As filed with the Securities and Exchange Commission
on December 13, 1996
Registration Nos. 33-54748
811-7348
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. 21 [ X ]
----
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940[ X ]
Amendment No. 23 [ X ]
----
(Check appropriate box or boxes)
The Munder Funds, Inc.
(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: (810) 647-9200
Teresa M.R. Hamlin, Esq.
First Data Investor Services Group, Inc.
One Exchange Place, 8th Floor
Boston, Massachusetts 02109
Copies to:
Lisa Anne Rosen, Esq. Paul F. Roye, Esq.
Munder Capital Management Dechert Price & Rhoads
480 Pierce Street 1500 K Street, NW
Birmingham, Michigan 48009 Washington, DC 20005
[X] It is proposed that this filing will become effective
December 14, 1996 pursuant to paragraph (b) of Rule 485
The Registrant has elected to register an indefinite number
of shares under the Securities Act of 1933 pursuant to Rule 24f-2
under the Investment Company Act of 1940. Registrant filed the
notice required by Rule 24f-2 with respect to its fiscal year
ended June 30, 1996 on August 29, 1996.
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds, Inc.
(The Munder Short Term Treasury Fund Class A, B and C Shares)
Part A
- ------
Item Heading
---- -------
1. Cover Page Cover Page
2. Synopsis Prospectus
Summary; Expense Table
3. Condensed Financial Information Not
Applicable
4. General Description of Registrant Cover
Page; The Fund; Prospectus Summary; Investment Objective and
Policies; Portfolio Instruments and Practices and Associated Risk
Factors; Description of Shares
5. Management of the Fund Management;
Investment Objective and Policies; Dividends and Distributions;
Performance
6. Capital Stock and Other Securities
Management; How to Purchase Shares; How to Redeem Shares;
Dividends and Distributions; Taxes; Description of Shares
7. Purchase of Securities Being How to
Purchase
Offered Shares; Net
Asset Value
8. Redemption or Repurchase How to
Redeem Shares
9. Pending Legal Proceedings Not
Applicable
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds, Inc.
(The Munder Short Term Treasury Fund Class K Shares)
Part A
- ------
Item Heading
---- -------
1. Cover Page Cover Page
2. Synopsis Expense
Table
3. Condensed Financial Information Not
Applicable
4. General Description of Registrant Cover
Page; The Fund; Investment Objective and Policies; Portfolio
Instruments and Practices and Associated Risk Factors; Description
of Shares
5. Management of the Fund Management;
Investment Objective and Policies; Dividends and Distributions;
Performance
6. Capital Stock and Other Securities
Management; Purchases and Redemptions of Shares; Dividends
and Distributions; Taxes; Description of Shares
7. Purchase of Securities Being
Purchases and
Offered Redemptions
of Shares; Net Asset Value
8. Redemption or Repurchase
Purchases and Redemptions of Shares
9. Pending Legal Proceedings Not
Applicable
THE MUNDER FUNDS, INC.
CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus to The Munder Funds, Inc.
(The Munder Short Term Treasury Fund Class Y Shares)
Part A
- ------
Item Heading
---- -------
1. Cover Page Cover Page
2. Synopsis Expense
Table
3. Condensed Financial Information Not
Applicable
4. General Description of Registrant Cover
Page; The Fund; Investment Objective and Policies; Portfolio
Instruments and Practices and Associated Risk Factors; Description
of Shares
5. Management of the Fund Management;
Investment Objective and Policies; Dividends and Distributions;
Performance
6. Capital Stock and Other Securities
Management; Purchases and Redemptions of Shares; Dividends
and Distributions; Taxes; Description of Shares
7. Purchase of Securities Being
Purchases and
Offered Redemptions
of Shares; Net Asset Value
8. Redemption or Repurchase
Purchases and Redemptions of Shares
9. Pending Legal Proceedings Not
Applicable
Part B
- ------
10. Cover Page Cover Page
11. Table of Contents Table of
Contents
12. General Information and History See
Prospectus --"The Fund" and "Management;" General; Directors and
Officers
13. Investment Objectives and Policies Fund
Investments; Additional Investment Limitations; Portfolio
Transactions
14. Management of the Fund See
Prospectus --"Management;" Directors and Officers; Miscellaneous
15. Control Persons and Principal See
Prospectus --
Holders of Securities
"Management;" Miscellaneous
16. Investment Advisory and Other Investment
Advisory
Services and Other
Service Arrangements; See Prospectus --"Management"
17. Brokerage Allocation and Other
Portfolio
Practices Transactions
18. Capital Stock and Other Securities See
Prospectus --"Description of Shares" and "Management;" Additional
Information Concerning Shares
19. Purchase, Redemption and Pricing
Purchase and
of Securities Being Offered
Redemption Information; Net Asset Value; Additional
Information Concerning Shares
20. Tax Status Taxes
21. Underwriters
Investment Advisory
and Other
Service
Agreements
22. Calculation of Performance Data
Performance Information
23. Financial Statements Not
Applicable
THE MUNDER FUNDS, INC.
The purpose of this Post-Effective Amendment filing is to
respond to make non-material language changes that the Registrant
deems appropriate.
The Prospectuses for the Multi-Season Growth Fund, Real Estate
Equity Investment Fund, Mid-Cap Growth Fund, Value Fund, Money
Market Fund, International Bond Fund, Small-Cap Value Fund, Equity
Selection Fund, Micro-Cap Equity Fund and NetNet Fund
(collectively, the "Existing Munder Funds") are not included in
this filing. The Statements of Additional Information for the
Existing Munder Funds are not included in this filing.
<PAGE>
MUNDER SHORT TERM TREASURY FUND
480 PIERCE STREET
BIRMINGHAM, MICHIGAN 48009
TELEPHONE (800) 438-5789
PROSPECTUS
CLASS A, CLASS B AND CLASS C SHARES
The Munder Short Term Treasury Fund (the "Fund") is a series of shares
issued by The Munder Funds, Inc. (the "Company"), an open-end management
investment company. The Fund's investment objective is to provide shareholders
with a high level of current income consistent with capital preservation. The
Fund seeks to achieve its objective by investing only in U.S. Treasury
securities and repurchase agreements fully collateralized by U.S. Treasury
securities. There can be no assurance that the Fund's investment objective
will be achieved. The net asset value per share of the Fund will fluctuate in
response to changes in market conditions and other factors.
Munder Capital Management (the "Advisor") serves as investment advisor to
the Fund.
This Prospectus contains the information that a prospective investor should
know before investing in the Fund. Investors are encouraged to read this
Prospectus and retain it for future reference. A Statement of Additional
Information dated December 14, 1996, as amended or supplemented from time to
time, has been filed with the Securities and Exchange Commission (the "SEC")
and is incorporated by reference into this Prospectus. The Statement of
Additional Information may be obtained 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 Statement of Additional Information 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 INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is December 14, 1996.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................... 3
The Fund
Expense Table............................................................ 5
Investment Objective and Policies........................................ 6
Portfolio Instruments and Practices and Associated Risk Factors.......... 6
Investment Limitations................................................... 8
How to Do Business with Us
How to Purchase Shares................................................... 9
How to Redeem Shares..................................................... 14
Conversion of Class B Shares............................................. 17
How to Exchange Shares................................................... 17
Dividends and Distributions.............................................. 18
Other Information
Net Asset Value.......................................................... 19
Management............................................................... 20
Taxes.................................................................... 22
Description of Shares.................................................... 23
Performance.............................................................. 23
Shareholder Account Information.......................................... 25
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION, OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S STATEMENT
OF ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH
THE OFFERING MADE BY THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ITS DISTRIBUTOR, FUNDS DISTRIBUTOR, INC. (THE "DISTRIBUTOR"). THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE COMPANY OR BY THE
DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE
MADE.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing in this Prospectus.
INVESTMENT OBJECTIVE
The investment objective of the Munder Short Term Treasury Fund is to
provide investors with a high level of current income consistent with capital
preservation. The Fund seeks to achieve its objective by investing only in
U.S. Treasury securities and repurchase agreements fully collateralized by
U.S. Treasury securities. There is no assurance that the Fund will achieve its
investment objective.
PRINCIPAL INVESTMENTS
Under normal market conditions, 100% of the Fund's assets are invested in
U.S. Treasury securities and repurchase agreements fully collateralized by
U.S. Treasury securities. The dollar-weighted average maturity of the Fund's
portfolio is not expected to exceed two years.
INVESTMENT RISKS AND SPECIAL CONSIDERATIONS
The Fund is not a money market fund and, although it seeks to maintain
minimum fluctuation of principal value, no assurance can be given that, when
an investor desires to redeem Fund shares, the then-current net asset value
per share will be at or greater than the net asset value per share at the time
of purchase.
The value of the portfolio securities held by the Fund will vary inversely
to changes in prevailing interest rates. Thus, if interest rates have
increased from the time a security was purchased, such security, if sold,
might be sold at a price less than its cost. Similarly, if interest rates have
declined from the time a security was purchased, such security, if sold, might
be sold at a price greater than its purchase cost. In either instance, if the
security was purchased at face value and held to maturity, no gain or loss
would be realized. See "Portfolio Instruments and Practices and Associated
Risk Factors."
PURCHASE PLANS
This Prospectus offers three classes, "Class A," "Class B," and "Class C,"
respectively, of shares ("Shares") to investors. Investors may select Class A
shares, Class B shares or Class C shares, each with different expense levels
and with a public offering price that reflects different sales charges.
Purchases in excess of $250,000 must be for Class A shares or Class C shares.
The Fund also offers two additional classes of Shares, Class K Shares and
Class Y Shares. These classes of the Fund may have different sales charges and
expense levels, which may affect performance. Investors may call the Fund at
(800) 438-5789 for more information concerning Class K Shares and Class Y
Shares.
CLASS A SHARES
Offered at net asset value plus a maximum initial sales charge of 4%. Class
A shares of the Fund pay a shareholder servicing fee at the annual rate of
.25% of the value of average daily net assets. See "How to Purchase Shares."
CLASS B SHARES
Offered at net asset value per share subject to a contingent deferred sales
charge ("CDSC") imposed on certain redemptions made within six years of the
date of purchase at the maximum rate of 5% of the lesser of the shares' net
asset value or original purchase price. Class B shares of the Fund are subject
to shareholder servicing and distribution fees at the annual rate of 1% of the
value of average daily net assets. Class B shares will convert automatically
to Class A shares, based on relative net asset value, at the end of six years
after the date of original purchase. See "How to Purchase Shares."
CLASS C SHARES
Offered at net asset value per share subject to a CDSC imposed on certain
redemptions made within one year of the date of purchase at the rate of 1% of
the lesser of the shares' net asset value or original purchase price. Class C
shares of the Fund are subject to shareholder servicing and distribution fees
at the annual rate of 1% of the value of average daily net assets.
3
<PAGE>
PURCHASING SHARES
Class A shares, Class B shares and Class C shares of the Fund are offered
continuously and may be purchased from the Distributor through certain broker-
dealers and other financial institutions or through First Data Investor
Services Group, Inc. (the "Transfer Agent"). Shares of the Fund are subject to
the applicable sales charge or CDSC. See "How to Purchase Shares."
MINIMUM INVESTMENT
$1,000 minimum investment ($50 through Automatic Investment Plan). $50
minimum for subsequent purchases.
EXCHANGE PRIVILEGES
Shares may be exchanged for shares of the same class of other funds of the
Company, The Munder Funds Trust or The Munder Framlington Funds Trust subject
to any applicable sales charge. See "How to Exchange Shares."
REINVESTMENT
Automatic reinvestment of dividends and capital gains without a sales charge
or CDSC unless a shareholder elects to receive cash.
OTHER FEATURES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------- -------------- --------------
<S> <C> <C>
Automatic Investment Plan Automatic Investment Plan Automatic Investment Plan
Automatic Withdrawal Plan Automatic Withdrawal Plan Automatic Withdrawal Plan
Retirement Plans Retirement Plans Retirement Plans
Telephone Exchanges Telephone Exchanges Telephone Exchanges
Rights of Accumulation Reinvestment Privilege Reinvestment Privilege
Letter of Intent
Quantity Discounts
Reinvestment Privilege
Free Checkwriting
</TABLE>
DIVIDENDS AND OTHER DISTRIBUTIONS
Dividends are declared daily and paid monthly for the Fund; capital gains
are distributed at least annually.
NET ASSET VALUE
Determined once daily for the Fund on each Business Day (as defined below).
REDEEMING SHARES
Class A shares of the Fund may be redeemed at net asset value per share by
mail, telephone or check. Certain redemptions of Class A shares may be subject
to a CDSC. Class B and Class C shares are redeemable at net asset value less
any applicable CDSC by mail or telephone. See "How to Redeem Shares."
INVESTMENT ADVISOR
As investment advisor for the Fund, Munder Capital Management provides
overall investment management for the Fund, provides research and credit
analysis, is responsible for all purchases and sales of portfolio securities,
maintains records relating to such purchases and sales, and provides reports
to the Board of Directors. See "Management--Investment Advisor."
DISTRIBUTOR
Funds Distributor, Inc.
4
<PAGE>
EXPENSE TABLE
The following table sets forth certain costs and expenses that an investor
will incur either directly or indirectly as a shareholder of the Fund based on
estimated operating expenses for the current fiscal year.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------- -------------- --------------
<S> <C> <C> <C>
Shareholder transaction expenses:
Maximum sales load on purchases.. 4.00% None None
Maximum sales load on reinvested
dividends....................... None None None
Maximum contingent deferred sales
charge.......................... None(1) 5.00% 1.00%(2)
Redemption fees.................. None None None
Exchange fees.................... None None None
Annual operating expenses:
(as a percentage of average net
assets)
Advisory fees.................... .25% .25% .25%
12b-1 fees....................... .25% 1.00%(3) 1.00%(3)
Other expenses................... .25% .25% .25%
---- ---- ----
Total Fund operating expenses.... .75% 1.50% 1.50%
==== ==== ====
</TABLE>
- --------
(1) A deferred sales charge of 1.00% is assessed on certain redemptions of
Class A shares that were purchased with no initial sales charge as part of
an investment of $1,000,000 or more. See "How to Purchase Shares."
(2) A deferred sales charge of up to 1.00% is assessed on redemption of Class C
shares made within the first year of investing.
(3) Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted by the National Association of
Securities Dealers, Inc.
The initial sales charge applicable to Class A shares set forth in the above
table is the maximum charge imposed upon the purchase of Class A shares.
Reductions and waivers from sales loads are described under "How to Purchase
Shares." The CDSC applicable to Class B shares set forth in the above table is
the maximum sales load applicable imposed upon redemption of Class B shares.
Waivers of CDSC are described under "How to Redeem Shares."
"Other expenses" in the above table include administrator fees, custodial
fees, legal and accounting fees, printing costs, registration fees, fees for
any portfolio valuation service, the cost of regulatory compliance, the costs
of maintaining the Fund's legal existence and the costs involved with
communicating with shareholders. The amount of "Other expenses" in the expense
table above is based on estimated expenses and projected assets for the current
fiscal year. The nature of the services for which the Fund is obligated to pay
advisory fees is described under "Management." Any fees charged by institutions
directly to customer accounts for services provided in connection with
investments in shares of the Fund are in addition to the expenses shown in the
above Expense Table and the Example shown below. The Transfer Agent may deduct
a wire redemption fee of $7.50 for wire redemptions under $5,000.
Example
The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over various periods with respect to
a hypothetical investment in the Fund. These amounts are based on payment by
the Fund of operating expenses at the levels set forth in the above table, and
are also based on the following assumptions:
<TABLE>
<CAPTION>
1 YEAR 3 YEAR
------ ------
<S> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return:
Class A Shares(1)............................................... $47 $63
Class B Shares
Assuming redemption at end of the period(2)..................... $65 $77
Assuming no redemption at end of the period..................... $15 $47
Class C Shares
Assuming redemption at end of the period(3)..................... $25 $47
Assuming no redemption at end of the period..................... $15 $47
</TABLE>
- --------
(1) Assumes deduction at the time of purchase of the maximum initial sales
charge and redemption at the end of the time period shown.
(2) Assumes deduction at the time of redemption of the maximum applicable CDSC.
See "How to Redeem Shares--Contingent Deferred Sales Charge--Class B
Shares."
(3) Assumes redemption at the end of time period shown and is subject to a CDSC
for redemptions made within one year of date of purchase.
5
<PAGE>
The foregoing Expense Table and Example are intended to assist investors in
understanding the various shareholder transaction expenses and operating
expenses of the Fund that investors bear either directly or indirectly.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
INVESTMENT RETURN OR OPERATING EXPENSES. ACTUAL INVESTMENT RETURN AND
OPERATING EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
THE FUND
The Munder Short Term Treasury Fund (the "Fund") is a series of shares
issued by the Company, an open-end management investment company. The Company
was organized under the laws of the State of Maryland on November 18, 1992 and
has registered under the Investment Company Act of 1940, as amended (the "1940
Act"). The Fund's principal office is located at 480 Pierce Street,
Birmingham, Michigan 48009 and its telephone number is (800) 438-5789.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to provide shareholders with a high level
of current income consistent with capital preservation. The Fund seeks to
achieve its objective by investing only in U.S. Treasury securities and
repurchase agreements fully collateralized by U.S. Treasury securities. Under
normal market conditions, the Fund will invest 100% of its total assets in
these securities. Under normal circumstances, the Fund will enter into
repurchase agreements with maturities of seven days or less and will invest in
securities with remaining maturities of three years or less. The dollar-
weighted average maturity of the Fund's portfolio is not expected to exceed
two years. The Fund also may borrow money for temporary purposes and to meet
redemption requests and may enter into reverse repurchase agreements. In
addition, the Fund may lend portfolio securities, purchase securities on a
"when-issued" basis and purchase or sell securities on a "forward commitment"
basis. See "Portfolio Instruments and Practices and Associated Risk Factors."
There can be no assurance that the Fund's investment objective will be
achieved.
The Fund is not a money market fund and, although it seeks to maintain
minimum fluctuation of principal value, no assurance can be given that, when
an investor desires to redeem Fund shares, the then-current net asset value
per share will be at or greater than the net asset value per share at the time
of purchase.
The value of the portfolio securities held by the Fund will vary inversely
to changes in prevailing interest rates. Thus, if interest rates have
increased from the time a security was purchased, such security, if sold,
might be sold at a price less than its cost. Similarly, if interest rates have
declined from the time a security was purchased, such security, if sold, might
be sold at a price greater than its purchase cost. In either instance, if the
security was purchased at face value and held to maturity, no gain or loss
would be realized.
PORTFOLIO INSTRUMENTS AND PRACTICES AND ASSOCIATED RISK FACTORS
U.S. Treasury Securities. Securities purchased by the Fund are direct
obligations of the U.S. Treasury and are guaranteed by the full faith and
credit of the U.S. government. These securities presently consist of U.S.
Treasury bills, U.S. Treasury notes and U.S. Treasury bonds. U.S. Treasury
securities differ in their interest rates, maturities and times of issuance.
Treasury bills have initial maturities of one year or less; Treasury notes
have initial maturities of one to ten years; and Treasury bonds generally have
initial maturities greater than ten years.
Zero Coupon Treasury Securities. A portion of the U.S. Treasury securities
purchased by the Fund may be "zero coupon" Treasury securities. These are U.S.
Treasury notes and bonds which have been stripped of their unmatured interest
coupons and receipts or which are certificates representing interests in such
stripped debt
6
<PAGE>
obligations and coupons. Such securities are purchased at a discount from
their face amount, giving the purchaser the right to receive their full value
at maturity. A zero coupon security pays no interest to its holder during its
life. Its value to an investor consists of the difference between its face
value at the time of maturity and the price for which it was acquired, which
is generally an amount significantly less than its face value (sometimes
referred to as a "deep discount" price).
The interest earned on such securities is, implicitly, automatically
compounded and paid out at maturity. While such compounding at a constant rate
eliminates the risk of receiving lower yields upon reinvestment of interest if
prevailing interest rates decline, the owner of a zero coupon security will be
unable to participate in higher yields upon reinvestment of interest received
if prevailing interest rates rise. For this reason, zero coupon securities are
subject to substantially greater market price fluctuations during periods of
changing prevailing interest rates than are comparable debt securities which
make current distributions of interest. Current federal tax law requires that
a holder (such as the Fund) of a zero coupon security accrue a portion of the
discount at which the security was purchased as income each year even though
the Fund receives no interest payments in cash on the security during the
year.
Certain banks and brokerage firms have separated ("stripped") the principal
portions ("corpus") from the coupon portions of the U.S. Treasury bonds and
notes and sell them separately in the form of receipts or certificates
representing undivided interests in these instruments (which instruments are
generally held by a bank in a custodial or trust account). The Fund will not
purchase any such receipts or certificates representing stripped corpus or
coupon interests in U.S. Treasury securities sold by banks and brokerage
firms. The Fund will only purchase zero coupon Treasury securities which have
been stripped by the Federal Reserve Bank.
Repurchase Agreements. The Fund may agree to purchase U.S. Treasury
securities from financial institutions subject to the seller's agreement to
repurchase them at an agreed-upon time and price ("repurchase agreements").
The financial institutions with which the Fund may enter into repurchase
agreements include member banks of the Federal Reserve system, any foreign
bank or any domestic or foreign broker/dealer which is recognized as a
reporting government securities dealer. The Advisor will review and
continuously monitor the creditworthiness of the seller under a repurchase
agreement, and will require the seller to maintain liquid assets in a
segregated account in an amount that is greater than the repurchase price.
Default by or bankruptcy of the seller would, however, expose the Fund to
possible loss because of adverse market action or delays in connection with
the disposition of the underlying obligations.
Borrowing. The Fund is authorized to borrow money in amounts up to 5% of the
value of the Fund's total assets at the time of such borrowing for temporary
purposes. However, the Fund is authorized to borrow money in amounts up to 33
1/3% of its assets, as permitted by the 1940 Act, for the purpose of meeting
redemption requests. Borrowing by the Fund creates an opportunity for greater
total return but, at the same time, increases exposure to capital risk.
Leveraging by means of borrowing may exaggerate the effect of any increase or
decrease in the value of portfolio securities on the Fund's net asset value.
In addition, borrowed funds are subject to interest costs that may offset or
exceed the return earned on the borrowed funds. However, the Fund will not
purchase portfolio securities while borrowings exceed 5% of the Fund's total
assets. For more detailed information with respect to the risks associated
with borrowing, see the heading "Borrowing" in the Statement of Additional
Information.
Reverse Repurchase Agreements. The Fund may borrow funds for temporary
purposes by selling portfolio securities to financial institutions such as
banks and broker/dealers and agreeing to repurchase them at a mutually
specified date and price ("reverse repurchase agreements"). Reverse repurchase
agreements involve the risk that the market value of the securities sold by
the Fund may decline below the repurchase price. The Fund would pay interest
on amounts obtained pursuant to a reverse repurchase agreement.
When-Issued Purchases and Forward Commitments. The Fund may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"forward commitment" basis. These transactions, which involve a
7
<PAGE>
commitment by the Fund to purchase or sell particular securities with payment
and delivery taking place at a future date (perhaps one or two months later),
permit the Fund to lock-in a price or yield on a security, regardless of
future changes in interest rates. When-issued and forward commitment
transactions involve the risk that the price or yield obtained may be less
favorable than the price or yield available when the delivery takes place. The
Fund will establish a segregated account consisting of cash, U.S. Government
securities or other high grade debt obligations in an amount equal to the
amount of its when-issued purchases and forward commitments. The Fund's when-
issued purchases and forward purchase commitments are not expected to exceed
25% of the value of the Fund's total assets absent unusual market conditions.
The Fund does not intend to engage in when-issued purchases and forward
commitments for speculative purposes but only in furtherance of its investment
objective.
Lending of Portfolio Securities. To enhance the return on its portfolio, the
Fund may lend securities in its portfolio representing up to 25% of its total
assets, taken at market value, to securities firms and financial institutions,
provided that each loan is secured continuously by collateral in the form of
cash or short-term U.S. Government securities adjusted daily to have a market
value at least equal to the current market value of the securities loaned. The
risk in lending portfolio securities, as with other extensions of credit,
consists of a possible delay in the recovery of the securities or a possible
loss of rights in the collateral should the borrower fail financially.
Portfolio Transactions and Turnover. All orders for the purchase or sale of
securities on behalf of the Fund are placed by the Advisor with broker/dealers
that the Advisor selects. A high portfolio turnover rate involves larger
brokerage commission expenses or transaction costs which must be borne
directly by the Fund, and may result in the realization of short-term capital
gains which are taxable to shareholders as ordinary income. The Advisor will
not consider portfolio turnover rate a limiting factor in making investment
decisions consistent with the Fund's investment objective and policies. It is
anticipated that the Fund's annual portfolio turnover rate will range from
100% to 200%.
INVESTMENT LIMITATIONS
The Fund's investment objective and policies may be changed by the Company's
Board of Directors without shareholder approval. No assurance can be given
that the Fund will achieve its investment objective.
The Fund has also adopted certain fundamental investment limitations that
may be changed only with the approval of a "majority of the outstanding shares
of the Fund" (as defined in the Statement of Additional Information). The
following descriptions summarize several of the Fund's fundamental investment
policies, which are set forth in full in the Statement of Additional
Information.
The Fund may not:
(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 one or more issuers
conducting their principal business activities in the same industry; or
(3) borrow money, which includes entering into reverse repurchase
agreements, except that the Fund may enter into reverse repurchase
agreements or borrow money for temporary purposes in amounts up to 5% of
the value of the Fund's total assets and borrow money for the purpose of
meeting redemption requests in amounts, when aggregated with borrowings for
temporary purposes and reverse repurchase agreements, up to 33 1/3% of the
value of the Fund's assets.
These investment limitations are applied at the time investment securities
are purchased.
8
<PAGE>
HOW TO PURCHASE SHARES
This Prospectus offers individual investors three methods of purchasing
shares of the Fund, thus enabling investors to choose the class that best
suits their needs, given the amount of purchase and intended length of
investment.
Shares of the Fund are sold on a continuous basis and may be purchased on
any day the New York Stock Exchange is open for business (a "Business Day")
through authorized investment dealers or directly from the Distributor or the
Transfer Agent. Only the Distributor and investment dealers which have a sales
agreement with the Distributor are authorized to sell shares of the Fund. The
Distributor is a registered broker/dealer with principal offices at 60 State
Street, Boston, Massachusetts 02109.
Shares will be credited to a shareholder's account at the public offering
price next computed after an order is received by the Distributor or a dealer,
less any applicable initial sales charges. The issuance of shares is recorded
on the books of the Fund, and share certificates are not issued unless
expressly requested in writing. The Fund's management reserves the right to
reject any purchase order if in its opinion, it is in the Fund's best interest
to do so and to suspend the offering of shares of any class for any period of
time.
The minimum initial investment for Class A, Class B or Class C shares is
$1,000 and subsequent investments must be at least $50. Purchases in excess of
$250,000 must be for Class A shares or Class C shares.
DIFFERENCES AMONG THE CLASSES
The primary distinctions among the classes of the Fund's shares are in their
sales charge structures and ongoing expenses, as summarized in the table
below. Each class has distinct advantages and disadvantages for different
investors, and investors may choose the class that best suits their
circumstances and objectives.
<TABLE>
<CAPTION>
ANNUAL 12B-1 FEES
(AS A % OF AVERAGE
SALES CHARGE DAILY NET ASSETS) OTHER INFORMATION
------------ ------------------ -----------------
<S> <C> <C> <C>
Class Maximum initial sales Service fee of 0.25% Initial sales charge
A charge of 4% of the pub- waived or reduced for
lic offering price. certain purchases.
Class Maximum CDSC of 5% of Service fee of 0.25%; CDSC waived for certain
B redemption proceeds; de- distribution fee of redemptions; shares con-
clines to zero after six 0.75% vert to Class A shares
years. approximately six years
after issuance, subject
to receipt of certain tax
rulings or opinions.
Class Maximum CDSC of 1% of Service fee of 0.25%; Shares do not convert to
C redemption proceeds for distribution fee of another class.
redemptions made within 0.75%
the first year after
purchase.
</TABLE>
FACTORS TO CONSIDER IN CHOOSING A CLASS OF SHARES
In deciding which class of shares to purchase, investors should consider the
cost of sales charges together with the cost of the ongoing annual expenses
described below, as well as any other relevant facts and circumstances:
9
<PAGE>
SALES CHARGES
Class A shares are sold at net asset value plus an initial sales charge of
up to 4% of the public offering price. Because of this initial sales charge,
not all of a Class A shareholder's purchase price is invested in the Fund.
Class A shares sold pursuant to a complete waiver of the initial sales charge
applicable to large purchase are subject to a 1% CDSC if redeemed within one
year of the date of purchase.
Class B shares are sold with no initial sales charge, but a CDSC of up to 5%
of the redemption proceeds applies to redemptions made within six years of
purchase. See "How to Redeem Shares--Contingent Deferred Sales Charge--Class B
Shares." Class B shares are subject to higher on going expenses than Class A
shares, but automatically convert to Class A shares approximately six years
after issuance subject to receipt of certain tax rulings or opinions.
Class C shares are sold without an initial sales charge or a CDSC except for
a CDSC of 1% applicable to redemptions made within the first year after
investing. Thus, the entire amount of a Class B or C shareholder's purchase
price is immediately invested in the Fund.
WAIVER AND REDUCTIONS OF CLASS A SALES CHARGES
Class A share purchases of $100,000 or more may be made at a reduced sales
charge. In considering the combined cost of sales charges and ongoing annual
expenses, investors should take into account any applicable reduced sales
charges on Class A shares. In addition, the entire initial sales charge on
Class A shares is waived for certain eligible purchasers. See "Initial Sales
Charge--Class A shares" and "Sales Charge Waivers--Class A Shares." Because
Class A shares bear lower ongoing annual expenses that Class B shares or Class
C shares, investors eligible for complete initial sales charge waivers should
purchase Class A shares.
ONGOING ANNUAL EXPENSES
Classes A, B and C shares pay an annual 12b-1 service fee of 0.25% of
average daily net assets. Classes B and C shares pay an annual 12b-1
distribution fee of 0.75% of average daily net assets. An investor should
consider both ongoing annual expenses and initial or contingent deferred sales
charges in estimating the costs of investing in the respective classes of Fund
shares over various time periods.
For example, assuming a constant net asset value, the cumulative
distribution fee on Class B and Class C shares would approximate the expense
of the 4% maximum initial sales charge on the Class A shares if the shares
were held for approximately 5 1/2 years. Because Class B shares convert to
Class A shares (which do not bear the expense of ongoing distribution fees)
approximately six years after purchase (subject to receipt of certain tax
rulings or opinions), an investor expecting to hold shares of the Fund for
longer than six years would generally pay lower cumulative expenses by
purchasing Class B shares than by purchasing Class C shares. An investor
expecting to hold shares of the Fund for less than four years would generally
pay lower cumulative expenses by purchasing Class C shares than by purchasing
Class A shares, and due to the contingent deferred sales charges that would
become payable on redemption of Class B shares, such an investor would
generally pay lower cumulative expenses by purchasing Class C shares than
Class B shares. On the other hand, an investor expecting to hold shares of the
Fund for more than six years would generally pay lower cumulative expenses by
purchasing Class B shares because of the Class B conversion feature described
under "Conversion of Class B Shares." An investor who qualifies for a
reduction or waiver of the initial sales charge on Class A shares may pay
lower cumulative expenses by purchasing Class A shares than by purchasing
Class B or Class C shares.
The foregoing examples do not reflect, among other variables, the cost or
benefit of bearing sales charges or distribution fees at the time of purchase,
upon redemption or over time, nor can they reflect fluctuations in the net
asset value of Fund shares, which will affect the actual amount of expenses
paid. Expenses borne by classes may differ slightly because of the allocation
of other class-specific expenses, such as transfer agency fees, printing and
postage expenses related to shareholder reports, prospectuses and proxies, and
securities registration fees.
10
<PAGE>
The example set forth above under "Fund Expenses" shows the cumulative
expenses an investor would pay over periods of one and three years on a
hypothetical investment in each class of Fund shares, assuming an annual
return of 5%.
OTHER INFORMATION
Dealers may receive different levels of compensation for selling one
particular class of Fund shares rather than another. Investors should
understand that distribution fees and initial and contingent deferred sales
charges all are intended to compensate the Distributor for distribution
services.
An account may be opened by mailing a check or other negotiable bank draft
(payable to The Munder Funds) for $1,000 or more for Class A, Class B or Class
C shares with a completed and signed Account Application Form to The Munder
Funds, c/o First Data Investor Services Group, Inc., P.O. Box 5130,
Westborough, Massachusetts 01581-5130. An Account Application Form may be
obtained by calling (800) 438-5789. All such investments are made at the
public offering price of Fund shares next computed following receipt of
payment by the Transfer Agent. The public offering price for the shares is the
per share net asset value (see "Net Asset Value") next determined after
receipt of the order by the dealer, plus any applicable initial sales charge
for Class A shares. Confirmations of the opening of an account and of all
subsequent transactions in the account are forwarded by the Transfer Agent to
the shareholder's address of record. When placing purchase orders, investors
should specify the class of shares being purchased. All share purchase orders
that fail to specify a class will automatically be invested in Class A shares.
The completed investment application must indicate a valid taxpayer
identification number. Failure to provide a certified taxpayer identification
number may result in backup withholding at the rate of 31%. Additionally,
investors may be subject to penalties if they falsify information with respect
to their taxpayer identification numbers.
In addition, investors having an account with a commercial bank that is a
member of the Federal Reserve System may purchase shares of the Fund by
requesting their bank to transmit funds by wire to Boston Safe Deposit and
Trust Company, Boston, MA, ABA #011001234, DDA #16-798-3, Fund Name,
Shareholder Account Number, Account of (Registered Shareholder). Before wiring
any funds, an investor must contact the Fund by calling (800) 438-5789 to
confirm the wire instructions. The investor's name, account number, taxpayer
identification or social security number, and address must be specified in the
wire. In addition an Account Application Form containing the investor's
taxpayer identification number should be forwarded within seven days of
purchase to The Munder Funds c/o First Data Investor Services Group, Inc.,
P.O. Box 5130, Westborough, Massachusetts 01581-5130.
Additional investments may be made at any time through the wire procedures
described above, which must include the investor's name and account number.
The investor's bank may impose a fee for investments by wire.
AUTOMATIC INVESTMENT PLAN ("AIP")
An investor in Class A, Class B and Class C shares of the Fund may arrange
for periodic investments in the Fund through automatic deductions from a
checking or savings account by completing the AIP Application Form or by
calling the Fund at (800) 438-5789. The minimum pre-authorized investment
amount is $50. Such a plan is voluntary and may be discontinued by the
shareholder at any time or by the Company on 30 days' written notice to the
shareholder.
See the Statement of Additional Information for further information
regarding purchase of the Fund's shares.
REINVESTMENT PRIVILEGE
Upon redemption of Class A, B or C shares of the Fund (or Class A, B or C
shares of another non-money market fund of the Company, The Munder Funds Trust
or The Munder Framlington Funds Trust), a shareholder has an annual right, to
be exercised within 60 days, to reinvest the redemption proceeds in shares of
the same
11
<PAGE>
class of the same fund without any sales charges. The Transfer Agent must be
notified in writing by the purchaser, or by his or her broker, at the time the
purchase is made of the reinvestment in order to eliminate a sales charge.
INITIAL SALES CHARGE--CLASS A SHARES
The public offering price of Class A shares is the next determined net asset
value plus any applicable sales charge, which will vary with the size of the
purchase as shown in the following table:
INITIAL SALES CHARGE SCHEDULE--CLASS A SHARES
<TABLE>
<CAPTION>
DISCOUNT TO
SALES CHARGE AS A PERCENTAGE OF SELECTED
--------------------------------------- DEALERS AS A
OFFERING NET AMOUNT INVESTED PERCENTAGE OF
AMOUNT OF PURCHASE PRICE (NET ASSET VALUE) OFFERING PRICE
- ------------------ --------------- --------------------- --------------
<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>
- --------
*No initial sales charge applies on investments of $1 million or more, but a
CDSC of 1% is imposed on certain redemptions within one year of the
purchase. See "How to Redeem Shares--Contingent Deferred Sales Charge--Class
A and Class C Shares."
**A 1% commission will be paid by the Distributor to dealers who initiate and
are responsible for purchases of $1 million or more.
The Distributor will pay the appropriate Dealers' Reallowance to brokers
purchasing Class A shares. From time to time, the Distributor may reallow to
brokers the full amount of the sales charge on Class A shares. To the extent
the Distributor reallows more than 90% of the sales charge to brokers, such
brokers may be deemed to be underwriters under the Securities Act of 1933, as
amended. In addition to the Dealers' Reallowance, the Distributor will, from
time to time, at its expense or as an expense for which it may be reimbursed
under the Class B Plan or Class C Plan described below, pay a bonus or other
consideration or incentive (which may be in the form of merchandise or trips)
to brokers or institutions which sell a minimum dollar amount of shares of the
Fund during a specified period of time. Dealers may receive compensation from
the Distributor on sales made without a sales charge.
SALES CHARGE WAIVERS--CLASS A SHARES
Upon notice to the Transfer Agent at the time of purchase, the initial sales
charge will be waived 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 Administrator, Distributor and Custodian, 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 defined below; and (5) financial institutions, financial
planners or employee benefit plan consultants acting for the accounts of their
clients.
QUALIFIED EMPLOYER SPONSORED RETIREMENT PLANS
Upon notice to the Transfer Agent at the time of purchase, the initial sales
charge will be waived on purchases by employer sponsored retirement plans
which are qualified under Section 401(a) of the Code, including: 401(k) plans,
defined benefit pension plans, profit-sharing pension plans, money-purchase
pension plans; and Section 457 deferred compensation plans and Section 403(b)
plans (each, a "Qualified Employee Benefit Plan") that (1) invest $1,000,000
or more in Class A shares of investment portfolios offered by the
12
<PAGE>
Company, The Munder Funds Trust or The Munder Framlington Funds Trust (other
than the Index 500 Fund) or (2) have at least 75 eligible plan participants.
In addition, the CDSC of 1% imposed on certain redemptions within one year of
purchase will be waived for Qualified Employee Benefit Plan purchases that
meet the above criteria. A 1% commission will be paid by the Distributor to
dealers who initiate and are responsible for Qualified Employee Benefit Plan
purchases that meet the above criteria. For purposes of the foregoing sales
charge waiver, Simplified Employee Pension Plans ("SEPs") and Individual
Retirement Accounts ("IRAs") are not considered to be Qualified Employee
Benefit Plans.
Sales charges will be waived for individuals who purchase Class A shares
with the proceeds of distributions from qualified retirement plans for which
the Advisor serves as investment advisor. Sales charges will be waived for
individuals who purchase Class A shares with the proceeds of redemptions of
Class Y shares of the Funds of the Company, The Munder Funds Trust or The
Munder Framlington Funds Trust if the proceeds are invested within 60 days of
redemption. See "Other Information--Description of Shares."
If an investor intends to purchase over the next 13 months at least $100,000
of Class A shares, the sales charge may be reduced by completing the Letter of
Intent portion of the Account Application Form or the applicable form from the
investor's broker. The Letter of Intent includes a provision for a sales
charge adjustment depending on the amount actually purchased within the 13-
month period. In addition, pursuant to a Letter of Intent, the Custodian will
hold in escrow the difference between the sales charge applicable to the
amount initially purchased and the sales charge paid at the time of the
investment which is based on the amount covered by the Letter of Intent. The
amount held in escrow will be applied to the investor's account at the end of
the 13-month period unless the amount specified in the Letter of Intent is not
purchased.
The Letter of Intent will not obligate the investor to purchase shares, but
if he or she does, each purchase made during the period will be at the sales
charge applicable to the total amount intended to be purchased. The letter may
be dated as of a prior date to include any purchase made within the past 90
days. The Letter of Intent will apply only to Class A shares of the Fund or
other investment portfolios of the Company, The Munder Funds Trust or The
Munder Framlington Funds Trust. The value of Class B or Class C shares of any
fund of the Company, The Munder Funds Trust or The Munder Framlington Funds
Trust will not be counted toward the fulfillment of a Letter of Intent.
As shown in the table under "Initial Sales Charge--Class A Shares," larger
purchases may reduce the sales charge paid. Upon notice to the investor's
broker or the Transfer Agent, purchases of Class A shares that are made by the
investor, his or her spouse, his or her children under age 21 and his or her
IRA will be combined when calculating the sales charge. The value of Class B
or Class C shares of any fund of the Company, The Munder Funds Trust or The
Munder Framlington Funds Trust will not be counted toward the foregoing
Quantity Discounts.
An investor who has previously purchased Class A shares of a non-money
market fund of the Company, The Munder Funds Trust or The Munder Framlington
Funds Trust upon which a sales charge has already been paid may, upon request,
aggregate investments in such shares with current purchases to determine the
applicable sales charge for current purchases. An investor's aggregate
investment is the total value (based upon the greater of current net asset
value or the public offering price originally paid if provided at the time of
purchase) of: (a) current purchases, and (b) shares that are beneficially
owned by the investor for which a sales charge has already been paid.
Similarly, with respect to each subsequent investment, all Class A shares of a
non-money market fund of the Company, The Munder Funds Trust or The Munder
Framlington Funds Trust upon which a sales charge has already been paid that
are beneficially owned by the investor at the time of investment may be
combined to determine the applicable sales charge.
Pursuant to the Fund's Variable Pricing System, the Fund issues two classes
of shares in addition to the classes described in this Prospectus, Class K and
Class Y shares. Class K and Class Y shares have different sales charges and
expense levels, which will affect performance. Investors may call (800) 438-
5789 to obtain more information concerning Class K and Class Y shares. When
placing purchase orders, investors should specify the class of shares being
purchased. All share purchase orders that fail to specify a class will
automatically be invested in Class A shares.
13
<PAGE>
HOW TO REDEEM SHARES
Generally, shareholders may require the Fund to redeem their shares by
sending a written request, signed by the record owner(s), to The Munder Funds
c/o First Data Investor Services Group, Inc., P.O. Box 5130, Westborough,
Massachusetts 01581-5130.
SIGNATURE GUARANTEE
If the proceeds of the redemption are greater than $50,000, or are to be
paid to someone other than the registered holder, or to other than the
shareholder's address of record, or if the shares are to be transferred, the
owner's signature must be guaranteed by a commercial bank, trust company,
savings association or credit union as defined by the Federal Deposit
Insurance Act, or by a securities firm having membership on a recognized
national securities exchange. If the proceeds of the redemption are less than
$50,000, no signature guarantees are required for shares for which
certificates have not been issued when an application is on file with the
Transfer Agent and payment is to be made to the shareholder of record at the
shareholder's address of record. The redemption price shall be the net asset
value per share next computed after receipt of the redemption request in
proper order. See "Net Asset Value." Redemption proceeds will be reduced by
the amount of any CDSC (see below).
EXPEDITED REDEMPTION
In addition, a shareholder redeeming at least $1,000 of shares and who has
authorized expedited redemption on the application form filed with the
Transfer Agent may, at the time of such redemption, request that funds be
mailed to the commercial bank or registered broker-dealer previously
designated on the application form by telephoning the Fund at (800) 438-5789
prior to 4:00 p.m. New York City time. Redemption proceeds will be sent on the
next business day following receipt of the telephone redemption request. If a
shareholder seeks to use an expedited method of redemption of shares recently
purchased by check, the Fund may withhold the redemption proceeds until it is
reasonably assured of the collection of the check representing the purchase,
which may take up to 15 days.
There is no minimum for telephone redemptions paid by check. However, the
Transfer Agent may deduct its current wire fee from the principal in the
shareholder's account for wire redemptions under $5,000. As of the date of
this prospectus, this fee was $7.50 for each wire redemption. There is no
charge for wire redemptions of $5,000 or more. The Company reserves the right
to delay the wiring of redemption proceeds for up to seven days after it
receives a redemption order if, in the judgment of the Advisor, an earlier
payment could adversely affect the Fund.
The Company, the Distributor and the Transfer Agent reserve the right at any
time to suspend or terminate the expedited redemption 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
redemptions. The Transfer Agent has instituted procedures that it believes are
reasonably designed to insure that redemption 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. If these
procedures are followed, neither the Company, the Distributor nor the Transfer
Agent will be responsible for any loss, damages, expense or cost arising out
of any telephone redemptions effected upon instructions believed by them to be
genuine. Redemption proceeds will be mailed only according to the previously
established instructions.
The Fund ordinarily will make payment for all Shares redeemed within seven
business days after the receipt by the Transfer Agent in proper form, however,
the right of redemption and payment of redemption proceeds are subject to
suspension for any period during which the New York Stock Exchange is closed,
or when trading
14
<PAGE>
on the New York Stock Exchange is restricted as determined by the SEC; during
any period when an emergency as defined by the rules and regulations of the
SEC exists; or during any period when the SEC has by order permitted such
suspension. The Fund will not mail redemption proceeds until checks (including
certified checks or cashier's checks) received for the shares purchased have
cleared, which can take as long as 15 days.
The value of shares on repurchase may be more or less than the investor's
cost depending upon the market value of the Fund's portfolio securities at the
time of redemption. No redemption fee is charged for the redemption of shares,
but a CDSC is imposed on certain redemptions of Class A, Class B and Class C
shares as described below.
REDEMPTION BY CHECK
Free checkwriting is available with respect to Class A Shares of the Fund.
With this service, a shareholder may write checks in the amount of $500 or
more. To obtain checks, a shareholder must complete the Signature Card Section
of the Account Application Form. To establish this checkwriting service after
opening an account, the shareholder must contact the Fund to obtain an Account
Application Form. Upon 30 days' prior written notice to shareholders, the
checkwriting privilege may be modified or terminated. An investor cannot close
an account in the Fund by writing a check. A shareholder will receive the
dividends declared on the shares to be redeemed up to the date that a check is
presented to the Custodian for payment.
INVOLUNTARY REDEMPTION
The Fund may involuntarily redeem an investor's shares if the net asset
value of such shares is less than $500; provided that involuntary redemptions
will not result from fluctuations in the value of an investor's shares. An
investor may be notified that the value of the investor's account is less than
$500, in which case the investor would be allowed 60 days to make an
additional investment before the redemption is processed.
AUTOMATIC WITHDRAWAL PLAN ("AWP")
The Fund offers an Automatic Withdrawal Plan which may be used by holders of
Class A, Class B and Class C shares who wish to receive regular distributions
from their accounts. Upon commencement of the AWP, the account must have a
current value of $2,500 or more in the Fund. Shareholders may elect to receive
automatic cash payments of $50 or more on a monthly, quarterly, semi-annual,
or annual basis. Automatic withdrawals are normally processed on the 20th day
of the applicable month or, if such day is not a day on which the New York
Stock Exchange is open for business, on the next business day, and are paid
promptly thereafter. An investor may utilize the AWP by completing the AWP
Application Form available through the Transfer Agent.
Shareholders should realize that if withdrawals exceed capital appreciation
and/or income dividends their invested principal in the account will be
depleted. Thus, depending upon the frequency and amounts of the withdrawal
payments and/or any fluctuations in the net asset value per share, their
original investment could be exhausted entirely. To participate in the AWP,
shareholders must have their dividends automatically reinvested and may not
hold share certificates. Shareholders may change or cancel the AWP at any
time, upon written notice to the Transfer Agent. Purchases of additional Class
A shares of the Fund concurrently with withdrawals may be disadvantageous to
investors because of the sales charges involved, and, therefore, are
discouraged. Class B and Class C shares, if any, that are redeemed in
connection with the AWP are still subject to the applicable CDSC.
CONTINGENT DEFERRED SALES CHARGE--CLASS B SHARES
Class B shares that are redeemed within six years of purchase will be
subject to a CDSC as set forth below. A CDSC payable to the Distributor is
imposed on any redemption of shares that causes the current value of a
shareholder's account to fall below the dollar amount of all payments by the
shareholder for the purchase of shares during the preceding six years.
15
<PAGE>
The CDSC will be waived for certain exchanges as described below. In
addition, Class B shares that are redeemed will not be subject to a CDSC to
the extent that the value of such shares represents (1) reinvestment of
dividends or capital gain distributions, (2) shares held more than six years,
or (3) capital appreciation of shares redeemed. In determining the
applicability and rate of any CDSC, it will be assumed that a redemption of
Class B shares is made first of shares representing reinvestment of dividends
and capital gains distributions, then any appreciation on shares redeemed, and
then of remaining shares held by the shareholders for the longest period of
time. The purchase payment from which a redemption is made is assumed to be
the earliest purchase payment from which a full redemption has not already
been effected. The holding period of Class B shares of the Fund acquired
through an exchange of Class B shares of The Munder Money Market Fund (which
are available only by exchange of Class B shares of the Fund or other funds in
the Company, The Munder Funds Trust or The Munder Framlington Funds Trust)
will be calculated from the date that the Class B shares were initially
purchased.
The amount of any applicable CDSC will be calculated by multiplying the net
asset value of shares subject to the charge at the time of redemption or at
the time of purchase, whichever is lower, by the applicable percentage shown
in the table below:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE
AS A PERCENTAGE OF THE LESSER OF
YEAR SINCE NET ASSET VALUE AT REDEMPTION OR
PURCHASE THE ORIGINAL PURCHASE PRICE
---------- --------------------------------
<S> <C>
First.................................... 5.00%
Second................................... 4.00%
Third.................................... 3.00%
Fourth................................... 3.00%
Fifth.................................... 2.00%
Sixth.................................... 1.00%
Seventh.................................. 0.00%
</TABLE>
For Federal income tax purposes, the amount of the CDSC will reduce the gain
or increase the loss, as the case may be, on the amount recognized on the
redemption of shares. The amount of any CDSC will be paid to the Distributor.
The Distributor will pay a commission of 4% of the net asset value of Class
B shares to brokers that initiate and are responsible for purchases of Class B
shares of the Fund.
The CDSC will be waived for certain exchanges, as described below. In
addition, the CDSC will be waived in the following circumstances: (1) total or
partial redemptions made within one year following the death 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 70
1/2; and (3) redemptions pursuant to the Fund's right to liquidate a
shareholder's account involuntarily.
CONTINGENT DEFERRED SALES CHARGE--CLASS A AND CLASS C SHARES
In order to recover commissions paid to dealers on investments of $1 million
or more in Class A shares and on investments in Class C shares, a CDSC of 1%
applies to certain redemptions of such shares made within the first year after
investing.
No charge is imposed to the extent that the 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
same waivers as are available with respect to the CDSC on Class B shares also
apply to the CDSC on Class A and Class C shares.
16
<PAGE>
The holding period of Class A or Class C shares of the 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 or other funds in the Company, The Munder Funds Trust or The Munder
Framlington Funds Trust, as the case may be) and other non-money market funds
of The Munder Funds Trust and other funds of the Company will be calculated
from the date that the Class A or Class C shares were initially purchased.
See the Statement of Additional Information for further information
regarding redemption of Fund shares.
Class A shares purchased for at least $1,000,000 without a sales charge may
be exchanged for Class A shares of another fund of the Company, The Munder
Funds Trust or The Munder Framlington Funds Trust without the imposition of a
CDSC, although the CDSC described above will apply to the redemption of the
shares acquired through an exchange.
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. For Federal income tax purposes, the amount of the CDSC will
reduce the gain or increase the loss, as the case may be, on the amount
realized on redemption. The amount of any CDSC will be paid to the
Distributor.
CONVERSION OF CLASS B SHARES
A shareholder's Class B shares will automatically convert to Class A shares
in the Fund on the sixth anniversary of the issuance of the Class B shares,
together with a pro rata portion of all Class B shares representing dividends
and other distributions paid in additional Class B shares. The Class B shares
so converted will no longer be subject to the higher expenses borne by Class B
shares. The conversion will be effected at the relative net asset values per
share of the two classes. If a shareholder effects one or more exchanges among
Class B shares of the Fund, other non-money market funds of the Company or
other funds of The Munder Funds Trust or The Munder Framlington Funds Trust
during the six-year period, the holding periods for the shares so exchanged
will be counted toward the six-year period. Because the per share net asset
value of the Class A shares may be higher than that of the Class B shares at
the time of conversion, a shareholder may receive fewer Class A shares than
the number of Class B shares converted, although the dollar value will be the
same. See "Net Asset Value."
OTHER
Some or all of the services and privileges described herein may not be
available to certain customers of a broker, and a broker may impose conditions
on its customers which are different from those described in this Prospectus.
Investors should consult their brokers in this regard.
HOW TO EXCHANGE SHARES
GENERAL
Class A, Class B and Class C shares of the Fund may be exchanged for shares
of the same class of other funds of the Company, The Munder Funds Trust or The
Munder Framlington Funds Trust, based on their respective net asset values,
subject to any applicable sales charge differential.
Class A shares of a money market fund of the Company, The Munder Funds Trust
or The Munder Framlington Funds Trust 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 Company, The Munder Funds Trust or
The Munder Framlington Funds Trust for which a sales charge was paid, can be
exchanged for Class A shares of a fund of the Company, The Munder Funds Trust
or The Munder Framlington Funds Trust subject to payment of differential sales
charges as applicable.
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The exchange of Class B shares of one fund of the Company, The Munder Funds
Trust or The Munder Framlington Funds Trust for Class B shares of another fund
of the Company, The Munder Funds Trust or The Munder Framlington Funds Trust
will not be subject to a CDSC. The exchange of Class C shares of one fund of
the Company, The Munder Funds Trust or The Munder Framlington Funds Trust for
Class C shares of another fund of the Company, The Munder Funds Trust or The
Munder Framlington Funds Trust will not be subject to a CDSC. For purposes of
computing the applicable CDSC, the length of time of ownership of the Class B
or Class C shares will be measured from the date of the original purchase and
will not be affected by such exchanges.
Any share exchange must satisfy the requirements relating to the minimum
initial investment in an investment portfolio of the Company, The Munder Funds
Trust or The Munder Framlington Funds Trust, and the shares involved must be
legally available for sale in the state of the investor's residence. For
Federal income tax purposes, a share exchange is a taxable event and,
accordingly, a taxable gain or loss may be realized. Before making an exchange
request, shareholders should consult a tax or other financial advisor and
should consider the investment objective, policies and restrictions of the
investment portfolio into which the shareholder is making an exchange, as set
forth in the applicable prospectus. An investor who is considering an exchange
may obtain a copy of the prospectus for any investment portfolio of the
Company, The Munder Funds Trust or The Munder Framlington Funds Trust by
contacting his or her broker or the Fund at (800) 438-5789. Certain brokers
may charge a fee for handling exchanges.
The Company reserves the right to modify or terminate the exchange privilege
at any time. Notice will be given to shareholders of any material
modifications except where notice is not required.
EXCHANGE BY TELEPHONE
A shareholder may give exchange instructions to the shareholder's broker or
by telephone to the Fund at (800) 438-5789. Telephone exchange privileges are
not available to shareholders who have custody of their share certificates.
The Company reserves the right to reject any telephone exchange request.
Telephone exchanges may be subject to limitations as to amount or frequency,
and to other restrictions that may be established from time to time to ensure
that exchanges do not operate to the disadvantage of the Fund or its
shareholders.
EXCHANGE BY MAIL
Exchange orders may be sent by mail to the shareholder's broker or to the
Transfer Agent at the address set forth in "Shareholder Account Information."
DIVIDENDS AND DISTRIBUTIONS
The Fund expects to pay dividends and distributions from the net income and
capital gains, if any, earned on investments held by the Fund. The net income
of the Fund is declared daily as a dividend and paid monthly. Generally,
dividends are paid within six business days after month-end.
The Fund's net realized capital gains (including net short-term capital
gains), if any, are distributed at least annually. Dividends and other
distributions paid by the Fund with respect to its Class A, Class B and Class
C shares are calculated at the same time. Dividends and capital gains are paid
in the form of additional shares of the same class of the Fund unless a
shareholder requests that dividends and capital gains be paid in cash. In the
absence of this request on the Account Application Form or in a subsequent
request, each purchase of shares is made on the understanding that the Fund's
Transfer Agent is automatically appointed to receive the dividends upon all
shares in the shareholder's account and to reinvest them in full and
fractional shares of the same class of the Fund at the net asset value in
effect at the close of business on the reinvestment date. Dividends are
automatically paid in cash (along with any redemption proceeds) not later than
seven business days after a shareholder closes an account with the Fund.
The per share dividends on Class B and Class C shares of the Fund generally
will be lower than the per share dividends on Class A shares of the Fund as a
result of the higher annual service and distribution fees applicable with
respect to Class B and Class C shares.
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The Fund's expenses are deducted from the income of the Fund before
dividends are declared and paid. These expenses include, but are not limited
to, fees paid to the Advisor, Administrator, Custodian and Transfer Agent;
fees and expenses of officers and Directors; taxes; interest; legal and
auditing fees; brokerage fees and commissions; certain fees and expenses in
registering and qualifying 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 Company that are not readily identifiable as belonging to a
particular fund of the Company are allocated among all funds of the Company by
or under the direction of the Board of Directors in a manner that the Board
determines to be fair and equitable. Except as noted in this Prospectus and
the Statement of Additional Information, the Fund's service contractors bear
expenses in connection with the performance of their services, and the Fund
bears the expenses incurred in its operations. The Advisor, Administrator,
Custodian and Transfer Agent may voluntarily waive all or a portion of their
respective fees from time to time.
The Fund's net investment income available for distribution to the holders
of shares will be reduced by the amount of shareholder service and
distribution fees payable under the Class A Plan, the Class B Plan and Class C
Plan described below.
NET ASSET VALUE
Net asset value for a particular class of shares of the Fund is calculated
by dividing the value of all securities and other assets belonging to the Fund
allocable to that class, less the liabilities charged to that class, by the
number of outstanding shares of that class.
The net asset value per share of the Fund for the purpose of pricing
purchase and redemption orders is determined as of the close of regular
trading hours on the New York Stock Exchange (currently 4:00 p.m., New York
time) on each Business Day. Securities traded on a national securities
exchange or on the NASDAQ National Market System are valued at the last sale
price on such exchange or market as of the close of business on the date of
valuation. Securities traded on a national securities exchange or on the
NASDAQ National Market System for which there were no sales on the date of
valuation and securities traded on other over-the-counter markets, including
listed securities for which the primary market is believed to be over-the-
counter, are valued at the mean between the most recently quoted bid and asked
prices. Restricted securities and securities and assets for which market
quotations are not readily available are valued at fair value by the Advisor
under the supervision of the Board of Directors. Debt securities with
remaining maturities of 60 days or less are valued at amortized cost, unless
the Board of Directors determines that such valuation does not constitute fair
value at that time. Under this method, such securities are valued initially at
cost on the date of purchase (or the 61st day before maturity).
The Company does not accept purchase and redemption orders on days on which
the New York Stock Exchange is closed. The New York Stock Exchange is
currently scheduled to be closed on New Year's Day, Presidents' Day, Good
Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving and
Christmas, and on the preceding Friday or subsequent Monday when one of these
holidays falls on a Saturday or Sunday, respectively.
The different expenses borne by each class of shares will result in
different net asset values and dividends. The per share net asset value of the
Class B and Class C shares of the Fund generally will be lower than that of
the Class A shares of the Fund because of the higher expenses borne by the
Class B and Class C shares.
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<PAGE>
MANAGEMENT
BOARD OF DIRECTORS
The Company is managed under the direction of its governing Board of
Directors. The Statement of Additional Information contains the name and
background information of each Director.
INVESTMENT ADVISOR
Munder Capital Management, a Delaware general partnership with its principal
offices at 480 Pierce Street, Birmingham, Michigan 48009, serves as the Fund's
investment advisor. The Advisor was formed in December 1994. The principal
partners of the Advisor are Old MCM, Inc. ("MCM"), Munder Group LLC,
Woodbridge Capital Management, Inc. ("Woodbridge") and WAM Holdings, Inc.
("WAM"). MCM was founded in February 1985 as a Delaware corporation and was a
registered investment advisor. Woodbridge and WAM are indirect, wholly-owned
subsidiaries of Comerica Incorporated. Mr. Lee P. Munder, the Advisor's chief
executive officer, indirectly owns or controls a majority of the partnership
interests in the Advisor. As of September 30, 1996, the Advisor and its
affiliates had approximately $36 billion in assets under active management, of
which $18 billion were invested in equity securities, $8 billion were invested
in money market or other short-term instruments, and $10 billion were invested
in other fixed income securities.
Subject to the supervision of the Board of Directors of the Company, the
Advisor provides overall investment management for the Fund, provides research
and credit analysis, is responsible for all purchases and sales of portfolio
securities, maintains books and records with respect to the Fund's securities
transactions and provides periodic and special reports to the Board of
Directors as requested.
For the advisory services provided and expenses assumed by it, the Advisor
has agreed to a fee from the Fund, computed daily and payable monthly, at an
annual rate of .25% of the Fund's average daily net assets.
The Advisor may, from time to time, make payments to banks, broker-dealers
or other financial institutions for certain services to the Fund and/or its
shareholders, including sub-administration, sub-transfer agency and
shareholder servicing. Such payments are made out of the Advisor's own
resources and do not involve additional costs to the Fund or its shareholders.
PORTFOLIO MANAGER
Sharon E. Fayolle, Vice President and Director of Money Market Trading for
the Advisor, is primarily responsible for the day to day management of the
investment selections of the Fund. She is also responsible for overseeing the
management of cash portfolios, money market funds and foreign currency trading
since May, 1996. She has co-managed the International Bond Fund since October,
1996. Prior to joining the Advisor in 1996, she was employed in the investment
area of Ford Motor Company as European Portfolio Manager responsible for
investment and cash management for Ford's European operations (August, 1981 to
April, 1996).
ADMINISTRATOR, CUSTODIAN AND TRANSFER AGENT
First Data Investor Services Group, Inc. ("First Data"), whose principal
business address is 53 State Street, Boston, Massachusetts 02109 (the
"Administrator"), serves as administrator for the Company. First Data is a
wholly-owned subsidiary of First Data Corporation. The Administrator generally
assists the Company in all aspects of its administration and operations,
including the maintenance of financial records and fund accounting.
First Data also serves as the Company's transfer agent and dividend
disbursing agent. Shareholder inquiries may be directed to First Data at P.O.
Box 5130, Westborough, Massachusetts 01581-5130.
As compensation for these services, the Administrator and Transfer Agent are
entitled to receive fees, based on the aggregate average daily net assets of
the Fund and certain other investment portfolios that are advised by the
Advisor for which they provide services, computed daily and payable monthly at
the rate of .12% of the first
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$2.8 billion of net assets, plus .105% of the next $2.2 billion of net assets,
plus .10% of all net assets in excess of $5 billion with respect to the
Administrator and .02% of the first $2.8 billion of net assets, plus .015% of
the next $2.2 billion of net assets, plus .01% of all net assets in excess of
$5 billion with respect to the Transfer Agent. Administration fees payable by
the Fund and certain other investment portfolios advised by the Advisor are
subject to a minimum annual fee of $1.2 million to be allocated among each
series and class thereof. The Administrator and Transfer Agent are also
entitled to reimbursement for out-of-pocket expenses. The Administrator has
entered into a Sub-Administration Agreement with the Distributor under which
the Distributor provides certain administrative services with respect to the
Fund. The Administrator pays the Distributor a fee for these services out of
its own resources at no cost to the Fund.
Comerica Bank (the "Custodian"), whose principal business address is One
Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226, provides
custodial services to the Fund. The Custodian is a wholly-owned subsidiary of
Comerica Incorporated, a publicly-held bank holding company. As compensation
for its services, the Custodian is entitled to receive fees, based on the
aggregate average daily net assets of the Fund and certain other investment
portfolios that are advised by the Advisor, for which the Custodian provides
services, computed daily and payable monthly at an annual rate of .03% of the
first $100 million of average daily net assets, .02% of the next $500 million
of net assets and .01% of net assets in excess of $600 million. The Custodian
also receives certain transaction based fees.
For an additional description of the services performed by the
Administrator, Transfer Agent and Custodian, see the Statement of Additional
Information.
DISTRIBUTION SERVICES ARRANGEMENT
The Company has adopted Distribution and Service Plans with respect to Class
A, Class B and Class C shares of the Fund, pursuant to which the Fund uses its
assets to finance activities relating to the distribution of its shares to
investors and the provision of certain shareholder services (collectively, the
"Plans"). Under the Class A Plan, the Distributor is paid a service fee at an
annual rate of 0.25% of the value of average daily net assets of the Class A
shares. Under the Class B and Class C Plans, the Distributor is paid a service
fee at an annual rate of 0.25%, and a distribution fee at an annual rate of
0.75%, of the value of average daily net assets of the Class B and Class C
shares.
Under the Plans, the Distributor uses the service fees primarily to pay
ongoing trail commissions to securities dealers (which may include the
Distributor itself) and other financial institutions and organizations
(collectively, the "Service Organizations") who provide shareholder services
for the Fund. These services include, among other things, processing new
shareholder account applications, preparing and transmitting to the Fund's
Transfer Agent computer processable tapes of all transactions by customers and
serving as the primary source of information to customers in answering
questions concerning the Fund and their transactions with the Fund.
The Class B and Class C Plans permit payments to be made by the Fund to the
Distributor for expenditures incurred by it in connection with the
distribution of Fund shares to investors and the provision of certain
shareholder services, including but not limited to the payment of
compensation, including incentive compensation, to Service Organizations to
obtain various distribution related services for the Fund. The Distributor is
also authorized to engage in advertising, the preparation and distribution of
sales literature and other promotional activities on behalf of the Fund. In
addition, the Class B and Class C Plans authorize payments by the Fund of the
cost of preparing, printing and distributing Fund prospectuses and statements
of additional information to prospective investors and of implementing and
operating the Plans. Distribution expenses also include an allocation of
overhead of the Distributor and accruals for interest on the amount of
distribution expenses that exceed distribution fees and CDSCs received by the
Distributor.
The Distributor expects to pay or arrange for payment of sales commissions
to dealers authorized to sell Class B or Class C shares, all or a part of
which may be paid at the time of sale. The Distributor will use its own funds
(which may be borrowed) to pay such commissions pending reimbursement pursuant
to the Class B and Class C Plans. Because the payment of distribution and
service fees with respect to Class B and Class C shares is
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<PAGE>
subject to the 1.00% limitation described above and will therefore be spread
over a number of years, it may take the Distributor a number of years to
recoup sales commissions paid by it to dealers and other distribution and
service related expenses from the payments received by it from the Fund
pursuant to the Plans.
The Plans may be terminated at any time. The Plans provide that amounts paid
as prescribed by the Plans at any time may not cause the limitation on such
payments established by the Plans to be exceeded. The amount of daily
compensation payable to the Distributor with respect to each day will be
accrued each day as a liability of the Fund and will accordingly reduce the
Fund's net assets upon such accrual.
Payments under the Plans are not tied exclusively to the distribution and/or
shareholder service expenses actually incurred by the Distributor and the
payments may exceed distribution and/or service expenses actually incurred.
The Company's Board of Directors evaluates the appropriateness of the Plans
and their payment terms on a continuous basis and in so doing will consider
all relevant factors, including expenses incurred by the Distributor and the
amount received under the Plans and the proceeds of the CDSCs with respect to
the Class B and Class C shares.
TAXES
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code for 1986, as amended (the "Code").
Such qualification relieves the Fund of liability for Federal income taxes to
the extent its earnings are distributed in accordance with the Code.
Qualification as a regulated investment company under the Code for any
taxable year requires, among other things, that the Fund distribute to its
shareholders an amount equal to at least 90% of its investment company taxable
income and 90% of its net tax-exempt interest income for such year. In general
the Fund's investment company income will be its taxable income (including
dividends, interest, and short-term capital gains) subject to certain
adjustments and excluding the excess of any net long-term capital gain for the
taxable year over the net short-term capital loss, if any, for such year. The
Fund intends to distribute substantially all of its investment company taxable
income each taxable year. Such distributions will be taxable as ordinary
income to the Fund's shareholders who are not currently exempt from Federal
income taxes, whether such income is received in cash or reinvested in
additional shares. (Federal income taxes for distributions to an IRA or
qualified retirement plan are deferred under the Code if applicable
requirements are met.)
Substantially all of the Fund's net realized long-term capital gains, if
any, will be distributed at least annually. The Fund will generally have no
Federal income tax liability with respect to such gains, and the distributions
will be taxable to shareholders who are not currently exempt from Federal
income taxes as long-term capital gains, no matter how long the shareholders
have held their shares.
A taxable gain or loss may also be realized by a holder of shares in the
Fund upon the redemption or transfer of shares depending upon the tax basis of
the shares and their price at the time of the transaction.
Dividends declared in October, November, or December of any year payable to
shareholders of record on a specified date in such months will be deemed to
have been received by shareholders and paid by the Fund on December 31 of such
year if such dividends are actually paid during January of the following year.
Before purchasing shares in the Funds, the impact of dividends or
distributions which are expected to be declared or have been declared, but not
paid, should be carefully considered. Any dividend or distribution declared
shortly after a purchase of such shares prior to the record date will have the
effect of reducing the per share net asset value by the per share amount of
the dividend or distribution. All or a portion of such dividend or
distribution, although in effect a return of capital, may be subject to tax.
On an annual basis, the Company will send written notices to record owners
of shares regarding the Federal tax status of distributions made by the Fund.
Since this is not an exhaustive discussion of applicable tax
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<PAGE>
consequences and since state and local taxes may be different from the Federal
taxes described above, investors may wish to contact their tax advisors
concerning investments in the Fund. With respect to state and local taxes,
investors should consult with their tax advisors as to whether Fund
distributions attributable to interest income earned on U.S. treasury
securities may be eligible for exemption from state or local income tax.
DESCRIPTION OF SHARES
The Fund operates as one series of the Company. The Company was organized as
a Maryland corporation on November 18, 1992 and is also registered under the
1940 Act as an open-end management investment company. The Company's Articles
of Incorporation authorize the Directors to classify and reclassify any
unissued shares into one or more classes of shares. Pursuant to such authority
the Directors have authorized the issuance of shares of common stock
representing interests in Equity Selection Fund, Micro-Cap Equity Fund, Mid-
Cap Growth Fund, Multi-Season Growth Fund, Real Estate Equity Investment Fund,
Small-Cap Value Fund, Value Fund, International Bond Fund, Short Term Treasury
Fund, Money Market Fund and NetNet Fund, each of which, except International
Bond Fund, is classified as a diversified investment company under the 1940
Act.
The shares of the Fund are offered as five separate classes of common stock,
$.01 par value per share, designated Class A shares, Class B shares, Class C
shares, Class K shares and Class Y shares. All shares represent interests in
the same assets of the Fund and are identical in all respects except that each
class bears different service and distribution expenses and may bear various
class-specific expenses, and each class has exclusive voting rights with
respect to its service and/or distribution plan, if any. Class B and Class C
shares are subject to a distribution fee which generally will cause Class B
and Class C shares to have a higher expense ratio and pay lower dividends than
Class A shares. Shares of the Fund issued are fully paid, non-assessable,
fully transferable and redeemable at the option of the holder. Investors may
call the Fund at (800) 438-5789 for more information concerning other classes
of shares of the Fund. This Prospectus relates only to the Class A, Class B
and Class C shares of the Fund.
The Company's shareholders are entitled to one vote for each full share held
and proportionate fractional votes for fractional shares held, and will vote
in the aggregate and not by Fund, except where otherwise required by law or
when the Directors determine that the matter to be voted upon affects only the
interests of the shareholders of a particular Fund. In addition, shareholders
of the Fund will vote in the aggregate and not by class, except as otherwise
expressly required by law or when the Directors determine that the matter to
be voted upon affects only the interests of the holders of a particular class
of shares. The Company is not required and does not currently intend to hold
annual meetings of shareholders for the election of Board members except as
required under the 1940 Act. A meeting of shareholders will be called upon the
written request of at least 10% of the outstanding shares of the Company. To
the extent required by law, the Company will assist in shareholder
communications in connection with such a meeting. For further discussion of
the voting rights of shareholders, see "Additional Information Concerning
Shares" in the Statement of Additional Information.
REPORTS TO SHAREHOLDERS
The Fund will seek to eliminate duplicate mailings of prospectuses and
shareholders reports to accounts which have the same primary record owner, and
with respect to joint tenant accounts or tenant in common accounts, accounts
which have the same address. Additional copies of prospectuses and reports to
shareholders are available upon request by calling the Fund at (800) 438-5789.
PERFORMANCE
From time to time, the Fund may quote performance and yield data for the
shares of the Fund in advertisements or in communications to shareholders. The
total return of Class A, Class B or Class C shares in the Fund may be
calculated on an average annual total return basis, and may also be calculated
on an aggregate total return basis, for various periods. Average annual total
return reflects the average percentage change in value of an investment in a
class of shares in the Fund from the beginning date of the measuring period to
the end of
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the measuring period. Aggregate total return reflects the total percentage
change in value over the measuring period. Both methods of calculating total
return assume that dividends and capital gains distributions made during the
period are reinvested in the same class of shares.
The yield of a class of shares in the Fund is computed based on the net
income of such class in the Fund during a 30-day (or one month) period (which
period will be identified in connection with the particular yield quotation).
More specifically, the Fund's yield for a class of shares is computed by
dividing the per share net income for the class during a 30-day (or one-month)
period by the maximum offering price per share on the last day of the period
and annualizing the result on a semi-annual basis.
Performance quotations for each class of shares will be calculated
separately. Quotations for total return for Class A shares will reflect the
maximum sales charge charged by the Fund with respect to Class A shares and
quotations of total return for Class B and Class C shares will reflect any
applicable CDSC, except that the Fund may also provide, in conjunction with
such quotations, additional quotations that do not reflect the maximum sales
charge when the quotations are being provided to investors who are subject to
waived or reduced sales charges as described in this Prospectus. Because these
additional quotations will not reflect the maximum sales charge payable by
non-exempt investors, these quotations will be higher than the performance
quotation otherwise computed.
Quotations of total return for shares will reflect the fees for certain
distribution and shareholder services as described in this Prospectus.
The Fund may compare the performance of the shares to the performance of
other mutual funds with similar investment objectives and to other relevant
indices or to rankings prepared by independent services or other financial or
industry publications that monitor the performance of mutual funds, including,
for example, Lipper Analytical Services, Inc., the Lehman Brothers
Government/Corporate Bond Index, a recognized unmanaged index of government
and corporate bonds, the Standard & Poor's 500 Index, an unmanaged index of a
group of common stocks, the Consumer Price Index, or the Dow Jones Industrial
Average, an unmanaged index of common stocks of 30 industrial companies listed
on the New York Stock Exchange. Performance and yield data as reported in
national financial publications such as Morningstar, Inc., Money Magazine,
Forbes, Barron's, The Wall Street Journal and The New York Times, or in
publications of a local or regional nature, may also be used in comparing the
performance of a class of shares in the Fund.
Performance will fluctuate and any quotation of performance should not be
considered as representative of future performance of a class of shares in the
Fund. Shareholders should remember that performance is generally a function of
the kind and quality of the instruments held in a fund, portfolio maturity,
operating expenses, and market conditions. Any fees charged by institutions
directly to their customers' accounts in connection with investments in the
Fund will not be included in calculations of yield and performance.
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SHAREHOLDER ACCOUNT INFORMATION
Shareholders are encouraged to place purchase, exchange and redemption orders
through their brokers. Shareholders may also place such orders directly through
the Transfer Agent. See "How to Purchase Shares," "How to Redeem Shares" and
"How to Exchange Shares" for more information. The Transfer Agent for the Funds
is First Data Investor Services Group, Inc.
INVESTMENT BY MAIL
Send the completed Account Application Form (if initial purchase) or letter
stating Fund name, share class, shareholder's registered name and account
number (if subsequent purchase) with a check to:
First Data Investor Services Group, Inc.
The Munder Funds
P.O. Box 5130
Westborough, Massachusetts 01581-5130
INVESTMENT BY BANK WIRE
An investor opening a new account should call the Fund at (800) 438-5789 to
obtain an account number. Within seven days of purchase such an investor must
send a completed Account Application Form containing the investor's certified
taxpayer identification number to First Data Investor Services Group, Inc. at
the address provided above under "Investment by Mail." Wire instructions must
state the Fund name, share class, the shareholder's registered name and the
shareholder account number. Bank wires 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.
(State Fund name, share class, shareholder's registered name and
shareholder account number)
Before writing any funds an investor must call the Fund at (800) 438-5789 to
confirm the wire instructions.
EXCHANGE BY TELEPHONE
Call your broker or the Fund at (800) 438-5789.
Class A, Class B and Class C shares may be exchanged only for shares of the
same class of another fund of the Company, The Munder Funds Trust or The Munder
Framlington Funds Trust, subject to any applicable sales charge.
REDEMPTIONS BY TELEPHONE
Call your broker or the Fund at (800) 438-5789.
REDEMPTIONS BY MAIL
Send complete instructions, including name of Fund, share class, amount of
redemption, shareholder's registered name, account number, and, if a
certificate has been issued, an endorsed share certificate, to:
First Data Investor Services Group, Inc.
The Munder Funds
P.O. Box 5130
Westborough, Massachusetts 01581-5130
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures may call the Fund at (800) 438-5789.
25
<PAGE>
MUNDER SHORT TERM TREASURY FUND
480 PIERCE STREET
BIRMINGHAM, MICHIGAN 48009
TELEPHONE (800) 438-5789
PROSPECTUS
CLASS K SHARES
The Munder Short Term Treasury Fund (the "Fund") is a series of shares
issued by The Munder Funds, Inc. (the "Company"), an open-end management
investment company. The Fund's investment objective is to provide shareholders
with a high level of current income consistent with capital preservation. The
Fund seeks to achieve its objective by investing only in U.S. Treasury
securities and repurchase agreements fully collateralized by U.S. Treasury
securities. There can be no assurance that the Fund's investment objective
will be achieved. The net asset value per share of the Fund will fluctuate in
response to changes in market conditions and other factors.
Munder Capital Management (the "Advisor") serves as investment advisor to
the Fund.
This Prospectus contains the information that a prospective investor should
know before investing in the Fund. Investors are encouraged to read this
Prospectus and retain it for future reference. A Statement of Additional
Information dated December 14, 1996, as amended or supplemented from time to
time, has been filed with the Securities and Exchange Commission (the "SEC")
and is incorporated by reference into this Prospectus. The Statement of
Additional Information may be obtained 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 Statement of Additional Information 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 INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE DATE OF THIS PROSPECTUS IS DECEMBER 14, 1996.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Fund
Expense Table............................................................ 3
Investment Objective and Policies........................................ 4
Portfolio Instruments and Practices and Associated Risk Factors.......... 4
Investment Limitations................................................... 6
Purchases and Redemptions of Shares...................................... 6
Dividends and Distributions.............................................. 8
Other Information
Net Asset Value.......................................................... 8
Management............................................................... 9
Taxes.................................................................... 11
Description of Shares.................................................... 11
Performance.............................................................. 12
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION, OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S STATEMENT
OF ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH
THE OFFERING MADE BY THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ITS DISTRIBUTOR, FUNDS DISTRIBUTOR, INC. (THE "DISTRIBUTOR"). THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE COMPANY OR BY THE
DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE
MADE.
2
<PAGE>
EXPENSE TABLE
The following table sets forth certain costs and expenses that an investor
will incur either directly or indirectly as a shareholder of Class K shares of
the Fund based on estimated operating expenses for the current fiscal year.
<TABLE>
<S> <C> <C>
Annual operating expenses
(as a percentage of average net assets)
Advisory fees ............................................................ .25%
Other expenses ........................................................... .50%
Shareholder servicing .............................................. .25%
All other expenses ................................................. .25%
----
Total fund operating expenses ............................................ .75%
====
</TABLE>
"Other expenses" in the above table include fees for shareholder services,
administrator fees, custodial fees, legal and accounting fees, printing costs,
registration fees, fees for any portfolio valuation service, the cost of
regulatory compliance, the costs of maintaining the Fund's legal existence and
the costs involved with communicating with shareholders. The amount of "Other
expenses" in the expense table above is based on estimated expenses and
projected assets for the current fiscal year. The nature of the services for
which the Fund is obligated to pay advisory fees is described under
"Management." Any fees charged by institutions directly to customer accounts
for services provided in connection with investments in shares of the Fund are
in addition to the expenses shown in the above Expense Table and the Example
shown below.
Example
The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over various periods with respect
to a hypothetical investment in the Fund. These amounts are based on payment
by the Fund of operating expenses at the levels set forth in the above table,
and are also based on the following assumptions:
<TABLE>
<CAPTION>
1 YEAR 3 YEAR
------ ------
<S> <C> <C>
An investor in Class K shares of the Fund would pay the following
expenses on a $1,000 investment, assuming (1) a hypothetical 5%
annual return and (2) redemption at the end of each time period:
................................................................ $8 $24
</TABLE>
The foregoing Expense Table and Example are intended to assist investors in
understanding the various shareholder transaction expenses and operating
expenses of the Fund that investors bear either directly or indirectly.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
INVESTMENT RETURN OR OPERATING EXPENSES. ACTUAL INVESTMENT RETURN AND
OPERATING EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
THE FUND
The Munder Short Term Treasury Fund (the "Fund") is a series of shares
issued by the Company, an open-end management investment company. The Company
was organized under the laws of the State of Maryland on November 18, 1992 and
has registered under the Investment Company Act of 1940, as amended (the "1940
Act"). The Fund's principal office is located at 480 Pierce Street,
Birmingham, Michigan 48009 and its telephone number is (800) 438-5789.
3
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to provide shareholders with a high level
of current income consistent with capital preservation. The Fund seeks to
achieve its objective by investing only in U.S. Treasury securities and
repurchase agreements fully collateralized by U.S. Treasury securities. Under
normal market conditions, the Fund will invest 100% of its total assets in
these securities. Under normal circumstances, the Fund will enter into
repurchase agreements with maturities of seven days or less and will invest in
securities with remaining maturities of three years or less. The dollar-
weighted average maturity of the Fund's portfolio is not expected to exceed
two years. The Fund also may borrow money for temporary purposes and to meet
redemption requests and may enter into reverse repurchase agreements. In
addition, the Fund may lend portfolio securities, purchase securities on a
"when-issued" basis and purchase or sell securities on a "forward commitment"
basis. See "Portfolio Instruments and Practices and Associated Risk Factors."
There can be no assurance that the Fund's investment objective will be
achieved.
The Fund is not a money market fund and, although it seeks to maintain
minimum fluctuation of principal value, no assurance can be given that, when
an investor desires to redeem Fund shares, the then-current net asset value
per share will be at or greater than the net asset value per share at the time
of purchase.
The value of the portfolio securities held by the Fund will vary inversely
to changes in prevailing interest rates. Thus, if interest rates have
increased from the time a security was purchased, such security, if sold,
might be sold at a price less than its cost. Similarly, if interest rates have
declined from the time a security was purchased, such security, if sold, might
be sold at a price greater than its purchase cost. In either instance, if the
security was purchased at face value and held to maturity, no gain or loss
would be realized.
PORTFOLIO INSTRUMENTS AND PRACTICES AND ASSOCIATED RISK FACTORS
U.S. Treasury Securities. Securities purchased by the Fund are direct
obligations of the U.S. Treasury and are guaranteed by the full faith and
credit of the U.S. government. These securities presently consist of U.S.
Treasury bills, U.S. Treasury notes and U.S. Treasury bonds. U.S. Treasury
securities differ in their interest rates, maturities and times of issuance.
Treasury bills have initial maturities of one year or less; Treasury notes
have initial maturities of one to ten years; and Treasury bonds generally have
initial maturities greater than ten years.
Zero Coupon Treasury Securities. A portion of the U.S. Treasury securities
purchased by the Fund may be "zero coupon" Treasury securities. These are U.S.
Treasury notes and bonds which have been stripped of their unmatured interest
coupons and receipts or which are certificates representing interests in such
stripped debt obligations and coupons. Such securities are purchased at a
discount from their face amount, giving the purchaser the right to receive
their full value at maturity. A zero coupon security pays no interest to its
holder during its life. Its value to an investor consists of the difference
between its face value at the time of maturity and the price for which it was
acquired, which is generally an amount significantly less than its face value
(sometimes referred to as a "deep discount" price).
The interest earned on such securities is, implicitly, automatically
compounded and paid out at maturity. While such compounding at a constant rate
eliminates the risk of receiving lower yields upon reinvestment of interest if
prevailing interest rates decline, the owner of a zero coupon security will be
unable to participate in higher yields upon reinvestment of interest received
if prevailing interest rates rise. For this reason, zero coupon securities are
subject to substantially greater market price fluctuations during periods of
changing prevailing interest rates than are comparable debt securities which
make current distributions of interest. Current federal tax law requires that
a holder (such as the Fund) of a zero coupon security accrue a portion of the
discount at which the security was purchased as income each year even though
the Fund receives no interest payments in cash on the security during the
year.
4
<PAGE>
Certain banks and brokerage firms have separated ("stripped") the principal
portions ("corpus") from the coupon portions of the U.S. Treasury bonds and
notes and sell them separately in the form of receipts or certificates
representing undivided interests in these instruments (which instruments are
generally held by a bank in a custodial or trust account). The Fund will not
purchase any such receipts or certificates representing stripped corpus or
coupon interests in U.S. Treasury securities sold by banks and brokerage
firms. The Fund will only purchase zero coupon Treasury securities which have
been stripped by the Federal Reserve Bank.
Repurchase Agreements. The Fund may agree to purchase U.S. Treasury
securities from financial institutions subject to the seller's agreement to
repurchase them at an agreed-upon time and price ("repurchase agreements").
The financial institutions with which the Fund may enter into repurchase
agreements include member banks of the Federal Reserve system, any foreign
bank or any domestic or foreign broker/dealer which is recognized as a
reporting government securities dealer. The Advisor will review and
continuously monitor the creditworthiness of the seller under a repurchase
agreement, and will require the seller to maintain liquid assets in a
segregated account in an amount that is greater than the repurchase price.
Default by or bankruptcy of the seller would, however, expose the Fund to
possible loss because of adverse market action or delays in connection with
the disposition of the underlying obligations.
Borrowing. The Fund is authorized to borrow money in amounts up to 5% of the
value of the Fund's total assets at the time of such borrowing for temporary
purposes. However, the Fund is authorized to borrow money in amounts up to 33
1/3% of its assets, as permitted by the 1940 Act, for the purpose of meeting
redemption requests. Borrowing by the Fund creates an opportunity for greater
total return but, at the same time, increases exposure to capital risk.
Leveraging by means of borrowing may exaggerate the effect of any increase or
decrease in the value of portfolio securities on the Fund's net asset value.
In addition, borrowed funds are subject to interest costs that may offset or
exceed the return earned on the borrowed funds. However, the Fund will not
purchase portfolio securities while borrowings exceed 5% of the Fund's total
assets. For more detailed information with respect to the risks associated
with borrowing, see the heading "Borrowing" in the Statement of Additional
Information.
Reverse Repurchase Agreements. The Fund may borrow funds for temporary
purposes by selling portfolio securities to financial institutions such as
banks and broker/dealers and agreeing to repurchase them at a mutually
specified date and price ("reverse repurchase agreements"). Reverse repurchase
agreements involve the risk that the market value of the securities sold by
the Fund may decline below the repurchase price. The Fund would pay interest
on amounts obtained pursuant to a reverse repurchase agreement.
When-Issued Purchases and Forward Commitments. The Fund may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"forward commitment" basis. These transactions, which involve a commitment by
the Fund to purchase or sell particular securities with payment and delivery
taking place at a future date (perhaps one or two months later), permit the
Fund to lock-in a price or yield on a security, regardless of future changes
in interest rates. When-issued and forward commitment transactions involve the
risk that the price or yield obtained may be less favorable than the price or
yield available when the delivery takes place. The Fund will establish a
segregated account consisting of cash, U.S. Government securities or other
high grade debt obligations in an amount equal to the amount of its when-
issued purchases and forward commitments. The Fund's when-issued purchases and
forward purchase commitments are not expected to exceed 25% of the value of
the Fund's total assets absent unusual market conditions. The Fund does not
intend to engage in when-issued purchases and forward commitments for
speculative purposes but only in furtherance of its investment objective.
Lending of Portfolio Securities. To enhance the return on its portfolio, the
Fund may lend securities in its portfolio representing up to 25% of its total
assets, taken at market value, to securities firms and financial institutions,
provided that each loan is secured continuously by collateral in the form of
cash or short-term U.S. Government securities adjusted daily to have a market
value at least equal to the current market value of the securities loaned. The
risk in lending portfolio securities, as with other extensions of credit,
consists of a possible delay in the recovery of the securities or a possible
loss of rights in the collateral should the borrower fail financially.
5
<PAGE>
Portfolio Transactions and Turnover. All orders for the purchase or sale of
securities on behalf of the Fund are placed by the Advisor with broker/dealers
that the Advisor selects. A high portfolio turnover rate involves larger
brokerage commission expenses or transaction costs which must be borne
directly by the Fund, and may result in the realization of short-term capital
gains which are taxable to shareholders as ordinary income. The Advisor will
not consider portfolio turnover rate a limiting factor in making investment
decisions consistent with the Fund's investment objective and policies. It is
anticipated that the Fund's annual portfolio turnover rate will range from
100% to 200%.
INVESTMENT LIMITATIONS
The Fund's investment objective and policies may be changed by the Company's
Board of Directors without shareholder approval. No assurance can be given
that the Fund will achieve its investment objective.
The Fund has also adopted certain fundamental investment limitations that
may be changed only with the approval of a "majority of the outstanding shares
of the Fund" (as defined in the Statement of Additional Information). The
following descriptions summarize several of the Fund's fundamental investment
policies, which are set forth in full in the Statement of Additional
Information.
The Fund may not:
(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 one or more issuers
conducting their principal business activities in the same industry; or
(3) borrow money, which includes entering into reverse repurchase
agreements, except that the Fund may enter into reverse repurchase
agreements or borrow money for temporary purposes in amounts up to 5% of
the value of the Fund's total assets and borrow money for the purpose of
meeting redemption requests in amounts, when aggregated with borrowings for
temporary purposes and reverse repurchase agreements, up to 33 1/3% of the
value of the Fund's assets.
These investment limitations are applied at the time investment securities
are purchased.
PURCHASES AND REDEMPTIONS OF SHARES
Shares of the Fund are sold on a continuous basis for the Fund by the
Distributor. The Distributor is a registered broker/dealer with principal
offices at 60 State Street, Boston, Massachusetts 02109.
PURCHASE OF SHARES
Class K shares of the Fund are sold without an initial or contingent
deferred sales charge to customers of banks and other institutions
("Customers") and the immediate family members of such customers, that have
entered into agreements with the Company providing for shareholder services
for Customers. Customers may include individuals, trusts, partnerships and
corporations. All share purchases are effected through a Customer's account at
an institution through procedures established in connection with the
requirements of the account, and confirmations of share purchases and
redemptions will be sent to the institution involved. 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. The exercise of voting rights and the delivery to Customers of
shareholder communications from the Fund will be governed by the Customers'
account agreements with the institution. Investors wishing to purchase shares
of the Fund should contact their account representatives.
6
<PAGE>
Shares of the Fund are sold at net asset value per share next determined on
that day after receipt of a purchase order. Purchase orders by an institution
for Class K shares must be received, together with payment, by the Distributor
or the Fund's Transfer Agent before the close of regular trading hours
(currently 4:00 p.m. New York City time) on the New York Stock Exchange (the
"Exchange"), on any Business Day (as defined below). Payment for such shares
must be made by institutions in Federal funds or other funds immediately
available to the Custodian no later than 4:00 p.m. (New York City time) on the
next Business Day following the receipt of the purchase order.
It is the responsibility of the institution to transmit orders for purchases
by their customers and to deliver required funds on a timely basis. If funds
are not received within the periods described above, the order will be
canceled, notice thereof will be given, and the institution will be
responsible for any loss to the Fund or its shareholders. Institutions may
charge certain account fees depending on the type of account the investor has
established with the institution. In addition, an institution may receive fees
from the Fund with respect to the investments of its customers as described
below under "Management." Payments for Class K shares of the Fund may, in the
discretion of the Advisor, be made in the form of securities that are
permissible investments for the Fund. For further information see "In-Kind
Purchases" in the Statement of Additional Information.
Purchases may be effected on days on which the Exchange is open for business
(a "Business Day"). The Company reserves the right to reject any purchase
order. Payment for orders which are not received or accepted will be returned
after prompt inquiry. The issuance of shares is recorded on the books of the
Fund, and share certificates are not issued unless expressly requested in
writing. Certificates are not issued for fractional shares.
Neither the Company, the Distributor nor the Transfer Agent will be
responsible for the authenticity of telephone instructions for the purchase or
redemption of shares where such instructions are reasonably believed to be
genuine. Accordingly, the Institution will bear the risk of loss. The Company
will attempt to confirm that telephone instructions are genuine and will use
such procedures as are considered reasonable. To the extent that the Company
fails to use reasonable procedures to verify the genuineness of telephone
instructions, it or its service providers may be liable for such instructions
that prove to be fraudulent or unauthorized.
REDEMPTION OF SHARES
Redemption orders are effected at the net asset value per share next
determined after receipt of the order by the Transfer Agent. Shares held by an
institution on behalf of its customers must be redeemed in accordance with
instructions and limitations pertaining to the account at the institution. The
Fund intends to pay cash for all shares redeemed, but in unusual circumstances
may make payment wholly or partly in portfolio securities at their then market
value equal to the redemption price. In such cases, an investor may incur
brokerage costs in converting such securities to cash.
Share balances may be redeemed pursuant to arrangements between institutions
and investors. It is the responsibility of an institution to transmit
redemption orders to the Fund's Transfer Agent and to credit its Customers'
accounts with the redemption proceeds on a timely basis. If the Transfer Agent
receives a redemption order prior to 4:00 p.m. (New York City time), the
redemption proceeds for shares of the Fund are normally wired to the redeeming
institution the following Business Day. The Fund reserves the right to delay
the wiring of redemption proceeds for up to seven days after it receives a
redemption order if, in the judgment of the Investment Advisor, an earlier
payment could adversely affect the Fund.
REDEMPTION BY CHECK
Free checkwriting is available with respect to Class K Shares of the Fund.
With this service, a shareholder may write checks in the amount of $500 or
more. To obtain checks, a shareholder must complete the Signature Card Section
of the Account Application Form. To establish this checkwriting service after
opening an account, the shareholder must contact the Fund to obtain an Account
Application Form. Upon 30 days' prior written notice to shareholders, the
checkwriting privilege may be modified or terminated. An investor cannot close
an account in the Fund by writing a check. A shareholder will receive the
dividends declared on the shares to be redeemed up to the date that a check is
presented to the Custodian for payment.
7
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
The Fund expects to pay dividends and distributions from the net income and
capital gains, if any, earned on investments held by the Fund. The net income
of the Fund is declared daily as a dividend and paid monthly. Generally,
dividends are paid within six business days after month-end.
The Fund's net realized capital gains (including net short-term capital
gains), if any, are distributed at least annually. Dividends and capital gains
are paid in the form of additional shares of the same class of the Fund unless
a shareholder requests that dividends and capital gains be paid in cash. In
the absence of this request on the Account Application Form or in a subsequent
request, each purchase of shares is made on the understanding that the Fund's
Transfer Agent is automatically appointed to receive the dividends upon all
shares in the shareholder's account and to reinvest them in full and
fractional shares of the same class of the Fund at the net asset value in
effect at the close of business on the reinvestment date. Dividends are
automatically paid in cash (along with any redemption proceeds) not later than
seven business days after a shareholder closes an account with the Fund.
The Fund's expenses are deducted from the income of the Fund before
dividends are declared and paid. These expenses include, but are not limited
to, fees paid to the Advisor, Administrator, Custodian and Transfer Agent;
fees and expenses of officers and Directors; taxes; interest; legal and
auditing fees; brokerage fees and commissions; certain fees and expenses in
registering and qualifying 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 Company that are not readily identifiable as belonging to a
particular fund of the Company are allocated among all funds of the Company by
or under the direction of the Board of Directors in a manner that the Board
determines to be fair and equitable. Except as noted in this Prospectus and
the Statement of Additional Information, the Fund's service contractors bear
expenses in connection with the performance of their services, and the Fund
bears the expenses incurred in its operations. The Advisor, Administrator,
Custodian and Transfer Agent may voluntarily waive all or a portion of their
respective fees from time to time.
The Fund's net investment income available for distribution to the holders
of Class K shares will be reduced by the amount of shareholder service fees
payable under the Class K Plan described below.
NET ASSET VALUE
Net asset value for Class K shares in the Fund is calculated by dividing the
value of all securities and other assets belonging to the Fund allocable to
that class, less the liabilities charged to that class, by the number of
outstanding shares of that class.
The net asset value per share of the Fund for the purpose of pricing
purchase and redemption orders is determined as of the close of regular
trading hours on the New York Stock Exchange (currently 4:00 p.m., New York
time) on each Business Day. Securities traded on a national securities
exchange or on the NASDAQ National Market System are valued at the last sale
price on such exchange or market as of the close of business on the date of
valuation. Securities traded on a national securities exchange or on the
NASDAQ National Market System for which there were no sales on the date of
valuation and securities traded on other over-the-counter markets, including
listed securities for which the primary market is believed to be over-the-
counter, are valued at the mean between the most recently quoted bid and asked
prices. Restricted securities and securities and assets for which market
quotations are not readily available are valued at fair value by the Advisor
under the supervision of the Board of Directors. Debt securities with
remaining maturities of 60 days or less are valued at amortized cost, unless
the Board of Directors determines that such valuation does not constitute fair
value at that time. Under this method, such securities are valued initially at
cost on the date of purchase (or the 61st day before maturity).
8
<PAGE>
The Company does not accept purchase and redemption orders on days on which
the New York Stock Exchange is closed. The New York Stock Exchange is
currently scheduled to be closed on New Year's Day, Presidents' Day, Good
Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving and
Christmas, and on the preceding Friday or subsequent Monday when one of these
holidays falls on a Saturday or Sunday, respectively.
MANAGEMENT
BOARD OF DIRECTORS
The Company is managed under the direction of its governing Board of
Directors. The Statement of Additional Information contains the name and
background information of each Director.
INVESTMENT ADVISOR
Munder Capital Management, a Delaware general partnership with its principal
offices at 480 Pierce Street, Birmingham, Michigan 48009, serves as the Fund's
investment advisor. The Advisor was formed in December 1994. The principal
partners of the Advisor are Old MCM, Inc. ("MCM"), Munder Group LLC,
Woodbridge Capital Management, Inc. ("Woodbridge") and WAM Holdings, Inc.
("WAM"). MCM was founded in February 1985 as a Delaware corporation and was a
registered investment advisor. Woodbridge and WAM are indirect, wholly-owned
subsidiaries of Comerica Incorporated. Mr. Lee P. Munder, the Advisor's chief
executive officer, indirectly owns or controls a majority of the partnership
interests in the Advisor. As of September 30, 1996, the Advisor and its
affiliates had approximately $36 billion in assets under active management, of
which $18 billion were invested in equity securities, $8 billion were invested
in money market or other short-term instruments, and $10 billion were invested
in other fixed income securities.
Subject to the supervision of the Board of Directors of the Company, the
Advisor provides overall investment management for the Fund, provides research
and credit analysis, is responsible for all purchases and sales of portfolio
securities, maintains books and records with respect to the Fund's securities
transactions and provides periodic and special reports to the Board of
Directors as requested.
For the advisory services provided and expenses assumed by it, the Advisor
has agreed to a fee from the Fund, computed daily and payable monthly, at an
annual rate of .25% of the Fund's average daily net assets.
The Advisor may, from time to time, make payments to banks, broker-dealers
or other financial institutions for certain services to the Fund and/or its
shareholders, including sub-administration, sub-transfer agency and
shareholder servicing. Such payments are made out of the Advisor's own
resources and do not involve additional costs to the Fund or its shareholders.
PORTFOLIO MANAGER
Sharon E. Fayolle, Vice President and Director of Money Market Trading for
the Advisor, is primarily responsible for the day to day management of the
investment selections of the Fund. She is also responsible for overseeing the
management of cash portfolios, money market funds and foreign currency trading
since May, 1996. She has co-managed the International Bond Fund since October,
1996. Prior to joining the Advisor in 1996, she was employed in the investment
area of Ford Motor Company as European Portfolio Manager responsible for
investment and cash management for Ford's European operations (August, 1981 to
April, 1996).
ADMINISTRATOR, CUSTODIAN AND TRANSFER AGENT
First Data Investor Services Group, Inc. ("First Data"), whose principal
business address is 53 State Street, Boston, Massachusetts 02109 (the
"Administrator"), serves as administrator for the Company. First Data is a
wholly-owned subsidiary of First Data Corporation. The Administrator generally
assists the Company in all aspects of its administration and operations,
including the maintenance of financial records and fund accounting.
9
<PAGE>
First Data also serves as the Company's transfer agent and dividend
disbursing agent. Shareholder inquiries may be directed to First Data at P.O.
Box 5130, Westborough, Massachusetts 01581-5130.
As compensation for these services, the Administrator and Transfer Agent are
entitled to receive fees, based on the aggregate average daily net assets of
the Fund and certain other investment portfolios that are advised by the
Advisor for which they provide services, computed daily and payable monthly at
the rate of .12% of the first $2.8 billion of net assets, plus .105% of the
next $2.2 billion of net assets, plus .10% of all net assets in excess of $5
billion with respect to the Administrator and .02% of the first $2.8 billion
of net assets, plus .015% of the next $2.2 billion of net assets, plus .01% of
all net assets in excess of $5 billion with respect to the Transfer Agent.
Administration fees payable by the Fund and certain other investment
portfolios advised by the Advisor are subject to a minimum annual fee of $1.2
million to be allocated among each series and class thereof. The Administrator
and Transfer Agent are also entitled to reimbursement for out-of-pocket
expenses. The Administrator has entered into a Sub-Administration Agreement
with the Distributor under which the Distributor provides certain
administrative services with respect to the Fund. The Administrator pays the
Distributor a fee for these services out of its own resources at no cost to
the Fund.
Comerica Bank (the "Custodian"), whose principal business address is One
Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226, provides
custodial services to the Fund. The Custodian is a wholly-owned subsidiary of
Comerica Incorporated, a publicly-held bank holding company. As compensation
for its services, the Custodian is entitled to receive fees, based on the
aggregate average daily net assets of the Fund and certain other investment
portfolios that are advised by the Advisor, for which the Custodian provides
services, computed daily and payable monthly at an annual rate of .03% of the
first $100 million of average daily net assets, .02% of the next $500 million
of net assets and .01% of net assets in excess of $600 million. The Custodian
also receives certain transaction based fees.
For an additional description of the services performed by the
Administrator, Transfer Agent and Custodian, see the Statement of Additional
Information.
SHAREHOLDER SERVICING ARRANGEMENTS
The Company, on behalf of the Fund, has 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 Company. The
agreements require the institutions to provide shareholder services to their
customers ("Customers") who from time to time own of record or beneficially
Class K shares in return for payment by the 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.
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 Fund on behalf of Customers; providing information
periodically to Customers showing their positions in Class K shares; providing
sub-accounting with respect to Class K shares beneficially owned by Customers
or the information necessary for sub-accounting; responding to inquiries from
Customers concerning their investment in Class K shares; arranging for bank
wires; and providing such other similar services as may be reasonably
requested.
The Fund understands that institutions may charge fees to their Customers
who are the owners of Class K shares in connection with their Customer
accounts. These fees would be in addition to any amounts which may be received
by an institution under its agreements with the Fund. The agreements require
an institution to disclose to its Customers any compensation payable to the
institution by the Fund and any other compensation payable by the Customers in
connection with the investment of their assets in Class K shares. Customers of
institutions should read this Prospectus in light of the terms governing their
accounts with their institutions. Conflict of interest restrictions may apply
to the receipt by institutions of compensation from the Distributor with
respect to the investment of fiduciary assets in Class K shares.
10
<PAGE>
Payments under the Class K Plan are not tied exclusively to the shareholder
service expenses actually incurred by the institutions and the payments may
exceed service expenses actually incurred. The Company's Board of Directors
evaluates the appropriateness of the Class K Plan and its payment terms on a
periodic basis.
TAXES
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
Such qualification relieves the Fund of liability for Federal income taxes to
the extent its earnings are distributed in accordance with the Code.
Qualification as a regulated investment company under the Code for any
taxable year requires, among other things, that the Fund distribute to its
shareholders an amount equal to at least 90% of its investment company taxable
income and 90% of its net tax-exempt interest income for such year. In general
the Fund's investment company income will be its taxable income (including
dividends, interest, and short-term capital gains) subject to certain
adjustments and excluding the excess of any net long-term capital gain for the
taxable year over the net short-term capital loss, if any, for such year. The
Fund intends to distribute substantially all of its investment company taxable
income each taxable year. Such distributions will be taxable as ordinary
income to the Fund's shareholders who are not currently exempt from Federal
income taxes, whether such income is received in cash or reinvested in
additional shares. (Federal income taxes for distributions to an IRA or
qualified retirement plan are deferred under the Code if applicable
requirements are met.)
Substantially all of the Fund's net realized long-term capital gains, if
any, will be distributed at least annually. The Fund will generally have no
Federal income tax liability with respect to such gains, and the distributions
will be taxable to shareholders who are not currently exempt from Federal
income taxes as long-term capital gains, no matter how long the shareholders
have held their shares.
A taxable gain or loss may also be realized by a holder of shares in the
Fund upon the redemption or transfer of shares depending upon the tax basis of
the shares and their price at the time of the transaction.
Dividends declared in October, November, or December of any year payable to
shareholders of record on a specified date in such months will be deemed to
have been received by shareholders and paid by the Fund on December 31 of such
year if such dividends are actually paid during January of the following year.
Before purchasing shares in the Funds, the impact of dividends or
distributions which are expected to be declared or have been declared, but not
paid, should be carefully considered. Any dividend or distribution declared
shortly after a purchase of such shares prior to the record date will have the
effect of reducing the per share net asset value by the per share amount of
the dividend or distribution. All or a portion of such dividend or
distribution, although in effect a return of capital, may be subject to tax.
On an annual basis, the Company will send written notices to record owners
of shares regarding the Federal tax status of distributions made by the Fund.
Since this is not an exhaustive discussion of applicable tax consequences and
since state and local taxes may be different from the Federal taxes described
above, investors may wish to contact their tax advisors concerning investments
in the Fund. With respect to state and local taxes, investors should consult
with their tax advisors as to whether Fund distributions attributable to
interest income earned on U.S. treasury securities may be eligible for
exemption from state and/or local income tax.
DESCRIPTION OF SHARES
The Fund operates as one series of the Company. The Company was organized as
a Maryland corporation on November 18, 1992 and is also registered under the
1940 Act as an open-end management investment company. The Company's Articles
of Incorporation authorize the Directors to classify and reclassify any
unissued shares into one or more classes of shares. Pursuant to such authority
the Directors have authorized the issuance of shares of common stock
representing interests in Equity Selection Fund, Micro-Cap Equity Fund, Mid-
Cap Growth Fund, Multi-Season Growth Fund, Real Estate Equity Investment Fund,
Small-Cap Value Fund, Value Fund, International Bond Fund, Short Term Treasury
Fund, Money Market Fund and NetNet Fund, each of which, except International
Bond Fund, is classified as a diversified investment company under the 1940
Act.
11
<PAGE>
The shares of the Fund are offered as five separate classes of common stock,
$.01 par value per share, designated Class A shares, Class B shares, Class C
shares, Class K shares and Class Y shares. All shares represent interests in
the same assets of the Fund and are identical in all respects except that each
class bears different service and distribution expenses and may bear various
class-specific expenses (which may affect performance), and each class has
exclusive voting rights with respect to its service and/or distribution plan,
if any. Shares of the Fund issued are fully paid, non-assessable, fully
transferable and redeemable at the option of the holder. Investors may call
the Fund at (800) 438-5789 for more information concerning other classes of
shares of the Fund. This Prospectus relates only to the Class K shares of the
Fund.
The Company's shareholders are entitled to one vote for each full share held
and proportionate fractional votes for fractional shares held, and will vote
in the aggregate and not by Fund, except where otherwise required by law or
when the Directors determine that the matter to be voted upon affects only the
interests of the shareholders of a particular Fund. In addition, shareholders
of the Fund will vote in the aggregate and not by class, except as otherwise
expressly required by law or when the Directors determine that the matter to
be voted upon affects only the interests of the holders of a particular class
of shares. The Company is not required and does not currently intend to hold
annual meetings of shareholders for the election of Board members except as
required under the 1940 Act. A meeting of shareholders will be called upon the
written request of at least 10% of the outstanding shares of the Company. To
the extent required by law, the Company will assist in shareholder
communications in connection with such a meeting. For further discussion of
the voting rights of shareholders, see "Additional Information Concerning
Shares" in the Statement of Additional Information.
REPORTS TO SHAREHOLDERS
The Fund will seek to eliminate duplicate mailings of prospectuses and
shareholders reports to accounts which have the same primary record owner, and
with respect to joint tenant accounts or tenant in common accounts, accounts
which have the same address. Additional copies of prospectuses and reports to
shareholders are available upon request by calling the Fund at (800) 438-5789.
PERFORMANCE
From time to time, the Fund may quote performance and yield data for Class K
shares of the Fund in advertisements or in communications to shareholders. The
total return of Class K shares of the Fund may be calculated on an average
annual total return basis, and may also be calculated on an aggregate total
return basis, for various periods. Average annual total return reflects the
average percentage change in value of an investment in a class of shares in
the Fund from the beginning date of the measuring period to the end of the
measuring period. Aggregate total return reflects the total percentage change
in value over the measuring period. Both methods of calculating total return
assume that dividends and capital gains distributions made during the period
are reinvested in the same class of shares.
The yield of a class of shares in the Fund is computed based on the net
income of such class in the Fund during a 30-day (or one month) period (which
period will be identified in connection with the particular yield quotation).
More specifically, the Fund's yield for a class of shares is computed by
dividing the per share net income for the class during a 30-day (or one-month)
period by the maximum offering price per Share on the last day of the period
and annualizing the result on a semi-annual basis.
The Fund may compare the performance of the Class K shares to the
performance of other mutual funds with similar investment objectives and to
other relevant indices or to rankings prepared by independent services or
other financial or industry publications that monitor the performance of
mutual funds, including, for example, Lipper Analytical Services, Inc., the
Lehman Brothers Government/Corporate Bond Index, a recognized unmanaged index
of government and corporate bonds, the Standard & Poor's 500 Index, an
unmanaged index of a group of common stocks, the Consumer Price Index, or the
Dow Jones Industrial Average, an unmanaged
12
<PAGE>
index of common stocks of 30 industrial companies listed on the New York Stock
Exchange. Performance and yield data as reported in national financial
publications such as Morningstar, Inc., Money Magazine, Forbes, Barron's, The
Wall Street Journal and The New York Times, or in publications of a local or
regional nature, may also be used in comparing the performance of a class of
shares in the Fund.
Performance will fluctuate and any quotation of performance should not be
considered as representative of future performance of a class of shares in the
Fund. Shareholders should remember that performance is generally a function of
the kind and quality of the instruments held in a fund, portfolio maturity,
operating expenses, and market conditions. Any fees charged by institutions
directly to their customers' accounts in connection with investments in the
Fund will not be included in calculations of yield and performance.
Quotations of total return for Class K shares will reflect the fees for
certain shareholder services described in this Prospectus.
13
<PAGE>
MUNDER SHORT TERM TREASURY FUND
480 PIERCE STREET
BIRMINGHAM, MICHIGAN 48009
TELEPHONE (800) 438-5789
PROSPECTUS
CLASS Y SHARES
The Munder Short Term Treasury Fund (the "Fund") is a series of shares
issued by The Munder Funds, Inc. (the "Company"), an open-end management
investment company. The Fund's investment objective is to provide shareholders
with a high level of current income consistent with capital preservation. The
Fund seeks to achieve its objective by investing only in U.S. Treasury
securities and repurchase agreements fully collateralized by U.S. Treasury
securities. There can be no assurance that the Fund's investment objective
will be achieved. The net asset value per share of the Fund will fluctuate in
response to changes in market conditions and other factors.
Munder Capital Management (the "Advisor") serves as investment advisor to
the Fund.
This Prospectus contains the information that a prospective investor should
know before investing in the Fund. Investors are encouraged to read this
Prospectus and retain it for future reference. A Statement of Additional
Information dated December 14, 1996, as amended or supplemented from time to
time, has been filed with the Securities and Exchange Commission (the "SEC")
and is incorporated by reference into this Prospectus. The Statement of
Additional Information may be obtained 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 Statement of Additional Information 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 INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE DATE OF THIS PROSPECTUS IS DECEMBER 14, 1996.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Fund
Expense Table............................................................ 3
Investment Objective and Policies........................................ 3
Portfolio Instruments and Practices and Associated Risk Factors.......... 4
Investment Limitations................................................... 6
Purchases and Redemptions of Shares...................................... 6
Dividends and Distributions.............................................. 8
Other Information
Net Asset Value.......................................................... 8
Management............................................................... 9
Taxes.................................................................... 10
Description of Shares.................................................... 11
Performance.............................................................. 12
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION, OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S STATEMENT
OF ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH
THE OFFERING MADE BY THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ITS DISTRIBUTOR, FUNDS DISTRIBUTOR, INC. (THE "DISTRIBUTOR"). THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE COMPANY OR BY THE
DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE
MADE.
2
<PAGE>
EXPENSE TABLE
The following table sets forth certain costs and expenses that an investor
will incur either directly or indirectly as a shareholder of Class Y shares of
the Fund based on estimated operating expenses for the current fiscal year.
<TABLE>
<S> <C>
Annual operating expenses:
(as a percentage of average net assets)
Advisory fees ............................................................ .25%
Other expenses ........................................................... .25%
----
Total fund operating expenses ............................................ .50%
====
</TABLE>
"Other expenses" in the above table include fees for shareholder services,
administrator fees, custodial fees, legal and accounting fees, printing costs,
registration fees, fees for any portfolio valuation service, the cost of
regulatory compliance, the costs of maintaining the Fund's legal existence and
the costs involved with communicating with shareholders. The amount of "Other
expenses" in the expense table above is based on estimated expenses and
projected assets for the current fiscal year. The nature of the services for
which the Fund is obligated to pay advisory fees is described under
"Management." Any fees charged by institutions directly to customer accounts
for services provided in connection with investments in shares of the Fund are
in addition to the expenses shown in the above Expense Table and the Example
shown below.
Example
The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over various periods with respect
to a hypothetical investment in the Fund. These amounts are based on payment
by the Fund of operating expenses at the levels set forth in the above table,
and are also based on the following assumptions:
<TABLE>
<CAPTION>
1 YEAR 3 YEAR
------ ------
<S> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming (1) a hypothetical 5% annual return and (2)
redemption at the end of each time period: ..................... $5 $16
</TABLE>
The foregoing Expense Table and Example are intended to assist investors in
understanding the various shareholder transaction expenses and operating
expenses of the Fund that investors bear either directly or indirectly.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
INVESTMENT RETURN OR OPERATING EXPENSES. ACTUAL INVESTMENT RETURN AND
OPERATING EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
THE FUND
The Munder Short Term Treasury Fund (the "Fund") is a series of shares
issued by the Company, an open-end management investment company. The Company
was organized under the laws of the State of Maryland on November 18, 1992 and
has registered under the Investment Company Act of 1940, as amended (the "1940
Act"). The Fund's principal office is located at 480 Pierce Street,
Birmingham, Michigan 48009 and its telephone number is (800) 438-5789.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to provide shareholders with a high level
of current income consistent with capital preservation. The Fund seeks to
achieve its objective by investing only in U.S. Treasury securities and
repurchase agreements fully collateralized by U.S. Treasury securities. Under
normal market conditions, the Fund will invest 100% of its total assets in
these securities. Under normal circumstances, the Fund will enter into
repurchase agreements with maturities of seven days or less and will invest in
securities with remaining maturities
3
<PAGE>
of three years or less. The dollar-weighted average maturity of the Fund's
portfolio is not expected to exceed two years. The Fund also may borrow money
for temporary purposes and to meet redemption requests and may enter into
reverse repurchase agreements. In addition, the Fund may lend portfolio
securities, purchase securities on a "when-issued" basis and purchase or sell
securities on a "forward commitment" basis. See "Portfolio Instruments and
Practices and Associated Risk Factors." There can be no assurance that the
Fund's investment objective will be achieved.
The Fund is not a money market fund and, although it seeks to maintain
minimum fluctuation of principal value, no assurance can be given that, when
an investor desires to redeem Fund shares, the then-current net asset value
per share will be at or greater than the net asset value per share at the time
of purchase.
The value of the portfolio securities held by the Fund will vary inversely
to changes in prevailing interest rates. Thus, if interest rates have
increased from the time a security was purchased, such security, if sold,
might be sold at a price less than its cost. Similarly, if interest rates have
declined from the time a security was purchased, such security, if sold, might
be sold at a price greater than its purchase cost. In either instance, if the
security was purchased at face value and held to maturity, no gain or loss
would be realized.
PORTFOLIO INSTRUMENTS AND PRACTICES AND ASSOCIATED RISK FACTORS
U.S. Treasury Securities. Securities purchased by the Fund are direct
obligations of the U.S. Treasury and are guaranteed by the full faith and
credit of the U.S. government. These securities presently consist of U.S.
Treasury bills, U.S. Treasury notes and U.S. Treasury bonds. U.S. Treasury
securities differ in their interest rates, maturities and times of issuance.
Treasury bills have initial maturities of one year or less; Treasury notes
have initial maturities of one to ten years; and Treasury bonds generally have
initial maturities greater than ten years.
Zero Coupon Treasury Securities. A portion of the U.S. Treasury securities
purchased by the Fund may be "zero coupon" Treasury securities. These are U.S.
Treasury notes and bonds which have been stripped of their unmatured interest
coupons and receipts or which are certificates representing interests in such
stripped debt obligations and coupons. Such securities are purchased at a
discount from their face amount, giving the purchaser the right to receive
their full value at maturity. A zero coupon security pays no interest to its
holder during its life. Its value to an investor consists of the difference
between its face value at the time of maturity and the price for which it was
acquired, which is generally an amount significantly less than its face value
(sometimes referred to as a "deep discount" price).
The interest earned on such securities is, implicitly, automatically
compounded and paid out at maturity. While such compounding at a constant rate
eliminates the risk of receiving lower yields upon reinvestment of interest if
prevailing interest rates decline, the owner of a zero coupon security will be
unable to participate in higher yields upon reinvestment of interest received
if prevailing interest rates rise. For this reason, zero coupon securities are
subject to substantially greater market price fluctuations during periods of
changing prevailing interest rates than are comparable debt securities which
make current distributions of interest. Current federal tax law requires that
a holder (such as the Fund) of a zero coupon security accrue a portion of the
discount at which the security was purchased as income each year even though
the Fund receives no interest payments in cash on the security during the
year.
Certain banks and brokerage firms have separated ("stripped") the principal
portions ("corpus") from the coupon portions of the U.S. Treasury bonds and
notes and sell them separately in the form of receipts or certificates
representing undivided interests in these instruments (which instruments are
generally held by a bank in a custodial or trust account). The Fund will not
purchase any such receipts or certificates representing stripped corpus or
coupon interests in U.S. Treasury securities sold by banks and brokerage
firms. The Fund will only purchase zero coupon Treasury securities which have
been stripped by the Federal Reserve Bank.
4
<PAGE>
Repurchase Agreements. The Fund may agree to purchase U.S. Treasury
securities from financial institutions subject to the seller's agreement to
repurchase them at an agreed-upon time and price ("repurchase agreements").
The financial institutions with which the Fund may enter into repurchase
agreements include member banks of the Federal Reserve system, any foreign
bank or any domestic or foreign broker/dealer which is recognized as a
reporting government securities dealer. The Advisor will review and
continuously monitor the creditworthiness of the seller under a repurchase
agreement, and will require the seller to maintain liquid assets in a
segregated account in an amount that is greater than the repurchase price.
Default by or bankruptcy of the seller would, however, expose the Fund to
possible loss because of adverse market action or delays in connection with
the disposition of the underlying obligations.
Borrowing. The Fund is authorized to borrow money in amounts up to 5% of the
value of the Fund's total assets at the time of such borrowing for temporary
purposes. However, the Fund is authorized to borrow money in amounts up to 33
1/3% of its assets, as permitted by the 1940 Act, for the purpose of meeting
redemption requests. Borrowing by the Fund creates an opportunity for greater
total return but, at the same time, increases exposure to capital risk.
Leveraging by means of borrowing may exaggerate the effect of any increase or
decrease in the value of portfolio securities on the Fund's net asset value.
In addition, borrowed funds are subject to interest costs that may offset or
exceed the return earned on the borrowed funds. However, the Fund will not
purchase portfolio securities while borrowings exceed 5% of the Fund's total
assets. For more detailed information with respect to the risks associated
with borrowing, see the heading "Borrowing" in the Statement of Additional
Information.
Reverse Repurchase Agreements. The Fund may borrow funds for temporary
purposes by selling portfolio securities to financial institutions such as
banks and broker/dealers and agreeing to repurchase them at a mutually
specified date and price ("reverse repurchase agreements"). Reverse repurchase
agreements involve the risk that the market value of the securities sold by
the Fund may decline below the repurchase price. The Fund would pay interest
on amounts obtained pursuant to a reverse repurchase agreement.
When-Issued Purchases and Forward Commitments. The Fund may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"forward commitment" basis. These transactions, which involve a commitment by
the Fund to purchase or sell particular securities with payment and delivery
taking place at a future date (perhaps one or two months later), permit the
Fund to lock-in a price or yield on a security, regardless of future changes
in interest rates. When-issued and forward commitment transactions involve the
risk that the price or yield obtained may be less favorable than the price or
yield available when the delivery takes place. The Fund will establish a
segregated account consisting of cash, U.S. Government securities or other
high grade debt obligations in an amount equal to the amount of its when-
issued purchases and forward commitments. The Fund's when-issued purchases and
forward purchase commitments are not expected to exceed 25% of the value of
the Fund's total assets absent unusual market conditions. The Fund does not
intend to engage in when-issued purchases and forward commitments for
speculative purposes but only in furtherance of its investment objective.
Lending of Portfolio Securities. To enhance the return on its portfolio, the
Fund may lend securities in its portfolio representing up to 25% of its total
assets, taken at market value, to securities firms and financial institutions,
provided that each loan is secured continuously by collateral in the form of
cash or short-term U.S. Government securities adjusted daily to have a market
value at least equal to the current market value of the securities loaned. The
risk in lending portfolio securities, as with other extensions of credit,
consists of a possible delay in the recovery of the securities or a possible
loss of rights in the collateral should the borrower fail financially.
Portfolio Transactions and Turnover. All orders for the purchase or sale of
securities on behalf of the Fund are placed by the Advisor with broker/dealers
that the Advisor selects. A high portfolio turnover rate involves larger
brokerage commission expenses or transaction costs which must be borne
directly by the Fund, and may result in the realization of short-term capital
gains which are taxable to shareholders as ordinary income. The Advisor will
not consider portfolio turnover rate a limiting factor in making investment
decisions consistent with the Fund's investment objective and policies. It is
anticipated that the Fund's annual portfolio turnover rate will range from
100% to 200%.
5
<PAGE>
INVESTMENT LIMITATIONS
The Fund's investment objective and policies may be changed by the Company's
Board of Directors without shareholder approval. No assurance can be given that
the Fund will achieve its investment objective.
The Fund has also adopted certain fundamental investment limitations that may
be changed only with the approval of a "majority of the outstanding shares of
the Fund" (as defined in the Statement of Additional Information). The
following descriptions summarize several of the Fund's fundamental investment
policies, which are set forth in full in the Statement of Additional
Information.
The Fund may not:
(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 one or more issuers
conducting their principal business activities in the same industry; or
(3) borrow money, which includes entering into reverse repurchase
agreements, except that the Fund may enter into reverse repurchase
agreements or borrow money for temporary purposes in amounts up to 5% of
the value of the Fund's total assets and borrow money for the purpose of
meeting redemption requests in amounts, when aggregated with borrowings for
temporary purposes and reverse repurchase agreements, up to 33 1/3% of the
value of the Fund's assets.
These investment limitations are applied at the time investment securities
are purchased.
PURCHASES AND REDEMPTIONS OF SHARES
Shares of the Fund are sold on a continuous basis for the Fund by the
Distributor. The Distributor is a registered broker/dealer with principal
offices at 60 State Street, Boston, Massachusetts 02109.
PURCHASE OF SHARES
Class Y Shares of the Fund are sold without an initial or contingent deferred
sales charge to fiduciary and discretionary accounts of institutions,
"institutional investors," Directors, trustees, officers and employees of the
Company, The Munder Funds Trust, the Advisor, the Distributor and the Advisor's
investment advisory clients and family members of the Advisor's employees.
"Institutional investors" may include financial institutions (such as banks,
savings institutions and credit unions); pension and profit sharing and
employee benefit plans and trusts; insurance companies; investment companies;
investment advisers; and broker-dealers acting for their own accounts or for
the accounts of such institutional investors. A minimum initial investment of
$500,000 for Class Y Shares of the Fund is required for fiduciary and
discretionary accounts of institutions and institutional investors.
Shares of the Fund are sold at net asset value per share next determined on
that day after receipt of a purchase order. Purchase orders by an institution
for Class Y shares must be received, together with payment, by the Distributor
or the Fund's Transfer Agent before the close of regular trading hours
(currently 4:00 p.m. New York City time) on the New York Stock Exchange (the
"Exchange"), on any Business Day (as defined below). Payment for such shares
must be made by institutions in Federal funds or other funds immediately
available to the Custodian no later than 4:00 p.m. (New York City time) on the
next Business Day following the receipt of the purchase order.
It is the responsibility of the institution to transmit orders for purchases
by their customers and to deliver required funds on a timely basis. If funds
are not received within the periods described above, the order will be
canceled, notice thereof will be given, and the institution will be responsible
for any loss to the Fund or its
6
<PAGE>
shareholders. Institutions may charge certain account fees depending on the
type of account the investor has established with the institution. In
addition, an institution may receive fees from the Fund with respect to the
investments of its customers as described below under "Management." Payments
for Class Y Shares of the Fund may, in the discretion of the Advisor, be made
in the form of securities that are permissible investments for the Fund. For
further information see "In-Kind Purchases" in the Statement of Additional
Information.
Purchases may be effected on days on which the Exchange is open for business
(a "Business Day"). The Company reserves the right to reject any purchase
order. Payment for orders which are not received or accepted will be returned
after prompt inquiry. The issuance of shares is recorded on the books of the
Fund, and share certificates are not issued unless expressly requested in
writing. Certificates are not issued for fractional shares.
Neither the Company, the Distributor nor the Transfer Agent will be
responsible for the authenticity of telephone instructions for the purchase or
redemption of shares where such instructions are reasonably believed to be
genuine. Accordingly, the Institution will bear the risk of loss. The Company
will attempt to confirm that telephone instructions are genuine and will use
such procedures as are considered reasonable. To the extent that the Company
fails to use reasonable procedures to verify the genuineness of telephone
instructions, it or its service providers may be liable for such instructions
that prove to be fraudulent or unauthorized.
AUTOMATIC INVESTMENT PLAN ("AIP")
An investor in Class Y Shares of the Fund may arrange for periodic
investments in the Fund through automatic deductions from a checking or
savings account by completing the AIP Application Form. The minimum pre-
authorized investment is $50.
REDEMPTION OF SHARES
Redemption orders are effected at the net asset value per share next
determined after receipt of the order by the Transfer Agent. Shares held by an
institution on behalf of its customers must be redeemed in accordance with
instructions and limitations pertaining to the account at the institution. The
Fund intends to pay cash for all shares redeemed, but in unusual circumstances
may make payment wholly or partly in portfolio securities at their then market
value equal to the redemption price. In such cases, an investor may incur
brokerage costs in converting such securities to cash.
Share balances may be redeemed pursuant to arrangements between institutions
and investors. It is the responsibility of an institution to transmit
redemption orders to the Fund's Transfer Agent and to credit its Customers'
accounts with the redemption proceeds on a timely basis. If the Transfer Agent
receives a redemption order prior to 4:00 p.m. (New York City time), the
redemption proceeds for shares of the Fund are normally wired to the redeeming
institution the following Business Day. The Fund reserves the right to delay
the wiring of redemption proceeds for up to seven days after it receives a
redemption order if, in the judgment of the Investment Advisor, an earlier
payment could adversely affect the Fund.
REDEMPTION BY CHECK
Free checkwriting is available with respect to Class Y Shares of the Fund.
With this service, a shareholder may write checks in the amount of $500 or
more. To obtain checks, a shareholder must complete the Signature Card Section
of the Account Application Form. To establish this checkwriting service after
opening an account, the shareholder must contact the Fund to obtain an Account
Application Form. Upon 30 days' prior written notice to shareholders, the
checkwriting privilege may be modified or terminated. An investor cannot close
an account in the Fund by writing a check. A shareholder will receive the
dividends declared on the shares to be redeemed up to the date that a check is
presented to the Custodian for payment.
EXCHANGES
Class Y Shares of the Fund may be exchanged for Class Y Shares of other
funds of the Company, The Munder Funds Trust or The Munder Framlington Funds
Trust, based on their respective net asset values, without the imposition of
any sales charges.
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Any shares involved in an exchange must satisfy the requirements relating to
the minimum initial investment in an investment portfolio of the Company, The
Munder Funds Trust or The Munder Framlington Funds Trust, and the shares
involved must be legally available for sale in the state of the investor's
residence. For Federal income tax purposes, a share exchange is a taxable
event and, accordingly, a capital gain or loss may be realized. Before making
an exchange request, shareholders should consult a tax or other financial
advisor and should consider the investment objective, policies and
restrictions of the investment portfolio into which the shareholder is making
an exchange, as set forth in the applicable prospectus. An investor who is
considering an exchange may obtain a copy of the prospectus for any investment
portfolio of the Company or The Munder Funds Trust by contacting his or her
broker or the Fund at (800) 438-5789. Certain brokers may charge a fee for
handling exchanges.
The Company reserves the right to modify or terminate the exchange privilege
at any time. Notice will be given to shareholders of any material
modifications, except where notice is not required.
DIVIDENDS AND DISTRIBUTIONS
The Fund expects to pay dividends and distributions from the net income and
capital gains, if any, earned on investments held by the Fund. The net income
of the Fund is declared daily as a dividend and paid monthly. Generally,
dividends are paid within six business days after month-end.
The Fund's net realized capital gains (including net short-term capital
gains), if any, are distributed at least annually. Dividends and capital gains
are paid in the form of additional shares of the same class of the Fund unless
a shareholder requests that dividends and capital gains be paid in cash. In
the absence of this request on the Account Application Form or in a subsequent
request, each purchase of shares is made on the understanding that the Fund's
Transfer Agent is automatically appointed to receive the dividends upon all
shares in the shareholder's account and to reinvest them in full and
fractional shares of the same class of the Fund at the net asset value in
effect at the close of business on the reinvestment date. Dividends are
automatically paid in cash (along with any redemption proceeds) not later than
seven business days after a shareholder closes an account with the Fund.
The Fund's expenses are deducted from the income of the Fund before
dividends are declared and paid. These expenses include, but are not limited
to, fees paid to the Advisor, Administrator, Custodian and Transfer Agent;
fees and expenses of officers and Directors; taxes; interest; legal and
auditing fees; brokerage fees and commissions; certain fees and expenses in
registering and qualifying 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 Company that are not readily identifiable as belonging to a
particular fund of the Company are allocated among all funds of the Company by
or under the direction of the Board of Directors in a manner that the Board
determines to be fair and equitable. Except as noted in this Prospectus and
the Statement of Additional Information, the Fund's service contractors bear
expenses in connection with the performance of their services, and the Fund
bears the expenses incurred in its operations. The Advisor, Administrator,
Custodian and Transfer Agent may voluntarily waive all or a portion of their
respective fees from time to time.
NET ASSET VALUE
Net asset value for Class Y Shares in the Fund is calculated by dividing the
value of all securities and other assets belonging to the Fund allocable to
that class, less the liabilities charged to that class, by the number of
outstanding shares of that class.
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The net asset value per share of the Fund for the purpose of pricing
purchase and redemption orders is determined as of the close of regular
trading hours on the New York Stock Exchange (currently 4:00 p.m., New York
time) on each Business Day. Securities traded on a national securities
exchange or on the NASDAQ National Market System are valued at the last sale
price on such exchange or market as of the close of business on the date of
valuation. Securities traded on a national securities exchange or on the
NASDAQ National Market System for which there were no sales on the date of
valuation and securities traded on other over-the-counter markets, including
listed securities for which the primary market is believed to be over-the-
counter, are valued at the mean between the most recently quoted bid and asked
prices. Restricted securities and securities and assets for which market
quotations are not readily available are valued at fair value by the Advisor
under the supervision of the Board of Directors. Debt securities with
remaining maturities of 60 days or less are valued at amortized cost, unless
the Board of Directors determines that such valuation does not constitute fair
value at that time. Under this method, such securities are valued initially at
cost on the date of purchase (or the 61st day before maturity).
The Company does not accept purchase and redemption orders on days on which
the New York Stock Exchange is closed. The New York Stock Exchange is
currently scheduled to be closed on New Year's Day, Presidents' Day, Good
Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving and
Christmas, and on the preceding Friday or subsequent Monday when one of these
holidays falls on a Saturday or Sunday, respectively.
MANAGEMENT
BOARD OF DIRECTORS
The Company is managed under the direction of its governing Board of
Directors. The Statement of Additional Information contains the name and
background information of each Director.
INVESTMENT ADVISOR
Munder Capital Management, a Delaware general partnership with its principal
offices at 480 Pierce Street, Birmingham, Michigan 48009, serves as the Fund's
investment advisor. The Advisor was formed in December 1994. The principal
partners of the Advisor are Old MCM, Inc. ("MCM"), Munder Group LLC,
Woodbridge Capital Management, Inc. ("Woodbridge") and WAM Holdings, Inc.
("WAM"). MCM was founded in February 1985 as a Delaware corporation and was a
registered investment advisor. Woodbridge and WAM are indirect, wholly-owned
subsidiaries of Comerica Incorporated. Mr. Lee P. Munder, the Advisor's chief
executive officer, indirectly owns or controls a majority of the partnership
interests in the Advisor. As of September 30, 1996, the Advisor and its
affiliates had approximately $36 billion in assets under active management, of
which $18 billion were invested in equity securities, $8 billion were invested
in money market or other short-term instruments, and $10 billion were invested
in other fixed income securities.
Subject to the supervision of the Board of Directors of the Company, the
Advisor provides overall investment management for the Fund, provides research
and credit analysis, is responsible for all purchases and sales of portfolio
securities, maintains books and records with respect to the Fund's securities
transactions and provides periodic and special reports to the Board of
Directors as requested.
For the advisory services provided and expenses assumed by it, the Advisor
has agreed to a fee from the Fund, computed daily and payable monthly, at an
annual rate of .25% of the Fund's average daily net assets.
The Advisor may, from time to time, make payments to banks, broker-dealers
or other financial institutions for certain services to the Fund and/or its
shareholders, including sub-administration, sub-transfer agency and
shareholder servicing. Such payments are made out of the Advisor's own
resources and do not involve additional costs to the Fund or its shareholders.
9
<PAGE>
PORTFOLIO MANAGER
Sharon E. Fayolle, Vice President and Director of Money Market Trading for
the Advisor, is primarily responsible for the day to day management of the
investment selections of the Fund. She is also responsible for overseeing the
management of cash portfolios, money market funds and foreign currency trading
since May, 1996. She has co-managed the International Bond Fund since October,
1996. Prior to joining the Advisor in 1996, she was employed in the investment
area of Ford Motor Company as European Portfolio Manager responsible for
investment and cash management for Ford's European operations (August, 1981 to
April, 1996).
ADMINISTRATOR, CUSTODIAN AND TRANSFER AGENT
First Data Investor Services Group, Inc. ("First Data"), whose principal
business address is 53 State Street, Boston, Massachusetts 02109 (the
"Administrator"), serves as administrator for the Company. First Data is a
wholly-owned subsidiary of First Data Corporation. The Administrator generally
assists the Company in all aspects of its administration and operations,
including the maintenance of financial records and fund accounting.
First Data also serves as the Company's transfer agent and dividend
disbursing agent. Shareholder inquiries may be directed to First Data at P.O.
Box 5130, Westborough, Massachusetts 01581-5130.
As compensation for these services, the Administrator and Transfer Agent are
entitled to receive fees, based on the aggregate average daily net assets of
the Fund and certain other investment portfolios that are advised by the
Advisor for which they provide services, computed daily and payable monthly at
the rate of .12% of the first $2.8 billion of net assets, plus .105% of the
next $2.2 billion of net assets, plus .10% of all net assets in excess of $5
billion with respect to the Administrator and .02% of the first $2.8 billion of
net assets, plus .015% of the next $2.2 billion of net assets, plus .01% of all
net assets in excess of $5 billion with respect to the Transfer Agent.
Administration fees payable by the Fund and certain other investment portfolios
advised by the Advisor are subject to a minimum annual fee of $1.2 million to
be allocated among each series and class thereof. The Administrator and
Transfer Agent are also entitled to reimbursement for out-of-pocket expenses.
The Administrator has entered into a Sub-Administration Agreement with the
Distributor under which the Distributor provides certain administrative
services with respect to the Fund. The Administrator pays the Distributor a fee
for these services out of its own resources at no cost to the Fund.
Comerica Bank (the "Custodian"), whose principal business address is One
Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226, provides
custodial services to the Fund. The Custodian is a wholly-owned subsidiary of
Comerica Incorporated, a publicly-held bank holding company. As compensation
for its services, the Custodian is entitled to receive fees, based on the
aggregate average daily net assets of the Fund and certain other investment
portfolios that are advised by the Advisor, for which the custodian provides
services, computed daily and payable monthly at an annual rate of .03% of the
first $100 million of average daily net assets, .02% of the next $500 million
of net assets and .01% of net assets in excess of $600 million. The Custodian
also receives certain transaction based fees.
For an additional description of the services performed by the Administrator,
Transfer Agent and Custodian, see the Statement of Additional Information.
TAXES
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code for 1986, as amended (the "Code").
Such qualification relieves the Fund of liability for Federal income taxes to
the extent its earnings are distributed in accordance with the Code.
Qualification as a regulated investment company under the Code for any
taxable year requires, among other things, that the Fund distribute to its
shareholders an amount equal to at least 90% of its investment company taxable
income and 90% of its net tax-exempt interest income for such year. In general
the Fund's investment company income will be its taxable income (including
dividends, interest, and short-term capital gains) subject
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to certain adjustments and excluding the excess of any net long-term capital
gain for the taxable year over the net short-term capital loss, if any, for
such year. The Fund intends to distribute substantially all of its investment
company taxable income each taxable year. Such distributions will be taxable
as ordinary income to the Fund's shareholders who are not currently exempt
from Federal income taxes, whether such income is received in cash or
reinvested in additional shares. (Federal income taxes for distributions to an
IRA or qualified retirement plan are deferred under the Code if applicable
requirements are met.)
Substantially all of the Fund's net realized long-term capital gains, if
any, will be distributed at least annually. The Fund will generally have no
Federal income tax liability with respect to such gains, and the distributions
will be taxable to shareholders who are not currently exempt from Federal
income taxes as long-term capital gains, no matter how long the shareholders
have held their shares.
A taxable gain or loss may also be realized by a holder of shares in the
Fund upon the redemption or transfer of shares depending upon the tax basis of
the shares and their price at the time of the transaction.
Dividends declared in October, November, or December of any year payable to
shareholders of record on a specified date in such months will be deemed to
have been received by shareholders and paid by the Fund on December 31 of such
year if such dividends are actually paid during January of the following year.
Before purchasing shares in the Funds, the impact of dividends or
distributions which are expected to be declared or have been declared, but not
paid, should be carefully considered. Any dividend or distribution declared
shortly after a purchase of such shares prior to the record date will have the
effect of reducing the per share net asset value by the per share amount of
the dividend or distribution. All or a portion of such dividend or
distribution, although in effect a return of capital, may be subject to tax.
On an annual basis, the Company will send written notices to record owners
of shares regarding the Federal tax status of distributions made by the Fund.
Since this is not an exhaustive discussion of applicable tax consequences and
since state and local taxes may be different from the Federal taxes described
above, investors may wish to contact their tax advisors concerning investments
in the Fund. With respect to state and local taxes, investors should consult
with their tax advisors as to whether Fund distributions attributable to
interest income earned on U.S. treasury securities may be eligible for
exemption from state and/or local income tax.
DESCRIPTION OF SHARES
The Fund operates as one series of the Company. The Company was organized as
a Maryland corporation on November 18, 1992 and is also registered under the
1940 Act as an open-end management investment company. The Company's Articles
of Incorporation authorize the Directors to classify and reclassify any
unissued shares into one or more classes of shares. Pursuant to such authority
the Directors have authorized the issuance of shares of common stock
representing interests in Equity Selection Fund, Micro-Cap Equity Fund, Mid-
Cap Growth Fund, Multi-Season Growth Fund, Real Estate Equity Investment Fund,
Small-Cap Value Fund, Value Fund, International Bond Fund, Short Term Treasury
Fund, Money Market Fund and NetNet Fund, each of which, except International
Bond Fund, is classified as a diversified investment company under the 1940
Act.
The shares of the Fund are offered as five separate classes of common stock,
$.01 par value per share, designated Class A Shares, Class B Shares, Class C
Shares, Class K Shares and Class Y Shares. All shares represent interests in
the same assets of the Fund and are identical in all respects except that each
class bears different service and distribution expenses and may bear various
class-specific expenses (which may affect performance), and each class has
exclusive voting rights with respect to its service and/or distribution plan,
if any. Shares of the Fund issued are fully paid, non-assessable, fully
transferable and redeemable at the option of the holder. Investors may call
the Fund at (800) 438-5789 for more information concerning other classes of
Shares of the Fund. This Prospectus relates only to the Class Y Shares of the
Fund.
The Company's shareholders are entitled to one vote for each full share held
and proportionate fractional votes for fractional shares held, and will vote
in the aggregate and not by Fund, except where otherwise required
11
<PAGE>
by law or when the Directors determine that the matter to be voted upon
affects only the interests of the shareholders of a particular Fund. The
Company is not required and does not currently intend to hold annual meetings
of shareholders for the election of Board members except as required under the
1940 Act. A meeting of shareholders will be called upon the written request of
at least 10% of the outstanding shares of the Company. To the extent required
by law, the Company will assist in shareholder communications in connection
with such a meeting. For further discussion of the voting rights of
shareholders, see "Additional Information Concerning Shares" in the Statement
of Additional Information.
REPORTS TO SHAREHOLDERS
The Fund will seek to eliminate duplicate mailings of prospectuses and
shareholders reports to accounts which have the same primary record owner, and
with respect to joint tenant accounts or tenant in common accounts, accounts
which have the same address. Additional copies of prospectuses and reports to
shareholders are available upon request by calling the Fund at (800) 438-5789.
PERFORMANCE
From time to time, the Fund may quote performance and yield data for Class Y
Shares of the Fund in advertisements or in communications to shareholders. The
total return of a class of shares in the Fund may be calculated on an average
annual total return basis, and may also be calculated on an aggregate total
return basis, for various periods. Average annual total return reflects the
average percentage change in value of an investment in a class of shares in
the Fund from the beginning date of the measuring period to the end of the
measuring period. Aggregate total return reflects the total percentage change
in value over the measuring period. Both methods of calculating total return
assume that dividends and capital gains distributions made during the period
are reinvested in the same class of shares.
The yield of a class of shares in the Fund is computed based on the net
income of such class in the Fund during a 30-day (or one month) period (which
period will be identified in connection with the particular yield quotation).
More specifically, the Fund's yield for a class of shares is computed by
dividing the per share net income for the class during a 30-day (or one-month)
period by the maximum offering price per share on the last day of the period
and annualizing the result on a semi-annual basis.
The Fund may compare the performance of its shares to the performance of
other mutual funds with similar investment objectives and to other relevant
indices or to rankings prepared by independent services or other financial or
industry publications that monitor the performance of mutual funds, including,
for example, Lipper Analytical Services, Inc., the Lehman Brothers
Government/Corporate Bond Index, a recognized unmanaged index of government
and corporate bonds, the Standard & Poor's 500 Index, an unmanaged index of a
group of common stocks, the Consumer Price Index, or the Dow Jones Industrial
Average, an unmanaged index of common stocks of 30 industrial companies listed
on the New York Stock Exchange. Performance and yield data as reported in
national financial publications such as Morningstar, Inc., Money Magazine,
Forbes, Barron's, The Wall Street Journal and The New York Times, or in
publications of a local or regional nature, may also be used in comparing the
performance of a class of shares in the Fund.
Performance will fluctuate and any quotation of performance should not be
considered as representative of future performance of a class of Shares in the
Fund. Shareholders should remember that performance is generally a function of
the kind and quality of the instruments held in a fund, portfolio maturity,
operating expenses, and market conditions. Any fees charged by institutions
directly to their customers' accounts in connection with investments in the
Fund will not be included in calculations of yield and performance.
12
MUNDER SHORT TERM TREASURY FUND
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 14, 1996
The Munder Short Term Treasury Fund (the "Fund") is a series of shares
issued by The Munder Funds, Inc. (the "Company"), an open-end management
investment company. The Fund's investment advisor is Munder Capital Management
(the "Advisor").
This Statement of Additional Information is intended to supplement the
information provided to investors in the Fund's Prospectuses dated December 14,
1996 and has been filed with the Securities and Exchange Commission ("SEC") as
part of the Company's Registration Statement. This Statement of Additional
Information is not a prospectus, and should be read only in conjunction with the
Fund's Prospectuses dated December 14, 1996. The contents of this Statement of
Additional Information are incorporated by reference in the Prospectuses in
their entirety. A copy of each Prospectus may be obtained through Funds
Distributor, Inc. (the "Distributor"), or by calling the Fund at (800) 438-5789.
This Statement of Additional Information is dated December 14, 1996.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. AN INVESTMENT IN
THE FUND INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
GENERAL........................................................................... 3
FUND INVESTMENTS.................................................................. 3
Repurchase Agreements.......................................................... 3
Borrowing...................................................................... 3
Reverse Repurchase Agreements.................................................. 4
When-Issued Purchases and Forward Commitments (Delayed-Delivery Transactions).. 4
Lending of Portfolio Securities................................................ 5
ADDITIONAL INVESTMENT LIMITATIONS................................................. 5
DIRECTORS AND OFFICERS............................................................ 7
INVESTMENT ADVISORY AND OTHER SERVICE ARRANGEMENTS................................ 13
Investment Advisor............................................................. 13
Distribution Agreement......................................................... 13
Administration Agreement....................................................... 15
Custodian and Transfer Agency Agreements....................................... 15
PORTFOLIO TRANSACTIONS............................................................ 17
PURCHASE AND REDEMPTION INFORMATION............................................... 19
Purchases...................................................................... 19
Letter of Intent............................................................... 19
Retirement Plans............................................................... 20
In-Kind Purchases.............................................................. 20
Redemptions.................................................................... 20
Systematic Withdrawals......................................................... 20
Other Information.............................................................. 21
Exchanges...................................................................... 21
NET ASSET VALUE................................................................... 22
PERFORMANCE INFORMATION........................................................... 22
TAXES............................................................................. 24
ADDITIONAL INFORMATION CONCERNING SHARES.......................................... 27
MISCELLANEOUS..................................................................... 28
Counsel........................................................................ 28
Independent Auditors........................................................... 28
Shareholder Approvals.......................................................... 28
REGISTRATION STATEMENT............................................................ 29
</TABLE>
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No person has been authorized to give any information or to make any
representations not contained in this Statement of Additional Information or in
the Prospectuses in connection with the offering made by the Prospectuses and,
if given or made, such information or representations must not be relied upon as
having been authorized by the Fund or the Distributor. The Prospectuses do not
constitute an offering by the Fund or by the Distributor in any jurisdiction in
which such offering may not lawfully be made.
3
<PAGE>
GENERAL
The Company was organized as a Maryland corporation on November 18,
1992. As stated in each Prospectus, the investment advisor of the Fund is
Munder Capital Management (the "Advisor"). The principal partners of the
Advisor are Old MCM, Inc. ("Old MCM"), Munder Group LLC, Woodbridge Capital
Management, Inc. ("Woodbridge") and WAM Holdings, Inc. ("WAM"). Mr. Lee P.
Munder, the Advisor's Chief Executive Officer, indirectly owns or controls a
majority of the partnership interests of the Advisor. Capitalized terms used
herein and not otherwise defined have the same meanings as are given to them in
the Prospectuses.
FUND INVESTMENTS
The following supplements the information contained in the Fund's
Prospectuses concerning the investment objective and policies of the Fund. The
Fund's investment objective is a non-fundamental policy and may be changed
without the authorization of the holders of a majority of the Fund's outstanding
shares. There can be no assurance that the Fund will achieve its objective.
REPURCHASE AGREEMENTS. The Fund may agree to purchase securities from
financial institutions such as member banks of the Federal Reserve System, any
foreign bank or any domestic or foreign broker/dealer that is recognized as a
reporting government securities dealer, subject to the seller's agreement to
repurchase them at an agreed-upon time and price ("repurchase agreements"). The
Advisor will review and continuously monitor the creditworthiness of the seller
under a repurchase agreement, and will require the seller to maintain liquid
assets in a segregated account in an amount that is greater than the repurchase
price. Default by, or bankruptcy of the seller would, however, expose the Fund
to possible loss because of adverse market action or delays in connection with
the disposition of underlying obligations.
The repurchase price under the repurchase agreements described in the
Prospectuses generally equals the price paid by the Fund plus interest
negotiated on the basis of current short-term rates (which may be more or less
than the rate on the securities underlying the repurchase agreement).
Securities subject to repurchase agreements will be held by the
Company's custodian (or sub-custodian) in the Federal Reserve/Treasury book-
entry system or by another authorized securities depository. Repurchase
agreements are considered to be loans by the Fund under the Investment Company
Act of 1940, as amended (the "1940 Act").
4
<PAGE>
BORROWING. The Fund is authorized to borrow money in amounts up to 5%
of the value of its total assets at the time of such borrowings for temporary
purposes, and is authorized to borrow money in excess of the 5% limit as
permitted by the 1940 Act to meet redemption requests. This borrowing may be
unsecured. The 1940 Act requires the Fund to maintain continuous asset coverage
of 300% of the amount borrowed. If the 300% asset coverage should decline as a
result of market fluctuations or other reasons, the Fund may be required to sell
some of its portfolio holdings within three days to reduce the debt and restore
the 300% asset coverage, even though it may be disadvantageous from an
investment standpoint to sell securities at that time. Borrowing may exaggerate
the effect on the Fund's net asset value of any increase or decrease in the
market value of securities purchased with borrowed funds. Money borrowed will
be subject to interest costs which may or may not be recovered by an
appreciation of the securities purchased. The 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.
The Fund may, in connection with permissible borrowings, transfer, as
collateral, securities owned by the Fund.
REVERSE REPURCHASE AGREEMENTS. The Fund may borrow funds for
temporary or emergency purposes by selling portfolio securities to financial
institutions such as banks and broker/dealers and agreeing to repurchase them at
a mutually specified date and price ("reverse repurchase agreements"). Reverse
repurchase agreements involve the risk that the market value of the securities
sold by the Fund may decline below the repurchase price. The Fund will pay
interest on amounts obtained pursuant to a reverse repurchase agreement. While
reverse repurchase agreements are outstanding, the Fund will maintain, in a
segregated account, cash, U.S. Government securities or other liquid high-grade
debt securities of an amount at least equal to the market value of the
securities, plus accrued interest, subject to the agreement.
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS (DELAYED-DELIVERY
TRANSACTIONS). When-issued purchases and forward commitments (delayed-delivery
transactions) are commitments by the Fund to purchase or sell particular
securities with payment and delivery to occur at a future date (perhaps one or
two months later). These transactions permit the Fund to lock-in a price or
yield on a security, regardless of future changes in interest rates.
When the Fund agrees to purchase securities on a when-issued or
forward commitment basis, the Custodian will set aside cash or liquid portfolio
securities equal to the amount of the commitment in a separate account.
Normally, the Custodian will set aside portfolio securities to satisfy a
purchase commitment, and in such a case the Fund may be required subsequently to
place additional assets in the separate account in order to ensure that the
value of the account remains equal to the amount of the Fund's commitments. It
may be expected that the market value of the Fund's net assets will fluctuate to
a greater degree when it sets aside portfolio securities to cover such purchase
commitments than when it sets aside cash. Because the Fund's liquidity and
ability to
5
<PAGE>
manage its portfolio might be affected when it sets aside cash or portfolio
securities to cover such purchase commitments, the Advisor expects that its
commitments to purchase when-issued securities and forward commitments will not
exceed 25% of the value of the Fund's total assets absent unusual market
conditions.
The Fund will purchase securities on a when-issued or forward
commitment basis only with the intention of completing the transaction and
actually purchasing the securities. If deemed advisable as a matter of
investment strategy, however, the Fund may dispose of or renegotiate a
commitment after it is entered into, and may sell securities it has committed to
purchase before those securities are delivered to the Fund on the settlement
date. In these cases the Fund may realize a taxable capital gain or loss.
When the Fund engages in when-issued and forward commitment
transactions, it relies on the other party to consummate the trade. Failure of
such party to do so may result in the Fund's incurring a loss or missing an
opportunity to obtain a price considered to be advantageous.
The market value of the securities underlying a when-issued purchase
or a forward commitment to purchase securities, and any subsequent fluctuations
in their market value, are taken into account when determining the net asset
value of the Fund starting on the day the Fund agrees to purchase the
securities. The Fund does not earn interest on the securities it has committed
to purchase until they are paid for and delivered on the settlement date.
LENDING OF PORTFOLIO SECURITIES. To enhance the return on its
portfolio, the Fund may lend securities in its portfolio (subject to a limit of
25% of its total assets) to securities firms and financial institutions,
provided that each loan is secured continuously by collateral in the form of
cash or 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 Fund will receive any interest or
dividends paid on the loaned securities. In addition, it is anticipated
that the
Fund may share with the borrower some of the income received on the collateral
for the loan or the Fund will be paid a premium for the loan. The risk in
lending
portfolio securities, as with other extensions of credit, consists of a
possible delay
in recovery of the securities or a possible loss of rights in the
collateral should the
borrower fail financially. In determining whether the Fund will lend
securities, the Advisor will consider all relevant facts and circumstances. The
Fund will only enter into loan arrangements with broker-dealers, banks or other
institutions which the Advisor has determined are creditworthy under guidelines
established by the Board of Directors.
6
<PAGE>
ADDITIONAL INVESTMENT LIMITATIONS
The Fund is subject to the investment limitations enumerated in this
section which may be changed only by a vote of the holders of a majority of the
Fund's outstanding shares (as defined under "Miscellaneous - Shareholder
Approvals").
The Fund may not:
1. With respect to 75% of the Fund's assets, invest more than 5% of
the Fund's assets (taken at market value at the time of purchase)
in the outstanding securities of any single issuer or own more
than 10% of the outstanding voting securities of any one issuer,
in each case other than securities issued or guaranteed by the
United States Government, its agencies or instrumentalities, at
the close of each quarter of its taxable year;
2. Invest more than 25% of its total assets in the securities of
issuers conducting their principal business activities in any one
industry (securities issued or guaranteed by the United States
Government, its agencies or instrumentalities are not considered
to represent industries);
3. Borrow money or enter into repurchase agreements (as defined
in the 1940 Act) except that the Fund may (i) borrow money or
enter into reverse repurchase agreements for temporary purposes
in amounts not exceeding 5% of its total assets and (ii) borrow
money for the purpose of meeting redemption requests, in amounts
(when aggregated with amounts borrowed under clause (i)) not
exceeding 33 1/3% of its total assets;
4. Pledge, mortgage or hypothecate its assets other than to secure
borrowings permitted by restriction 2 above;
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 (the "1933 Act") in selling portfolio
securities;
7
<PAGE>
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 for the use of short-term credit necessary for the
clearance of purchase and sales of portfolio securities;
9. Make investments for the purpose of exercising control of
management; or
10. Invest in commodities or commodity futures contracts.
11. Issue any senior securities (as such term is defined in Section
18(f) of the 1940 Act) except as permitted under the 1940 Act.
Additional investment restrictions adopted by the Fund, which may be
changed by the Board of Directors, provide that the Fund may not:
1. Invest more than 15% of its net assets (taken at market value at
the time of purchase) in securities which cannot be readily
resold because of legal or contractual restrictions or which are
not otherwise marketable;
8
<PAGE>
2. Invest in other investment companies except as permitted under
the 1940 Act.
If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in the value of
the Fund's investments will not constitute a violation of such limitation,
except that any borrowing by the Fund that exceeds the fundamental investment
limitations stated above must be reduced to meet such limitations within the
period required by the 1940 Act (currently three days). In addition, if the
Fund's holdings of illiquid securities exceeds 15% because of changes in the
value of the Fund's investments, the Fund will take action to reduce its
holdings of illiquid securities within a time frame deemed to be in the best
interest of the Fund. Otherwise, the Fund may continue to hold a security even
though it causes the Fund to exceed a percentage limitation because of
fluctuation in the value of the Fund's assets.
DIRECTORS AND OFFICERS
The directors and executive officers of the Company, and their
business addresses and principal occupations during the past five years, are:
<TABLE>
<CAPTION>
Name, Address and Age Positions with Company Principal Occupations
During the Past Five Years ---------------------- ---------------------------
- ---------------------------
<S> <C> <C>
Charles W. Elliott 1/ Chairman of the Board Senior Advisor to the
3338 Bronson Boulevard of Directors President - Western
Kalmazoo, MI 49008 Michigan University since
Age: 64 July 1995; prior to that
Executive Vice President -
Administration & Chief
Financial Officer, Kellogg
Company from January 1987
through June 1995; before
that Price Waterhouse.
Board of Directors,
Steelcase Financial
Corporation.
</TABLE>
9
<PAGE>
<TABLE>
<S> <C> <C>
John Rakolta, Jr. Director and Vice Chairman, Walbridge
1876 Rathmor Chairman of the Board Aldinger Company
Bloomfield Hills, MI 48304 of Directors
Age: 49
Thomas B. Bender Director Investment Advisor,
7 Wood Ridge Road Financial & Investment
Glen Arbor, MI 49636 Management Group (since
Age: 63 April, 1991); Vice
President Institutional
Sales, Kidder, Peabody &
Co. (Retired April, 1991).
David J. Brophy Director Professor, University of
1025 Martin Place Michigan; Director, River
Ann Arbor, MI 48104 Place Financial Corp.;
Age: 60 Trustee, Renaissance
Assets Trust.
</TABLE>
10
<PAGE>
<TABLE>
<S> <C> <C>
Dr. Joseph E. Champagne Director Corporate and Executive
319 Snell Road Consultant since September
Rochester, MI 48306 1995; prior to that
Age: 58 Chancellor, Lamar
University from September
1994 until September 1995;
before that Consultant to
Management, Lamar
University; President and
Chief Executive Officer,
Crittenton Corporation,
Crittenton Development
Corporation until August
1993; before that
President, Oakland
University of Rochester,
MI, until August 1991;
Member, Board of
Directors, Ross Operating
Valve of Troy, MI
Thomas D. Eckert Director President and COO,
10726 Falls Pointe Drive Mid-Atlantic Group of
Great Falls, VA 22066 Pulte Home Corporation
Age: 49
Jack L. Otto Director Retired; Director of
6532 W. Beech Tree Road Standard Federal Bank;
Glen Arbor, MI 49636 Executive Director,
Age: 70 McGregor Fund (a private
philanthropic foundation)
1981-1985; Managing
Partner, Detroit office of
Ernst & Young, until 1981.
</TABLE>
11
<PAGE>
<TABLE>
<S> <C> <C>
Arthur DeRoy Rodecker Director President, Rodecker &
4000 Town Center Company, Investment
Suite 101 Brokers, Inc. since
Southfield, MI 48075 November 1976; President,
Age: 69 RAC Advisors, Inc.,
Registered Investment
Advisor since February
1979; President and
Trustee, Helen L. DeRoy
Foundation, a charitable
foundation; Vice President
and Trustee, DeRoy
Testamentary Foundation, a
charitable foundation;
Trustee, Providence
Hospital Foundation.
Lee P. Munder President President and CEO of the
480 Pierce Street Advisor; Chief Executive
Suite 300 Officer and President of
Birmingham, MI 48009 Old MCM, Inc.; Chief
Age: 51 Executive Officer of World
Asset Management; and
Director, LPM Investment
Services, Inc. ("LPM").
Terry H. Gardner Vice President, Chief Vice President and Chief
480 Pierce Street Financial Officer and Financial Officer of the
Suite 300 Treasurer Advisor; Vice President
Birmingham, MI 48009 and Chief Financial
Age: 36 Officer of Old MCM, Inc.
(February 1993 to
present); Audit Manager
Arthur Andersen & Co.
(1991 to February 1993);
Secretary of LPM
</TABLE>
12
<PAGE>
<TABLE>
<S> <C> <C>
Paul Tobias Vice President Executive Vice President
480 Pierce Street and Chief Operating
Suite 300 Officer of the Advisor
Birmingham, MI 48009 (since April 1995) and
Age: 45 Executive Vice President
of Comerica, Inc.
Gerald Seizert Vice President Executive Vice President
480 Pierce Street and Chief Investment
Suite 300 Officer/Equities of the
Birmingham, MI 48009 Advisor (since April
Age: 44 1995); Managing Director
(1991-1995), Director
(1992-1995) and Vice
President (1984-1991) of
Loomis, Sayles and
Company, L.P.
Elyse G. Essick Vice President Vice President and
480 Pierce Street Director of Marketing for
Suite 300 the Advisor; Vice
Birmingham, MI 48009 President and Director of
Age: 38 Client Services of Old
MCM, Inc. (August 1988 to
December 1994).
James C. Robinson Vice President Vice President and Chief
480 Pierce Street Investment Officer/Fixed
Suite 300 Income for the Advisor;
Birmingham, MI 48009 Vice President and
Age: 35 Director of Fixed Income
of Old MCM, Inc.
(1987-1994).
</TABLE>
13
<PAGE>
<TABLE>
<S> <C> <C>
Leonard J. Barr, II Vice President Vice President and
480 Pierce Street Director of Core Equity
Suite 300 Research of the Advisor;
Birmingham, MI 48009 Director and Senior Vice
Age: 52 President of Old MCM, Inc.
(since 1988); Director of
LPM.
Ann F. Putallaz Vice President Vice President and
480 Pierce Street Director of Fiduciary
Suite 300 Services of the Advisor
Birmingham, MI 48009 (since January 1995);
Age: 51 Director of Client and
Marketing Services of
Woodbridge Capital
Management, Inc.
Richard H. Rose Assistant Treasurer Senior Vice President,
First Data Investor First Data Investor
Services Services Group, Inc.
Group, Inc. (since May 6, 1994).
One Exchange Place Formerly, Senior Vice
6th Floor President, The Boston
Boston, MA 02109 Company Advisors, Inc.
Age: 41 since November 1989.
</TABLE>
14
<PAGE>
<TABLE>
<S> <C> <C>
Lisa A. Rosen Secretary, Assistant General Counsel of the
480 Pierce Street Treasurer Advisor since May, 1996;
Suite 300 Formerly Counsel, First
Birmingham, MI 48009 Data Investor Services
Age: 29 Group, Inc.; Assistant
Vice President and Counsel
with The Boston Company
Advisors, Inc.; Associate
with Hutchins, Wheeler &
Dittmar.
Teresa M. R. Hamlin Assistant Secretary Counsel, First Data
First Data Investor Investor Services Group,
Services Group, Inc. Inc.; Formerly Paralegal
One Exchange Place Manager, The Boston
6th Floor Company Advisors, Inc.
Boston, MA 02109
Age: 33
</TABLE>
1/ Director is an "interested person" of the Company as defined in the 1940
Act.
Directors of the Company receive an aggregate fee from the Company, The
Munder Funds Trust (the "Trust"), The Munder Framlington Funds Trust
("Framlington Trust") and St. Clair Funds, Inc. ("St. Clair") comprised of an
annual retainer fee and a fee for each Board meeting attended, and are
reimbursed for all out-of-pocket expenses relating to attendance at meetings.
15
<PAGE>
The following table summarizes the compensation paid by the Company and the
Trust to their respective Directors/Trustees for the fiscal year ended June 30,
1996. Neither Framlington Trust or St. Clair had operations during the fiscal
year ended June 30, 1996.
<TABLE>
<CAPTION>
Aggregate Pension
Compensation Retirement Estimated
Name of from the Trust and Benefits Accrued Annual Benefits Total from
Person the as Part of upon the Fund
and Position Company Fund Expenses Retirement Complex
------------ ------------------ ---------------- --------------- ----------
<S> <C> <C> <C> <C>
Charles W. Elliott $14,000.00 None None $14,000.00
Chairman
</TABLE>
16
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
John Rakolta, Jr. $14,000.00 None None $14,000.00
Vice Chairman
Thomas B. Bender $14,000.00 None None $14,000.00
David J. Brophy $14,000.00 None None $14,000.00
Trustee and Director
Dr. Joseph E. Champagne $14,000.00 None None $14,000.00
Trustee and Director
Thomas D. Eckert $14,000.00 None None $14,000.00
Trustee and Director
Jack L. Otto $14,000.00 None None $14,000.00
Trustee and Director
</TABLE>
17
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Arthur DeRoy Rodecker $14,000.00 None None $14,000.00
Trustee and Director
</TABLE>
No officer, director or employee of the Advisor, Comerica, the Distributor,
the Administrator or the Transfer Agent currently receives any compensation from
the Trust, the Company, St. Clair or Framlington Trust.
The Company will not employ Rodecker & Company, Investment Brokers, Inc. to
effect brokerage transactions for the Funds.
INVESTMENT ADVISORY AND OTHER SERVICE ARRANGEMENTS
INVESTMENT ADVISOR. The Advisor of the Fund is Munder Capital
Management, a Delaware general partnership. The general partners of the Advisor
are Woodbridge, WAM, Old MCM, and Munder Group, LLC. Woodbridge and WAM are
wholly-owned subsidiaries of Comerica Bank -- Ann Arbor, which, in turn is a
wholly-owned subsidiary of Comerica Incorporated, a publicly-held bank holding
company.
Under the terms of the Advisory Agreement, the Advisor furnishes
continuing investment supervision to the Fund and is responsible for the
management of the Fund's portfolio. The responsibility for making decisions to
buy, sell or hold a particular security rests with the Advisor, subject to
review by the Company's Board of Directors.
For the advisory services provided and expenses assumed by it, the
Advisor has agreed to a fee from the Fund, computed daily and payable monthly,
at an annual rate of 0.25% of average daily net assets of the Fund.
The Fund's Advisory Agreement will continue in effect for a period of
two years from its effective date. If not sooner terminated, the Advisory
Agreement will continue in effect for successive one year periods thereafter,
provided that each continuance is
18
<PAGE>
specifically approved annually by (a) the vote of a majority of the Board of
Directors who are not parties to the Advisory Agreement or interested persons
(as defined in the 1940 Act), cast in person at a meeting called for the purpose
of voting on approval, and (b) either (i) the vote of a majority of the
outstanding voting securities of the Fund, or (ii) the vote of a majority of the
Board of Directors. The Advisory Agreement is terminable by vote of the Board of
Directors, or by the holders of a majority of the outstanding voting securities
of the Fund, at any time without penalty, upon 60 days' written notice to the
Advisor. The Advisor may also terminate its advisory relationship with the Fund
without penalty upon 90 days' written notice to the Company. The Advisory
Agreement terminates automatically in the event of its assignment (as defined in
the 1940 Act).
DISTRIBUTION AGREEMENT. The Company has entered into a distribution
agreement, under which the Distributor, as agent, sells shares of the Fund on a
continuous basis. The Distributor has agreed to use appropriate efforts to
solicit orders for the purchase of shares of the Fund, although it is not
obligated to sell any particular amount of shares. The Distributor pays the
cost of printing and distributing prospectuses to persons who are not holders of
shares of the Fund (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.
DISTRIBUTION SERVICES ARRANGEMENTS - CLASS A, CLASS B AND CLASS C
SHARES. The Fund has adopted a Service 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 Plans, the
Distributor is paid an annual service fee at the rate of 0.25% of the value of
average daily net assets of the Class A Shares of the Fund. The Fund has
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 the provision of certain
shareholder services. Under the Service and Distribution Plans, the Distributor
is paid an annual service fee of 0.25% of the value of average daily net assets
of the Class B and Class C Shares of the Fund and an annual distribution fee at
the rate of 0.75% of the value of average daily net assets of the Class B and
Class C Shares of the Fund.
Under the terms of the Service Plan and both Service and Distribution
Plans (collectively, the "Plans"), each Plan continues from year to year,
provided such continuance is approved annually by vote of the Board of
Directors, including a majority of the Board of Directors who are not interested
persons of the Company, as applicable, and who have no direct or indirect
financial interest in the operation of that Plan (the "Non-Interested Plan
Directors"). The 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 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 Fund
(as defined in the 1940 Act) upon not
19
<PAGE>
more than 30 days' written notice to any other party to the Plan. Pursuant to
each Plan, the Distributor will provide the Board of Directors periodic reports
of amounts expended under the Plan and the purposes for which such expenditures
were made.
With respect to Class B and Class C Shares of the Fund, the
Distributor expects to pay sales commissions to dealers authorized to sell the
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 pursuant to 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 Fund's shares to support their
sales efforts.
SHAREHOLDER SERVICING ARRANGEMENTS - CLASS K SHARES. As stated in the
Fund's Prospectus, Class K Shares are sold to investors through institutions
which enter into Shareholder Servicing Agreements with the Company to provide
support services to their Customers who beneficially own Class K Shares in
consideration of the Fund's 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 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 Company's
arrangements with institutions; and (x) providing such other similar services
the Company may reasonably request to the extent the institutions are permitted
to do so under applicable statues, rules and regulations.
Pursuant to the Company's agreements with such institutions, the Board
of Directors will review, at least quarterly, a written report of the amounts
expended under 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 Board of Directors
including a majority of the Directors who are not "interested persons" as
defined in the 1940 Act, and have no direct or indirect financial interest in
such arrangements.
20
<PAGE>
The Board of Directors has approved the arrangements with the
institutions based on information provided by the service contractors that there
is a reasonable likelihood that the arrangements will benefit the Fund and its
shareholders by affording the Fund greater flexibility in connection with the
servicing of the accounts of the beneficial owners of their shares in an
efficient manner.
ADMINISTRATION AGREEMENT. First Data Investor Services Group, Inc.
("First Data") located at 53 State Street, Boston, Massachusetts 02109 serves as
administrator for the Company pursuant to an administration agreement (the
"Administration Agreement"). First Data has agreed to maintain office
facilities for the Company; provide accounting and bookkeeping services for the
Fund, including the computation of the Fund's net asset value, net income and
realized capital gains, if any; furnish statistical and research data, clerical
services, and stationery and office supplies; prepare and file various reports
with the appropriate regulatory agencies; and prepare various materials required
by the SEC or any state securities commission having jurisdiction over the
Company.
The Administration Agreement provides that the Administrator
performing services thereunder shall not be liable under the Agreement except
for its willful misfeasance, bad faith or gross negligence in the performance of
its duties or from the reckless disregard by it of its duties and obligations
thereunder.
CUSTODIAN AND TRANSFER AGENCY AGREEMENTS. Comerica Bank (the
"Custodian"), whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, MI 48226, maintains custody of the Fund's assets
pursuant to a custodian agreement ("Custody Agreement") with the Company. Under
the Custody Agreement, the Custodian (i) maintains a separate account in the
name of the Fund, (ii) holds and transfers portfolio securities on account of
the Fund, (iii) accepts receipts and makes disbursements of money on behalf of
the Fund, (iv) collects and receives all income and other payments and
distributions on account of the Fund's securities and (v) makes periodic reports
to the Board of Directors concerning the Fund's operations. The Custodian is
authorized to select one or more domestic or foreign banks or trust companies to
serve as sub-custodian on behalf of the Fund.
First Data also serves as the transfer and dividend disbursing agent
for the Fund pursuant to a transfer agency agreement (the "Transfer Agency
Agreement") with the Company, under which First Data (i) issues and redeems
shares of the Fund, (ii) addresses and mails all communications by the Fund to
its record owners, including reports to shareholders, dividend and distribution
notices and proxy materials for its meetings of shareholders, (iii) maintains
shareholder accounts, (iv) responds to correspondence by shareholders of the
Fund and (v) makes periodic reports to the Board of Directors
21
<PAGE>
concerning the operations of the Fund.
Comerica Bank. As stated in the Fund's Class K Shares Prospectus,
Class K Shares of the Fund are sold to customers of banks and other
institutions. Such banks and institutions may include Comerica Incorporated (a
publicly-held bank holding company) and its affiliates and subsidiaries and
other institutions that have entered into agreements with the Company 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 Company contemplated by their respective agreements with the Company
without violation of applicable banking laws or regulations. It should be
noted, however, that there have been no cases deciding whether bank and non-bank
subsidiaries of a registered bank holding company may perform services
comparable to those that are to be performed by these companies, and future
changes in either Federal or state statutes and regulations relating to
permissible activities of banks and their subsidiaries or affiliates, as well as
future judicial or administrative decisions or interpretations of current and
future statutes and regulations, could prevent these companies from continuing
to perform such service for the Company.
Should future legislative, judicial or administrative action prohibit
or restrict the activities of such companies in connection with the provision of
services on behalf of the Company, the Company might be required to alter
materially or discontinue its arrangements with such companies and change its
method of operations. It is not anticipated, however, that any change in the
Company's method of operations would affect the net asset value per share of the
Fund or result in a financial loss to any shareholder of the Fund.
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
22
<PAGE>
statutes and regulations, could prevent Comerica and certain other institutions
from continuing to perform certain services for Class K Shares of the Fund.
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
Company might be required to alter materially or discontinue its arrangements
with the institutions and change its method of operations with respect to
Comerica and certain other institutions. It is not anticipated, however, that
any change in the Fund's method of operations would affect the net asset value
per share of the Fund or result in a financial loss to any holder of Class K
Shares of the Fund.
OTHER INFORMATION PERTAINING TO DISTRIBUTION, ADMINISTRATION,
CUSTODIAN AND TRANSFER AGENCY AGREEMENTS. As stated in the Prospectuses, the
Administrator and Transfer Agent each receives, as compensation for its
services, fees from the Fund based on the aggregate average daily net assets of
the Fund and other investment portfolios advised by the Advisor. The Custodian
receives a separate fee for its services. In approving the Administration
Agreement and Transfer Agency Agreement, the Board of Directors did consider the
services that are to be provided under their respective agreements, the
experience and qualifications of the respective service contractors, the
reasonableness of the fees payable by the Company in comparison to the charges
of competing vendors, the impact of the fees on the estimated total ordinary
operating expense ratio of the Fund and the fact that neither the Administrator
nor the Transfer Agent is affiliated with the Company or the Advisor. The Board
also considered its responsibilities under federal and state law in approving
these agreements.
Comerica Bank provides custodial services to the Fund. As
compensation for its services, Comerica Bank is entitled to receive fees, based
on the aggregate average daily net assets of the Fund and certain other
investment portfolios for which Comerica Bank provides services, computed daily
and payable monthly at an annual rate of 0.03% of the first $100 million of
average daily net assets, plus 0.02% of the next $500 million of net assets,
plus 0.01% of all net assets in excess of $600 million. Comerica Bank also
receives certain transaction based fees.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board Members, the Advisor
makes decisions with respect to and places orders for all purchases and sales of
portfolio securities for the Fund.
Transactions on U.S. stock exchanges involve the payment of negotiated
brokerage commissions. On exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers. Transactions on foreign
stock exchanges involve payment for brokerage commissions which are generally
fixed.
23
<PAGE>
Over-the-counter issues, including corporate debt and government
securities, are normally traded on a "net" basis (i.e., without commission)
through dealers, or otherwise involve transactions directly with the issuer of
an instrument. With respect to over-the-counter transactions, the Advisor will
normally deal directly with dealers who make a market in the instruments
involved except in those circumstances where more favorable prices and execution
are available elsewhere. The cost of 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 Fund 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 Fund will engage in this practice, however, only when the Advisor believes
such practice to be in the Fund's interests.
The portfolio turnover rate of the Fund is calculated by dividing the
lesser of the Fund's annual sales or purchases of portfolio securities
(exclusive of purchases or sales of securities whose maturities at the time of
acquisition were one year or less) by the monthly average value of the
securities held by the Fund during the year. The Fund may engage in short-term
trading to achieve its investment objective. Portfolio turnover may vary
greatly from year to year as well as within a particular year.
In its Advisory Agreements, the Advisor agrees to select broker-
dealers in accordance with guidelines established by the Company's Board of
Directors from time to time and in accordance with applicable law. In assessing
the terms available for any transaction, the Advisor shall consider all factors
it deems relevant, including the breadth of the market in the security, the
price of the security, the financial condition and execution capability of the
broker-dealer, and the reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. In addition, the Advisory
Agreements authorize the Advisor, subject to the prior approval of the Company's
Board of Directors, to 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 to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either the particular transaction or the
overall responsibilities of the Advisor to the Fund. Such brokerage and
research services might consist of reports and statistics on specific companies
or industries, general summaries of groups of bonds and their comparative
earnings and yields, or broad overviews of the securities markets and the
economy.
Supplementary research information so received is in addition to, and
not in lieu of, services required to be performed by the Advisor and does not
reduce the advisory fees payable to the Advisor by the Fund. It is possible
that certain of the supplementary
24
<PAGE>
research or other services received will primarily benefit one or more other
investment companies or other accounts for which investment discretion is
exercised. Conversely, the 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, the Distributor or any affiliated person (as defined in the 1940 Act)
of the foregoing entities except to the extent permitted by SEC exemptive order
or by applicable law.
Investment decisions for the Fund and for other investment accounts
managed by the Advisor are made independently of each other in the light of
differing conditions. However, the same investment decision may be made for two
or more of such accounts. In such cases, simultaneous transactions are
inevitable. Purchases or sales are then averaged as to price and allocated as
to amount in a manner deemed equitable to each such account. While in some
cases this practice could have a detrimental effect on the price or value of the
security as far as the Fund is concerned, in other cases it is believed to be
beneficial to the Fund. To the extent permitted by law, the Advisor may
aggregate the securities to be sold or purchased for the Fund with those to be
sold or purchased for other investment companies or accounts in executing
transactions.
The Fund will not purchase securities during the existence of any
underwriting or selling group relating to such securities of which the Advisor
or any affiliated person (as defined in the 1940 Act) thereof is a member except
pursuant to procedures adopted by the Company's Board of Directors in accordance
with Rule 10f-3 under the 1940 Act.
Except as noted in the Prospectuses and this Statement of Additional
Information the Fund's service contractors bear all expenses in connection with
the performance of its services and the Fund bears the expenses incurred in its
operations. These expenses include, but are not limited to, fees paid to the
Advisor, Administrator, Custodian and Transfer Agent; fees and expenses of
officers and directors; taxes; interest; legal and auditing fees; brokerage fees
and commissions; certain fees and expenses in registering and qualifying 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 Company that are not readily identifiable as
belonging to a particular investment portfolio of the Company are allocated
among all investment portfolios of the Company by or under the direction of the
Board of Directors in a manner that the Board of Directors determines to be fair
and equitable. The Advisor, Administrator, Custodian and Transfer Agent may
voluntarily waive all or a portion of their respective fees from time to time.
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<PAGE>
PURCHASE AND REDEMPTION INFORMATION
Purchases and redemptions are discussed in the Fund's Prospectuses and
such information is incorporated herein by reference.
PURCHASES. In addition to the methods of purchasing shares described
in each Prospectus, the Fund also offers a pre-authorized checking plan by which
investors may accumulate shares of the Fund regularly each month by means of
automatic debits to their checking accounts. There is a $50 minimum on each
automatic debit. Shareholders may choose this option by checking the
appropriate part of the application form or by calling the Fund at (800) 438-
5789. Such a plan is voluntary and may be discontinued by the shareholder at
any time or by the Company on 30 days' written notice to the shareholder.
LETTER OF INTENT. Purchasers who intend to invest $100,000 or more in
Class A Shares of the Fund within 13 months (whether in one lump sum or in
installments the first of which may not be less than 5% of the total intended
amount and each subsequent installment not less than $100, including automatic
investment and payroll deduction plans), and to beneficially hold the total
amount of such shares fully paid for and outstanding simultaneously for at least
one full business day before the expiration of that period, should complete the
Letter of Intent ("LOI") section in the Application. Payment for not less than
5% of the total intended amount must accompany the executed LOI. Those shares
purchased with the first 5% of the intended amount stated in the LOI will be
held as "escrowed shares" for as long as the LOI remains unfulfilled. Although
the escrowed shares are registered in the investor's name, his full ownership of
them is conditional upon fulfillment of the LOI. No escrowed shares can be
redeemed by the investor for any purpose until the LOI is fulfilled or
terminated. If the LOI is terminated for any reason other than fulfillment, the
Transfer Agent will redeem that portion of the escrowed shares required and
apply the proceeds to pay any adjustment that may be appropriate to the sales
commission on all shares (including the escrowed shares) already purchased under
the LOI and apply any unused balance to the investor's account. The LOI is not
a binding obligation to purchase any amount of shares, but its execution will
result in the purchaser paying a lower sales charge at the appropriate quantity
purchase level. A purchase not originally made pursuant to an LOI may be
included under a subsequent LOI executed within 90 days of such purchase. In
this case, an adjustment will be made at the end of 13 months from the effective
date of the LOI at the net asset value per share then in effect, unless the
investor makes an earlier written request to the Funds' Distributor upon
fulfilling the purchase of Shares under the LOI. In addition, the aggregate
value of any shares purchased prior to the 90-day period referred to above may
be applied to purchases under a current LOI in fulfilling the total intended
purchases under the LOI. However, no adjustment of sales charge previously paid
on purchases prior to the 90-day period will be made. Shares acquired through
reinvestment of dividends and capital gain distributions are considered in
connection with an investor's fulfillment of the LOI.
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<PAGE>
RETIREMENT PLANS. Shares of the Fund 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.
IN-KIND PURCHASES
Payment for shares may, in the discretion of the Advisor, be made in
the form of securities that are permissible investments for the Fund as
described in each Prospectus. For further information about this form of payment
please contact the Transfer Agent. In connection with an in-kind securities
payment, the Fund will require, among other things, that the securities (a) meet
the investment objectives and policies of the Fund; (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; 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.
REDEMPTIONS
SYSTEMATIC WITHDRAWALS. In addition to the methods of redemption
described in each Prospectus, a systematic withdrawal plan is available in which
a shareholder of the Fund may elect to receive a fixed amount ($50 minimum),
monthly, quarterly, semi-annually, or annually, for accounts with a value of
$2,500 or more. Checks are mailed on or about the 10th of each designated
month. All certified shares must be placed on deposit under the plan and
dividends and capital gain distributions, if any, are automatically reinvested
at net asset value for shareholders participating in the plan. If the checks
received by a shareholder through the systematic withdrawal plan exceed the
dividends and capital appreciation of the shareholder's account, the systematic
withdrawal plan will have the effect of reducing the value of the account. Any
gains and/or losses realized from redemptions through the systematic withdrawal
plan are considered a taxable event by the Internal Revenue Service and must be
reported on the shareholders' income tax return. Shareholders should consult
with a tax advisor for information on their specific financial situations. At
the time of initial investment, a shareholder may request that the check for the
systematic withdrawal be sent to an address other than the address of record.
The address to which the payment is mailed may be changed by submitting a
written request, signed by all registered owners, with their signatures
guaranteed. Shareholders may add this option after the account is already
established or change the
27
<PAGE>
amount on an existing account by calling the Fund at (800) 438-5789. The Fund
may terminate the plan on 30 days' written notice to the shareholder.
OTHER INFORMATION. The Fund reserves the right to suspend or postpone
redemptions during any period when: (i) trading on the New York Stock Exchange
is restricted, as determined by the SEC, or the New York Stock Exchange is
closed for other than customary weekend and holiday closings; (ii) the SEC has
by order permitted such suspension or postponement for the protection of
shareholders; or (iii) an emergency, as determined by the SEC, exists, making
disposal of portfolio securities or valuation of net assets of the Fund not
reasonably practicable.
The Fund may involuntarily redeem an investor's shares if the net
asset value of such shares is less than $500; 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 $500 or more. A check for the redemption proceeds
payable to the investor will be mailed to the investor at the address of record.
Redemption proceeds are normally paid in cash; however, the Fund may
pay the redemption price in whole or part by a distribution in kind of
securities from the portfolio of the Fund, in lieu of cash, in conformity with
applicable rules of the SEC. If shares are redeemed in kind, the redeeming
Shareholder might incur transaction costs in converting the assets into cash.
The Fund is obligated to redeem Shares solely in cash up to the lesser of
$250,000 or 1% of its net assets during any 90-day period for any one
Shareholder.
EXCHANGES. In addition to the method of exchanging shares described
in the Fund's 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 Fund at (800) 438-5789. Telephone exchange
instructions must be received by the Transfer Agent by 4:00 p.m., New York City
time. The Fund, 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 Fund 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.
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<PAGE>
NET ASSET VALUE
In determining the approximate market value of portfolio investments,
the Company may employ outside organizations, which may use matrix or formula
methods that take into consideration market indices, matrices, yield curves and
other specific adjustments. This may result in the securities being valued at a
price different from the price that would have been determined had the matrix or
formula methods not been used. All cash, receivables and current payables are
carried on the Company's books at their face value. Other assets, if any, are
valued at fair value as determined in good faith under the supervision of the
Board of Directors.
PERFORMANCE INFORMATION
The Fund may, from time to time, include information regarding its
yield or total return in advertisements, sales literature, or reports to
shareholders or prospective investors.
The Fund's 30-day (or one month) standard yield described in each
Prospectus is calculated for the 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);
c = average daily number of shares outstanding during the period
entitled to receive dividends; and
d = maximum offering price per share on the last day of the period.
For the purpose of determining interest earned on debt obligations
purchased by the Fund at a discount or premium (variable "a" in the formula),
the Fund computes the yield to maturity of such instrument based on the market
value of the obligation (including actual accrued interest) at the close of
business on the last business day of each month, or, with respect to obligations
purchased during the month, the purchase price (plus actual accrued interest).
Such yield is then divided by 360 and the quotient is multiplied by the
29
<PAGE>
market value of the obligation (including actual accrued interest) in order to
determine the interest income on the obligation for each day of the subsequent
month that the obligation is in the portfolio. It is assumed in the above
calculation that each month contains 30 days. The maturity of a debt obligation
with a call provision is deemed to be the next call date on which the obligation
reasonably may be expected to be called or, if none, the maturity date. For the
purpose of computing yield on equity securities held by the Fund, dividend
income is recognized by accruing 1/360 of the stated dividend rate of the
security for each day that the security is held by the Fund.
Interest earned on tax-exempt obligations that are issued without original
issue discount and have a current market discount is calculated by using the
coupon rate of interest instead of the yield to maturity. In the case of tax-
exempt obligations that are issued with original issue discount but which have
discounts based on current market value that exceed the then-remaining portion
of the original issue 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 discount 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 the Fund to all shareholder accounts in proportion to the length of
the base period and the Fund's mean (or median) account size. Undeclared earned
income will be subtracted from the offering price per share (variable "d" in the
formula). The Fund's maximum offering price per share for purposes of the
formula includes the maximum sales charge imposed -- currently 4.00% of the per
share offering price for Class A Shares of the Fund.
The Fund may advertise its "average annual total return" and will compute
such return by determining the average annual compounded rate of return during
specified periods that equates the initial amount invested to the ending
redeemable value of such investment according to the following formula:
P (1 + T)/n/ = ERV
Where: T = average annual total return;
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5, or 10 year
(or other) periods at the end of the applicable period
(or a fractional portion thereof);
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<PAGE>
P = hypothetical initial payment of $1,000; and
n = period covered by the computation, expressed in years.
The Fund may advertise its "aggregate total return" and will compute such
return by determining the aggregate compounded rates of return during specified
periods that likewise equate the initial amount invested to the ending
redeemable value of such investment. The formula for calculating aggregate
total return is as follows:
(ERV) - 1
-----
Aggregate Total Return = P
The calculations are made assuming that (1) all dividends and capital gain
distributions are reinvested on the reinvestment dates at the price per share
existing on the reinvestment date, (2) all recurring fees charged to all
shareholder accounts are included, and (3) for any account fees that vary with
the size of the account, a mean (or median) account size in the Fund during the
periods is reflected. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment after deduction of all non-recurring charges at the end of the
measuring period. The Fund's average annual total return and 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; and the
Fund's average annual total return and aggregate total return quotations for
Class B Shares will reflect any applicable CDSC; provided that Fund 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.
The performance of any investment is generally a function of portfolio
quality and maturity, type of investment and operating expenses.
From time to time, in advertisements or in reports to shareholders, the
Fund's yields or total returns may be quoted and compared to those of other
mutual funds with similar investment objectives and to stock or other relevant
indices. For example, the Fund's yield may be compared to the IBC/Donoghue's
Money Fund Average, which is an average compiled by Donoghue's MONEY FUND REPORT
of Holliston, MA 01746, a widely recognized independent publication that
monitors the performance of money market funds, or to the data prepared by
Lipper Analytical Services, Inc., a widely recognized independent service that
monitors the performance of mutual funds. In addition, as stated in the Fund's
Prospectuses, the tax-equivalent yield (and hypothetical examples illustrating
the effect of tax-equivalent yields) of the 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.
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<PAGE>
TAXES
The following summarizes certain additional tax considerations
generally affecting the Fund and its shareholders that are not described in the
Fund's Prospectuses. No attempt is made to present a detailed explanation of the
tax treatment of the Fund or its shareholders, and the discussion here and in
the Prospectuses is not intended as a substitute for careful tax planning.
Potential investors should consult their tax Advisors with specific reference to
their own tax situations.
The Fund will elect to be taxed separately as a regulated investment
company under Subchapter M, of the Internal Revenue Code of 1986, as amended
(the "Code"). As a regulated investment company, the 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, the Fund
must derive with respect to a taxable year at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans and gains
from the sale or other disposition of stock or securities or foreign currencies,
or from other income derived with respect to its business of investing in such
stock, securities, or currencies (the "Income Requirement") and derive less than
30% of its gross income from the sale or other disposition of securities and
certain other investments held for less than three months (the "Short-Short Gain
Test"). Interest (including original issue discount and "accrued market
discount") received by the 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 the Fund's assets must
consist of cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and securities of other issuers (as to which the
Fund has not invested more than 5% of the value of its total assets in
securities of such issuer and as to which the Fund does not hold more than 10%
of the outstanding voting securities of such issuer) and no more than 25% of the
value of the Fund's total assets may be invested in the securities of any one
issuer (other than U.S. Government securities and securities of other regulated
investment
32
<PAGE>
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses. Repurchase agreements
collateralized by U.S. treasury securities are not treated for purposes of the
diversification requirement described in this paragraph as U.S. Government
securities.
Certain debt instruments acquired by the Fund may include "original
issue discount" or "market discount". As a result, the Fund may be deemed under
tax law rules to have earned discount income in taxable periods in which it does
not actually receive any payments on the particular debt instruments involved.
This income, however, will be subject to the Distribution Requirements and must
also be distributed in accordance with the excise tax distribution rules
discussed above, which may cause the Fund to have to borrow or liquidate
securities to generate cash in order to timely meet these requirements (even
though such borrowing or liquidating securities at that time may be detrimental
from the standpoint of optimal portfolio management). Gain from the sale of a
debt instrument having market discount may be treated for tax purposes as
ordinary income to the extent that market discount accrued during the Fund's
ownership of that instrument.
Distributions of net investment income received by the Fund from
investments in debt securities and any net realized short-term capital gains
distributed by the Fund will be taxable to shareholders as ordinary income and
will not be eligible for the dividends received deduction for corporations.
The Fund intends to distribute to shareholders any excess of net long-
term capital gain over net short-term capital loss ("net capital gain") for each
taxable year. Such gain is distributed as a capital gain dividend and is
taxable to shareholders as long-term capital gain, regardless of the length of
time the shareholder has held the shares, whether such gain was recognized by
the Fund prior to the date on which a shareholder acquired shares of the Fund
and whether the distribution was paid in cash or reinvested in shares. In
addition, investors should be aware that any loss realized upon the sale,
exchange or redemption of shares held for six months or less will be treated as
a long-term capital loss to the extent any capital gain dividends have been paid
with respect to such shares. Capital gain dividends are not eligible for the
dividends received deduction for corporations.
Ordinary income of individuals is taxable at a maximum nominal rate of
39.6%, although because of limitations on itemized deductions otherwise
allowable and the phase-out of personal exemptions, the maximum effective
marginal rate of tax for some taxpayers may be higher. An individual's long-
term capital gains are taxable at a maximum rate of 28%. Capital gains and
ordinary income of corporate taxpayers are both taxed at a nominal maximum rate
of 35%.
If for any taxable year the Fund does not qualify as a regulated
investment company, all of its taxable income will be subject to tax at regular
corporate rates without any deduction for distributions to shareholders. In
such event, all distributions (whether or not derived from exempt-interest
income) would be taxable as ordinary income and
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<PAGE>
would be eligible for the dividends received deduction in the case of corporate
shareholders to the extent of the Fund's current and accumulated earnings and
profits.
Shareholders will be advised annually as to the Federal income tax
consequences of distributions made by the Fund each year.
The Code imposes a non-deductible 4% excise tax on regulated
investment companies that fail to currently distribute an amount equal to
specified percentages of their ordinary taxable income and capital gain net
income (excess of capital gains over capital losses). The Fund intends to make
sufficient distributions or deemed distributions of its ordinary taxable income
and capital gain net income each calendar year to avoid liability for this
excise tax.
The Company will be required in certain cases to withhold and remit to
the United States Treasury 31% of taxable dividends or 31% of gross proceeds
realized upon sale paid to any shareholder (i) who has provided either an
incorrect tax identification number or no number at all, (ii) who is subject to
backup withholding by the Internal Revenue Service for failure to report the
receipt of taxable interest or dividend income properly, or (iii) who has failed
to certify to the Company that he is not subject to backup withholding or that
he is an "exempt recipient."
The foregoing general discussion of Federal income tax consequences is
based on the Code and the regulations issued thereunder as in effect on the date
of this Statement of Additional Information. Future legislative or
administrative changes or court decisions may significantly change the
conclusions expressed herein, and any such changes or decisions may have a
retroactive effect with respect to the transactions contemplated herein.
Although the Fund expects to qualify as a "regulated investment
company" and to be relieved of all or substantially all Federal income taxes,
depending upon the extent of its activities in states and localities in which
its offices are maintained, in which its agents or independent contractors are
located or in which it is otherwise deemed to be conducting business, the Fund
may be subject to the tax laws of such states or localities.
ADDITIONAL INFORMATION CONCERNING SHARES
The Company is a Maryland corporation. The Company's Articles of
Incorporation authorize the Board of Directors to classify or reclassify any
unissued shares of the Company into one or more classes by setting or changing,
in any one or more
34
<PAGE>
respects, their respective designations, preferences, conversion or other
rights, voting powers, restrictions, limitations, qualifications and terms and
conditions of redemption. 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 Equity Selection Fund, Micro-Cap Equity
Fund, Mid-Cap Growth Fund, Multi-Season Growth Fund, Real Estate Equity
Investment Fund, Small-Cap Value Fund, Value Fund, International Bond Fund,
Short Term Treasury Fund, Money Market Fund, and NetNet Fund, respectively. The
Shares of each Fund (other than the Money Market 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 Company and the Munder Funds Trust) and Class Y
Shares. The NetNet Fund offers only one Class of Shares.
In the event of a liquidation or dissolution of the Company or the
Fund, shareholders of the Fund would be entitled to receive the assets available
for distribution belonging to the Fund, and a proportionate distribution, based
upon the relative net asset value of the Fund, of any general assets not
belonging to the Fund which are available for distribution. Shareholders of the
Fund are entitled to participate in the net distributable assets of the Fund,
based on the number of shares of the Fund that are held by each shareholder.
Holders of all outstanding shares of the Fund will vote together in
the aggregate and not by class on all matters, except that only Class A Shares
of the 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 the 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 the Fund will be entitled to vote on
matters submitted to a vote of shareholders pertaining to the Class K Plan.
Shareholders of the Fund, as well as those of any other investment
portfolio now or hereafter offered by the Company, will vote together in the
aggregate and not separately on a Fund-by-Fund basis, except as otherwise
required by law or when permitted by the Boards of Directors. Rule 18f-2 under
the 1940 Act provides that any matter required to be submitted to the holders of
the outstanding voting securities of an investment company such as the Company
shall not be deemed to have been effectively acted upon unless approved by the
holders of a majority of the outstanding shares of each Fund affected by the
matter. The Fund is affected by a matter unless it is clear that the interests
of the Fund in the matter are substantially identical to the interests of other
portfolios of the Company or that the matter does not affect any interest of the
Fund. Under the Rule, the approval of an investment advisory agreement or any
change in a
35
<PAGE>
Fundamental investment policy would be effectively acted upon with respect to
the Fund only if approved by a majority of the outstanding shares of the 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
Company voting together in the aggregate without regard to a particular
portfolio.
Shares of the Company have noncumulative voting rights and,
accordingly, the holders of more than 50% of the Company's outstanding shares
may elect all of the 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 Prospectuses, shares will be fully paid
and non-assessable by the Company.
Shareholder meetings to elect directors will not be held unless and
until such time as required by law. At that time, the directors then in office
will call a shareholders' meeting to elect directors. Except as set forth
above, the directors will continue to hold office and may appoint successor
directors. Meetings of the shareholders of the Company shall be called by the
directors upon the written request of shareholders owning at least 10% of the
outstanding shares entitled to vote.
MISCELLANEOUS
COUNSEL. The law firm of Dechert Price & Rhoads, 1500 K Street, N.W.,
Washington, DC 20005, has passed upon certain legal matters in connection with
the shares offered by the Fund and serves as counsel to the Company.
INDEPENDENT AUDITORS. Ernst & Young LLP, serves as the Company's
independent auditors.
SHAREHOLDER APPROVALS. As used in this Statement of Additional
Information and in the Prospectuses, a "majority of the outstanding shares" of
the Fund means the lesser of (a) 67% of the shares of the Fund represented at a
meeting at which the holders of more than 50% of the outstanding shares of the
Fund are present in person or by proxy, or (b) more than 50% of the outstanding
shares of the Fund.
REGISTRATION STATEMENT
This Statement of Additional Information and 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.
36
<PAGE>
Statements contained herein and in the Fund's Prospectuses as to the
contents of any contract or other documents referred to are not necessarily
complete, and, in such instance, reference is made to the copy of such contract
or other documents filed as an exhibit to the Fund's registration statement,
each such statement being qualified in all respect by such reference.
37
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
---------------------------------
(a) Financial Statements
Not Applicable.
(b) Exhibits (the number of each exhibit relates to the
exhibit designation in Form N-1A):
(1) (a) Articles of Incorporation10
(b) Articles of Amendment10
(c) Articles Supplementary10
(d) Articles Supplementary for The Munder Small-Cap
Value Fund, The Munder Equity Selection Fund, The Munder Micro-Cap
Equity Fund, and the NetNet Fund.11
(e) Articles Supplementary for The Munder Short Term
Treasury Fund is filed herein.
(2) By-Laws1
(3) Not Applicable
(4) (a) Specimen security for The Munder Multi-
Season Growth Fund2
(b) By-Laws1
(5) (a) Form of Investment Advisory Agreement for
The Munder Multi-Season Growth Fund5
(b) Form of Investment Advisory Agreement for
The Munder Money Market Fund5
(c) Form of Investment Advisory Agreement for
The Munder Real Estate Equity Investment Fund5
(d) Investment Advisory Agreement for The
Munder Value Fund8
(e) Investment Advisory Agreement for The
Munder Mid-Cap Growth Fund8
(f) Form of Investment Advisory Agreement for
The Munder International Bond Fund10
(g) Form of Investment Advisory Agreement for
the NetNet Fund9
(h) Form of Investment Advisory Agreement for
The Munder Small-Cap Value Fund10
(i) Form of Investment Advisory Agreement for
The Munder Micro-Cap Equity Fund10
(j) Form of Investment Advisory Agreement for
The Munder Equity Selection Fund10
(k) Form of Investment Advisory Agreement for
The Munder Short Term Treasury Fund is filed herein.
(6) (a) Underwriting Agreement8
(b) Notice to Underwriting Agreement with
respect to The Munder Value Fund and The Munder Mid-Cap Growth
Fund8
(c) Notice to Underwriting Agreement with
respect to The Munder International Bond Fund8
(d) Notice to Underwriting Agreement with
respect to The Munder Small-Cap Value Fund, The Munder Equity
Selection Fund, The Munder Micro-Cap Equity Fund, and the NetNet
Fund10
(e) Form of Notice to Underwriting Agreement
with respect to the Munder Short Term Treasury Fund is filed
herein.
(7) Not Applicable
(8) (a) Form of Custodian Contract8
(b) Notice to Custodian Contract with respect
to The Munder Value Fund and The Munder Mid-Cap Growth Fund8
(c) Notice to Custodian Contract with respect
to the Munder International Bond Fund8
(d) Notice to Custodian Contract with respect
to The Munder Small-Cap Value Fund, The Munder Equity Selection
Fund, The Munder Micro-Cap Equity Fund and the NetNet Fund10
(e) Form of Notice to the Custodian Contract
with respect to The Munder Short Term Treasury Fund is filed
herein.
(f) Form of Subcustodian Agreement11 .
(9) (a) Transfer Agency and Service Agreement8
(b) Notice to Transfer Agency and Service
Agreement with respect to the Munder Value Fund and the Munder
Mid-Cap Growth Fund8
(c) Notice to Transfer Agency and Service
Agreement with respect to the Munder International Bond Fund8
(d) Notice to Transfer Agency and Service
Agreement with respect to The Munder Small-Cap Value Fund, The
Munder Equity Selection Fund, The Munder Micro-Cap Equity Fund and
the NetNet Fund10
(e) Form of Notice to Transfer Agency and
Service Agreement with respect to The Munder Short Term Treasury
Fund is filed herein.
(f) Administration Agreement8
(g) Notice to Administration Agreement with
respect to The Munder Value and The Munder Mid-Cap Growth Fund8
(h) Notice to Administration Agreement with
respect to The Munder International Bond Fund8
(i) Notice to Administration Agreement with
respect to The Munder Small-Cap Value Fund, The Munder Equity
Selection Fund, The Munder Micro-Cap Equity Fund and the NetNet
Fund10
(j) Form of Notice to Administration Agreement
with respect to The Munder Short Term Treasury Fund is filed
herein.
(10) (a) Opinion and Consent of Counsel with
respect to The Munder Multi-Season Growth Fund2
(b) Opinion and Consent of Counsel with
respect to The Munder Money Market Fund4
(c) Opinion and Consent of Counsel with
respect to The Munder Real Estate Equity Investment Fund3
(d) Opinion and Consent of Counsel with
respect to the Munder Value Fund and The Munder Mid-Cap Growth
Fund8
(e) Opinion and Consent of Counsel with
respect to the Munder International Bond Fund8
(f) Opinion and Consent of Counsel with
respect to the NetNet Fund9
(g) Opinion and Consent of Counsel with
respect to the Munder Small-Cap Value Fund, the Munder Equity
Selection Fund, and the Munder Micro-Cap Equity Fund.11
(h) Opinion and Consent of Counsel with
respect to Munder Short Term Treasury Fund is filed herein.
(11) (a) Consent of Dechert Price & Rhoads
(included with Exhibit 10 a-h).
(b) Consent of Ernst & Young LLP11
(c) Consent of Arthur Andersen LLP7
(d) Letter of Arthur Andersen LLP regarding
change in independent auditor required by Item 304 of Regulation
S-K.7
(e) Powers of Attorney9
(12) Not Applicable
(13) Initial Capital Agreement2
(14) Not Applicable
(15) (a) Service Plan for The Munder Multi-Season
Growth Fund Class A Shares5
(b) Service and Distribution Plan for The
Munder Multi-Season Growth Fund Class B Shares5
(c) Service and Distribution Plan for The
Munder Multi-Season Growth Fund Class D Shares5
(d) Service Plan for The Munder Money Market
Fund Class A Shares5
(e) Service and Distribution Plan for The
Munder Money Market Fund Class B Shares5
(f) Service and Distribution Plan for The
Munder Money Market Fund Class D Shares5
(g) Service Plan for The Munder Real Estate
Equity Investment Fund Class A Shares5
(h) Service and Distribution Plan for The
Munder Real Estate Equity Investment Fund Class B Shares5
(i) Service and Distribution Plan for The
Munder Real Estate Equity Investment Fund Class D Shares5
(j) Form of Service Plan for The Munder Multi-
Season Growth Fund Investor Shares6
(k) Form of Service Plan for Class K Shares of
The Munder Funds, Inc.10
(l) Form of Service Plan for Class A Shares of
The Munder Funds, Inc.10
(m) Form of Distribution and Service Plan for
Class B Shares for The Munder Funds, Inc.10
(n) Form of Distribution and Service Plan for
Class C Shares for The Munder Funds, Inc.10
(o) Form of Distribution and Service Plan for
the NetNet Fund9
(16) Schedule for Computation of Performance
Quotations is filed herein.
(17) Not Applicable
(18) Multi-Class Plan8
- --------------------------------
1. Filed in Registrant's initial Registration Statement
on November 18, 1992 and incorporated by reference herein.
2. Filed in Pre-Effective Amendment No. 2 to the
Registrant's Registration Statement on February 26, 1993 and
incorporated by reference herein.
3. Filed in Post-Effective Amendment No. 7 to the
Registrant's Registration Statement on August 26, 1994 and
incorporated by reference herein.
4. Filed in Post-Effective Amendment No. 2 to the
Registrant's Registration Statement on July 9, 1993 and
incorporated by reference herein.
5. Filed in Post-Effective Amendment No. 8 to the
Registrant's Registration Statement on February 28, 1995 and
incorporated by reference herein.
6. Filed in Post-Effective Amendment No. 9 to the
Registrant's Registration Statement on April 13, 1995 and
incorporated by reference herein.
7. Filed in Post-Effective Amendment No. 12 to the
Registrant's Registration Statement on August 29, 1995 and
incorporated by reference herein.
8. Filed in Post-Effective Amendment No. 16 to the
Registrant's Registration Statement on June 25, 1996 and
incorporated by reference herein.
9. Filed in Post-Effective Amendment No. 17 to the
Registrant's Registration Statement on August 9, 1996 and
incorporated by reference herein.
10. Filed in Post-Effective Amendment No. 18 to the
Registrant's Registration Statement on August 14, 1996 and
incorporated by reference herein.
11. Filed in Post-Effective Amendment No. 20 to the
Registrant's Registration Statement on October 28, 1996 and
incorporated by reference herein.
Item 25. Persons Controlled by or Under Common Control with
Registrant.
--------------------------------------------------
Not Applicable.
Item 26. Number of Holders of Securities.
-------------------------------
As of October 1, 1996, the number of shareholders of
record of each Class of shares of each Series of the Registrant
that was offered as of that date was as follows:
Class A Class B Class C Class
K Class Y
-----------------------------------------
- ---------------------------------
The Munder Multi-Season Growth Fund 384 1,620 18 141
101
The Munder Money Market Fund 6 8 1 0 67
The Munder Real Estate Equity 14 9 4 1 28
Investment Fund
The Munder Mid-Cap Growth Fund 8 17 3 1 23
The Munder Value Fund 5 16 1 2 27
The Munder International Bond Fund 1 1
1 1 1
The NetNet Fund - as of October 1, 1996, the NetNet Fund had 28 accounts open.
Item 27. Indemnification.
---------------
Article VII, Section 7.6 of the Registrant's Articles
of Incorporation ("Section 7.6") provides that the Registrant,
including its successors and assigns, shall indemnify its
directors and officers and make advance payment of related
expenses to the fullest extent permitted, and in accordance with
the procedures required, by the General Laws of the State of
Maryland and the Investment Company Act of 1940. Such
indemnification shall be in addition to any other right or claim
to which any director, officer, employee or agent may otherwise be
entitled. In addition, Article VI of the Registrant's By-laws
provides that the Registrant shall indemnify its employees and/or
agents in any manner as shall be authorized by the Board of
Directors and within such limits as permitted by applicable law.
The Board of Directors may take such action as is necessary to
carry out these indemnification provisions and is expressly
empowered to adopt, approve and amend from time to time such
resolutions or contracts implementing such provisions or such
further indemnification arrangements as may be permitted by law.
The Registrant may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of
the Registrant or is serving at the request of the Registrant as a
director, officer, partner, trustee, employee or agent of another
foreign or domestic corporation, partnership, joint venture, trust
or other enterprise or employee benefit plan, against any
liability asserted against and incurred by such person in any such
capacity or arising out of such person's position, whether or not
the Registrant would have had the power to indemnify against such
liability. The rights provided by Section 7.6 shall be
enforceable against the Registrant by such person who shall be
presumed to have relied upon such rights in serving or continuing
to serve in the capacities indicated therein.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933, as amended, may be permitted to
directors, officers and controlling persons of the Registrant by
the Registrant pursuant to the Fund's Articles of Incorporation,
its By-Laws or otherwise, the Registrant is aware that in the
opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act
and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by directors,
officers or controlling persons of the Registrant in connection
with the successful defense of any act, suit or proceeding) is
asserted by such directors, officers or controlling persons in
connection with shares being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed
by the final adjudication of such issues.
Item 28. Business and Other Connections of Investment Advisor.
----------------------------------------------------
Munder Capital Management
- -------------------------
Position
Name with Adviser
---- ------------
Old MCM, Inc. Partner
Munder Group LLC Partner
WAM Holdings, Inc. Partner
Woodbridge Capital Management, Inc. Partner
Lee P. Munder President
and Chief
Executive Officer
Leonard J. Barr, II Senior Vice
President and
Director of
Research
Ann J. Conrad Vice
President and Director of Special Equity Products
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
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 Executive Vice
President and Chief Investment Officer/Equity
Paul D. Tobias Executive
Vice President and Chief Operating Officer
For further information relating to the Investment Adviser'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, Boston, Massachusetts 02109, is the principal underwriter
of the Funds. FDI is an indirectly wholly-owned subsidiary of
Boston Institutional Group, Inc. a holding company, all of whose
outstanding shares are owned by key employees. FDI is a broker
dealer registered under the Securities Exchange Act of 1934, as
amended. FDI acts as principal underwriter of the following
investment companies other than the Registrant:
HT Insight Funds, d/b/a Harris Insight Funds
Harris Insight Funds Trust Skyline Funds
The Munder Funds Trust Foreign Fund, Inc.
St. Clair Funds, Inc. Fremont Mutual Funds, Inc.
BJB Investment Funds RCM Capital Funds, Inc.
PanAgora Funds
RCM Equity Funds, Inc.
Waterhouse Investors Cash Management Fund, Inc.
LKCM Fund
Pierpont Funds
JPM Advisor Funds
JPM Institutional Funds
(b) The information required by this Item 29(b) with
respect to each director, officer or partner of FDI is
incorporated by reference to Schedule A of Form BD filed by FDI
with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 (SEC File No. 8-20518).
(c) Not Applicable
Item 30. Location of Accounts and Records.
--------------------------------
The account books and other documents required to be
maintained by Registrant pursuant to Section 31(a) of the
Investment Company Act of 1940 and the Rules thereunder will be
maintained at the offices of:
(1) Munder Capital Management, 480 Pierce Street or 255 East
Brown Street, Birmingham, Michigan 48009 (records relating to its
function as investment advisor)
(2) First Data Investor Services Group, Inc., 53 State Street,
Exchange Place, Boston, Massachusetts 02109 or 4400 Computer
Drive, Westborough, Massachusetts 01581 (records relating to its
functions as administrator and transfer agent)
(3) Funds Distributor, Inc., 60 State Street, Boston,
Massachusetts 02109 (records relating to its function as
distributor)
(4) Comerica Bank, 1 Detroit Center, 500 Woodward Avenue,
Detroit, Michigan 48226 (records relating to its function as
custodian)
Item 31. Management Services.
-------------------
Not Applicable
Item 32. Undertakings.
------------
(a) Not Applicable.
(b) Registrant undertakes to call a meeting of
Shareholders for the purpose of voting upon the question of
removal of a Director or Directors when requested to do so by the
holders of at least 10% of the Registrant's outstanding shares of
common stock and in connection with such meeting to comply with
the shareholders' communications provisions of Section 16(c) of
the Investment Company Act of 1940.
(c) Registrant undertakes to furnish to each person to
whom a prospectus is delivered a copy of the Registrant's latest
annual report to shareholders upon request and without charge.
(d) Registrant undertakes to file a Post-Effective
Amendment relating to each of the Munder Small-Cap Value Fund, the
Munder Micro-Cap Equity Fund, and the Munder Equity Selection
Fund, the Munder International Bond Fund, the Munder NetNet Fund
and the Munder Short Term Treasury Fund, using reasonably current
financial statements which need not be certified, within four to
six months from the effective date of the Registration Statement
describing the respective Fund.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
the Registrant certifies that this Post-Effective Amendment No. 21
to the Registration Statement meets the requirements for
effectiveness pursuant to Rule 485(b) of the Securities Act of
1933, as amended, and the Registrant has duly caused this Post-
Effective Amendment No. 21 to the Registration Statement to be
signed on its behalf by the undersigned, thereto duly authorized,
in the City of Boston and the Commonwealth of Massachusetts on the
13th day of December, 1996.
The Munder Funds, Inc.
By: *
Lee P. Munder
*By: /s/ Teresa M.R. Hamlin
Teresa M.R. Hamlin
as Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement has been signed by the
following persons in the capacities and on the date indicated.
Signatures Title Date
* President and
Chief December 13, 1996
Lee P. Munder Executive Officer
* Director
December 13, 1996
Charles W. Elliott
* Director
December 13, 1996
Joseph E. Champagne
* Director
December 13, 1996
Arthur DeRoy Rodecker
* Director
December 13, 1996
Jack L. Otto
* Director
December 13, 1996
Thomas B. Bender
* Director
December 13, 1996
Thomas D. Eckert
* Director
December 13, 1996
John Rakolta, Jr.
* Director
December 13, 1996
David J. Brophy
* Vice President,
December 13, 1996
Terry H. Gardner Treasurer and
Chief Financial
Officer
* By: /s/ Teresa M.R. Hamlin
Teresa M.R. Hamlin
as Attorney-in-Fact
* The Powers of Attorney are incorporated by reference to
Post-Effective Amendment No. 17 as filed with the Securities and
Exchange Commission on August 9, 1996.
EXHIBIT INDEX
Exhibit Description
(1)(e) Articles Supplementary for the Munder
Short Term Treasury Fund
(5)(k) Form of Investment Advisory Agreement for The Munder
Short Term Treasury Fund
(6)(e) Form of Notice to Underwriting Agreement with respect
to the Munder Short Term Treasury Fund
(8)(e) Form of Notice to the Custodian Contract with respect
to the Munder Short Term Treasury Fund
(9)(e) Form of Notice to Transfer Agency and Service
Agreement with respect to the Munder Short Term Treasury Fund
(9)(j) Form of Notice to Administration Agreement with
respect to the Munder Short Term Treasury Fund
(10)(h) Opinion and Consent of Counsel with respect to Munder
Short Term Treasury Fund
(16) Schedule for Computation of Performance Quotations
Ex. 1(e)
THE MUNDER FUNDS, INC.
ARTICLES SUPPLEMENTARY
THE MUNDER FUNDS, INC., a Maryland corporation registered as
an open-end investment company under the Investment Company Act of
1940, as amended (the "1940 Act"), and having its principal office
in the State of Maryland in Baltimore City, Maryland (hereinafter
called the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: In accordance with procedures established in the
Corporation's Charter, the Board of Directors of the Corporation,
by resolution dated November 7, 1996 pursuant to Section 2-208 of
Maryland General Corporate Law, duly classified 100,000,000 shares
of the unissued, authorized capital stock of the Corporation into
the following additional series, designated as follows:
Name of Series Name of Class of Series Number
of Shares Allocated
The Munder Short Term
Treasury Fund Class A
20,000,000 shares
Class B
40,000,000 shares
Class Y
20,000,000 shares
Class C
10,000,000 shares
Class K
10,000,000 shares
SECOND: The shares of the Corporation classified pursuant
to Article First of these Articles Supplementary have been so
classified by the Board of Directors under the authority contained
in the Charter of the Corporation. The number of Shares of
capital stock of the various classes that the Corporation has
authority to issue has been established by the Board of Directors
in accordance with Section 2-105(c) of the Maryland General
Corporation Law.
THIRD: Immediately prior to the effectiveness of the
Articles Supplementary of the Corporation as hereinabove set
forth, the Corporation had the authority to issue two billion,
three-hundred million (2,300,000,000) shares of Common Stock of
the par value of $0.01 per share and of the aggregate par value of
twenty-three million dollars ($23,000,000), of which the Board of
Directors had designated one billion, five hundred and five
million (1,505,000,000) shares into Series and classified the
shares of each Series as follows:
Previously Classified Shares
Authorized
Name of Shares Shares by Class (in millions)
NetNet Fund 50
A B Y C K
The Munder Multi-Season Growth Fund 10 60 50 10 50
The Munder Money Market Fund 55 20 500 20 200
The Munder Real Estate Equity Investment Fund 10 50 10
10 10
The Munder World Growth Fund 20 40 20 10 10
The Munder International Bond Fund 20 40 20 10 10
The Munder Mid-Cap Growth Fund 5 10 10 5 10
The Munder Value Fund 5 10 10 5 10
The Munder Michigan High Yield Bond Fund 10 15 10 10
10
The Munder Small-Cap Value Fund 10 15 10 10 10
As amended hereby, the Corporation's Articles of
Incorporation authorize the issuance of two billion, three-hundred
million (2,300,000,000) shares of Common Stock of the par value of
$0.01 per share and having an aggregate par value of twenty-three
million dollars ($23,000,000), of which the Board of Directors has
designated one billion, six hundred and five million
(1,605,000,000) (including the 1,505,000,000 shares previously
designated) shares into Series and classified the shares of each
Series as follows:
Current Classification of Shares
Name of Shares
Authorized Shares
(in millions)
NetNet Fund 50
Authorized
Shares by Class (in millions)
A B Y C K
The Munder Multi-Season Growth Fund 10 60 50 10 50
The Munder Money Market Fund 55 20 500 20 200
The Munder Real Estate Equity Investment Fund 10 50 10
10 10
The Munder Equity Selection Fund 20 40 20 10 10
The Munder International Bond Fund 20 40 20 10 10
The Munder Mid-Cap Growth Fund 5 10 10 5 10
The Munder Value Fund 5 10 10 5 10
The Munder Micro-Cap Equity Fund 10 15 10 10 10
The Munder Small-Cap Value Fund 10 15 10 10 10
The Munder Short Term Treasury Fund 20 40 20 10 10
FOURTH: The preferences, rights, voting powers,
restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption of the various classes of
shares shall be as set forth in the Corporation's Articles of
Incorporation and shall be subject to all provisions of the
Articles of Incorporation relating to shares of the Corporation
generally, and those set forth as follows:
(a) The assets of each Class of a Series shall be invested in the
same investment portfolio of the Corporation.
(b) The dividends and distributions of investment income and
capital gains with respect to each class of shares shall be in
such amount as may be declared from time to time by the Board of
Directors, and the dividends and distributions of each class of
shares may vary from the dividends and distributions of the other
classes of shares to reflect differing allocations of the expenses
of the Corporation among the holders of each class and any
resultant differences between the net asset value per share of
each class, to such extent and for such purposes as the Board of
Directors may deem appropriate. The allocation of investment
income or capital gains and expenses and liabilities of the
Corporation among the classes shall be determined by the Board of
Directors in a manner it deems appropriate.
(c) Class A shares of each Series (including fractional shares)
may be subject to an initial sales charge pursuant to the terms of
the issuance of such shares.
(d) The proceeds of the redemption of Class B shares of each
Series (including fractional shares) may be reduced by the amount
of any contingent deferred sales charge payable on such redemption
pursuant to the terms of the issuance of such shares.
(e) The holders of Class A shares, Class B shares, Class Y
shares, Class C shares, and Class K shares of each Series shall
have (i) exclusive voting rights with respect to provisions of any
service plan or service and distribution plan adopted by the
Corporation pursuant to Rule 12b-1 under the Investment Company
Act of 1940 (a "Plan") applicable to the respective class of the
respective Series and (ii) no voting rights with respect to the
provisions of any Plan applicable to any other class or Series of
shares or with regard to any other matter submitted to a vote of
shareholders which does not affect holders of that respective
class of the respective Series of shares.
(f)(l) Each Class B share of each Series, other than a share
purchased through the automatic reinvestment of a dividend or a
distribution with respect to Class B shares, shall be converted
automatically, and without any action or choice on the part of the
holder thereof, into Class A shares of that Series on the date
that is the first business day of the month in which the sixth
anniversary of the issuance of the Class B shares occurs (the
"Conversion Date"). With respect to Class B shares issued in an
exchange or series of exchanges for shares of capital stock of
another investment company or class or series thereof registered
under the Investment Company Act of 1940 pursuant to an exchange
privilege granted by the Corporation, the date of issuance of the
Class B shares for purposes of the immediately preceding sentence
shall be the date of issuance of the original shares of capital
stock.
(2) Each Class B share of a Series purchased through the
automatic reinvestment of a dividend or a distribution with
respect to Class B shares shall be segregated in a separate sub-
account. Each time any Class B shares in a shareholder's Fund
account (other than those in the sub-account) convert to Class A
shares, an equal pro rata portion of the Class B shares then in
the sub-account shall also convert automatically to Class A shares
without any action or choice on the part of the holder thereof.
The portion shall be determined by the ratio that the
shareholder's Class B shares of a Series converting to Class A
shares bears to the shareholder's total Class B shares of that
Series not acquired through dividends and distributions.
(3) The conversion of Class B shares to Class A shares is
subject to the continuing availability of an opinion of counsel or
a ruling of the Internal Revenue Service that payment of different
dividends on Class A and Class B shares does not result in the
Corporation's dividends or distributions constituting
"preferential dividends" under the Internal Revenue Code of 1986,
as amended, and that the conversion of shares does not constitute
a taxable event under federal income tax law.
(4) The number of Class A shares of a Series into which a
share of Class B shares is converted pursuant to paragraphs (f)(1)
and (f)(2) hereof shall equal the number (including for this
purpose fractions of a share) obtained by dividing the net asset
value per share of the Class B shares of the Series (for purposes
of sales and redemptions thereof on the Conversion Date) by the
net asset value per share of the Class A shares of the Series (for
purposes of sales and redemptions thereof on the Conversion Date).
(5) On the Conversion Date, the Class B shares of a Series
converted into Class A shares will cease to accrue dividends and
will no longer be deemed outstanding and the rights of the holders
thereof (except the right to receive (i) the number of Class A
shares into which the Class B shares have been converted and (ii)
declared but unpaid dividends to the Conversion Date) will cease.
Certificates representing Class A shares resulting from the
conversion need not be issued until certificates representing
Class B shares converted, if issued, have been received by the
Corporation or its agent duly endorsed for transfer.
IN WITNESS WHEREOF, The Munder Funds, Inc. has caused these
Articles Supplementary to be signed in its name on its behalf by
its authorized officers who acknowledge that these Articles
Supplementary are the act of the Corporation, that to the best of
their knowledge, information and belief, all matters and facts set
forth herein relating to the authorization and approval of these
Articles Supplementary are true in all material respects and that
this statement is made under the penalties of perjury.
Date: November 7, 1996
THE MUNDER FUNDS, INC.
[CORPORATE SEAL]
By: : /s/ Terry H. Gardner
Terry H. Gardner
Vice President
Attest:
/s/ Lisa Anne Rosen
Lisa Anne Rosen
Secretary
Ex. 5(k)
FORM OF
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made this day of , 1996,
between The Munder Funds, Inc. (the "Company") on behalf of The
Munder Short Term Treasury Fund (the "Fund") and Munder Capital
Management (the "Adviser"), a Delaware partnership.
WHEREAS, the Company is a Maryland corporation 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 the Fund is a series of the Company;
WHEREAS, the Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended ("Advisers
Act"); and
WHEREAS, the Company wishes to retain the Adviser to render
investment advisory services to the Fund, and the Adviser is
willing to furnish such services to the Fund;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the Company and
the Adviser as follows:
1. Appointment
The Company hereby appoints the Adviser to act as investment
adviser to the Fund for the periods and on the terms set forth
herein. The Adviser accepts the appointment and agrees to furnish
the services set forth herein for the compensation provided
herein.
2. Services as Investment Adviser
Subject to the general supervision and direction of the
Board of Directors of the Company, the Adviser will (a) manage the
Fund in accordance with the Fund's investment objective and
policies as stated in the Fund's Prospectuses and the Statement of
Additional Information filed with the Securities and Exchange
Commission, as they may be, amended from time to time; (b) make
investment decisions for the Fund; (c) place purchase and sale
orders on behalf of the Fund; and (d) employ professional
portfolio managers and securities analysts to provide research
services to the Fund. In providing those services, the Adviser
will provide the Fund with ongoing research, analysis, advice and
judgments regarding individual investments, general economic
conditions and trends and long-range investment policy. In
addition, the Adviser will furnish the Fund with whatever
statistical information the Fund may reasonably request with
respect to the securities that the Fund may hold or contemplate
purchasing.
The Adviser further agrees that, in performing its duties
hereunder, it will:
(a) comply with the 1940 Act and all rules and regulations
thereunder the Advisers Act, the Internal Revenue Code of 1986, as
amended (the "Code"), and all other applicable federal and state
laws and regulations, and with any applicable procedures adopted
by the Directors;
(b) use reasonable efforts to manage the 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 the Fund's
securities transactions, render to the Board of Directors of the
Company such periodic and special reports as the Board may
reasonably request, and keep the Directors informed of
developments materially affecting the Fund's portfolio;
(d) make available to the Fund's administrator, and the
Company, promptly upon their request, such copies of its
investment records and ledgers with respect to the Fund as may be
required to assist the administrator and the Company in their
compliance with applicable laws and regulations. The Adviser will
furnish the Directors with such periodic and special reports
regarding the Fund as they may reasonably request; and
(e) immediately notify the Company in the event that the
Adviser or any of its affiliates: (1) becomes aware that it is
subject to a statutory disqualification that prevents the Adviser
from serving as investment adviser 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 Adviser further
agrees to notify the Company immediately of any material fact
known to the Adviser respecting or relating to the Adviser that is
not contained in the Company's Registration Statement regarding
the Fund, 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 Fund has delivered properly certified or authenticated
copies of each of the following documents to the Adviser and will
deliver to it all future amendments and supplements thereto, if
any:
(a) certified resolution of the Board of Directors of the
Company authorizing the appointment of the Adviser and approving
the form of this Agreement;
(b) the Registration Statement as filed with the
Securities and Exchange Commission and any amendments thereto; and
(c) exhibits, powers of attorneys, certificates and any
and all other documents relating to or filed in connection with
the Registration Statement described above.
4. Brokerage
In selecting brokers or dealers to execute transactions on
behalf of the Fund, the Adviser will use its best efforts to seek
the best overall terms available. In assessing the best overall
terms available for any Fund transaction, the Adviser 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 or dealers to execute a particular transaction,
and in evaluating the best overall terms available, the Adviser 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
Fund and/or other accounts over which the Adviser or its
affiliates exercise investment discretion. 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 Adviser
and its affiliates are authorized to effect portfolio transactions
for the Fund and to retain brokerage commissions on such
transactions.
5. Records
The Adviser 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 Adviser with respect to the Fund
by the 1940 Act. The Adviser further agrees that all records
which it maintains for the Fund are the property of the Fund and
it will promptly surrender any of such records upon request.
6. Standard of Care
The Adviser shall exercise its best judgment in rendering
the services under this Agreement. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss
suffered by the Fund or the Fund's 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
Adviser against any liability to the Fund or to its shareholders
to which the Adviser 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 Adviser's
reckless disregard of its obligations and duties under this
Agreement. As used in this Section 6, the term "Adviser" shall
include any officers, directors, employees, or other affiliates of
the Adviser performing services with respect to the Fund.
7. Compensation
In consideration of the services rendered pursuant to this
Agreement, the Fund will pay the Adviser a fee at an annual rate
equal to .25% of the average daily net assets of the Fund. This
fee shall be computed and accrued daily and payable monthly. For
the purpose of determining fees payable to the Adviser, the value
of the Fund's average daily net assets shall be computed at the
times and in the manner specified in the Fund's Prospectuses or
Statement of Additional Information.
8. Expenses
The Adviser will bear all expenses in connection with the
performance of its services under this Agreement. The Fund will
bear certain other expenses to be incurred in its operation,
including: taxes, interest, brokerage fees and commissions, if
any, fees of Directors of the Company who are not officers,
directors, or employees of the Adviser; Securities and Exchange
Commission fees and state blue sky qualification fees; charges of
custodians and transfer and dividend disbursing agents; the Fund's
proportionate share of insurance premiums; outside auditing and
legal expenses; costs of maintenance of the Fund's existence;
costs attributable to investor services, including, without
limitation, 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 Directors of the Company;
and any extraordinary expenses.
9. Services to Other Companies or Accounts
The investment advisory services of the Adviser to the Fund
under this Agreement are not to be deemed exclusive, and the
Adviser, or any affiliate thereof, shall be free to render similar
services to other investment companies and the clients (whether or
not their investment objectives and policies are similar to those
of the Fund) and to engage in the activities, so long as it
services hereunder are not impaired thereby.
10. Duration and Termination
This Agreement shall become effective on and shall continue
in effect, unless sooner terminated as provided herein, for two
years from such date and shall continue from year to year
thereafter, provided each continuance is specifically approve at
least annually by (i) the vote of a majority of the Board of
Directors of the Company 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 Directors who are not
"interested persons" (as defined in the 1940 Act) of any party to
this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable,
without penalty, on sixty (60) days' written notice by the Board
of Directors of the Company or by vote of holders of a "majority"
(as defined in the 1940 Act) of the Fund's shares or upon ninety
(90) days' written notice by the Adviser. 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 shall be changed, waived,
discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, and no
amendment of this Agreement shall be effective until approved by
an affirmative vote of (i) a majority of the outstanding voting
securities of the Fund, and (ii) a majority of the Directors of
the Company, including a majority of Directors 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 Adviser and its affiliates, and that the
Fund has the right to use such name (or derivable or logo) only so
long as this Agreement shall continue with respect to the Fund.
Upon termination of this Agreement, the Fund shall forthwith cease
to use such name (or derivative or logo) and shall promptly amend
its Articles of Incorporation to change its name to comply
herewith.
13. Miscellaneous
(a) This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter
hereof.
(b) Titles or captions of sections contained in this
Agreement are inserted only as a matter of convenience and for
reference, and in no way define, limit, extend or describe the
scope of this Agreement or the intent of any provisions thereof.
(c) This Agreement may be executed in several
counterparts, all of which together shall for all purposes
constitute one Agreement, binding on all the parties.
(d) This Agreement and the rights and obligations of the
parties hereunder shall be governed by, and interpreted, construed
and enforced in accordance with the laws of the State of Michigan.
(e) If any provisions of this Agreement or the application
thereof to any party or circumstances shall be determined by any
court of competent jurisdiction to be invalid or unenforceable to
any extent, the remainder of this Agreement or the application of
such provision to such person circumstance, other than these as to
which it is so determined to be invalid or unenforceable, shall
not be affected thereby, and each provision hereof shall be valid
and shall be enforced to the fullest extent permitted by law.
(f) Notices of any kind to be given to the Adviser by the
Company shall be in writing and shall be duly given if mailed or
delivered to the Adviser at 480 Pierce Street, Birmingham,
Michigan 48009, or at such other address or to such individual as
shall be specified by the Adviser to the Company. Notices of any
kind to be given to the Company by the Adviser shall be in writing
and shall be duly given if mailed or delivered to 480 Piece
Street, Birmingham, Michigan 48009, or at such the address or to
such individual as shall be specified by the Company to the
Adviser.
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, INC.
By:
MUNDER CAPITAL MANAGEMENT
By:
Ex.
6(e)
FORM OF
NOTICE TO UNDERWRITING AGREEMENT
Funds Distributor, Inc.
One Exchange Place
Boston, Massachusetts, 02109
Gentlemen:
Reference is made to the Underwriting Agreement between us
dated as of January 13, 1995 (the "Agreement").
Pursuant to the Agreement, this letter is to provide notice
of the creation of an additional investment portfolio of The
Munder Funds, Inc., The Munder Short Term Treasury Fund (the "New
Portfolio").
We request that you act as Underwriter under the Agreement
with respect to the New Portfolio.
If the foregoing is in accordance with your understanding,
please so indicate by signing and returning to us the enclosed
copy hereof.
Very truly yours,
The Munder Funds, Inc.
By:
Accepted:
Funds Distributor, Inc.
Date: By:
Ex.
8(e)
FORM OF
NOTICE TO CUSTODY AGREEMENT
Comerica Bank
One Detroit Center
500 Woodward Avenue
Detroit, Michigan 48226
Gentlemen:
Reference is made to the Custody Agreement between us dated
as of May 1, 1995 (the "Agreement").
Pursuant to the Agreement, this letter is to provide notice
of the creation of an additional investment portfolio of The
Munder Funds, Inc., The Munder Short Term Treasury Fund (the "New
Portfolio").
We request that you act as Custodian under the Agreement
with respect to the New Portfolio.
If the foregoing is in accordance with your understanding,
please so indicate by signing and returning to us the enclosed
copy hereof.
Very truly yours,
The Munder Funds, Inc.
By:
Accepted:
Comerica Bank
Date: By:
Ex.
9(e)
FORM OF
NOTICE TO TRANSFER AGENCY AND REGISTRAR AGREEMENT
First Data Investor Services Group, Inc.
One Exchange Place
Boston, Massachusetts, 02109
Gentlemen:
Reference is made to the Transfer Agency and Registrar
Agreement between us dated as of June 19, 1995 (the "Agreement").
Pursuant to the Agreement, this letter is to provide notice
of the creation of an additional investment portfolio of The
Munder Funds, Inc., The Munder Short Term Treasury Fund (the "New
Portfolio").
We request that you act as Transfer Agent under the
Agreement with respect to the New Portfolio.
If the foregoing is in accordance with your understanding,
please so indicate by signing and returning to us the enclosed
copy hereof.
Very truly yours,
The Munder Funds, Inc.
By:
Accepted:
First Data Investor Services Group, Inc.
Date: By:
Ex.
9(j)
FORM OF
NOTICE TO ADMINISTRATION AGREEMENT
First Data Investor Services Group, Inc.
One Exchange Place
Boston, Massachusetts 02109
Gentlemen:
Reference is made to the Administration Agreement between us
dated as of May 1, 1995 (the "Agreement").
Pursuant to the Agreement, this letter is to provide notice
of the creation of an additional investment portfolio of The
Munder Funds, Inc., The Munder Short Term Treasury Fund (the "New
Portfolio")
We request that you act as Administrator under the Agreement
with respect to the New Portfolio.
If the foregoing is in accordance with your understanding,
please so indicate by signing and returning to us the enclosed
copy hereof.
Very truly yours,
The Munder Funds, Inc.
By:
Accepted:
First Data Investor Services Group, Inc.
Date: By:
Ex. 10(h)
December 12, 1996
The Munder Funds, Inc.
480 Pierce Street
Birmingham, MI 48009
Dear Sirs:
In connection with the registration under the Securities Act
of 1933 of an indefinite number of shares of common stock (the
"Shares") of Munder Short Term Treasury Fund (the "Fund"), which
is a series of The Munder Funds, Inc. (the "Company"), we have
examined such matters as we have deemed necessary, and we are of
the opinion that, as permitted by its Articles of Incorporation,
and assuming that the Company or its agent receives consideration
of the Shares in accordance with the provisions of its Articles of
Incorporation, the Shares will be legally and validly issued, will
be fully paid, and will be non-assessable by the Company.
We hereby consent to the use of this opinion as an exhibit
to Post-Effective Amendment No. 21 to the Company's Registration
Statement on Form N-1A filed with the Securities and Exchange
Commission (File No. 33-54748), and to the use of our name in the
prospectuses and statement of additional information contained
therein or incorporated therein by reference, and any amendments
thereto.
Very truly yours,
/s/ Dechert Price & Rhoads
Dechert Price & Rhoads
shared/bankgrp/munder/secltrs/opinion.doc
Ex. 16
THE MUNDER FUNDS, INC.
Schedule of Computation
(Exhibit 16)
1. 30-Day SEC Yield:
Formula: 2*(((A - B + 1)/(C*D)) + 1)^6 - 1)
A = interest earned during the period
B = expenses accrued during the period
C = average fund shares outstanding during
the period
D = maximum offering price per share on
the last day of the period
2. Average Annual Total Return:
Formula: P(1 + T)n = ERV
T = average annual total return
ERV = ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the 1, 5 or
10 year (or other) periods at the end of the applicable period (or
a fractional portion thereof);
P = hypothetical initial payment
of $1,000; and
n = period covered by the
computation, expressed in years and portion of a year
3. Aggregate Total Return:
Formula: (ERV/P) - 1
