and non-
corporate taxpayers. Second, exempt-interest dividends derived from all bonds,
regardless of the date of issue, must be taken into account by corporate
taxpayers in determining the amount of certain adjustments for alternative
minimum tax purposes. Receipt of exempt-interest dividends may result in
collateral federal income tax consequences to certain other taxpayers,
including financial institutions, property and casualty insurance companies,
individual recipients of Social Security or Railroad Retirement benefits, and
foreign corporations engaged in a trade or business in the United States.
Prospective investors should consult their own tax advisors as to such
consequences.
The percentage of total dividends paid by the Fund with respect to any
taxable year which qualifies as federal exempt-interest dividends will be the
same for all shareholders receiving dividends during such year. If a
shareholder receives an exempt-interest dividend with respect to any share and
such share is held for six months or less, any loss on the sale or exchange of
such share will be disallowed to the extent of the amount of such dividends.
Interest on indebtedness incurred by a shareholder to purchase or carry
shares of the Funds generally is not deductible for federal income tax purposes
if the Funds distribute exempt-interest dividends during the shareholder's
taxable year.
Investors may be subject to state and local taxes on income derived from an
investment in a Fund. In certain states, income derived from a Fund which is
attributable to interest on obligations of that state or any municipality or
political subdivision thereof may be exempt from taxation.
Shareholders are advised to consult their own tax advisers with respect to
the particular tax consequences to them of an investment in a Fund. Persons who
may be "substantial users" (or "related persons" of substantial users) of
facilities financed by industrial development bonds should consult their tax
advisers before investing in a Fund.
MICHIGAN TAX CONSIDERATIONS - MICHIGAN BOND FUND AND TAX-FREE INTERMEDIATE
BOND FUND. As stated in the Michigan Bond Fund Prospectus and the Tax-Free
Intermediate Bond Fund Prospectus, dividends paid by the Fund that are derived
from interest attributable to tax-exempt Michigan Municipal Obligations will be
exempt from Michigan Income Tax, Michigan Intangibles Tax and Michigan Single
Business Tax. Conversely, to the extent that the Fund's dividends are derived
from interest on obligations other than Michigan Municipal Obligations, such
dividends will be subject to Michigan Income, Intangibles and Michigan Single
Business Taxes, even though the dividends may be exempt for federal Income Tax
purposes.
In particular, gross interest income and dividends derived from obligations
or securities of the State of Michigan and its political subdivisions, exempt
from federal Income Tax, are exempt from Michigan Income Tax under Act No. 281,
Public Acts of Michigan, 1967, as amended, and are exempt from Michigan Single
Business Tax under Act No. 228, Public Acts of Michigan, 1975, as amended. The
Michigan Income Tax act levies a flat-rate income tax on individuals, estates,
and trusts. The Single Business Tax Act levies a tax upon the "adjusted tax
base" of most individuals, corporations, financial organizations, partnerships,
joint ventures, estates, and trusts with "business activity" in Michigan.
66
<PAGE>
Bonds or other similar obligations of the State of Michigan or of a
political subdivision of the State of Michigan are exempt from Michigan
Intangibles Tax under Act No. 301, Public Acts of Michigan, 1939, as amended.
In 1986, the Michigan Department of Treasury issued a Bulletin stating that
holders of interests in investment companies who are subject to the Michigan
intangibles tax will be exempt from the tax to the extent that the investment
portfolio consists of items such as Michigan Municipal Obligations.
The transfer of obligations or securities of the State of Michigan and its
political subdivisions by the Fund, as well as the transfer of Fund shares by a
shareholder, is subject to Michigan taxes measured by gain on the sale, payment,
or other disposition thereof.]
INTERNATIONAL EQUITY FUND, INTERNATIONAL GROWTH FUND, GLOBAL FINANCIAL
SERVICES FUND, EMERGING MARKETS FUND AND INTERNATIONAL BOND FUND. Income
received by the International Equity Fund, the International Growth Fund, the
Emerging Markets Fund, the Global Financial Services Fund and the International
Bond Fund from sources within foreign countries may be subject to withholding
and other foreign taxes. The payment of such taxes will reduce the amount of
dividends and distributions paid to the Funds' shareholders. So long as a Fund
qualifies as a regulated investment company, certain distribution requirements
are satisfied, and more than 50% of the value of the Fund's assets at the close
of the taxable year consists of securities of foreign corporations, the Fund may
elect, subject to limitation, to pass through its foreign tax credits to its
shareholders. The Fund may qualify for and make this election in some, but not
necessarily all, of its taxable years. If a Fund were to make an election, an
amount equal to the foreign income taxes paid by the Fund would be included in
the income of its shareholders and the shareholders would be entitled to credit
their portions of this amount against their U.S. tax due, if any, or to deduct
such portions from their U.S. taxable income, if any. Shortly after any year
for which it makes such an election, a Fund will report to its shareholders, in
writing, the amount per share of such foreign tax that must be included in each
shareholder's gross income and the amount which will be available for deduction
or credit. No deduction for foreign taxes may be claimed by a shareholder who
does not itemize deductions. Certain limitations are imposed on the extent to
which the credit (but not the deduction) for foreign taxes may be claimed.
Shareholders who choose to utilize a credit (rather than a deduction) for
foreign taxes will be subject to limitations, including the restriction that the
credit may not exceed the shareholder's United States tax (determined without
regard to the availability of the credit) attributable to his or her total
foreign source taxable income. For this purpose, the portion of dividends and
distributions paid by the Fund from its foreign source income will be treated as
foreign source income. The Fund's gains and losses from the sale of securities
will generally be treated as derived from United States sources and certain
foreign currency gains and losses likewise will be treated as derived from
United States sources. The limitation on the foreign tax credit is applied
separately to foreign source "passive income", such as the portion of dividends
received from the Fund which qualifies as foreign source income. In addition,
only a portion of the foreign tax credit will be allowed to offset any
alternative minimum tax imposed on corporations and individuals. Because of
these limitations, shareholders may be unable to claim a credit for the full
amount of their proportionate shares of the foreign income taxes paid by the
Fund.
TAXATION OF CERTAIN FINANCIAL INSTRUMENTS. Special rules govern the
Federal income tax treatment of financial instruments that may be held by some
of the Funds. These rules may have a particular impact on the amount of income
or gain that the Funds must distribute to their respective shareholders to
comply with the Distribution Requirement, on the income or gain qualifying under
the Income Requirement, all described above.
MARKET DISCOUNT. If a Fund purchases a debt security at a price lower than
the stated redemption price of such debt security, the excess of the stated
redemption price over the purchase price is "market discount". If the amount of
market discount is more than a de minimis amount, a portion of such market
discount must be included as ordinary income (not capital gain) by the Fund in
each taxable year in which the Fund owns an interest in such debt security and
receives a principal payment on it. In particular, the Fund will be required to
allocate that principal payment first to the portion of the market discount on
the debt security that has accrued but has not previously been includable in
income. In general, the amount of market discount that must be included for
each period is equal to the lesser of (i) the amount of market discount accruing
during such period (plus any accrued
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<PAGE>
market discount for prior periods not previously taken into account) or (ii) the
amount of the principal payment with respect to such period. Generally, market
discount accrues on a daily basis for each day the debt security is held by a
Fund at a constant rate over the time remaining to the debt security's maturity
or, at the election of the Fund, at a constant yield to maturity which takes
into account the semi-annual compounding of interest. Gain realized on the
disposition of a market discount obligations must be recognized as ordinary
interest income (not capital gain) to the extent of the "accrued market
discount."
ORIGINAL ISSUE DISCOUNT. Certain debt securities acquired by the Funds may
be treated as debt securities that were originally issued at a discount. Very
generally, original issue discount is defined as the difference between the
price at which a security was issued and its stated redemption price at
maturity. Although no cash income on account of such discount is actually
received by a Fund, original issue discount that accrues on a debt security in a
given year generally is treated for federal income tax purposes as interest and,
therefore, such income would be subject to the distribution requirements
applicable to regulated investment companies.
Some debt securities may be purchased by the Fund, at a discount that
exceeds the original issue discount on such debt securities, if any. This
additional discount represents market discount for federal income tax purposes
(see above).
HEDGING TRANSACTIONS. The taxation of equity options and over-the-counter
options on debt securities is governed by Code section 1234. Pursuant to Code
section 1234, the premium received by a Fund for selling a put or call option is
not included in income at the time of receipt. If the option expires, the
premium is short-term capital gain to the Fund. If the Fund enters into a
closing transaction, the difference between the amount paid to close out its
position and the premium received is short-term capital gain or loss. If a call
option written by a Fund is exercised, thereby requiring the Fund to sell the
underlying security, the premium will increase the amount realized upon the sale
of such security and any resulting gain or loss will be a capital gain or loss,
and will be long-term or short-term depending upon the holding period of the
security. With respect to a put or call option that is purchased by a Fund, if
the option is sold, any resulting gain or loss will be a capital gain or loss,
and will be long-term or short-term, depending upon the holding period of the
option. If the option expires, the resulting loss is a capital loss and is
long-term or short-term, depending upon the holding period of the option. If
the option is exercised, the cost of the option, in the case of a call option,
is added to the basis of the purchased security and, in the case of a put
option, reduces the amount realized on the underlying security in determining
gain or loss.
Any regulated futures and foreign currency contracts and certain options
(namely, nonequity options and dealer equity options) in which a Fund may invest
may be "section 1256 contracts." Gains or losses on section 1256 contracts are
generally considered 60% long-term and 40% short-term capital gains or losses;
however, foreign currency gains or losses arising from certain section 1256
contracts may be treated as ordinary income or loss. Also, section, 1256
contracts held by a Fund at the end of each taxable year (and generally for
purposes of the 4% excise tax, on October 31 of each year) are "marked-to-
market" with the result that unrealized gains or losses are treated as though
they were realized.
Generally, hedging transactions, if any, undertaken by a Fund may result in
"straddles" for U.S. federal income tax purposes. The straddle rules may affect
the character of gains (or losses) realized by the Funds. In addition, losses
realized by a Fund on positions that are part of a straddle may be deferred
under the straddle rules, rather than being taken into account in calculating
the taxable income for the taxable year in which such losses are realized.
Because only a few regulations implementing the straddle rules have been
promulgated, the tax consequences of hedging transactions to the Funds are not
entirely clear. The hedging transactions may increase the amount of short-term
capital gain realized by the Funds which is taxed as ordinary income when
distributed to shareholders.
The Funds may make one or more of the elections available under the Code
which are applicable to straddles. If a Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections
may operate to accelerate the recognition of gains or losses from the affected
straddle positions.
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<PAGE>
Because application of the straddle rules may affect the character of gains
or losses, defer losses and/or accelerate the recognition of gains or losses
from the affected straddle positions, the amount which must be distributed to
shareholders, and which will be taxed to shareholders as ordinary income or
long-term capital gain, may be increased or decreased substantially as compared
to a fund that did not engage in such hedging transactions.
The diversification requirements applicable to the Funds' assets may limit
the extent to which the Funds will be able to engage in transactions in options,
futures or forward contracts.
CONSTRUCTIVE SALES. Recently enacted rules may affect the timing and
character of gain if a Fund engages in transactions that reduce or eliminate its
risk of loss with respect to appreciated financial positions. If the Fund
enters into certain transactions in property while holding substantially
identical property, the Fund would be treated as if it had sold and immediately
repurchased the property and would be taxed on any gain (but not loss) from the
constructive sale. The character of gain from a constructive sale would depend
upon the Fund's holding period in the property. Loss from a constructive sale
would be recognized when the property was subsequently disposed of, and its
character would depend on the Fund's holding period and the application of
various loss deferral provisions of the Code.
CURRENCY FLUCTUATIONS - "SECTION 988" GAINS OR LOSSES. Under the Code,
gains or losses attributable to fluctuations in exchange rates which occur
between the time a Fund accrues receivables or liabilities denominated in a
foreign currency and the time the Fund actually collects such receivables or
pays such liabilities generally are treated as ordinary income and loss.
Similarly, on disposition of debt securities denominated in a foreign currency
and on disposition of certain futures, forward contracts and options, gains or
losses attributable to fluctuations in the value of the foreign currency between
the date of acquisition of the security or contract and the date of disposition
also are treated as ordinary gain or loss. These gains or losses, referred to
under the Code as "Section 988" gains or losses, may increase or decrease the
amount of a Fund's investment company taxable income to be distributed to its
shareholders as ordinary income.
PASSIVE FOREIGN INVESTMENT COMPANIES. Certain Funds may invest in shares
of foreign corporations that may be classified under the Code as passive foreign
investment companies ("PFICs"). In general, a foreign corporation is classified
as a PFIC if at least on-half of its assets constitute investment-type assets,
or 75% or more of its gross income investment-type income. If a Fund receives a
so-called "excess distribution" with respect to PFIC stock, the Fund itself may
be subject to a tax on a portion of the excess distribution, whether or not the
corresponding income is distributed by the Fund to shareholders. In general,
under the PFIC rules, an excess distribution is treated as having been realized
ratably over the period during which the Fund held the PFIC shares. Each Fund
will itself be subject to tax on the portion, if any, of an excess distribution
that is so allocated to prior Fund taxable years and an interest factor will be
added to the tax, as if the tax had been payable in such prior taxable years.
Certain distributions from a PFIC as well as gain from the sale of PFIC shares
are treated as excess distributions. Excess distributions are characterized as
ordinary income even though, absent application of the PFIC rules, certain
excess distributions might have been classified as capital gain.
The Funds may be eligible to elect alternative tax treatment with respect
to PFIC shares. Under an election that currently is available in some
circumstances, a Fund generally would be required to include in its gross income
its share of the earnings of a PFIC on a current basis, regardless of whether
distributions were received from the PFIC in a given year. If this election
were made, the special rules, discussed above, relating to the taxation of
excess distributions, would not apply. In addition, another election would
involve marking to market the Fund's PFIC shares at the end of each taxable
year, with the result that unrealized gains would be treated as though they were
realized and reported as ordinary income. Any mark-to market losses and any
loss from an actual disposition of Fund shares would be deductible as ordinary
losses to the extent of any net mark-to-market gains included in income in prior
years.
Income received by a Fund from sources within foreign countries may be subject
to withholding and other taxes imposed by such countries.
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Fund shareholders may be subject to state, local and foreign taxes on their
Fund distributions. In many states, Fund distributions which are derived from
interest on certain U.S. Government obligations are exempt from taxation. The
tax consequences to a foreign shareholder of an investment in the Fund may be
different from those described herein. Foreign shareholders are advised to
consult their own tax advisers with respect to the particular tax consequences
to them of an investment in the Fund. Shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them of an
investment in the Fund.
OTHER TAXATION
The foregoing discussion relates only to U.S. federal income tax law and
certain state taxes as applicable to U.S. persons (i.e., U.S. citizens and
residents and domestic corporations, partnerships, trusts and estates).
Distributions by the Funds, and dispositions of Fund shares also may be subject
to other state and local taxes, and their treatment under state and local income
tax laws may differ from the U.S. federal income tax treatment. Shareholders
should consult their tax advisers with respect to particular questions of U.S.
federal, state and local taxation. Shareholders who are not U.S. persons should
consult their tax advisers regarding U.S. and foreign tax consequences of
ownership of shares of the Fund, including the likelihood that distributions to
them would be subject to withholding of U.S. federal income tax at a rate of 30%
(or at a lower rate under a tax treaty). Future legislative or administrative
changes or court decisions may significantly change the conclusions expressed
herein, and any such changes or decisions may have a retroactive effect with
respect to the transactions contemplated herein.
ADDITIONAL INFORMATION CONCERNING SHARES
The Trust and Framlington are Massachusetts business trusts. Under each
Declaration of Trust, the beneficial interest in the Trust or Framlington may be
divided into an unlimited number of full and fractional transferable shares.
The Company is a Maryland corporation. The Trust's and Framlington's
Declaration of Trust and the Company's Articles of Incorporation authorize the
Boards of Trustees and Directors to classify or reclassify any unissued shares
of the Trust, Framlington and the Company into one or more classes by setting or
changing, in any one or more respects, their respective designations,
preferences, conversion or other rights, voting powers, restrictions,
limitations, qualifications and terms and conditions of redemption. Pursuant to
such authority, the Trust's Board of Trustees has authorized the issuance of an
unlimited number of shares of beneficial interest in the Trust, representing
interests in the Accelerating Growth, Balanced, Growth & Income, Index 500,
International Equity, Small Company Growth, Bond, Intermediate Bond, U.S.
Government Income, Michigan Bond, Tax-Free Bond, Tax-Free Intermediate Bond,
Cash Investment, Tax-Free Money Market and U.S. Treasury Money Market Funds.
The shares of each Fund (other than the Cash Investment Fund, Tax-Free Money
Market Fund and U.S. Treasury Money Market Fund) are offered in five separate
classes: Class A, Class B, Class C, Class K and Class Y Shares. The Cash
Investment Fund, Tax-Free Money Market Fund and U.S. Treasury Money Market Fund
offer only Class Y Shares, Class K Shares and Class A Shares. Pursuant to the
authority of Framlington's Declaration of Trust, the Trustees have authorized
the issuance of an unlimited number of shares of beneficial interest in
Framlington representing interests in the International Growth Fund, Emerging
Markets Fund, Global Financial Services Fund and Healthcare Fund. The shares of
each Fund are offered in five separate classes: Class A, Class B, Class C, Class
K and Class Y Shares. Pursuant to the authority of the Company's Articles of
Incorporation, the Directors have authorized the issuance of shares of common
stock representing interests in the Growth Opportunities Fund, Micro-Cap Fund,
Multi-Season Fund, Real Estate Fund, Small-Cap Value Fund, Value Fund,
International Bond Fund, Money Market Fund, All-Season Conservative Fund, All-
Season Moderate Fund and All-Season Aggressive Fund, Short Term Treasury Fund
and NetNet Fund, respectively. The shares of each Fund (other than the Money
Market Fund, All-Season Conservative Fund, All-Season Moderate Fund and All-
Season Aggressive Fund, Short Term Treasury Fund and the NetNet Fund) are
offered in five separate classes: Class A, Class B, Class C, Class K and Class Y
Shares. The Money Market Fund offers only Class A, Class B and Class C Shares
(which may be acquired only through an exchange of shares from the corresponding
classes of other funds of the Trust, Framlington the Company) and Class Y
Shares. The All-Season Conservative Fund, All-Season Moderate Fund and All-
Season Aggressive Fund offer only Class A, Class B and Class Y Shares. The Short
Term Treasury Fund offers Class Y Shares and the Michigan Municipal Shares
(formerly, Class
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K Shares). The NetNet Fund offers only Class A, Class B, Class C and Class Y
Shares.
At a meeting on April 25 and 26, 1995, the Boards of the Trust and the
Company, and at a meeting on November 7, 1996, the Board of Framlington Trust
adopted plans pursuant to Rule 18f-3 under the 1940 Act ("Multi-Class Plans") on
behalf of each Fund At a meeting on February 4, 1997, the Trust, Framlington
and the Company adopted Amended and Restated Multi-Class Plans on behalf of each
Fund. At a meeting on May 5, 1998, the Company adopted a Second Amended and
Restated Multi-Class Plan on behalf of each Fund. At a meeting on August 4,
1998, the Company adopted a Third Amended Restated Multi-Class Plan on behalf of
each Fund. Each Multi-Class Plan provides that shares of each class of a Fund
are identical, except for one or more expense variables, certain related rights,
exchange privileges, class designation and sales loads assessed due to differing
distribution methods.
In the event of a liquidation or dissolution of each of the Trust,
Framlington or the Company or an individual Fund, shareholders of a particular
Fund would be entitled to receive the assets available for distribution
belonging to such Fund, and a proportionate distribution, based upon the
relative net asset values of the Trust's, Framlington Trust's or the Company's
respective Funds, of any general assets not belonging to any particular Fund
which are available for distribution. Shareholders of a Fund are entitled to
participate in the net distributable assets of the particular Fund involved on
liquidation, based on the number of shares of the Fund that are held by each
shareholder.
Holders of all outstanding shares of a particular Fund will vote together
in the aggregate and not by class on all matters, except that only Class A
Shares of a Fund will be entitled to vote on matters submitted to a vote of
shareholders pertaining to the Fund's Class A Plan, only Class B Shares will be
entitled to vote on matters submitted to a vote of shareholders pertaining to
the Fund's Class B Plan, only Class C Shares of a Fund will be entitled to vote
on matters submitted to a vote of shareholders pertaining to the Fund's Class C
Plan, and only Class K Shares of a Fund will be entitled to vote on matters
submitted to a vote of shareholders pertaining to the Class K Plan. Further,
shareholders of all of the Funds, as well as those of any other investment
portfolio now or hereafter offered by the Trust, Framlington or the Company,
will vote together in the aggregate and not separately on a Fund-by-Fund basis,
except as otherwise required by law or when permitted by the Boards of Trustees
and Directors. Rule 18f-2 under the 1940 Act provides that any matter required
to be submitted to the holders of the outstanding voting securities of an
investment company such as the Trust, Framlington or the Company shall not be
deemed to have been effectively acted upon unless approved by the holders of a
majority of the outstanding shares of each Fund affected by the matter. A Fund
is affected by a matter, (i) unless it is clear that the interests of each Fund
in the matter are substantially identical or (ii) that the matter does not
affect any interest of the Fund. Under the Rule, the approval of an investment
advisory agreement, sub-advisory agreement or any change in a fundamental
investment policy would be effectively acted upon with respect to a Fund only if
approved by a majority of the outstanding shares of such Fund. However, the
Rule also provides that the ratification of the appointment of independent
auditors, the approval of principal underwriting contracts and the election of
trustees may be effectively acted upon by shareholders of the Trust, Framlington
or the Company voting together in the aggregate without regard to a particular
Fund.
Shares of each of the Trust, Framlington and the Company have noncumulative
voting rights and, accordingly, the holders of more than 50% of each of the
Trust's, Framlington's and the Company's outstanding shares (irrespective of
class) may elect all of the trustees or directors. Shares have no preemptive
rights and only such conversion and exchange rights as the Board may grant in
its discretion. When issued for payment as described in the applicable
Prospectus, shares will be fully paid and non-assessable by each of the Trust,
Framlington and the Company.
Shareholder meetings to elect trustees or directors will not be held unless
and until such time as required by law. At that time, the trustees then in
office will call a shareholders' meeting to elect trustees. Except as set forth
above, the trustees will continue to hold office and may appoint successor
trustees. Meetings of the shareholders of the Trust, Framlington or the Company
shall be called by the trustees or directors upon the written request of
shareholders owning at least 10% of the outstanding shares entitled to vote.
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The Trust's and Framlington's Declaration of Trust, as amended, authorizes
the Board of Trustees, without shareholder approval (unless otherwise required
by applicable law), to: (i) sell and convey the assets belonging to a class of
shares to another management investment company for consideration which may
include securities issued by the purchaser and, in connection therewith, to
cause all outstanding shares of such class to be redeemed at a price which is
equal to their net asset value and which may be paid in cash or by distribution
of the securities or other consideration received from the sale and conveyance;
(ii) sell and convert the assets belonging to one or more classes of shares into
money and, in connection therewith, to cause all outstanding shares of such
class to be redeemed at their net asset value; or (iii) combine the assets
belonging to a class of shares with the assets belonging to one or more other
classes of shares if the Board of Trustees reasonably determines that such
combination will not have a material adverse effect on the shareholders of any
class participating in such combination and, in connection therewith, to cause
all outstanding shares of any such class to be redeemed or converted into shares
of another class of shares at their net asset value. However, the exercise of
such authority may be subject to certain restrictions under the 1940 Act. The
Trust's and Framlington's Board of Trustees may authorize the termination of any
class of shares after the assets belonging to such class have been distributed
to its shareholders.
MISCELLANEOUS
COUNSEL. The law firm of Dechert Price & Rhoads, 1775 Eye Street, N.W.,
Washington, DC 20006, has passed upon certain legal matters in connection with
the shares offered by the Funds and serves as counsel to the Trust, Framlington
and the Company.
INDEPENDENT AUDITORS. Ernst & Young LLP, 200 Clarendon Street, Boston,
Massachusetts 02116, serves as the Trust's, Framlington's and the Company's
independent auditors.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES. As of October __,
1998, Comerica Bank, One Detroit Center, 500 Woodward Ave., Detroit, Michigan
48226, held of record substantially all of the outstanding shares of the Funds
as agent, custodian or trustee for its customers. As of such date, the following
persons were beneficial owners of 5% or more of the outstanding shares of a Fund
because they possessed voting or investment power with respect to such
shares:
<TABLE>
<CAPTION>
NAME OF FUND NAME AND ADDRESS PERCENT OF TOTAL SHARES OUTSTANDING
- ------------ ---------------- -----------------------------------
<S> <C> <C>
</TABLE>
[UPDATE ] As of October __, 1998, Munder Capital Management, on behalf of
their clients owned % _________________________. [Update]
The Munder All-Season Aggressive Fund, as of October __, 1998, held the
following positions in ______________________________. [Update]
The Munder All-Season Conservative Fund, as of October __, 1998, held the
following positions in ______________________________. [Update]
The Munder All-Season Moderate Fund, as of October __, 1998, held the
following positions in ______________________________. [Update]
SHAREHOLDER APPROVALS. As used in this Statement of Additional Information
and in each Prospectus, a "majority of the outstanding shares" of a Fund or
investment portfolio means the lesser of (a) 67% of the shares of the particular
Fund or portfolio represented at a meeting at which the holders of more than 50%
of the outstanding shares of such Fund or portfolio are present in person or by
proxy, or (b) more than 50% of the outstanding shares of such Fund or portfolio.
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REGISTRATION STATEMENT
This Statement of Additional Information and each of the Fund's
Prospectuses do not contain all the information included in the Fund's
registration statement filed with the SEC under the 1933 Act with respect to the
securities offered hereby, certain portions of which have been omitted pursuant
to the rules and regulations of the SEC. The registration statement, including
the exhibits filed therewith, may be examined at the offices of the SEC in
Washington, D.C.
Statements contained herein and in each of the Fund's Prospectuses as to
the contents of any contract of other documents referred to are not necessarily
complete, and, in such instance, reference is made to the copy of such contract
or other documents filed as an exhibit to the Fund's registration statement,
each such statement being qualified in all respects by such reference.
FINANCIAL STATEMENTS
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APPENDIX A
----------
- RATED INVESTMENTS -
CORPORATE BONDS
- ---------------
Excerpts from MOODY'S INVESTORS SERVICES, INC. ("MOODY'S") description of
its bond ratings:
"Aaa":
Bonds that are rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred
to as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
"Aa":
Bonds that are rated "Aa" are judged to be of high-quality by all
standards. Together with the "Aaa" group they comprise what are
generally known as "high-grade" bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in "Aaa"
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risks appear somewhat larger than in "Aaa" securities.
"A":
Bonds that are rated "A" possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
"Baa":
Bonds that are rated "Baa" are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appears adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
"Ba":
Bonds that are rated "Ba" are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
"B":
Bonds that are rated "B" generally lack characteristics of desirable
investments. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
"Caa":
Bonds that are rated "Caa" are of poor standing. These issues may be
in default or present elements of danger may exist with respect to
principal or interest.
Moody's applies numerical modifiers (1, 2 and 3) with respect to bonds
rated "Aa" through "B". The modifier 1 indicates that the bond being rated
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the bond ranks in the
lower end of its generic rating category.
A-1
<PAGE>
Excerpts from STANDARD & POOR'S CORPORATION ("S&P") description of its bond
ratings:
"AAA":
Debt rated "AAA" has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
"AA":
Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from "AAA" issues by a small degree.
"A":
Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher
rated categories.
"BBB":
Bonds rated "BBB" are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds in
higher rated categories.
"BB", "B" AND "CCC":
Bonds rated "BB" and "B" are regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal
in accordance with the terms of the obligations. "BB" represents a lower
degree of speculation than "B" and "CCC" the highest degree of
speculation. While such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions.
To provide more detailed indications of credit quality, the "AA" or "A"
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
COMMERCIAL PAPER
- ----------------
The rating "PRIME-1" is the highest commercial paper rating assigned by
Moody's. These issues (or related supporting institutions) are considered to
have a superior capacity for repayment of short-term promissory obligations.
Issues rated "PRIME-2" (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics of "PRIME-1" rated issues, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
Commercial paper ratings of S&P are current assessments of the likelihood
of timely payment of debt having original maturities of no more than 365 days.
Commercial paper rated "A-1" by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted "A-1+."
Commercial paper rated "A-2" by S&P indicates that capacity for timely payment
is strong. However, the relative degree of safety is not as high as for issues
designated "A-1."
A-2
<PAGE>
APPENDIX A
- RATED INVESTMENTS -
COMMERCIAL PAPER
- ----------------
Rated commercial paper purchased by a Fund must have (at the time of
purchase) the highest quality rating assigned to short-term debt securities or,
if not rated, or rated by only one agency, are determined to be of comparative
quality pursuant to guidelines approved by a Fund's Boards of Trustees and
Directors. Highest quality ratings for commercial paper for Moody's and S&P are
as follows:
MOODY'S: The rating "PRIME-1" is the highest commercial paper rating
--------
category assigned by Moody's. These issues (or related supporting institutions)
are considered to have a superior capacity for repayment of short-term
promissory obligations.
S&P: Commercial paper ratings of S&P are current assessments of the
----
likelihood of timely payment of debts having original maturities of no more than
365 days. Commercial paper rated in the "A-1" category by S&P indicates that
the degree of safety regarding timely payment is either overwhelming or very
strong. Those issues determined to possess overwhelming safety characteristics
are denoted "A-1+".
A-3
<PAGE>
APPENDIX B
As stated in the applicable Prospectuses, the Equity Funds, the Balanced
Fund and the Bond Funds may enter into certain futures transactions and options
for hedging purposes. Such transactions are described in this Appendix.
I. INTEREST RATE FUTURES CONTRACTS
-------------------------------
USE OF INTEREST RATE FUTURES CONTRACTS. Bond prices are established in
---------------------------------------
both the cash market and the futures market. In the cash market, bonds are
purchased and sold with payment for the full purchase price of the bond being
made in cash, generally within five business days after the trade. In the
futures market, only a contract is made to purchase or sell a bond in the future
for a set price on a certain date. Historically, the prices for bonds
established in the futures markets have tended to move generally in the
aggregate in concert with the cash market prices and have maintained fairly
predictable relationships. Accordingly, the Funds may use interest rate futures
contracts as a defense, or hedge, against anticipated interest rate changes and
not for speculation. As described below, this would include the use of futures
contract sales to protect against expected increases in interest rates and
futures contract purchases to offset the impact of interest rate declines.
The Funds presently could accomplish a similar result to that which it
hopes to achieve through the use of futures contracts by selling bonds with long
maturities and investing in bonds with short maturities when interest rates are
expected to increase, or conversely, selling short-term bonds and investing in
long-term bonds when interest rates are expected to decline. However, because
of the liquidity that is often available in the futures market, the protection
is more likely to be achieved, perhaps at a lower cost and without changing the
rate of interest being earned by the Funds, through using futures contracts.
DESCRIPTION OF INTEREST RATE FUTURES CONTRACTS. An interest rate futures
-----------------------------------------------
contract sale would create an obligation by a Fund, as seller, to deliver the
specific type of financial instrument called for in the contract at a specific
future time for a specified price. A futures contract purchase would create an
obligation by the Fund, as purchaser, to take delivery of the specific type of
financial instrument at a specific future time at a specific price. The
specific securities delivered or taken, respectively, at settlement date, would
not be determined until or at near that date. The determination would be in
accordance with the rules of the exchange on which the futures contract sale or
purchase was made.
Although interest rate futures contracts by their terms call for actual
delivery or acceptance of securities, in most cases the contracts are closed out
before the settlement date without making or taking of delivery of securities.
Closing out a futures contract sale is effected by the Fund's entering into a
futures contract purchase for the same aggregate amount of the specific type of
financial instrument and the same delivery date. If the price of the sale
exceeds the price of the offsetting purchase, the Fund is immediately paid the
difference and thus realizes a gain. If the offsetting purchase price exceeds
the sale price, the Fund pays the difference and realizes a loss. Similarly,
the closing out of a futures contract purchase is effected by the Fund entering
into a futures contract sale. If the offsetting sale price exceeds the purchase
price, the Fund realizes a gain, and if the purchase price exceeds the
offsetting sale price, the Fund realizes a loss.
Interest rate futures contracts are traded in an auction environment on the
floors of several exchanges -principally, the Chicago Board of Trade, the
Chicago Mercantile Exchange and the New York Futures Exchange. The Funds would
deal only in standardized contracts on recognized exchanges. Each exchange
guarantees performance under contract provisions through a clearing corporation,
a nonprofit organization managed by the exchange membership.
A public market now exists in futures contracts covering various financial
instruments including long-term United States Treasury Bonds and Notes,
Government National Mortgage Association (GNMA) modified pass-through mortgage
backed securities, three-month United States Treasury Bills, and ninety-day
commercial paper.
B-1
<PAGE>
The Funds may trade in any interest rate futures contracts for which there
exists a public market, including, without limitation, the foregoing
instruments.
EXAMPLE OF FUTURES CONTRACT SALE. The Funds would engage in an interest
---------------------------------
rate futures contract sale to maintain the income advantage from continued
holding of a long-term bond while endeavoring to avoid part or all of the loss
in market value that would otherwise accompany a decline in long-term securities
prices. Assume that the market value of a certain security held by a particular
Fund tends to move in concert with the futures market prices of long-term United
States Treasury bonds ("Treasury Bonds"). The adviser wishes to fix the current
market value of the portfolio security until some point in the future. Assume
the portfolio security has a market value of 100, and the adviser believes that,
because of an anticipated rise in interest rates, the value will decline to 95.
The fund might enter into futures contract sales of Treasury bonds for an
equivalent of 98. If the market value of the portfolio security does indeed
decline from 100 to 95, the equivalent futures market price for the Treasury
bonds might also decline from 98 to 93.
In that case, the five point loss in the market value of the portfolio
security would be offset by the five point gain realized by closing out the
futures contract sale. Of course, the futures market price of Treasury bonds
might well decline to more than 93 or to less than 93 because of the imperfect
correlation between cash and futures prices mentioned below.
The adviser could be wrong in its forecast of interest rates and the
equivalent futures market price could rise above 98. In this case, the market
value of the portfolio securities, including the portfolio security being
protected, would increase. The benefit of this increase would be reduced by the
loss realized on closing out the futures contract sale.
If interest rate levels did not change, the Fund in the above example might
incur a loss of 2 points (which might be reduced by an offsetting transaction
prior to the settlement date). In each transaction, transaction expenses would
also be incurred.
EXAMPLE OF FUTURES CONTRACT PURCHASE. The Funds would engage in an
-------------------------------------
interest rate futures contract purchase when they are not fully invested in
long-term bonds but wish to defer for a time the purchase of long-term bonds in
light of the availability of advantageous interim investments, e.g., shorter
term securities whose yields are greater than those available on long-term
bonds. A Fund's basic motivation would be to maintain for a time the income
advantage from investing in the short-term securities; the Fund would be
endeavoring at the same time to eliminate the effect of all or part of an
expected increase in market price of the long-term bonds that the Fund may
purchase.
For example, assume that the market price of a long-term bond that the Fund
may purchase, currently yielding 10% , tends to move in concert with futures
market prices of Treasury bonds. The adviser wishes to fix the current market
price (and thus 10% yield) of the long-term bond until the time (four months
away in this example) when it may purchase the bond. Assume the long-term bond
has a market price of 100, and the adviser believes that, because of an
anticipated fall in interest rates, the price will have risen to 105 (and the
yield will have dropped to about 91/2%) in four months. The Fund might enter
into futures contracts purchases of Treasury bonds for an equivalent price of
98. At the same time, the Fund would assign a pool of investments in short-term
securities that are either maturing in four months or earmarked on the books of
the Fund or the Fund's sub-custodian for sale in four months, for purchase of
the long-term bond at an assumed market price of 100. Assume these short-term
securities are yielding 15%. If the market price of the long-term bond does
indeed rise from 100 to 105, the equivalent futures market price for Treasury
bonds might also rise from 98 to 103. In that case, the 5 point increase in the
price that the Fund pays for the long-term bond would be offset by the 5 point
gain realized by closing out the futures contract purchase.
The adviser could be wrong in its forecast of interest rates; long-term
interest rates might rise to above 10%; and the equivalent futures market price
could fall below 98. If short-term rates at the same time fall to 10% or below,
it is possible that the Fund would continue with its purchase program for long-
term bonds. The market price
B-2
<PAGE>
of available long-term bonds would have decreased. The benefit of this price
decrease, and thus yield increase, will be reduced by the loss realized on
closing out the futures contract purchase.
If, however, short-term rates remained above available long-term rated, it
is possible that the Fund would discontinue its purchase program for long-term
bonds. The yield on short-term securities in the portfolio, including those
originally in the pool assigned to the particular long-term bond, would remain
higher than yields on long-term bonds. The benefit of this continued
incremental income will be reduced by the loss realized on closing out the
futures contract purchase. In each transaction, expenses would also be
incurred.
II. INDEX FUTURES CONTRACTS
-----------------------
GENERAL. A bond index assigns relative values of the bonds included in the
--------
index and the index fluctuates with changes in the market values of the bonds
included. The Chicago Board of Trade has designed a futures contract based on
the Bond Buyer Municipal Bond Index. This Index is composed of 40 term revenue
and general obligation bonds and its composition is updated regularly as new
bonds meeting the criteria of the Index are issued and existing bonds mature.
The Index is intended to provide an accurate indicator of trends and changes in
the municipal bond market. Each bond in the Index is independently priced by
six dealer-to-dealer municipal bond brokers daily. The 40 prices then are
averaged and multiplied by a coefficient. The coefficient is used to maintain
the continuity of the Index when its composition changes.
A stock index assigns relative values to the stocks included in the index
and the index fluctuates with changes in the market values of the stocks
included. Some stock index futures contracts are based on broad market indices,
such as the Standard & Poor's 500 or the New York Stock Exchange Composite
Index. In contrast, certain exchanges offer futures contracts on narrower
market indices, such as the Standard & Poor's 100 or indices based on an
industry or market segment, such as oil and gas stocks.
Futures contracts are traded on organized exchanges regulated by the
Commodity Futures Trading Commission. Transactions on such exchanges are
cleared through a clearing corporation, which guarantees the performance of the
parties to each contract.
A Fund will sell index futures contracts in order to offset a decrease in
market value of its portfolio securities that might otherwise result from a
market decline. A Fund will purchase index futures contracts in anticipation of
purchases of securities. In a substantial majority of these transactions, a
Fund will purchase such securities upon termination of the long futures
position, but a long futures position may be terminated without a corresponding
purchase of securities.
In addition, a Fund may utilize index futures contracts in anticipation of
changes in the composition of its portfolio holdings. For example, in the event
that a Fund expects to narrow the range of industry groups represented in its
holdings it may, prior to making purchases of the actual securities, establish a
long futures position based on a more restricted index, such as an index
comprised of securities of a particular industry group. A Fund may also sell
futures contracts in connection with this strategy, in order to protect against
the possibility that the value of the securities to be sold as part of the
restructuring of the portfolio will decline prior to the time of sale.
EXAMPLES OF STOCK INDEX FUTURES TRANSACTIONS. The following are examples
---------------------------------------------
of transactions in stock index futures (net of commissions and premiums, if
any).
ANTICIPATORY PURCHASE HEDGE: Buy the Future
Hedge Objective: Protect Against Increasing Price
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
PORTFOLIO FUTURES
- ------------------------------------------------------------------------------------------------------
<S> <C>
Anticipate buying $62,500 in Equity Securities -Day Hedge is Placed-
Buying 1 Index Futures at 125
Value of Futures = $62,500/Contract
</TABLE>
B-3
<PAGE>
<TABLE>
<S> <C>
Buy Equity Securities with Actual Cost = $65,000 Day Hedge is Lifted-
Increase in Purchase Price = $2,500 Sell 1 Index Futures at 130
Value of Futures = $65,000/Contract
Gain on Futures = $2,500
- ------------------------------------------------------------------------------------------------------
</TABLE>
HEDGING A STOCK PORTFOLIO: Sell the Future
Hedge Objective: Protect Against Declining
Value of the Portfolio
FACTORS:
Value of Stock Portfolio = $1,000,000
Value of Futures Contract - 125 X $500 =
$62,500 Portfolio Beta Relative to the Index = 1.0
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
PORTFOLIO FUTURES
- ------------------------------------------------------------------------------------------------
<S> <C>
Anticipate Selling $1,000,000 in Equity Securities - Day Hedge is Placed-
Sell 16 Index Futures at 125
Value of Futures = $1,000,000
Equity Securities - Own Stock Day Hedge is Lifted-
with Value = $960,000 Buy 16 Index Futures at 120
Loss in Portfolio Value = $40,000 Value of Futures = $960,000
Gain on Futures = $40,000
- ------------------------------------------------------------------------------------------------
</TABLE>
III. MARGIN PAYMENTS
---------------
Unlike purchase or sales of portfolio securities, no price is paid or
received by a Fund upon the purchase or sale of a futures contract. Initially,
the Fund will be required to deposit with the broker or earmarked on the books
of the Fund or the Fund's sub-custodian in an amount of cash or cash
equivalents, known as initial margin, based on the value of the contract. The
nature of initial margin in futures transactions is different from that of
margin in security transactions in that futures contract margin does not involve
the borrowing of funds by the customer to finance the transactions. Rather, the
initial margin is in the nature of a performance bond or good faith deposit on
the contract which is returned to the Fund upon termination of the futures
contract assuming all contractual obligations have been satisfied. Subsequent
payments, called variation margin, to and from the broker, will be made on a
daily basis as the price of the underlying instruments fluctuates making the
long and short positions in the futures contract more or less valuable, a
process known as marking-to-the-market. For example, when a particular Fund has
purchased a futures contract and the price of the contract has risen in response
to a rise in the underlying instruments, that position will have increased in
value and the Fund will be entitled to receive from the broker a variation
margin payment equal to that increase in value. Conversely, where the Fund has
purchased a futures contract and the price of the futures contract has declined
in response to a decrease in the underlying instruments, the position would be
less valuable and the Fund would be required to make a variation margin payment
to the broker. At any time prior to expiration of the futures contract, the
Adviser or Sub-Advisor may elect to close the position by taking an opposite
position, subject to the availability of a secondary market, which will operate
to terminate the Fund's position in the futures contract. A final determination
of variation margin is then made, additional cash is required to be paid by or
released to the Fund, and the Fund realizes a loss or gain.
IV. RISKS OF TRANSACTIONS IN FUTURES CONTRACTS
------------------------------------------
There are several risks in connection with the use of futures by the Funds
as hedging devices. One risk arises because of the imperfect correlation
between movements in the price of the futures and movements in the price of the
instruments which are the subject of the hedge. The price of the future may
move more than or less than the price of the
B-4
<PAGE>
instruments being hedged. If the price of the futures moves less than the price
of the instruments which are the subject of the hedge, the hedge will not be
fully effective but, if the price of the instruments being hedged has moved in
an unfavorable direction, the Fund would be in a better position than if it had
not hedged at all. If the price of the instruments being hedged has moved in a
favorable direction, this advantage will be partially offset by the loss on the
futures. If the price of the futures moves more than the price of the hedged
instruments, the Fund involved will experience either a loss or gain on the
futures which will not be completely offset by movements in the price of the
instruments which are the subject of the hedge. To compensate for the imperfect
correlation of movements in the price of instruments being hedged and movements
in the price of futures contracts, the Fund may buy or sell futures contracts in
a greater dollar amount than the dollar amount of instruments being hedged if
the volatility over a particular time period of the prices of such instruments
has been greater than the volatility over such time period of the futures, or if
otherwise deemed to be appropriate by the Adviser or Sub-Advisor. Conversely,
the Funds may buy or sell fewer futures contracts if the volatility over a
particular time period of the prices of the instruments being hedged is less
than the volatility over such time period of the futures contract being used, or
if otherwise deemed to be appropriate by the Adviser or Sub-Advisor. It is also
possible that, when the Fund had sold futures to hedge its portfolio against a
decline in the market, the market may advance and the value of instruments held
in the Fund may decline. If this occurred, the Fund would lose money on the
futures and also experience a decline in value in its portfolio securities.
Where futures are purchased to hedge against a possible increase in the
price of securities before a Fund is able to invest its cash (or cash
equivalents) in an orderly fashion, it is possible that the market may decline
instead; if the Fund then concludes not to invest its cash at that time because
of concern as to possible further market decline or for other reasons, the Funds
will realize a loss on the futures contract that is not offset by a reduction in
the price of the instruments that were to be purchased.
In instances involving the purchase of futures contracts by the Funds, an
amount of cash and cash equivalents, equal to the market value of the futures
contracts, will be earmarked on the books of the Fund or the Fund's sub-
custodian to collateralize the position and thereby insure that the use of such
futures is unleveraged.
In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the futures and the instruments
being hedged, the price of futures may not correlate perfectly with movement in
the cash market due to certain market distortions. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through off-setting transactions which could distort the normal relationship
between the cash and futures markets. Second, with respect to financial futures
contracts, the liquidity of the futures market depends on participants entering
into off-setting transactions rather than making or taking delivery. To the
extent participants decide to make or take delivery, liquidity in the futures
market could be reduced thus producing distortions. Third, from the point of
view of speculators, the deposit requirements in the futures market are less
onerous than margin requirements in the securities market. Therefore, increased
participation by speculators in the futures market may also cause temporary
price distortions. Due to the possibility of price distortion in the futures
market, and because of the imperfect correlation between the movements in the
cash market and movements in the price of futures, a correct forecast of general
market trends or interest rate movements by the Adviser or Sub-Advisor may still
not result in a successful hedging transaction over a short time frame.
Positions in futures may be closed out only on an exchange or board of
trade which provides a secondary market for such futures. Although the Funds
intend to purchase or sell futures only on exchanges or boards of trade where
there appear to be active secondary markets, there is no assurance that a liquid
secondary market on any exchange or board of trade will exist for any particular
contract or at any particular time. In such event, it may not be possible to
close a futures investment position, and in the event of adverse price
movements, the Funds would continue to be required to make daily cash payments
of variation margin. However, in the event futures contracts have been used to
hedge portfolio securities, such securities will not be sold until the futures
contract can be terminated. In such circumstances, an increase in the price of
the securities, if any, may partially or completely offset losses on the futures
contract. However, as described above, there is no guarantee that the price of
the securities will in fact correlate with the price movements in the futures
contract and thus provide an offset on a futures contract.
B-5
<PAGE>
Further, it should be noted that the liquidity of a secondary market in a
futures contract may be adversely affected by "daily price fluctuation limits"
established by commodity exchanges which limit the amount of fluctuation in a
futures contract price during a single trading day. Once the daily limit has
been reached in the contract, no trades may be entered into at a price beyond
the limit, thus preventing the liquidation of open futures positions. The
trading of futures contracts is also subject to the risk of trading halts,
suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal activity, which could at times make it difficult or
impossible to liquidate existing positions or to recover excess variation margin
payments.
Successful use of futures by the Funds is also subject to the Adviser's or
Sub-Advisor's ability to predict correctly movements in the direction of the
market. For example, if a particular Fund has hedged against the possibility of
a decline in the market adversely affecting securities held by it and securities
prices increase instead, the Fund will lose part or all of the benefit to the
increased value of its securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in such situations, if
the Fund has insufficient cash, it may have to sell securities to meet daily
variation margin requirements. Such sales of securities may be, but will not
necessarily be, at increased prices which reflect the rising market. The Funds
may have to sell securities at a time when they may be disadvantageous to do so.
V. OPTIONS ON FUTURES CONTRACTS
----------------------------
The Funds may purchase and write options on the futures contracts described
above. A futures option gives the holder, in return for the premium paid, the
right to buy (call) from or sell (put) to the writer of the option a futures
contract at a specified price at any time during the period of the option. Upon
exercise, the writer of, the option is obligated to pay the difference between
the cash value of the futures contract and the exercise price. Like the buyer
or seller of a futures contract, the holder, or writer, of an option has the
right to terminate its position prior to the scheduled expiration of the option
by selling, or purchasing an option of the same series, at which time the person
entering into the closing transaction will realize a gain or loss. A Fund will
be required to deposit initial margin and variation margin with respect to put
and call options on futures contracts written by it pursuant to brokers'
requirements similar to those described above. Net option premiums received
will be included as initial margin deposits.
Investments in futures options involve some of the same considerations that
are involved in connection with investments in future contracts (for example,
the existence of a liquid secondary market). In addition, the purchase or sale
of an option also entails the risk that changes in the value of the underlying
futures contract will not correspond to changes in the value of the option
purchased. Depending on the pricing of the option compared to either the
futures contract upon which it is based, or upon the price of the securities
being hedged, an option may or may not be less risky than ownership of the
futures contract or such securities. In general, the market prices of options
can be expected to be more volatile than the market prices on underlying futures
contract. Compared to the purchase or sale of futures contracts, however, the
purchase of call or put options on futures contracts may frequently involve less
potential risk to the Fund because the maximum amount at risk is the premium
paid for the options (plus transaction costs). The writing of an option on a
futures contract involves risks similar to those risks relating to the sale of
futures contracts.
VI. CURRENCY TRANSACTIONS
---------------------
The Fund may engage in currency transactions in order to hedge the value of
portfolio holdings denominated in particular currencies against fluctuations in
relative value. Currency transactions include forward currency contracts,
currency futures, options on currencies, and currency swaps. A forward currency
contract involves a privately negotiated obligation to purchase or sell (with
delivery generally required) a specific currency at a future date, which may be
any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. A currency swap is an
agreement to exchange cash flows based on the notional difference among two or
more currencies and operates similarly to an interest rate swap as described in
the Statement of Additional Information. The Fund may enter into currency
transactions with counterparties which have received (or the guarantors of the
obligations which have received) a credit rating of A-1 or P-1 by S&P or
B-6
<PAGE>
Moody's, respectively, or that have an equivalent rating from a NRSRO or are
determined to be of equivalent credit quality by the Advisor.
The Fund's dealings in forward currency contracts and other currency
transactions such as futures, options, options on futures and swaps will be
limited to hedging involving either specific transactions or portfolio
positions. Transaction hedging is entering into a currency transaction with
respect to specific assets or liabilities of the Fund, which will generally
arise in connection with the purchase or sale of its portfolio securities or the
receipt of income therefrom. Position hedging is entering into a currency
transaction with respect to portfolio security positions denominated or
generally quoted in that currency.
The Fund will not enter into a transaction to hedge currency exposure to an
extent greater after netting all transactions intended wholly or partially to
offset other transactions, than the aggregate market value (at the time of
entering into the transaction) of the securities held in its portfolio that are
denominated or generally quoted in or currently convertible into such currency,
other than with respect to proxy hedging as described below.
The Fund may also cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which the Fund has or in which the Fund expects
to have portfolio exposure.
To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, the Fund may also engage proxy
hedging. Proxy hedging is often used when the currency to which the Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar.
Proxy hedging entails entering into a commitment or option to sell a currency
whose changes in value are generally considered to be correlated to a currency
or currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, in exchange for U.S. dollars. The amount of the
commitment or option would not exceed the value of the Fund's securities
denominated in correlated currencies. For example, if the Advisor or Sub-
Advisor considers that the Austrian schilling is correlated to the German mark
(the "D-mark"), the Fund holds securities denominated in shillings and the
Advisor or Sub-Advisor believes that the value of the schillings will decline
against the U.S. dollar, the Advisor or Sub-Advisor may enter into a commitment
or option to sell D-marks and buy dollars. Currency hedging involves some of
the same risks and considerations as other transactions with similar
instruments. Currency transactions can result in losses to the Fund if the
currency being hedged fluctuates in value to a degree or in a direction that is
not anticipated. Further, there is the risk that the perceived correlation
between various currencies may not be present or may not be present during the
particular time that the Fund is engaging in proxy hedging. If a Fund enters
into a currency hedging transaction, the Fund will earmark liquid, high grade
assets on the books of the Fund or the Fund's sub-custodian to the extent the
Fund's obligations are not otherwise "covered" through ownership of the
underlying currency.
Currency transactions are subject to risks different from those of other
portfolio transactions. Because currency control is of great importance to the
issuing governments and influences economic planning and policy, purchases and
sales of currency and related instruments can be negatively affected by
government exchange controls, blockages, and manipulations or exchange
restrictions imposed by governments. These can result in losses to the Fund if
it is unable to deliver or receive currency or funds in settlement of
obligations and could also cause hedges it has entered into to be rendered
useless, resulting in full currency exposure as well as incurring transaction
costs. Buyers and sellers of currency futures are subject to the same risks
that apply to the use of futures generally. Further, settlement of a currency
futures contract for the purchase of most currencies must occur at a bank based
in the issuing nation. Trading options on currency futures is relatively new,
and the ability to establish and close to positions on such options is subject
to the maintenance of a liquid market which may not always be available.
Currency exchange rates may fluctuate based on factors extrinsic to that
country's economy.
VII. OTHER MATTERS
-------------
Accounting for futures contracts will be in accordance with generally
accepted accounting principles.
B-7
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
Included in Part A:
Financial Highlights to be filed by amendment.
Included in Part B:
Audited Financial Statements as of June 30, 1998 to be filed by
amendment.
(b) Exhibits:
(1) (a) Declaration of Trust of the Registrant dated August 30, 1989 is
incorporated herein by reference to Exhibit (1) to the Registrant's
Registration Statement on Form N-1A filed with the Commission on
September 1, 1989.
(b) Amendment No. 1 to Declaration of Trust of the Registrant is
incorporated herein by reference to Exhibit (1)(b) to Pre-Effective
Amendment No. 1 to the Registrant's Registration Statement on Form N-
1A filed with the Commission on November 21, 1989.
(c) Amendment No. 2 to Declaration of Trust of the Registrant is
incorporated herein by reference to Exhibit (1)(c) to Post-Effective
Amendment No. 1 to the Registrant's Registration Statement on Form N-
1A filed with the Commission on February 22, 1990.
(d) Amendment No. 3 to the Declaration of Trust is incorporated herein by
reference to Exhibit 1(d) to Post-Effective Amendment No. 20 filed
with the Commission on June 28, 1995.
(e) Certificate of Classification of Shares dated August 30, 1991
pertaining to Class D shares; Class E shares; Class F shares; Class G
shares; Class H shares; and Class I shares is incorporated herein by
reference to Exhibit (1)(d) to Post-Effective Amendment No. 7 to the
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 3, 1992.
(f) Certificate of Classification of Shares pertaining to Class A-1 shares
and Class A-2 shares; Class B-1 shares and Class B-2 shares; Class C-1
shares and Class C-2 shares; Class D-1 shares and Class D-2 shares;
Class E-1 shares and Class E-2 shares; Class F-1 shares and Class F-2
shares; Class G-1 shares and Class G-2 shares; Class H-1 shares and
Class H-2 shares; Class I-1 shares and Class I-2 shares; Class J
shares; Class J-1 shares; and Class J-2 shares; and Class K shares;
Class K-1 shares and Class K-2 shares is incorporated herein by
reference to Exhibit (1)(e) to Post-Effective Amendment No. 7 to the
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 3, 1992.
<PAGE>
(g) Certificate of Classification of Shares pertaining to Class L shares,
Class L-1 shares and Class L-2 shares is incorporated herein by
reference to Exhibit (1)(f) to Post-Effective Amendment No. 10 to the
Registrant's Registration Statement on Form N-1A filed with the
Commission on April 30, 1993.
(h) Certificate of Classification of Shares pertaining to Class M shares,
Class M-1 shares and Class M-2 shares is incorporated herein by
reference to Exhibit (1)(g) to Post-Effective Amendment No. 11 to the
Registrant's Registration Statement on Form N-1A filed with the
Commission on June 29, 1993.
(i) Certificate of Classification of Shares pertaining to Class N shares,
Class N-1 shares and Class N-2 shares is incorporated herein by
reference to Exhibit (1)(h) to Post-Effective Amendment No. 14 to the
Registrant's Registration Statement on Form N-1A filed with the
Commission on December 30, 1993.
(j) Certificate of Classification of Shares pertaining to Class O shares,
Class O-1 shares and Class O-2 shares; Class P shares, Class P-1
shares and Class P-2 shares is incorporated herein by reference to
Exhibit 1(i) to Post-Effective Amendment No. 15 to the Registrant's
Registration Statement on Form N-1A filed with the Commission on
February 28, 1994.
(k) Certificate of Classification of Shares pertaining to Class A-3
shares; Class D-3 shares; Class E-3 shares; Class G-3 shares; Class H-
3 shares; Class I-3 shares; Class J-3 shares; Class K-3 shares; Class
L-3 shares; Class M-3 shares; Class N-3 shares; Class O shares; Class
O-1 shares; Class O-2 shares; Class O-3 shares; Class P shares; Class
P-1 shares; Class P-2 shares and Class P-3 shares is incorporated
herein by reference to Exhibit (1)(j) to Post-Effective Amendment No.
17 to the Registrant's Registration Statement on Form N-1A filed with
the Commission on June 28, 1994.
(l) Certificate of Classification of Shares pertaining to Class D-4
shares, E-4 shares, F-4 shares, G-4 shares, H-4 shares, I-4 shares, K-
4 shares, L-4 shares, M-4 shares, N-4 shares, O-4 shares and P-4
shares is incorporated herein by reference to Exhibit 1(L) to Post-
Effective Amendment No. 20 filed with the Commission on June 28, 1995.
(m) Certificate of Classification of Shares pertaining to Class F-3 for
the Index Fund Class B Shares is incorporated herein by reference to
Exhibit 1(m) to Post-Effective Amendment No. 23 filed with the
Commission on October 28, 1996.
(2) Registrant's Code of Regulations is incorporated herein by reference
to Exhibit (2) to the Registrant's Registration Statement on Form N-1A
filed with the Commission on September 1, 1989.
(3) Not Applicable.
<PAGE>
(4) Registrant's Code of Regulations is incorporated herein by reference
to Exhibit (2) to the Registrant's Registration Statement on Form N-1A
filed with the Commission on September 1, 1989.
(5) Investment Advisory Agreement between Registrant and Munder Capital
Management dated July 2, 1998 is filed herein.
(6) (a) Amended and Restated Distribution Agreement between Registrant
and Funds Distributor, Inc. dated January 21, 1994 is incorporated
herein by reference to Exhibit (6)(h) to Post-Effective Amendment No.
17 to the Registrant's Registration Statement on Form N-1A filed with
the Commission on June 28, 1994.
(b) Amendment dated July 14, 1995 to the Amended and Restated Distribution
Agreement dated January 21, 1994 between Registrant and Funds
Distributor, Inc. is incorporated herein by reference to Exhibit 6(i)
to Post-Effective Amendment No. 23 to the Registrant's Registration
Statement on Form N-1A filed with the Commission on October 28, 1996.
(7) Not Applicable.
(8) (a) Custody Agreement between Registrant and Comerica Bank dated June
13, 1994 with respect to the Money Market Fund, U.S. Treasury Fund,
Tax-Free Money Market Fund, Bond Fund, Income Bond Fund, Intermediate
Bond Fund, Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund,
Michigan Tax-Free Bond Fund, Core Growth Fund, Growth Stock Fund,
Small Company Growth Stock Fund, International Stock Fund, Indexed
Stock Fund, Income Stock Fund, and Balanced Fund is incorporated
herein by reference to Exhibit 8(k) to Post-Effective Amendment No. 23
to the Registrant's Registration Statement on Form N-1A filed with the
Commission of October 28, 1996.
(b) Form of Amendment dated May 6, 1997 to Custody Agreement dated June
13, 1994 is incorporated herein by reference to Exhibit 8(m) to Post-
Effective Amendment No. 24 to the Registrant's Registration Statement
on Form N-1A filed with the Commission on August 29, 1997.
(c) Form of Sub-Custodian Contract among Registrant, Comerica Bank and
State Street Bank and Trust Company dated October 1, 1997 is filed
herein.
(9) (a) Administration Agreement dated October 31, 1997 by and between
State Street Bank and Trust Company and The Munder Funds Trust is
filed herein.
(b) Transfer Agency and Registrar Agreement between The Munder Funds Trust
and The Shareholder Services Group, Inc., dated June 28, 1995 is
incorporated herein by reference to Exhibit 9(y) to Post-Effective
Amendment No. 23 to the Registrant's Registration Statement on Form N-
1A filed with the Commission on October 28, 1996.
<PAGE>
(c) Form of Amendment dated February 4, 1997 to the Transfer Agency and
Registrar Agreement dated June 28, 1995 is incorporated herein by
reference to Exhibit 9 (bb) to Post-Effective Amendment No. 24 to the
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 29, 1997.
(d) Form of Amendment dated May 6, 1997 to the Transfer Agency and
Registrar Agreement dated June 28, 1995 is incorporated herein by
reference to Exhibit 9 (cc) to Post-Effective Amendment No. 24 to the
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 29, 1997.
(e) Amendment No. 1 dated June 1, 1998 to the Transfer Agency and
Registrar Agreement dated June 28, 1995 is filed herein.
(f) Amendment No. 2 dated June 1, 1998 to Transfer Agency and Registrar
Agreement dated June 28, 1995 is filed herein.
(g) Amendment No. 3 dated June 1, 1998 to Transfer Agency and Registrar
Agreement dated June 28, 1995 is filed herein.
(h) Agreement and Plan of Reorganization by and among St. Clair Fixed
Income Fund, Inc.; St. Clair Tax-Free Fund, Inc.; and Ambassador Funds
dated September 30, 1992 is incorporated herein by reference to
Exhibit (9)(t) to Post-Effective Amendment No. 11 to the Registrant's
Registration Statement on Form N-1A filed with the Commission on June
29, 1993.
(i) Shareholder Servicing Plan for Retail A Shares is incorporated herein
by reference to Exhibit (9)(cc) to Post-Effective Amendment No. 17 to
the Registrant's Registration Statement on Form N-1A filed with the
Commission on June 28, 1994.
(10) Opinion and Consent of Counsel is incorporated by reference to the
Rule 24f-2 Notice filed on August 28, 1997, Accession Number
0000927405-97-000310.
(11) (a) Consent of Ernst & Young LLP to be filed by amendment.
(b) Powers of Attorney are filed herein.
(c) Certified Resolution of Board Authorizing Signature on behalf of
Registrant pursuant to Power of Attorney is filed herein.
(12) Not Applicable.
(13) Purchase Agreement between Registrant and Shearson Lehman Hutton Inc.
dated November 13, 1989 is incorporated herein by reference to Exhibit
(13) to Post-Effective Amendment No. 2 to the Registrant's
Registration Statement on Form N-1A filed with the Commission on
October 1, 1990.
<PAGE>
(14) Not Applicable.
(15) (a) Amended and Restated Distribution Agreement and Service Plan -
Class A Shares, dated January 21, 1994, is incorporated herein by
reference to Exhibit 15(f) of Post-Effective Amendment No. 23 to the
Registrant's Registration Statement on Form N-1A filed with the
Commission on October 28, 1996.
(b) Distribution and Servicing Agreement dated February 10, 1994 is
incorporated herein by reference to Exhibit 15(g) of Post-Effective
Amendment No. 23 to the Registrant's Registration Statement on Form N-
1A filed with the Commission on October 28, 1996.
(c) Form of Class B Shares Distribution and Service Plan is incorporated
herein by reference to Exhibit 15(h) of Post-Effective Amendment No.
23 to the Registrant's Registration Statement on Form N-1A filed with
the Commission on October 28, 1996.
(d) Form of Class B Shares Distribution and Servicing incorporated herein
by reference to Exhibit 15(i) of Post-Effective Amendment No. 23 to
the Registrant's Registration Statement on Form N-1A filed with the
Commission on October 28, 1996.
(e) Form of Class C Shares Distribution and Service Plan is incorporated
herein by reference to Exhibit 15(j) of Post-Effective Amendment No.
23 to the Registrant's Registration Statement on Form N-1A filed with
the Commission on October 28, 1996.
(f) Form of Class C Shares Distribution and Servicing Agreement
incorporated herein by reference to Exhibit 15(k) of Post-Effective
Amendment No. 23 to the Registration Statement on Form N-1A filed with
the Commission on October 28, 1996.
(g) Service Plan dated July 31, 1995 is incorporated herein by reference
to Exhibit 15(l) of Post-Effective Amendment No. 23 to the
Registrant's Registration Statement on Form N-1A filed with the
Commission on October 28, 1996.
(h) Form of Servicing Agreement (Class K Shares) is incorporated herein by
reference to Exhibit 15(m) of Post-Effective Amendment No. 23 to the
Registrant's Registration Statement on Form N-1A filed with the
Commission on October 28, 1996.
(i) Amended and Restated Service Plan for Class K Shares is incorporated
herein by reference to Exhibit 15(n) of Post-Effective Amendment No.
24 to the Registrant's Registration Statement on Form N-1A filed with
the Commission on August 29, 1997.
(16) Schedules for computation of performance quotations to be filed by
amendment.
(17) Financial Data Schedules to be filed by amendment.
<PAGE>
(18) Form of Amended and Restated Multi-Class Plan is incorporated herein by
reference to Exhibit 18 of Post-Effective Amendment No. 24 to the
Registrant's Registration Statement on Form N-1A filed with the Commission
on August 29, 1997.
ITEM 25. Persons Controlled by or under Common Control with Registrant
Not Applicable.
ITEM 26. Number of Holders of Securities
The following information is as of July 29, 1998 for Class A Shares
(formerly, Retail A Shares), Class B Shares (formerly, Retail B Shares), Class K
Shares (formerly, Investor Shares) and Class Y Shares (formerly, Fiduciary
Shares):
<TABLE>
<CAPTION>
Class A Class B Class C Class K Class Y
<S> <C> <C> <C> <C> <C>
Accelerating Growth Fund 338 26 4 2 16
Balanced Fund 39 34 3 2 9
Growth & Income Fund 174 74 34 61 28
Index 500 Fund 2626 3386 -- 18 58
International Equity Fund 291 35 10 8 44
Small Company Growth Fund 785 461 196 79 142
Bond Fund 81 6 3 2 19
Intermediate Bond Fund 243 20 3 33 24
U.S. Government Income Fund 77 12 2 9 12
Michigan Triple Tax-Free Bond Fund 27 14 4 1 6
Tax-Free Bond Fund 32 5 2 4 6
Tax-Free Intermediate Bond Fund 100 2 2 19 5
Cash Investment Fund 198 -- -- 90 18
Tax-Free Money Market Fund 30 -- -- 20 12
U.S. Treasury Money Market Fund 7 -- -- 3 7
</TABLE>
ITEM 27. Indemnification
Indemnification of Registrant's principal underwriter against certain
losses is provided for in Section V of the Distribution Agreement incorporated
herein by reference as Exhibit 6 (e) hereto. Indemnification of The Shareholder
Services Group in its capacity as administrator is provided for in Section 13 of
the Administration Agreement incorporated herein by reference as Exhibit 9(h)
hereto. Indemnification of Registrant's Custodian and Transfer Agent is provided
for, respectively, in Section 22 of the Custodian Agreement incorporated herein
by reference as Exhibit 8(l) hereto and Section 17 of the Transfer Agency
Agreement incorporated herein by reference as Exhibit 9(w) hereto. Registrant
has obtained a major insurance carrier a trustees' and officers' liability
policy covering certain types of errors and omissions. In addition, Section 9.3
of the Registrant's Agreement and Declaration of Trust incorporated herein by
reference as Exhibit 1(a) hereto provides as follows:
Indemnification of Trustees, Officers, Representatives and Employees. The
Trust shall indemnify each of its Trustees against all liabilities and expenses
(including amounts paid in satisfaction of judgments, in compromise, as fines
and penalties, and as counsel fees) reasonably incurred by him in connection
with the defense or disposition of any action, suit or other
<PAGE>
proceeding, whether civil or criminal in which he may be involved or with which
he may be threatened, while as a Trustee or thereafter, by reason of his being
or having been such a Trustee except with respect to any matter as to which he
shall have been adjudicated to have acted in bad faith, willful misfeasance,
gross negligence or reckless disregard of his duties, provided that as to any
matter disposed of by a compromise payment by such person, pursuant to a consent
decree or otherwise, no indemnification either for said payment or for any other
expenses shall be provided unless the Trust shall have received a written
opinion from independent legal counsel approved by the Trustees to the effect
that if either the matter of willful misfeasance, gross negligence or reckless
disregard of duty, or the matter of bad faith had been adjudicated, it would in
the opinion of such counsel have been adjudicated in favor of such person. The
rights accruing to any person under these provisions shall not exclude any other
right to which he may be lawfully entitled, provided that no person may satisfy
any right of indemnity or reimbursement hereunder except out of the property of
the Trust. The Trustees may make advance payments in connection with the
indemnification under this Section 9.3, provided that the indemnified person
shall have given a written undertaking to reimburse the Trust in the event it is
subsequently determined that he is not entitled to such indemnification.
The Trustees shall indemnify officers, representatives and employees of the
Trust to the same extent that Trustees are entitled to indemnification pursuant
to this Section 9.3.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of expenses incurred or
paid by a trustee, officer or controlling person of Registrant in the successful
defense of any action, suit or proceeding) is asserted by such trustee, officer
or controlling person in connection with the securities being registered,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
Section 9.6 of the Registrant's Agreement and Declaration of Trust,
incorporated herein by reference as Exhibit 1(a), also provides for the
indemnification of shareholders of the Registrant. Section 9.6 states as
follows:
Indemnification of Shareholders. In case any Shareholder or former
Shareholder shall be held to be personally liable solely by reason of his being
or having been a Shareholder and not because of his acts or omissions or for
some other reason, the Shareholder or former Shareholder (or his heirs,
executors, administrators or other legal representatives or, in the case of a
corporation or other entity, its corporate or other general successor) shall be
entitled out of the assets belonging to the classes of Shares with the same
alphabetical designation as that of the Shares owned by such Shareholder to be
held harmless from and indemnified against all loss and expense arising from
such liability. The Trust shall, upon request by the Shareholder, assume the
defense of any claim made against any Shareholder for any act or obligations of
the Trust and satisfy any judgment thereon from such assets.
<PAGE>
ITEM 28. Business and Other Connections of Investment Advisor
(a) Munder Capital Management (the "Advisor") performs investment advisory
services for Registrant and other investment companies and institutional
and individual investors.
MUNDER CAPITAL MANAGEMENT
<TABLE>
<CAPTION>
NAME POSITION WITH ADVISOR
<S> <C>
Old MCM, Inc. Partner
Munder Group LLC Partner
WAM Holdings, Inc. Partner
Lee P. Munder President and Chairman
Leonard J. Barr, II Senior Vice President and Director of Research
Clark Durant Vice President and Co-Director of The Private Management Group
Terry H. Gardner Vice President and Chief Financial Officer
Elyse G. Essick Vice President and Director of Client Services
Sharon E. Fayolle Vice President and Director of Money Market Trading
Otto G. Hinzmann Vice President and Director of Equity Portfolio Management
Anne K. Kennedy Vice President and Director of Corporate Bond Trading
Richard R. Mullaney Vice President and Director of The Private Management Group
Ann F. Putallaz Vice President and Director of Fiduciary Services
Peter G. Root Vice President and Director of Government Securities Trading
Lisa A. Rosen General Counsel and Director of Mutual Fund Operations
James C. Robinson Vice President and Chief Investment Officer/Fixed Income
Gerald L. Seizert Chief Executive Officer and Chief Investment Officer/Equity
Paul D. Tobias Chief Executive Officer and Chief Operating Officer
</TABLE>
For further information relating to the Investment Advisor's officers, reference
is made to Form ADV filed under the Investment Advisers Act of 1940 by Munder
Capital Management, SEC File No. 801-32415.
ITEM 29. Principal Underwriters
(a) Funds Distributor, Inc. ("FDI"), located at 60 State Street, Suite
1300, Boston, Massachusetts 02109. FDI is an indirect wholly-owned
subsidiary of Boston Institutional Group, Inc., a holding company, all
of whose outstanding shares are owned by key employees. FDI is a
broker dealer registered under the Securities Exchange Act of 1934, as
amended. FDI acts as principal underwriter of the following investment
companies other than the Registrant:
<TABLE>
<S> <C>
American Century California Tax-Free and Municipal JP Morgan Institutional Funds
Funds
American Century Capital Portfolios, Inc. JP Morgan Funds
American Century Government Income Trust JPM Series Trust
American Century International Bond Funds JPM Series Trust II
American Century Investment Trust LaSalle Partners Funds, Inc.
American Century Municipal Trust Monetta Fund, Inc.
American Century Mutual Funds, Inc. Monetta Trust
American Century Premium Reserves, Inc. The Montgomery Funds
American Century Quantitative Equity Funds The Montgomery Funds II
</TABLE>
<PAGE>
<TABLE>
<S> <C>
American Century Strategic Asset Allocations, Inc. The Munder Framlington Funds Trust
American Century Target Maturities Trust The Munder Funds, Inc.
American Century Variable Portfolios, Inc. The Munder Funds Trust
American Century World Mutual Funds, Inc. National Investors Cash Management Fund, Inc.
BJB Investment Funds Orbitex Group of Funds
The Brinson Funds St. Clair Funds, Inc.
Dresdner RCM Capital Funds, Inc. The Skyline Funds
Dresdner RCM Equity Funds, Inc. Waterhouse Investor Family of Funds, Inc.
Founders Funds, Inc. WEBS Index Fund, Inc.
Harris Insight Funds Trust HT Insight Funds, Inc. d/b/a Harris Insight Funds
</TABLE>
(b) The following is a list of the executive officers, directors and
partners of Funds Distributor, Inc.
<TABLE>
<S> <C>
Director, President and Chief Executive Officer Marie E. Connolly
Executive Vice President Richard W. Ingram
Executive Vice President Donald R. Roberson
Executive Vice President George A. Rio
Executive Vice President William S. Nichols
Senior Vice President, General Counsel, Chief Compliance Officer, Secretary Margaret W. Chambers
and Clerk
Senior Vice President Michael S. Petrucelli
Director, Senior Vice President, Treasurer and Chief Financial Officer Joseph F. Tower, III
Senior Vice President Paula R. David
Senior Vice President Allen B. Closser
Senior Vice President Bernard A. Whalen
Chairman and Director William J. Nutt
</TABLE>
(c) Not Applicable.
ITEM 30. Location of Accounts and Records
(1) Munder Capital Management, 480 Pierce Street or 255 East Brown Street,
Birmingham, Michigan 48009 (records relating to its functions as
investment advisor);
(2) Comerica Bank, One Detroit Center, 500 Woodward Avenue, Detroit,
Michigan 48226 (records relating to its functions as custodian);
(3) Funds Distributor, Inc., 60 State Street, Boston, Massachusetts 02109
(records relating to its functions as distributor);
(4) First Data Investor Services Group, Inc., 53 State Street, Exchange
Place, Boston, Massachusetts or 4400 Computer Drive, Westborough,
Massachusetts 01581 (records relating to its functions as transfer
agent); and
(5) State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 or 150 Newport Avenue, North Quincy, Massachusetts
02171 (records relating to its function as administrator and
subcustodian).
<PAGE>
ITEM 31. Management Services
Not Applicable.
ITEM 32. Undertakings
(a) Not Applicable.
(b) Not Applicable.
(c) Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered a copy of the Registrant's most recent annual
report to shareholders, upon request without charge.
(d) Registrant hereby undertakes to call a meeting of its shareholders
for the purpose of voting upon the question of removal of a trustee or
trustees of Registrant when requested in writing to do so by the
holders of at least 10% of Registrant's outstanding shares. Registrant
undertakes further, in connection with the meeting, to comply with the
provisions of Section 16(c) of the Investment Company Act of 1940, as
amended, relating to communications with the shareholders of certain
common-law trusts.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this
Post-Effective Amendment No. 26 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Quincy
and The Commonwealth of Massachusetts, on the 28th day of August, 1998.
THE MUNDER FUNDS TRUST
By: *
---------------------------------
Lee P. Munder
*By: /s/ Cynthia Surprise
---------------------------------
Cynthia Surprise
as Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 26 to the Registration Statement has been signed by the
following persons in the capacities and on the date indicated:
<TABLE>
<S> <C> <C>
Signatures Title Date
- ---------- ----- ----
*_____________________ Director and August 28, 1998
Lee P. Munder President
*_____________________ Director August 28, 1998
Charles W. Elliott
*_____________________ Director August 28, 1998
Joseph E. Champagne
*_____________________ Director August 28, 1998
Thomas B. Bender
*_____________________ Director August 28, 1998
Thomas D. Eckert
*_____________________ Director August 28, 1998
John Rakolta, Jr.
*_____________________ Director August 28, 1998
David J. Brophy
*_____________________ Vice President, August 28, 1998
Terry H. Gardner Treasurer and
Chief Financial Officer
</TABLE>
*By: /s/ Cynthia Surprise
---------------------------
Cynthia Surprise
as Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ---------- -----------
<S> <C>
5 Investment Advisory Agreement between Registrant and Munder
Capital Management
8(c) Form of Sub-Custodian Contract among Registrant, Comerica Bank
and State Street Bank and Trust Company
9(a) Administration Agreement between Registrant and State Street Bank
and Trust Company
9(e) Amendment No. 1 to Transfer Agency and Registrar Agreement
between Registrant and First Data Investor Services Group, Inc.
9(f) Amendment No. 2 to Transfer Agency and Registrar Agreement
between Registrant and First Data Investor Services Group, Inc.
9(g) Amendment No. 3 to Transfer Agency and Registrar Agreement
between Registrant and First Data Investor Services Group, Inc.
11(b) Power of Attorney
11(c) Secretary's Certificate
</TABLE>
<PAGE>
EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made this 2nd day of July, 1998, between The Munder Funds Trust
(the "Trust") on behalf of each Fund (collectively, the "Funds") set forth on
Schedule A attached hereto, and Munder Capital Management (the "Advisor"), a
Delaware partnership.
WHEREAS, the Trust is a Massachusetts business trust authorized to issue
shares in series and is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), and each
Fund is a series of the Trust;
WHEREAS, the Advisor is registered as an investment advisor under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, the Trust wishes to retain the Advisor to render investment
advisory services to the Funds, and the Advisor is willing to furnish such
services to the Funds;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Trust and the Advisor as follows:
1. APPOINTMENT
(a) The Trust hereby appoints the Advisor to act as investment advisor to
the Funds for the periods and on the terms set forth herein. The Advisor
accepts the appointment and agrees to furnish the services set forth herein for
the compensation provided herein.
(b) In the event that the Trust establishes one or more portfolios other
than the Funds listed on Schedule A attached hereto, with respect to which it
desires to retain the Investment Advisor to act as investment advisor hereunder,
it shall notify the Investment Advisor in writing. If the Investment Advisor is
willing to render such services under this Agreement it shall notify the Trust
in writing whereupon such portfolio shall become a Fund hereunder and shall be
subject to the provisions of this Agreement to the same extent as the Fund named
above except to the extent that said provisions (including those relating to the
compensation payable by the Fund to the Investment Advisor) are modified with
respect to such Fund in writing by the Trust and the Investment Advisor at the
that time.
2. SERVICES AS INVESTMENT ADVISOR
Subject to the general supervision and direction of the Board of Trustees
of the Trust, the Advisor will (a) provide overall management to the Funds in
accordance with each Fund's investment objective and policies as stated in the
Fund's Prospectus and the Statement of Additional Information filed with the
Securities and Exchange Commission, as they may be amended from time to time;
(b) make investment decisions for the Funds; (c) oversee the placement of
purchase and sale orders on behalf of the Funds; (d) employ professional
portfolio managers and securities analysts to provide research services to the
Funds; (e) maintain books and records with respect to each Fund's securities
transactions; and (f) provide periodic and special reports to the Board of
Trustees of the Trust, as requested. In providing those services, the Advisor
will provide the Funds with ongoing research, analysis, advice and judgments
regarding individual investments, general economic conditions and trends and
long-range investment policy. In addition, the Advisor will furnish the Funds
with whatever
<PAGE>
statistical information the Funds may reasonably request with
respect to the securities that the Funds may hold or contemplate purchasing.
The Advisor further agrees that, in performing its duties hereunder, it
will:
(a) comply with the 1940 Act and all rules and regulations thereunder and
under the Advisers Act, the Internal Revenue Code of 1986, as amended (the
"Code"), and all other applicable federal and state law and regulations, and
with any applicable procedures adopted by the Trustees;
(b) use reasonable efforts to manage each Fund so that it will qualify, and
continue to qualify, as a regulated investment company under Subchapter M of the
Code and regulations issued thereunder;
(c) maintain books and records with respect to each Fund's securities
transactions, render to the Board of Trustees of the Trust such periodic and
special reports as the Board may reasonably request, and keep the Trustees
informed of developments materially affecting each Fund's portfolio;
(d) make available to the Funds' administrator and the Trust, promptly upon
their request, such copies of its investment records and ledgers with respect to
the Funds as may be required to assist the administrator and the Trust in their
compliance with applicable laws and regulations. The Advisor will furnish the
Trustees with such periodic and special reports regarding the Funds as they may
reasonably request; and
(e) immediately notify the Trust in the event that the Advisor or any of
its affiliates: (1) becomes aware that it is subject to a statutory
disqualification that prevents the Advisor from serving as investment advisor
pursuant to this Agreement; or (2) becomes aware that it is the subject of an
administrative proceeding or enforcement action by the Securities and Exchange
Commission or other regulatory authority. The Advisor further agrees to notify
the Trust immediately of any material fact known to the Advisor respecting or
relating to the Advisor that is not contained in the Trust's Registration
Statement regarding the Funds, or any amendment or supplement thereto, but that
is required to be disclosed therein, and of any statement contained therein that
becomes untrue in any material respect.
3. DOCUMENTS
The Trust has delivered properly certified or authenticated copies of each
of the following documents to the Advisor and will deliver to it all future
amendments and supplements thereto, if any:
(a) certified resolution of the Board of Trustees of the Trust authorizing
the appointment of the Advisor and approving the form of this Agreement;
(b) the Registration Statement describing the Fund as filed with the
Securities and Exchange Commission and any amendments thereto; and
(c) exhibits, powers of attorneys, certificates and any and all other
documents relating to or filed in connection with the Registration Statement
described above.
2
<PAGE>
4. BROKERAGE
In selecting brokers or dealers to execute transactions on behalf of the
Funds, the Advisor will use its best efforts to seek the best overall terms
available. In assessing the best overall terms available for any Fund
transaction, the Advisor will consider all factors it deems relevant, including,
but not limited to, the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer and the reasonableness of the commission, if any, for the specific
transaction and on a continuing basis. In selecting brokers-dealers to execute
a particular transaction, and in evaluating the best overall terms available,
the Advisor is authorized to consider the brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of 1934,
as amended (the "1934 Act")) provided to the Funds and/or other accounts over
which the Advisor or its affiliates exercise investment discretion. The parties
hereto acknowledge that it is desirable for the Trust that the Advisor have
access to supplemental investment and market research and security and economic
analysis provided by brokers-dealers who may execute brokerage transactions at a
higher cost to the Trust than may result when allocating brokerage to other
brokers on the basis of seeking the most favorable price and efficient
execution. Therefore, the Advisor may cause the Fund to pay a broker-dealer
which furnishes brokerage and research services a higher commission than that
which might be charged by another broker-dealer for effecting the same
transaction, provided that the Advisor determines in good faith that such
commission is reasonable in relation the value of the brokerage and research
services provided by such broker-dealer, viewed in terms of either the
particular transaction or the overall responsibilities of the Advisor to the
Fund. It is understood that the services provided by such brokers may be useful
to the Advisor in connection with the Advisor's services to other clients. In
accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T) thereunder and
subject to any other applicable laws and regulations, the Advisor and its
affiliates are authorized to effect portfolio transactions for the Funds and to
retain brokerage commissions on such transactions.
5. RECORDS
The Advisor agrees to maintain and to preserve for the periods prescribed
under the 1940 Act any such records as are required to be maintained by the
Advisor with respect to the Funds by the 1940 Act. The Advisor further agrees
that all records which it maintains for the Funds are the property of the Funds
and it will promptly surrender any of such records upon request.
6. STANDARD OF CARE
The Advisor shall exercise its best judgment in rendering the services
under this Agreement. The Advisor shall not be liable for any error of judgment
or mistake of law or for any loss suffered by a Fund or the Funds' shareholders
in connection with the matters to which this Agreement relates, provided that
nothing herein shall be deemed to protect or purport to protect the Advisor
against any liability to a Fund or to its shareholders to which the Advisor
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or by reason of the
Advisor's reckless disregard of its obligations and duties under this Agreement.
As used in this Section 6, the term "Advisor" shall include any officers,
Trustees, employees, or other affiliates of the Advisor performing services with
respect to a Fund.
3
<PAGE>
7. COMPENSATION
In consideration of the services rendered pursuant to this Agreement, each
Fund will pay the Advisor a fee as set forth on Schedule B attached hereto.
This fee shall be computed and accrued daily and payable monthly; however, with
respect to any Fund for which the effective date of this Agreement is prior to
November 30, 1998, the fee shall be maintained in an interest-bearing escrow
account until such time as shareholders of the Fund approve the payment of fees
pursuant to this agreement. If shareholders do not approve such payment of fees
on or before November 30, 1998, the balance in the escrow account shall be paid
to the Fund. For the purpose of determining fees payable to the Advisor, the
value of a Fund's average daily net assets shall be computed at the times and in
the manner specified in the Fund's Prospectus or Statement of Additional
Information.
8. EXPENSES
The Advisor will bear all expenses in connection with the performance of
its services under this Agreement and will bear the costs and expenses payable
to Sub-Advisors under the Sub-Advisory Agreements. Each Fund will bear certain
other expenses to be incurred in its operation, including: taxes, interest,
brokerage fees and commissions, if any, fees of Trustees of the Trust who are
not officers, Trustees or employees of the Advisor or any Sub-Advisor;
Securities and Exchange Commission fees and state blue sky fees; charges of
custodians and transfer and dividend disbursing agents; the Fund's proportionate
share of insurance premiums; outside auditing and legal expenses; costs of
maintenance of the Fund's existence; costs attributable to investor services,
including, without limitation, telephone and personal expenses; charges of an
independent pricing service, costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes and for
distribution to existing shareholders; costs of shareholders' reports and
meetings of the shareholders of the Fund and of the officers of Board of
Trustees of the Trust; and any extraordinary expenses.
9. SERVICES TO OTHER COMPANIES OR ACCOUNTS
The investment advisory services of the Advisor to the Funds under this
Agreement are not to be deemed exclusive, and the Advisor, or any affiliate
thereof, shall be free to render similar services to other investment companies
and clients (whether or not their investment objective and policies are similar
to those of a Fund) and to engage in activities so long as its services
hereunder are not impaired thereby.
10. DURATION AND TERMINATION
This Agreement shall become effective on the date of this Agreement
provided that with respect to any Fund, this Agreement shall not take effect
unless it has been approved (a) by a vote of a majority of the Board of Trustees
of the Trust, including a majority of those Trustees who are not "interested
persons" (as defined in the 1940 Act) of any party to this Agreement cast in
person at a meeting called for the purpose of voting on such approval and (b) by
vote of a majority of that Fund's outstanding voting securities and shall
continue in effect with respect to the Fund, unless sooner terminated as
provided herein, for two years from such date and shall continue from year to
year thereafter, provided each continuance is specifically approved at least
annually by (i) the vote of a majority of the Board of Trustees of the Trust or
(ii) a vote of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities, provided that in either event the continuance is
also approved by a majority of the Board of Trustees who are not "interested
persons" (as defined in the 1940 Act) of any party to this
4
<PAGE>
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. This Agreement is terminable with respect to the Funds, or any
Fund, without penalty, on sixty (60) days' written notice by the Board of
Trustees of the Trust or by vote of the holders of a "majority" (as defined in
the 1940 Act) of the shares of the affected Funds or upon ninety (90) days'
written notice by the Advisor. Termination of this Agreement with respect to any
given Fund, shall in no way affect the continued validity of this Agreement or
the performance thereunder with respect to any other Fund. This Agreement will
be terminated automatically in the event of its "assignment" (as defined in the
1940 Act).
11. AMENDMENT
No provision of this Agreement may be changed, waived or discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement with respect to any Fund shall be
effective until approved by an affirmative vote of (i) a majority of the
outstanding voting securities of that Fund, and (ii) a majority of the Trustees
of the Trust, including a majority of Trustees who are not "interested persons"
(as defined in the 1940 Act) of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval, if such approval is
required by applicable law.
12. USE OF NAME
It is understood that the name of Munder Capital Management or any
derivative thereof or logo associated with that name is the valuable property of
the Advisor and its affiliates, and that the Trust and each Fund have the right
to use such name (or derivable or logo) only so long as this Agreement shall
continue with respect to a given Fund. Upon termination of this Agreement, or
upon termination of this Agreement with respect to a given Fund, the Trust and
any affected Fund shall forthwith cease to use such name (or derivable or logo)
and the Trust shall promptly amend its Articles of Incorporation to change the
Fund name to comply herewith.
The words "The Munder Funds Trust" and "Trustees" or "Board of Trustees"
used herein refer respectively to the Trust created and the Trustees, as
trustees of the Trust but not individually or personally acting from time to
time under a Declaration of Trust dated August 30, 1989 which is hereby referred
to and a copy of which is on file at the office of the Secretary of The
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of "The Munder Framlington Funds Trust" entered into the name or on
behalf thereof by any of the Trustees, officers, representatives or agents of
the Trust are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders, officers, representatives or agents of
the Trust personally, but bind only the Trust Property, and all persons dealing
with any class of shares of the Trust must look solely to the Trust Property
belonging to such class for the enforcement of any claims against the Trust.
13. MISCELLANEOUS
(a) This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof.
(b) Titles or captions of sections in this Agreement are inserted only as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or the intent of any provisions thereof.
5
<PAGE>
(c) This Agreement may be executed in several counterparts, all of which
together shall for all purposes constitute one Agreement, binding on all the
parties.
(d) This Agreement and the rights and obligations of the parties hereunder
shall be governed by, and interpreted, construed and enforced in accordance with
the laws of the State of Michigan.
(e) If any provisions of this Agreement or the application thereof to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder of this
Agreement or the application of such provision to such person circumstance,
other than these as to which it so determined to be invalid or unenforceable,
shall not be affected thereby, and each provision hereof shall be valid and
shall be enforced to the fullest extent permitted by law.
(f) Notices of any kind to be given to the Advisor by the Trust shall be in
writing and shall be duly given if mailed or delivered to the Advisor at 480
Pierce Street, Birmingham, Michigan 48009, or at such other address or to such
individual as shall be specified by the Advisor to the Trust. Notices of any
kind to be given to the Trust by the Advisor shall be in writing and shall be
duly given if mailed or delivered to 480 Pierce Street, Birmingham, Michigan
48009, or at such the address to such individual as shall be specified by the
Trust to the Advisor.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first above
written.
THE MUNDER FUNDS TRUST
By: /s/ Lisa Anne Rosen
--------------------
Name: Lisa Anne Rosen
MUNDER CAPITAL MANAGEMENT
By: /s/ Terry H. Gardner
---------------------
Name: Terry H. Gardner
7
<PAGE>
SCHEDULE A
Munder Accelerating Growth Fund
Munder Balanced Fund
Munder Bond Fund
Munder Cash Investment Fund
Munder Growth & Income Fund
Munder Index 500 Fund
Munder Intermediate Bond Fund
Munder International Equity Fund
Munder Michigan Triple Tax-Free Bond Fund
Munder Small Company Growth Fund
Munder Tax-Free Bond Fund
Munder Tax-Free Intermediate Bond Fund
Munder Tax-Free Money Market Fund
Munder U.S. Government Income Fund
Munder U.S. Treasury Money Market Fund
8
<PAGE>
SCHEDULE B
<TABLE>
<CAPTION>
FUND ANNUAL FEES (AS A PERCENTAGE OF
AVERAGE DAILY NET ASSETS)
<S> <C>
Munder Accelerating Growth Fund 0.75%
Munder Balanced Fund 0.65%
Munder Bond Fund 0.50%
Munder Cash Investment Fund 0.35%
Munder Growth & Income Fund 0.75%
Munder Index 500 Fund 0.20% of the first $250 million; 0.12% of
the next $250 million; 0.07% of net assets
in excess of $500 million
Munder International Equity Fund 0.75%
Munder Intermediate Bond Fund 0.50%
Munder Michigan Triple Tax-Free Bond Fund 0.50%
Munder Small Company Growth Fund 0.75%
Munder Tax-Free Bond Fund 0.50%
Munder Tax-Free Intermediate Bond Fund 0.50%
Munder Tax-Free Money Market Fund 0.35%
Munder U.S. Government Income Fund 0.50%
Munder U.S. Treasury Money Market Fund 0.35%
</TABLE>
9
<PAGE>
EXHIBIT 8(c)
FORM OF
SUB-CUSTODIAN CONTRACT
Among
THE MUNDER FUNDS TRUST,
COMERICA BANK
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Employment of Sub-Custodian and Property to be Held By
It............................................................................ 1
2. Duties of the Sub-Custodian with Respect to Property
of the Fund Held by the Sub-Custodian in the United States.................... 2
2.1 Holding Securities...................................................... 2
2.2 Delivery of Securities.................................................. 2
2.3 Registration of Securities.............................................. 4
2.4 Bank Accounts........................................................... 4
2.5 Availability of Federal Funds........................................... 5
2.6 Collection of Income.................................................... 5
2.7 Payment of Fund Monies.................................................. 5
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased.................................................... 6
2.9 Appointment of Agents................................................... 7
2.10 Deposit of Fund Assets in U.S. Securities System........................ 7
2.11 Fund Assets Held in the Sub-Custodian's Direct
Paper System............................................................ 8
2.12 Segregated Account...................................................... 9
2.13 Ownership Certificates for Tax Purposes................................. 9
2.14 Proxies................................................................. 9
2.15 Communications Relating to Portfolio
Securities.............................................................. 10
3. Duties of the Sub-Custodian with Respect to Property of
the Fund Held Outside of the United States.................................... 10
3.1 Appointment of Foreign Sub-Sub-Custodians............................... 10
3.2 Assets to be Held....................................................... 10
3.3 Foreign Securities Systems.............................................. 10
3.4 Holding Securities...................................................... 11
3.5 Agreements with Foreign Banking Institutions............................ 11
3.6 Access of Independent Accountants of the Fund........................... 11
3.7 Reports by Sub-Sub-Custodian............................................ 11
3.8 Transactions in Foreign Custody Account................................. 11
3.9 Liability of Foreign Sub-Sub-Custodians................................. 12
3.10 Liability of Sub-Custodian.............................................. 12
3.11 Reimbursement for Advances.............................................. 12
3.12 Monitoring Responsibilities............................................. 13
3.13 Branches of U.S. Banks.................................................. 13
3.14 Tax Law................................................................. 13
</TABLE>
<PAGE>
<TABLE>
<S> <C>
4. Payments for Sales or Repurchases or Redemptions
of Shares of the Fund...................................................... 13
5. Proper Instructions........................................................ 14
6. Actions Permitted Without Express Authority................................ 14
7. Evidence of Authority...................................................... 15
8. Duties of Sub-Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income.......................... 15
9. Records.................................................................... 15
10. Opinion of Fund's Independent Accountants.................................. 15
11. Reports to Fund by Independent Public Accountants.......................... 16
12. Compensation of Sub-Custodian.............................................. 16
13. Responsibility of Sub-Custodian............................................ 16
14. Effective Period, Termination and Amendment................................ 18
15. Successor Sub-Custodian.................................................... 18
16. Interpretive and Additional Provisions..................................... 19
17. Additional Funds........................................................... 19
18. Massachusetts Law to Apply................................................. 19
19. Prior Contracts............................................................ 20
20. Reproduction of Documents.................................................. 20
21. Shareholder Communications Election........................................ 20
22. Use of Fund's Name......................................................... 20
</TABLE>
<PAGE>
SUB-CUSTODIAN CONTRACT
----------------------
This Contract among The Munder Funds Trust, a business trust organized and
existing under the laws of The Commonwealth of Massachusetts, having its
principal place of business at 480 Pierce Street, Birmingham, Michigan 48009,
hereinafter called the "Fund", Comerica Bank, a Michigan banking corporation
having a principal place of business at 411 West Lafayette, Detroit, Michigan
48226, hereinafter called the "Custodian" and State Street Bank and Trust
Company, a Massachusetts trust company, having its principal place of business
at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Sub-Custodian",
WITNESSETH:
WHEREAS, the Fund has appointed the Custodian as custodian of its assets;
WHEREAS, the Custodian and the Fund desire to appoint the Sub-Custodian to
act as sub-custodian of the assets of the Fund;
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund currently offers shares in fifteen series, Munder
Accelerating Growth Fund, Munder Balanced Fund, Munder Bond Fund, Munder Cash
Investment Fund, Munder Growth and Income Fund, Munder Index 500 Fund, Munder
Intermediate Bond Fund, Munder International Equity Fund, Munder Michigan Triple
Tax-Free Bond Fund, Munder Small Company Growth Fund, Munder Tax-Free Bond Fund,
Munder Tax-Free Intermediate Bond Fund, Munder Tax-Free Money Market Fund,
Munder U.S. Government Income Fund and Munder U.S. Treasury Money Market Fund
(such series together with all other series subsequently established by the Fund
and made subject to this Contract in accordance with paragraph 17, being herein
referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Sub-Custodian and Property to be Held by It
---------------------------------------------------------
The Custodian and the Fund hereby employ the Sub-Custodian as the Sub-
Custodian of the assets of the Portfolios of the Fund, including securities
which the Fund, on behalf of the applicable Portfolio desires to be held in
places within the United States ("domestic securities") and securities it
desires to be held outside the United States ("foreign securities") pursuant to
the provisions of the Declaration of Trust. The Fund on behalf of the
Portfolio(s) agrees to deliver to the Sub-Custodian all securities and cash of
the Portfolios, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the
Portfolio(s) from time to time, and the cash consideration received by it for
such new or treasury shares of beneficial interest of the Fund representing
interests in the Portfolios, ("Shares") as may be issued or sold
<PAGE>
from time to time. The Sub-Custodian shall not be responsible for any property
of a Portfolio held or received by the Portfolio and not delivered to the Sub-
Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Sub-Custodian shall on behalf of the applicable Portfolio(s) from time to
time employ one or more sub-sub-custodians, located in the United States but
only in accordance with an applicable vote by the Board of Trustees of the Fund
on behalf of the applicable Portfolio(s), and provided that the Sub-Custodian
shall have no more or less responsibility or liability to the Fund on account of
any actions or omissions of any sub-sub-custodian so employed than any such sub-
sub-custodian has to the Sub-Custodian. The Sub-Custodian may employ as sub-sub-
custodian for the Fund's foreign securities on behalf of the applicable
Portfolio(s) the foreign banking institutions and foreign securities
depositories designated in Schedule A hereto but only in accordance with the
provisions of Article 3.
2. Duties of the Sub-Custodian with Respect to Property of the Fund Held By
------------------------------------------------------------------------
the Sub-Custodian in the United States
--------------------------------------
2.1 Holding Securities. The Sub-Custodian shall hold and physically
------------------
segregate for the account of each Portfolio all non-cash property, to be
held by it in the United States including all domestic securities owned by
such Portfolio, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository or
in a book-entry system authorized by the U.S. Department of the Treasury
(each, a U.S. Securities System") and (b) commercial paper of an issuer for
which State Street Bank and Trust Company acts as issuing and paying agent
("Direct Paper") which is deposited and/or maintained in the Direct Paper
System of the Sub-Custodian (the "Direct Paper System") pursuant to Section
2.11.
2.2 Delivery of Securities. The Sub-Custodian shall release and deliver
----------------------
domestic securities owned by a Portfolio held by the Sub-Custodian or in a
U.S. Securities System account of the Sub-Custodian or in the Sub-
Custodian's Direct Paper book entry system account ("Direct Paper System
Account") only upon receipt of Proper Instructions from the Fund on behalf
of the applicable Portfolio, which may be continuing instructions when
deemed appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;
2
<PAGE>
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Sub-Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of
the Portfolio or into the name of any nominee or nominees of the Sub-
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.9 or into the name or nominee name of any sub-
sub-custodian appointed pursuant to Article 1; or for exchange for a
different number of bonds, certificates or other evidence representing
the same aggregate face amount or number of units; provided that, in
--------
any such case, the new securities are to be delivered to the Sub-
Custodian;
7) Upon the sale of such securities for the account of the Portfolio,
to the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom; provided that
in any such case, the Sub-Custodian shall have no responsibility or
liability for any loss arising from the delivery of such securities
prior to receiving payment for such securities except as may arise
from the Sub-Custodian's own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Sub-Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary
securities for definitive securities; provided that, in any such case,
the new securities and cash, if any, are to be delivered to the Sub-
Custodian;
10) For delivery in connection with any loans of securities made by
the Portfolio, but only against receipt of adequate collateral as
--- ----
agreed upon from time to time by the Sub-Custodian and the Fund on
behalf of the Portfolio, which may be in the form of cash or
obligations issued by the United States government, its agencies or
instrumentalities, except that in connection with any loans for which
collateral is to be credited to the Sub-Custodian's account in the
book-entry system authorized by the U.S. Department of the Treasury,
the Sub-Custodian will not be held liable or responsible for the
delivery of securities owned by the Portfolio prior to the receipt of
such collateral;
11) For delivery as security in connection with any borrowings by the
Fund on behalf of the Portfolio requiring a pledge of assets by the
Fund on behalf of the Portfolio, but only against receipt of amounts
--- ----
borrowed;
3
<PAGE>
12) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Sub-Custodian and a
broker-dealer registered under the Securities Exchange Act of 1934
(the "Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Sub-Custodian, and a
Futures Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity Futures
Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may be
described from time to time in the currently effective prospectus and
statement of additional information of the Fund, related to the
Portfolio ("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon receipt of,
--- ----
in addition to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution of the Board of
Trustees or of the Executive Committee signed by an officer of the
Fund and certified by the Secretary or an Assistant Secretary,
specifying the securities of the Portfolio to be delivered, setting
forth the purpose for which such delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming the person
or persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Sub-
--------------------------
Custodian (other than bearer securities) shall be registered in the name of
the Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Sub-Custodian which nominee shall be
assigned exclusively to the Portfolio, unless the Fund has authorized in
------
writing the appointment of a nominee to be used in common with other
registered investment companies having the same investment adviser as the
Portfolio, or in the name or nominee name of any agent appointed pursuant
to Section 2.9 or in the name or nominee name of any sub-sub-custodian
appointed pursuant to Article 1. All securities accepted by the Sub-
Custodian on behalf of the Portfolio under the terms of this Contract shall
be in "street name" or other good delivery form. If, however, the Fund
directs the Sub-Custodian to maintain securities in "street name", the Sub-
Custodian shall utilize its best efforts only to timely collect income due
the Fund on such securities and to notify the
4
<PAGE>
Fund on a best efforts basis only of relevant corporate actions including,
without limitation, pendency of calls, maturities, tender or exchange
offers.
2.4 Bank Accounts. The Sub-Custodian shall open and maintain a separate
-------------
bank account or accounts in the United States in the name of each Portfolio
of the Fund, subject only to draft or order by the Sub-Custodian acting
pursuant to the terms of this Contract, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it from or
for the account of the Portfolio, other than cash maintained by the
Portfolio in a bank account established and used in accordance with Rule
17f-3 under the Investment Company Act of 1940. Funds held by the Sub-
Custodian for a Portfolio may be deposited by it to its credit as Sub-
Custodian in the Banking Department of the Sub-Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company shall
--------
be qualified to act as a Sub-Custodian under the Investment Company Act of
1940 and that each such bank or trust company and the funds to be deposited
with each such bank or trust company shall on behalf of each applicable
Portfolio be approved by vote of a majority of the Board of Trustees of the
Fund. Such funds shall be deposited by the Sub-Custodian in its capacity as
Sub-Custodian and shall be withdrawable by the Sub-Custodian only in that
capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund
-----------------------------
on behalf of each applicable Portfolio and the Sub-Custodian, the Sub-
Custodian shall, upon the receipt of Proper Instructions from the Fund on
behalf of a Portfolio, make federal funds available to such Portfolio as of
specified times agreed upon from time to time by the Fund and the Sub-
Custodian in the amount of checks received in payment for Shares of such
Portfolio which are deposited into the Portfolio's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
--------------------
Sub-Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which each
Portfolio shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and
other payments with respect to bearer domestic securities if, on the date
of payment by the issuer, such securities are held by the Sub-Custodian or
its agent thereof and shall credit such income, as collected, to such
Portfolio's Sub-Custodian account. Without limiting the generality of the
foregoing, the Sub-Custodian shall detach and present for payment all
coupons and other income items requiring presentation as and when they
become due and shall collect interest when due on securities held
hereunder. Income due each Portfolio on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of the Fund.
The Sub-Custodian will have no duty or responsibility in connection
therewith, other than to provide the Fund with such information or data as
may be necessary to assist the Fund in arranging for the timely delivery to
the Sub-Custodian of the income to which the Portfolio is properly
entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from the
----------------------
Fund on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by
5
<PAGE>
the parties, the Sub-Custodian shall pay out monies of a Portfolio in the
following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of the
Portfolio but only (a) against the delivery of such securities or
evidence of title to such options, futures contracts or options on
futures contracts to the Sub-Custodian (or any bank, banking firm or
trust company doing business in the United States or abroad which is
qualified under the Investment Company Act of 1940, as amended, to act
as a Sub-Custodian and has been designated by the Sub-Custodian as its
agent for this purpose) registered in the name of the Portfolio or in
the name of a nominee of the Sub-Custodian referred to in Section 2.3
hereof or in proper form for transfer; (b) in the case of a purchase
effected through a U.S. Securities System, in accordance with the
conditions set forth in Section 2.10 hereof; (c) in the case of a
purchase involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.11; (d) in the case of repurchase
agreements entered into between the Fund on behalf of the Portfolio
and the Sub-Custodian, or another bank, or a broker-dealer which is a
member of NASD, (i) against delivery of the securities either in
certificate form or through an entry crediting the Sub-Custodian's
account at the Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase by the Portfolio
of securities owned by the Sub-Custodian along with written evidence
of the agreement by the Sub-Custodian to repurchase such securities
from the Portfolio or (e) for transfer to a time deposit account of
the Fund in any bank, whether domestic or foreign; such transfer may
be effected prior to receipt of a confirmation from a broker and/or
the applicable bank pursuant to Proper Instructions from the Fund as
defined in Article 5;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Portfolio
as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments for the
account of the Portfolio: interest, taxes, management, accounting,
transfer agent and legal fees, and operating expenses of the Fund
whether or not such expenses are to be in whole or part capitalized or
treated as deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio
declared pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
6
<PAGE>
7) For any other proper purpose, but only upon receipt of, in addition
--- ----
to Proper Instructions from the Fund on behalf of the Portfolio, a
certified copy of a resolution of the Board of Trustees or of the
Executive Committee of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary, specifying the
amount of such payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
--------------------------------------------------------- ---------
Except as specifically stated otherwise in this Contract, in any and every
case where payment for purchase of domestic securities for the account of a
Portfolio is made by the Sub-Custodian in advance of receipt of the
securities purchased in the absence of specific written instructions from
the Fund on behalf of such Portfolio to so pay in advance, the Sub-
Custodian shall be absolutely liable to the Fund for such securities to the
same extent as if the securities had been received by the Sub-Custodian.
2.9 Appointment of Agents. The Sub-Custodian may at any time or times in
---------------------
its discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of 1940,
as amended, to act as a Sub-Custodian, as its agent to carry out such of
the provisions of this Article 2 as the Sub-Custodian may from time to time
direct; provided, however, that the appointment of any agent shall not
--------
relieve the Sub-Custodian of its responsibilities or liabilities hereunder.
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Sub-Custodian
-------------------------------------------------
may deposit and/or maintain securities owned by a Portfolio in a clearing
agency registered with the Securities and Exchange Commission under Section
17A of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S. Department
of the Treasury and certain federal agencies, collectively referred to
herein as "U.S. Securities System" in accordance with applicable Federal
Reserve Board and Securities and Exchange Commission rules and regulations,
if any, and subject to the following provisions:
1) The Sub-Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are represented in an
account ("Account") of the Sub-Custodian in the U.S. Securities System
which shall not include any assets of the Sub-Custodian other than
assets held as a fiduciary, Custodian or otherwise for customers;
2) The records of the Sub-Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Portfolio;
3) The Sub-Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from the U.S.
Securities System that such securities have been transferred to the
Account, and (ii) the making of an entry on
7
<PAGE>
the records of the Sub-Custodian to reflect such payment and transfer
for the account of the Portfolio. The Sub-Custodian shall transfer
securities sold for the account of the Portfolio upon (i) receipt of
advice from the U.S. Securities System that payment for such
securities has been transferred to the Account, and (ii) the making of
an entry on the records of the Sub-Custodian to reflect such transfer
and payment for the account of the Portfolio. Copies of all advices
from the U.S. Securities System of transfers of securities for the
account of the Portfolio shall identify the Portfolio, be maintained
for the Portfolio by the Sub-Custodian and be provided to the Fund at
its request. Upon request, the Sub-Custodian shall furnish the Fund
on behalf of the Portfolio confirmation of each transfer to or from
the account of the Portfolio in the form of a written advice or notice
and shall furnish to the Fund on behalf of the Portfolio copies of
daily transaction sheets reflecting each day's transactions in the
U.S. Securities System for the account of the Portfolio;
4) The Sub-Custodian shall provide the Fund for the Portfolio with any
report obtained by the Sub-Custodian on the U.S. Securities System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the U.S. Securities System;
5) The Sub-Custodian shall have received from the Fund on behalf of
the Portfolio the initial or annual certificate, as the case may be,
required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the Sub-
Custodian shall be liable to the Fund for the benefit of the Portfolio
for any loss or damage to the Portfolio resulting from use of the U.S.
Securities System by reason of any negligence, misfeasance or
misconduct of the Sub-Custodian or any of its agents or of any of its
or their employees or from failure of the Sub-Custodian or any such
agent to enforce effectively such rights as it may have against the
U.S. Securities System; at the election of the Fund, it shall be
entitled to be subrogated to the rights of the Sub-Custodian with
respect to any claim against the U.S. Securities System or any other
person which the Sub-Custodian may have as a consequence of any such
loss or damage if and to the extent that the Portfolio has not been
made whole for any such loss or damage.
2.11 Fund Assets Held in the Sub-Custodian's Direct Paper System. The Sub-
------------------------------------------------------------
Custodian may deposit and/or maintain securities owned by a Portfolio in
the Direct Paper System of the Sub-Custodian subject to the following
provisions:
1) No transaction relating to securities in the Direct Paper System
will be effected in the absence of Proper Instructions from the Fund
on behalf of the Portfolio;
2) The Sub-Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are represented in an
account ("Account") of the Sub-Custodian in the Direct Paper System
which shall not include any assets of the Sub-
8
<PAGE>
Custodian other than assets held as a fiduciary, Custodian or
otherwise for customers;
3) The records of the Sub-Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Portfolio;
4) The Sub-Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on the records of
the Sub-Custodian to reflect such payment and transfer of securities
to the account of the Portfolio. The Sub-Custodian shall transfer
securities sold for the account of the Portfolio upon the making of an
entry on the records of the Sub-Custodian to reflect such transfer and
receipt of payment for the account of the Portfolio;
5) The Sub-Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the Portfolio,
in the form of a written advice or notice, of Direct Paper on the next
business day following such transfer and shall furnish to the Fund on
behalf of the Portfolio copies of daily transaction sheets reflecting
each day's transaction in the U.S. Securities System for the account
of the Portfolio;
6) The Sub-Custodian shall provide the Fund on behalf of the Portfolio
with any report on its system of internal accounting control as the
Fund may reasonably request from time to time.
2.12 Segregated Account. The Sub-Custodian shall upon receipt of Proper
------------------
Instructions from the Fund on behalf of each applicable Portfolio establish
and maintain a segregated account or accounts for and on behalf of each
such Portfolio, into which account or accounts may be transferred cash
and/or securities, including securities maintained in an account by the
Sub-Custodian pursuant to Section 2.10 hereof, (i) in accordance with the
provisions of any agreement among the Fund on behalf of the Portfolio, the
Sub-Custodian and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national securities
exchange (or the Commodity Futures Trading Commission or any registered
contract market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions by
the Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by the
Portfolio or commodity futures contracts or options thereon purchased or
sold by the Portfolio, (iii) for the purposes of compliance by the
Portfolio with the procedures required by Investment Company Act Release
No. 10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon receipt of, in
--- ----
addition to Proper Instructions from the Fund on behalf of the applicable
Portfolio, a
9
<PAGE>
certified copy of a resolution of the Board of Trustees or of the Executive
Committee signed by an officer of the Fund and certified by the Secretary
or an Assistant Secretary, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper corporate
purposes.
2.13 Ownership Certificates for Tax Purposes. The Sub-Custodian shall
---------------------------------------
execute ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other payments
with respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
2.14 Proxies. The Sub-Custodian shall, with respect to the domestic
-------
securities held hereunder, cause to be promptly executed by the registered
holder of such securities, if the securities are registered otherwise than
in the name of the Portfolio or a nominee of the Portfolio, all proxies,
without indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 Communications Relating to Portfolio Securities. Subject to the
-----------------------------------------------
provisions of Section 2.3, the Sub-Custodian shall transmit promptly to the
Fund for each Portfolio all written information (including, without
limitation, pendency of calls and maturities of domestic securities and
expirations of rights in connection therewith and notices of exercise of
call and put options written by the Fund on behalf of the Portfolio and the
maturity of futures contracts purchased or sold by the Portfolio) received
by the Sub-Custodian from issuers of the securities being held for the
Portfolio. With respect to tender or exchange offers, the Sub-Custodian
shall transmit promptly to the Portfolio all written information received
by the Sub-Custodian from issuers of the securities whose tender or
exchange is sought and from the party (or his agents) making the tender or
exchange offer. If the Portfolio desires to take action with respect to
any tender offer, exchange offer or any other similar transaction, the
Portfolio shall notify the Sub-Custodian at least three business days prior
to the date on which the Sub-Custodian is to take such action.
3. Duties of the Sub-Custodian with Respect to Property of the Fund Held
---------------------------------------------------------------------
Outside of the United States
----------------------------
3.1 Appointment of Foreign Sub-Sub-Custodians. The Fund hereby authorizes
-----------------------------------------
and instructs the Sub-Custodian to employ as sub-sub-custodians for the
Portfolio's securities and other assets maintained outside the United
States the foreign banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign sub-sub-custodians"). Upon
receipt of "Proper Instructions", as defined in Section 5 of this Contract,
together with a certified resolution of the Fund's Board of Trustees, the
Sub-Custodian and the Fund may agree to amend Schedule A hereto from time
to time to designate additional foreign banking institutions and foreign
securities depositories to act as sub-sub-custodian. Upon receipt of
Proper Instructions, the Fund may instruct the Sub-Custodian to cease the
employment of any one or more such sub-sub-custodians for maintaining
custody of the Portfolio's assets.
10
<PAGE>
3.2 Assets to be Held. The Sub-Custodian shall limit the securities and
-----------------
other assets maintained in the custody of the foreign sub-Sub-Custodians
to: (a) "foreign securities", as defined in paragraph (c)(1) of Rule 17f-5
under the Investment Company Act of 1940, and (b) cash and cash
equivalents in such amounts as the Sub-Custodian or the Fund may determine
to be reasonably necessary to effect the Portfolio's foreign securities
transactions. The Sub-Custodian shall identify on its books as belonging
to the Fund, the foreign securities of the Fund held by each foreign sub-
sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
--------------------------
writing by the Sub-Custodian and the Fund, assets of the Portfolios shall
be maintained in a clearing agency which acts as a securities depository or
in a book-entry system for the central handling of securities located
outside the United States (each a "Foreign Securities System") only through
arrangements implemented by the foreign banking institutions serving as
sub-sub-custodians pursuant to the terms hereof (Foreign Securities Systems
and U.S. Securities Systems are collectively referred to herein as the
"Securities Systems"). Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 3.5
hereof.
3.4 Holding Securities. The Sub-Custodian may hold securities and other non-
-------------------
cash property for all of its customers, including the Fund, with a foreign
sub-sub-custodian in a single account that is identified as belonging to
the Sub-Custodian for the benefit of its customers, provided however, that
----------------
(i) the records of the Sub-Custodian with respect to securities and other
non-cash property of the Fund which are maintained in such account shall
identify by book-entry those securities and other non-cash property
belonging to the Fund and (ii) the Sub-Custodian shall require that
securities and other non-cash property so held by the foreign sub-sub-
custodian be held separately from any assets of the foreign sub-sub-
custodian or of others.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a
--------------------------------------------
foreign banking institution shall provide that: (a) the assets of each
Portfolio will not be subject to any right, charge, security interest, lien
or claim of any kind in favor of the foreign banking institution or its
creditors or agent, except a claim of payment for their safe custody or
administration; (b) beneficial ownership for the assets of each Portfolio
will be freely transferable without the payment of money or value other
than for custody or administration; (c) adequate records will be maintained
identifying the assets as belonging to each applicable Portfolio; (d)
officers of or auditors employed by, or other representatives of the Sub-
Custodian, including to the extent permitted under applicable law the
independent public accountants for the Fund, will be given access to the
books and records of the foreign banking institution relating to its
actions under its agreement with the Sub-Custodian; and (e) assets of the
Portfolios held by the foreign sub-sub-custodian will be subject only to
the instructions of the Sub-Custodian or its agents.
3.6 Access of Independent Accountants of the Fund. Upon request of the
---------------------------------------------
Fund, the Sub-Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the books and
records of any foreign banking institution employed as
11
<PAGE>
a foreign sub-Sub-Custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement with
the Sub-Custodian.
3.7 Reports by Sub-Custodian. The Sub-Custodian will supply to the Fund
------------------------
from time to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Portfolio(s) held by foreign sub-sub-
custodians, including but not limited to an identification of entities
having possession of the Portfolio(s) securities and other assets and
advices or notifications of any transfers of securities to or from each
custodial account maintained by a foreign banking institution for the Sub-
Custodian on behalf of each applicable Portfolio indicating, as to
securities acquired for a Portfolio, the identity of the entity having
physical possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise
---------------------------------------
provided in paragraph (b) of this Section 3.8, the provision of Sections
2.2 and 2.7 of this Contract shall apply, mutatis mutandis to the foreign
------- --------
securities of the Fund held outside the United States by foreign sub-sub-
custodians.
(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of each
applicable Portfolio and delivery of securities maintained for the account
of each applicable Portfolio may be effected in accordance with the
customary established securities trading or securities processing practices
and procedures in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivering securities to the
purchaser thereof or to a dealer therefor (or an agent for such purchaser
or dealer) against a receipt with the expectation of receiving later
payment for such securities from such purchaser or dealer.
(c) Securities maintained in the custody of a foreign sub-sub-custodian may
be maintained in the name of such entity's nominee to the same extent as
set forth in Section 2.3 of this Contract, and the Fund agrees to hold any
such nominee harmless from any liability as a holder of record of such
securities.
3.9 Liability of Foreign Sub-Sub-Custodians. Each agreement pursuant to
---------------------------------------
which the Sub-Custodian employs a foreign banking institution as a foreign
sub-sub-custodian shall require the institution to exercise reasonable care
in the performance of its duties and to indemnify, and hold harmless, the
Sub-Custodian and the Fund from and against any loss, damage, cost,
expense, liability or claim arising out of or in connection with the
institution's performance of such obligations. At the election of the
Fund, it shall be entitled to be subrogated to the rights of the Sub-
Custodian with respect to any claims against a foreign banking institution
as a consequence of any such loss, damage, cost, expense, liability or
claim if and to the extent that the Fund has not been made whole for any
such loss, damage, cost, expense, liability or claim.
3.10 Liability of Sub-Custodian. The Sub-Custodian shall be liable for the
--------------------------
acts or omissions of a foreign banking institution to the same extent as
set forth with respect to sub-sub-custodians generally in this Contract
and, regardless of whether assets are maintained in the custody of
12
<PAGE>
a foreign banking institution, a foreign securities depository or a branch
of a U.S. bank as contemplated by paragraph 3.13 hereof, the Sub-Custodian
shall not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions, or
acts of war or terrorism or any loss where the sub-sub-custodian has
otherwise exercised reasonable care. Notwithstanding the foregoing
provisions of this paragraph 3.10, in delegating custody duties to State
Street London Ltd., the Sub-Custodian shall not be relieved of any
responsibility to the Fund for any loss due to such delegation, except such
loss as may result from (a) political risk (including, but not limited to,
exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or (b)
other losses (excluding a bankruptcy or insolvency of State Street London
Ltd. not caused by political risk) due to Acts of God, nuclear incident or
other losses under circumstances where the Sub-Custodian and State Street
London Ltd. have exercised reasonable care.
3.11 Reimbursement for Advances. If the Fund requires the Sub-Custodian to
--------------------------
advance cash or securities for any purpose for the benefit of a Portfolio
including the purchase or sale of foreign exchange or of contracts for
foreign exchange, or in the event that the Sub-Custodian or its nominee
shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this Contract,
except such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time
held for the account of the applicable Portfolio shall be security therefor
to the extent thereof, and should the Fund fail to repay the Sub-Custodian
promptly, the Sub-Custodian shall be entitled to utilize available cash and
to dispose of such Portfolio's assets to the extent necessary to obtain
reimbursement.
3.12 Monitoring Responsibilities. The Sub-Custodian shall furnish annually
---------------------------
to the Fund, during the month of June, information concerning the foreign
sub-sub-custodians employed by the Sub-Custodian. Such information shall
be similar in kind and scope to that furnished to the Fund in connection
with the initial approval of this Contract. In addition, the Sub-Custodian
will promptly inform the Fund in the event that the Sub-Custodian learns of
a material adverse change in the financial condition of a foreign sub-sub-
custodian or any material loss of the assets of the Fund or in the case of
any foreign sub-sub-custodian not the subject of an exemptive order from
the Securities and Exchange Commission is notified by such foreign sub-sub-
custodian that there appears to be a substantial likelihood that its
shareholders' equity will decline below $200 million (U.S. dollars or the
equivalent thereof) or that its shareholders' equity has declined below
$200 million (in each case computed in accordance with generally accepted
U.S. accounting principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this
----------------------
Contract, the provisions hereof shall not apply where the custody of the
Portfolios assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a sub-
sub-custodian shall be governed by paragraph 1 of this Contract.
13
<PAGE>
(b) Cash held for each Portfolio of the Fund in the United Kingdom shall be
maintained in an interest bearing account established for the Fund with the
Sub-Custodian's London branch, which account shall be subject to the
direction of the Sub-Custodian, State Street London Ltd. or both.
3.14 Tax Law. The Sub-Custodian shall have no responsibility or liability
-------
for any obligations now or hereafter imposed on the Fund or the Sub-
Custodian as Sub-Custodian of the Fund by the tax law of the United States
of America or any state or political subdivision thereof. It shall be the
responsibility of the Fund to notify the Sub-Custodian of the obligations
imposed on the Fund or the Sub-Custodian as Sub-Custodian of the Fund by
the tax law of jurisdictions other than those mentioned in the above
sentence, including responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and governmental
reporting. The sole responsibility of the Sub-Custodian with regard to
such tax law shall be to use reasonable efforts to assist the Fund with
respect to any claim for exemption or refund under the tax law of
jurisdictions for which the Fund has provided such information.
4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund
----------------------------------------------------------------------
The Sub-Custodian shall receive from the distributor for the Shares or from
the transfer agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by the Fund. The Sub-Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the transfer agent
of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and any applicable votes of the Board of
Trustees of the Fund pursuant thereto, the Sub-Custodian shall, upon receipt of
instructions from the transfer agent, make funds available for payment to
holders of Shares who have delivered to the transfer agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares of a Portfolio, the Sub-Custodian is authorized upon
receipt of instructions from the transfer agent to wire funds to or through a
commercial bank designated by the redeeming shareholders. In connection with
the redemption or repurchase of Shares of the Fund, the Sub-Custodian shall
honor checks drawn on the Sub-Custodian by a holder of Shares, which checks have
been furnished by the Fund to the holder of Shares, when presented to the Sub-
Custodian in accordance with such procedures and controls as are mutually agreed
upon from time to time between the Fund and the Sub-Custodian.
5. Proper Instructions
-------------------
Proper Instructions as used throughout this Contract means a writing signed or
initialed by one or more person or persons as the Board of Trustees shall have
from time to time authorized. Each such writing shall set forth the specific
transaction or type of transaction involved, including a specific statement of
the purpose for which such action is requested. Oral instructions will be
considered Proper Instructions if the Sub-Custodian reasonably believes them to
have been given
14
<PAGE>
by a person authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be confirmed in
writing. Upon receipt of a certificate of the Secretary or an Assistant
Secretary as to the authorization by the Board of Trustees of the Fund
accompanied by a detailed description of procedures approved by the Board of
Trustees, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Trustees and the Sub-Custodian are satisfied that such procedures afford
adequate safeguards for the Portfolios' assets. For purposes of this Section,
Proper Instructions shall include instructions received by the Sub-Custodian
pursuant to any three - party agreement which requires a segregated asset
account in accordance with Section 2.12.
6. Actions Permitted without Express Authority
-------------------------------------------
The Sub-Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
--------
the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Portfolio except as
otherwise directed by the Board of Trustees of the Fund.
7. Evidence of Authority
---------------------
The Sub-Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the Fund.
The Sub-Custodian may receive and accept a certified copy of a vote of the Board
of Trustees of the Fund as conclusive evidence (a) of the authority of any
person to act in accordance with such vote or (b) of any determination or of any
action by the Board of Trustees pursuant to the Declaration of Trust as
described in such vote, and such vote may be considered as in full force and
effect until receipt by the Sub-Custodian of written notice to the contrary.
8. Duties of Sub-Custodian with Respect to the Books of Account and
----------------------------------------------------------------
Calculation of Net Asset Value and Net Income
---------------------------------------------
The Sub-Custodian shall keep the books of account of each Portfolio and
compute the net asset value per share of the outstanding shares of each
Portfolio. The Sub-Custodian shall also
15
<PAGE>
calculate daily the net income of the Portfolio as described in the Fund's
currently effective prospectus related to such Portfolio and shall advise the
Fund and the transfer agent daily of the total amounts of such net income and
shall advise the transfer agent periodically of the division of such net income
among its various components. The calculations of the net asset value per share
and the daily income of each Portfolio shall be made at the time or times
described from time to time in the Fund's currently effective prospectus related
to such Portfolio.
9. Records
-------
The Sub-Custodian shall with respect to each Portfolio create and maintain
all records relating to its activities and obligations under this Contract in
such manner as will meet the obligations of the Fund under the Investment
Company Act of 1940, with particular attention to Section 31 thereof and Rules
31a-1 and 31a-2 thereunder. All such records shall be the property of the Fund
and shall at all times during the regular business hours of the Sub-Custodian be
open for inspection by duly authorized officers, employees or agents of the Fund
and employees and agents of the Securities and Exchange Commission. The Sub-
Custodian shall, at the Fund's request, supply the Fund with a tabulation of
securities owned by each Portfolio and held by the Sub-Custodian and shall, when
requested to do so by the Fund and for such compensation as shall be agreed upon
between the Fund and the Sub-Custodian, include certificate numbers in such
tabulations.
10. Opinion of Fund's Independent Accountant
----------------------------------------
The Sub-Custodian shall take all reasonable action, as the Fund on behalf
of each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Fund's independent accountants with respect
to its activities hereunder in connection with the preparation of the Fund's
Form N-1A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
-------------------------------------------------
The Sub-Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a Securities System, relating to the services provided by the Sub-Custodian
under this Contract; such reports, shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall so state.
12. Compensation of Sub-Custodian
-----------------------------
The Sub-Custodian shall be entitled to reasonable compensation for its
services and expenses as Sub-Custodian, as agreed upon from time to time between
the Fund on behalf of each applicable Portfolio and the Sub-Custodian.
16
<PAGE>
13. Responsibility of Sub-Custodian
-------------------------------
So long as and to the extent that it is in the exercise of reasonable care,
the Sub-Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Sub-Custodian shall be held to
the exercise of reasonable care in carrying out the provisions of this Contract,
but shall be kept indemnified by the Fund and shall be without liability to the
Fund or to the Custodian for any action taken or omitted by it in good faith
without negligence, willful misconduct or reckless disregard of its duties and
obligations under this Contract. It shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on all matters, and
shall be without liability for any action reasonably taken or omitted pursuant
to such advice.
Except as may arise from the Sub-Custodian's own bad faith, negligence,
willful misconduct or reckless disregard of its duties and obligations hereunder
or the bad faith, negligence or willful misconduct or reckless disregard of the
duties and obligations of a sub-sub-custodian or agent, the Sub-Custodian shall
be without liability to the Fund or to the Custodian for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Sub-Custodian or any sub-sub-custodian or
Securities System or any agent or nominee of any of the foregoing, including,
without limitation, nationalization or expropriation, imposition of currency
controls or restrictions, the interruption, suspension or restriction of trading
on or the closure of any securities market, power or other mechanical or
technological failures or interruptions, computer viruses or communications
disruptions, acts of war or terrorism, riots, revolutions, work stoppages,
natural disasters or other similar events or acts; (ii) errors by the Fund or
the Investment Advisor in their instructions to the Sub-Custodian provided such
instructions have been in accordance with this Contract; (iii) the insolvency of
or acts or omissions by a Securities System; (iv) any delay or failure of any
broker, agent or intermediary, central bank or other commercially prevalent
payment or clearing system to deliver to the Sub-Custodian's sub-sub-custodian
or agent securities purchased or in the remittance or payment made in connection
with securities sold; (v) any delay or failure of any company, corporation, or
other body in charge of registering or transferring securities in the name of
the Sub-Custodian, the Fund, the Sub-Custodian's sub-sub-custodians, nominees or
agents or any consequential losses arising out of such delay or failure to
transfer such securities including non-receipt of bonus, dividends and rights
and other accretions or benefits; (vi) delays or inability to perform its duties
due to any disorder in market infrastructure with respect to any particular
security or Securities System; and (vii) any provision of any present or future
law or regulation or order of the United States of America, or any state
thereof, or any other country, or political subdivision thereof or of any court
of competent jurisdiction.
The Sub-Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to sub-sub-
custodians generally in this Contract.
17
<PAGE>
If the Fund on behalf of a Portfolio requires the Sub-Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the Sub-Custodian, result in the Sub-
Custodian or its nominee assigned to the Fund or the Portfolio being liable for
the payment of money or incurring liability of some other form, the Fund on
behalf of the Portfolio, as a prerequisite to requiring the Sub-Custodian to
take such action, shall provide indemnity to the Sub-Custodian in an amount and
form satisfactory to it.
If the Fund requires the Sub-Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlement) or
in the event that the Sub-Custodian or its nominee shall incur or be assessed
any taxes, charges, expenses, assessments, claims or liabilities in connection
with the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable Portfolio shall
be security therefor to the extent thereof, and should the Fund fail to repay
the Sub-Custodian promptly, the Sub-Custodian shall be entitled to utilize
available cash and to dispose of such Portfolio's assets to the extent necessary
to obtain reimbursement.
The Sub-Custodian shall have no responsibility or liability for any acts or
omissions of any prior custodian, subcustodian, accounting agent or other
service provider to the Fund and shall be indemnified by the Fund against any
claims arising out of or attributable to the acts or omissions of any prior
custodian, subcustodian, accounting agent or other service provider. Without in
any way limiting the foregoing, the Subcustodian shall have no liability in
respect of any loss, damage or expense suffered by the Fund insofar as such
loss, damage or expense arises from the performance of the Subcustodian's duties
hereunder in reliance upon records that were maintained for the Fund by entities
other than the Subcustodian prior to the Subcustodian's appointment as
subcustodian for the Fund.
In no event shall the Sub-Custodian be liable for indirect, special or
consequential damages.
14. Effective Period, Termination and Amendment
-------------------------------------------
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
the Fund, the Custodian or the Sub-Custodian by an instrument in writing
delivered or mailed, postage prepaid to the other parties, such termination to
take effect not sooner than thirty (30) days after the date of such delivery or
mailing; provided, however that the Sub-Custodian shall not with respect to a
--------
Portfolio act under Section 2.10 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board of
Trustees of the Fund has approved the initial use of a particular Securities
System by such Portfolio, as required by Rule 17f-4 under the Investment Company
Act of 1940, as amended and that the Sub-Custodian shall not with respect to a
Portfolio act under Section 2.11 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board of
Trustees has approved the initial use of the Direct Paper System by such
Portfolio ; provided further, however, that the Fund shall not amend or
-------- -------
terminate this Contract in contravention of any
18
<PAGE>
applicable federal or state regulations, or any provision of the Declaration of
Trust, and further provided, that the Fund on behalf of one or more of the
Portfolios may at any time by action of its Board of Trustees (i) substitute
another bank or trust company for the Sub-Custodian by giving notice as
described above to the Sub-Custodian, or (ii) immediately terminate this
Contract in the event of the appointment of a conservator or receiver for the
Sub-Custodian by the Comptroller of the Currency or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Sub-Custodian such compensation as may be due as of
the date of such termination and shall likewise reimburse the Sub-Custodian for
its costs, expenses and disbursements.
15. Successor Sub-Custodian
-----------------------
If a successor Sub-Custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Trustees of the Fund, the Sub-Custodian
shall, upon termination, deliver to such successor Sub-Custodian at the office
of the Sub-Custodian, duly endorsed and in the form for transfer, all securities
of each applicable Portfolio then held by it hereunder and shall transfer to an
account of the successor Sub-Custodian all of the securities of each such
Portfolio held in a Securities System.
If no such successor Sub-Custodian shall be appointed, the Sub-Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the Board
of Trustees of the Fund, deliver at the office of the Sub-Custodian and transfer
such securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor Sub-Custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Sub-Custodian on or before the date when such termination shall become
effective, then the Sub-Custodian shall have the right to deliver to a bank or
trust company, which is a "bank" as defined in the Investment Company Act of
1940, doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Sub-Custodian on behalf of each applicable Portfolio and
all instruments held by the Sub-Custodian relative thereto and all other
property held by it under this Contract on behalf of each applicable Portfolio
and to transfer to an account of such successor Sub-Custodian all of the
securities of each such Portfolio held in any Securities System. Thereafter,
such bank or trust company shall be the successor of the Sub-Custodian under
this Contract.
In the event that securities, funds and other properties remain in the
possession of the Sub-Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor Sub-Custodian, the Sub-Custodian
shall be entitled to fair compensation for its services during such period as
the Sub-Custodian retains possession of such securities, funds and other
properties and the provisions of this
19
<PAGE>
Contract relating to the duties and obligations of the Sub-Custodian shall
remain in full force and effect.
16. Interpretive and Additional Provisions
--------------------------------------
In connection with the operation of this Contract, the Sub-Custodian and
the Fund on behalf of each of the Portfolios, may from time to time agree on
such provisions interpretive of or in addition to the provisions of this
Contract as may in their joint opinion be consistent with the general tenor of
this Contract. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, provided that no
--------
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Declaration of Trust of the
Fund. No interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Contract.
17. Additional Funds
----------------
In the event that the Fund establishes one or more series of Shares in
addition to Munder Accelerating Growth Fund, Munder Balanced Fund, Munder Bond
Fund, Munder Cash Investment Fund, Munder Growth and Income Fund, Munder Index
500 Fund, Munder Intermediate Bond Fund, Munder International Equity Fund,
Munder Michigan Triple Tax-Free Bond Fund, Munder Small Company Growth Fund,
Munder Tax-Free Bond Fund, Munder Tax-Free Intermediate Bond Fund, Munder Tax-
Free Money Market Fund, Munder U.S. Government Income Fund and Munder U.S.
Treasury Money Market Fund with respect to which it desires to have the Sub-
Custodian render services as Sub-Custodian under the terms hereof, it shall so
notify the Sub-Custodian in writing, and if the Sub-Custodian agrees in writing
to provide such services, such series of Shares shall become a Portfolio
hereunder.
18. Massachusetts Law to Apply
--------------------------
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
20
<PAGE>
19. Prior Contracts
---------------
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the Sub-
Custodian relating to the custody of the Fund's assets.
20. Reproduction of Documents
-------------------------
This Contract and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm, micro-
card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
21. Shareholder Communications Election
-----------------------------------
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Sub-Custodian needs the Fund to indicate whether it authorizes the
Sub-Custodian to provide the Fund's name, address, and share position to
requesting companies whose securities the Fund owns. If the Fund tells the Sub-
Custodian "no", the Sub-Custodian will not provide this information to
requesting companies. If the Fund tells the Sub-Custodian "yes" or does not
check either "yes" or "no" below, the Sub-Custodian is required by the rule to
treat the Fund as consenting to disclosure of this information for all
securities owned by the Fund or any funds or accounts established by the Fund.
For the Fund's protection, the Rule prohibits the requesting company from using
the Fund's name and address for any purpose other than corporate communications.
Please indicate below whether the Fund consents or objects by checking one of
the alternatives below.
YES [ ] The Sub-Custodian is authorized to release the Fund's name,
address, and share positions.
NO [ ] The Sub-Custodian is not authorized to release the Fund's
name, address, and share positions.
22. Use of Fund's Name
------------------
The Sub-Custodian shall not, without the written consent of the Custodian
and the Fund, identify the Fund, or any Portfolio, as a custodial client of the
Sub-Custodian in any promotional materials, proposals to or other communications
with clients or prospective clients.
21
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 1st day of October, 1997.
ATTEST THE MUNDER FUNDS TRUST
______________________ By_________________________________
ATTEST STATE STREET BANK AND TRUST COMPANY
______________________ By_________________________________
Senior Vice President
ATTEST COMERICA BANK
______________________ By_________________________________
22
<PAGE>
Schedule A
----------
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Trustees of The Munder Funds
Trust for use as sub-sub-custodians for the Fund's securities and other assets:
(Insert banks and securities depositories)
Certified:
- -------------------------
Fund's Authorized Officer
Date: ___________________
23
<PAGE>
EXHIBIT 9(a)
ADMINISTRATION AGREEMENT
Agreement dated as of October 31, 1997 by and between State Street Bank
and Trust Company, a Massachusetts trust company (the "Administrator"), and The
Munder Funds Trust (the "Fund").
WHEREAS, the Fund is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund desires to retain the Administrator to furnish certain
administrative services to the Fund, and the Administrator is willing to furnish
such services, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF ADMINISTRATOR
The Fund hereby appoints the Administrator to act as administrator with
respect to the Fund for purposes of providing certain administrative services
for the period and on the terms set forth in this Agreement. The Administrator
accepts such appointment and agrees to render the services stated herein.
The Fund will initially consist of the portfolio(s) and/or class(es) of
shares (each an "Investment Fund") listed in Schedule A to this Agreement. In
the event that the Fund establishes one or more additional Investment Funds with
respect to which it wishes to retain the Administrator to act as administrator
hereunder, the Fund shall notify the Administrator in writing. Upon written
acceptance by the Administrator, such Investment Fund shall become subject to
the provisions of this Agreement to the same extent as the existing Investment
Funds, except to the extent that such provisions (including those relating to
the compensation and expenses payable by the Fund and its Investment Funds) may
be modified with respect to each additional Investment Fund in writing by the
Fund and the Administrator at the time of the addition of the Investment Fund.
2. DELIVERY OF DOCUMENTS
The Fund will promptly deliver to the Administrator copies of each of
the following documents and all future amendments and supplements, if any:
a. The Fund's charter document and by-laws;
<PAGE>
b. The Fund's currently effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and the 1940
Act and the Fund's Prospectus(es) and Statement(s) of Additional
Information relating to all Investment Funds and all amendments
and supplements thereto as in effect from time to time;
c. Certified copies of the resolutions of the Board of Trustees of
the Fund (the "Board") authorizing (1) the Fund to enter into
this Agreement and (2) certain individuals on behalf of the Fund
to (a) give instructions to the Administrator pursuant to this
Agreement and (b) sign checks and pay expenses;
d. A copy of the investment advisory agreement between the Fund and
its investment adviser; and
e. Such other certificates, documents or opinions which the
Administrator may, in its reasonable discretion, deem necessary
or appropriate in the proper performance of its duties.
3. REPRESENTATION AND WARRANTIES OF THE ADMINISTRATOR
The Administrator represents and warrants to the Fund that:
a. It is a Massachusetts trust company, duly organized, existing and
in good standing under the laws of The Commonwealth of
Massachusetts;
b. It has the corporate power and authority to carry on its business
in The Commonwealth of Massachusetts;
c. All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement;
d. No legal or administrative proceedings have been instituted or
threatened which would impair the Administrator's ability to
perform its duties and obligations under this Agreement; and
e. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of the Administrator or any law or regulation
applicable to it.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Administrator that:
a. It is a business trust, duly organized and existing and in good
standing under the laws of Massachusetts;
2
<PAGE>
b. It has the corporate power and authority under applicable laws
and by its charter and by-laws to enter into and perform this
Agreement;
c. All requisite proceedings have been taken to authorize it to
enter into and perform this Agreement;
d. It is an investment company properly registered under the 1940
Act;
e. A registration statement under the 1933 Act and the 1940 Act has
been filed and will be effective and remain effective during the
term of this Agreement. The Fund also warrants to the
Administrator that as of the effective date of this Agreement,
all necessary filings under the securities laws of the states in
which the Fund offers or sells its shares have been made;
f. No legal or administrative proceedings have been instituted or
threatened which would impair the Fund's ability to perform its
duties and obligations under this Agreement;
g. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of the Fund or any law or regulation applicable to it;
and
h. As of the close of business on the date of this Agreement, the
Fund is authorized to issue an unlimited amount of shares of
beneficial interest.
5. ADMINISTRATION SERVICES
The Administrator shall provide the following services, in each case,
subject to the control, supervision and direction of the Fund and the review and
comment by the Fund's auditors and legal counsel and in accordance with
procedures which may be established from time to time between the Fund and the
Administrator:
a. Oversee the determination and publication of the Fund's net asset
value in accordance with the Fund's policy as adopted from time
to time by the Board;
b. Oversee the maintenance by the Fund's custodian of certain books
and records of the Fund as required under Rule 31a-1(b) of the
1940 Act;
c. Prepare the Fund's federal, state and local income tax returns
for review by the Fund's independent accountants and filing by
the Fund's treasurer;
d. Review calculation, submit for approval by officers of the Fund
and arrange for payment of the Fund's expenses;
3
<PAGE>
e. Prepare for review and approval by officers of the Fund financial
information for the Fund's semi-annual and annual reports, proxy
statements and other communications required or otherwise to be
sent to Fund shareholders, and arrange for the printing and
dissemination of such reports and communications to shareholders;
f. Prepare for review by an officer of and legal counsel for the
Fund the Fund's periodic financial reports required to be filed
with the Securities and Exchange Commission ("SEC") on Form N-SAR
and financial information required by Form N-1A and such other
reports, forms or filings as may be mutually agreed upon;
g. Prepare reports relating to the business and affairs of the Fund
as may be mutually agreed upon and not otherwise prepared by the
Fund's investment adviser, custodian, legal counsel or
independent accountants;
h. Make such reports and recommendations to the Board concerning the
performance of the independent accountants as the Board may
reasonably request;
i. Make such reports and recommendations to the Board concerning the
performance and fees of the Fund's custodian and transfer and
dividend disbursing agent ("Transfer Agent") as the Board may
reasonably request or deems appropriate;
j. Calculate, submit for review by officers of the Fund, and arrange
for the payment of fees to the Fund's investment adviser,
custodian, sub-administrator and Transfer Agent;
k. Consult with the Fund's officers, independent accountants, legal
counsel, custodian and Transfer Agent in establishing the
accounting policies of the Fund;
l. Review implementation of any dividend reinvestment programs
authorized by the Board;
m. Respond to, or refer to the Fund's officers or Transfer Agent,
shareholder inquiries relating to the Fund;
n. Provide periodic testing of portfolios to assist the Fund's
investment adviser in complying with Internal Revenue Code
mandatory qualification requirements, the requirements of the
1940 Act and Fund prospectus limitations as may be mutually
agreed upon;
4
<PAGE>
o. Maintain general corporate calendar, and with respect to each
Investment Fund create and maintain all records required by
Section 31 of the 1940 Act and Rule 31a-1 and 31a-2 thereunder,
except those records that are maintained by the Fund's custodian,
transfer agent, adviser or sub-administrator;
p. Maintain copies of the Fund's charter and by-laws;
q. File annual and semi-annual shareholder reports with the
appropriate regulatory agencies; review text of "President's
letters" to shareholders and "Management's Discussion of Fund
Performance" (which shall also be subject to review by the Fund's
legal counsel);
r. Prepare and furnish the Fund (at the Fund's request) with
performance information (including yield and total return
information) calculated in accordance with applicable U.S.
securities laws and report to external databases such information
as may reasonably be requested.
s. Organize, attend and prepare minutes of shareholder meetings;
t. Provide consultation on regulatory matters relating to portfolio
management, Fund operations and any potential changes in the
Fund's investment policies, operations or structure; act as
liaison to legal counsel to the Fund and, where applicable, to
legal counsel to the Fund's independent Board members;
u. Maintain continuing awareness of significant emerging regulatory
and legislative developments which may affect the Fund, update
the Board and the investment adviser on those developments and
provide related planning assistance where requested or
appropriate;
v. Develop or assist in developing guidelines and procedures to
improve overall compliance by the Fund and its various agents;
w. Counsel and assist the Fund in the handling of routine regulatory
examinations and work closely with the Fund's legal counsel in
response to any non-routine regulatory matters.
Subject to review and comment by the Fund's legal counsel:
x. Prepare and file with the SEC amendments to the Fund's
registration statement, including updating the Prospectus and
Statement of Additional Information, where applicable;
y. Prepare and file with the SEC proxy statements; provide
consultation on proxy solicitation matters;
5
<PAGE>
z. Prepare agenda and background materials for Board meetings, make
presentations where appropriate, prepare minutes and follow-up on
matters raised at Board meetings;
aa. Prepare and file with the SEC Form N-SAR and Rule 24f-2
notices;
bb. Review and provide assistance on Fund advertisements, sales
literature and shareholder communications; and
cc. Prepare and file state notice filings of the Fund's
securities pursuant to the specific instructions of the Fund and
as detailed in Schedule C to this Agreement.
The Administrator shall provide the office facilities and the personnel required
by it to perform the services contemplated herein. In performing its duties
hereunder, the Administrator shall act in accordance with the charter, bylaws
and prospectus of the Fund and with instructions of the Board of Trustees of the
Fund and will conform to and comply with the requirements of the 1940 Act and
all other applicable federal and state laws and regulations, and will consult
with legal counsel to the Fund, as necessary and appropriate.
6. FEES; EXPENSES; EXPENSE REIMBURSEMENT
The Administrator shall receive from the Fund such compensation for the
Administrator's services provided pursuant to this Agreement as may be agreed to
from time to time in a written fee schedule approved by the parties and
initially set forth in Schedule B to this Agreement. The fees are accrued daily
and billed monthly and shall be due and payable upon receipt of the invoice.
Upon the termination of this Agreement before the end of any month, the fee for
the part of the month before such termination shall be prorated according to the
proportion which such part bears to the full monthly period and shall be payable
upon the date of termination of this Agreement. In addition, the Fund shall
reimburse the Administrator for its out-of-pocket costs incurred in connection
with this Agreement.
The Fund agrees promptly to reimburse the Administrator for any
equipment and supplies specially ordered by or for the Fund through the
Administrator and for any other expenses not contemplated by this Agreement that
the Administrator may incur on the Fund's behalf at the Fund's request or with
the Fund's consent.
The Fund will bear all expenses that are incurred in its operation and
not specifically assumed by the Administrator. Expenses to be borne by the Fund,
include, but are not limited to: organizational expenses; cost of services of
independent accountants and outside legal and tax counsel (including such
counsel's review of the Fund's registration statement, proxy materials, federal
and state tax qualification as a regulated investment company and other reports
and materials prepared by the Administrator under this Agreement); cost of any
services contracted for by the Fund directly from parties other than the
Administrator; cost of trading operations and brokerage fees, commissions and
transfer taxes in connection with the purchase and sale of securities for the
Fund; investment advisory fees; taxes, insurance premiums and other fees and
expenses applicable to its operation; costs incidental to any meetings of
shareholders including, but not limited to, legal and accounting fees, proxy
filing fees and the costs of preparation (excluding preparation as provided in
Section 5y), printing and mailing of any proxy materials; costs incidental to
Board meetings other than the costs of preparation of the agenda and
6
<PAGE>
background materials, including fees and expenses of Board members; the salary
and expenses of any officer, director\trustee or employee of the Fund; costs
incidental to the preparation (excluding preparation as provided in Section 5x),
printing and distribution of the Fund's registration statements and any
amendments thereto and shareholder reports; cost of typesetting and printing of
prospectuses; cost of preparation (excluding preparation as provided in Section
5x) and filing of the Fund's tax returns, Form N-1A or N-2 and Form N-SAR, and
all notices, registrations and amendments associated with applicable federal and
state tax and securities laws; all applicable registration fees and filing fees
required under federal and state securities laws; fidelity bond and directors'
and officers' liability insurance; and cost of independent pricing services used
in computing the Fund's net asset value.
The Administrator is authorized to and may employ or associate with such
person or persons as the Administrator may deem desirable to assist it in
performing its duties under this Agreement; provided, however, that the
compensation of such person or persons shall be paid by the Administrator and
that the Administrator shall be as fully responsible to the Fund for the acts
and omissions of any such person or persons as it is for its own acts and
omissions.
7. INSTRUCTIONS AND ADVICE
At any time, the Administrator may apply to any officer of the Fund for
instructions and may consult with outside counsel for the Fund or with the
independent accountants for the Fund at the expense of the Fund, or with its own
legal counsel at its own expense, with respect to any matter arising in
connection with the services to be performed by the Administrator under this
Agreement. The Administrator shall not be liable, and shall be indemnified by
the Fund, for any action taken or omitted by it in good faith in reliance upon
any such instructions or advice or upon any paper or document believed by it to
be genuine and to have been signed by the proper person or persons. The
Administrator shall not be held to have notice of any change of authority of any
person until receipt of written notice thereof from the Fund. Nothing in this
paragraph shall be construed as imposing upon the Administrator any obligation
to seek such instructions or advice, or to act in accordance with such advice
when received.
8. LIMITATION OF LIABILITY AND INDEMNIFICATION
The Administrator shall be responsible for the performance of only such
duties as are set forth in this Agreement and, except as otherwise provided
under Section 6, shall have no responsibility for the actions or activities of
any other party, including other service providers. The Administrator shall have
no liability in respect of any loss, damage or expense suffered by the Fund
insofar as such loss, damage or expense arises from the performance of the
Administrator's duties hereunder in reliance upon records that were maintained
for the Fund by entities other than the Administrator prior to the
Administrator's appointment as administrator for the Fund. The Administrator
shall have no liability for any error of judgment or mistake of law or for any
loss or damage resulting from the performance or nonperformance of its duties
under this Agreement unless solely caused by or resulting from the bad faith,
negligence, willful misconduct or reckless disregard of the duties and
obligations under this Agreement of the Administrator, its officers or
employees. The Administrator shall not be liable for any special, indirect or
consequential damages of any kind whatsoever (including, without limitation,
attorneys' fees) under any provision of this Agreement or for any such damages
arising out of any act or failure to act hereunder. In any event, for any
liability or loss suffered by the Fund including, but not limited to, any
liability relating to qualification of the Fund as a regulated investment
company or any liability relating to the Fund's compliance with any federal or
state tax or securities statute, regulation or ruling, the
7
<PAGE>
Administrator's liability under this Agreement shall be limited to such amount
as may be agreed upon from time to time between the parties hereto.
Except as may arise from the Administrator's bad faith, negligence,
willful misconduct or reckless disregard of its duties and obligations under
this Agreement, the Administrator shall not be responsible or liable for any
failure or delay in performance of its obligations under this Agreement arising
out of or caused, directly or indirectly, by circumstances beyond its control,
including without limitation, work stoppage, power or other mechanical failure,
computer virus, natural disaster, governmental action or communication
disruption, nor shall any such failure or delay give the Fund the right to
terminate this Agreement.
The Fund shall indemnify and hold the Administrator harmless from all
loss, cost, damage and expense, including reasonable fees and expenses for
counsel, incurred by the Administrator resulting from any claim, demand, action
or suit in connection with the Administrator's acceptance of this Agreement, any
action or omission by it in the performance of its duties hereunder, or as a
result of acting upon any instructions reasonably believed by it to have been
duly authorized by the Fund, provided that this indemnification shall not apply
to actions or omissions of the Administrator, its officers or employees in cases
of its or their own bad faith, negligence, willful misconduct or reckless
disregard of its duties and obligations under this Agreement.
The Fund will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any liability subject to the indemnification provided above. In the
event the Fund elects to assume the defense of any such suit and retain counsel,
the Administrator or any of its affiliated persons, named as defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) the Fund shall have specifically
authorized the retaining of such counsel or (ii) the Administrator shall have
determined in good faith that the retention of such counsel is required as a
result of a conflict of interest.
The indemnification contained herein shall survive the termination of
this Agreement.
9. CONFIDENTIALITY
The Administrator agrees that, except as otherwise required by law or in
connection with any required disclosure to a banking or other regulatory
authority, it will keep confidential all records and information in its
possession relating to the Fund or its shareholders or shareholder accounts and
will not disclose the same to any person except at the request or with the
written consent of the Fund.
8
<PAGE>
10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS; RECORDS
The Fund assumes full responsibility for complying with all securities,
tax, commodities and other laws, rules and regulations applicable to it.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Administrator agrees that all records which it maintains for the Fund shall
at all times remain the property of the Fund, shall be readily accessible during
normal business hours, and shall be promptly surrendered upon the termination of
the Agreement or otherwise on written request. The Administrator further agrees
that all records which it maintains for the Fund pursuant to Rule 31a-1 under
the 1940 Act will be preserved for the periods prescribed by Rule 31a-2 under
the 1940 Act unless any such records are earlier surrendered as provided above.
Records shall be surrendered in usable machine-readable form.
11. SERVICES NOT EXCLUSIVE
The services of the Administrator to the Fund are not to be deemed
exclusive, and the Administrator shall be free to render similar services to
others. The Administrator shall be deemed to be an independent contractor and
shall, unless otherwise expressly provided herein or authorized by the Fund from
time to time, have no authority to act or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
12. TERM, TERMINATION AND AMENDMENT
This Agreement shall become effective as of the date first above
written. The Agreement shall remain in effect with respect to the Fund unless
terminated by either party on sixty (60) days' prior written notice. Termination
of this Agreement with respect to any given Investment Fund shall in no way
affect the continued validity of this Agreement with respect to any other
Investment Fund. Upon termination of this Agreement, the Fund shall pay to the
Administrator such compensation and any reimbursable expenses as may be due
under the terms hereof as of the date of such termination, including reasonable
out-of-pocket expenses associated with such termination. This Agreement may be
modified or amended from time to time by mutual written agreement of the parties
hereto.
13. NOTICES
Any notice or other communication authorized or required by this
Agreement to be given to either party shall be in writing and deemed to have
been given when delivered in person or by confirmed facsimile, or posted by
certified mail, return receipt requested, to the following address (or such
other address as a party may specify by written notice to the other): if to the
Fund:_________________________________________, Attn:_________________, fax:
__________________; if to the Administrator: State Street Bank and Trust
Company, 1776 Heritage Drive, North Quincy, Massachusetts 02171, Attn: Mutual
Funds Legal Division, fax: (617) 985-2497.
9
<PAGE>
14. NON-ASSIGNABILITY
This Agreement shall not be assigned by either party hereto without
the prior consent in writing of the other party.
15. SUCCESSORS
This Agreement shall be binding on and shall inure to the benefit of
the Fund and the Administrator and their respective successors and permitted
assigns.
16. ENTIRE AGREEMENT
This Agreement together with any written agreement of the parties
entered into from time to time pursuant to Section 8 contain the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersede all previous representations, warranties or commitments
regarding the services to be performed hereunder whether oral or in writing.
17. WAIVER
The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver nor shall it
deprive such party of the right thereafter to insist upon strict adherence to
that term or any term of this Agreement. Any waiver must be in writing signed by
the waiving party.
18. SEVERABILITY
If any provision of this Agreement is invalid or unenforceable, the
balance of the Agreement shall remain in effect, and if any provision is
inapplicable to any person or circumstance it shall nevertheless remain
applicable to all other persons and circumstances.
19. GOVERNING LAW
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
20. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm, micro-
card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written above.
THE MUNDER FUNDS TRUST
By: /s/ Lisa Anne Rosen
-------------------------------------
Name: Lisa Anne Rosen
-----------------------------------
Title: Secretary and Assistant Treasurer
----------------------------------
STATE STREET BANK AND TRUST COMPANY
By: /s/ Kathleen C. Cuocolo
-------------------------------------
Name: Kathleen C. Cuocolo
----------------------------------
Title: Senior Vice President
---------------------------------
11
<PAGE>
ADMINISTRATION AGREEMENT
THE MUNDER FUNDS TRUST
SCHEDULE A
LISTING OF INVESTMENT FUNDS
Munder Accelerating Growth Fund
Munder Balanced Fund
Munder Bond Fund
Munder Cash Investment Fund
Munder Growth and Income Fund
Munder Index 500 Fund
Munder Intermediate Bond Fund
Munder International Equity Fund
Munder Michigan Triple Tax-Free Bond Fund
Munder Small Company Growth Fund
Munder Tax-Free Bond Fund
Munder Tax-Free Intermediate Bond Fund
Munder Tax-Free Money Market Fund
Munder U.S. Government Income Fund
Munder U.S. Treasury Money Market Fund
12
<PAGE>
ADMINISTRATION AGREEMENT
THE MUNDER FUNDS TRUST
SCHEDULE B
FEES AND EXPENSES
13
<PAGE>
ADMINISTRATION AGREEMENT
THE MUNDER FUNDS TRUST
SCHEDULE C
NOTICE FILING WITH
STATE SECURITIES ADMINISTRATORS
AT THE SPECIFIC DIRECTION OF THE FUND, THE ADMINISTRATOR WILL PREPARE REQUIRED
DOCUMENTATION AND MAKE NOTICE FILINGS IN ACCORDANCE WITH THE SECURITIES LAWS OF
EACH JURISDICTION IN WHICH FUND SHARES ARE TO BE OFFERED OR SOLD PURSUANT TO
INSTRUCTIONS GIVEN TO THE ADMINISTRATOR BY THE FUND.
THE FUND SHALL BE SOLELY RESPONSIBLE FOR THE DETERMINATION (I) OF THOSE
JURISDICTIONS IN WHICH NOTICE FILINGS ARE TO BE SUBMITTED AND (II) THE NUMBER OF
FUND SHARES TO BE PERMITTED TO BE SOLD IN EACH SUCH JURISDICTION. IN THE EVENT
THAT THE ADMINISTRATOR BECOMES AWARE OF (A) THE SALE OF FUND SHARES IN A
JURISDICTION IN WHICH NO NOTICE FILING HAS BEEN MADE OR (B) THE SALE OF FUND
SHARES IN EXCESS OF THE NUMBER OF FUND SHARES PERMITTED TO BE SOLD IN SUCH
JURISDICTION, THE ADMINISTRATOR SHALL REPORT SUCH INFORMATION TO THE FUND, AND
IT SHALL BE THE FUND'S RESPONSIBILITY TO DETERMINE APPROPRIATE CORRECTIVE ACTION
AND INSTRUCT THE ADMINISTRATOR WITH RESPECT THERETO.
The Blue Sky services shall consist of the following:
1. Filing of Fund's Initial Notice Filings, as directed by the Fund;
2. Filing of Fund's renewals and amendments as required;
3. Filing of amendments to the Fund's registration statement where
required;
4. Filing Fund sales reports where required;
5. Payment at the expense of the Fund of all Fund Notice Filing fees;
6. Filing the Prospectuses and Statements of Additional Information and
any amendments or supplements thereto where required;
7. Filing of annual reports and proxy statements where required; and
8. The performance of such additional services as the Administrator and
the Fund may agree upon in writing.
Unless otherwise specified in writing by the Administrator, Blue Sky services by
the Administrator shall not include determining the availability of exemptions
under a jurisdiction's blue sky law. Any such determination shall be made by
the Fund or its legal counsel. In connection with the services described
herein, the Fund shall issue in favor of the Administrator a power of attorney
to submit Notice Filings on behalf of the Fund, which power of attorney shall be
substantially in the form of Exhibit I attached hereto.
14
<PAGE>
EXHIBIT I
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, as of October 31, 1997 that the undersigned THE
MUNDER FUNDS TRUST with principal offices at 480 Pierce Street, Birmingham,
Michigan 48009 (individually the "Fund") makes, constitutes, and appoints STATE
STREET BANK AND TRUST COMPANY (the "Administrator") with principal offices at
225 Franklin Street, Boston, Massachusetts its lawful attorney-in-fact for it to
do as if it were itself acting, the following:
1. REGISTRATION OF FUND SHARES. The power to register shares of the Fund
in each jurisdiction in which Fund shares are offered or sold and in
connection therewith the power to prepare, execute, and deliver and file
any and all Fund applications, including without limitation, applications
to register shares, consents, including consents to service of process,
reports, including without limitation, all periodic reports, claims for
exemption, or other documents and instruments now or hereafter required or
appropriate in the judgment of the Administrator in connection with the
registration of Fund shares.
2. AUTHORIZED SIGNERS. Pursuant to this Limited Power of Attorney,
individuals holding the titles of Officer, Blue Sky Manager, or Senior Blue
Sky Administrator at the Administrator shall have authority to act on
behalf of the Fund with respect to item 1 above.
The execution of this limited power of attorney shall be deemed coupled with an
interest and shall be revocable only upon receipt by the Administrator of such
termination of authority. Nothing herein shall be construed to constitute the
appointment of the Administrator as or otherwise authorize the Administrator to
act as an officer, director or employee of the Fund.
IN WITNESS WHEREOF, the Fund has caused this Agreement to be executed in its
name and on its behalf by and through its duly authorized officer, as of the
date first written above.
THE MUNDER FUNDS TRUST
By:
-------------------
Name:
-----------------
Title:
----------------
15
<PAGE>
EXHIBIT 9(e)
AMENDMENT TO THE
TRANSFER AGENCY AND REGISTRAR AGREEMENT
THIS AMENDMENT, dated as of June 1, 1998 is made to the Transfer Agency
Agreement[s] (the "Agreement[s]") between each of the Funds executing this
Amendment and listed on Exhibit 1 of this Amendment attached hereto and
incorporated herein (hereinafter individually and collectively referred to as
the "Fund") and FIRST DATA INVESTOR SERVICES GROUP, INC. ("Investor Services
Group").
1. Amendment # 2 to the Transfer Agency and Registrar Agreement between The
Munder Funds Trust and First Data Investor Services Group, Inc. for
retirement account fees and services, dated June 1, 1998 is deleted in its
entirety.
2. Schedule C is modified by adding the following new Section 10:
"10.Retirement Account Services The Transfer Agent agrees to perform the
services set forth in the Attached Exhibit 2 of this Schedule C with
respect to those retirement plans offered by the Fund."
This Amendment contains the entire understanding among the parties with respect
to the transactions contemplated hereby. To the extent that any provision of
this Amendment modifies or is otherwise inconsistent with any provision of the
prior agreements and related agreements, this Amendment shall control, but the
prior agreements and all related documents shall otherwise remain in full force
and effect.
IN WITNESS WHEREOF, each party has caused this Amendment to be executed by
its duly authorized representative on the date first stated above.
THE MUNDER FUNDS, INC. THE MUNDER FUNDS TRUST
/s/ Terry H. Gardner /s/ Terry H. Gardner
- -------------------- --------------------
By: Terry H. Gardner By: Terry H. Gardner
Title: Vice President Title: Vice President
ST. CLAIR FUNDS, INC. THE MUNDER FRAMLINGTON FUNDS TRUST
/s/ Terry H. Gardner /s/ Terry H. Gardner
- -------------------- --------------------
By: Terry H. Gardner By: Terry H. Gardner
Title: Vice President Title: Vice President
FIRST DATA INVESTOR SERVICES
GROUP, INC.
/s/ Gerald G. Kokos
- -------------------
By: Gerald G. Kokos
Title: Executive Vice President
<PAGE>
Exhibit 1
List of Funds and Portfolios
THE MUNDER FUNDS TRUST
- ----------------------
Munder Accelerating Growth Fund
Munder Balanced Fund
Munder Bond Fund
Munder Cash Investment Fund
Munder Growth & Income Fund
Munder Index 500 Fund
Munder Intermediate Bond Fund
Munder International Equity Fund
Munder Michigan Triple Tax-Free Bond Fund
Munder Small Company Growth Fund
Munder Tax-Free Bond Fund
Munder Tax-Free Intermediate Bond Fund
Munder Tax-Free Money Market Fund
Munder U.S. Government Income Fund
Munder U.S. Treasury Money Market Fund
THE MUNDER FUNDS INC.
- ---------------------
The Munder Multi-Season Growth Fund
The Munder Money Market Fund
The Munder Real Estate Equity Investment Fund
The Munder Value Fund
The Munder Mid-Cap Growth Fund
THE ST. CLAIR FUND INC.
- -----------------------
Liquidity Plus Money Market Fund
Munder S&P 500 Index Equity Fund
Munder S&P MidCap Index Equity Fund
Munder S&P SmallCap Index Equity Fund
Munder Foreign Equity Fund
Munder Aggregate Bond Index Fund
THE MUNDER FRAMLINGTON FUNDS TRUST
- ----------------------------------
Framlington Emerging Markets Fund
Framlington Healthcare Fund
Framlington International Growth Fund
<PAGE>
Exhibit 2 to Schedule C
RETIREMENT ACCOUNT SERVICES
- ---------------------------
(a) Process new accounts, verify completeness of application forms; establish
new account records with standard abbreviations and registration formats,
including proper account identification codes.
(b) Examine and process contributions and invest monies received in Investments
in accordance with the written instructions of the Participant/Employer, as
the case may be.
(c) Process transactions in Custodial Accounts upon receipt of proper
documentation and in accordance with the terms of the plan.
(d) Reinvest income dividends and capital gains distributions in Investments
selected by the Participant.
(e) Send a confirmation to the proper person(s) with respect to each
transaction in the account.
(f) Examine and process requests for distributions, subject to receipt of
required legal documents; verify eligibility of the recipient and make
payments.
(g) Establish a record of types and reasons for distributions (i.e., attainment
of age 59-1/2, disability, death, return of excess contributions, etc.)
(h) Record method of distribution requested and/or made.
(i) Distribute the account in the event of death as required in writing by the
Participant/Beneficiary, subject to receipt of required legal documents.
(j) Receive and process designation of the beneficiary forms.
(k) Examine and process requests for direct transfers between
custodians/trustees, transfer and pay over to the successor assets in the
account and records pertaining thereto as requested;
(l) Send to each Participant/Beneficiary/Employer notices, prospectuses,
account statements, proxies and other documents or communications relating
to Fund shares or other Investments; send such other notices, documents or
other communications to Participants/Beneficiaries/Employers as the Fund
may direct FDISG to deliver.
(m) Maintain records of contributions, distributions, and other transactions.
(n) Prepare any annual reports or returns required to be prepared and/or filed
by a custodian of a Plan, including, but not limited to, an annual fair
market value report, Forms 1099R and 5498 and file with the IRS and provide
to Participant/Beneficiary.
(o) Send Participants/Beneficiaries an annual TEFRA notice regarding required
federal tax withholding.
(p) Answer Participant/ Beneficiary telephone, written or other inquiries
concerning the plan and Investments under the Plan.
(q) Process requested changes to account information.
(r) Retain original source documents, such as applications and correspondence,
microfilm original source documents, as required.
(s) Respond to research inquiries from Fund or as requested by Custodian is
directed by the Fund. Perform applicable withholding for accounts.
(t) Purge "closed" accounts as directed by the Fund.
<PAGE>
Exhibit 9(f)
AMENDMENT TO THE TRANSFER AGENCY AGREEMENT
This Amendment dated as of 1st day of June, 1998 (the "Amendment") is made
to the Transfer Agency and Registrar Agreement(s) (the "Agreement(s)") between
each of the Funds executing this Amendment and listed on Exhibit 1 of this
Amendment attached hereto and incorporated herein (hereinafter individually and
collectively referred to as the "Fund") and First Data Investor Services Group,
Inc. ("Investor Services Group").
WITNESSETH
WHEREAS, the Fund desires to enable the shareholders of the Funds and their
respective Portfolios of the Fund as applicable set forth in Exhibit 1, to
access certain Fund information maintained by Investor Services Group on behalf
of the Fund through use of the Internet (as hereinafter defined) and Investor
Services Group desires to allow such access and provide certain services as more
fully described below in connection therewith;
NOW THEREFORE, the Fund and Investor Services Group agree that as of the
date first referenced above, Investor Services Group Agreement shall be amended
as follows:
1. The following definitions are hereby incorporated into Agreement:
(a) "Investor Services Group Secure Net Gateway" shall mean the system of
computer hardware and software and network established by Investor
Services Group to provide access between Investor Services Group
recordkeeping system and the Internet;
(b) "Investor Services Group Web Transaction Engine" shall mean the system
of computer hardware and software created and established by Investor
Services Group in order to enable Shareholders of the Fund to perform
the transactions contemplated hereunder.
(c) "Internet" shall mean the communications network comprised of multiple
communications networks linking education, government, industrial and
private computer network.
(d) "Fund Home Page" shall mean the Fund's proprietary web site on the
Internet used by the Fund to provide information to its shareholders
and potential shareholders.
2. In addition to the services rendered by Investor Services Group as set forth
in the Agreement, Investor Services Group agrees to provide the following
services for the fees set forth in the Schedule of IMPRESSNet Fees attached
hereto as Schedule A of this Amendment:
<PAGE>
(a) in accordance with the written procedures established between the fund
and Investor Services Group, enable the Fund and its Shareholders
utilize the Internet in order to access Fund information maintained by
Investor Services Group through the use of the Investor Services Group
Web Transaction Engine and Secure Net Gateway;
(b) allow the Shareholders to perform account inquiries and transactions;
(c) maintenance of the Investor Services Group Secure Net Gateway and the
Investor Services Group Web Transaction Engine.
3. Responsibility of the Fund. In connection with the services provided by
Investor Services Group hereunder, the Fund shall be responsible for the
following:
(a) establishment and maintenance of the Fund Home Page on the Internet;
(b) services and relationships between the Fund and any third party on-
line service providers to enable the Shareholders to access the Fund
Home Page;
(c) provide Investor Services Group with access to and information
regarding the Fund Home Page in order to enable Investor Services
Group to provide the services contemplated hereunder;
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment 2 to be
executed by their duly authorized officers, as of the day and year first above
written.
THE MUNDER FUNDS, INC. THE MUNDER FUNDS TRUST
/s/ Terry H. Gardner /s/ Terry H. Gardner
- -------------------- --------------------
By: Terry H. Gardner By: Terry H. Gardner
Title: Vice President Title: Vice President
ST. CLAIR FUNDS, INC. THE MUNDER FRAMLINGTON FUNDS TRUST
/s/ Terry H. Gardner /s/ Terry H. Gardner
- -------------------- --------------------
By: Terry H. Gardner By: Terry H. Gardner
Title: Vice President Title: Vice President
FIRST DATA INVESTOR SERVICES
GROUP, INC.
/s/ Gerald G. Kokos
- -------------------
By: Gerald G. Kokos
Title: Executive Vice President
<PAGE>
Exhibit 1
LIST OF FUNDS AND PORTFOLIOS
The Munder Funds Trust
Munder Accelerating Growth Fund
Munder Balanced Fund
Munder Bond Fund
Munder Cash Investment Fund
Munder Growth & Income Fund
Munder Index 500 Fund
Munder Intermediate Bond Fund
Munder International Equity Fund
Munder Michigan Triple Tax-Free Bond Fund
Munder Small Company Growth Fund
Munder Tax-Free Bond Fund
Munder Tax-Free Intermediate Bond Fund
Munder Tax-Free Money Market Fund
Munder U.S. Government Income Fund
Munder U.S. Treasury Money Market Fund
The Munder Funds, Inc.
Munder Multi-Season Growth Fund
Munder Money Market Fund
Munder Real Estate Equity Investment Fund
Munder Value Fund
Munder Mid-Cap Growth Fund
St. Clair Funds, Inc.
Liquidity Plus Money Market Fund
Munder S&P 500 Index Equity Fund
Munder S&P MidCap Index Equity Fund
Munder S&P SmallCap Index Equity Fund
Munder Foreign Equity Fund
Munder Aggregate Bond Index Fund
Munder Framlington Funds Trust
Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund
Munder Framlington International Growth Fund
<PAGE>
Schedule A
IMPRESSNet Fees
Web Transaction Engine
Transaction Cost:
. Account Inquiry $.10 per inquiry
. Financial Transactions $.50 per transaction
*Hardware Maintenance Fee Including Hardware and Software: $50,000 per annum
. Does not include client hardware and software requirements. That is an out-
of-pocket expense for the client
. Installation of hardware is billed as time and materials
. Does not include third party hardware and software maintenance agreements
. Does not include hardware upgrades
*Customized Development: $150 Per hour
Call Center Services for Registration (one-time): $2.50 per call
*Network Fee (one-time): $2,100
Per Pin Assignment (one-time): $2.50
*Cumulative charge with respect to all Funds executing this Amendment and such
other Funds advised by Munder Asset Management services by Investor Services
Group.
Investor Services Group will provide an invoice as soon as practicable after the
end of each calendar month. The Fund agrees to pay to Investor Services Group
the amounts so billed by Federal Funds Wire within fifteen (15) business days
after the Fund's receipt of invoice. In addition, with respect to all fees,
Investor Services Group may charge a service fee equal to the lesser of (i) one
and one half percent (1-1/2%) per month or (ii) the highest rate legally
permitted on any past due invoiced amounts.
<PAGE>
Exhibit 9(g)
AMENDMENT TO THE TRANSFER AGENCY AND REGISTRAR AGREEMENT
This Amendment dated as of June 1, 1998 is made to the Transfer Agency
Agreement(s) (the "Agreement(s)") between each of the Funds executing this
Amendment and listed on Exhibit 1 of this Amendment attached hereto and
incorporated herein (hereinafter individually and collectively referred to as
the "Fund") and First Data Investor Services Group, Inc. ("Investor Services
Group").
1. Modify Paragraph "(a)" of Section 15 "Term and Termination" by deleting the
contents of this paragraph in its entirety and inserting the following new
paragraph in its place:
"(a) Except as otherwise set forth herein, this Agreement shall be
effective as of the dates first written above and shall continue until June
1, 2000 (the "Initial Term"). Upon the expiration of the Initial Term,
this Agreement shall automatically renew for successive terms of one (1)
year ("Renewal Terms") each, unless the Trust or the Transfer Agent
provides written notice to the other of its intent not to renew. Such
notice must be received not less than ninety (90) days and not more than
one-hundred eighty (180) days prior to the expiration of the Initial Term
or the then current Renewal Term."
2. Modify Schedule A "Transfer Agent Fees" by deleting this Schedule in its
entirety and insert the attached new Schedule A in its place.
3. Modify Schedule B "Out-of-Pocket Expenses" by deleting this Schedule in its
entirety and insert the attached new Schedule B in its place.
4. Modify Exhibit 1 to Schedule C insert the following additional bullet:
. Identify area responsible for gain/loss purposes due to "as/of"
processing and daily reconciliation of processing to identify gains
and/or losses which impact the Fund. Any gain or loss will be netted out
on a quarterly basis. The Transfer Agent will compensate the Fund for
any Losses attributable to Transfer Agent processing errors.
<PAGE>
This Amendment contains the entire understanding among the parties with respect
to the transactions contemplated hereby. To the extent that any provision of
this Amendment modifies or is otherwise inconsistent with any provisions of the
prior agreements and related agreements, this Amendment shall control, but the
prior agreements and all related documents shall otherwise remain in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers, as of the day and year first above
written.
THE MUNDER FUNDS, INC. THE MUNDER FUNDS TRUST
/s/ Terry H. Gardner /s/ Terry H. Gardner
- -------------------- --------------------
By: Terry H. Gardner By: Terry H. Gardner
Title: Vice President Title: Vice President
ST. CLAIR FUNDS, INC. THE MUNDER FRAMLINGTON FUNDS TRUST
/s/ Terry H. Gardner /s/ Terry H. Gardner
- -------------------- --------------------
By: Terry H. Gardner By: Terry H. Gardner
Title: Vice President Title: Vice President
FIRST DATA INVESTOR SERVICES
GROUP, INC.
/s/ Gerald G. Kokos
- -------------------
By: Gerald G. Kokos
Title: Executive Vice President
<PAGE>
Exhibit 1
LIST OF FUNDS AND PORTFOLIOS
The Munder Funds Trust
- ----------------------
Munder Accelerating Growth Fund
Munder Balanced Fund
Munder Bond Fund
Munder Cash Investment Fund
Munder Growth & Income Fund
Munder Index 500 Fund
Munder Intermediate Bond Fund
Munder International Equity Fund
Munder Michigan Triple Tax-Free Bond Fund
Munder Small Company Growth Fund
Munder Tax-Free Bond Fund
Munder Tax-Free Intermediate Bond Fund
Munder Tax-Free Money Market Fund
Munder U.S. Government Income Fund
Munder U.S. Treasury Money Market Fund
The Munder Funds, Inc.
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Munder Multi-Season Growth Fund
Munder Money Market Fund
Munder Real Estate Equity Investment Fund
Munder Value Fund
Munder Mid-Cap Growth Fund
St. Clair Funds, Inc.
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Liquidity Plus Money Market Fund
Munder S&P 500 Index Equity Fund
Munder S&P MidCap Index Equity Fund
Munder S&P SmallCap Index Equity Fund
Munder Foreign Equity Fund
Munder Aggregate Bond Index Fund
Munder Framlington Funds Trust
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Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund
Munder Framlington International Growth Fund
<PAGE>
SCHEDULE A
TRANSFER AGENT'S FEES
1. Fund Complex Minimum* $90,000 per month
2. Asset Based Fees 2.00 Basis Points for assets (less than)
5 billion
1.50 Basis Points for assets 5 billion-9 billion
1.00 Basis Points for assets (greater than)
9 billion
3. Other Fees: IRA accounts will be charged $10.00 per global
account per annum (excluding Consumer's Energy
Group)
NSCC Transaction Charge is $.15 per financial
transaction
Client defined system enhancements will be agreed
upon by Transfer Agent and Munder Capital and
billed at a rate of $150.00 per hour
* The Fund Complex minimum will apply to all existing and any future funds
offered by Munder Capital Management which are serviced by the Transfer
Agent. The fees specified herein may be adjusted at any time upon written
agreement between the parties. After March 1, 2000 the parties agree to
review the fees charged for services under this Agreement.
<PAGE>
SCHEDULE B
OUT-OF-POCKET EXPENSES
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The Fund shall reimburse the Transfer Agent monthly for applicable out-of-
pocket expenses, including, but not limited to the following items:
. Microfiche/microfilm production
. Magnetic media tapes and freight
. Printing costs, including certificates, envelopes, checks and stationery
. Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct pass through
to the Fund
. Due diligence mailings
. Telephone and telecommunication costs, including all lease, maintenance and
line costs
. Ad hoc reports
. Proxy solicitations, mailings and tabulations
. Daily & Distribution advice mailings
. Shipping, Certified and Overnight mail and insurance
. Year-end form production and mailings
. Terminals, communication lines, printers and other equipment specifically
required by the Fund
. Duplicating services
. Courier services
. Incoming and outgoing wire charges
. Overtime, as approved by the Fund
. Temporary staff, as approved by the Fund
. Travel and entertainment, as approved by the Fund
. Federal Reserve changes for check clearance
. Record retention, retrieval and destruction costs
. Third party audit reviews
. Insurance
. Such other miscellaneous expenses reasonably incurred by the Transfer Agent
in performing its duties and responsibilities under this Agreement as
approved the Fund
The Company agrees that postage and mailing expenses will be paid on the
day of or price to mailing as agreed with the Transfer Agent. In addition, the
Company will promptly reimburse the Transfer Agent for any other unscheduled
expenses incurred by the Transfer Agent whenever the Company and the Transfer
Agent mutually agree that such expenses are not otherwise properly borne by the
Transfer Agent as part of its duties and obligations under the Agreement.
<PAGE>
Exhibit 11(B)
The Munder Funds Trust
Power of Attorney
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The undersigned, Lee P. Munder, whose signature appears below, does hereby
constitute and appoint Lisa Anne Rosen, Cynthia Surprise and Paul F. Roye his
true and lawful attorneys and agents to execute in his name, place and stead, in
his capacity as director or officer, or both, of The Munder Funds Trust (the
"Trust"), the Registration Statement of the Trust on Form N-1A, any amendments
thereto, and all instruments necessary or incidental in connection therewith,
and to file the same with the Securities and Exchange Commission; and such
attorneys shall have the full power of substitution and re-substitution; and
such attorneys shall have full power and authority to do and perform in the name
and on the behalf of the undersigned director and/or officer of the Trust, in
any and all capacities, every act whatsoever requisite or necessary to be done
in the premises, as fully and to all intents and purposes as the undersigned
director and/or officer of the Trust might or could do in person, such acts of
such attorneys being hereby ratified and approved.
/s/ Lee P. Munder
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Lee P. Munder
Dated: February 24, 1998
<PAGE>
The Munder Funds Trust
Power of Attorney
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The undersigned, Charles W. Elliot, whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Cynthia Surprise and Paul F. Roye
his true and lawful attorneys and agents to execute in his name, place and
stead, in his capacity as director or officer, or both, of The Munder Funds
Trust (the "Trust"), the Registration Statement of the on Form N-1A, any
amendments thereto, and all instruments necessary or incidental in connection
therewith, and to file the same with the Securities and Exchange Commission; and
such attorneys shall have the full power of substitution and re-substitution;
and such attorneys shall have full power and authority to do and perform in the
name and on the behalf of the undersigned director and/or officer of the Trust,
in any and all capacities, every act whatsoever requisite or necessary to be
done in the premises, as fully and to all intents and purposes as the
undersigned director and/or officer of the Trust might or could do in person,
such acts of such attorneys being hereby ratified and approved.
/s/ Charles W. Elliott
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Charles W. Elliott
Dated: February 24, 1998
<PAGE>
The Munder Funds Trust
Power of Attorney
-----------------
The undersigned, Joseph E. Champagne, whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Cynthia Surprise and Paul F. Roye
his true and lawful attorneys and agents to execute in his name, place and
stead, in his capacity as director or officer, or both, of The Munder Funds
Trust (the "Trust"), the Registration Statement of the Trust on Form N-1A, any
amendments thereto, and all instruments necessary or incidental in connection
therewith, and to file the same with the Securities and Exchange Commission; and
such attorneys shall have the full power of substitution and re-substitution;
and such attorneys shall have full power and authority to do and perform in the
name and on the behalf of the undersigned director and/or officer of the Trust,
in any and all capacities, every act whatsoever requisite or necessary to be
done in the premises, as fully and to all intents and purposes as the
undersigned director and/or officer of the Trust might or could do in person,
such acts of such attorneys being hereby ratified and approved.
/s/ Joseph E. Champagne
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Joseph E. Champagne
Dated: February 24, 1998
<PAGE>
The Munder Funds Trust
Power of Attorney
-----------------
The undersigned, Thomas B. Bender, whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Cynthia Surprise and Paul F. Roye
his true and lawful attorneys and agents to execute in his name, place and
stead, in his capacity as director or officer, or both, of The Munder Funds
Trust (the "Trust"), the Registration Statement of the Trust on Form N-1A, any
amendments thereto, and all instruments necessary or incidental in connection
therewith, and to file the same with the Securities and Exchange Commission; and
such attorneys shall have the full power of substitution and re-substitution;
and such attorneys shall have full power and authority to do and perform in the
name and on the behalf of the undersigned director and/or officer of the Trust,
in any and all capacities, every act whatsoever requisite or necessary to be
done in the premises, as fully and to all intents and purposes as the
undersigned director and/or officer of the Trust might or could do in person,
such acts of such attorneys being hereby ratified and approved.
/s/ Thomas B. Bender
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Thomas B. Bender
Dated: February 24, 1998
<PAGE>
The Munder Funds Trust
Power of Attorney
-----------------
The undersigned, Thomas D. Eckert, whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Cynthia Surprise and Paul F. Roye
his true and lawful attorneys and agents to execute in his name, place and
stead, in his capacity as director or officer, or both, of The Munder Funds
Trust (the "Trust"), the Registration Statement of the Trust on Form N-1A, any
amendments thereto, and all instruments necessary or incidental in connection
therewith, and to file the same with the Securities and Exchange Commission; and
such attorneys shall have the full power of substitution and re-substitution;
and such attorneys shall have full power and authority to do and perform in the
name and on the behalf of the undersigned director and/or officer of the Trust,
in any and all capacities, every act whatsoever requisite or necessary to be
done in the premises, as fully and to all intents and purposes as the
undersigned director and/or officer of the Trust might or could do in person,
such acts of such attorneys being hereby ratified and approved.
/s/ Thomas D. Eckert
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Thomas D. Eckert
Dated: February 24, 1998
<PAGE>
The Munder Funds Trust
Power of Attorney
-----------------
The undersigned, John Rakolta, Jr., whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Cynthia Surprise and Paul F. Roye
his true and lawful attorneys and agents to execute in his name, place and
stead, in his capacity as director or officer, or both, of The Munder Funds
Trust (the "Trust"), the Registration Statement of the Trust on Form N-1A, any
amendments thereto, and all instruments necessary or incidental in connection
therewith, and to file the same with the Securities and Exchange Commission; and
such attorneys shall have the full power of substitution and re-substitution;
and such attorneys shall have full power and authority to do and perform in the
name and on the behalf of the undersigned director and/or officer of the Trust,
in any and all capacities, every act whatsoever requisite or necessary to be
done in the premises, as fully and to all intents and purposes as the
undersigned director and/or officer of the Trust might or could do in person,
such acts of such attorneys being hereby ratified and approved.
/s/ John Rakolta, Jr.
--------------------------
John Rakolta, Jr.
Dated: February 24, 1998
<PAGE>
The Munder Funds Trust
Power of Attorney
-----------------
The undersigned, David J. Brophy, whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Cynthia Surprise and Paul F. Roye
his true and lawful attorneys and agents to execute in his name, place and
stead, in his capacity as director or officer, or both, of The Munder Funds
Trust (the "Trust"), the Registration Statement of the Trust on Form N-1A, any
amendments thereto, and all instruments necessary or incidental in connection
therewith, and to file the same with the Securities and Exchange Commission; and
such attorneys shall have the full power of substitution and re-substitution;
and such attorneys shall have full power and authority to do and perform in the
name and on the behalf of the undersigned director and/or officer of the Trust,
in any and all capacities, every act whatsoever requisite or necessary to be
done in the premises, as fully and to all intents and purposes as the
undersigned director and/or officer of the Trust might or could do in person,
such acts of such attorneys being hereby ratified and approved.
/s/ David J. Brophy
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David J. Brophy
Dated: February 24, 1998
<PAGE>
The Munder Funds Trust
Power of Attorney
-----------------
The undersigned, Terry H. Gardner, whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Cynthia Surprise and Paul F. Roye
his true and lawful attorneys and agents to execute in his name, place and
stead, in his capacity as director or officer, or both, of The Munder Funds
Trust (the "Trust"), the Registration Statement of the Trust on Form N-1A, any
amendments thereto, and all instruments necessary or incidental in connection
therewith, and to file the same with the Securities and Exchange Commission; and
such attorneys shall have the full power of substitution and re-substitution;
and such attorneys shall have full power and authority to do and perform in the
name and on the behalf of the undersigned director and/or officer of the Trust,
in any and all capacities, every act whatsoever requisite or necessary to be
done in the premises, as fully and to all intents and purposes as the
undersigned director and/or officer of the Trust might or could do in person,
such acts of such attorneys being hereby ratified and approved.
/s/ Terry H. Gardner
--------------------------
Terry H. Gardner
Dated: February 24, 1998
<PAGE>
Exhibit 11(c)
Secretary's Certificate
I, Lisa A. Rosen, Secretary of The Munder Funds Trust ("Trust"), hereby
certify that the following resolution authorizing Paul Roye, Lisa A. Rosen and
Cynthia Surprise to sign the Trust's Registration Statement on behalf of Lee
Munder, President of the Trust, has been adopted, at a meeting of the Board of
Trustees duly called and held on February 24, 1998, at which a quorum was
present and acting throughout:
Resolved, that Paul Roye, Lisa A. Rosen and Cynthia Surprise be, and hereby
are authorized to execute and sign on behalf of Lee Munder, President of the
Trust, all amendments and supplements to the Trust's Registration Statements on
Form N-1A pursuant to a power of attorney from Lee Munder and hereby ratifies
the execution of such Registration Statements by such persons.
Dated: August 28, 1998 /s/ Lisa A. Rosen
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Lisa A. Rosen, Secretary
The Munder Funds Trust
