As filed with the Securities and Exchange Commission
on August 14, 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. 18 [ X ]
----
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940[ X ]
Amendment No. 20 [ 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 R. 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
October 28, 1996 pursuant to paragraph (a)(2) 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 will file
the notice required by Rule 24f-2 with respect to its fiscal year
ended June 30, 1996 on or before August 29, 1996.
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Equity Funds 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 Financial
Highlights
4. General Description of Registrant Cover Page;
Prospectus Summary; Investment Objectives 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
(Income Funds 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 <R/>Financial
Highlights[/R]
4. General Description of Registrant Cover Page;
Prospectus Summary; Investment Objectives and Policies; Portfolio
Instruments and Practices and Associated Risk Factors; Description
of Shares
5. Management of the Fund Management;
Investment Objectives 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
(Money Market Funds 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 Financial
Highlights
4. General Description of Registrant Cover Page;
Prospectus Summary; Investment Objectives and Policies; Portfolio
Instruments and Practices and Associated Risk Factors; Description
of Shares
5. Management of the Fund Management;
Investment Objectives 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
(Class K Shares)
Part A
- ------
Item Heading
---- -------
1. Cover Page Cover Page
2. Synopsis Expense
Table;
The Fund
3. Condensed Financial Information
Financial
Highlights
4. General Description of Registrant Cover Page; The
Fund; Investment Objectives and Policies; Portfolio Instruments
and Practices and Associated Risk Factors; Description of
Shares
5. Management of the Fund Management;
Investment Objectives 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
(Class Y Shares)
Part A
- ------
Item Heading
---- -------
1. Cover Page Cover Page
2. Synopsis The Fund;
Expense Table
3. Condensed Finanial Information
Financial
Highlights
4. General Description of Registrant Cover Page; The
Fund; Investment Objectives and Policies; Portfolio Instruments
and Practices and Associated Risk Factors; Description of
Shares
5. Management of the Fund Management;
Investment Objectives 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 --
"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 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 Distribution
of Fund Shares
22. Calculation of Performance Data Performance
Information
23. Financial Statements Financial
Statements
THE MUNDER FUNDS, INC.
The purpose of this Post-Effective Amendment filing is to
add three new portfolios to the Company's Registration Statement,
namely The Munder Small-Cap Value Fund, The Munder Micro-Cap
Equity Fund and The Munder Equity Selection Fund.
<PAGE>
PROSPECTUS
CLASS A, CLASS B AND CLASS C SHARES
The Munder Funds Trust (the "Company") is an open-end investment company (a
mutual fund) that currently offers a selection of fifteen investment portfolios.
The Munder Funds, Inc. ("Munder") is an open-end investment company that
currently offers ten investment portfolios. This Prospectus describes six
investment portfolios offered by the Company (the "Munder Funds") and seven
investment portfolios offered by Munder (the "MFI Funds") described below
(collectively, the "Funds"):
Munder Multi-Season Growth Fund*
Munder Real Estate Equity Investment Fund*
Munder Accelerating Growth Fund
Munder Small Company Growth Fund
Munder Mid-Cap Growth Fund
Munder International Equity Fund
Munder Index 500 Fund**
Munder Growth & Income Fund
Munder Value Fund
Munder Balanced Fund
Munder Small-Cap Value Fund
Munder Equity Selection Fund
Munder Micro-Cap Equity Fund
* Class C Shares of the Multi-Season Growth Fund and the Real Estate Equity
Investment Fund were formerly known as Class D Shares.
**Class C Shares of the Index 500 Fund are not currently available for
purchase.
Munder Capital Management (the "Advisor") serves as the investment advisor
of the Funds.
This Prospectus sets forth concisely information that a prospective investor
should know before investing. Investors are encouraged to read this Prospectus
and retain it for future reference. A Statement of Additional Information dated
___________, 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 Funds at (800) 438-5789.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR
ENDORSED BY ANY BANK, AND ARE NOT INSURED OR GUARANTEED BY
THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING
THE POSSIBLE LOSS
OF PRINCIPAL.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED
OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is _________, 1996.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary..................... 3
The Funds
Expense Table......................... 7
Financial Highlights.................. 12
Investment Objectives and Policies.... 29
Portfolio Instruments and Practices
and Associated Risk Factors......... 39
Investment Limitations................ 46
How to Do Business with Us
How to Purchase Shares................ 47
How to Redeem Shares.................. 53
Conversion of Class B Shares.......... 58
How to Exchange Shares................ 59
Dividends and Distributions........... 60
Other Information
Net Asset Value....................... 61
Management............................ 61
Taxes................................. 66
Description of Shares................. 67
Performance........................... 68
Shareholder Account Information....... 69
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION, OR TO
MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE
FUNDS' STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN
CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUNDS
OR FUNDS DISTRIBUTOR, INC. (THE "DISTRIBUTOR"). THIS PROSPECTUS
DOES NOT
CONSTITUTE AN OFFERING BY THE FUNDS OR BY THE DISTRIBUTOR IN
ANY JURISDICTION IN
WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing in this Prospectus.
INVESTMENT OBJECTIVES
Each Fund, other than the Growth & Income Fund, Index 500 Fund and Balanced
Fund, seeks capital appreciation. The Growth & Income Fund seeks capital
appreciation and current income by investing primarily in dividend-paying equity
securities. The Index 500 Fund seeks to provide price performance and income
that is comparable to the Standard & Poor's 500 Composite Stock Index ("S&P
500"). The Balanced Fund seeks to provide an attractive investment return
through a combination of growth of capital and current income. The Real Estate
Equity Investment Fund seeks capital appreciation and current income by
investing primarily in securities of United States companies which are
principally engaged in the real estate industry or own significant real estate
assets. The Accelerating Growth Fund, International Equity Fund, Small Company
Growth Fund, Multi-Season Growth Fund, Mid-Cap Growth Fund, Value Fund, Small-
Cap Value Fund, Equity Selection Fund and Micro-Cap Equity Fund seek to provide
shareholders long-term capital appreciation.
PRINCIPAL INVESTMENTS
The Funds, other than the Balanced Fund, invest primarily in equity
securities, with each Fund implementing a different investment strategy. The
Balanced Fund allocates its assets primarily among three major asset groups:
equity securities, fixed income securities and cash equivalents.
INVESTMENT PROGRAM
The Multi-Season Growth Fund invests primarily in a diversified portfolio of
equity securities of companies that have demonstrated superior long-term
earnings growth, financial stability, attractive valuation and relative price
momentum. The Real Estate Equity Investment Fund invests primarily in securities
of United States companies which are principally engaged in the real estate
industry or which own significant real estate assets. The Accelerating Growth
Fund emphasizes stocks of companies, determined by the Advisor to demonstrate
accelerating earnings growth and which are expected to continue expanding
earnings at an accelerated pace, maintain a substantial competitive advantage,
have a focused management team and a stable balance sheet. The Small Company
Growth Fund focuses on stocks of smaller companies with the potential for
significant long-term capital appreciation. The Mid-Cap Growth Fund invests
primarily in a diversified portfolio of equity securities of companies that have
market capitalizations that range between $100 million and $5 billion and have
demonstrated superior earnings growth, financial stability, attractive valuation
and relative price momentum. The International Equity Fund invests primarily in
the equity securities of foreign companies selected for their long-term growth
potential. The Index 500 Fund invests in a portfolio of stocks constructed to
provide price performance and income to track the market as represented by the
S&P 500. The Growth & Income Fund invests in a broadly diversified portfolio of
dividend-paying stocks whose prospects for dividend growth and capital
appreciation are considered favorable by the Advisor. The Value Fund invests in
a diversified portfolio of equity securities of well-established companies with
intermediate to large market capitalizations which the Advisor believes to be
undervalued at the time of purchase. The Balanced Fund allocates its assets
primarily among equity securities, fixed income securities and cash equivalents
to provide growth of capital and current income. The Small-Cap Value Fund and
Micro-Cap Equity Fund each invest primarily in equity securities of smaller
companies with market capitalizations that are less than the capitalization of
companies which predominate the major market indices, such as the S&P 500. The
3
<PAGE>
Equity Selection Fund invests in equity securities that are deemed to be of high
quality and that are undervalued compared to equity securities of other
companies in the same industry. See "Investment Objectives and Policies."
INVESTMENT RISKS AND SPECIAL CONSIDERATIONS
A Fund's performance and price per Share will change daily based on many
factors, including interest rate levels, the quality of the instruments in each
Fund's investment portfolio, national and international economic conditions, the
overall level of equity prices, general market conditions and international
exchange rates. Depending on these factors, the net asset value of each Fund may
decrease instead of increase. Certain Funds may seek to achieve their investment
objectives through investments in securities of foreign issuers (that involve
risks not typically associated with U.S. issuers), instruments below or with the
lowest investment grade ratings which have speculative characteristics, and
certain options and futures strategies. The Multi-Season Growth Fund, Small
Company Growth Fund and Mid-Cap Growth Fund may invest in the securities of
emerging growth companies, which may involve greater price volatility and risk
than those incurred by funds that do not invest in such companies. The Small-Cap
Value Fund and the Micro-Cap Equity Fund each invests primarily in small
capitalization companies which are typically subject to a greater degree of
change in earnings and business prospects than larger, more established
companies. In addition, the Real Estate Equity Investment Fund invests primarily
in the real estate industry and could conceivably own real estate directly as a
result of a default on debt securities it owns. The Fund, therefore, may be
subject to certain risks associated with the direct ownership of real estate.
There is no assurance that any Fund will achieve its investment objective. See
"Portfolio Instruments and Practices 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 Funds also
offer two additional classes of Shares, Class K Shares and Class Y Shares. These
classes of the Funds may have different sales charges and expense levels, which
may affect performance. Investors may call the Funds 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 5.50% with
respect to each Fund, other than the Index 500 Fund. Class A Shares of each
Fund, other than the Index 500 Fund, pay a shareholder servicing fee at the
annual rate of 0.25% of the value of average daily net assets. Class A Shares of
the Index 500 Fund are offered at net asset value plus a maximum initial sales
charge of 2.50%. Class A Shares of the Index 500 Fund pay a shareholder
servicing fee at the annual rate of 0.10% of the value of average daily net
assets. See "How to Purchase Shares."
CLASS B SHARES
Offered at net asset value per share, subject to a contingent deferred sales
charge ("CDSC") imposed on certain redemptions made within six years of the
date of purchase at the maximum rate of 5.00% of the lesser of the Shares' net
asset value or original purchase price with respect to each Fund, other than the
Index 500 Fund. Class B Shares of each Fund, other than the Index 500 Fund, are
subject to shareholder servicing and distribution fees at the annual rate of
1.00% of the value of average daily net assets. Class B Shares of the Index 500
Fund are
4
<PAGE>
offered at asset value per share, subject to a CDSC imposed on certain
redemptions made within six years of the date of purchase at a maximum rate of
3.00% of the lesser of the Shares' net asset value or original purchase price.
Class B Shares of the Index 500 Fund are subject to shareholder servicing and
distribution fees (Rule 12b-1 fees) at the annual rate of .45% of the value of
average daily net assets. Class B Shares will convert automatically to Class A
Shares, based on relative net asset value, at the end of six years after the
date of original purchase. See "How to Purchase Shares."
CLASS C SHARES
Offered at net asset value per share, subject to a CDSC imposed on certain
redemptions made within one year of the date of purchase at the rate of 1.00% of
the lesser of the Shares' net asset value or original purchase price. Class C
Shares of each Fund are subject to shareholder servicing and distribution fees
at the annual rate of 1.00% of the value of average daily net assets.
PURCHASING SHARES
The Shares of each of the Funds are offered continuously and may be purchased
from the Distributor through certain broker-dealers and other financial
institutions or through First Data Investor Services Group, Inc. (the "Transfer
Agent"). The Shares are subject to the applicable sales charge or CDSC. See
"How to Purchase Shares."
MINIMUM INVESTMENT
$1,000 minimum investment ($50 through Automatic Investment Plan). $50 minimum
for subsequent purchases.
EXCHANGE PRIVILEGES
Shares may be exchanged for shares of the same Class of other funds of the
Company and Munder, subject to any applicable sales charges. 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.
<TABLE>
<CAPTION>
OTHER FEATURES
Class A Shares Class B Shares Class C Shares
- --------------------------- ------------------------- ------------------------
<S> <C> <C>
Automatic Investment Plan Automatic Investment Plan Automatic Investment
Plan
Automatic Withdrawal Plan Automatic Withdrawal Plan Automatic Withdrawal
Plan
Retirement Plans Retirement Plans Retirement Plans
Telephone Exchanges Telephone Exchanges Telephone Exchanges
Rights of Accumulation Reinvestment Privilege Reinvestment Privilege
Letter of Intent
Quantity Discounts
Reinvestment Privilege
</TABLE>
5
<PAGE>
DIVIDENDS AND OTHER DISTRIBUTIONS
Dividends from net investment income are declared and paid quarterly for all
Funds, except the Multi-Season Growth Fund, Mid-Cap Growth Fund, International
Equity Fund, Value Fund, Small-Cap Value Fund, Micro-Cap Equity Fund and Equity
Selection Fund, which declare and pay dividends at least annually, and the Real
Estate Equity Investment Fund which declares and pays dividends monthly. Capital
gains, if any, are distributed at least annually.
NET ASSET VALUE
Determined once daily on each Business Day (as defined below).
REDEEMING SHARES
Class A Shares of the Funds may be redeemed at net asset value by mail or
telephone. Certain redemptions of Class A Shares may be subject to a CDSC. Class
B Shares and Class C Shares are redeemable at net asset value less any
applicable CDSC by mail or telephone. See "How to Redeem Shares."
INVESTMENT ADVISOR
As investment advisor for the Funds, Munder Capital Management, provides
overall investment management for each Fund, provides research and credit
analysis, is responsible for all purchases and sales of portfolio securities,
maintains records relating to such purchases and sales, and provides reports to
the Company's Board of Trustees and Munder's Board of Directors. See
"Management--Investment Advisor."
DISTRIBUTOR
Funds Distributor, Inc.
6
<PAGE>
EXPENSE TABLE
The tables below set forth certain information concerning shareholder
transaction expenses and projected annual operating expenses for the Shares of
the Funds that investors will incur, either directly or indirectly, as
shareholders of the Funds for the current fiscal year. The expense information
in the tables has been restated with respect to the Multi-Season Growth Fund and
Index 500 Fund to reflect anticipated fees and waivers. The Small-Cap Value
Fund, the Equity Selection Fund and the Micro-Cap Equity Fund did not commence
operations until _____________, 1996 and therefore the expense information set
forth below is based on estimated operating expenses for each Fund.
<TABLE>
<CAPTION>
Class A Shares
------------------------------------------
Real
Multi- Estate Small Small-
Micro-
Season Equity Accelerating Company Mid-Cap Cap
Equity Cap
Growth Investment Growth Growth Growth
Value Selection Equity
Fund Fund Fund Fund Fund Fund
Fund Fund
------ ---------- ------------ ------- ------- ------ ---------
- ------
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Shareholder transaction expenses:
Maximum sales load on purchases*....... 5.50% 5.50% 5.50% 5.50%
5.50% 5.50% 5.50% 5.50%
Maximum sales load on reinvested
dividends............................. None None None None None None
None None
Maximum contingent deferred sales
charge**................................ None None None None None None
None None
Redemption fees........................ None None None None None
None None None
Exchange Fees.......................... None None None None None
None None None
Annual Fund operating expenses:
(as a percentage of average net assets)
Advisory fees.......................... .75%+ .74% .75% .75% .74%
.75% .75% 1.00%
12b-1 fees............................. .25% .25% .25% .25% .25% .25%
.25% .25%
Other expenses......................... .26% .26% .20% .21% .21%
.25% .25% .25%
---- ---- ----- ---- ---- ---- ---- ---
- -
Total fund operating expenses.......... 1.26%+ 1.25% 1.20% 1.21%
1.20% 1.25% 1.25% 1.50%
==== ==== ===== ==== ==== ====
==== ====
Class A Shares
------------------------------------------
Inter-
national Index Growth &
Equity 500 Income Value Balanced
Fund Fund Fund Fund Fund
-------- ----- -------- ----- --------
Shareholder transaction expenses:
Maximum sales load on purchases*....... 5.50% 2.50% 5.50%
5.50% 5.50%
Maximum sales load on reinvested
dividends............................. None None None None None
Maximum contingent deferred sales
charge ** ............................ None None None None None
Redemption fees........................ None None None None
None
Exchange Fees.......................... None None None None
None
Annual Fund operating expenses:
(as a percentage of average net assets)
Advisory fees.......................... .75% .07%+ .75% .74%
.65%
12b-1 fees............................. .25% .10%+ .25% .25% .25%
Other expenses......................... .26% .19% .21% .21%
.25%
------ ----- ---- ---- ----
Total fund operating expenses.......... 1.26% .36%+ 1.21% 1.20%
1.15%
====== ===== ==== ==== ====
</TABLE>
- --------------------
*Maximum sales load applicable to Class A Shares. Reductions and waivers of
sales loads are described under "How to Purchase Shares."
**A deferred sales charge of 1.00% is assessed on certain redemptions of Class
A Shares of the Funds, other than the Index 500 Fund, that are purchased with
no initial sales charge as part of an investment of $1,000,000 or more. A
deferred sales charge of 1.00% is assessed on certain redemptions of Class A
Shares of the Munder Funds purchased on or before June 27, 1995 as part of an
investment of $500,000 or more. A deferred sales charge of up to 0.20% is
assessed on certain redemptions of Class A Shares of the Index 500 Fund that
are purchased with no initial sales charge as part of an investment of
$500,000 or more. See "How to Redeem Shares."
+Reflects waivers as described on page 11. Without waivers, the ratio of
advisory fees to average net assets would be 1.00% for the Multi-Season
Growth Fund and .20% for the Index 500 Fund; the ratio of 12b-1 fees to
average net assets would be .25% for the Index 500 Fund. Without waivers,
total fund operating expenses would be 1.51% for the Multi-Season Growth Fund
and 0.64% for the Index 500 Fund.
7
<PAGE>
<TABLE>
<CAPTION>
Class B Shares
--------------------------------------
Real
Multi- Estate Small- Small-
Micro-
Season Equity Accelerating Cap Mid-Cap Cap
Equity Cap
Growth Investment Growth Growth Growth
Value Selection Equity
Fund Fund Fund Fund Fund Fund
Fund Fund
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Shareholder transaction expenses:
Maximum sales load on purchases............. None None None None
None None None None
Maximum sales load on reinvested dividends.. None None None None
None None None None
Maximum contingent deferred sales charge++.. 5.00% 5.00% 5.00% 5.00%
5.00% 5.00% 5.00% 5.00%
Redemption fees............................. None None None None None
None None None
Exchange fees............................... None None None None None
None None None
Annual Fund operating expenses:
Advisory fees............................... .75%+ .74% .75% .75% .74%
.75% .75% 1.00%
12b-1 fees.................................. 1.00% 1.00% 1.00% 1.00% 1.00%
1.00% 1.00% 1.00%
Other expenses.............................. .26% .26% .20% .21% .21%
.25% .25% .25%
---- ---- ---- ---- ---- ---- ---- ----
Total fund operating expenses............... 2.01%+ 2.00% 1.95% 1.96%
1.95% 2.00% 2.00% 2.25%
==== ==== ==== ==== ==== ====
==== ====
</TABLE>
<TABLE>
<CAPTION>
Class B Shares
--------------------------------------
Inter-
national Index Growth &
Equity 500 Income Value Balanced
Fund Fund Fund Fund Fund
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Shareholder transaction expenses:
Maximum sales load on purchases............. None None None None
None
Maximum sales load on reinvested dividends.. None None None None
None
Maximum contingent deferred sales charge++.. 5.00% 3.00% 5.00% 5.00%
5.00%
Redemption fees............................. None None None None None
Exchange fees............................... None None None None None
Annual Fund operating expenses:
(as a percentage of average net assets)
Advisory fees............................... .75% .07%+ .75% .74% .65%
12b-1 fees.................................. 1.00% .45%+ 1.00% 1.00% 1.00%
Other expenses.............................. .26% .19% .21% .21% .25%
---- ---- ---- ---- ----
Total fund operating expenses............... 2.01% .71%+ 1.96% 1.95%
1.90%
==== ==== ==== ==== ====
</TABLE>
- -----------
+Reflects waivers as described on page 11. Without waivers, the ratio of
advisory fees to average net assets would be 1.00% for the Multi-Season Growth
Fund and .20% for the Index 500 Fund; the ratio of 12b-1 fees to average net
assets would be 1.00% for the Index 500 Fund. Without waivers, total fund
operating expenses would be 2.26% for the Multi-Season Growth Fund and 1.39%
for the Index 500 Fund.
++Maximum CDSC applicable to Class B Shares. Class B Shares of the Munder Funds
purchased on or before June 27, 1995 are subject to a different CDSC schedule.
See "How to Redeem Shares--Contingent Deferred Sales Charge--Class B
Shares." Waivers of CDSC are described under "How to Redeem Shares."
Because of the Rule 12b-1 fees paid by the Funds as shown in the above tables,
long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc.
8
<PAGE>
<TABLE>
<CAPTION>
Class C Shares
------------------------------------------------------------------------
- -----
Real Estate Small
Multi-Season Equity Accelerating Company
Mid-Cap
Growth Investment Growth Growth
Growth
Fund Fund Fund Fund Fund
------------ ------------ ------------ ------- -------
<S> <C> <C> <C> <C>
<C>
Shareholder transaction expenses:
Maximum sales load on purchases............. None None None
None None
Maximum sales load on reinvested dividends.. None None None
None None
Maximum contingent deferred sales charge*... 1.00% 1.00% 1.00%
1.00% 1.00%
Redemption fees............................. None None None None
None
Exchange fees............................... None None None None
None
Annual operating expenses
(as a percentage of average net assets)
Advisory fees............................... .75%+ .74% .75% .75%
.74%
12b-1 fees.................................. 1.00% 1.00% 1.00% 1.00%
1.00%
Other expenses.............................. .26% .26% .20% .21%
.21%
---- ---- ---- ---- ----
Total fund operating expenses............... 2.01%+ 2.00% 1.95%
1.96% 1.95%
==== ==== ===== ====
====
</TABLE>
<TABLE>
<CAPTION>
Small- Micro-
Cap Equity Cap
Value Selection Equity
Fund Fund Fund
----- --------- ------
<S> <C> <C> <C>
Shareholder transaction expenses:
Maximum sales load on purchases............. None None None
Maximum sales load on reinvested dividends.. None None None
Maximum contingent deferred sales charge*... 1.00% 1.00% 1.00%
Redemption fees............................. None None None
Exchange fees............................... None None None
Annual operating expenses
(as a percentage of average net assets)
Advisory fees............................... .75% .75% 1.00%
12b-1 fees.................................. 1.00% 1.00% 1.00%
Other expenses.............................. .25% .25% .25%
---- ---- ----
Total fund operating expenses............... 2.00% 2.00% 2.25%
==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
Class C Shares
------------------------------------------------------------------------
- -----
Growth &
International Index 500 Income Value
Balanced
Equity Fund Fund Fund Fund
Fund
------------- --------- -------- ----- --------
<S> <C> <C> <C> <C>
<C>
Shareholder transaction expenses:
Maximum sales load on purchases............. None None None
None None
Maximum sales load on reinvested dividends.. None None None
None None
Maximum contingent deferred sales charge*... 1.00% 1.00% 1.00%
1.00% 1.00%
Redemption fees............................. None None None None
None
Exchange fees............................... None None None None
None
Annual operating expenses:
(as a percentage of average net assets)
Advisory fees............................... .75% .07%+ .75% .74%
.65%
12b-1 fees.................................. 1.00% 1.00% 1.00% 1.00%
1.00%
Other expenses.............................. .26% .18% .21% .21%
.25%
---- ---- ---- ---- ----
Total fund operating expenses............... 2.01% 1.25%+ 1.96%
1.95% 1.90%
==== ==== ==== ====
====
</TABLE>
- --------------------
*A deferred sales charge of 1.00% is assessed on redemptions of Class C Shares
made within the first year of investing.
+Reflects advisory fees after waivers. Without waivers, the ratio of advisory
fees to average net assets would be 1.00% for the Multi-Season Growth Fund and
.20% for the Index 500 Fund. Without waivers, total fund operating expenses
would be 2.26% for the Multi-Season Growth Fund and 1.39% for the Index 500
Fund. Waivers are described on page 11.
Because of the Rule 12b-1 fees paid by the Funds as shown in the above tables,
long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc.
The initial sales charge applicable to Class A Shares set forth in the above
tables 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 Share set forth in the above tables 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 tables 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 Funds' legal existence and
the costs involved with communicating with shareholders. With respect to each
Fund, the amount of "Other Expenses" in the tables above is based on estimated
expenses and projected assets for the current fiscal year. See "Management" in
this Prospectus and the financial statements and related notes incorporated by
reference in the Statement of Additional Information for a further description
of the Funds' operating expenses and of the nature of the services for which a
9
<PAGE>
Fund is obligated to pay advisory fees. Any fees charged by institutions
directly to customer accounts for services provided in connection with
investments in shares of the Funds are in addition to the expenses shown in the
above Expense Table and the Example shown below. The Transfer Agent may deduct a
wire redemption fee of $7.50 for wire redemptions under $5,000.
EXAMPLE
The following examples demonstrate the projected dollar amount of total
cumulative expenses that would be incurred over various periods with respect to
a hypothetical investment in the Funds. These amounts are based on payments by
the Funds of operating expenses at the levels set forth in the above tables and
are also based on the following assumptions:
An investor would pay the following expenses on a $1,000 investment in Class A
Shares (subject to the applicable sales load), assuming (1) a hypothetical 5%
annual return and (2) redemption at the end of the following time periods:
<TABLE>
<CAPTION>
Class A Shares
----------------------------------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Multi-Season Growth Fund............ $67 $ 93 $120 $199
Real Estate Equity Investment Fund.. $67 $ 93 $120 $198
Accelerating Growth Fund............ $67 $ 91 $117 $193
Small Company Growth Fund........... $67 $ 91 $118 $194
Mid-Cap Growth Fund................. $67 $ 91 $118 $193
International Equity Fund........... $67 $ 93 $120 $199
Index 500 Fund...................... $29 $ 36 $ 45 $ 69
Growth & Income Fund................ $67 $ 91 $112 $194
Value Fund.......................... $67 $ 91 $118 $193
Balanced Fund....................... $66 $ 90 $115 $187
Small-Cap Value Fund................ $67 $ 93 N/A N/A
Equity Selection Fund............... $67 $ 93 N/A N/A
Micro-Cap Equity Fund............... $69 $100 N/A N/A
</TABLE>
An investor would pay the following expenses on a $1,000 investment in Class B
Shares (subject to the applicable CDSC), assuming (1) a hypothetical 5% annual
return and (2) redemption at the end of the following time periods and (3) no
redemption at the end of the following periods:
<TABLE>
<CAPTION>
Class B Shares
--------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years*
----------------- ----------------- ----------------- -----------------
Redemp- No Re- Redemp- No Re- Redemp- No Re- Redemp-
No Re-
tion demption tion demption tion demption tion demption
------- -------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Multi-Season Growth Fund... $70 $20 $ 113 $63 $158 $108 $152
152
Real Estate Equity
Investment Fund.......... $70 $20 $ 113 $63 $158 $108 $151
$151
Accelerating Growth Fund... $70 $20 $ 111 $61 $155 $105 $145
$145
Small Company Growth
Fund..................... $70 $20 $ 112 $62 $156 $106 $147 $147
Mid-Cap Growth Fund........ $70 $20 $ 111 $61 $155 $105 $145
$145
International Equity Fund.. $70 $20 $1132 $63 $158 $108 $152
$152
Index 500 Fund............. $37 $ 7 $ 53 $23 $ 70 $409 $ 46 $ 46
Growth & Income Fund....... $70 $20 $ 112 $62 $156 $105 $147
$147
Value Fund................. $70 $20 $ 111 $61 $155 $103 $145 $145
Balanced Fund.............. $69 $19 $ 110 $60 $153 $103 $140
$140
Small-Cap Value Fund....... $70 $20 $ 113 $63 N/A N/A N/A
N/A
Equity Selection Fund...... $70 $20 $ 113 $63 N/A N/A N/A
N/A
Micro-Cap Equity Fund...... $73 $23 $ 120 $70 N/A N/A N/A
N/A
- -----------
</TABLE>
*Reflects conversion of Class B Shares to Class A Shares (which pay lower
ongoing expenses) six years after purchase. See " How to Redeem Shares--
Contingent Deferred Sales Charge--Class B Shares." Class B Shares of the Munder
Funds purchased on or before June 27, 1995 are subject to a different CDSC
schedule. See " How to Redeem Shares--Contingent Deferred Sales Charge--Class B
Shares."
10
<PAGE>
An investor would pay the following expenses on a $1,000 investment in Class C
Shares (subject to the applicable CDSC), assuming (1) a hypothetical 5% annual
return and (2) redemption at the end of the following time periods.
<TABLE>
<CAPTION>
Class C Shares
----------------------------------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Multi-Season Growth Fund............ $ 0 $63 $108 $234
Real Estate Equity Investment Fund.. $30 $63 $108 $233
Accelerating Growth Fund............ $30 $61 $105 $227
Small Company Growth Fund........... $30 $62 $106 $229
Mid-Cap Growth Fund................. $30 $61 $105 $227
International Equity Fund........... $30 $62 $108 $234
Index 500 Fund...................... $23 $40 $ 69 $151
Growth & Income Fund................ $30 $62 $106 $229
Value Fund.......................... $30 $61 $105 $227
Balanced Fund....................... $29 $60 $103 $222
Small-Cap Value Fund................ $30 $63 N/A N/A
Equity Selection Fund............... $30 $63 N/A N/A
Micro-Cap Equity Fund............... $33 $70 N/A N/A
</TABLE>
Because of the Rule 12b-1 fees paid by the Funds as shown in the above tables,
long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc.
The foregoing Expense Tables and Examples are intended to assist investors in
understanding the various shareholder transaction expenses and operating
expenses of the Funds that investors bear, either directly or indirectly. The
expense information in the table with respect to the Multi-Season Growth Fund
and Index 500 Fund has been restated to reflect anticipated fees and waivers. As
stated below under "Management," the Advisor has agreed to an advisory fee
computed separately on a Fund-by-Fund basis at an annual rate of 1.00% of the
first $500 million of the average daily net assets and .75% of net assets in
excess of $500 million of the Multi-Season Growth Fund; 1.00% of average daily
net assets of the Micro-Cap Equity Fund; .75% of average daily net assets of
each the Accelerating Growth Fund, Small Company Growth Fund, International
Equity Fund, Growth & Income Fund, Small-Cap Value Fund, and Equity Selection
Fund; .74% of the average daily net assets of each the Real Estate Equity
Investment Fund, Mid-Cap Growth Fund and Value Fund; .65% of average daily net
assets of the Balanced Fund; and .20% of the first $250 million of the average
daily net assets, .12% of the next $250 million of net assets and .07% of net
assets in excess of $500 million of the Index 500 Fund. As noted above, the
Advisor expects to waive a portion of its fees with respect to the Multi-Season
Growth Fund and Index 500 Fund during the current fiscal year. Class A Shares of
the Index 500 Fund pay a Rule 12b-1 fee of up to .25% of the value of average
daily net assets. Class B Shares of the Index 500 Fund pay a Rule 12b-1 fee of
up to 1.00% of the value of average daily net assets. The Distributor expects to
waive a portion of the Rule 12b-1 fees with respect to Class A and Class B
Shares of the Index 500 Fund during the current fiscal year. The Advisor and the
Distributor may discontinue such waivers at any time in their sole discretion.
Without waivers, an investor in the Multi-Season Growth Fund and Index 500 Fund
would pay the following expenses on a $1,000 investment over periods of one,
three, five and ten years, respectively, assuming a hypothetical 5% annual
return: $70, $100, $133 and $226 for Class A Shares of the Multi-Season Growth
Fund and $30, $42, $54 and $91 for Class A Shares of the Index 500 Fund,
assuming the maximum sales load and redemption at the end of each time period;
$73, $121, $171 and $226 for Class B Shares of the Multi-Season Growth Fund and
$39, $58, $79 and $91 for Class B Shares of the Index 500 Fund, assuming
redemption at the end of each time period and deduction at the time of
redemption of the maximum CDSC applicable and $33, $80, $130 and $267 for Class
C Shares of the Multi-Season Growth Fund and $23, $49, $78 and $160 for Class C
Shares of the Index 500 Fund, assuming redemption at the end of each time
period.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR
FUTURE INVESTMENT RETURN OR OPERATING EXPENSES. ACTUAL
INVESTMENT RETURN AND
OPERATING EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN. THE
11
<PAGE>
HYPOTHETICAL EXPENSES IN THE EXAMPLE REFLECT FEE WAIVERS AT
THE ANTICIPATED
RATES.
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the Funds' financial
statements audited by Ernst & Young LLP, independent auditors, except that, for
periods ended prior to June 30, 1995 for the Multi-Season Growth Fund, such
financial highlights are derived from the financial statements audited by
another independent auditor. No fees for distribution and support services under
the "Class A Plan" (as defined below) were paid by the Munder Funds for the
periods through December 31, 1993. Prior to March 1, 1994, Class B Shares of
the Munder Funds were not offered. Class C Shares of the Index 500 Fund were not
offered during the periods shown and no shares of the Small-Cap Value Fund, the
Equity Selection Fund or the Micro-Cap Equity Fund were offered during the
periods shown; accordingly, no financial information is provided with respect to
such shares. The following data should be read in conjunction with the financial
statements, related notes, and other financial information incorporated by
reference in the Statement of Additional Information. Further information about
the Funds, including financial information with respect to the Funds' other
Classes of Shares, is contained in the Funds' Annual Reports dated June 30, 1996
which may be obtained without charge by calling (800) 438-5789.
<TABLE>
<CAPTION>
Multi-Season Growth Fund(a)
-------------------------------------------------------------------------
- -----------
Year Ended Year Ended Year Ended Period Ended
Period Ended Period Ended
6/30/96 6/30/96 6/30/96 6/30/95(b)(c) 6/30/95(b)(c)
6/30/95(b)(c)
Class A Class B Class C Class A Class B
Class C
---------- ---------- ---------- ------------ ------------ ------
- ------
<S> <C> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Period..... $10.38 $ 10.27
$10.28
------ ------- ------
Income from Investment Operations:
Net investment income (loss)............ 0.01 (0.03)
(0.02)
Net realized and unrealized gain on
investments............................ 1.63 1.61 1.60
------ ------- ------
Total from investment operations........ 1.64 1.58
1.58
------ ------- ------
Less Distributions:
Distributions from net realized gains... -- --
- --
------ ------- ------
Total distributions..................... -- -- --
------ ------- ------
Net Asset Value, End of Period........... $12.02 $ 11.85
$11.86
====== =======
======
Total Return(d)......................... 15.80% 15.38%
15.37%
====== =======
======
Ratios to Average Net Assets/
Supplemental Data:
Net Assets, End of Period (in
thousands)............................. $9,409 $54,349
$3,207
Ratio of operating expenses to average
net assets............................. 1.65%(e) 2.40%(e)
2.40%(e)
Ratio of net investment income (loss)
to average net assets.................. 0.28%(e) (0.47)%(e)
(0.47)%(e)
Portfolio turnover rate.................. 27% 27%
27%
Ratio of operating expenses to average
net assets without waivers............ 1.97%(e) 2.72%(e)
2.72%(e)
Net investment (loss) per share without
waivers(f)............................ $(0.00)(g) $ (0.05)
$(0.04)
Average commission rate(i).............
- ---------------
</TABLE>
(a) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was December 31.
(c) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Annualized.
(f) Amounts shown for periods prior to June 30, 1995 are unaudited.
(g) Amount represents less than $0.01 per share.
(h) The Munder Multi-Season Growth Fund Class A Shares, Class B Shares and Class
C Shares commenced operations on August 4, 1993, April 29, 1993 and
September 20, 1993, respectively. Class C Shares were formerly known as
Class D Shares.
12
<PAGE>
(i) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
Multi-Season Growth Fund(a)
------------------------------------------------
Year Ended Year Ended Year Ended
------------ ------------ ------------
12/31/94 12/31/94 12/31/94
-------- -------- --------
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period... $ 10.68 $ 10.65 $ 10.66
------- ------- -------
Income from Investment Operations:
Net investment income (loss)......... 0.01 (0.07) (0.07)
Net realized and unrealized (loss) on
investments......................... (0.27) (0.27) (0.27)
------- ------- -------
Total from investment operations..... (0.26) (0.34) (0.34)
------- ------- -------
Less Distributions:
Distributions from net realized gains (0.04) (0.04) (0.04)
------- ------- -------
Total distributions.................. (0.04) (0.04) (0.04)
------- ------- -------
Net Asset Value, End of Period......... $ 10.38 $ 10.27 $ 10.28
======= ======= =======
Total Return(d)...................... (2.45)% (3.21)% (3.21)%
======= ======= =======
Ratios to Average Net
Assets/Supplemental Data:
Net Assets, End of Period (in
thousands).......................... $ 2,829 $46,549 $ 2,071
Ratio of operating expenses to
average net assets.................. 1.75% 2.50% 2.50%
Ratio of net investment income
(loss) to average net assets........ 0.04% (0.71)% (0.65)%
Portfolio turnover rate.............. 48% 48% 48%
Ratio of operating expenses to
average net assets without waivers.. 3.05% 2.89% 4.57%
Net investment (loss) per share
without waivers(f).................. $ (0.32) $ (0.11) $ (0.29)
Multi-Season Growth Fund(a)
------------------------------------------------
Period Ended Period Ended Period Ended
------------ ------------ ------------
12/31/93(h) 12/31/93(h) 12/31/93(h)
------------ ------------ ------------
Class A Class B Class C
------------ ------------ ------------
Net Asset Value, Beginning of Period... $ 10.16 $ 10.00 $ 10.19
-------- -------- --------
Income from Investment Operations:
Net investment income (loss)........... (0.01) (0.04) (0.01)
Net realized and unrealized gain on
investments........................... 0.53 0.69 0.48
-------- -------- --------
Total from investment operations....... 0.52 0.65 0.47
-------- -------- --------
Less Distributions:
Distributions from net realized gains.. -- -- --
-------- -------- --------
Total distributions.................... -- -- --
-------- -------- --------
Net Asset Value, End of Period......... $ 10.68 $ 10.65 $ 10.66
======== ======== ========
Total Return(d)........................ 5.12% 6.50% 4.61%
======== ======== ========
Ratios to Average Net
Assets/Supplemental Data:
Net Assets, End of Period (in
thousands)............................ $ 2,104 $ 46,860 $ 249
Ratio of operating expenses to average
net assets............................ 1.75%(e) 2.50%(e) 2.50%(e)
Ratio of net investment income (loss)
to average net assets................. (0.18)%(e) (0.69)%(e) (0.99)%(e)
Portfolio turnover rate................ 238% 238% 238%
Ratio of operating expenses to average
net assets without waivers............ 3.32%(e) 2.94%(e) 15.47%(e)
Net investment (loss) per share
without waivers(f).................... $ (0.10) $ (0.07) $ (0.14)
Average commission rate(i).............
- -------------------
</TABLE>
(a) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was December 31.
(c) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Annualized.
(f) Amounts shown for periods prior to June 30, 1995 are unaudited.
(g) Amount represents less than $0.01 per share.
13
<PAGE>
(h) The Munder Multi-Season Growth Fund Class A Shares, Class B Shares and Class
C Shares commenced operations on August 4, 1993, April 29, 1993 and
September 20, 1993, respectively. Class C Shares were formerly known as
Class D Shares.
(i) Average commission rate paid per share of securities purchased or sold by
the Fund.
(j) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
Real Estate Equity Investment Fund(a)
-------------------------------------------------------------------------
- ----------------
Period Period
------------- ------------
- -
Ended Ended
------------- ------------
- -
Year Ended Year Ended [Year Ended
6/30/95(b)(c) 6/30/95(b)(c)
6/30/96 6/30/96 6/30/96 ------------- -
- ------------
Class A Class B Class C] Class A
Class B
------------------ ------------------ ------------------- -------------
- -------------
<S> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Period... $10.00
$10.00
------ ------
Income from Investment Operations:
Net investment income................ 0.36
0.30
Net realized and unrealized gain on
investments......................... 0.07
0.07
------ ------
Total from investment operations..... 0.43
0.37
------ ------
Less Distributions:
Dividends from net investment income.
(0.34) (0.28)
------ ------
Total distributions.................. (0.34)
(0.28)
------ ------
Net Asset Value, End of Period......... $10.09
$10.09
======
======
Total Return(d)...................... 4.45%
3.87%
======
======
Ratios to Average Net
Assets/Supplemental Data:
Net Assets, End of Period (in
thousands)............................ $ 223
$1,496
Ratio of operating expenses to average
net assets............................ 1.50%(e)
2.25%(e)
Ratio of net investment income to
average net assets.................... 5.03%(e)
4.28%(e)
Portfolio turnover rate................ 3%
3%
Ratio of operating expenses to average
net assets without waivers............ 7.23%(e)
7.98%(e)
Net investment loss per share without
waivers............................... $(0.05)
$(0.10)
Average commission rate(f).............
- -------------
</TABLE>
(a) The Fund is authorized to issue Class C Shares. [As of June 30, 1996, the
Fund had not begun selling Class C Shares.]
(b) The Munder Real Estate Equity Investment Fund Class A Shares and Class B
Shares commenced operations on September 30, 1994 and October 3, 1994,
respectively.
(c) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Annualized.
(f) Average commission rate paid per share of securities purchased or sold by
the Fund.
14
<PAGE>
<TABLE>
<CAPTION>
Accelerating Growth Fund(a)(b)
------------------------------
Year Year [Year
Ended Ended Ended
6/30/96 6/30/96 6/30/96
Class A Class B Class C]
-------- -------- ----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.............
Income from Investment Operations:
Net investment income (loss)....................
Net realized and unrealized gain (loss) on
investments....................................
Total from investment operations................
Less Distributions:
Dividends from net investment income............
Distributions from net realized gains...........
Total distributions.............................
Net Asset Value, End of Period...................
Total Return(d).................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands)........
Ratio of operating expenses to average
net assets.....................................
Ratio of net investment income (loss) to
average net assets.............................
Portfolio turnover rate.........................
Ratio of operating expenses to average net
assets without waivers.........................
Net investment income (loss) per share without
waivers........................................
Average commission rate(e)......................
- -------------------
</TABLE>
(a) Formerly, Ambassador Growth Fund.
(b) [The Fund is authorized to issue Class C Shares. As of June 30, 1996, the
Fund had not begun selling Class C Shares.]
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Average commission rate paid per share of securities purchased or sold by
the Fund.
15
<PAGE>
<TABLE>
<CAPTION>
Accelerating Growth Fund(a)(b)
-------------------------------------------------------------------------
- -
Period Period Year Period Year Period
Ended Ended Ended Ended Ended
Ended
6/30/95(c) 6/30/95(c) 2/28/95(f) 2/28/95(f)(g) 2/28/94
2/28/93(g)
------- ------- ------- ------- ------- -------
Class A Class B Class A Class B Class A
Class A
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Period.... $12.73 $12.66 $13.98 $12.88
$12.08 $11.74
------ ------ ------ ------ ------ ------
Income from Investment Operations:
Net investment income (loss)........... (0.01) (0.02) (0.03) (0.07)
(0.00)(h) 0.01
Net realized and unrealized gain
(loss) on investments................. 2.10 2.06 (0.88) 0.19 2.17
0.62
------ ------ ------ ------ ------ ------
Total from investment operations....... 2.09 2.04 (0.91) 0.12 2.17
0.63
------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from net investment income... -- -- -- -- (0.02)
(0.01)
Distributions from net realized gains.. -- -- (0.34) (0.34) (0.25)
(0.28)
------ ------ ------ ------ ------ ------
Total distributions.................... -- -- (0.34) (0.34) (0.27)
(0.29)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period.......... $14.82 $14.70 $12.73 $12.66
$13.98 $12.08
====== ====== ====== ====== ======
======
Total Return(d)........................ 16.42% 16.11% (6.45)% 0.99%
18.00% 5.43%
====== ====== ====== ====== ======
======
Ratios to Average Net
Assets/Supplemental Data:
Net Assets, End of Period
(in thousands)....................... $4,701 $ 67 $4,138 $ 39 $5,152
$ 349
Ratio of operating expenses to average
net assets............................ 1.20%(e) 1.95%(e) 1.18% 1.88%(f) 1.03%
0.96%(f)
Ratio of net investment income (loss)
to average net assets................. (0.21)%(c) (0.96)%(e) (0.25)% (0.95)%(f)
(0.02)% 0.18%(f)
Portfolio turnover rate................ 31% 31% 90% 90% 34%
56%
Ratio of operating expenses to average
net assets without waivers............ 1.44%(e) 2.19%(e) 1.41% 2.11%(f)
1.28% 1.21%(f)
Net investment income (loss) per share
without waivers....................... $(0.02) $(0.02) $(0.07) $(0.08) $ 0.00(h)
$ 0.00(h)
Average commission rate(i).............
</TABLE>
- --------------
(a) Formerly, Ambassador Growth Fund.
(b) [The Fund is authorized to issue Class C Shares. As of June 30, 1996, the
Fund had not begun selling Class C Shares.]
(c) Fiscal year changed to June 30. Prior to this, the fiscal year end was the
last day of February.
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Annualized.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) The Munder Accelerating Growth Fund Class A Shares and Class B Shares
commenced operations on November 23, 1992 and April 25, 1994, respectively.
(h) Amount represents less than $0.01 per share.
(i) Average commission rate paid per share of securities purchased or sold by
the Fund.
16
<PAGE>
<TABLE>
<CAPTION>
Small Company Growth Fund(a)(b)
-------------------------------
<S> <C> <C> <C>
Year Year [Year
Ended Ended Ended
6/30/96 6/30/96 6/30/96
Class A Class B Class C]
--------- --------- ---------
Net Asset Value, Beginning of Period............
Income from Investment Operations:
Net investment (loss)..........................
Net realized and unrealized gain (loss)
on investments................................
Total from investment operations...............
Less Distributions:
Distributions from net realized gains..........
Total distributions............................
Net Asset Value, End of Period..................
Total Return(d)................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands).......
Ratio of operating expenses to average
net assets....................................
Ratio of net investment (loss) to average
net assets....................................
Portfolio turnover rate........................
Ratio of operating expenses to average net
assets without waivers........................
Net investment (loss) per share without
waivers.......................................
Average commission rate(e).....................
- -------------------
</TABLE>
(a) Formerly, Ambassador Small Company Growth Fund.
(b) [The Fund is authorized to issue Class C Shares. As of June 30, 1996, the
Fund had not begun selling Class C Shares.]
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Average commission rate paid per share of securities purchased or sold by
the Fund.
17
<PAGE>
<TABLE>
<CAPTION>
Small Company Growth Fund(a)(b)
------------------------------------------------
Period Period Year Period Year Period
Ended Ended Ended Ended Ended
Ended
6/30/95(c) 6/30/95(c) 2/28/95(f) 2/28/95(f)(g) 2/28/94
2/28/93(g)
---------- ---------- ---------- ------------- ------- ----------
Class A Class B Class A Class B Class A
Class A
---------- ---------- ---------- ------------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period... $13.89 $13.81 $ 14.37 $13.54 $
12.72 $12.32
------ ------ ------- ------ -------- ------
Income from Investment Operations:
Net investment (loss).................. (0.02) (0.05) (0.07) (0.05) (0.05)
(0.01)
Net realized and unrealized gain
(loss) on investments................. 1.41 1.39 (0.39) 0.34 1.97
0.41
------ ------ ------- ------ -------- ------
Total from investment operations....... 1.39 1.34 (0.46) 0.29 1.92
0.40
------ ------ ------- ------ -------- ------
Less Distributions:
Distributions from net realized gains.. -- -- (0.02) (0.02) (0.27)
[_]7
------ ------ ------- ------ -------- ------
Total distributions.................... -- -- (0.02) (0.02) (0.27) --
------ ------ ------- ------ -------- ------
Net Asset Value, End of Period......... $15.28 $15.15 $ 13.89 $13.81 $
14.37 $12.72
====== ====== ======= ======
======== ======
Total Return(d)........................ 10.01% 9.70% (3.21)% 2.13%
15.11% 3.25%
====== ====== ======= ======
======== ======
Ratios to Average Net
Assets/Supplemental Data:
Net Assets, End of Period (in
thousands)............................ $2,871 $ 46 $ 2,697 $ 39 $ 3,269 $
742
Ratio of operating expenses to average
net assets............................ 1.21%(e) 1.96%(e) 1.23% 1.85%(e) 1.01%
0.96%(e)
Ratio of net investment (loss) to
average net assets.................... (0.41)(e) (1.16)%(e) (0.40)% (1.02)%(e)
(0.36)% (0.29)%(e)
Portfolio turnover rate................ 39% 39% 45% 45% 47%
46%
Ratio of operating expenses to average
net assets without waivers............. 1.46%(e) 2.21%(e) 1.48% 2.10%(e)
1.26% 1.21%(e)
Net investment (loss) per share
without waivers....................... $(0.03) $(0.06) $ (0.11) $(0.06) $ (0.08)
$(0.02)
Average commission rate(h).............
- -------------
</TABLE>
(a) Formerly, Ambassador Small Company Growth Fund.
(b) [The Fund is authorized to issue Class C Shares. As of June 30, 1996, the
Fund had not begun selling Class C Shares.]
(c) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Annualized.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory business of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) The Munder Small Company Growth Fund Class A Shares and Class B Shares
commenced operations on November 23, 1992 and April 28, 1994, respectively.
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
18
<PAGE>
<TABLE>
<CAPTION>
Mid-Cap Growth Fund
---------------------------
Period Period Period
Ended Ended Ended
6/30/96 6/30/96 6/30/96
Class A Class B Class C ]
------- ------- ---------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period....
Income from Investment Operations:
Net investment income/(loss)...........
Net realized and unrealized gain on
investments...........................
Total from investment operations.......
Less Distributions:
Dividends from net investment income...
Total distributions....................
Net Asset Value, End of Period..........
Total Return(d)........................
Ratios to Average Net
Assets/Supplemental Data:
Net Assets, End of Period (in 000's)...
Ratio of operating expenses to average
net assets............................
Ratio of net investment loss to average
net assets............................
Portfolio turnover rate................
Ratio of operating expenses to average
net assets without reimbursements.....
Net investment income/(loss) per share
without reimbursements................
Average commission rate................
- ----------------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
International Equity Fund(a)(b)
-------------------------------
Year Year [Year
Ended Ended Ended
6/30/96 6/30/96 6/30/96
Class A Class B Class C]
-------- ------- ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.....
Income from Investment Operations:
Net investment income..................
Net realized and unrealized gain
(loss) on investments.................
Total from investment operations.......
Less Distributions:
Dividends from net investment income...
Distributions net realized gains.......
Distributions from capital.............
Total distributions....................
Net Asset Value, End of Period...........
Total Return(d)........................
Ratios to Average Net Assets /
Supplemental Data:
Net Assets, End of Period (in
thousands)............................
Ratio of operating expenses to average
net assets............................
Ratio of net investment income to
average net assets....................
Portfolio turnover rate................
Ratio of operating expenses to
average net assets without waivers....
Net investment income per share without
waivers...............................
Average commission rate(e).............
</TABLE>
- --------------------
(a) Formerly, Ambassador International Stock Fund.
(b) [The Fund is authorized to issue Class C Shares. As of June 30, 1996, the
Fund had not begun selling Class C Shares.]
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Average commission rate paid per share of securities purchased or sold by
the Fund.
20
<PAGE>
<TABLE>
<CAPTION>
International Equity Fund(a)(b)
--------------------------------------------------------
Period Period Year Period Year
Period
Ended Ended Ended Ended Ended
Ended
6/30/95(c) 6/30/95(c) 2/28/95(f)(g) 2/28/95(f)(g)(h)
2/28/94 2/28/93(h)
Class A Class B Class A Class B Class A
Class A
---------- --------- ------------- ---------------- ------- -----
- -----
<S> <C> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Period..... $12.29 $12.26 $13.68
$13.45 $10.64 $10.60
------ ------ ------ ------ ------ ------
Income from Investment Operations:
Net investment income.................. 0.12 0.08 0.17 0.08
0.19 0.01
Net realized and unrealized gain
(loss) on investments................. 1.01 1.01 (1.48) (1.21) 2.85
0.16
------ ------ ------ ------ ------ ------
Total from investment operations....... 1.13 1.09 (1.31) (1.13)
3.04 0.17
------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from net investment income... -- -- (0.02) (0.00)(i)
- -- (0.11)
Distributions net realized gains....... -- -- -- -- --
(0.02)
Distributions from capital............. -- -- (0.06) (0.06) --
- --
------ ------ ------ ------ ----- ------
Total distributions.................... -- -- (0.08) (0.06) --
(0.13)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period........... $13.42 $13.35 $12.29 $12.26
$13.68 $10.64
====== ====== ====== ======
====== ======
Total Return(d)........................ 9.28% 8.89% (9.67)% (8.38)%
28.57% 1.60%
====== ====== ====== ======
====== ======
Ratios to Average Net
Assets/Supplemental Data:
Net Assets, End of Period (in
thousands)............................ $1,400 $ 128 $1,339 $ 118
$1,450 $ 42
Ratio of operating expenses to
average net assets.................... 1.21%(e) 1.96%(e) 1.18% 1.88%(e)
1.13% 1.03%(e)
Ratio of net investment income to
average net assets.................... 2.57%(e) 1.82%(e) 1.31% 0.61%(e)
0.80% 0.42%(e)
Portfolio turnover rate................ 14% 14% 20% 20%
15% 1%
Ratio of operating expenses to
average net assets without waivers.... 1.46%(e) 2.21%(e) 1.43%
2.13%(e) 1.38% 1.28%(e)
Net investment income per share
without waivers....................... $ 0.11 $ 0.07 $ 0.14 $ 0.05 $
0.13 $ 0.01
Average commission rate(j).............
</TABLE>
- -------------
(a) Formerly, Ambassador International Stock Fund.
(b) [The Fund is authorized to issue Class C Shares. As of June 30, 1996, the
Fund had not begun selling Class C Shares.]
(c) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Annualized.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(g) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory business of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(h) The Munder International Equity Fund Class A and Class B Shares commenced
operations on November 30, 1992 and March 9, 1994, respectively.
(i) Amount represents less than $0.01 per share.
(j) Average commission rate paid per share of securities purchased or sold by
the Fund.
21
<PAGE>
<TABLE>
<CAPTION>
Index 500 Fund(a)(b)
---------------------------------------------------
Year Ended [Year Ended [Year Ended
6/30/96 6/30/96 6/30/96
Class A Class B] Class C]
---------------- ---------------- ---------------
<S> <C> <C> <C>
Net Asset Value,
Beginning of Period........
Income from Investment
Operations:
Net investment income.....
Net realized and
unrealized gain on
investments..............
Total from investment
operations...............
Less Distributions:
Dividends from net
investment income........
Distributions from net
realized gains...........
Total distributions.......
Net Asset Value, End of
Period.....................
Total Return(d)...........
Ratios to Average Net
Assets/Supplemental Data:
Net Assets, End of Period
(in thousands)...........
Ratio of operating
expenses to average net
assets...................
Ratio of net investment
income to average net
assets...................
Portfolio turnover rate...
Ratio of operating
expenses to average net
assets without
waivers..................
Net investment income per
share without waivers....
Average commission rate(e)
</TABLE>
- -------
(a) Formerly, Ambassador Indexed Stock Fund.
(b) The Fund is authorized to issue Class B Shares and Class C Shares. As of
June 30, 1996, the Fund had not begun selling Class C Shares.
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Average commission rate paid per share of securities purchased or sold by
the Fund.
22
<PAGE>
<TABLE>
<CAPTION>
Index 500 Fund(a)(b)
----------------------------------------------
Period Ended Year Ended Year Ended Period
Ended
6/30/95(c) 2/28/95(f)(g) 2/28/94 2/28/93(h)
Class A Class A Class A Class A
------------ ------------- ---------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..... $12.39 $12.06 $11.47
$11.61
------ ------ ------ ------
Income from Investment Operations:
Net investment income.................. 0.09 0.29 0.30 0.06
Net realized and unrealized gain
on investments........................ 1.46 0.50 0.59 0.20
------ ------ ------ ------
Total from investment operations....... 1.55 0.79 0.89 0.26
------ ------ ------ ------
Less Distributions
Dividends from net investment
income................................ (0.14) (0.29) (0.30) (0.07)
Distributions from net realized -- (0.17) -- (0.33)
gains................................. ------ ------ ------ ------
Total distributions.................... (0.14) (0.46) (0.30) (0.40)
------ ------ ------ ------
Net Asset Value, End of Period........... $13.80 $12.39 $12.06
$11.47
====== ====== ====== ======
Total Return(d)........................ 12.58% 6.81% 7.89% 2.34%
====== ====== ====== ======
Ratios to Average Net
Assets/Supplemental Data:
Net Assets, End of Period (in
thousands)............................ $ 684 $ 429 $ 489 $ 67
Ratio of operating expenses to average
net assets............................ 0.50%(e) 0.50% 0.31% 0.25%(e)
Ratio of net investment income to
average net assets.................... 2.41%(e) 2.49% 2.51%
2.54%(e)
Portfolio turnover rate................ 6% 7% 1% 22%
Ratio of operating expenses to average
net assets without waivers............ 0.63%(e) 0.64% 0.48%
0.38%(e)
Net investment income per share
without waivers....................... $ 0.09 $ 0.28 $ 0.28 $ 0.06
Average commission rate(i).............
</TABLE>
- ----------------
(a) Formerly, Ambassador Indexed Stock Fund.
(b) The Fund is authorized to issue Class B Shares and Class C Shares. As of
June 30, 1996, the Fund had not begun selling Class C Shares.
(c) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Annualized.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(g) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory business of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(h) The Munder Index 500 Fund Class A Shares commenced operations on
December 9, 1992.
(i) Average commission rate paid per share of securities purchased or sold by
the Fund.
23
<PAGE>
<TABLE>
<CAPTION>
Growth & Income Fund(a)(b)
-----------------------------------
Year Ended Year Ended [Year Ended
6/30/96 6/30/96 6/30/96
Class A Class B Class C]
---------- ---------- -----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.....
Income from Investment Operations:
Net investment income..................
Net realized and unrealized gain on
investments...........................
Total from investment operations.......
Less Distributions:
Dividends from net investment
income................................
Distributions from net
realized gains........................
Total distributions....................
Net Asset Value, End of Period...........
Total Return(d)........................
Ratios to Average Net
Assets/Supplemental Data:
Net Assets, End of Period (in
thousands)............................
Ratio of operating expenses to average
net assets............................
Ratio of net investment income to
average net assets....................
Portfolio turnover rate................
Ratio of operating expenses to average
net assets without waivers............
Net investment income per share
without waivers.......................
Average commission rate(e).............
</TABLE>
- -------------
(a) Formerly, Ambassador Growth & Income Fund.
[(b) The Fund is authorized to issue Class C Shares. As of June 30, 1996, the
Fund had not begun selling Class C Shares.]
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Average commission rate paid per share of securities purchased or sold by
the Fund.
24
<PAGE>
<TABLE>
<CAPTION>
Growth & Income Fund(a)(b)
----------------------------------------------------------------------
Period Ended Period Ended Period Ended Period
Ended
---------------- ---------------- ---------------- ----------------
6/30/95(c) 6/30/95(c) 2/28/95(f)(g) 2/28/95(f)(g)
---------------- ---------------- ---------------- ----------------
Class A Class B Class A Class B
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period... $10.42 $10.41 $10.10
$10.10
------ ------ ------ ------
Income from Investment Operations:
Net investment income................ 0.10 0.09 0.23 0.19
Net realized and unrealized gain on
investments......................... 0.80 0.77 0.24 0.25
Total from investment operations..... 0.90 0.86 0.47 0.44
------ ------ ------ ------
Less Distributions:
Dividends from net investment income.. (0.18) (0.14) (0.15)
(0.13)
Distributions from net realized gains. -- -- (0.00)(h)
(0.00)(h)
------ ------ ------ ------
Total distributions................... (0.18) (0.14) (0.15) (0.13)
------ ------ ------ ------
Net Asset Value, End of Period......... $11.14 $11.13 $10.42
$10.41
====== ====== ====== ======
Total Return(d)....................... 8.69% 8.30% 4.79% 4.47%
====== ====== ====== ======
Ratios to Average Net
Assets/Supplemental Data:
Net Assets, End of Period (in
thousands).......................... $ 226 $ 57 $ 128 $ 51
Ratio of operating expenses to average
net assets.......................... 1.09%(e) 1.84%(e) 0.53%(e)
1.27%(e)
Ratio of net investment income to
average net assets................... 3.33%(e) 2.58%(e) 4.72%(e)
3.96%(e)
Portfolio turnover rate............... 13% 13% 12% 12%
Ratio of operating expenses to average
net assets without waivers.......... 1.51%(e) 2.26%(e) 1.53%(e)
2.27%(e)
Net investment income per share
without waivers..................... $ 0.09 $ 0.08 $ 0.18 $ 0.14
Average commission rate(i)...........
</TABLE>
- --------------------
(a) Formerly, Ambassador Growth & Income Fund.
(b) [The Fund is authorized to issue Class C Shares. As of June 30, 1996, the
Fund had not begun selling Class C Shares.]
(c) Fiscal year changed to June 30. Prior to this, the fiscal year end was the
last day of February.
(d) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(e) Annualized.
(f) The Munder Growth & Income Fund Class A Shares and Class B Shares
commenced operations on August 8, 1994 and August 9, 1994, respectively.
(g) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(h) Amount represents less than $0.01 per share.
(i) Average commission rate paid per share of securities purchased or sold by
the Fund.
25
<PAGE>
<TABLE>
<CAPTION>
Value Fund
------------------------------
Period Period Period
Ended Ended Ended
6/30/96 6/30/96 6/30/96
Class A Class B Class C]
------- ------- --------
<S> <C> <C> <C>
Asset Value, Beginning of Period .....................
Income from Investment Operations:
Net investment income ..............................
Net realized and unrealized gain on investments ....
Total from investment operations ...................
Less Distributions:
Dividends from net investment income ...............
Total distributions ................................
Net Asset Value, End of Period .......................
Total Return(c) ....................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in 000's) ...............
Ratio of operating expenses to average net assets ..
Ratio of net investment income/(loss) to average
net assets .......................................
Portfolio turnover rate ............................
Ratio of operating expenses to average net assets
without reimbursements ...........................
Net investment income/(loss) per share without
reimbursements ...................................
Average commission rate ............................
</TABLE>
_____________________
26
<PAGE>
<TABLE>
<CAPTION>
Balanced Fund(a)(b)
-----------------------------------
Year Ended Year Ended [Year Ended
6/30/96 6/30/96 6/30/96
Class A Class B Class C ]
---------- ---------- -----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period...
- ----------------------------------------
Income from Investment Operations:
Net investment income..................
Net realized and unrealized gain
(loss) on
investments...........................
Total from investment operations.......
Less Distributions:
Dividends from net investment income...
Total distributions....................
Net Asset Value, End of Period.........
Total Return(d)........................
Ratios to Average Net
Assets/Supplemental
Data:
Net Assets, End of Period (in
thousands)............................
Ratio of operating expenses to average
net
assets................................
Ratio of net investment income to
average
net assets............................
Portfolio turnover rate................
Ratio of operating expenses to average
net
assets without waivers................
Net investment income per share without
waivers...............................
Average commission rate................
- --------------
</TABLE>
(a) Formerly, Ambassador Balanced Fund.
[(b) The Fund is authorized to issue Class C Shares. As of June 30, 1996, the
Fund had not begun selling Class C Shares.]
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Average commission rate paid per share of securities purchased or sold by
the Fund.
27
<PAGE>
<TABLE>
<CAPTION>
Balanced Fund(a)(b)
-------------------------------------------------------------------------
- ------------
Period Ended Period Ended Year Ended Period
Ended Period Ended
---------------- ---------------- ------------- ---------------- ------
- ----------
6/30/95(c) 6/30/95(c) 2/28/95(f) 2/28/95(f)(g)
2/28/94(g)
---------------- ---------------- ------------- ---------------- ------
- ----------
Class A Class B Class A Class B
Class A
---------------- ---------------- ------------- ---------------- ------
- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 9.95 $ 9.93 $ 10.35 $
9.56 $ 9.86
------ ------ ------- ------ ------
Income from Investment Operations:
Net investment income.................. 0.09 0.06 0.19 0.07
0.14
Net realized and unrealized gain (loss)
on investments........................ 0.85 0.84 (0.41) 0.37
0.47
------ ------ ------- ------ ------
Total from investment operations....... 0.94 0.90 (0.22) 0.44
0.61
------ ------ ------- ------ ------
Less Distributions:
Dividends from net investment income... (0.12) (0.07) (0.18)
(0.07) (0.12)
------ ------ ------- ------ ------
Total distributions.................... (0.12) (0.07) (0.18) (0.07)
(0.12)
------ ------ ------- ------ ------
Net Asset Value, End of Period........... $10.77 $10.76 $ 9.95 $
9.93 $10.35
====== ====== ======= ======
======
Total Return(d)........................ 9.44% 9.11% (2.07)% 4.65%
6.20%
====== ====== ======= ======
======
Ratios to Average Net Assets/Supplemental
Data:
Net Assets, End of Period (in
thousands)............................ $ 314 $ 15 $ 286 $ 19 $
321
Ratio of operating expenses to average
net assets............................ 1.16%(e) 1.91%(e) 1.22% 1.85%(e)
1.02%(e)
Ratio of net investment income to
average net assets.................... 2.51%(e) 1.76%(e) 1.89%
1.26%(e) 1.67%(e)
Portfolio turnover rate................ 52% 52% 116% 116%
50%
Ratio of operating expenses to average
net assets without waivers............ 1.51%(e) 2.26%(e) 1.57%
2.20%(e) 1.27%(e)
Net investment income per share without
waivers............................... $ 0.07 $ 0.05 $ 0.16 $ 0.05 $
0.12
Average commission rate(h).............
</TABLE>
- -----------
(a) Formerly, Ambassador Balanced Fund.
[(b) The Fund is authorized to issue Class C Shares. As of June 30, 1996, the
Fund had not begun selling Class C Shares.]
(c) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(d) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(e) Annualized.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory business of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) The Munder Balanced Fund Class A Shares and Class B Shares commenced
operations on April 30, 1993 and June 21, 1994, respectively.
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
28
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
This Prospectus describes the following Funds: the Multi-Season Growth Fund,
Real Estate Equity Investment Fund, Mid-Cap Growth Fund, Value Fund, Small-Cap
Value Fund, Equity Selection Fund and Micro-Cap Equity Fund offered by Munder
and the Accelerating Growth Fund, Small Company Growth Fund, International
Equity Fund, Index 500 Fund, Growth & Income Fund and Balanced Fund offered by
the Company. Purchasing shares of any Fund should not be considered a complete
investment program, but an important segment of a well-diversified investment
program.
The Funds (other than the Real Estate Equity Investment, Index 500, Growth &
Income and Balanced Funds) are designed for investors seeking capital
appreciation primarily through the equity markets. The Real Estate Equity
Investment Fund is designed for investors seeking capital appreciation and
current income primarily through U.S. companies principally engaged in the real
estate industry or which own significant real estate assets. The Index 500 Fund
is designed for investors seeking price performance and income to track the
market as represented by the S&P 500. The Growth & Income Fund is designed for
investors seeking capital appreciation and current income through the equity
markets. The Balanced Fund is designed for investors seeking an attractive
investment return through a combination of growth of capital and current income.
The Multi-Season Growth Fund invests primarily in a diversified portfolio of
equity securities of companies that have demonstrated superior long-term
earnings growth, financial stability, attractive valuation and relative price
momentum. The Accelerating Growth Fund emphasizes stocks of companies determined
by the Advisor to demonstrate accelerating earnings growth and which are
expected to continue expanding earnings at an accelerated pace, maintain a
substantial competitive advantage, have a focused management team and a stable
balance sheet. The Mid-Cap Growth Fund invests primarily in equity securities of
companies that have market capitalizations that range between $100 million and
$5 billion and have demonstrated superior earnings growth, financial stability,
attractive valuation and relative price momentum. The International Equity Fund
invests primarily in the equity securities of foreign companies selected for
their long-term growth potential. The Index 500 Fund consists of a portfolio of
stocks constructed to provide price performance and income to track the market
as represented by the S&P 500, a broad-based and widely used unmanaged index of
common stocks. The Growth & Income Fund focuses on dividend-paying stocks whose
prospects for dividend growth and capital appreciation are considered favorable
by the Advisor. The Value Fund invests primarily in equity securities of well-
established companies with intermediate to large market capitalizations which
the Advisor believes to be undervalued at the time of purchase. The Small-Cap
Value Fund is designed for investors seeking long-term capital appreciation,
with income as a secondary objective. The Micro-Cap Equity Fund and the Small
Company Growth Fund seek long-term capital appreciation through investing
primarily in equity securities of smaller companies with market capitalizations
that are less than the capitalization of companies which predominate the major
market indices. The Equity Selection Fund invests primarily in equity securities
believed to be of high quality that are undervalued compared to equity
securities of other companies in the same industry. The Balanced Fund allocates
its assets primarily among equity securities, fixed income securities and cash
equivalents to provide growth of capital and current income.
MULTI-SEASON GROWTH FUND
The investment objective of the Multi-Season Growth Fund is to provide
shareholders with long-term capital appreciation. The Fund seeks to achieve this
objective by investing primarily in a diversified portfolio of equity securities
of companies that have demonstrated superior long-term earnings growth,
financial stability, attractive valuation and relative price momentum. Income is
not a primary consideration in the selection of investments. This style which
incorporates both growth investing and value constraints has been nationally
recognized as GARP (Growth at a Reasonable Price) and seeks to produce
attractive returns during various market environments.
29
<PAGE>
The Advisor believes that superior investment returns are derived from
securities of financially stable companies that reward shareholders with
superior earnings growth, are attractively priced and enjoy relative price
momentum. Specifically, the Advisor will examine the earnings growth
characteristics of approximately 5,500 companies for each of the last five years
to determine earnings strength, consistency and momentum. Companies which have
demonstrated superior earnings growth will be further reviewed for financial
stability. Corporate balance sheets will be scrutinized to select those
companies which reinvest a significant portion of profits, demonstrate a high
return on equity and carry a relatively low debt load. Companies that meet these
earnings growth and financial stability criteria are further judged for their
value relative to these criteria and the market. Historically, the median
valuation of the portfolios managed by the Advisor has been no more than a
moderate premium to that of the S&P 500. Once determined to be attractive
values, those securities exhibiting the strongest relative price momentum to the
S&P 500 normally will be chosen by the Advisor for the Fund. Within these
parameters, the Advisor typically will establish equity positions in
approximately 50 to 100 companies. Equity securities generally will be sold from
the Fund's portfolio when they consistently fail to achieve any two or more of
the four criteria stated above.
The Fund invests substantially all, and at least 65%, of its assets in equity
securities. Equity securities include common and preferred stocks and securities
convertible into or exchangeable for common stocks, such as convertible
preferred stocks, convertible debentures or warrants. No more than 25% of the
assets of the Fund will be invested in one industry group. In addition, the Fund
will not own more than 10% of the outstanding voting securities of a single
issuer. The Fund may also invest up to 20% of the value of its total assets in
equity securities of foreign issuers, including companies domiciled in
developing countries.
The Fund may also invest in short-term money market instruments. Under normal
market conditions, short-term money market instruments could comprise up to 35%
of the Fund's total assets. The Fund could invest a higher percentage of its
assets in money market instruments for temporary defensive purposes.
The Fund's investment objective is a fundamental policy and may not be changed
without the authorization of the holders of a majority (as defined in the
Investment Company Act of 1940, as amended (the "1940 Act")) ("Majority") of
the Fund's outstanding shares.
REAL ESTATE EQUITY INVESTMENT FUND
The Real Estate Equity Investment Fund's investment objectives are to provide
shareholders with capital appreciation and current income. It seeks to achieve
these objectives by investing primarily in securities of United States companies
which are principally engaged in the real estate industry or which own
significant real estate assets. It will not invest directly in real estate.
Under normal conditions, the Fund will invest at least 65% of its total assets
in equity securities of companies listed on U.S. securities exchanges or NASDAQ
which are principally engaged in the real estate industry. Equity securities
include common stock, preferred stock and securities convertible into common
stock. A company is "principally engaged" in the real estate industry if at
least 50% of its assets, gross income or net profits are attributable to
ownership, construction, management or sale of residential, commercial or
industrial real estate. Real estate industry companies may include among others:
equity real estate investment trusts, which pool investors' funds for investment
primarily in commercial real estate properties; mortgage real estate investment
trusts, which invest pooled funds in real estate related loans; brokers, home
builders or real estate developers; and companies with substantial real estate
holdings, such as paper and lumber producers and hotel and entertainment
companies. The Fund will invest in real estate investment trusts only if they
are traded on major U.S. exchanges or NASDAQ. The Fund will not invest more than
15% of its total assets in equity real estate investment trusts, excluding self-
managed and/or self-administrated trusts. The specific risks of investing in
real estate industry companies are summarized under "Portfolio Instruments and
Practices and Associated Risk Factors--Industry Concentration."
30
<PAGE>
The Fund may also invest up to 35% of its total assets in equity securities of
issuers whose products and services are related to the real estate industry,
such as manufacturers and distributors of building supplies and financial
institutions which issue or service mortgages. The Fund will invest more than
25% of its total assets in the real estate and real estate related industries.
In addition to these securities, the Fund may invest up to 35% of its total
assets in securities of companies outside the real estate and real estate
related industries believed by the Advisor to be undervalued and to have capital
appreciation potential. Moreover, consistent with its objective of current
income, the Fund may invest in nonconvertible debt securities of companies
outside the real estate and real estate related industries. The debt securities
purchased (except for those described below) will be of investment grade or
better quality (e.g., rated no lower than Baa by Moody's Investor Services, Inc.
("Moody's") or BBB by Standard & Poor's Ratings Service, a division of McGraw-
Hill Companies ("S&P") or if not so rated, believed by the Advisor to be of
comparable quality). From time to time, the Fund may invest up to 5% of its
total assets in securities rated below investment grade and in unrated debt
securities of issuers which are secured by real estate assets where the Advisor
believes that the securities are trading at a discount and that the underlying
collateral is sufficient to ensure repayment of principal. In such situations,
it is conceivable that the Fund could, in the event of default, end up holding
the underlying real estate directly.
The Fund may also invest in short-term money market securities. Under normal
market conditions, short-term money market securities could comprise up to 35%
of the Fund's total assets. The Fund could invest a higher percentage of its
assets in money market securities for temporary defensive purposes.
The Fund's investment objective is fundamental and may not be changed without
the authorization of the holders of a Majority of the Fund's outstanding shares.
Unless otherwise noted, all other investment policies of the Fund are non-
fundamental and may be changed by the Board of Directors without shareholder
approval.
ACCELERATING GROWTH FUND
The investment objective of the Accelerating Growth Fund is to provide long-
term capital appreciation, with income a secondary consideration. The Fund seeks
to achieve its objective by investing primarily in equity securities and
instruments convertible or exchangeable into equity securities. The Fund's
investment portfolio will consist primarily of the stocks of companies
determined by the Advisor to demonstrate accelerating earnings growth and which
are expected to continue expanding earnings at an accelerated pace, maintain a
substantial competitive advantage, have a focused management team and a stable
balance sheet.
Under normal market conditions, at least 65% of the Fund's total assets will
be invested in equity securities. In addition to investing in equity securities,
the Fund is authorized to invest in high quality short-term fixed income
securities as cash reserves or for defensive purposes. See "Portfolio
Instruments and Practices and Associated Risk Factors" for a description of
investment practices of the Fund, including limited investments in warrants,
foreign securities and stock index futures and options.
SMALL COMPANY GROWTH FUND
The investment objective of the Small Company Growth Fund is to provide long-
term capital appreciation. The Fund pursues its objective by investing primarily
in equity securities such as common stocks and instruments convertible or
exchangeable into common stocks.
Securities held by the Fund will generally be issued by smaller companies.
Smaller companies will be considered those companies with market capitalizations
that are less than the capitalization of companies which predominate the major
market indices, such as the S&P 500. The market capitalization of the issuers of
securities purchased by the Fund will be between $50 million and $1 billion at
the time of purchase. In managing the Fund,
31
<PAGE>
the Advisor seeks smaller companies with above-average growth prospects. Factors
considered in selecting such issuers include participation in a fast growing
industry, a strategic niche position in a specialized market, adequate
capitalization and fundamental value.
The Fund has been designed to provide investors with potentially greater long-
term rewards than those provided by an investment in a fund that seeks capital
appreciation from equity securities of larger, more established companies. Since
small capitalization companies are generally not as well-known to investors and
have less of an investor following than larger companies, they may provide
opportunities for greater investment gains as a result of inefficiencies in the
marketplace.
Small capitalization companies typically are subject to a greater degree of
change in earnings and business prospects than larger, more established
companies. In addition, securities of small capitalization companies are traded
in lower volume than those issued by larger companies and may be more volatile.
As a result, the Fund may be subject to greater price volatility than a fund
consisting of larger capitalization stocks. By maintaining a broadly diversified
portfolio, the Advisor will attempt to reduce this volatility. The Fund may not
be appropriate for investors requiring stability of principal or income flow
from their investments.
Under normal market conditions, at least 65% of the Fund's total assets will
be invested in small company equity securities. In addition to investing in
equity securities, the Fund is also authorized to invest in high quality short-
term fixed income securities as cash reserves or for defensive purposes. See
"Portfolio Instruments and Practices and Associated Risk Factors" for a
description of investment practices of the Fund, including limited investments
in warrants, foreign securities and stock index futures and options.
MID-CAP GROWTH FUND
The investment objective of the Mid-Cap Growth Fund is to provide shareholders
with long-term capital appreciation. It seeks to achieve this objective by
investing primarily in a diversified portfolio of equity securities of companies
that have market capitalizations between $100 million and $5 billion and have
demonstrated superior earnings growth, financial stability, attractive valuation
and relative price momentum. Income is not a primary consideration in the
selection of investments. This style which incorporates both growth investing
and value constraints has been nationally recognized as GARP (Growth at a
Reasonable Price) and seeks to produce attractive returns during various market
environments.
The Advisor believes that superior investment returns are derived from
securities of financially stable companies that reward shareholders with
superior earnings growth, are attractively priced and enjoy relative price
momentum. Specifically, the Advisor will examine the earnings growth
characteristics of approximately 10,000 companies for each of the last three
years to determine earnings strength, consistency and momentum. Companies which
have demonstrated superior earnings growth will be further reviewed for
financial stability. Corporate balance sheets will be scrutinized to select
those companies which reinvest a significant portion of profits, demonstrate a
high return on equity and carry a relatively low debt load. Companies that meet
these earnings growth and financial stability criteria are further judged for
their value relative to these criteria and the market. Once determined to be
attractive values, those securities exhibiting relative price momentum to the
Standard & Poor's Mid-Cap Index generally will be favored by the Advisor for the
Fund. Within these parameters, the Advisor typically will establish equity
positions in approximately 50 to 100 companies. Equity securities generally will
be sold from the Fund's portfolio when they consistently fail to achieve any two
or more of the four criteria stated above.
The Fund invests substantially all, and at least 65%, of its total assets in
equity securities of companies with market capitalizations that range between
$100 million and $5 billion. Equity securities include common and preferred
stocks and securities convertible into or exchangeable for common stocks, such
as convertible preferred stocks, convertible debentures or warrants. No more
than 25% of the assets of the Fund will be invested in one
32
<PAGE>
industry group. In addition, the Fund will not own more than 10% of the
outstanding voting securities of a single issuer.
The Fund may also invest in short-term money market securities. Under normal
market conditions, short-term money market securities could comprise up to 35%
of the Fund's total assets. The Fund could invest a higher percentage of its
assets in money market securities for temporary defensive purposes.
INTERNATIONAL EQUITY FUND
The investment objective of the International Equity Fund is to provide long-
term capital appreciation by investing primarily in the equity securities of
foreign issuers. These securities will be held directly or in the form of
American Depositary Receipts ("ADRs") or European Depositary Receipts
("EDRs"). ADRs are receipts typically issued by a United States bank or trust
company evidencing ownership of the underlying foreign securities. EDRs are
receipts issued by a European financial institution evidencing a similar
arrangement. The Fund will emphasize companies with a market capitalization of
at least $100 million. In selecting issuers, the Advisor may consider, among
other factors, the location of the issuer, its competitive stature, the issuer's
past record and future prospects for growth, and the marketability of its
securities.
On a continuing basis, but at least quarterly, the Advisor creates a list of
securities eligible for purchase by the Fund. The Advisor then calculates the
adjusted market capitalization of all the equity securities, ADRs and EDRs
considered to be eligible for purchase. Market capitalization for equity
securities is calculated by multiplying the market price of the security by the
number of shares outstanding, adjusted for control blocks. A control block is
defined as a block of securities owned by another corporation. The primary
sources of information regarding the existence and size of control blocks are
the S&P Stock reports and the Morgan Stanley Capital International Perspective.
Control blocks will be updated each time the eligible list of securities is
created or a company is added to the eligible universe.
Following calculation of the adjusted market capitalization, the list of
eligible securities is then sorted in descending order of adjusted market
capitalization. Securities with market capitalizations greater than $100 million
are considered for purchase by the Fund. On a regular basis, securities will be
added to the eligible universe as new ADR and EDR facilities and exchange
listings occur, subject to meeting other eligibility requirements. Each time the
list of eligible securities is created, any security held by the Fund that does
not appear on the updated eligibility list will be sold as soon as practicable.
Equity securities on the eligible securities list are continuously evaluated
on the basis of total return in relation to their respective local, regional and
global markets. From the list of eligible securities a portfolio is constructed
that is composed of two major sections. The first section is designed to provide
broad coverage of international markets. Securities representation generally
covers all major markets and industry sectors. The second section is designed to
complement the first section by increasing exposure to securities that are
expected to outperform their markets and industry sectors on a relative basis.
The blending of the two sections is designed to provide an international
portfolio that provides a broad market exposure to stock markets and has the
capability to enhance the value of the portfolio by adjusting allocations to
stocks that are expected to outperform their respective markets on a relative
basis.
The Fund will increase its exposure to the second section when the Advisor
identifies securities that are expected to outperform their markets and the Fund
will conversely increase its exposure to the first section when the Advisor
believes a broader market exposure is required. When the Advisor believes
broader market exposure will benefit the Fund, the Fund may allocate up to 80%
of its assets for investment in the first section securities. When the Advisor
identifies strong potential for specific securities to outperform their relative
benchmarks, the Fund may invest up to 50% of its total assets in the second
section securities.
33
<PAGE>
The Advisor will determine section two allocation by examining the
relationship each security has with the economic environment of its respective
industry, country market and geographic region. A stock's economic environment
is analyzed by identifying relevant key economic factor relationships with each
stock, sector and market and then determining the level of influence the factors
have in influencing the stock price.
The Fund may invest in the securities of issuers located in the principal
trading market which is in countries which include, but are not limited to, the
following: Argentina, Australia, Belgium, Brazil, Canada, Chile, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Korea, Luxembourg,
Malaysia, Mexico, The Netherlands, New Zealand, Norway, Peru, The Philippines,
Portugal, Singapore, Spain, Sweden, Switzerland, Taiwan, Turkey and The United
Kingdom.
Under normal market conditions, at least 65% of the Fund's total assets will
be invested in the equity securities of foreign issuers and such issuers will be
located in at least three foreign countries. In addition to investing in stocks,
the Fund may, for the purpose of hedging its portfolio, purchase and write put
and call options on foreign stock indices listed on foreign and domestic stock
exchanges. The Fund may also invest in convertible securities, stock index
futures, and, to a limited extent, warrants. The Fund is also authorized to
invest in high quality short-term fixed income securities as cash reserves or
for defensive purposes. The Fund may not be appropriate for investors requiring
stability of principal or income flow from their investments. See "Portfolio
Instruments and Practices and Associated Risk Factors - Foreign Securities."
INDEX 500 FUND
The investment objective of the Index 500 Fund is to provide price performance
and income that is comparable to the performance of the S&P 500, an index which
emphasizes large capitalization companies. As of December 31, 1994, the S&P 500
represented approximately 74% of the market capitalization of publicly owned
stocks in the United States. Although the Fund may not hold securities of all
500 issuers included in the S&P 500 Index, it will normally hold the securities
of at least 80% of such issuers. Stock selections are based primarily on market
capitalization and industry weightings. The Fund may also invest in Standard &
Poor's Depository Receipts ("SPDRs"). SPDRs are securities traded on the
American Stock Exchange that represent ownership in the SPDR Trust, a long-term
unit investment trust which is intended to provide investment results that
generally correspond to the price and yield performance of the S&P 500. See
"Portfolio Instruments and Practices and Associated Risk Factors -- Investment
Company Securities." The Fund seeks quarterly performance within a .95
correlation with the S&P 500.
The Fund is managed through the use of a "quantitative" or "indexing"
investment approach, which attempts to duplicate the investment composition and
performance of the S&P 500 through statistical procedures. As a result, the
Advisor does not employ traditional methods of fund investment management, such
as selecting securities on the basis of economic, financial and market analysis.
The Index 500 Fund is not sponsored, endorsed, sold or promoted by S&P. S&P
makes no representation or warranty, express or implied, to the owners of the
Index 500 Fund or any member of the public regarding the advisability of
investing in securities generally or in the Index 500 Fund particularly or the
ability of the S&P 500 Index to trace general stock market performance. S&P's
only relationship to the Company is the licensing of certain trademarks and
trade names of S&P and of the S&P 500 Index which is determined, composed and
calculated by S&P without regard to the Company or the Index 500 Fund. S&P has
no obligation to take the needs of the Company or the owners of the Index 500
Fund into consideration in determining, composing or calculating the S&P 500
Index. S&P is not responsible for and has not participated in the determination
of the prices and amount of the Index 500 Fund or the timing of the issuance or
sale of the Index 500 Fund or in the determination or calculation of the
equation by which the Index 500 Fund is to be converted into cash. S&P has no
obligation or liability in connection with the administration, marketing or
trading of the Index 500 Fund.
34
<PAGE>
S&P does not guarantee the accuracy and/or the completeness of the S&P 500
Index or any data included therein and S&P shall have no liability for any
errors, omissions, or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the Company, owners of the Index 500
Fund, or any other person or entity from the use of the S&P 500 Index or any
data included therein. S&P makes no express or implied warranties, and expressly
disclaims all warranties of merchantability of fitness for a particular purpose
or use with respect to the S&P 500 Index or any data included therein. Without
limiting any of the foregoing, in no event shall S&P have any liability for any
special, punitive, indirect, or consequential damages (including lost profits),
even if notified of the possibility of such damages.
''Standard & Poor's(R)'', ''S&P(R)'', ''S&P 500(R)'', ''Standard & Poor's
500'', and ''500'' are trademarks of McGraw-Hill, Inc. and have been licensed
for use by the Company. The Index 500 Fund is not sponsored, endorsed, sold or
promoted by S&P and S&P makes no representation regarding the advisability of
investing in the Index 500 Fund.
In addition to investing in stocks, the Index 500 Fund is also authorized to
invest in high quality short-term fixed income securities as cash reserves or
for defensive purposes. The Fund may also invest in stock index futures. See
''Portfolio Instruments and Practices and Associated Risk Factors'' for a
description of investment practices of the Fund.
GROWTH & INCOME FUND
The investment objective of the Growth & Income Fund is to provide capital
appreciation and current income by investing primarily in dividend-paying equity
securities. The Fund is designed for investors seeking current income and
capital appreciation through the equity markets. The Fund will seek to achieve
its objectives principally by investing in a broadly diversified portfolio of
dividend-paying stocks of companies whose prospects for dividend growth and
capital appreciation are considered favorable by the Advisor. In general, the
Advisor selects large, well-known companies that it believes have above-average
and secure dividends. The Fund will seek to produce a current yield greater than
the S&P 500.
The Fund's investment philosophy is founded on the Advisor's belief that over
time, dividend income can account for a significant component of the total
return from equity investments. Over time, reinvested dividend income has
accounted for approximately one-half of the total return of the S&P 500. Second,
dividends are normally a more stable and predictable source of return than
capital appreciation. While the price of a company's stock generally increases
or decreases in response to short-term earnings and market fluctuations, its
dividends are generally less volatile. Finally, the Advisor believes that stocks
which distribute a high level of current income tend to have less price
volatility than those which pay below average dividends.
To achieve its objective, the Fund will invest under normal circumstances at
least 65% of its assets in income-producing common stocks and convertible
preferred stocks. The Fund also may invest in convertible bonds which are debt
securities convertible into or ultimately exchangeable for common stock. The
Fund may invest up to 20% of the value of its total assets in securities that
are rated below investment grade by S&P or Moody's. In addition to investing in
common stocks and convertible securities, the Fund is authorized to invest in
high quality short-term fixed income securities as cash reserves or for
defensive purposes. See "Portfolio Instruments and Practices and Associated Risk
Factors" for a description of these and other investment practices of the Fund,
including investments in warrants, foreign securities and in stock index futures
and options.
35
<PAGE>
VALUE FUND
The investment objective of the Value Fund is to provide long-term capital
appreciation, with income a secondary objective. The Fund seeks to achieve its
objective by investing primarily in equity securities of well-established
companies with intermediate to large market capitalizations or capitalizations
which exceed $750 million. The Advisor will generally favor companies that are
believed by the Advisor to be undervalued at the time of purchase. Companies
will also exhibit a stable or improving earnings record and sound finances at
the time of purchase.
Securities may become undervalued generally because they are temporarily out
of favor due to economic conditions, a market decline, industry conditions or
actual or anticipated developments affecting the company. The Fund may be
considered ''contrarian'' in nature because its investments may be considered
out of favor with general investors. Generally, the Fund will invest at least
65% of its total assets in equity securities. The Fund will typically invest in
companies with lower price/earnings ratios, lower price/cash flow ratios and/or
lower price/book values than the equity markets in general, as measured by the
S&P 500. In addition, a company's valuation level will be compared to its own
historical valuation. The dividend yield of portfolio companies is expected to
approximate that of the general equity market. No more than 25% of the assets of
the Fund will be invested in one industry group. In addition, the Fund will not
own more than 10% of the outstanding voting securities of a single issuer.
It is the Advisor's intention to invest primarily in domestic equity
securities. In addition to investing in domestic common stocks, the Fund may
invest in other equity securities and equity equivalents. Other equity
securities and equity equivalents include securities that permit the Fund to
receive an equity interest in an issuer, the opportunity to acquire an equity
interest in an issuer, or the opportunity to receive a return on its investment
that permits the Fund to benefit from the growth over time in the equity of an
issuer. Examples of equity securities and equity equivalents include ADRs,
preferred stock, convertible preferred stock and convertible debt securities.
Equity equivalents may also include securities whose value or return is derived
from the value or return of a different security. An example of the type of
derivative security in which the Fund might invest includes depositary receipts.
The Fund may also invest in short-term money market instruments.
The Fund will limit its purchase of convertible debt securities that, at the
time of purchase, are rated below investment grade by S&P or Moody's, or if not
rated by S&P or Moody's, are of equivalent investment quality as determined by
the Advisor, to 5% of the value of the Fund's total assets. For more detailed
information with respect to such securities and the risks associated with such
investments see ''Lower Rated Debt Securities'' in the Statement of Additional
Information.
BALANCED FUND
The investment objective of the Balanced Fund is to provide an attractive
investment return through a combination of growth of capital and current income.
The Fund seeks to achieve its objective by allocating assets among three major
asset groups: equity securities, fixed income securities and cash equivalents.
In pursuing its investment objective, the Advisor will allocate the Fund's
assets based upon its evaluation of the relative attractiveness of the major
asset groups.
The Fund's policy is to invest at least 25% of the value of its total assets
in fixed income securities including short-term obligations and no more than 75%
in equity securities at all times. The actual percentage of assets invested in
fixed income and equity securities will vary from time to time, depending on the
judgment of the Advisor as to general market and economic conditions, trends and
yields, interest rates and fiscal and monetary developments. The Fund will not
purchase a security if, as a result of such purchase, less than 25% of its total
assets would be in fixed income securities (including short and long-term debt
securities, preferred stocks, and convertible debt securities and preferred
stocks, to the extent their value is attributable to their fixed income
36
<PAGE>
characteristics). This policy is not fundamental and may be changed by the Board
of Trustees without a vote of the majority of shareholders, but only with 30
days' prior shareholder notice and in accordance with the 1940 Act.
Subject to the above limitations, the Fund's assets may be invested in U.S.
Government and agency obligations, corporate bonds, senior debt securities,
preferred and common stocks in such proportions and of such type as are deemed
by the Advisor to be best adapted to the current economic and market outlook.
The Advisor may incorporate several considerations into its asset allocation
decision-making process including the Advisor's outlook for future returns on
each asset class, inflation, interest rates and long-term corporate earnings
growth. Investment returns are normally strongly influenced by such variables
and their expected changes over time. Therefore, the Advisor will attempt to
take advantage of changing economic conditions by increasing or decreasing the
ratio of stocks to fixed income obligations or cash equivalents in the Fund. For
example, if the Advisor expected more rapid economic growth leading to better
corporate earnings in the future, it would normally increase the Fund's equity
holdings while reducing its fixed income and cash equivalent holdings.
The Fund reserves the right to hold as a temporary defensive measure up to
100% of its total assets in cash and short-term obligations (having remaining
maturities of 18 months or less) at such times and in such proportions as, in
the opinion of the Advisor, prevailing market or economic conditions warrant.
Short-term obligations include, but are not limited to, domestic commercial
paper, bankers' acceptances, certificates of deposit, demand and time deposits
of domestic and foreign banks and savings and loan associations, repurchase
agreements, and obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities.
SMALL-CAP VALUE FUND
The investment objective of the Small-Cap Value Fund is long-term capital
appreciation, with income as a secondary objective. The Fund seeks to achieve
its objective by investing primarily (i.e. 65% of its total assets) in equity
securities of smaller companies with market capitalizations that are less than
the capitalization of companies which predominate the major market indices, such
as the S&P 500. These issuers generally have a market capitalization below $750
million at the time of purchase.
The Advisor will generally favor companies that are believed by the Advisor to
be undervalued at the time of purchase. Companies will also exhibit a stable or
improving earnings record and sound finances at the time of purchase as well as
above-average growth prospects. Factors considered in selecting such issuers
include participation in a fast growing industry, a strategic niche position in
a specialized market, adequate capitalization and fundamental value.
Securities may become undervalued generally because they are temporarily
overlooked or out of favor due to economic conditions, a market decline,
industry conditions or actual or anticipated developments affecting the company.
The Fund may be considered "contrarian" in nature because its investments may be
considered out of favor with general investors.
The Fund will attempt to provide investors with potentially greater long-term
rewards than those provided by an investment in a fund that seeks capital
appreciation from equity securities of larger, more established companies. Since
small capitalization companies are generally not as well-known to investors and
have less of an investor following than larger companies, they may provide
opportunities for greater investment gains as a result of inefficiencies in the
marketplace.
Small capitalization companies typically are subject to a greater degree of
change in earnings and business prospects than larger, more established
companies. In addition, securities of small capitalization companies are traded
in lower volume than those issued by larger companies and may be more volatile.
As a result, the Fund may be subject to greater price volatility than a fund
consisting of larger capitalization stocks. By maintaining a broadly diversified
portfolio, the Advisor will attempt to reduce this volatility.
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Under normal market conditions, the Fund will invest at least 65% of its total
assets in equity securities. The Fund will typically invest in companies with
lower price/earnings ratios, lower price/cash flow ratios and/or lower
price/book values than the equity markets in general, as measured by the Russell
2000(R) index of small stocks. In addition, a company's valuation level will be
compared to its own historical valuation. The dividend yield of portfolio
companies is expected to approximate that of the general equity market. No more
than 25% of the assets of the Fund will be invested in one industry group.
It is the Advisor's intention to invest primarily in domestic equity
securities. In addition to investing in domestic common stocks, the Fund may
invest in other equity securities and equity equivalents. Other equity
securities and equity equivalents include securities that permit the Fund to
receive an equity interest in an issuer, the opportunity to acquire an equity
interest in an issuer, or the opportunity to receive a return on its investment
that permits the Fund to benefit from the growth over time in the equity of an
issuer. Examples of equity securities and equity equivalents include ADRs,
preferred stock, convertible preferred stock and convertible debt securities.
Equity equivalents may also include securities whose value or return is derived
from the value or return of a different security. An example of the type of
derivative security in which the Fund might invest includes depositary receipts.
In addition to investing in equity securities, the Fund is also authorized to
invest in high quality short-term fixed income securities as cash reserves or
for defensive purposes. See "Portfolio Instruments and Practices and Associated
Risk Factors" for a description of investment practices of the Fund, including
limited investments in warrants, foreign securities and stock index futures and
options.
EQUITY SELECTION FUND
The investment objective of the Equity Selection Fund is to provide
shareholders with long-term capital appreciation. The Fund seeks to achieve this
objective by investing in equity securities that a dedicated research team
believes to be of high quality and that, as determined through both fundamental
and technical analysis, are undervalued compared to equity securities of other
companies in the same industry. The Fund generally will invest in issuers that
have market capitalizations of at least $9 billion at the time of purchase. The
Fund will be diversified by industry with proportionate weightings approximately
the same as those of the S&P 500.
The Fund seeks long-term capital appreciation by investing primarily in common
stocks. Under normal market conditions, the Fund will invest at least 65% of its
total assets in equity securities. In addition to investing in equity
securities, the Fund is also authorized to invest in high quality short-term
fixed income securities as cash reserves or for defensive purposes. See
"Portfolio Instruments and Practices and Associated Risk Factors" for a
description of investment practices of the Fund, including limited investments
in warrants, foreign securities and stock index futures and options.
MICRO-CAP EQUITY FUND
The investment objective of the Micro-Cap Equity Fund is long-term capital
appreciation. The Fund seeks to achieve its objective by investing, under normal
market conditions, at least 65% of its total assets in equity securities of
smaller companies with market capitalizations that are less than the
capitalization of companies which predominate the major market indices, such as
the S&P 500. These issuers generally have a market capitalization of $200
million or less at the time of purchase.
The Advisor will generally favor companies that it believes offer attractive
opportunities due to the inefficiencies of the micro-cap market and that the
Advisor believes, through internal research, will have the ability to grow
significantly over the next several years. The Fund will typically invest in
small-sized, emerging growth
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companies that are positioned to benefit from changes in technologies,
regulations, and/or secular trends. These companies may still be in the
developmental stage and may have limited product lines.
The Fund will attempt to provide investors with potentially greater long-term
rewards than those provided by an investment in a fund that seeks capital
appreciation from equity securities of larger, more established companies. Since
smaller capitalization companies are generally not as well-known to investors
and have less of an investor following than larger companies, they may provide
opportunities for greater investment gains as a result of inefficiencies in the
marketplace.
Smaller capitalization companies typically are subject to a greater degree of
change in earnings and business prospects than larger, more established
companies. In addition, securities of smaller capitalization companies are
traded in lower volume than those issued by larger companies and may be more
volatile. As a result, the Fund may be subject to greater price volatility than
a fund consisting of larger capitalization stocks. By maintaining a broadly
diversified portfolio, the Advisor will attempt to reduce this volatility.
Generally, the Fund will invest at least 65% of its total assets in equity
securities. No more than 25% of the assets of the Fund will be invested in one
industry group. In addition to investing in equity securities, the Fund is also
authorized to invest in high quality short-term fixed income securities as cash
reserves or for defensive purposes. See "Portfolio Instruments and Practices and
Associated Risk Factors" for a description of investment practices of the Fund,
including limited investments in warrants, foreign securities and stock index
futures and options.
PORTFOLIO INSTRUMENTS AND PRACTICES AND ASSOCIATED RISK
FACTORS
Investment strategies that are available to the Funds are set forth below.
Additional information concerning certain of these strategies and their related
risks is contained in the Statement of Additional Information.
Equity Securities. The Funds will invest in common stocks, and may invest in
warrants and similar rights to purchase common stock. A Fund may invest up to 5%
of its net assets at the time of purchase in warrants and similar rights (other
than those that have been acquired in units or attached to other securities).
Warrants represent rights to purchase securities at a specific price valid for a
specific period of time. The prices of warrants do not necessarily correlate
with the prices of the underlying securities. The Small Company Growth Fund,
Small-Cap Value Fund and Micro-Cap Equity Fund each invests primarily in the
equity securities of small capitalization companies. Small capitalization
companies typically are subject to a greater degree of change in earnings and
business prospects than larger, more established companies. In addition,
securities of small capitalization companies are traded in lower volume than
those issued by larger companies and may be more volatile. As a result, these
Funds may be subject to greater price volatility than a fund consisting of
larger capitalization stocks. By maintaining a broadly diversified portfolio,
the Advisor will attempt to reduce this volatility. In addition, the Funds
(except the Index 500 Fund) may invest in convertible bonds and convertible
preferred stock. A convertible security is a security that may be converted
either at a stated price or rate within a specified period of time into a
specified number of shares of common stock. By investing in convertible
securities, a Fund seeks the opportunity, through the conversion feature, to
participate in the capital appreciation of the common stock into which the
securities are convertible, while earning higher current income than is
available from the common stock. Although a Fund may acquire convertible
securities that are rated below investment grade by S&P or Moody's, it is
expected that, except for the Growth & Income Fund, investments in lower-rated
convertible securities will not exceed 5% of the value of the total assets of a
Fund at the time of purchase. The Growth & Income Fund may invest up to 20% of
the value of its total assets in securities that are rated below investment
grade by S&P or Moody's. These high yield, high risk securities are commonly
referred to as junk bonds. Securities that are rated Ba by Moody's or BB by S&P
have speculative characteristics with respect to the capacity to pay interest
and repay principal. Securities that are rated B generally lack characteristics
of a desirable investment, and assurance of interest and principal payments over
any long period of time may be small. Securities that are rated Caa or CCC are
of poor standing. These issues may
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be in default or present elements of danger that may exist with respect to
principal or interest. In light of the risks, the Advisor, in evaluating the
creditworthiness of an issue, will take various factors into consideration,
which may include, as applicable, the issuer's financial resources, its
sensitivity to economic conditions and trends, the ability of the issuer's
management and regulatory matters. To the extent a Fund purchases convertibles
rated below investment grade or convertibles that are not rated, a greater risk
exists as to the timely repayment of the principal of, and the timely payment of
interest or dividends on, such securities. Particular risks include (a) the
sensitivity of such securities to interest rate and economic changes, (b) the
lower payments, (c) the relatively low trading market liquidity for the
securities, (d) the impact that legislation may have on the market for these
securities (and, in turn, on a Fund's net asset value) and (e) the
creditworthiness of the issuers of such securities. During an economic downturn
or substantial period of rising interest rates, highly leveraged issuers may
experience financial stress which would negatively affect their ability to meet
their principal and interest payment obligations, to meet projected business
goals and to obtain additional financing. An economic downturn could also
disrupt the market for lower-rated convertible securities and negatively affect
the value of outstanding securities and the ability of the issuers to repay
principal and interest. If the issuer of a convertible security held by a Fund
defaulted, the Fund could incur additional expenses to seek recovery. Adverse
publicity and investor perceptions, whether or not they are based on fundamental
analysis, could also decrease the values and liquidity of lower-rated
convertible securities held by a Fund, especially in a thinly traded market.
Fixed Income Securities. Generally, the market value of fixed-income
securities in the Small-Cap value Fund and Micro-Cap Equity Fund can be expected
to vary inversely to changes in prevailing interest rates. Investors should
also recognize that in periods of declining interest rates the yields if
investment portfolios composed primarily of fixed income securities will tend to
be higher than prevailing market rates and, in periods of rising interest rates,
yields will tend to be somewhat lower. [The Funds may purchase zero-coupon
bonds (i.e., discount debt obligations that do not make periodic interest
payments). Zero-coupon bonds are subject to grater market fluctuations from
changing interest rates than debt obligations of comparable maturities which
make current distributions of interest.
When-Issued Purchases and Forward Commitments. The Funds may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"forward commitment" basis. These transactions, which involve a commitment by a
Fund to purchase or sell particular securities with payment and delivery taking
place at a future date (perhaps one or two months later), permit the Funds 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. A 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. A 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 Funds do not intend to engage in
when-issued purchases and forward commitments for speculative purposes but only
in furtherance of their respective investment objectives.
Foreign Securities. The Funds (except the Real Estate Equity Investment Fund)
may invest in the securities of foreign issuers. There are certain risks and
costs involved in investing in securities of companies and governments of
foreign nations, which are in addition to the usual risks inherent in U.S.
investments. Investments in foreign securities involve higher costs than
investments in U.S. securities, including higher transaction costs as well as
the imposition of additional taxes by foreign governments. In addition, foreign
investments may include additional risks associated with the level of currency
exchange rates, less complete financial information about the issuers, less
market liquidity, and political instability. Future political and economic
developments, the possible imposition of withholding taxes on interest income,
the possible seizure or nationalization of foreign holdings, the possible
establishment of exchange controls, or the adoption of other governmental
restrictions might adversely affect the payment of principal and interest on
foreign obligations. Additionally, foreign banks and foreign branches of
domestic banks may be subject to less stringent reserve requirements, and to
different accounting, auditing and recordkeeping requirements.
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The Multi-Season Growth Fund, Mid-Cap Growth Fund, Value Fund, Small-Cap Value
Fund, Equity Selection Fund and Micro-Cap Equity Fund each may invest up to 20%
of its total assets in equity securities of foreign issuers, including companies
domiciled in developing countries. The International Equity Fund may also invest
in countries with emerging economies or securities markets located in the Asia-
Pacific region, Eastern Europe, Latin and South America and Africa. Political
and economic structures in many of these countries may be undergoing significant
evolution and rapid development, and such countries may lack the social,
political and economic stability characteristic of more developed countries. As
a result, the risks described above, including the risks of nationalization or
expropriation of assets, may be heightened, and the limited volume of trading in
securities in these countries may make such investments illiquid and
particularly volatile.
Although a Fund may invest in securities denominated in foreign currencies,
portfolio securities and other assets held by the Funds are valued in U.S.
dollars. As a result, the net asset value of a Fund's shares may fluctuate with
U.S. dollar exchange rates as well as with price changes of its portfolio
securities in the various local markets and currencies. In addition to favorable
and unfavorable currency exchange-rate developments, the Funds are subject to
the possible imposition of exchange control regulations or freezes on
convertibility of currency.
Investments in foreign securities may be in the form of ADRs, EDRs or similar
securities. These securities may not be denominated in the same currency as the
securities they represent. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying foreign securities.
EDRs are receipts issued by a European financial institution evidencing a
similar arrangement. Generally, ADRs, in registered form, are designed for use
in United States securities markets, and EDRs, in bearer form, are designed for
use in the European securities markets. The Multi-Season Growth Fund and the
Mid-Cap Growth Fund typically will only purchase foreign securities which are
represented by sponsored or unsponsored ADRs listed on a domestic securities
exchange or included in the NASDAQ National Market System. Ownership of
unsponsored ADRs may not entitle a Fund to financial or other reports from the
issuer, to which it would be entitled as the owner of sponsored ADRs. Interest
or dividend payments on such securities may be subject to foreign withholding
taxes.
Forward Foreign Currency Exchange Contracts. The Funds (except the Real Estate
Equity Investment Fund) may enter into forward currency exchange contracts in an
effort to reduce the level of volatility caused by changes in foreign currency
exchange rates. A Fund may not enter into these contracts for speculative
purposes. A forward currency exchange contract is an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set at the
time of contract. A Fund will segregate cash or liquid securities to cover its
obligation to purchase foreign currency under a forward foreign currency
contract. Although such contracts tend to minimize the risk of loss due to a
decline in the value of the hedged currency, at the same time they tend to limit
any potential gain that might be realized should the value of such currency
increase. The Mid-Cap Growth Fund and Value Fund will not enter into forward
foreign currency exchange contracts if as a result, the Fund will have more than
20% of its total assets committed to consummation of such forward foreign
currency exchange contracts.
Futures Contracts and Options. Each Fund may invest in futures contracts and
options on futures contracts for hedging purposes or to maintain liquidity.
However, a Fund may not purchase or sell a futures contract unless immediately
after any such transaction the sum of the aggregate amount of margin deposits on
its existing futures positions and the amount of premiums paid for related
options is 5% or less of its total assets. The Multi-Season Growth Fund does not
presently anticipate engaging in transactions involving options on securities,
or stock indices or options on stock index futures contracts, although it has
the authority to do so. The Real Estate Equity Investment Fund may to a limited
extent, enter into financial futures contracts including futures contracts based
on securities indices, purchase and write put and call options and engage in
related closing transactions to the extent available to hedge all or a portion
of its portfolio or as an efficient means of regulating its exposure to the
equity markets. In addition, the Real Estate Equity Investment Fund will not
hedge more than 30% of its total assets and will not write covered call options
against more than 15% of the value of the equity securities held in the
portfolio.
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Futures contracts obligate a Fund, at maturity, to take or make delivery of
certain securities or the cash value of a bond or securities index. When
interest rates are rising, futures contracts can offset a decline in value of
the Fund's portfolio securities. When rates are falling, these contracts can
secure higher yields for securities the Fund intends to purchase.
The Funds may purchase and sell call and put options on futures contracts
traded on an exchange or board of trade. When a Fund purchases an option on a
futures contract, it has the right to assume a position as a purchaser or seller
of a futures contract at a specified exercise price at any time during the
option period. When the Fund sells an option on a futures contract, it becomes
obligated to purchase or sell a futures contract if the option is exercised. In
anticipation of a market advance, a Fund may purchase call options on futures
contracts as a substitute for the purchase of futures contracts to hedge against
a possible increase in the price of securities which the Fund intends to
purchase. Similarly, if the value of a Fund's portfolio securities is expected
to decline, the Fund might purchase put options or sell call options on futures
contracts rather than sell futures contracts. In connection with a Fund's
position in a futures contract or option thereon, the Fund will create a
segregated account of liquid assets or will otherwise cover its position in
accordance with applicable requirements of the SEC.
In addition, each Fund, may write covered call options, buy put options, buy
call options and write secured put options on particular securities or various
stock indices. Options trading is a highly specialized activity which entails
greater than ordinary investment risks. A call option for a particular security
gives the purchaser of the option the right to buy, and a writer the obligation
to sell, the underlying security at the stated exercise price at any time prior
to the expiration of the option, regardless of the market price of the security.
The premium paid to the writer is in consideration for undertaking the
obligations under the option contract. A put option for a particular security
gives the purchaser the right to sell the underlying security at the stated
exercise price at any time prior to the expiration date of the option,
regardless of the market price of the security. In contrast to an option on a
particular security, an option on a stock index provides the holder with the
right to make or receive a cash settlement upon exercise of the option.
The use of derivative instruments exposes a Fund to additional risks and
transaction costs. Risks inherent in the use of derivative instruments include:
(1) the risk that interest rates, securities prices and currency markets will
not move in the direction that a portfolio manager anticipates; (2) imperfect
correlation between the price of derivative instruments and movements in the
prices of the securities, interest rates or currencies being hedged; (3) the
fact that skills needed to use these strategies are different than those needed
to select portfolio securities; (4) the possible inability to close out certain
hedged positions to avoid adverse tax consequences; (5) the possible absence of
a liquid secondary market for any particular instrument and possible exchange-
imposed price fluctuation limits, either of which may make it difficult or
impossible to close out a position when desired; (6) leverage risk, that is, the
risk that adverse price movements in an instrument can result in a loss
substantially greater than a Fund's initial investment in that instrument (in
some cases, the potential loss is unlimited); and (7) particularly in the case
of privately-negotiated instruments, the risk that the counterparty will fail to
perform its obligations, which could leave a Fund worse off than if it had not
entered into the position. For a further discussion, see "Fund Investments" and
Appendix B in the Statement of Additional Information.
When a Fund invests in a derivative instrument, it may be required to
segregate cash and other high-grade liquid debt securities or certain portfolio
securities to ''cover'' the Fund's position. Assets segregated or set aside
generally may not be disposed of so long as the Fund maintains the positions
requiring segregation or cover. Segregating assets could diminish a Fund's
return due to the opportunity losses of foregoing other potential investments
with the segregated assets.
A Fund is not a commodity pool, and all futures transactions engaged in by a
Fund must constitute bona fide hedging or other permissible transactions in
accordance with the rules and regulations promulgated by the Commodity Futures
Trading Commission. Successful use of futures and options is subject to special
risk considerations.
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For a further discussion see ''Additional Information on Fund Investments''
and Appendix B to the Statement of Additional Information.
Repurchase Agreements. The Funds may agree to purchase securities from
financial institutions subject to the seller's agreement to repurchase them at
an agreed-upon time and price (''repurchase agreements''). The financial
institutions with which a Fund may enter into repurchase agreements include
member banks of the Federal Reserve system, any foreign bank or any domestic or
foreign broker/dealer which is recognized as a reporting government securities
dealer. The Advisor will review and continuously monitor the creditworthiness of
the seller under a repurchase agreement, and will require the seller to maintain
liquid assets in a segregated account in an amount that is greater than the
repurchase price. Default by or bankruptcy of the seller would, however, expose
a Fund to possible loss because of adverse market action or delays in connection
with the disposition of the underlying obligations.
Reverse Repurchase Agreements. Each Fund (except the Multi-Season Growth Fund)
may borrow funds for temporary purposes by selling portfolio securities to
financial institutions such as banks and broker/dealers and agreeing to
repurchase them at a mutually specified date and price (''reverse repurchase
agreements''). Reverse repurchase agreements involve the risk that the market
value of the securities sold by a Fund may decline below the repurchase price. A
Fund would pay interest on amounts obtained pursuant to a reverse repurchase
agreement.
Investment Company Securities. In connection with the management of their
daily cash positions, the Funds may invest in securities issued by other
investment companies which invest in short-term debt securities and which seek
to maintain a $1.00 net asset value per share (i.e., ''money market funds'').
The International Equity Fund may purchase shares of investment companies
investing primarily in foreign securities, including so called ''country
funds.'' Country funds have portfolios consisting exclusively of securities of
issuers located in one or more foreign countries. The Index 500 Fund may also
invest in SPDRs and shares of other investment companies that are structured to
seek a similar correlation to the performance of the S&P 500. Securities of
other investment companies will be acquired within limits prescribed by the 1940
Act. These limitations, among other matters, restrict investments in securities
of other investment companies to no more than 10% of the value of a Fund's total
assets, with no more than 5% invested in the securities of any one investment
company. As a shareholder of another investment company, a Fund, other than the
Real Estate Equity Investment Fund, would bear, along with other shareholders,
its pro rata portion of the other investment company's expenses, including
advisory fees. These expenses would be in addition to the expenses each Fund
bears directly in connection with its own operations.
Liquidity Management. Pending investment, to meet anticipated redemption
requests, or as a temporary defensive measure if the Advisor determines that
market conditions warrant, the Funds may also invest without limitation in
short-term U.S. Government obligations, high quality money market instruments,
variable and floating rate instruments and repurchase agreements as described
above. The Balanced Fund may also invest in these securities in furtherance of
its investment objective.
High quality money market instruments may include obligations issued by
Canadian corporations and Canadian counterparts of U.S. corporations and
Europaper, which is U.S. dollar-denominated commercial paper of a foreign
issuer. The Funds may also purchase U.S. dollar-denominated bank obligations,
such as certificates of deposit, bankers' acceptances and interest-bearing
savings and time deposits, issued by U.S. or foreign banks or savings
institutions having total assets at the time of purchase in excess of $1
billion. Short-term obligations purchased by a Fund will either have short-term
debt ratings at the time of purchase in the top two categories by one or more
unaffiliated nationally recognized statistical rating organizations (''NRSROs'')
or be issued by issuers with such ratings. Unrated instruments purchased by a
Fund will be of comparable quality as determined by the Advisor.
Illiquid Securities. Each Fund may invest up to 15% of the total value of its
net assets (determined at time of acquisition) in securities which are illiquid.
Illiquid securities would generally include repurchase agreements and time
deposits with notice/termination dates in excess of seven days, and certain
securities which are subject to
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trading restrictions because they are not registered under the Securities Act of
1933, as amended (the "Act"). If, after the time of acquisition, events cause
this limit to be exceeded, a Fund will take steps to reduce the aggregate amount
of illiquid securities as soon as reasonably practicable in accordance with the
policies of the SEC.
Each of the Funds may invest in commercial obligations issued in reliance on
the "private placement" exemption from registration afforded by Section 4(2) of
the Securities Act of 1933, as amended ("Section 4(2) paper"). Each Fund may
also purchase securities that are not registered under the Securities Act of
1933, as amended, but which can be sold to qualified institutional buyers in
accordance with Rule 144A under that Act ("Rule 144A securities"). Section 4(2)
paper is restricted as to disposition under the Federal securities laws, and
generally is sold to institutional investors which agree that they are
purchasing the paper for investment and not with a view to public distribution.
Any resale by the purchaser must be in an exempt transaction. Section 4(2) paper
normally is resold to other institutional investors through or with the
assistance of the issuer or investment dealers which make a market in the
Section 4(2) paper, thus providing liquidity. Rule 144A securities generally
must be sold only to other qualified institutional buyers. If a particular
investment in Section 4(2) paper or Rule 144A securities is not determined to be
liquid, that investment will be included within a Fund's limitation on
investment in illiquid securities. The Advisor will determine the liquidity of
such investments pursuant to guidelines established by the Company's Board of
Trustees or Munder's Board of Directors. The Multi-Season Growth, Mid-Cap Growth
and Value Funds' investments in restricted securities will be limited to 5% of
each Fund's total assets excluding Rule 144A securities. The Real Estate Equity
Investment Fund will limit its investment in restricted securities to 10% of the
Fund's total assets, excluding Rule 144A securities, and will limit its
investment in all restricted securities, including Rule 144A securities, to 15%
of its total assets.
Corporate Obligations. The Balanced Fund may purchase corporate bonds that are
considered to be investment grade or better (within the four highest rating
categories of S&P or Moody's or, if unrated, of comparable quality. Obligations
rated "Baa" by Moody's lack outstanding investment characteristics. Adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity of obligations rated "BBB" by S&P to pay interest and repay
principal than in the case of higher grade obligations. Descriptions of each
rating category are included as Appendix A to the Statement of Additional
Information.
In addition, debt securities with longer maturities, which tend to produce
higher yields, are subject to potentially greater capital appreciation and
depreciation than obligations with shorter maturities. The market value of the
Balanced Fund's investments will change in response to changes in interest rates
and the relative financial strength of each issuer. During periods of falling
interest rates, the values of long-term fixed income securities generally rise.
Conversely, during periods of rising interest rates the values of such
securities generally decline. Changes in the financial strength of an issuer or
changes in the ratings of any particular security may also affect the value of
these investments. Fluctuations in the market value of fixed income securities
subsequent to their acquisitions will not affect cash income from such
securities but will be reflected in the Balanced Fund's net asset value.
The Balanced Fund may also purchase zero-coupon bonds (i.e., discount debt
obligations that do not make periodic interest payments). Zero-coupon bonds are
subject to greater market fluctuations from changing interest rates than debt
obligations of comparable maturities which make current distributions of
interest.
Asset-Backed Securities. The Balanced Fund may purchase investment grade
asset-backed securities (i.e., securities backed by mortgages, installment sales
contracts, credit card receivables or other assets). The average life of asset-
backed securities varies with the maturities of the underlying instruments
which, in the case of mortgages, have maximum maturities of forty years. The
average life of a mortgage-backed instrument, in particular, is likely to be
substantially less than the original maturity of the mortgage pools underlying
the securities as the result of scheduled principal payments and mortgage
prepayments. The rate of such mortgage prepayments, and hence the life of the
certificates, will be primarily a function of current market rates and current
conditions in the relevant housing markets. The relationship between mortgage
prepayment and interest rates may give some high-yielding mortgage-related
securities less potential for growth in value than conventional bonds with
comparable maturities.
44
<PAGE>
In addition, in periods of falling interest rates, the rate of mortgage
prepayment tends to increase. During such periods, the reinvestment of
prepayment proceeds by the Balanced Fund will generally be at lower rates than
the rates that were carried by the obligations that have been prepaid. Because
of these and other reasons, an asset-backed security's total return may be
difficult to predict precisely. To the extent that the Balanced Fund purchases
mortgage-related or mortgage-backed securities at a premium, mortgage
prepayments (which may be made at any time without penalty) may result in some
loss of the Balanced Fund's principal investment to the extent of premium paid.
Presently there are several types of mortgage-backed securities issued or
guaranteed by U.S. Government agencies, including guaranteed mortgage pass-
through certificates, which provide the holder with a pro rata interest in the
underlying mortgages, and collateralized mortgage obligations ("CMOs"), which
provide the holder with a specified interest in the cash flow of a pool of
underlying mortgages or other mortgage-backed securities. Issuers of CMOs
frequently elect to be taxed as a pass-through entity known as real estate
mortgage investment conduits, or REMICs. CMOs are issued in multiple classes,
each with a specified fixed or floating interest rate and a final distribution
date. The relative payment rights of the various CMO classes may be structured
in many ways. In most cases, however, payments of principal are applied to the
CMO classes in the order of their respective stated maturities, so that no
principal payments will be made on a CMO class until all other classes having an
earlier stated maturity date are paid in full. The classes may include accrual
certificates (also known as "Z-Bonds"), which only accrue interest at a
specified rate until other specified classes have been retired and are converted
thereafter to interest-paying securities. They may also include planned
amortization classes ("PAC") which generally require, within certain limits,
that specified amounts of principal be applied on each payment date, and
generally exhibit less yield and market volatility than other classes. The
Balanced Fund will not purchase residual CMO interests, which normally exhibit
the greatest price volatility.
U.S. Government Obligations. The Funds may purchase obligations issued or
guaranteed by the U.S. Government and U.S. Government agencies and
instrumentalities. Obligations of certain agencies and instrumentalities of the
U.S. Government, such as those of the Government National Mortgage Association,
are supported by the full faith and credit of the U.S. Treasury. Others, such as
those of the Export-Import Bank of the United States, are supported by the right
of the issuer to borrow from the U.S. Treasury; and still others, such as those
of the Student Loan Marketing Association, are supported only by the credit of
the agency or instrumentality issuing the obligation. No assurance can be given
that the U.S. Government would provide financial support to U.S. Government-
sponsored instrumentalities if it is not obligated to do so by law.
Stripped Securities. The Balanced Fund may purchase participations in trusts
that hold U.S. Treasury and agency securities (such as TIGRs and CATS) and also
may purchase Treasury receipts and other stripped securities, which represent
beneficial ownership interests in either future interest payments or the future
principal payments on U.S. Government obligations. These instruments are issued
at a discount to their "face value" and may (particularly in the case of
stripped mortgage-backed securities) exhibit greater price volatility than
ordinary debt securities because of the manner in which their principal and
interest are returned to investors.
Borrowing. The Funds are authorized to borrow money in amounts up to 5% of the
value of each Fund's total assets at the time of such borrowing for temporary
purposes. However, a Fund is authorized to borrow money in amounts up to 33-1/3%
of its assets, as permitted by the 1940 Act, for the purpose of meeting
redemption requests. Borrowing by a Fund creates an opportunity for greater
total return but, at the same time, increases exposure to capital risk. In
addition, borrowed funds are subject to interest costs that may offset or exceed
the return earned on the borrowed funds. However, a Fund will not purchase
portfolio securities while borrowings exceed 5% of a Fund's total assets. For
more detailed information with respect to the risks associated with borrowing,
see the heading "Borrowing" in the Statement of Additional Information.
Lending of Portfolio Securities. To enhance the return of each of their
respective portfolios, each Fund may lend securities in their portfolios
representing up to 25% of their total assets, taken at market value, to
securities firms and financial institutions, provided that each loan is secured
continuously by collateral in the form of cash,
45
<PAGE>
high quality money market instruments or short-term U.S. Government securities
adjusted daily to have a market value at least equal to the current market value
of the securities loaned. The risk in lending portfolio securities, as with
other extensions of credit, consists of possible delay in the recovery of the
securities or possible loss of rights in the collateral should the borrower fail
financially.
Portfolio Transactions and Turnover. All orders for the purchase or sale of
securities on behalf of a Fund are placed by the Advisor with broker/dealers
that the Advisor selects. A high portfolio turnover rate involves larger
brokerage commission expenses or transaction costs which must be borne directly
by a Fund, and may result in the realization of short-term capital gains which
are taxable to shareholders as ordinary income. The Advisor will not consider
portfolio turnover rate a limiting factor in making investment decisions
consistent with a Fund's objective and policies. It is anticipated that the
portfolio turnover rate of each of the Small-Cap Value Fund, Micro-Cap Equity
Fund and Equity Selection Fund will not exceed 100%. See "Financial Highlights"
for the portfolio turnover rate of each of the Funds other than the Small-Cap
Value Fund, Micro-Cap Equity Fund and Equity Selection Fund.
Industry Concentration. Because the Real Estate Equity Investment Fund invests
primarily in the real estate industry, it could conceivably own real estate
directly as a result of a default on debt securities it owns. The Fund,
therefore, may be subject to certain risks associated with the direct ownership,
as well as indirect ownership, of real estate. These risks include: declines in
the value of real estate, risks related to general and local economic
conditions, overbuilding and increased competition, increases in property taxes
and operating expenses, changes in zoning laws, casualty or condemnation losses,
variations in rental income, changes in neighborhood values, the appeal of
properties to tenants and increase in interest rates. If the Fund has rental
income or income from the disposition of real property, the receipt of such
income may adversely affect its ability to retain its tax status as a regulated
investment company. See "Tax Status" in the Statement of Additional
Information. Because the Fund may invest more than 25% of its total assets in
any one sector of the real estate or real estate related industries, it may be
subject to greater risk and market fluctuations than a portfolio representing a
broader range of industries.
In addition, equity real estate investment trusts may be affected by changes
in the value of the underlying property owned by the trust, while mortgage real
estate investment trusts may be affected by the quality of credit extended.
Equity and mortgage real estate investment trusts are dependent upon management
skill, may not be diversified and are subject to the risk of financing projects.
Such trusts are also subject to heavy cash flow dependency, defaults by
borrowers, self liquidation and the possibility of failing to qualify for the
beneficial tax treatment available to real estate investment trusts under the
Internal Revenue Code of 1986, as amended (the "Code") and to maintain
exemption from the 1940 Act. Real estate investment trusts may be subject to
interest rate risks similar to fixed income securities. In general, fixed income
security prices vary inversely with interest rates (when interest rates rise,
prices fall; and, conversely, when interest rates fall, prices rise).
Additionally, while the Fund intends to primarily purchase publicly traded real
estate investment trusts, some real estate investment trusts may be subject to
lower market liquidity due to their small size. This may impact the Fund's
ability to sell the securities, or the price at which such securities may be
sold. Changes in prevailing interest rates may adversely affect the value of the
debt securities in which the Fund will invest. By investing in real estate
investment trusts indirectly through the Fund, a shareholder will bear not only
his or her proportionate share of expenses of the Fund, but also, indirectly,
similar expenses of the real estate investment trusts.
INVESTMENT LIMITATIONS
Except for the Multi-Season Growth and Real Estate Equity Investment Funds'
investment objectives, the investment objectives and policies stated above may
be changed by the Company's Board of Trustees or Munder's Board of Directors,
where applicable, without approval by a majority of a Fund's outstanding shares.
However, shareholders will be notified in writing at least thirty days in
advance of any material change, except where notice is not required. No
assurance can be given that a Fund will achieve its investment objective.
46
<PAGE>
Each Munder Fund has also adopted certain fundamental investment limitations
that may be changed only with the approval of a "majority of the outstanding
shares of a Fund" (as defined in the Statement of Additional Information). The
following descriptions summarize several of the Munder Funds' fundamental
investment policies, which are set forth in full in the Statement of Additional
Information. The MFI Funds' restrictions are set forth in the Statement of
Additional Information.
No Munder Fund may:
(1) purchase securities (except U.S. Government securities) if more than 5%
of its total assets will be invested in the securities of any one issuer,
except that up to 25% of a Fund's total assets may be invested without regard
to this 5% limitation;
(2) subject to the foregoing 25% exception, purchase more than 10% of the
outstanding voting securities of any issuer;
(3) invest 25% or more of its total assets in one or more issuers
conducting their principal business activities in the same industry; and
(4) borrow money except for temporary purposes in amounts up to one-third
of the value of its total assets at the time of such borrowing. Whenever
borrowings exceed 5% of a Fund's total assets, the Fund will not make any
additional investments.
These investment limitations are applied at the time investment securities are
purchased.
HOW TO PURCHASE SHARES
Each of the Funds offers individual investors three methods of purchasing
shares, thus enabling investors to choose the Class that best suits their needs
given the amount of purchase and intended duration of investment.
Shares of each 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 Funds. 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 Funds, and share certificates are not issued unless expressly
requested in writing. The Funds' management reserves the right to reject any
purchase order if, in its opinion, it is in the Funds' 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 and 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.
47
<PAGE>
DIFFERENCES AMONG THE CLASSES
The primary distinctions among the Classes of a 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
Sales Charge average daily net assets Other Information
------------ ---------------------------- -----------------
<S> <C> <C> <C>
Class A Maximum initial sales charge of Service fee of 0.25% Initial
sales charge waived or
5.5% of the public offering price (0.10% for the Index 500 Fund)
reduced for certain purchases.
(2.5% for the Index 500 Fund)
Class B Maximum CDSC of 5% of redemption Service fee of 0.25% (0.10%
CDSC charge waived for certain
proceeds (3% for the Index 500 Fund); for the Index 500 Fund);
redemptions, shares convert to
declines to zero after six years distribution fee of 0.75% (0.35% Class A
Shares approximately six
for the Index 500 Fund) years after issuance,
subject to
receipt of certain tax rulings
or opinions
Class C Maximum CDSC of 1% of redemption Service fee of 0.25%;
Shares do not convert to
proceeds for redemption made within distribution fee of 0.75% another
class
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:
SALES CHARGES
Class A Shares of the Funds, other than the Index 500 Fund, are sold at net
asset value plus an initial sales charge of up to 5.5% of the public offering
price. Class A Shares of the Index 500 Fund are sold at net asset value plus an
initial sales charge of up to 2.5% 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 of the Funds, other than the Index 500
Fund, sold pursuant to a complete waiver of the initial sales charge applicable
to large purchases are subject to a 1% (up to 0.20% for the Index 500 Fund)
contingent deferred sales charge if redeemed within one year of the date of
purchase.
Class B Shares of the Funds, other than the Index 500 Fund, are sold with no
initial sales charge, but a contingent deferred sales charge of up to 5% of the
redemption proceeds applies to redemptions made within six years of purchase.
Class B Shares of the Index 500 Fund are sold with no initial sales charge, but
a contingent deferred sales charge of up to 3% 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 ongoing expenses than Class A Shares, but automatically
convert to Class A Shares approximately six years after issuance subject to
receipt of certain tax rulings and opinions.
48
<PAGE>
Class C Shares are sold without an initial sales charge or a contingent
deferred sales charge, except for a contingent deferred sales charge of 1%
(0.20% for the Index 500 Fund) 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 $25,000 or more ($100,000 or more for the Index 500
Fund) 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 than 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 Rule 12b-1 service fee of up to 0.25%
of average daily net assets. Classes B and C Shares pay an annual Rule 12b-1
distribution fee of up to 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 the Class C Shares would approximate the expense of the 5.5% maximum
initial sales charge on the Class A Shares of the Funds (other than the Index
500 Fund) if the shares were held for approximately 7 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 a Fund
(other than the Index 500 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 a Fund (other than the Index
500 Fund) for less than six 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 by purchasing 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. The example set forth above under "Fund
Expenses" shows the cumulative expenses an investor would pay over periods of
one, three, five and ten years on a hypothetical investment in each class of
Fund shares, assuming an annual return of 5%.
49
<PAGE>
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, principal underwriter of the Fund's
shares, 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, 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 certified 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 a 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, 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 Shares of any Fund may arrange for periodic investments in that
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
purchases of the Funds' Shares.
REINVESTMENT PRIVILEGE
Upon redemption of Class A, B or C Shares of a Fund (or Class A, B or C Shares
of another non-money market fund of the Company or Munder), a shareholder has an
annual right, to be exercised within 60 days of redemption, to reinvest the
redemption proceeds in shares of the same 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.
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<PAGE>
See the Statement of Additional Information for further information regarding
purchases of the Funds' Shares.
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 tables:
INITIAL SALES CHARGE SCHEDULE--CLASS A SHARES (OTHER THAN THE
INDEX 500 FUND)
<TABLE>
<CAPTION>
Amount of Purchase Sales Charge as a Percentage of
- ------------------ ---------------------------------
Discount to
Selected
Dealers as
a Percentage
Offering Net Amount Invested of Offering
Price (Net Asset Value) Price
-------- ------------------- --------------
<S> <C> <C> <C>
Less than $25,000 5.50% 5.82% 5.00%
$25,000 but less than $50,000 5.25% 5.54% 4.75%
$50,000 but less than $100,000 4.50% 4.71% 4.00%
$100,000 but less than $250,000 3.50% 3.63% 3.25%
$250,000 but less than $500,000 2.50% 2.56% 2.25%
$500,000 but less than $1,000,000 1.50% 1.52% 1.25%
$1,000,000 or more None* None* (see below)**
</TABLE>
- -------------------
*No initial sales charge applies on investments of $1 million or more, but a
CDSC of 1% is imposed on certain redemptions within one year of purchase.
Class A Shares of the Munder Funds purchased on or before June 27, 1995 are
subject to a different CDSC. 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.
INITIAL SALES CHARGE SCHEDULE - CLASS A SHARES OF THE INDEX 500
FUND
<TABLE>
<CAPTION>
Amount of Purchase Sales Charge as a Percentage of
- ------------------ ---------------------------------
Discount to
Selected
Dealers as
a Percentage
Offering Net Amount Invested of Offering
Price (Net Asset Value) Price
-------- ------------------- -------------
<S> <C> <C> <C>
Less than $100,000 2.50% 2.56% 2.25%
$100,000 but less than $250,000 2.00% 2.04% 1.75%
$250,000 but less than $500,000 1.50% 1.52% 1.25%
$500,000 but less than $1,000,000 None* None* 0.20%
$1,000,000 but less than $3,000,000 None* None* 0.15%
$3,000,000 or more None* None* 0.10%
</TABLE>
- -------------------
*There is no initial sales charge on purchases of $500,000 or more of Class A
Shares of the Index 500 Fund; however, a CDSC in the amount of the Discount to
Selected Dealers shown above will be imposed on the lower of original purchase
price or the net asset value of the shares at the time of redemption if such
shares are redeemed within one year after the date of purchase.
51
<PAGE>
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 Securities Act of 1933. 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 a 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 or
full-time employees (and their families) that certify to the Distributor at the
time of purchase that such purchase is for their own account (or for the benefit
of their families); (4) 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
CLASS A SHARES (OTHER THAN THE INDEX 500 FUND)
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 that
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 Company (other than the
Index 500 Fund) or Munder 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.
CLASS A SHARES OF THE INDEX 500 FUND
The initial sales charge will be waived for all investments by Qualified
Employee Benefit Plans in Class A Shares of the Index 500 Fund. In addition, the
CDSC of up to .20% imposed on certain redemptions within one year of purchase
will be waived for Qualified Employee Benefit Plan purchases of $500,000 or more
of Class A Shares of the Index 500 Fund. The Distributor will pay the following
commissions to dealers who initiate and are responsible for Qualified Employee
Benefit Plan purchases of Class A Shares of the Index 500 Fund:
52
<PAGE>
<TABLE>
<CAPTION>
Discount to Selected Dealer
Amount of Purchase as a Percentage of Offering Price
- ------------------------------------- ---------------------------------
<S> <C>
Less than $500,000 0.25%
$500,000 but less than $1,000,000 0.20%
$1,000,000 but less than $3,000,000 0.15%
$3,000,000 or more 0.10%
</TABLE>
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 or Munder 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 $25,000 of
Class A Shares of the Funds other than the Index 500 Fund or $100,000 of Class A
Shares of the Index 500 Fund, 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 Funds or other non-
money market funds of the Company or Munder. The value of Class B or Class C
Shares of any fund of the Company or Munder will not be counted toward the
fulfillment of a Letter of Intent.
As shown in the tables under "Initial Sales Charge Schedule--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 or Munder 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 or Munder 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 or Munder 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.
53
<PAGE>
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.
Pursuant to the Funds' Variable Pricing System, each Fund issues two
additional classes of shares, Class K and Class Y Shares in addition to the
classes described in this Prospectus. Class K and Class Y Shares have different
sales charges and expense levels, which may 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.
HOW TO REDEEM SHARES
Generally, shareholders may require a Fund to redeem their shares by sending a
written request, signed by the record owner(s), to The Munder Funds, c/o First
Data, 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 then $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.
The Company, Munder, 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
54
<PAGE>
followed, neither the Company, Munder, 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/wired only according to the previously
established instructions.
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 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 be as long as 15 days.
There is no minimum requirement for telephone redemptions paid by check.
However the Transfer Agent may deduct its current wire fee from the principal in
the shareholders 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 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
contingent deferred sales charge is imposed on certain redemptions of Class A,
Class B and Class C Shares as described below.
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 Funds offer 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 a 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 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 Funds concurrently with withdrawals may be disadvantageous to investors
because of the sales charges involved, and, therefore, is discouraged. Class B
and Class C Shares, if any, that are redeemed in connection with the AWP are
still subject to the applicable CDSC.
55
<PAGE>
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.
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 gains 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 a Fund acquired through an exchange of Class B
Shares of a Fund will be calculated from the date that the Class B Shares were
initially purchased.
For Class B Shares purchased after June 27, 1995, the amount of any applicable
contingent deferred sales charge 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
tables below:
CLASS B SHARES OF FUNDS (OTHER THAN THE INDEX 500 FUND)
<TABLE>
<CAPTION>
Contingent Deferred
-------------------
Sales Charge as
---------------
a Percentage of
---------------
Year Since Dollar Amount
---------- -------------
Purchase Subject to Charge
-------- -----------------
<S> <C>
First...... 5.00%
Second..... 4.00%
Third...... 3.00%
Fourth..... 3.00%
Fifth...... 2.00%
Sixth...... 1.00%
Seventh.... 0.00%
</TABLE>
CLASS B SHARES OF THE INDEX 500 FUND
<TABLE>
<CAPTION>
Contingent Deferred
-------------------
Sales Charge as
---------------
a Percentage of
---------------
Year Since Dollar Amount
---------- -------------
Purchase Subject to Charge
-------- -----------------
<S> <C>
First...... 3.00%
Second..... 2.50%
Third...... 2.00%
Fourth..... 1.50%
Fifth...... 1.00%
Sixth...... 0.50%
Seventh.... 0.00%
</TABLE>
56
<PAGE>
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 4.0% of the net asset value of Class
B Shares of Funds (other than the Index 500 Fund) and 2.0% of the net asset
value of Class B Shares of the Index 500 Fund to brokers that initiate and are
responsible for purchases of such Class B Shares of the Funds.
Class B Shares of the Munder Funds purchased on or before June 27, 1995 will
be subject to a CDSC calculated by multiplying the net asset value of shares
subject to the CDSC 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
------------------
Redemption During Dollar Amount Subject to Charge
----------------- -------------------------------
<S> <C>
1st Year Since Purchase.. 4.00%
2nd Year Since Purchase.. 4.00%
3rd Year Since Purchase.. 3.00%
4th Year Since Purchase.. 3.00%
5th Year Since Purchase.. 2.00%
6th Year Since Purchase.. 1.00%
</TABLE>
Class B Shares of a Munder Fund purchased on or before June 27, 1995 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 distributions or (2) shares
redeemed at the end of six years or more after their purchase. Class B Shares of
the Munder Funds purchased on or before June 27, 1995 will convert to Class A
Shares of a Fund at the end of six years after the date of purchase based on the
relative net asset values of shares of each Class. Class B Shares of the Munder
Funds acquired through the reinvestment of dividends or distributions are also
converted at the earlier of these dates--six years after the reinvestment date
or the date of conversion of the most recently purchased Class B Shares that
were not acquired through reinvestment.
The CDSC will be waived for certain exchanges, as described below. In
addition, the CDSC payable with respect to Class B Shares of the Funds 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 a Fund's right to liquidate a shareholder's account involuntarily. The CDSC
will be waived with respect to Class B Shares of the Munder Funds purchased on
or before June 27, 1995 in the following circumstances: (1) total or partial
redemptions made within one year following the death or disability of a
shareholder or registered joint owner; (2) minimum required distributions made
in connection with an IRA or other retirement plan following attainment of age
59 1/2 and (3) redemptions pursuant to a Fund's right to liquidate a
shareholder's account involuntarily.
The CDSC will be waived on the following types of redemptions with respect to
Class B Shares of the MFI Funds purchased on or before June 27, 1995: (1)
redemptions by investors who have invested a lump sum amount of $1 million or
more in the Fund; (2) redemptions by the officers, directors, and employees of
the Advisor or the Distributor and such persons' immediate families; (3) dealers
or brokers who have a sales agreement with the Distributor, for their own
accounts, or for retirement plans for their employees or sold to registered
representatives or full time employees (and their families) that certify to the
Distributor at the time of purchase that such purchase is for their own account
(or for the benefit of their families); (4) involuntary redemptions effected
pursuant to the Fund's right to liquidate shareholder accounts having an
aggregate net asset value of less than $500; and (5) redemptions the proceeds of
which are reinvested in the Fund within 90 days of the redemption.
57
<PAGE>
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 of the Funds, other than the Index 500 Fund, and on
investments of $500,000 or more in Class A Shares of the Index 500 Fund and on
investments in Class C Shares, a CDSC of 1% (up to .20% for the Index 500 Fund)
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 contingent deferred sales charge on Class A and Class C Shares.
The holding period of Class A or Class C Shares of a Fund acquired through an
exchange of the corresponding class of shares of The Munder Money Market Fund
(which are available only by exchange of Class A or Class C Shares of the Fund,
as the case may be) and the MFI Funds and non-money market funds of the Company
will be calculated from the date that the Class A or Class C Shares of the Fund
were initially purchased.
See the Statement of Additional Information for further information regarding
redemption of Fund shares.
Class A Shares of the Munder Funds purchased on or before June 27, 1995
without a sales charge by reason of a purchase of $500,000 or more are subject
to a CDSC of 1.00% of the lower of the original purchase price or the net asset
value at the time of redemption if such shares are redeemed within two years of
the date of purchase. Class A Shares of the Munder Funds purchased on or before
June 27, 1995 that are redeemed will not be subject to the CDSC to the extent
that the value of such shares represents: (1) reinvestment of dividends or other
distributions; (2) Class A Shares redeemed more than two years after their
purchase; (3) a minimum required distribution made in connection with IRA or
other retirement plans following attainment of age 59 1/2; or (4) total or
partial redemptions made within one year following the death or disability of a
shareholder or registered joint owner.
Class A Shares of the Funds, other than the Index 500 Fund, purchased for at
least $1,000,000 without a sales charge may be exchanged for Class A Shares of
another fund of the Company or Munder without the imposition of a CDSC, although
the CDSC described above will apply to the redemption of the shares acquired
through an exchange. Class A Shares of the Index 500 Fund purchased for at least
$500,000 without a sales charge may be exchanged for Class A Shares of another
Fund of the Company or Munder subject to any differential sales charges as
applicable. The Index 500 Fund Class A Shares CDSC described above will apply to
the redemption of the shares acquired through an exchange in the event that no
sales charge differential is payable upon 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.
58
<PAGE>
CONVERSION OF CLASS B SHARES
A shareholder's Class B Shares will automatically convert to Class A Shares in
a Fund on the sixth anniversary of the issuance of the Class B Shares occurs,
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 funds of Munder or non-money market funds of
the Company 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 each Fund may be exchanged for shares
of the same class of other funds of the Company and Munder, 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 or Munder 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 or
Munder for which a sales charge was paid, can be exchanged for Class A Shares of
a fund of the Company or Munder subject to differential sales charges as
applicable.
The exchange of Class B Shares of one fund of the Company or Munder for Class
B Shares of another fund of the Company or Munder will not be subject to a CDSC.
The exchange of Class C Shares of one fund of the Company or Munder for Class C
Shares of another fund of the Company or Munder 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 or Munder, 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 or Munder by contacting his or her broker or the Funds at (800) 438-
5789. Certain brokers may charge a fee for handling exchanges.
The Company and Munder reserve the right to modify or terminate the exchange
privilege at any time. Notice will be given to shareholders of any material
modification or termination except where notice is not required.
59
<PAGE>
EXCHANGES BY TELEPHONE
A shareholder may give exchange instructions to the shareholder's broker or by
telephone to the Funds at (800) 438-5789. Telephone exchange privileges are not
available to shareholders who have custody of their share certificates. The
Funds reserve 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 any Fund or its shareholders.
EXCHANGES 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
Shareholders of each Fund are entitled to dividends and distributions from the
net income and capital gains, if any, earned on investments held by the Fund.
The net income of the Funds (other than the Multi-Season Growth Fund, Real
Estate Equity Investment Fund, Mid-Cap Growth Fund, International Equity Fund,
Value Fund, Small-Cap Value Fund, Micro-Cap Equity Fund and Equity Selection
Fund) is declared quarterly as a dividend. Generally, dividends are paid within
six business days after quarter-end. Dividends from net investment income, if
any, are paid at least annually by the Multi-Season Growth Fund, Mid-Cap Growth
Fund, International Equity Fund, Value Fund, Small-Cap Value Fund, Micro-Cap
Equity Fund and Equity Selection Fund and monthly by the Real Estate Equity
Investment Fund.
Each 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 each 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 a 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 same 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 a Fund.
The per share dividends on Class B and Class C Shares of a Fund generally will
be lower than the per share dividends on Class A Shares of that Fund as a result
of the higher annual service and distribution fees applicable with respect to
Class B and Class C Shares.
Each 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 Trustees/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
Trustees'/Directors' and officers' liability insurance premiums; the expense of
using independent pricing
60
<PAGE>
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 Trustees in a manner that the Board
determines to be fair and equitable. Any general expenses of Munder that are not
readily identifiable as belonging to a particular fund of Munder are allocated
among all funds of Munder 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 Funds' service
contractors bear expenses in connection with the performance of their services,
and the Funds bear the expenses incurred in their operations. The Advisor,
Administrator, Custodian and Transfer Agent may voluntarily waive all or a
portion of their respective fees from time to time.
Each Fund's net investment income available for distribution to the holders of
Shares will be reduced by the amount of 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 in a 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 Funds for the purpose of pricing purchase
and redemption orders is determined as of the close of regular trading on the
New York Stock Exchange (currently 4:00 p.m., New York time) on each Business
Day.
With respect to the Funds, securities that are 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.
Options will be valued at market value or fair value if no market exists.
Futures contracts will be valued in like manner, except that open futures
contract sales will be valued using the closing settlement price or, in the
absence of such a price, the most recently quoted asked price. Portfolio
securities primarily traded on the London Stock Exchange are generally valued at
the mid-price between the current bid and asked prices. Portfolio securities
which are primarily traded on foreign securities exchanges, other than the
London Stock Exchange, are generally valued at the preceding closing values of
such securities on their respective exchanges, except when an occurrence
subsequent to the time a value was so established is likely to have changed such
value. In such an event, the fair value of those securities will be determined
through the consideration of other factors by or under the direction of the
Boards of Trustees and Directors. 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 Boards of Trustees and
Directors. Debt securities with remaining maturities of 60 days or less are
valued at amortized cost, unless the Boards of Trustees and Directors determine
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 Funds do not accept purchase and redemption orders on days the New York
Stock Exchange is closed. The New York Stock Exchange is currently scheduled to
be closed on New Year's Day, Presidents' Day, Good Friday, Memorial Day
(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.
61
<PAGE>
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 a Fund generally will be lower than that of the Class A Shares
of that Fund because of the higher expenses borne by the Class B and Class C
Shares.
MANAGEMENT
BOARD OF TRUSTEES/DIRECTORS
The Company and Munder are managed under the direction of their governing
Boards of Trustees and Directors. The Statement of Additional Information
contains the name and background information of each Trustee and Director.
INVESTMENT ADVISOR
The investment advisor of the Funds is Munder Capital Management, a Delaware
general partnership with its principal offices at 480 Pierce Street, Birmingham,
Michigan 48009. The Advisor was formed in December, 1994. On February 1, 1995,
the Advisor assumed the investment advisory duties with respect to the Funds
previously performed by Woodbridge Capital Management, Inc. ("Woodbridge") and
Old MCM, Inc. ("MCM"). The principal partners of the Advisor are MCM,
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 June 30,
1996, the Advisor and its affiliates had approximately $34 billion in assets
under management, of which $17 billion were invested in equity securities, $6
billion were invested in money market or other short-term instruments, and $11
billion were invested in other fixed income securities.
Subject to the supervision of the Board of Trustees of the Company and the
Board of Directors of Munder, the Advisor provides overall investment management
for each Fund, provides research and credit analysis, is responsible for all
purchases and sales of portfolio securities, maintains books and records with
respect to each Fund's securities transactions and provides periodic and special
reports to the Board of Trustees and the Board of Directors as requested.
The Portfolio Managers primarily responsible for the management of the
investment selections of the portfolios of the Funds (other than the Index 500
Fund) together with information as to their principal business occupations
during the past five years, are shown below.
Leonard J. Barr II, CFA, Senior Vice President and Director of Research of the
Advisor has co-managed the Multi-Season Growth Fund since its inception in
April, 1993 and has co-managed the Balanced Fund since February, 1995. Prior to
February, 1995, he was Vice President and Director of Research for MCM.
Ann J. Conrad, CFA, Vice President and Director of Specialty Equity Products
of the Advisor or Woodbridge since June, 1992, has managed the Accelerating
Growth Fund since the Fund's inception in December, 1991, and has co-managed the
Balanced Fund since the Fund's inception in March, 1993. Prior to the formation
of the Advisor in June, 1992, she was Director of Equity Strategy for Comerica
Capital Management, Inc.
Arnold Kent Douville began his investment career as an associate in the
Capital Markets group of the investment banking firm, Drexel Burnham Lambert.
Mr. Douville joined MCM in 1989 and now serves as a Senior Portfolio Manager of
the Advisor and specializes in managing Mid-Cap Growth portfolios for
institutional clients. Mr. Douville has co-managed the Mid-Cap Growth Fund since
its inception in August, 1995. Prior to beginning his investment career, Mr.
Douville worked as a cost analyst for The Analytic Sciences Corporation
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(TASC). Mr. Douville earned his B.S. degree in economics from the United States
Air Force Academy and his M.B.A. from the University of Chicago Graduate School
of Business.
Otto Hinzmann, Jr., Vice President and Director of Equity Portfolio Management
of the Advisor or MCM since January, 1987, has managed the Growth & Income Fund
since February, 1995.
Lee P. Munder, CFA, President and Chief Executive Officer of the Advisor or
MCM since MCM's inception in 1985. Manager of the Real Estate Equity Investment
Fund since its inception in September, 1994, and co-manager of the Multi-Season
Growth Fund since its inception in April, 1993. Mr. Munder began his investment
career in 1969 as Chief Trust Investment Officer for Security Bank and Trust of
Southgate, Michigan. From 1973 to 1985 he served as portfolio manager at Loomis,
Sayles & Co., Inc. serving in later years as Vice President and Senior Partner.
In 1985, Mr. Munder left Loomis, Sayles & Co., Inc. and founded MCM.
Todd B. Johnson, Director of Equity Management of the Advisor is currently the
Portfolio Manager of the International Equity Fund. Mr. Johnson previously
served as a portfolio manager at Woodbridge Capital Management and Manufacturers
Bank. Mr. Johnson received a B.A. in Finance from Michigan State University and
an M.B.A. from Wayne State University.
Gerald Seizert is Executive Vice President and Chief Investment Officer of all
equity management at MCM and manager of the Value Fund since its inception in
August, 1995 and the Small-Cap Value Fund upon commencement of operations. Prior
to joining the Advisor in 1995, Mr. Seizert served as Director and Managing
Partner of the Detroit office of Loomis, Sayles & Company, L.P. Before his 1984
affiliation with Loomis, he served as Vice President, Trust Investments for
First of America Bank. Earlier, 1977-1979, Mr. Seizert served as a Credit
Analyst at Bank One of Columbus, N.A. Mr. Seizert received his B.B.A. degree and
an M.B.A from The University of Toledo and is a Chartered Financial Analyst and
Chartered Investment Counselor.
Kurt R. Stalzer, Senior Equity Fund Manager of the Advisor or Woodbridge since
June, 1992, managed the Small Company Growth Fund since April, 1992.
Jeffrey A. Wrona, CFA, began his investment career as a Fixed Income Research
Analyst for the investment banking firm, Drexel Burnham Lambert. Mr. Wrona
joined MCM in 1990 and now serves as a senior portfolio manager of the Advisor
and specializes in managing Mid-Cap Growth portfolios for institutional clients.
Mr. Wrona has co-managed the Mid-Cap Growth Fund since its inception in August,
1995. Prior to beginning his investment career, Mr. Wrona worked as a product
design engineer for Ford Motor Company. Mr. Wrona earned his B.S. degree in
engineering from the University of Michigan and his M.B.A. from the University
of Michigan Graduate School of Business.
Investment decisions for the Equity Selection Fund and the Micro-Cap Equity
Fund will be made by a committee of Portfolio Managers who are employed by the
Advisor.
For the advisory services provided and expenses assumed by it, the Advisor has
agreed to a fee from each Fund, computed daily and payable monthly on a separate
Fund-by-Fund basis, at an annual rate of 1.00% of the first $500 million of
average daily net assets and .75% of net assets in excess of $500 million of the
Multi-Season Growth Fund; 1.00% of average daily net assets of the Micro-Cap
Equity Fund; .75% of average daily net assets of each of the Accelerating Growth
Fund, Small Company Growth Fund, International Equity Fund, Growth & Income
Fund, Small-Cap Value Fund, and Equity Selection Fund; .74% of the average daily
net assets of each of the Real Estate Equity Investment Fund, Mid-Cap Growth
Fund and Value Fund; .65% of average daily net assets of the Balanced Fund; and
.07% of the average daily net assets of the Index 500 Fund.
For the period July 1, 1995 to October 27, 1995, the Advisor received fees
after waivers, at an effective rate of .75% of the average daily net assets of
each of the Multi-Season Growth Fund, Accelerating Growth Fund, Small Company
Growth Fund, Growth and Income Fund and International Equity Fund, .74% of the
average daily net
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assets of the Real Estate Equity Investment Fund, .65% of the
average daily net assets of the Balanced Fund, and .07% of the average daily net
assets of the Index 500 Fund.
For the period from August 14, 1995 to October 27, 1995 the Advisor received
fees after waivers, at an effective rate of .74% of the average daily net assets
of the Mid-Cap Growth Fund.
For the period from August 18, 1995 to October 27, 1995 the Advisor received
fees after waivers, at an effective rate of .74% of the average daily net assets
of the Value Fund.
For the period October 28, 1995 to June 30, 1996, the Advisor received fees,
after waivers, at an effective rate of .75% of the average daily net assets of
the Multi-Season Growth Fund, Accelerating Growth Fund, Small Company Growth
Fund, Growth and Income Fund and International Equity Fund, .73% of the average
daily net assets of the Value Fund, .71% of the average daily net assets of the
Mid-Cap Growth Fund, .67% of the average daily net assets of the Real Estate
Equity Investment Fund and .06% of the average daily net assets of the Index 500
Fund.
The Advisor expects to voluntarily waive a portion of the fees payable to it
with respect to the Multi-Season Growth Fund and Index 500 Fund during the
current fiscal year. However, the Advisor may discontinue such fee waiver at any
time, in its sole discretion. The Advisor expects to receive, after waivers, an
advisory fee at the annual rate of .75% and .07% of the average daily net assets
of the Multi-Season Growth Fund and the Index 500 Fund, respectively, during the
Company's and Munder's current fiscal year.
The Adviser may, from time to time, make payments to banks, broker-dealers or
other financial institutions for certain services to the Funds and/or their
shareholders, including sub-administration, sub-transfer agency and shareholder
servicing. Such payments are made out of the Advisor's own resources and do not
involve additional costs to the Funds or their shareholders.
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 Funds. First Data is a
wholly-owned subsidiary of First Data Corporation. The Administrator generally
assists the Company and Munder in all aspects of their administration and
operations, including the maintenance of financial records and fund accounting.
First Data also serves as the Funds' transfer agent and dividend disbursing
agent ("Transfer Agent"). Shareholder inquiries may be directed to First Data
at P.O. Box 5130, Westborough, Massachusetts 01581-5130.
As compensation for its services, the Administrator and Transfer Agent are
entitled to receive fees, based on the aggregate average daily net assets of the
Funds, computed daily and payable monthly at the rates 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
Funds 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 Funds' Distributor under which the
Distributor provides certain administrative services with respect to the Funds.
The Administrator pays the Distributor a fee for these services out of its own
resources at no cost to the Funds.
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Comerica Bank (the "Custodian"), whose principal business address is One
Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226, provides custodial
services to the Funds. As compensation for its services, the Custodian is
entitled to receive fees, based on the aggregate average daily net assets of the
Funds, 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. Because of the additional custody and
accounting charges associated with investments in foreign securities, the
International Equity Fund incurred additional custody and accounting fees during
the Company's fiscal year ended June 30, 1996 equal to __%.
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 Funds have adopted Distribution and Service Plans with respect to their
Class A, Class B and Class C Shares, pursuant to which each 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 up to 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 up to 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 Funds. 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 Funds and their transactions with the Funds.
The Class B and Class C Plans permit payments to be made by the Funds to the
Distributor for expenditures incurred by it in connection with the distribution
of Fund shares to investors and 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 Funds. The Distributor is also authorized to engage in
advertising, the preparation and distribution of sales literature and other
promotional activities on behalf of the Funds. In addition, the Class B and
Class C Plans authorize payments by the Funds 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 contingent deferred sales charges 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 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 Funds pursuant to the Plans.
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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 Funds and will accordingly reduce each 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 and Munder's Boards of Trustees and Directors evaluates the
appropriateness of the Plans and their payment terms on a continuous basis and
in doing so will consider all relevant factors, including expenses incurred by
the Distributor and the amount received under the Plans and the proceeds of the
contingent deferred sales charges with respect to the Class B and Class C
Shares.
TAXES
Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Code. Such qualification generally relieves a Fund of
liability for Federal income taxes to the extent its earnings are distributed in
accordance with the Code.
Qualification as a regulated investment company under the Code for a taxable
year requires, among other things, that a Fund distribute to its shareholders an
amount equal to at least 90% of its investment company taxable income for such
year. In general, a Fund's investment company income will be its taxable income
(including dividends, interest, and short-term capital gains) subject to certain
adjustments and excluding the excess of any net long-term capital gain for the
taxable year over the net short-term capital loss, if any, for such year. Each
Fund intends to distribute substantially all of its investment company taxable
income each taxable year. 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.)
[The dividends received deduction for corporations will apply to such
distributions by the Funds to the extent of the total qualifying dividends
received by the distributing Fund from domestic corporations for the taxable
year and if other applicable tax requirements are met.]
Substantially all of each of the Funds' net realized long-term capital gains,
if any, will be distributed at least annually. The Funds will generally have no
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.
On an annual basis, the Funds will send written notices to record owners of
shares regarding the Federal tax status of distributions made by them.
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 a 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.
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A taxable gain or loss may also be realized by a holder of shares in the Funds
upon the redemption, exchange or transfer of shares depending upon the tax basis
of the shares and their price at the time of the transaction. Generally, a
shareholder may include sales loads incurred upon the purchase of Class A Shares
in his or her tax basis for such Class A Shares for the purpose of determining
gain or loss on a redemption, transfer or exchange of such shares. However, if
the shareholder effects an exchange of such shares for Class A Shares of another
fund of the Company or Munder within 90 days of the purchase and is able to
reduce the sales load applicable to the new shares (by virtue of the Company's
and Munder's exchange privilege), the amount equal to such reduction may not be
included in the tax basis of the shareholder's exchanged shares but may be
included (subject to the limitation) in the tax basis of the new shares.
TAXES--FOREIGN INVESTMENTS
Income or gain from investments in foreign securities may be subject to
foreign withholding or other taxes. It is expected that the International Equity
Fund will, and the other Funds may, be subject to foreign withholding taxes with
respect to income received from sources within foreign countries. If more than
50% of the value of the International Equity Fund's total assets at the close of
a taxable year consists of stock or securities of foreign corporations, the Fund
may elect, for U.S. Federal income tax purposes, to treat certain foreign taxes
paid by it, including generally any withholding taxes and other foreign income
taxes, as paid by its shareholders. If the Fund makes this election, the amount
of such foreign taxes paid by the Fund will be included in its shareholders'
income pro rata (in addition to taxable distributions actually received by
them), and the shareholders would be entitled (a) to credit their proportionate
amount of such taxes against their U.S. Federal income tax liabilities subject
to certain limitations described in the Statement of Additional Information, or
(b) if they itemize their deductions, to deduct such proportionate amount from
their U.S. income.
If a Fund invests in certain "passive foreign investment companies"
("PFICs"), it will be subject to Federal income tax (and possibly additional
interest charges) on a portion of any "excess distribution" or gain from the
disposition of such shares even if it distributes such income to its
shareholders. If a Fund elects to treat the PFIC as a "qualified electing
fund" ("QEF") and the PFIC furnishes certain financial information in the
required form to such Fund, the Fund will instead be required to include in
income each year its allocable share of the ordinary earnings and net capital
gains on the QEF, regardless of whether received, and such amounts will be
subject to the various distribution requirements described above.
The foregoing summarizes some of the important tax considerations generally
affecting the Funds and their shareholders and is not intended as a substitute
for careful tax planning. State and local tax laws may differ from the Federal
laws summarized above. Further, future legislative or administrative changes or
court decisions may materially affect the tax consequences of investing in the
Funds. Accordingly, potential investors in the Funds should consult their tax
advisors with respect to their own tax situation.
DESCRIPTION OF SHARES
The Company was organized as a Massachusetts business trust on August 30,
1989, and is registered under the 1940 Act as an open-end management investment
company. The Company's Declaration of Trust authorizes the Trustees to classify
and reclassify any unissued shares into one or more classes of shares. Pursuant
to such authority, the Trustees have authorized the issuance of an unlimited
number of shares of beneficial interest in the Company, representing interests
in the Accelerating Growth, Small Company Growth Fund, International Equity,
Index 500, Growth & Income, Balanced, Bond, Intermediate Bond, U.S. Government
Income, Michigan Triple Tax-Free Bond, Tax-Free Bond, Tax-Free Intermediate
Bond, Tax-Free Money Market, U.S. Treasury Money Market and Cash Investment
Funds, respectively, each of which, except the Tax-Free Intermediate Bond Fund
and Michigan Triple Tax-Free Bond Fund, is classified as a diversified
investment company under the 1940 Act.
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Munder 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.
Munder'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 the Munder Multi-Season Growth Fund, Munder
Real Estate Equity Investment Fund, Munder Mid-Cap Growth Fund, Munder Value
Fund, Munder International Bond Fund, Munder Small-Cap Value Fund, Munder Equity
Selection Fund, Munder Micro-Cap Equity Fund, Net Net Fund and Munder Money
Market Fund, respectively, each of which, except the Munder International Bond
Fund, is classified as a diversified investment company under the 1940 Act.
There is a possibility that the Company might become liable for any
misstatement, inaccuracy, or incomplete disclosure in this Prospectus concerning
Munder. There is a possibility that Munder might become liable for any
misstatement, inaccuracy, or incomplete disclosure in this Prospectus concerning
the Company.
The Shares of each investment portfolio of the Company and Munder (other than
the Money Market Fund, Tax-Free Money Market Fund, U.S. Treasury Money Market
Fund, Cash Investment Fund and Net Net Fund) are offered as five separate
classes: Class A Shares, Class B Shares, Class C Shares, Class K Shares and
Class Y Shares. Class C Shares of the Index 500 Fund are not currently available
for purchase. The Money Market Fund offers Class A, Class B and Class C Shares
(which may be acquired only through an exchange of shares from the corresponding
classes of a fund of the Company or Munder) and Class Y Shares. The Tax-Free
Money Market Fund, U.S. Treasury Money Market Fund and Cash Investment Fund
offer only Class A Shares, Class K Shares and Class Y Shares. The Net Net Fund
offers only one class of shares. These other classes of the Funds may have
different sales charges and expense levels, which may affect performance.
Investors may call the Funds at (800) 438-5789 for more information concerning
other classes of shares of the Funds. This Prospectus relates only to the Class
A, Class B and Class C Shares of the Multi-Season Growth Fund, Real Estate
Equity Investment Fund, Accelerating Growth Fund, Small Company Growth Fund,
Mid-Cap Growth Fund, International Equity Fund, Index 500 Fund, Growth & Income
Fund, Value Fund, Balanced Fund, Small-Cap Value Fund, Equity Selection Fund and
Micro-Cap Equity Fund.
Each Share of a Munder Fund has a par value of $.001, represents an equal
proportionate interest in the particular Fund with other shares of the same
class and is entitled to such dividends and distributions earned on such Fund's
assets as are declared in the discretion of the Trustees. Each share of the MFI
Fund has a par value of $.01 per share and represents a proportionate interest
in the assets of the Fund.
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
Trustees or Directors determine that the matter to be voted upon affects only
the interests of the shareholders of a particular Fund. In addition,
shareholders of each of the Funds will vote in the aggregate and not by Class,
except as otherwise expressly required by law or when the Trustees or Directors
determine that the matter to be voted on affects only the interests of the
holders of a particular class of shares. The Funds are not required and do 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 or Munder. To the extent required by law, the Funds will
assist in shareholder communications in connection with such a meeting. For a
further discussion of the voting rights of shareholders, see "Additional
Information Concerning Shares" in the Statement of Additional Information.
As of __________, Comerica Bank held of record substantially all of the
outstanding shares of the Funds as agent, custodian or trustee for its
customers. In addition, as of __________, 1996, Comerica Bank possessed sole or
shared voting or investment power for its customer accounts with respect to the
following percentages of the Funds' outstanding shares: Mid-Cap Growth Fund--
__%; Value Fund--__%; Multi-Season Growth Fund--__%; Real Estate Equity
Investment Fund--__%; Accelerating Growth Fund--__%; Small Company Growth Fund--
__%; International Equity Fund--__%; Index 500 Fund--__%; Growth & Income Fund--
__%; and Balanced Fund--__%. The Small-Cap Value Fund, Equity Selection Fund and
Micro-Cap Equity Fund commenced operations on __________.
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REPORTS TO SHAREHOLDERS
The Funds have eliminated duplicate mailings of prospectuses and shareholder
reports to accounts which have the same primary record owner, and with respect
to joint tenant accounts or tenant in common accounts and accounts which have
the same address. Additional copies of prospectuses and reports to shareholders
are available upon request by calling the Funds at (800) 438-5789.
PERFORMANCE
From time to time, the Funds may quote performance data for the Shares in
advertisements or in communications to shareholders. The total return of Class
A, Class B or Class C Shares in a 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.
Performance quotations for each Class will be calculated separately.
Quotations for total return for Class A Shares will reflect the maximum sales
charge charged by a 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 Funds 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 quotations otherwise computed.
Quotations of total return for Class A, Class B and Class C Shares will
reflect the fees for certain distribution and shareholder services as described
in this Prospectus.
The yield of a class of shares in the Funds is computed based on the net
income of such class in a 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 results on a semi-annual basis.
The Funds 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 a Fund.
Performance will fluctuate and any quotation of performance should not be
considered as representative of future performance of a class of shares in a
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
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market conditions. Any fees charged by institutions directly to their Customers'
accounts in connection with investments in a Fund will not be included in
calculations of yield and performance.
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
The Munder Funds
P.O. Box 5130
Westborough, Massachusetts 01581-5130
INVESTMENTS BY BANK WIRE
An investor opening a new account should call the Funds 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 "Investments by Mail." Wire instructions must
state the Fund name, 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, shareholder's registered name and shareholder account
number)
Before wiring any funds an investor must call the Funds at (800) 438-5789 to
confirm the wire instructions.
EXCHANGE BY TELEPHONE
Call your broker or the Funds at (800) 438-5789.
Investors should note that shares of the Funds are exchangeable for shares of
the same class of another fund of the Company or Munder, subject to any
applicable sales charge.
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REDEMPTIONS BY TELEPHONE
Call your broker or the Funds at (800) 438-5789.
REDEMPTIONS BY MAIL
Send complete instructions, including name of Fund, amount of redemption,
shareholder's registered name, share class, account number, and, if a
certificate has been issued, an endorsed share certificate, to:
First Data
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 Funds at (800) 438-5789.
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CLASS A, CLASS B AND CLASS C SHARES
The Munder Funds Trust (the "Company") is an open-end investment company
(a mutual fund) that currently offers a selection of fifteen investment
portfolios. The Munder Funds, Inc. ("Munder") is an open-end investment company
that currently offers ten investment portfolios. This Prospectus describes six
investment portfolios offered by the Company (the "Munder Funds") and the
International Bond Fund offered by Munder described below (collectively, the
"Funds"):
Munder Bond Fund
Munder Intermediate Bond Fund
Munder U.S. Government Income Fund
Munder Michigan Triple Tax-Free Bond Fund*
Munder Tax-Free Bond Fund
Munder Tax-Free Intermediate Bond Fund
Munder International Bond Fund
*The Michigan Triple Tax-Free Bond Fund is offered only in the State of
Michigan.
Munder Capital Management (the "Advisor") serves as the investment advisor
to the Funds.
This Prospectus sets forth concisely information that a prospective investor
should know before investing. Investors are encouraged to read this Prospectus
and retain it for future reference. A Statement of Additional Information dated
__________, 1996, as amended or supplemented from time to time, has been filed
with the Securities and Exchange Commission (the "SEC") and is incorporated by
reference into this Prospectus. It may be obtained free of charge by calling the
Funds at (800) 438-5789.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR
ENDORSED BY ANY BANK, AND ARE NOT INSURED OR GUARANTEED BY
THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING
THE POSSIBLE LOSS
OF PRINCIPAL.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED
OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is __________, 1996.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.................... 3
The Funds
Expense Table........................ 6
Financial Highlights................. 13
Investment Objectives and Policies... 19
Portfolio Instruments and Practices
and Associated Risk Factors 22
Investment Limitations............... 29
How to Do Business with Us
How to Purchase Shares............... 30
How to Redeem Shares................. 35
Conversion of Class B Shares......... 39
How to Exchange Shares............... 40
Dividends and Distributions.......... 41
Other Information
Net Asset Value...................... 42
Management........................... 43
Taxes................................ 46
Description of Shares................ 49
Performance.......................... 49
Shareholder Account Information...... 51
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION, OR TO
MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE
FUNDS' STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN
CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUNDS
OR THEIR DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFERING BY THE
FUNDS OR BY FUNDS DISTRIBUTOR, INC. (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 OBJECTIVES
The Bond Fund seeks a high level of current income with capital appreciation
a secondary consideration; the U.S. Government Income Fund seeks to provide high
current income; the Intermediate Bond Fund seeks a competitive rate of return
which exceeds the inflation rate and the return provided by money market
instruments; the Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund and
Michigan Triple Tax-Free Bond Fund (the "Tax-Free Bond Funds") seek current
interest income exempt from Federal income taxes; and the International Bond
Fund seeks to realize a competitive total return through a combination of
current income and capital appreciation by investing primarily in a non-
diversified portfolio of foreign debt obligations.
PRINCIPAL INVESTMENTS
The Bond Fund, the U.S. Government Income Fund and the Intermediate Bond Fund
invest in debt securities that allow them to maintain an average dollar-weighted
portfolio maturity of six to fifteen years, six to fifteen years and three to
eight years, respectively. The Tax-Free Bond Funds invest in a portfolio of
municipal obligations, the interest on which is exempt from regular Federal
income taxes and, in the case of the Michigan Triple Tax-Free Bond Fund, exempt
from Michigan State income and intangibles taxes. The International Bond Fund
invests at least 65% of its assets in bonds of issuers located in at least three
countries other than the United States, and expects to maintain an average
dollar-weighted maturity of three to fifteen years.
INVESTMENT PROGRAM
Each of the Bond, U.S. Government Income and Intermediate Bond Funds invests
substantially all of its assets in debt obligations such as bonds and
debentures, obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, debt obligations of domestic and foreign
corporations, debt obligations of foreign governments and their political
subdivisions, asset-backed securities and various mortgage-related securities.
The Tax-Free Bond Fund invests primarily in intermediate-term and long-term
investment grade municipal obligations with average remaining maturities between
three and thirty years. The Tax-Free Intermediate Bond Fund invests
substantially all of its assets in a non-diversified portfolio of short-term and
intermediate-term municipal obligations, a substantial portion of which may be
issued by the State of Michigan and its political subdivisions. The Michigan
Triple Tax-Free Bond Fund invests primarily in a non-diversified portfolio of
intermediate-term and long-term municipal obligations issued by or on behalf of
the State of Michigan, its political subdivisions, municipalities and public
authorities, the interest on which is exempt from Federal income tax and
Michigan state income, intangibles and single business taxes. The International
Bond Fund invests substantially all of its assets in debt obligations of foreign
governments and their political subdivisions, debt securities issued or
guaranteed by supranational organizations, debt obligations of foreign and
domestic corporations, asset-backed securities and various mortgage-related
securities and obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, and other debt securities including those
convertible into foreign stock. See "Investment Objectives and Policies."
3
<PAGE>
INVESTMENT RISKS AND SPECIAL CONSIDERATIONS
A Fund's performance per Share will change daily based on many factors;
including interest rate levels, the quality of the instruments in each Fund's
investment portfolio, state, national and international economic conditions and
general market conditions. Depending on these factors, the net asset value of
each Fund may decrease instead of increase. Further, for hedging purposes the
International Bond Fund may enter into certain interest rate and currency swap
transactions and also may engage in certain futures contracts and options.
These strategies are highly specialized and involve techniques and risks
different from those associated with ordinary portfolio transactions. In
addition, there are certain risks inherent in investing in a non-diversified
investment portfolio such as the Tax-Free Intermediate Bond Fund, the Michigan
Triple Tax-Free Bond Fund and the International Bond Fund. It is anticipated
that the International Bond Fund will have an annual portfolio turnover rate
ranging from 200% to 300%. There is no assurance that any Fund will achieve its
investment objective. 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 Funds also
offer two additional classes of Shares, Class K Shares and Class Y Shares.
These classes of the Funds may have different sales charges and expense levels,
which may affect performance. Investors may call the Funds 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%. Each
Fund pays 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. Each Fund is 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. Each Fund
is subject to shareholder servicing and distribution fees at the annual rate of
1% of the value of average daily net assets.
PURCHASING SHARES
Shares of each of the Funds are offered continuously and may be purchased from
the Distributor through certain broker-dealers and other financial institutions
or through the First Data Investor Services Group, Inc. (the
4
<PAGE>
"Transfer Agent"). Shares of the Funds 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 or Munder subject to any applicable sales charge. See "How to Exchange
Shares."
REINVESTMENT
Automatic reinvestment of dividends and capital gains without a sales charge
unless a shareholder elects to receive cash.
<TABLE>
<CAPTION>
OTHER FEATURES
<S> <C> <C>
Class A Shares Class B Shares Class C Shares
-------------- -------------- --------------
Automatic Investment Plan Automatic Investment Plan Automatic Investment Plan
Automatic Withdrawal Plan Automatic Withdrawal Plan Automatic Withdrawal Plan
Retirement Plans Retirement Plans Retirement Plans
Telephone Exchanges Telephone Exchanges Telephone Exchanges
Free Check Writing Reinvestment Privilege Reinvestment Privilege
Rights of Accumulation
Letter of Intent
Quantity Discounts
Reinvestment Privilege
</TABLE>
DIVIDENDS AND OTHER DISTRIBUTIONS
Dividends are declared monthly for the Funds (other than International Bond
Fund); capital gains are distributed at least annually. Dividends of the
International Bond Fund are declared quarterly.
NET ASSET VALUE
Determined once daily for the Funds on each Business Day (as defined below).
REDEEMING SHARES
Class A Shares of the Funds 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."
5
<PAGE>
INVESTMENT ADVISOR
As investment advisor for the Funds, Munder Capital Management, provides
overall investment management for each Fund, provides research and credit
analysis, is responsible for all purchases and sales of portfolio securities,
maintains records relating to such purchases and sales, and provides reports to
the Company's Board of Trustees and Munder's Board of Directors. See
"Management--Investment Advisor."
DISTRIBUTOR
Funds Distributor, Inc.
6
<PAGE>
EXPENSE TABLE
The tables below set forth certain information concerning shareholder
transaction expenses and annual fund operating expenses for the Shares of the
Funds that investors will incur, either directly or indirectly, as shareholders
of the Funds during the current fiscal year. The International Bond Fund did not
commence operations until __________, 1996 and therefore the expense information
set forth below is based on estimated operating expenses for such Fund.
<TABLE>
<CAPTION>
Class A Shares
-------------------------------------
Michigan
U.S. Triple Tax-Free
Bond Intermediate Government Tax-Free Tax-Free
Intermediate International
Fund Bond Fund Income Fund Bond Fund Bond Fund
Bond Fund Bond Fund
---- ------------ ----------- --------- --------- ------------ ------
- -------
<S> <C> <C> <C> <C> <C> <C>
<C>
Shareholder transaction expenses:
Maximum sales load on
purchases*.......................... 4.00% 4.00% 4.00% 4.00% 4.00%
4.00% 4.00%
Maximum sales load on reinvested
dividends........................... None None None None None None
None
Maximum contingent deferred
sales charge**...................... None None None None None
None None
Redemption fees...................... None None None None None
None None
Exchange fees........................ None None None None None
None None
Annual Fund operating expenses:
(as a percentage of average net
assets)
Advisory fees........................ .50% .50% .50% .50% .50%
.50% .50%
12b-1 fees........................... .25% .25% .25% .25% .25% .25%
.25%
Other expenses....................... .20% .19% .22% .26% .23%
.21% .35%
---- ---- ---- ---- ---- ---- ----
Total fund operating expenses......... .95% .94% .97% 1.01%+ .98%
.96% 1.10%
==== ==== ==== ==== ==== ====
====
</TABLE>
- -----------------------------
*Maximum sales load applicable to Class A Shares. Reductions and waivers of
sales loads are described under "How to Purchase Shares."
**A deferred sales charge of 1.00% is assessed on certain redemptions of Class
A Shares that were purchased with no initial sales charge as part of an
investment of $1,000,000 or more. A deferred sales charge of 1.00% is
assessed on certain redemptions of Class A Shares purchased on or before June
27, 1995 as part of an investment of $500,000 or more. See "How to Purchase
Shares."
7
<PAGE>
<TABLE>
<CAPTION>
Class B Shares
------------------------------------------------
Michigan
U.S. Triple Tax-Free
Bond Intermediate Government Tax-Free Tax-Free
Intermediate International
Fund Bond Fund Income Fund Bond Fund Bond Fund
Bond Fund Bond Fund
---- ------------ ----------- --------- --------- ------------ -------
- ------
<S> <C> <C> <C> <C> <C> <C>
<C>
Shareholder transaction expenses:
Maximum sales load on None None None None None
None None
purchases.........................
Maximum sales load on
reinvested dividends.............. None None None None None
None None
Maximum contingent deferred
sales charge*..................... 5.00% 5.00% 5.00% 5.00% 5.00%
5.00% 5.00%
Redemption fees.................... None None None None None
None None
Exchange fees...................... None None None None None None
None
Annual Fund operating expenses:
(as a percentage of average net
assets)
Advisory fees...................... .50% .50% .50% .50% .50% .50%
.50%
12b-1 fees......................... 1.00% 1.00% 1.00% 1.00% 1.00%
1.00% 1.00%
Other expenses..................... .20% .19% .22% .26% .23% .21%
.35%
---- ---- ---- ---- ---- ---- ----
Total fund operating expenses...... 1.70% 1.69% 1.72% 1.76%+ 1.73%
1.71% 1.85%
==== ==== ==== ==== ==== ====
====
- --------------
</TABLE>
*Maximum CDSC applicable to Class B Shares. Class B Shares purchased on or
before June 27, 1995 are subject to a different CDSC schedule. See "How to
Redeem Shares--Contingent Deferred Sales Charge--Class B Shares." Waivers of
CDSC are described under "How to Redeem Shares."
8
<PAGE>
<TABLE>
<CAPTION>
Class C Shares
---------------------------------------------------
Michigan
U.S. ---------- Tax-Free Tax-Free
Bond Intermediate ------------ Triple ---------- -----------
- -- International
----- ------------- Government ---------- Bond Fund
Intermediate --------------
Fund Bond Fund ------------ Tax-Free ---------- ---------
- ---- Bond Fund
----- ------------- Income Fund ---------- Bond
Fund --------------
------------ Bond Fund -------------
----------
<S> <C> <C> <C> <C> <C> <C>
<C>
Shareholder transaction expenses:
Maximum sales load on
purchases............................. None None None None None
None None
Maximum sales load on
reinvested dividends.................. None None None None None
None None
Maximum contingent deferred
sales charge * 1.00% 1.00% 1.00% 1.00% 1.00%
1.00% 1.00%
Redemption fees None None None None None
None None
Exchange fees None None None None None
None None
Annual Fund operating expenses:
(as a percentage of average net assets)
Advisory fees........................ .50% .50% .50% .50 .50%
.50% .50%
12b-1 fees........................... 1.00% 1.00% 1.00% 1.00% 1.00%
1.00% 1.00%
Other expenses....................... .20% .19% .22% .26% .23%
.21% .35%
---- ---- ---- ------ ---- ---- ----
Total fund operating expenses........ 1.70% 1.69% 1.72% 1.76%+
1.73% 1.71% 1.85%
==== ==== ==== ====== ====
==== ====
</TABLE>
_____________________________
*A deferred sales charge of up to 1.00% is assessed on redemptions of Class C
Shares made within the first year of investing.
Because of the 12b-1 fees paid by the Funds as shown in the above tables,
long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc.
The initial sales charge applicable to Class A Shares set forth in the
above tables 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 tables 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 fees for 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 Funds' level existence and the costs involved with
communicating with shareholders.
9
<PAGE>
With respect to each Fund, the amount of "Other expenses" in the expense
tables above is based on estimated expenses and projected assets for the current
fiscal year. See ''Management'' in this Prospectus and the financial statements
and related notes incorporated by reference in the Statement of Additional
Information for a further description of the Funds' operating expenses and of
the nature of the services for which a Fund is obligated to pay advisory fees.
Any fees charged by institutions directly to customer accounts for services
provided in connection with investments in shares of the Funds are in addition
to the expenses shown in the above Expense Table and the Example shown below.
The Transfer Agent may deduct a wire redemption fee of $7.50 for wire
redemptions under $5,000.
EXAMPLE
The following examples demonstrate the projected dollar amount of total
cumulative expenses that would be incurred over various periods with respect to
a hypothetical investment in the Funds. These amounts are based on payments by
the Funds of operating expenses at the levels set forth in the above tables, and
are also based on the following assumptions:
An investor would pay the following expenses on a $1,000 investment in
Class A Shares (subject to the maximum sales load), assuming (1) a hypothetical
5% annual return and (2) redemption at the end of the following time periods.
<TABLE>
<CAPTION>
Class A Shares
----------------------------------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Bond Fund............................. $49 $69 $91 $152
Intermediate Bond Fund................ $49 $69 $90 $151
U.S. Government Income Fund........... $50 $70 $92 $154
Michigan Triple Tax-Free Bond Fund.... $45 $56 $67 $102
Tax-Free Bond Fund.................... $50 $70 $92 $156
Tax-Free Intermediate Bond Fund....... $49 $69 $91 $153
International Bond Fund................ $51 $74 N/A N/A
</TABLE>
10
<PAGE>
An investor would pay the following expenses on a $1,000 investment in
Class B Shares (subject to the applicable CDSC), assuming (1) a hypothetical 5%
annual return, (2) redemption at the end of the following time periods and (3)
no redemption at the end of the following periods.
<TABLE>
<CAPTION>
Class B Shares
----------------------------------------------------------------------------
- -----------------
1 Year 3 Years 5 Years 10
Years*
----------------------------------- -------- ---------------------- ------
- ----------------
Redemp- No Re- Redemp- No Re- Redemp- No
Re- Redemp- No Re-
tion demption tion demption tion demption
tion demption
------------ -------- ----------- -------- ------------ -------- -------
- ----- --------
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Bond Fund............................ $67 $17 $104 $54 $142 $92
$117 $117
Intermediate Bond Fund............... $67 $17 $103 $53 $142
$92 $115 $115
U.S. Government Income Fund.......... $67 $17 $104 $54 $143
$93 $119 $119
Michigan Triple Tax-Free Bond Fund... $63 $13 $ 90 $40 $119
$69 $ 64 $ 64
Tax-Free Bond Fund................... $68 $18 $104 $54 $144 $94
$120 $120
Tax-Free Intermediate Bond Fund...... $67 $17 $104 $54 $143
$93 $118 $118
International Bond Fund.............. $69 $19 $108 $58 N/A
N/A N/A N/A
</TABLE>
_______________________________
*Reflects conversion of Class B Shares to Class A Shares (which pay lower
ongoing expenses) approximately six years after purchase. See "How to Redeem
Shares--Contingent Deferred Sales Charge--Class B Shares." Class B Shares
purchased on or before June 27, 1995 are subject to a different CDSC schedule.
See "How to Redeem Shares--Contingent Deferred Sales Charge--Class B
Shares."
11
<PAGE>
An investor would pay the following expenses on a $1,000 investment in Class C
Shares (subject to the applicable CDSC), assuming (1) a hypothetical 5% annual
return and (2) redemption at the end of the following time periods.
<TABLE>
<CAPTION>
Class C Shares
----------------------------------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Bond Fund.............................. $27 $54 $92 $201
Intermediate Bond Fund................. $27 $53 $92 $200
U.S. Government Income Fund............ $27 $54 $93 $203
Michigan Triple Tax-Free Bond Fund..... $23 $40 $69 $152
Tax-Free Bond Fund..................... $28 $54 $94 $204
Tax-Free Intermediate Bond Fund........ $27 $54 $93 $202
International Bond Fund................ $29 $58 N/A N/A
</TABLE>
Because of the Rule 12b-1 fees paid by the Funds as shown in the above tables,
long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc.
The foregoing Expense Tables and Example are intended to assist investors in
understanding the various shareholder transaction expenses and operating
expenses of the Funds that investors bear either directly or indirectly. As
stated below under "Management," the Advisor has agreed to an advisory fee
computed separately on a Fund-by-Fund basis at an annual rate of .50% of average
daily net assets of each of the Funds.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR
FUTURE INVESTMENT RETURN OR OPERATING EXPENSES. ACTUAL
INVESTMENT RETURN AND
OPERATING EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN. THE
HYPOTHETICAL
EXPENSES IN THE EXAMPLE REFLECT FEE WAIVERS AT THE ANTICIPATED
RATES.
12
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the Funds' Financial
Statements audited by Ernst & Young LLP, independent auditors. Prior to March 1,
1994, Class B Shares were not offered. Class C Shares were not offered during
the periods shown and no shares of International Bond Fund were offered during
the periods shown and, accordingly, no financial information is provided with
respect to such shares. The following data should be read in conjunction with
the financial statements, related notes, and other financial information
incorporated by reference in the Statement of Additional Information. Further
information about the Funds, including financial information with respect to the
Fund's other classes of shares, is contained in the Funds' Annual Report to
Shareholders dated June 30, 1996, which may be obtained without charge by
calling (800) 438-5789.
<TABLE>
<CAPTION>
Bond Fund(a)(b)
----------------------------------------------
Year Ended Period Ended Year Ended Year Ended
Period Ended
---------- ------------ ------------- ---------- ------------
6/30/96 6/30/95(c) 2/28/95(f)(g) 2/28/94
2/28/93(h)
---------- ------------ ------------- --------- ------------
Class A Class A Class A Class A Class A
---------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period... $ 931 $ 9.91 $ 9.92
$ 9.61
------ ------ -------- ------
Income from Investment Operations:
Net investment income.................. 0.21 0.61 0.58 0.11
Net realized and unrealized gain 0.38 (0.63) (0.03)
0.38
(loss) on investments................. ------ ------ -------- ------
Total from investment operations....... 0.59 (0.02) 0.55
0.49
------ ------ -------- ------
Less Distributions:
Dividends from net investment income... (0.20) (0.58) (0.56)
(0.09)
Distributions from net capital gains... -- -- -- (0.09)
------ ------ -------- ------
Total Distributions.................... (0.20) (0.58) (0.56) (0.18)
------ ------ -------- ------
Net Asset Value, End of Period......... $ 9.70 $ 9.31 $ 9.91 $
9.92
====== ====== ========
======
Total Return(d)........................ 6.39% 0.45% 5.61%
5.19%
====== ====== ========
======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands)............................ $ 919 $ 880 $ 1,318 $ 116
Ratio of operating expenses to average
net assets............................ 0.95%(e) 0.92% .87%
0.76%(e)
Ratio of net investment income to
average net assets.................... 6.47%(e) 6.57% .76%
5.05%(e)
Portfolio turnover rate................ 99% 165% 28%
77%
Ratio of operating expenses to average
net assets without waivers............ 1.19%(e) 1.16% .01%
0.90%(e)
Net investment income per share
without waivers....................... $ 0.20 $ 0.59 $ 0.57 $ 0.10
Average commission rate (i)
</TABLE>
- ---------------------------------------
(a) Formerly, Ambassador Bond Fund.
(b) [The Fund is authorized to issue Class B Shares and Class C Shares. As of
June 30, 1996, the Fund had not begun selling Class B Shares and Class C
Shares.]
(c) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Annualized.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(g) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(h) The Munder Bond Fund Class A Shares commenced operations on December 9,
1992.
(i) Average commission rate paid per share of securities purchased or sold by
the Fund.
13
<PAGE>
<TABLE>
<CAPTION>
Intermediate Bond Fund(a)(b)
-------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Year Year Period Period Year Period
Year Period
Ended Ended Ended Ended Ended Ended
Ended Ended
6/30/96 6/30/96 6/30/95(c) 6/30/95(c) 2/28/95(f)
2/28/95(f)(g) 2/28/94 2/28/93(g)
------- ------- ---------- ---------- ---------- ------------- ---------
- -- ----------
Class A Class B Class A Class B Class A Class B
Class A Class A
------- ------- ---------- ---------- ---------- ------------- ---------
- -- ----------
Net Asset Value, Beginning of Period. $ 9.27 $ 9.27 $ 9.91 $
9.22 $ 10.47 $10.26
========== ========== ==========
============= =========== ==========
Income from Investment
Operations:
Net investment income................. 0.22 0.20 0.59 0.19
0.59 0.17
Net realized and unrealized
gain (loss) on investments.......... 0.25 0.24 (0.61) 0.11
(0.20) 0.25
========== ========== ==========
============= =========== ==========
Total from investment
operations.......................... 0.47 0.44 (0.02) 0.30 0.39
0.42
========== ========== ==========
============= =========== ==========
Less Distributions:
Dividends from net
investment income................... (0.22) (0.20) (0.61) (0.24)
(0.58) (0.12)
========== ========== ==========
============= =========== ==========
Distributions from net
realized gains...................... -- -- (0.01) (0.01) (0.37)
(0.09)
========== ========== ==========
============= =========== ==========
Total distributions................... (0.22) (0.20) (0.62) (0.25)
(0.95) (0.21)
========== ========== ==========
============= =========== ==========
Net Asset Value, End of
Period.............................. $ 9.52 $ 9.51 $ 9.27 $ 9.27
9.91 $10.47
========== ========== ==========
============= =========== ==========
Total Return(d)....................... .15% 4.78% 0.54% 3.33%
3.77% 4.15%
========== ========== ==========
============= =========== ==========
Ratios to Average Net Assets/
Supplemental Data:
Net assets, end of period (in
thousands).......................... $5,470 $ 9 $5,472 $ 7 $
6,401 $ 542
========== ========== ==========
============= =========== ==========
Ratio of operating expenses
to average net assets............... .95%(e) 1.70%(e) 0.93%
1.67%(e) 0.86% 0.78%(e)
========== ========== ==========
============= =========== ==========
Ratio of net investment
income to average net
assets.............................. .12%(e) 6.37%(e) 6.71% 5.97%(e)
5.75% 5.52%(e)
========== ========== ==========
============= ===========
Portfolio turnover rate............... 84% 84% 80% 80%
155% 104%
Ratio of operating expenses
to average net assets
without waivers..................... 1.19%(e) 1.94%(e) 1.18%
1.92%(e) 1.00% 0.92%(e)
========== ========== ==========
============= =========== ==========
Net investment income per
share without waivers............... $ 0.22 $ 0.19 $ 0.57 $ 0.18 $
0.58
========== ========== ==========
============= ===========
Average commission rate (h)
- -----------------
</TABLE>
(a) Formerly, Ambassador Intermediate Bond Fund.
(b) [The Fund is authorized to issue Class C Shares. As of June 30, 1996, the
Fund had not begun selling Class C Shares.
(c) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Annualized.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) The Munder Intermediate Bond Fund Class A Shares and Class B Shares
commenced operations on November 24, 1992 and October 25, 1994,
respectively.
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
14
<PAGE>
<TABLE>
<CAPTION>
U.S. Government Income Fund(a)(b)
------------------------------------------
<S> <C> <C> <C>
Year Ended Period Ended Period Ended
---------- ------------ ------------
6/30/96 6/30/95(c) 2/28/95(f)(g)
---------- ------------ ------------
Class A Class A Class A
---------- ------------ ------------
Net Asset Value, Beginning of Period............ $ 9.88 $10.03
------ ------ ------
Income from Investment Operations:
Net investment income........................... 0.24 0.42
Net realized and unrealized gain
(loss) on investments.......................... 0.41 (0.10)
------ ------ ------
Total from investment operations................ 0.65 0.32
------ ------ ------
Less Distributions:
Dividends from net investment income............ (0.23) (0.47)
------ ------ ------
Total distributions............................. (0.23) (0.47)
------ ------ ------
Net Asset Value, End of Period.................. $10.30 $ 9.88
====== ====== ======
Total Return(d)................................. 6.66% 3.30%
====== ====== ======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands).................................... $ 97 $ 69
====== ====== ======
Ratio of operating expenses to average
net assets................................... 0.97%(e) 0.95%(e)
Ratio of net investment income to
average net assets............................ 6.96%(e) 7.02%(e)
====== ====== ======
Portfolio turnover rate........................ 42% 143%
Ratio of operating expenses to average
net assets without waivers.................... 1.21%(e) 1.19%(e)
====== ====== ======
Net investment income per share without
waivers....................................... $ 0.23 $ 0.41
====== ====== ======
Average commission rate (h)
</TABLE>
_________________________________________
(a) Formerly, Ambassador Income Bond Fund.
(b) [The Fund is authorized to issue Class B Shares and Class C Shares. As of
June 30, 1996 the Fund had not begun selling Class B Shares and Class C
Shares.]
(c) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Annualized.
(f) The Munder U.S. Government Income Fund Class A Shares commenced operations
on July 28, 1994.
(g) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
15
<PAGE>
<TABLE>
<CAPTION>
Michigan Triple Tax-Free Bond Fund(a)(b)
------------------------------------------------------------
Year Year Period Period Year Period
Period
------- ------- --------- --------- --------- ------------ -
- ------
Ended Ended Ended Ended Ended Ended
Ended
------- ------- --------- --------- --------- ------------ -
- ------
6/30/96 6/30/96 6/30/95(c)(d) 6/30/95(c)(d) 2/28/95(d)(g)
2/28/95(d)(g)(h) 2/28/94(h)
------- ------- ------------ ------------ ------------ ---------------
- --------
Class A Class B Class A Class B Class A Class B
Class A
------- ------- --------- --------- --------- ------------ -
- ------
<S> <C> <C> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Period... $ 9.24 $ 9.24 $ 9.73
$ 9.17 $ 9.93
------ ------ ------- ------ -------
Income from Investment Operations:
Net investment income.................. 0.16 0.14 0.44 0.24
0.01
Net realized and unrealized gain
(loss) on investments................ 0.10 0.10 (0.50) 0.10
(0.21)
----- ----- ------ ----- ------
Total from investment operation....... 0.26 0.24 (0.06)
0.34 (0.20)
----- ----- ------ ----- ------
Less Distributions:
Dividends from net investment
income............................... (0.16) (0.14) (0.43) (0.27)
- --
----- ----- ------ ----- ------
Total distributions.................... (0.16) (0.14) (0.43) (0.27)
- --
----- ----- ------ ----- ------
Net Asset Value, End of Period......... $ 9.34 $ 9.34 $ 9.24 $
9.24 $ 9.73
===== ===== ====== =====
======
Total Return(e)........................ 2.84% 2.58% (0.16)%
3.81% (2.01)%
===== ===== ====== =====
======
Ratios to Average Net Assets/
Supplemental Data:
Net assets, end of period (in
thousands)........................... $ 417 $ 254 $ 444 $ 227
$ 43
Ratio of operating expenses to
average net assets................... 0.52%(f) 1.27%(f) 0.56%
1.29%(f) 0.46%(f)
Ratio of net investment income
to average net assets................ 5.06%(f) 4.31%(f) 4.81%
4.08%(f) 3.76%(f)
Portfolio turnover rate ............... 8% 8% 53%
53% 0%
Ratio of operating expenses to
average net assets without
waivers.............................. 1.26%(f) 2.01%(f) 1.30%
2.03%(f) 1.20%(f)
Net investment income per share
without waivers...................... $ 0.14 $ 0.12 $ 0.37 $ 0.20
$ 0.01
Average commission rate (i)
</TABLE>
- ------------------------------------------
(a) Formerly, Ambassador Michigan Tax-Free Bond Fund.
(b) [The Fund is authorized to issue Class C Shares. As of June 30, 1996 the
Fund had not begun selling Class C Shares.]
(c) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(e) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(f) Annualized.
(g) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(h) The Munder Michigan Triple Tax-Free Bond Fund Class A Shares and Class B
Shares commenced operations on February 15, 1994 and July 5, 1994,
respectively.
(i) Average commission rate paid per share of securities purchased or sold by
the Fund.
16
<PAGE>
<TABLE>
<CAPTION>
Tax-Free Bond Fund(a)(b)
----------------------------------------------
Year Ended Period Ended Period Ended
---------- ------------ ------------
6/30/96 6/30/95(c)(d) 2/28/95(g)(h)
---------- ------------ ------------
Class B Class B Class B
---------- ------------ ------------
<S> <C> <C>
Net Asset Value, Beginning of Period.... $10.14 $ 9.72
------ ------
Income from Investment Operations:
Net investment income.................. 0.13 0.10
Net realized and unrealized gain on 0.15 0.42
investments........................... ------ ------
Total from investment operations....... 0.28 0.52
------ ------
Less Distributions:
Dividends from net investment income... (0.13) (0.10)
------ ------
Total distributions.................... (0.13) (0.10)
------ ------
Net Asset Value, End of Period.......... $10.29 $10.14
====== ======
Total Return(e)........................ 2.80% 5.39%
====== ======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in $ 1 $ 0(i)
thousands)............................
Ratio of operating expenses to average 1.77%(f) 1.67%(f)
net assets............................
Ratio of net investment income to 3.63%(f) 3.95%(f)
average net assets....................
Portfolio turnover rate................ 12% 50%
Ratio of operating expenses to average 2.01%(f) 1.91%(f)
net assets without waivers............
Net investment income per share $ 0.10 $ 0.09
without waivers.......................
Average commission rate (j)
</TABLE>
- -------------------------------------------
(a) Formerly, Ambassador Tax-Free Bond Fund.
(b) [The Fund is authorized to issue Class A Shares and Class C Shares. As of
June 30, 1996, the Fund had not begun selling Class A Shares and Class C
Shares.]
(c) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(d) Per share amounts have been calculated using the average share method which
more appropriately presents the per share data for the period since the use
of the undistributed net investment income method did not accord with
results of operations.
(e) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(f) Annualized.
(g) The Munder Tax-Free Bond Fund Class B Shares commenced operations on
December 6, 1994.
(h) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
[(i)Total net assets were $164 at period ended February 28, 1995.]
(j) Average commission rate paid per share of securities purchased or sold by
the Fund.
17
<PAGE>
<TABLE>
<CAPTION>
Tax-Free Intermediate Bond Fund(a)(b)
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Ended Period Ended Year Ended Year Ended
Period Ended
---------- ------------ ---------- ---------- ------------
6/30/96 6/30/95(c) 2/28/95(f) 2/28/94 2/28/93(g)
------- ---------- ---------- ------- ----------
Class A Class A Class A Class A Class A
------- ------- ------- ------- -------
Net Asset Value, Beginning of Period... $10.17 $10.44 $10.69
$10.39
------ ------ -------- ------
Income from Investment Operations:
Net investment income................. 0.14 0.40 0.42 0.09
Net realized and unrealized gain
(loss) on investments................. 0.19 (0.23) (0.14) 0.31
------ ------ -------- ------
Total from investment operations...... 0.33 0.17 0.28
0.40
------ ------ -------- ------
Less Distributions:
Dividends from net investment income.. (0.14) (0.42) (0.42)
(0.08)
Distributions from net realized gains. -- (0.02) (0.11)
(0.02)
------ ------ -------- ------
Total distributions................... (0.14) (0.44) (0.53) (0.10)
------ ------ -------- ------
Net Asset Value, End of Period......... $10.36 $10.17 $10.44
$10.69
====== ====== ========
======
Total Return(d)........................ 3.25% 2.05% 2.62%
3.90%
====== ====== ========
======
Ratios to Average Net Assets/Supplemental Data:
Net assets, end of period (in
thousands)............................ $4,138 $4,551 $6,011 $1,262
Ratio of operating expenses to average
net assets............................ 0.98%(e) 0.95% 0.86%
0.79%(e)
Ratio of net investment income to
average net assets.................... 4.02%(e) 4.19% 3.88%
4.09%(e)
Portfolio turnover rate................ 5% 52% 38% 57%
Ratio of operating expenses to average
net assets without waivers............ 1.22%(e) 1.19% 1.00%
0.93%(e)
Net investment income per share
without waive......................... $ 0.13 $ 0.38 $ 0.40 $ 0.08
Average commission rate (h)
</TABLE>
- ---------------------------------------------
(a) Formerly, Ambassador Tax-Free Intermediate Bond Fund.
(b) [The Fund is authorized to issue Class A Shares and Class B Shares. As of
June 30, 1996, the Fund had not begun selling Class B Shares and Class C
Shares.]
(c) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Annualized.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) The Munder Tax-Free Intermediate Bond Fund Class A Shares commenced
operations on November 30, 1992.
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
18
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
This Prospectus describes the following Funds offered by the Company: Bond
Fund, Intermediate Bond Fund, U.S. Government Income Fund (the "Bond Funds");
the Michigan Triple Tax-Free Bond Fund, Tax-Free Bond Fund and Tax-Free
Intermediate Bond Fund (the "Tax-Free Bond Funds"); and the International Bond
Fund, offered by Munder (together, the "Funds"). Purchasing shares of any Fund
should not be considered a complete investment program, but an important segment
of a well-diversified investment program.
THE BOND FUNDS
The investment objective of the Bond Fund is to provide a high level of
current income, and secondarily, capital appreciation. The Bond Fund's dollar-
weighted average maturity will generally be between six and fifteen years except
during temporary defensive periods, and will be adjusted by the Advisor
according to market conditions. The investment objective of the Intermediate
Bond Fund is to provide a competitive rate of return which over time exceeds the
rate of inflation and the return provided by money market instruments. The
Intermediate Bond Fund's dollar-weighted average maturity will generally be
between three and eight years and will be adjusted by the Advisor according to
market conditions. The investment objective of the U.S. Government Income Fund
is to provide high current income. Under normal market conditions, the U.S.
Government Income Fund's dollar-weighted average maturity will be between six
and fifteen years, and will be adjusted by the Advisor according to market
conditions.
Each Fund invests substantially all of its assets in debt obligations such as
bonds and debentures, obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities ("U.S. Government obligations"), debt
obligations of domestic and foreign corporations, debt obligations of foreign
governments and their political subdivisions, asset-backed securities and
various mortgage-related securities. The Bond Funds may purchase obligations
issued by or on behalf of states, territories and possessions of the United
States, the District of Columbia and their political subdivisions, agencies,
instrumentalities and authorities. For purposes of the 65% limitation with
respect to the Bond Fund and Intermediate Bond Fund described below, the
securities described in this paragraph are considered "bonds."
Pending investment, to meet anticipated redemption requests, or as a temporary
defensive measure if the Advisor determines that market conditions warrant, the
Bond Funds may invest without limitation in short-term U.S. Government
obligations, high quality money market instruments and repurchase agreements.
Such obligations may include those issued by foreign banks and foreign branches
of U.S. banks.
The Bond Funds may also invest in futures contracts and options and enter into
interest rate swap transactions. See "Portfolio Instruments and Practices and
Associated Risk Factors--Futures Contracts and Options" for a discussion of the
risks associated with the use of derivative instruments. During normal market
conditions at least 65% of each of the Bond Fund's and the Intermediate Bond
Fund's total assets will be invested in bonds. During normal market conditions
at least 65% of the U.S. Government Income Fund's total assets will be invested
in U.S. Government obligations. A further description of the types of
obligations and the various investment techniques used by the Bond Funds is
provided below under "Portfolio Instruments and Practices and Associated Risk
Factors."
MICHIGAN TRIPLE TAX-FREE BOND FUND
The investment objective of the Michigan Triple Tax-Free Bond Fund is to
provide a high level of current interest income exempt from regular Federal
income taxes and to the extent possible Michigan state income tax and
intangibles tax as is consistent with prudent investment management and
preservation of capital. The Fund seeks to achieve its objective by investing in
a professionally managed portfolio of intermediate-term and long-term municipal
obligations, the interest on which, in the opinion of bond counsel or counsel to
the issuer, is exempt from regular Federal income tax and Michigan state income,
intangibles and single business taxes. The Fund will
19
<PAGE>
invest primarily in obligations which have remaining maturities of between three
and thirty years. The Fund's dollar-weighted average maturity will generally be
between ten and twenty years except during temporary defensive periods, and will
be adjusted downward by the Advisor according to market conditions.
Except during temporary defensive periods, at least 65% of the net assets
of the Fund will be invested in municipal obligations issued by the State of
Michigan and its political subdivisions ("Michigan Municipal Obligations").
Interest income from certain types of municipal securities may be subject to
Federal alternative minimum tax. The Fund will treat certain of these securities
as Michigan Municipal Obligations. See "Portfolio Instruments and Practices and
Associated Risk Factors--Michigan Municipal Obligations."
TAX-FREE BOND FUND
The investment objective of the Tax-Free Bond Fund is to provide a high
level of current interest income exempt from Federal income taxes and to
generate a competitive long-term rate of return as is consistent with prudent
investment management and preservation of capital. The Fund will seek to achieve
its objective by investing, under normal market conditions, in a professionally
managed portfolio of intermediate-term and long-term municipal obligations, the
interest on which, in the opinion of bond counsel or counsel to the issuer, is
exempt from regular Federal income tax. The Fund will invest primarily in
obligations which have remaining maturities of between three and thirty years.
The Fund's dollar-weighted average maturity will generally be between ten and
twenty years except during temporary defensive periods, and will be adjusted by
the Advisor according to market conditions.
The Tax-Free Bond Fund may purchase obligations issued by or on behalf of
states, territories and possessions of the United States, the District of
Columbia and their political subdivisions, agencies, instrumentalities and
authorities. For purposes of the 65% limitation with respect to the Tax-Free
Bond Fund described below, the securities described in this paragraph are
considered "bonds."
During normal market conditions at least 65% of the Tax-Free Bond Fund's
total assets will be invested in bonds. A further description of the types of
obligations and the various investment techniques used by the Tax-Free Bond Fund
is provided below under "Portfolio Instruments and Practices and Associated
Risk Factors."
Except during temporary defensive periods, at least 80% of the net assets
of the Tax-Free Bond Fund will be invested in municipal obligations, the
interest on which is exempt from regular Federal income tax. This policy is
fundamental and may be changed only with shareholder approval. A portion of the
Fund's dividends may be subject to Federal alternative minimum tax. See "Taxes--
Tax-Free Bond Funds."
TAX-FREE INTERMEDIATE BOND FUND
The Tax-Free Intermediate Bond Fund's investment objective is to provide a
competitive level of current interest income exempt from regular Federal income
taxes and a total return which, over time, exceeds the rate of inflation and the
return provided by tax-free money market instruments. The Fund invests
substantially all of its assets in a non-diversified portfolio of short-term and
intermediate-term municipal obligations, the interest on which, in the opinion
of bond counsel or counsel to the issuer, is exempt from regular Federal income
tax. "Municipal obligations" are obligations issued by or on behalf of states,
territories and possessions of the United States, the District of Columbia, and
their political subdivisions, agencies, instrumentalities and authorities. In
addition, in managing the Fund, the Advisor intends to invest, when possible,
the Fund's assets in Michigan Municipal Obligations, the interest on which may
be exempt from Michigan income tax, Michigan intangibles tax and Michigan single
business tax, provided the investment is consistent with the Fund's investment
objective and policies. All obligations purchased by the Fund will have
remaining maturities of ten years or less (although variable rate demand notes,
put option securities, and securities subject to repurchase agreements may bear
longer maturities). The portfolio's dollar-weighted average maturity will
generally be between three and eight years, and will be adjusted by the Advisor
according to market conditions. During certain periods, the dollar-weighted
20
<PAGE>
average maturity may be longer than eight years, but will not exceed ten years.
See "Portfolio Instruments and Practices and Associated Risk Factors--Michigan
Municipal Obligations."
The Tax-Free Intermediate Bond Fund may purchase obligations issued by or
on behalf of states, territories and possessions of the United States, the
District of Columbia and their political subdivisions, agencies,
instrumentalities and authorities. For purposes of the 65% limitation with
respect to the Tax-Free Intermediate Bond Fund described below, the securities
described in this paragraph are considered "bonds."
During normal market conditions at least 65% of the Tax-Free Intermediate
Bond Fund's total assets will be invested in bonds. A further description of the
types of obligations and the various investment techniques used by the Tax-Free
Intermediate Bond Fund is provided below under "Portfolio Instruments and
Practices and Associated Risk Factors."
Except during temporary defensive periods, at least 80% of the net assets
of the Tax-Free Intermediate Bond Fund will be invested in municipal
obligations, the interest on which is exempt from regular Federal income tax.
This policy is fundamental and may be changed only with shareholder approval. A
portion of the Fund's dividends may be subject to Federal alternative minimum
tax. See "Taxes--Tax-Free Bond Funds."
INTERNATIONAL BOND FUND
- -----------------------
The investment objective of the International Bond Fund is to realize a
competitive total return through a combination of current income and capital
appreciation. The Fund seeks to achieve its objective by investing primarily in
foreign debt obligations. As an international fund, the Fund may invest in
securities of any issuer and in any currency. Under normal market conditions, at
least 65% of the Fund's assets are invested in bonds of issuers located in at
least three countries other than the United States. The Fund will primarily
invest in foreign debt obligations denominated in foreign currencies, including
the European Currency Unit ("ECU"), which are issued by foreign governments and
governmental agencies, instrumentalities or political subdivisions; debt
securities issued or guaranteed by supranational organizations (e.g. European
Investment Bank, Inter-American Development Bank or the World Bank); corporate
debt securities; bank or bank holding company debt securities and other debt
securities including those convertible into foreign stock. For the purposes of
the 65% limitation with respect to the Fund's designation as an international
bond fund, the securities described in this paragraph are considered
"international bonds." There can be no assurance that the Fund will achieve its
investment objective. Purchasing shares of the Fund should not be considered a
complete investment program, but an important segment of a well-diversified
investment program.
The Fund's dollar-weighted average maturity will generally be between three
and fifteen years except during temporary defensive periods, and will be
adjusted by the Advisor according to market conditions. Pending investment, to
meet anticipated redemption requests, or as a temporary defensive measure if the
Advisor determines that market conditions warrant, the Fund may invest without
limitation in short-term U.S. Government obligations, high quality money market
instruments and repurchase agreements. Such obligations may include those issued
by foreign banks and foreign branches of U.S. Banks. The Fund may also invest in
futures contracts and options and enter into interest rate swap transactions.
See "Portfolio Instruments and Practices and Associated Risk Factors--Futures
Contracts and Options" for a discussion of the risks associated with the use of
derivative instruments. A further description of the types of obligations and
the various investment techniques used by the Fund is provided below under
"Portfolio Instruments and Practices and Associated Risk Factors."
PORTFOLIO INSTRUMENTS AND PRACTICES AND ASSOCIATED RISK
FACTORS
Corporate Obligations. Each Bond Fund may purchase commercial paper and
corporate bonds that meet the applicable quality and maturity limitations.
Commercial paper may include obligations issued by Canadian and other foreign
corporations and Canadian and other foreign counterparts of U.S. corporations
and europaper, which is U.S. dollar-denominated and other foreign commercial
paper of a foreign issuer. The International Bond Fund may also purchase
commercial paper indexed to certain specific foreign currency exchange rates.
21
<PAGE>
Each Bond Fund will purchase only those securities which are considered to
be investment grade or better (within the four highest rating categories of
Standard & Poor's Ratings Service, a division of McGraw Hill Companies ("S&P")
or Moody's Investor Services, Inc. ("Moody's") or, if unrated, of comparable
quality). Obligations rated "Baa" by Moody's lack outstanding investment
characteristics and have speculative characteristics. Adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity of obligations rated "BBB" by S&P to pay interest and repay principal
than in the case of higher grade obligations. After purchase by a Fund, a
security may cease to be rated or its rating may be reduced below the minimum
required for purchase by the Fund. Neither event will require the Fund to sell
such security. However, the Advisor will reassess promptly whether the security
presents minimal credit risks and determine whether continuing to hold the
security is in the best interests of the Fund. To the extent that the ratings
given by Moody's, S&P or another nationally recognized statistical rating
organization for securities may change as a result of changes in the rating
systems or because of corporate reorganization of such rating organizations, the
Fund will attempt to use comparable ratings as standards for its investments in
accordance with the investment objectives and policies of the Funds.
Descriptions of each rating category are included as Appendix A to the Statement
of Additional Information.
Bank Obligations. Each Bond Fund and the International Bond Fund may
purchase U.S. dollar-denominated bank obligations, including certificates of
deposit, bankers' acceptances, bank notes, deposit notes and interest-bearing
savings and time deposits, issued by U.S. or foreign banks or savings
institutions having total assets at the time of purchase in excess of $1
billion. For this purpose, the assets of a bank or savings institution include
the assets of both its domestic and foreign branches. See "Foreign Securities"
for a discussion of the risks associated with investments in obligations of
foreign banks and foreign branches of domestic banks. The International Bond
Fund may also purchase debt obligations issued or guaranteed by supranational
organizations such as the World Bank, Asian Development Bank, European
Investment Bank and European Union; and debt obligations of U.S. and foreign
banks and bank holding companies. Investments by a Bond Fund in the obligations
of foreign banks and foreign branches of domestic banks will not exceed 25% of
the Fund's total assets at the time of investment. Foreign bank obligations
include Eurodollar Certificates of Deposit ("ECDs"), Eurodollar Time Deposits
("ETDs"), Canadian Time Deposits ("CTDs"), Schedule Bs, Yankee Certificates of
Deposit ("Yankee CDs") and Yankee Bankers' Acceptances ("Yankee BAs"). A
discussion of these obligations appears in the Statement of Additional
Information under "Additional Information on Portfolio Investments--Non-Domestic
Bank Obligations."
Asset-Backed Securities. Subject to applicable maturity and credit criteria,
the Bond Funds and the International Bond Fund may purchase asset-backed
securities (i.e., securities backed by mortgages, installment sales contracts,
credit card receivables or other assets). The average life of asset-backed
securities varies with the maturities of the underlying instruments which, in
the case of mortgages, have maximum maturities of forty years. The average life
of a mortgage-backed instrument, in particular, is likely to be substantially
less than the original maturity of the mortgage pools underlying the securities
as the result of scheduled principal payments and mortgage prepayments. The rate
of such mortgage prepayments, and hence the life of the certificates, will be
primarily a function of current market rates and current conditions in the
relevant housing markets. In calculating the average weighted maturity of the
Bond Funds and the International Bond Fund, the maturity of mortgage-backed
instruments will be based on estimates of average life. The relationship between
mortgage prepayment and interest rates may give some high-yielding mortgage-
related securities less potential for growth in value than conventional bonds
with comparable maturities. In addition, in periods of falling interest rates,
the rate of mortgage prepayment tends to increase. During such periods, the
reinvestment of prepayment proceeds by a Fund will generally be at lower rates
than the rates that were carried by the obligations that have been prepaid.
Because of these and other reasons, an asset-backed security's total return may
be difficult to predict precisely. To the extent that a Fund purchases mortgage-
related or mortgage-backed securities at a premium, mortgage prepayments (which
may be made at any time without penalty) may result in some loss of the Fund's
principal investment to the extent of premium paid.
Presently there are several types of mortgage-backed securities issued or
guaranteed by U.S. Government agencies, including guaranteed mortgage pass-
through certificates, which provide the holder with a pro rata interest in the
underlying mortgages, and collateralized mortgage obligations ("CMOs"), which
provide the holder
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with a specified interest in the cash flow of a pool of underlying mortgages or
other mortgage-backed securities. Issuers of CMOs frequently elect to be taxed
as a pass-through entity known as real estate mortgage investment conduits, or
REMICs. CMOs are issued in multiple classes, each with a specified fixed or
floating interest rate and a final distribution date. The relative payment
rights of the various CMO classes may be structured in many ways. In most cases,
however, payments of principal are applied to the CMO classes in the order of
their respective stated maturities, so that no principal payments will be made
on a CMO class until all other classes having an earlier stated maturity date
are paid in full. The classes may include accrual certificates (also known as
"Z-Bonds"), which only accrue interest at a specified rate until other specified
classes have been retired and are converted thereafter to interest-paying
securities. They may also include planned amortization classes ("PAC") which
generally require, within certain limits, that specified amounts of principal be
applied on each payment date, and generally exhibit less yield and market
volatility than other classes. The Funds will not purchase "residual" CMO
interests, which normally exhibit the greatest price volatility.
Interest Rate and Currency Swaps. For hedging purposes, the International
Bond Fund may enter into interest rate and currency swap transactions and
purchase or sell interest rate caps and floors. The Fund expects to enter into
these transactions primarily to preserve a return or spread on a particular
investment or portion of its portfolio, to protect against currency fluctuations
as a technique for managing the portfolio's duration (i.e., the price
sensitivity to changes in interest rates) or to protect against any increase in
the price of securities the Fund anticipates purchasing at a later date. An
interest rate or currency swap is a derivative instrument which involves an
agreement between the Fund and another party to exchange payments calculated as
if they were interest on a fictitious ("notional") principal amount (e.g., an
exchange of floating rate payments by one party for fixed rate payments by the
other). An interest rate cap or floor is a derivative instrument which entitles
the purchaser, in exchange for a premium, to receive payments of interest on a
notional principal amount from the seller of the cap or floor, to the extent
that a specified reference rate exceeds or falls below a predetermined level.
The Fund usually enters into such transactions on a "net" basis, with the
Fund receiving or paying, as the case may be, only the net amount of the two
payment streams. The net amount of the excess, if any, of the Fund's obligations
over its entitlements with respect to each swap is accrued on a daily basis and
an amount of cash or high-quality liquid securities having an aggregate net
asset value at least equal to the accrued excess is maintained in a segregated
account by the Fund's custodian. If the Fund enters into a swap on other than a
net basis, or sells caps or floors, the Fund maintains a segregated account in
the full amount accrued on a daily basis of the Fund's obligations with respect
to the transaction. Such segregated accounts are maintained in accordance with
applicable regulations of the SEC.
The use of swaps, caps and floors is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If the Advisor's forecast of market
values, interest rates, currency rates of exchange and other applicable factors
is incorrect, the investment performance of the Fund will diminish compared with
the performance that could have been achieved if these investment techniques
were not used. Moreover, even if the Advisor's forecasts were correct, a Fund's
swap position may correlate imperfectly with the asset or liability being
hedged. In addition, in the event of a default by the other party to the
transaction, the Fund might incur a loss.
U.S. Government Obligations. The Bond Funds and the International Bond Fund
may purchase obligations issued or guaranteed by the U.S. Government and U.S.
Government agencies and instrumentalities. Obligations of certain agencies and
instrumentalities of the U.S. Government, such as those of the Government
National Mortgage Association, are supported by the full faith and credit of the
U.S. Treasury. Others, such as those of the Export-Import Bank of the United
States, are supported by the right of the issuer to borrow from the U.S.
Treasury; and still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the agency or instrumentality
issuing the obligation. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
is not obligated to do so by law.
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Borrowing. The Funds are authorized to borrow money in amounts up to 5% of
the value of each Fund's total assets at the time of such borrowing for
temporary purposes. However, a Fund is authorized to borrow money in amounts up
to 33 1/3% of its assets, as permitted by the 1940 Act, for the purpose of
meeting redemption requests. Borrowing by a Fund creates an opportunity for
greater total return but, at the same time, increases exposure to capital risk.
In addition, borrowed funds are subject to interest costs that may offset or
exceed the return earned on the borrowed funds. However, a Fund will not
purchase portfolio securities while borrowings exceed 5% of a Fund's total
assets. For more detailed information with respect to the risks associated with
borrowing, see the heading "Borrowing" in the Statement of Additional
Information.
Stripped Securities. The Bond Funds and the International Bond Fund may
purchase participations in trusts that hold U.S. Treasury and agency securities
(such as TIGRs and CATS) and also may purchase Treasury receipts and other
stripped securities, which represent beneficial ownership interests in either
future interest payments or the future principal payments on U.S. Government
obligations. These instruments are issued at a discount to their "face value"
and may (particularly in the case of stripped mortgage-backed securities)
exhibit greater price volatility than ordinary debt securities because of the
manner in which their principal and interest are returned to investors. Stripped
securities will normally be considered illiquid investments and will be acquired
subject to the limitation on illiquid investments unless determined to be liquid
under guidelines established by the Board of Trustees/Directors.
Repurchase Agreements. The Bond Funds may agree to purchase securities from
financial institutions subject to the seller's agreement to repurchase them at
an agreed-upon time and price ("repurchase agreements"). The financial
institutions with which a Fund may enter into repurchase agreements include
member banks of the Federal Reserve System, any foreign bank or any domestic or
foreign broker/dealer which is recognized as a reporting government securities
dealer. The Advisor will review and continuously monitor the creditworthiness of
the seller under a repurchase agreement, and will require the seller to maintain
liquid assets in a segregated account in an amount that is greater than the
repurchase price. Default by or bankruptcy of the seller would, however, expose
a Fund to possible loss because of adverse market action or delays in connection
with the disposition of the underlying obligations.
Reverse Repurchase Agreements. Each Bond Fund and the International Bond
Fund may borrow funds for temporary purposes by selling portfolio securities to
financial institutions such as banks and broker/dealers and agreeing to
repurchase them at a mutually specified date and price ("reverse repurchase
agreements"). Reverse repurchase agreements involve the risk that the market
value of the securities sold by a Fund may decline below the repurchase price. A
Fund would pay interest on amounts obtained pursuant to a reverse repurchase
agreement.
Foreign Securities. The Bond Funds may invest in the securities of foreign
issuers, and the Tax-Free Bond Funds may purchase securities that are backed by
letters of credit or guarantees issued by foreign financial institutions. The
International Bond Fund may purchase debt obligations issued or guaranteed by a
foreign sovereign government or one of its agencies, authorities,
instrumentalities or political subdivisions, including foreign states, provinces
or municipalities, and corporate debt securities. There are certain risks and
costs involved in investing in securities of companies and governments of
foreign nations, which are in addition to the usual risks inherent in U.S.
investments. Investments in foreign securities involve higher costs than
investment in U.S. securities, including higher transaction costs as well as the
imposition of additional taxes by foreign governments. In addition, foreign
investments may include additional risks associated with the level of currency
exchange rates, less complete financial information about the issuers, less
market liquidity, and political instability. Future political and economic
developments, the possible imposition of withholding taxes on interest income,
the possible seizure or nationalization of foreign holdings, the possible
establishment of exchange controls, or the adoption of other governmental
restrictions might adversely affect the payment of principal and interest on
foreign obligations. Additionally, foreign banks and foreign branches of
domestic banks may be subject to less stringent reserve requirements, and to
different accounting, auditing and record keeping requirements.
Forward Foreign Currency Transactions. Each of the Bond Funds and the
International Bond Fund normally conducts its foreign currency exchange
transactions either on a spot (cash) basis at the spot rate prevailing in the
foreign currencies or on a forward basis. Under normal circumstances, the
Advisor expects that a Fund will enter
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into forward currency contracts (to purchase or sell a specified currency at a
specified future date and price). A Fund generally will not enter into a forward
contract with a term of greater than one year. Although forward contracts are
used primarily to protect a Fund from adverse currency movements, they may also
be used to increase exposure to a currency, and involve the risk that
anticipated currency movements will not be accurately predicted and a Fund's
total return will be adversely affected as a result. Open positions in forward
contracts are covered by the segregation with the Fund's custodian of cash, U.S.
Government securities or other high grade debt obligations which are marked to
market daily.
Futures Contracts and Options. The Bond Funds and the International Bond
Fund may write covered call options, buy put options, buy call options and write
secured put options. Such options may be related to particular securities or to
various bond indices. The Bond Funds may also invest in futures contracts and
options on futures contracts for hedging purposes or to maintain liquidity.
However, a Fund may not purchase or sell a futures contract unless immediately
after any such transaction the sum of the aggregate amount of margin deposits on
its existing futures positions and the amount of premiums paid for related
options is 5% or less of its total assets.
Options trading is a highly specialized activity which entails greater than
ordinary investment risks. A call option for a particular security gives the
purchaser of the option the right to buy, and a writer the obligation to sell,
the underlying security at the stated exercise price at any time prior to the
expiration of the option, regardless of the market price of the security. The
premium paid to the writer is in the consideration for undertaking the
obligations under the option contract. A put option for a particular security
gives the purchaser the right to sell, and the writer the obligation to
purchase, the underlying security prior to the expiration date of the option,
regardless of the market price of the security. In contrast to an option on a
particular security, an option on a bond index provides the holder with the
right to make or receive a cash settlement upon exercise of the option.
Futures contracts obligate a Fund, at maturity, to take or make delivery of
certain securities or the cash value of a bond or securities index. When
interest rates are rising, futures contracts can offset a decline in value of
the Fund's portfolio securities. When rates are falling, these contracts can
secure higher yields for securities the Fund intends to purchase.
The Bond Funds and the International Bond Fund may purchase and sell call
and put options on futures contracts traded on an exchange or board of trade.
When a Fund purchases an option on a futures contract, it has the right to
assume a position as a purchaser or seller of a futures contract at a specified
exercise price at any time during the option period. When a Fund sells an option
on a futures contract, it becomes obligated to purchase or sell a futures
contract if the option is exercised. In anticipation of a decline in interest
rates, a Fund may purchase call options on futures contracts as a substitute for
the purchase of futures contracts to hedge against a possible increase in the
price of securities which the Fund intends to purchase. Similarly, if the value
of a Fund's portfolio securities is expected to decline as a result of an
increase in interest rates, the Fund might purchase put options or sell call
options on futures contracts rather than sell futures contracts. The
International Bond Fund may also enter into contracts for the purchase or sale
for future delivery of foreign currencies and purchase and write put and call
options of foreign currencies (traded on U.S. and foreign exchanges or over the
counter) to manage the Funds exposure to changes in currency exchange rates.
In connection with a Fund's position in a futures contract or option
thereon, the Fund will create a segregated account of liquid assets or will
otherwise cover its position in accordance with applicable requirements of the
SEC.
The use of derivative instruments exposes a Fund to additional risks and
transaction costs. Risks inherent in the use of derivative instruments include:
(1) the risk that interest rates, securities prices and currency markets will
not move in the direction that a portfolio manager anticipates; (2) imperfect
correlation between the price of derivative instruments and movements in the
prices of the securities, interest rates or currencies being hedged; (3) the
fact that skills needed to use these strategies are different than those needed
to select portfolio securities; (4) inability to close out certain hedged
positions to avoid adverse tax consequences; (5) the possible absence of a
liquid secondary market for any particular instrument and possible exchange-
imposed price fluctuation limits, either of which may make it difficult or
impossible to close out a position when desired; (6) leverage risk, that is, the
risk that adverse price movements in an instrument can result in a loss
substantially greater than a Fund's
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initial investment in that instrument (in some cases, the potential loss is
unlimited); and (7) particularly in the case of privately-negotiated
instruments, the risk that the counterparty will fail to perform its
obligations, which could leave a Fund worse off than if it had not entered into
the position. For a further discussion see "Additional Information on Fund
Investments" and Appendix B in the Statement of Additional Information.
Municipal Obligations. Long-term instruments acquired by the Tax-Free Bond
Funds will be rated at the time of purchase "A" or better by Moody's or S&P or,
if unrated, will be of comparable quality as determined by the Advisor. Short-
term instruments acquired by these Funds will either have short-term debt
ratings at the time of purchase in the top two categories by one or more
unaffiliated nationally recognized statistical rating organizations or will be
issued by issuers with such ratings. Unrated instruments purchased by a Fund
will be of comparable quality as determined by the Advisor.
Although each Tax-Free Bond Fund may invest more than 25% of its net assets
in municipal revenue obligations, the interest on which is paid solely from
revenues of similar projects, the Funds do not currently intend to do so on a
regular basis. If it does, a Fund will be subject to the peculiar risks
presented by the laws and economic conditions relating to such projects to a
greater extent that it would be if its assets were not so concentrated.
Except during temporary defensive periods, at least 80% of the net assets
of each of the Tax-Free Bond Funds will be invested in municipal obligations,
the interest on which is exempt from regular Federal income tax. This policy is
fundamental and may be changed only with shareholder approval. A portion of a
Fund's dividends may be subject to Federal alternative minimum tax. See "Taxes--
Tax-Free Bond Funds."
The two principal classifications of municipal obligations are "general
obligation" securities and "revenue" securities. General obligation securities
are secured by the issuer's pledge of its full faith, credit and taxing power
for the payment of principal and interest. Revenue securities are payable only
from the revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise tax or other specific
revenue source such as the user of the facility being financed. Revenue
securities include private activity bonds which are not payable from the
unrestricted revenues of the issuer. Consequently, the credit quality of private
activity bonds is usually directly related to the credit standing of the
corporate user of the facility involved.
Municipal obligations may also include "moral obligation" bonds, which are
normally issued by special purpose public authorities. If the issuer of moral
obligation bonds is unable to meet its debt service obligations from current
revenues, it may draw on a reserve fund, the restoration of which is a moral
commitment but not a legal obligation of the state or municipality which created
the issuer.
Michigan Municipal Obligations. As stated above, in managing the Tax-Free
Intermediate Bond Fund, the Advisor intends to invest, when possible, the Fund's
assets in Michigan Municipal Obligations, provided the investment is consistent
with the Fund's investment objective and policies. In managing the Michigan
Triple Tax-Free Bond Fund, the Advisor intends to concentrate in Michigan
Municipal Obligations. The number of Michigan municipal issuers is, however,
relatively limited, and the supply of municipal obligations issued by them that
meet the Fund's investment criteria is restricted. In addition, Comerica Bank
and its affiliates deal in certain Michigan obligations and, under the
Investment Company Act of 1940, as amended (the "1940 Act"), are prevented from
entering into securities transactions with the Funds on a principal basis. The
1940 Act also limits the Funds' ability to purchase securities from underwriting
syndicates in which either Comerica Bank or one of its affiliates is a member.
For these reasons the Advisor cannot predict precisely what percentage of the
Fund's portfolio will be invested in such issuers. If the State of Michigan or
any of its political subdivisions were to suffer serious financial difficulties
jeopardizing their ability to pay their obligations, the marketability of
obligations issued by the State or localities within the State, and the value of
the Funds' portfolio, could be adversely affected.
The principal sectors of Michigan's diversified economy are manufacturing
of durable goods (including automobiles and components and office equipment),
tourism and agriculture. As reflected in historical employment figures, the
State's economy has lessened its dependence upon durable goods manufacturing. In
1960, employment in such industry accounted for 33% of the State's work force.
By 1994, this figure had fallen to 17%. However,
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such manufacturing continues to be an important part of the States economy. The
particular industries are highly cyclical and in the period 1994-1995 are
expected to operate at somewhat less than full capacity. This factor generally
adversely affects the revenue streams of the State and its political
subdivisions because it adversely impacts tax sources, particularly sales,
income and single business taxes.
In 1994, a ballot proposal ("Proposal A") to implement extensive property
tax and school finance reform measures was subject to voter approval and in fact
approved on March 15, 1994. Under Proposal A as approved, effective May 1, 1994,
the State sales and use tax increased from 4% to 6% and the State income tax
decreased from 4.6% to 4.4%. As of January 1, 1995, a 0.75% real estate transfer
tax also became effective. In 1994, a State education property tax of 6 mills
was imposed on all real and personal property currently subject to the general
property tax. In addition, all school boards can now, with voter approval, levy
up to the lesser of 18 mills or the number of mills levied in 1993 for school
operating purposes, on non-homestead property. Proposal A contained additional
provisions regarding the ability of local school districts to levy taxes as well
as a limit on assessment increases for each parcel of property, beginning in
1995 to the lesser of 5% or the rate of inflation. When property is subsequently
sold, its assessed value is adjusted to equal 50% of true cash value. Under
Proposal A, much of the additional revenue generated by these taxes is dedicated
to the State School Aid Fund.
Currently, the State's general obligation bonds are rated A1 by Moody's and
AA by Fitch. To the extent that the portfolio of Michigan municipal bonds is
comprised of revenue or general obligations of local governments or authorities,
rather than general obligations of the State of Michigan itself, ratings on such
Michigan obligations will be different from those given to the State of Michigan
and their value may be independently affected by economic matters not directly
impacting the State. The Statement of Additional Information includes a further
discussion of Proposal A and economic conditions in Michigan.
Except as stated above with respect to investments by the Tax-Free
Intermediate Bond Fund and Michigan Triple Tax-Free Bond Fund in Michigan
Municipal Obligations, the Advisor does not intend to invest more than 25% of
any Fund's total assets on a regular basis in securities whose issuers are in
the same state.
Variable and Floating Rate Securities. Each Fund may purchase variable and
floating rate securities which may have stated maturities in excess of the
Fund's maturity limitations but are deemed to have shorter maturities because
the Fund can demand payment of the principal of the security at least once
within such periods on not more than thirty days' notice (this demand feature is
not required if the security is guaranteed by the U.S. Government or an agency
or instrumentality thereof). These securities may include variable amount master
demand notes that permit the indebtedness to vary in addition to providing for
periodic adjustments in the interest rate. Unrated variable and floating rate
securities will be determined by the Advisor to be of comparable quality at the
time of purchase to rate securities purchasable by the Funds. The absence of an
active secondary market, however, could make it difficult to dispose of the
securities, and a Fund could suffer a loss if the issuer defaulted or during
periods when the Fund is not entitled to exercise its demand rights. Variable
and floating rate securities held by a Fund will be subject to the Fund's
limitation on illiquid investments when a Fund may not demand payment of the
principal amount within seven days absent a reliable trading market.
Fixed Income Securities. Generally, the market value of fixed income
securities held by the Funds can be expected to vary inversely to changes in
prevailing interest rates. Investors should also recognize that in periods of
declining interest rates the yields of investment portfolios composed primarily
of fixed income securities will tend to be higher than prevailing market rates
and, in periods of rising interest rates, yields will tend to be somewhat lower.
The Bond Funds may purchase zero-coupon bonds (i.e., discount debt obligations
that do not make periodic interest payments). Zero-coupon bonds are subject to
greater market fluctuations from changing interest rates than debt obligations
of comparable maturities which make current distributions of interest.
Guaranteed Investment Contracts. The Funds may make limited investments in
guaranteed investment contracts ("GICs") issued by U.S. insurance companies.
Pursuant to such contracts, a Fund makes cash contributions to a deposit fund of
the insurance company"s general account. The insurance company then credits to
the Fund on a monthly basis interest which is based on an index (in most cases
this index is expected to be the Salomon Brothers CD Index), but is guaranteed
not to be less than a certain minimum rate. A GIC is normally a
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general obligation of the issuing insurance company and not funded by a separate
account. The purchase price paid for a GIC becomes part of the general assets of
the insurance company, and the contract is paid from the company's general
assets. A Fund will only purchase GICs from insurance companies which, at the
time of purchase, have assets of $1 billion or more and meet quality and credit
standards established by the Advisor pursuant to guidelines approved by the
Board of Trustees. Generally, GICs are not assignable or transferable without
the permission of the issuing insurance companies, and an active secondary
market in GICs does not currently exist. Therefore, GICs will normally be
considered illiquid investments, and will be acquired subject to the limitation
on illiquid investments.
When-Issued Purchases and Forward Commitments. The Funds may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"forward commitment" basis. These transactions, which involve a commitment by a
Fund to purchase or sell particular securities with payment and delivery taking
place at a future date (perhaps one or two months later), permit the Fund to
lock-in a price or yield on a security, regardless of future changes in interest
rates. When-issued and forward commitment transactions involve the risk that the
price or yield obtained may be less favorable than the price or yield available
when the delivery takes place. Each Fund will establish a segregated account
consisting of cash, U.S. Government securities or other high grade debt
obligations in an amount equal to the amount of its when-issued purchases and
forward commitments. Each Fund's when-issued purchases and forward purchase
commitments are not expected to exceed 25% of the value of the Fund's total
assets absent unusual market conditions. The Funds do not intend to engage in
when-issued purchases and forward commitments for speculative purposes but only
in furtherance of their investment objectives.
Investment Company Securities. In connection with the management of their
daily cash positions, the Funds may invest in securities issued by other
investment companies which invest in short-term debt securities and which seek
to maintain a $1.00 net asset value per share (i.e., "money market funds").
Securities of other investment companies will be acquired within limits
prescribed by the 1940 Act. These limitations, among other matters, restrict
investments in securities of other investment companies to no more than 10% of
the value of a Fund's total assets, with no more than 5% invested in the
securities of any one investment company. As a shareholder of another investment
company, a Fund would bear its pro rata portion of the other investment
company's expenses, including advisory fees. These expenses would be in addition
to the fees and expenses the Fund bears directly in connection with its own
operations.
Temporary Investments. The Tax-Free Bond Funds may hold uninvested cash if,
in the opinion of the Advisor, suitable obligations bearing tax-exempt interest
are unavailable. Uninvested cash will not earn income. In addition, each of the
Tax-Free Bond Funds may invest from time to time, to the extent consistent with
its investment objective, a portion of its assets on a temporary basis or for
temporary defensive purposes in short-term money market instruments ("Temporary
Investments"), the income from which is subject to Federal income tax.
Temporary Investments will generally not exceed 20% of the total assets of
a Tax-Free Bond Fund, except when made for temporary defensive purposes, and may
include obligations of the U.S. Government or its agencies or instrumentalities;
debt securities (including commercial paper) of issuers having, at the time of
purchase, a quality rating within the two highest categories of either Moody's
or S&P; certificates of deposit or bankers' acceptances of domestic branches of
U.S. banks with total assets at the time of purchase of $1 billion or more; and
repurchase agreements with respect to such obligations.
Illiquid Securities. Each of the Funds will not invest more than 15% of the
value of its net assets (determined at the time of acquisition) in securities
that are illiquid. If, after the time of acquisition, events cause this limit to
be exceeded, a Fund will take steps to reduce the aggregate amount of its
illiquid holdings as soon as reasonably practicable in accordance with the
policies of the SEC. Subject to this limitation are GICs and repurchase
agreements and time deposits which do not provide for payment within seven days.
Each Bond Fund may invest in commercial obligations issued in reliance on the
"private placement" exemption from registration afforded by Section 4(2) of the
Securities Act of 1933, as amended ("Section 4(2) paper"). Each Fund may also
purchase securities that are not registered under the Securities Act of 1933, as
amended, but which can be sold to qualified institutional buyers in accordance
with Rule 144A under that Act ("Rule 144A securities"). Section 4(2) paper is
restricted as to disposition under Federal securities laws, and generally is
sold to institutional investors which agree
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to purchase the paper for investment and not with a view to public distribution.
Any resale by the purchasers must be an exempt transaction. Section 4(2) paper
normally is resold to other institutional investors through or with the
assistance of the issuer or investment dealers who make a market in the Section
4(2) paper, thus providing liquidity. Rule 144A securities generally must be
sold only to other qualified institutional buyers. If a particular investment in
Section 4(2) paper Rule 144A securities is not determined to be liquid, that
investment will be included within a Fund's limitation on investments in
illiquid securities. The Advisor will determine the liquidity of such
investments pursuant to guidelines established by the Boards of
Trustees/Directors.
Stand-by Commitments. The Tax-Free Bond Funds may acquire "stand-by
commitments" with respect to municipal obligations held by them. Under a stand-
by commitment, a dealer agrees to purchase, at a Fund's option, specified
municipal obligations at a specified price. The acquisition of a stand-by
commitment may increase the cost, and thereby reduce the yield, of the municipal
obligations to which the commitment relates. The Tax-Free Bond Funds will
acquire stand-by commitments solely to facilitate portfolio liquidity and do not
intend to exercise their rights thereunder for trading purposes.
Diversification. The Bond Funds and Tax-Free Bond Fund are each classified
as a diversified investment company under the 1940 Act; the Tax-Free
Intermediate Bond Fund, Michigan Triple Tax-Free Bond Fund and International
Bond Fund are each classified as non-diversified and, consequently, are not
subject to the provisions of the 1940 Act which would otherwise limit the
proportion of their assets that may be invested in obligations of a single
issuer. Because these Funds may hold a relatively high proportion of their
assets in a limited number of issuers, investments in these Funds may, under
certain circumstances, present greater risk to an investor than an investment in
a diversified investment company. Investment return on a non-diversified
portfolio typically is dependent upon the performance of a smaller number of
securities relative to the number held in a diversified portfolio. Consequently,
the change in value of any one security may affect the overall value of a non-
diversified portfolio more than it would a diversified portfolio, and thereby
subject the market-based net asset value per share of the non-diversified
portfolio to greater fluctuations. In addition, a non-diversified portfolio may
be more susceptible to economic, political and regulatory developments than a
diversified investment portfolio with similar objectives. The Funds will,
however, comply with the diversification requirements imposed by the Internal
Revenue Code of 1986, as amended (the "Code").
Lending of Portfolio Securities. To enhance the return of each of their
respective portfolios, each Fund may lend securities in its portfolios
representing up to 25% of its total assets, taken at market value, to securities
firms and financial institutions, provided that each loan is secured
continuously by collateral in the form of cash, high quality money market
instruments or short-term U.S. Government securities adjusted daily to have a
market value at least equal to the current market value of the securities
loaned. The risk in lending portfolio securities, as with other extensions of
credit, consists of possible delay in the recovery of the securities or possible
loss of rights in the collateral should the borrower fail financially.
Portfolio Turnover. The Advisor will not consider portfolio turnover rate a
limiting factor in making investment decisions consistent with the Fund's
objective and policies. A high portfolio turnover rate involves larger brokerage
commission expenses or transaction costs which must be borne directly by a Fund,
and may result in the realization of short-term capital gains which are taxable
to shareholders as ordinary income. It is anticipated that the International
Bond Fund's annual portfolio turnover will range from 200% to 300%. See
"Financial Highlights" for the portfolio turnover rate of each of the Funds
other than the International Bond Fund.
INVESTMENT LIMITATIONS
A Fund's investment objective and policies may be changed by the Company's
Board of Trustees or Munder's Board of Directors, where applicable, without
shareholder approval. However, shareholders will be notified in writing at least
thirty days in advance of any such material change, except where notice is not
required. No assurance can be given that a Fund will achieve its investment
objective.
29
<PAGE>
Except for the policy to invest at least 80% of each Tax-Free Bond Fund's
net assets in municipal obligations bearing tax-exempt interest, the investment
objectives and policies stated above may be changed by the Board of Trustees
without approval by a majority of a Fund's outstanding shares.
Each Fund has also adopted certain fundamental investment limitations that
may be changed only with the approval of a "majority of the outstanding shares
of a Fund" (as defined in the Statement of Additional Information). The
following descriptions summarize several of the Funds' fundamental investment
policies, which are set forth in full in the Statement of Additional
Information.
No Munder Fund may:
(1) purchase securities (except U.S. Government securities) if more
than 5% of its total assets will be invested in the securities of any one
issuer, except that up to 25% of the Bond Fund, Intermediate Bond Fund,
U.S. Government Income Fund and Tax-Free Bond Fund, and up to 50% of the
Fund's total assets in the case of the Tax-Free Intermediate Bond Fund and
Michigan Triple Tax-Free Bond 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
(securities issued or guaranteed by the United States Government, its
agencies or instrumentalities are not considered to represent industries);
and
(3) borrow money or issue senior securities (as defined in the 1940
Act) except (i) to borrow for temporary purposes in amounts not exceeding
5% of its total assets and (ii) to meet redemption requests, in amounts
(when aggregated with amounts borrowed under clause (i)) not exceeding
33 1/3% of its total assets.
These investment limitations are applied at the time investment securities
are purchased.
HOW TO PURCHASE SHARES
This Prospectus offers individual investors three methods of purchasing
shares of the Funds, thus enabling investors to choose the Class that best suits
their needs, given the amount of purchase and intended duration of investment.
Shares of a 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 a 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 Funds, 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 and 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.
30
<PAGE>
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
Sales Charge average daily net assets) Other
Information
------------ ------------------------- -----------------
<S> <C> <C>
Class A Maximum initial sales charge of Service fee of 0.25% Initial
sales charge waived or
4% of the public offering price reduced for certain
purchases
Class B Maximum CDSC of 5% of Service fee of 0.25%; CDSC
waived for certain
redemption proceeds; declines to distribution fee of 0.75%
redemptions, shares convert to
zero after six years Class A Shares
approximately six
years after issuance, subject to
receipt of certain tax rulings or
opinions
Class C Maximum CDSC of 1% of Service fee of 0.25%; Shares
do not convert to
redemption proceeds for distribution fee of 0.75% another class
redemptions made within 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:
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 purchases are subject to a 1% contingent deferred sales charge if
redeemed within one year of the date of purchase.
Class B Shares are sold with no initial sales charge, but a contingent
deferred sales charge 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 ongoing expenses than Class A Shares, but automatically convert to
Class A Shares approximately six years after issuance subject to receipt of
certain tax rulings and opinions.
Class C Shares are sold without an initial sales charge or a contingent
deferred sales charge, except for a contingent deferred sales charge 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.
31
<PAGE>
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 than 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 a 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 a 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 by purchasing Class B Shares. On the other
hand, an investor expecting to hold shares of a 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. The example set forth above under "Fund
Expenses" shows the cumulative expenses an investor would pay over periods of
one, three, five and ten 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 Funds Distributor, Inc., principal underwriter of the
Fund's shares, 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, 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
32
<PAGE>
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 certified 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 a 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, 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 any Fund may arrange
for periodic investments in that 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 or Munder on 30-days' written notice to the shareholder.
In addition, the Funds offer a pre-authorized checking plan by which
investors may accumulate shares of a 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 applications form or by calling the Funds 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.
See the Statement of Additional Information for further information
regarding purchases of the Funds' Shares.
REINVESTMENT PRIVILEGE
Upon redemption of Class A, B or C Shares of a Fund (or Class A, B or C
Shares of another non-money market fund of the Company or Munder Funds), a
shareholder has an annual right, to be exercised within 60 days, to reinvest the
redemption proceeds in shares of the same Class of the same Fund without any
sales charges of redemption. 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:
33
<PAGE>
Initial Sales Charge Schedule--Class A Shares
<TABLE>
<CAPTION>
Discount to
Selected
--------------------
Amount of Purchase Sales Charge as a Percentage of
Dealers as a Percentage
- ------------------ ------------------------------- -----------
- ------------
of Offering Price
-----------------
Offering Net Amount Invested
-------- -------------------
Price (Net Asset Value)
----- ---------------
<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. Class A Shares of the Funds purchased on or before June
27, 1995 are subject to a different CDSC. 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. 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 a 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 or
full-time employees (and their families) that certify to the Distributor at the
time of purchase that such purchase if 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.
Sales charges will be waived for individuals who purchase Class A Shares
with the proceeds of (i) distributions from qualified retirement plans for which
the Advisor serves as investment advisor and (ii) Class Y Shares of the Funds of
the Company or Munder if the proceeds are invested within 60 days of
redemptions.
34
<PAGE>
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 Company (other
than the Index 500 Fund) or Munder or (2) have at least 75 eligible plan
participants. In addition, the contingent deferred sales charge 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.
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 Funds or
other investment portfolios of the Company and Munder. The value of Class B or
Class C Shares of any Fund of the Company or Munder 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 or Munder 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 or Munder 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 or Munder 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 Funds' Variable Pricing System, each Fund issues two
additional classes of shares, Class K and Class Y Shares in addition to the
classes described in this Prospectus. 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.
35
<PAGE>
HOW TO REDEEM SHARES
Generally, shareholders may require a Fund to redeem their shares by
sending a written request, signed by the record owner(s), to The Munder Funds,
c/o First Data, 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 a 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, a
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 requirement 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, Munder, 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, Munder, 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 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 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 Funds will not mail redemption proceeds until
checks (including certified checks or cashier's checks) received for the shares
purchased have cleared, which can be as long as 15 days.
36
<PAGE>
The value of shares on repurchase may be more or less than the investor's
cost depending upon the market value of a Fund's portfolio securities at the
time of redemption. No redemption fee is charged for the redemption of shares
but a contingent deferred sales charge is imposed on certain redemptions of
Class A, Class B and Class C Shares as described below.
REDEMPTION BY CHECK
Free check writing is available with respect to Class A Shares of the
Funds. With this service, a shareholder may write checks in the amount of $500
or more. To establish this check writing service after opening an account, the
shareholder must contact the Transfer Agent or his or her broker to obtain an
Account Application Form. Upon 30 days' prior written notice to shareholders,
the check writing privilege may be modified or terminated. An investor cannot
close an account in a 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
A 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 Funds offer 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 a 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 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
a Fund concurrently with withdrawals may be disadvantageous to investors because
of the sales charges involved, and, therefore, is 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.
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 gains distributions, (2) shares held more than six years, or (3) capital
appreciation of shares
37
<PAGE>
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 a 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) will be
calculated from the date that the Class B Shares of a Fund were initially
purchased.
For Class B Shares purchased after June 27, 1995, the amount of any
applicable contingent deferred sales charge 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
---------------
Year Since Dollar Amount
---------- -------------
Purchase Subject to Charge
-------- -----------------
<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 Funds.
Class B Shares of the Funds purchased on or before June 27, 1995 will be
subject to a CDSC calculated by multiplying the net asset value of shares
subject to the CDSC 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
--------------------------------
Net Asset Value at Redemption
-----------------------------
Redemption During or the Original Purchase Price
- ----------------- ------------------------------
<S> <C>
1st Year Since Purchase.. 4.00%
2nd Year Since Purchase.. 4.00%
3rd Year Since Purchase.. 3.00%
4th Year Since Purchase.. 3.00%
5th Year Since Purchase.. 2.00%
6th Year Since Purchase.. 1.00%
</TABLE>
Class B Shares of a Fund purchased on or before June 27, 1995 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 distributions or (2) shares
redeemed at the end of six years or more after their purchase. Class B Shares of
the Funds purchased on or before June 27, 1995 will convert to Class A Shares of
a Fund at the end of six years after the date of purchase based on the relative
net asset values of shares of each Class. Class B Shares acquired through the
reinvestment of dividends or distributions are also converted at the earlier of
these dates--six years after the reinvestment date or the date of conversion of
the most recently purchased Class B Shares that were not acquired through
reinvestment.
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
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other retirement plan following attainment of age 70 1/2; and (3) redemptions
pursuant to a Fund's right to liquidate a shareholder's account involuntarily.
The CDSC will be waived with respect to Class B Shares purchased on or before
June 27, 1995 in the following circumstances: (1) total or partial redemptions
made within one year following the death or disability of a shareholder or
registered joint owner; (2) minimum required distributions made in connection
with an IRA or other retirement plan following attainment of age 59 1/2; and
(3) redemptions pursuant to a Fund's right to liquidate a shareholder's account
involuntarily.
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 contingent deferred sales charge on Class A and Class C Shares.
The holding period of Class A or Class C Shares of a Fund acquired through
an exchange of the corresponding class of shares of The Munder Money Market Fund
(which are available only by exchange of Class A or Class C Shares of the Fund,
as the case may be) and other Funds of Munder and non-money market funds of the
Company will be calculated from the date that the Class A or Class C Shares of
the fund were initially purchased.
See the Statement of Additional Information for further information
regarding redemption of Fund shares.
Class A Shares of the Funds purchased on or before June 27, 1995 without a
sales charge by reason of a purchase of $500,000 or more are subject to a CDSC
of 1% of the lower of the original purchase price or the net asset value at the
time of redemption if such shares are redeemed within two years of the date of
purchase. Class A Shares of the Funds purchased on or before June 27, 1995 that
are redeemed will not be subject to the CDSC to the extent that the value of
such shares represents: (1) reinvestment of dividends or other distributions;
(2) Class A Shares redeemed more than one year after their purchase; (3) a
minimum required distribution made in connection with IRA or other retirement
plans following attainment of age 59 1/2; or (4) total or partial redemptions
made within one year following the death or disability of a shareholder or
registered joint owner. 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 or The Munder Funds, Inc. 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 a Fund on the sixth anniversary of the issuance of the Class B Shares,
together with a pro rata portion of all Class B Shares
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<PAGE>
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 a Fund, other funds of the Company
or non-money market funds of Munder 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 each Fund may be exchanged for
shares of the same Class of other funds of the Company or Munder, 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 or Munder 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
or Munder for which a sales charge was paid, can be exchanged for Class A Shares
of a fund of the Company or Munder subject to payment of differential sales
charges as applicable.
The exchange of Class B Shares of one fund of the Company or Munder for
Class B Shares of another fund of the Company or Munder will not be subject to a
CDSC. The exchange of Class C Shares of one fund of the Company or Munder for
Class C Shares of another fund of the Company or Munder 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 or Munder 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 or Munder by contacting his or her broker or the Funds at (800) 438-
5789. Certain brokers may charge a fee for handling exchanges.
The Company and Munder reserve 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.
EXCHANGES BY TELEPHONE
A shareholder may give exchange instructions to the shareholder's broker or
by telephone to the Funds at (800) 438-5789. Telephone exchange privileges are
not available to shareholders who have custody of their share
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<PAGE>
certificates. The Company and Munder 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 any Fund or
its shareholders.
EXCHANGES 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
Shareholders of each Fund are entitled to dividends and distributions from the
net income and capital gains, if any, earned on investments held by the Fund.
The net income of the Funds (other than the International Bond Fund) is declared
monthly as a dividend. The net income of the International Bond Fund is
declared quarterly as a dividend. Generally, dividends are paid within six
business days of month-end.
Each 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 each 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 a 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 same 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 a Fund.
The per share dividends on Class B and Class C Shares of a Fund generally will
be lower than the per share dividends on Class A Shares of that Fund as a result
of the higher annual service and distribution fees applicable with respect to
Class B and Class C Shares.
Each 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,
Directors and Trustees; taxes; interest; legal and auditing fees; brokerage fees
and commissions; certain fees and expenses in registering and qualifying the
Fund and its shares for distribution under Federal and state securities laws;
expenses of preparing prospectuses and statements of additional information and
of printing and distributing prospectuses and statements of additional
information to existing shareholders; the expense of reports to shareholders,
shareholders' meetings and proxy solicitations; fidelity bond and Directors',
Trustees' 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 or Trustees in a manner that the Board determines to be fair and
equitable. Any general expenses of Munder that are not readily identifiable as
belonging to a particular fund of Munder are allocated among all funds of Munder
by or under the direction of the Board of Directors and Trustees 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 Funds' service
contractors bear expenses in connection with the performance of their services,
and the Funds bear the expenses incurred in their operations. 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>
Each Fund's net investment income available for distribution to the holders of
Shares will be reduced by the amount of 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 in a 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 Funds 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. Options will be valued at
market value or fair value if no market exists. Futures contracts will be valued
in like manner, except that open futures contract sales will be valued using the
closing settlement price or, in the absence of such a price, the most recently
quoted asked price. Portfolio securities which are primarily traded on foreign
securities exchanges, are generally valued at the preceding closing values of
such securities on their respective exchanges, except when an occurrence
subsequent to the time a value was so established is likely to have changed such
value. In such an event, the fair value of those securities will be determined
through the consideration of other factors by or under the direction of the
Board of Trustees. 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 Trustees. Debt securities with
remaining maturities of 60 days or less are valued at amortized cost, unless the
Board of Trustees 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 Funds do not accept purchase and redemption orders on days the New York
Stock Exchange is closed. The New York Stock Exchange is currently scheduled to
be closed on New Year's Day, Presidents' Day, Good Friday, Memorial Day
(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 a Fund generally will be lower than that of the Class A Shares
of that Fund because of the higher expenses borne by the Class B and Class C
Shares.
42
<PAGE>
MANAGEMENT
BOARD OF TRUSTEES
The Company and Munder are managed under the direction of their governing
Boards of Trustees and Directors. The Statement of Additional Information
contains the name and background information of each Trustee and Director.
INVESTMENT ADVISOR
The investment advisor of the Funds is Munder Capital Management, a Delaware
general partnership with its principal offices at 480 Pierce Street, Birmingham,
Michigan 48009. The Advisor was formed in December, 1994. On February 1, 1995,
the Advisor assumed the investment advisory duties with respect to the Funds
previously performed by Woodbridge Capital Management, Inc. ("Woodbridge") and
Old MCM, Inc. ("MCM"). The principal partners of the Advisor are MCM,
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 June 30,
1996, the Advisor and its affiliates had approximately $34 billion in assets
under management, of which $17 billion were invested in equity securities, $6
billion were invested in money market or other short-term instruments, and $11
billion were invested in other fixed income securities.
Subject to the supervision of the Board of Trustees of the Company and the
Board of Directors of Munder, the Advisor provides overall investment management
for each Fund, provides research and credit analysis, is responsible for all
purchases and sales of portfolio securities, maintains books and records with
respect to each Fund's securities transactions and provides periodic and special
reports to the Board of Trustees and the Board of Directors as requested.
The Portfolio Managers primarily responsible for the management of the
investment selections of the portfolios of the Funds together with information
as to their principal business occupations during the past five years, are shown
below.
Wendy B. Harries, Senior Fixed Income Portfolio Manager of the Advisor or
Woodbridge since June, 1992, is the portfolio manager primarily responsible for
the management of the investment selections of the portfolios of the Tax-Free
Bond Fund, Tax-Free Intermediate Bond Fund and Michigan Triple Tax-Free Bond
Fund. Ms. Harries has managed the Tax-Free Intermediate Bond Fund since May,
1993 and the Michigan Triple Tax-Free Bond Fund since its inception in January,
1994 and the Tax-Free Bond Fund since its inception in July, 1994. Prior to June
1992, she was a Senior Fixed Income Manager for Comerica Capital Management,
Inc.
Anne K. Kennedy, Vice President and Director of Corporate Bond Trading of the
Advisor or MCM, has managed the Intermediate Bond Fund since March, 1995. In
addition to managing the corporate bond trading function, Ms. Kennedy is
responsible for managing institutional fixed income portfolios. Prior to
joining MCM in 1991, she was involved in several investment related areas for
Ford Motor Company.
James C. Robinson, Vice President and Chief Investment Officer--Fixed Income
of the Advisor or MCM since 1987, has co-managed the Bond Fund, U.S. Government
Income Fund and Intermediate Bond Fund since March, 1995. Mr. Robinson has co-
managed the Balanced Fund since June, 1995. In his position, Mr. Robinson
oversees the Advisor's fixed income strategy and manages institutional
portfolios. Prior to his joining MCM in 1987, he was a Senior Fixed Income
Portfolio Manager for the National Bank of Detroit Trust Investment Department.
43
<PAGE>
Peter G. Root, Vice President, Director of Government Securities Trading of
the Advisor has managed the U.S. Government Income Fund since March, 1995. Mr.
Root joined MCM in 1991 and as a Senior Portfolio Manager of MCM or the Advisor
has been responsible for fixed income portfolios.
Gregory A. Prost, CFA, Senior Fixed Income Portfolio Manager of the Advisor or
MCM, has co-managed the Munder Bond Fund and Munder Balanced Fund since May,
1995 and The Munder International Bond Fund since __________, 1996. Prior to
joining MCM in 1995, he was a Vice President and Senior Fund Manager for First
of America Investment Corp.
Sharon E. Fayolle, Vice President and Director of Money Market Trading for the
Advisor or MCM, is responsible for overseeing the management of cash portfolios,
money market funds and foreign currency trading since May, 1996. She has co-
managed The Munder International Bond since __________, 1996. Prior to joining
MCM in 1996, she was employed in the investment area of Ford Motor Company as
European Portfolio Manager responsible for investments and cash management for
Ford's European operations.
For the advisory services provided and expenses assumed by it, the Advisor has
agreed to a fee from the Funds, computed daily and payable monthly on a separate
Fund-by-Fund basis, at an annual rate of .50% of a Fund's average daily net
assets.
For the period July 1, 1995 to October 27, 1995, the Advisor received fees
after waivers, at an effective rate of .50% of the average daily net assets of
the Intermediate Bond Fund, U.S. Government Fund, Bond Fund, Tax-Free Bond Fund
and the Michigan Triple Tax-Free Bond Fund.
For the period October 28, 1995 to June 30, 1996, the Advisor received fees
after waivers at an effective rate of .50% of the average daily net assets of
the Intermediate Bond Fund, U.S. Government Fund, Bond Fund, Tax-Free Bond Fund
and the Michigan Triple Tax-Free Bond Fund. The International Bond Fund did not
commence operations until __________, 1996.
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.
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 ("Transfer Agent"). Shareholder inquiries may be directed to First Data
at P.O. Box 5130, Westborough, Massachusetts 01581-5130.
As compensation for these services, the Administrator and Transfer Agent are
entitled to receive fees, based on the aggregate average daily net assets of the
Funds 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 Company 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
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<PAGE>
provides certain administrative services with respect to the Funds. The
Administrator pays the Distributor a fee for these services out of its own
resources at no cost to the Funds.
Comerica Bank (the "Custodian"), whose principal business address is One
Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226, provides custodial
services to the Funds. As compensation for its services, the Custodian is
entitled to receive fees, based on the aggregate average daily net assets of the
Funds 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 and Munder have adopted Distribution and Service Plans with
respect to Class A, Class B and Class C Shares of the Funds, pursuant to which
each 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 up to 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 up to 0.25%, and a
distribution fee at an annual rate of up to 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 Funds. 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 Funds and their transactions with the Funds.
The Class B and Class C Plans permit payments to be made by the Funds to the
Distributor for expenditures incurred by it in connection with the distribution
of Fund shares to investors and 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 Funds. The Distributor is also authorized to engage in
advertising, the preparation and distribution of sales literature and other
promotional activities on behalf of the Funds. In addition, the Class B and
Class C Plans authorize payments by the Funds 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 contingent deferred sales charges 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 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 Funds 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 Funds and will accordingly reduce each Fund's net
assets upon such accrual.
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<PAGE>
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 Trustees and Munder's Board of Directors evaluates the
appropriateness of the Plans and their payment terms on a continuous basis and
in doing so will consider all relevant factors, including expenses incurred by
the Distributor and the amount received under the Plans and the proceeds of the
contingent deferred sales charges with respect to the Class B and Class C
Shares.
TAXES
GENERAL
Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Code. Such qualification generally relieves a Fund of
liability for Federal income taxes to the extent its earnings are distributed in
accordance with the Code.
Qualification as a regulated investment company under the Code for a taxable
year requires, among other things, that a Fund distribute to its shareholders an
amount equal to at least the sum of 90% of its investment company taxable income
and 90% of its net tax-exempt interest income for such year. In general, a
Fund's investment company income will be its taxable income (including
dividends, interest, and short-term capital gains) subject to certain
adjustments and excluding the excess of any net long-term capital gain for the
taxable year over the net short-term capital loss, if any, for such year. Each
Fund intends to distribute substantially all of its investment company taxable
income each taxable year. 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 each of the Funds' net realized long-term capital gains,
if any, will be distributed at least annually. The Funds will generally have no
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 be realized by a holder of shares in the Funds 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 a Fund on December 31 of such year if
such dividends are actually paid during January of the following year.
Shareholders should be aware that redeeming shares of a Fund after tax-exempt
interest income has been accrued by a Fund but before that income has been
distributed as a dividend may be disadvantageous. Any gain on such redemption
will be taxable, even though the gain may be attributable in part to the accrued
tax-exempt interest that might have qualified as an exempt-interest dividend if
distributed as a dividend rather than as redemption proceeds.
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 Funds will send written notices to record owners of
shares regarding the Federal tax status of distributions made by each Fund.
Since this is not an exhaustive discussion of applicable tax
46
<PAGE>
consequences, and since state and local taxes may be different than the Federal
taxes described above, investors may wish to contact their tax advisers
concerning investments in the Funds.
TAXES - FOREIGN TAXES
Income or gain from the International Bond Fund's investments in foreign
securities may be subject to foreign withholding or other taxes. It is expected
that the Fund will be subject to foreign withholding taxes with respect to
income received from sources within foreign countries. If more than 50% of the
value of the Fund's total assets at the close of a taxable year consists of
securities of foreign corporations, the Fund may elect, for U.S. Federal income
tax purposes, to treat certain foreign taxes paid by it, including generally any
withholding taxes and other foreign income taxes, as paid by its shareholders.
If the Fund makes this election, the amount of such foreign taxes paid by the
Fund will be included in its shareholders' income pro rata (in addition to
taxable distributions actually received by them), and the shareholders would be
entitled (a) to credit their proportionate amount of such taxes against their
U.S. Federal income tax liabilities subject to certain limitations described in
the Statement of Additional Information, or (b) if they itemize their deductions
to deduct such proportionate amount from their U.S. income.
The International Bond Fund's investments in derivative instruments are
subject to special tax rules, some of which are not entirely clear. As a
result, the Fund may be limited by tax considerations in the extent to which it
enters into such transactions. See the Statement of Additional Information for
further information.
TAXES--TAX-FREE BOND FUNDS
The Tax-Free Bond Funds intend to pay substantially all of their dividends as
exempt-interest dividends. Under normal market conditions, at least 80% of each
Fund's net assets will be invested in municipal obligations, the interest on
which is exempt from regular Federal income tax and does not constitute an item
of tax preference for purposes of the Federal alternative minimum tax. Investors
in the Funds should note, however, that taxpayers are required to report the
receipt of tax-exempt interest dividends on their Federal income tax returns and
that in some circumstances such amounts, while exempt from regular Federal
income tax, are taxable to persons subject to alternative minimum and
environmental taxes.
First, tax-exempt interest and exempt interest dividends derived from certain
private activity bonds issued after August 7, 1986, will generally constitute an
item of tax preference for corporate and non-corporate taxpayers in determining
alternative minimum and environmental tax liability. During normal market
conditions the Funds may invest up to 20% each of their net assets in such
private activity bonds.
Second, all dividends, including exempt interest dividends received by
corporate taxpayers must be taken into account by them in determining certain
adjustments for alternative minimum and environmental tax purposes. Shareholders
who are recipients of Social Security Act or Railroad Retirement Act benefits
should further note that all dividends, including exempt interest dividends
derived from a Fund will be taken into account in determining the taxability of
their benefit payments.
The Funds will determine annually the percentages of their net investment
income which are exempt from the regular Federal income tax, which constitute an
item of tax preference for purposes of the Federal alternative minimum tax, and
which are fully taxable. The Funds will apply these percentages uniformly to all
distributions declared from net investment income during that year. These
percentages may differ significantly from the actual percentages for any
particular day. On an annual basis, the Company will send written notices to
record owners of shares regarding the Federal tax status of distributions made
by each Fund.
Dividends paid by each Fund may be taxable to investors under state or local
law as dividend income even though all or a portion of such dividends may be
derived from interest on obligations which, if realized directly, would be
exempt from such income taxes. Moreover, to the extent, if any, that dividends
paid to shareholders are derived from taxable interest or from capital gains,
such dividends will be subject to Federal income tax.
47
<PAGE>
MICHIGAN TAXES--TAX-FREE INTERMEDIATE BOND FUND AND MICHIGAN
TRIPLE TAX-FREE
BOND FUND
Ordinary tax-exempt interest dividends paid by the Tax-Free Intermediate Bond
Fund and Michigan Triple Tax-Free Bond Fund that are derived from interest
attributable to tax-exempt obligations of the State of Michigan and its
political subdivisions, as well as certain U.S. territorial obligations, are
exempt from Michigan income tax, Michigan intangibles tax and Michigan single
business tax. Conversely, to the extent that the Funds' tax-exempt interest
dividends are derived from interest on other obligations, such dividends will be
subject to Michigan income, intangibles and single business taxes, even if
exempt for Federal income tax purposes. A Fund is unable to predict in advance
the exact portion of its tax-exempt dividends that will be derived from interest
on Michigan Municipal Obligations, but will advise shareholders at least
annually of the percentage of the tax-exempt dividends actually paid by it. Such
percentage will equal a Fund's tax-exempt interest from Michigan Municipal
Obligations divided by the total tax-exempt interest earned by the Fund, whether
or not the total tax-exempt interest earned by the Fund is distributed as
dividends. However, capital gains dividends (both short- and long-term) are
subject to Michigan income tax.
The taxability of dividends for Michigan income and intangibles taxes
generally follows the domicile of the owner/participant. Non-Michigan residents
are not subject to Michigan income and intangibles taxes on dividends received
from the Funds.
In addition, under Michigan's Uniform City Income Tax ordinance, which
authorizes Michigan cities to impose a local income tax, interest dividends from
Michigan municipal obligations, which are not subject to Michigan income tax
will similarly not be subject to the Michigan Uniform City Income Tax.
* * *
Since this is not an exhaustive discussion of applicable tax consequences,
investors may wish to contact their tax advisers concerning investments in the
Funds. Future legislative or administrative changes or court decisions may
materially affect the tax consequences of investing in the Funds.
DESCRIPTION OF SHARES
The Company was organized as a Massachusetts business trust on August 30,
1989, and is registered under the 1940 Act as an open-end management investment
company. The Company's Declaration of Trust authorizes the Trustees to classify
and reclassify any unissued shares into one or more classes of shares. Pursuant
to such authority, the Trustees have authorized the issuance of an unlimited
number of shares of beneficial interest in the Company, representing interests
in the Accelerating Growth, Small Company Growth, International Equity, Index
500, Growth & Income, Balanced, Bond, Intermediate Bond, U.S. Government Income,
Michigan Triple Tax-Free Bond, Tax-Free Bond, Tax-Free Intermediate Bond, Tax-
Free Money Market, U.S. Treasury Money Market and Cash Investment Funds,
respectively, each of which, except the Tax-Free Intermediate Bond Fund and
Michigan Triple Tax-Free Bond Fund, is classified as a diversified investment
company under the 1940 Act.
Munder 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 The Munder Multi-Season Growth Fund, Munder
Real Estate Equity Investment Fund, Munder Mid-Cap Growth Fund, Munder Value
Fund, Munder International Bond Fund, Munder Small-Cap Value Fund, Munder Equity
Selection Fund, Munder Micro-Cap Equity Fund, Net Net Fund and Munder Money
Market Fund, respectively, each of which, except The Munder International Bond
Fund, is classified as a diversified investment company under the 1940 Act.
There is a possibility that the Company might become liable for any
misstatement, inaccuracy or incomplete disclosure in this Prospectus concerning
Munder. There is a possibility that Munder might become liable for any
misstatement, inaccuracy or incomplete disclosure in this Prospectus concerning
the Company.
48
<PAGE>
The shares of each investment portfolio of the Company and Munder (other than
the Tax-Free Money Market Fund, U.S. Treasury Money Market Fund, Cash Investment
Fund and the Net Net Fund) are offered as five separate classes: Class A Shares,
Class B Shares, Class C Shares, Class K Shares and Class Y Shares. Class C
Shares of the Index 500 Fund are not currently available for purchase. The Tax-
Free Money Market Fund, U.S. Treasury Money Market Fund and Cash Investment Fund
offer only Class A Shares, Class K Shares and Class Y Shares. The Net Net Fund
offers only one class of shares. These other classes of the Funds may have
different sales charges and expense levels, which may affect performance.
Investors may call the Funds at (800) 438-5789 for more information concerning
other classes of shares of the Funds. This Prospectus relates only to the Class
A, Class B and Class C Shares of the Bond Fund, Intermediate Bond Fund, U.S.
Government Income Fund, Michigan Triple Tax-Free Bond Fund, Tax-Free Bond Fund,
Tax-Free Intermediate Bond Fund and International Bond Fund.
Each share of a Fund of the Company has a par value of $.001, represents an
equal proportionate interest in the particular Fund with other shares of the
same class and is entitled to such dividends and distributions earned on such
Fund's assets as are declared in the discretion of the Trustees. Each share of
the International Bond Fund has a par value of $.01 per share and represents a
proportionate interest in the assets of the Fund.
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
Trustees or Directors determine that the matter to be voted upon affects only
the interests of the shareholders of a particular Fund. In addition,
shareholders of each of the Funds will vote in the aggregate and not by Class,
except as otherwise expressly required by law or when the Trustees or Directors
determine that the matter to be voted on affects only the interests of the
holders of a particular class of shares. The Funds are not required and do 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 or Munder. To the extent required by law, the Funds will
assist in shareholder communications in connection with such a meeting. For a
further discussion of the voting rights of shareholders, see "Additional
Information Concerning Shares" in the Statement of Additional Information.
As of _________, 1996, Comerica Bank held of record substantially all of the
outstanding shares of the Funds as agent, custodian or trustee for its
customers. In addition, as of _________, 1995, Comerica Bank possessed sole or
shared voting or investment power for its customer accounts with respect to the
following percentages of the Funds' outstanding shares: Bond Fund--__%;
Intermediate Bond Fund--__%; U.S. Government Income Fund--__%; Michigan Triple
Tax-Free Bond Fund--__%; Tax-Free Bond Fund--__%; Tax-Free Intermediate Bond
Fund--__%. The International Bond Fund did not commence operations until
__________, 1996.
REPORTS TO SHAREHOLDERS
The Funds have eliminated duplicate mailings of prospectuses and shareholder
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 Funds at (800) 438-5789.
PERFORMANCE
From time to time, the Funds may quote performance and yield data for the
Shares in advertisements or in communications to shareholders. The total return
of Class A, Class B or Class C Shares in a 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 a
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
49
<PAGE>
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 Funds is computed based on the net
income of such class in a 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 "tax-equivalent yields" of
the Shares in the Michigan Triple Tax-Free Bond Fund, Tax-Free Bond Fund and
Tax-Free Intermediate Bond Fund may also be quoted from time to time, which show
the level of taxable yield needed to produce an after-tax equivalent to the tax-
free yield of the particular class. This is done by increasing the yield
(calculated as above) by the amount necessary to reflect the payment of Federal
and/or state income taxes at a stated rate.
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 a 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 Funds 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 quotations otherwise computed.
Quotations of total return for Shares will reflect the fees for certain
distribution and shareholder services as described in this Prospectus.
The Funds 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 a Fund.
Performance will fluctuate and any quotation of performance should not be
considered as representative of future performance of a Class of Shares in a
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 a Fund
will not be included in calculations of yield and performance.
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:
50
<PAGE>
First Data
The Munder Funds
P.O. Box 5130
Westborough, Massachusetts 01581-5130
INVESTMENTS BY BANK WIRE
An investor opening a new account should call the Funds 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 "Investments by Mail." Wire instructions must
state the Fund name, 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, shareholder's registered name and shareholder account
number)
Before wiring any funds an investor must call the Funds at (800) 438-5789 to
confirm the wire instructions.
Exchange by Telephone
Call your broker or the Funds 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 or Munder subject to any applicable
sales charge.
REDEMPTIONS BY TELEPHONE
Call your broker or the Funds 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
The Munder Funds
P.O. Box 5130
Westborough, Massachusetts 01581-5130
51
<PAGE>
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures may call the Funds at (800) 438-5789.
52
PROSPECTUS
The Munder Funds Trust (the "Company") is an open-end investment company (a
mutual fund) that currently offers a selection of fifteen investment portfolios.
The Munder Funds, Inc. ("Munder") is an open-end investment company that
currently offers ten investment portfolios. This Prospectus describes three
investment portfolios offered by the Company (the "Munder Funds") and the
Money Market Fund offered by Munder (collectively, the "Funds"):
Munder Money Market Fund
Munder Tax-Free Money Market Fund
Munder U.S. Treasury Money Market Fund
Munder Cash Investment Fund
Munder Capital Management (the "Advisor") serves as the investment advisor
to the Funds.
The Munder Funds are currently offered for sale to retail investors only in
Class A Shares. Class A, Class B and Class C Shares of the Money Market Fund may
be acquired only through an exchange of shares from the corresponding classes of
other funds of the Company or Munder. Class C Shares of the Money Market Fund
were formerly known as Class D Shares. Class A, Class B and Class C Shares of
the Money Market Fund are subject to a contingent deferred sales charge on
certain redemptions. See "Redemption of Shares."
This Prospectus sets forth concisely information that a prospective investor
should know before investing. Investors are encouraged to read this Prospectus
and retain it for future reference. A Statement of Additional Information dated
__________, 1996, as amended or supplemented from time to time, has been filed
with the Securities and Exchange Commission (the "SEC") and is incorporated by
reference into this Prospectus. It may be obtained free of charge by calling the
Funds at (800) 438-5789.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
ALTHOUGH THE FUNDS SEEK TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1.00 PER
SHARE, THERE CAN BE NO ASSURANCE THAT THE FUNDS CAN DO SO ON A CONTINUING BASIS.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is __________, 1996.
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary..................... 3
The Funds
Expense Table......................... 6
Financial Highlights.................. 8
Investment Objectives and Policies.... 11
Portfolio Instruments and Practices...
and Associated Risk Factors.......... 12
Investment Limitations................ 16
How to Do Business with Us
How to Purchase Shares................ 17
How to Redeem Shares.................. 18
Conversion of Money Market Fund Class
B Shares............................. 22
How to Exchange Shares................ 22
Dividends and Distributions........... 23
Other Information
Net Asset Value....................... 24
Management............................ 24
Taxes................................. 27
Description of Shares................. 28
Performance........................... 29
Shareholder Account Information....... 30
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION, OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUNDS' STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS
OR THEIR DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE
FUNDS OR BY FUNDS DISTRIBUTOR, INC. ("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 OBJECTIVES
The Money Market Fund seeks to provide current income consistent with the
preservation of capital and liquidity. The Tax-Free Money Market Fund seeks as
high a level of current interest income exempt from Federal income taxes as is
consistent with maintaining liquidity and stability of principal. The U.S.
Treasury Money Market and Cash Investment Funds seek as high a level of current
interest income as is consistent with maintaining liquidity and stability of
principal.
PRINCIPAL INVESTMENTS
Each of the Funds invests solely in dollar-denominated debt securities with
remaining maturities of 13 months or less and maintains an average dollar-
weighted portfolio maturity of 90 days or less.
INVESTMENT PROGRAM
The Money Market Fund and the Cash Investment Fund invest in a broad range of
short-term, high quality, U.S. dollar-denominated instruments, such as bank,
commercial and other obligations (including Federal, state and local government
obligations) that are available in the money markets. The Tax-Free Money Market
Fund invests substantially all its assets in a diversified portfolio of short-
term municipal obligations. The U.S. Treasury Money Market Fund invests solely
in short-term bonds, bills and notes issued by the U.S. Treasury and in
repurchase agreements relating to such obligations. See "Investment Objectives
and Policies."
INVESTMENT RISKS AND SPECIAL CONSIDERATIONS
A Fund's performance per share will change daily based on many factors;
including interest rate levels, the quality of the instruments in each Fund's
investment portfolio, national and international economic conditions and general
market conditions. It is expected that the Funds will maintain a net asset value
of $1.00 per share, although there is no assurance that they will be able to do
so on a continuous basis. In addition, the Cash Investment Fund may seek to
achieve its investment objective through investments in securities of foreign
issuers (that involve risks not typically associated with U.S. issuers). There
is no assurance that any Fund will achieve its investment objective. See
"Portfolio Instruments and Practices and Associated Risk Factors."
CLASS A SHARES
This Prospectus offers to investors one class of shares of the Munder Funds,
Class A Shares. Class A Shares of the Munder Funds are offered at net asset
value without an initial sales charge. Class A Shares (as well as Class B and
Class C Shares) of the Money Market Fund may be acquired only through an
exchange of shares from the corresponding classes of other funds of the Company
or Munder. Class A Shares of each Fund pay a 12b-1 fee at the annual rate of
.25% of the value of average daily net assets. See "How to Purchase Shares."
3
<PAGE>
CLASS B SHARES
Only the Money Market Fund offers Class B Shares. Class B Shares of the Money
Market Fund may be acquired only through an exchange of shares from the
corresponding class of another fund of the Company or Munder. Class B Shares
that are redeemed within six years of original purchase will be subject to a
contingent deferred sales charge ("CDSC") at a maximum rate of 5.00% of the
lesser of the shares' net asset value or original purchase price. Class B Shares
are subject to 12b-1 servicing and distribution fees at the annual rate of 1.00%
of the value of average daily net assets. Class B Shares acquired pursuant to an
exchange from a corresponding class of another fund of the Company or Munder
will automatically convert 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 Redeem
Shares."
CLASS C SHARES
Only the Money Market Fund offers Class C Shares. Class C Shares of the Money
Market Fund may be acquired only through an exchange of shares from the
corresponding class of another fund of the Company or Munder. Class C Shares so
acquired are subject to a contingent deferred sales charge imposed on certain
redemptions of shares made within the first year after the original investment.
Class C Shares are subject to 12b-1 servicing and distribution fees at the
annual rate of 1.00% of the value of average daily net assets. See "How to
Redeem Shares."
PURCHASING SHARES OF THE MUNDER FUNDS
Class A Shares of each of the Munder Funds are offered continuously and may be
purchased from the Distributor through certain broker-dealers and other
financial institutions or through the Transfer Agent. See "How to Purchase
Shares."
MINIMUM INVESTMENT
$1,000 minimum investment ($50 through Automatic Investment Plan). $50 minimum
for subsequent purchases.
EXCHANGE PRIVILEGES
Class A Shares of the Munder Funds and Class A, B and C Shares of the Money
Market Fund may be exchanged for shares of corresponding classes of other funds
of the Company or Munder, subject to any applicable sales charges.
REINVESTMENT
Automatic reinvestment of dividends and capital gains without a sales charge
unless a shareholder elects to receive cash.
4
<PAGE>
<TABLE>
<CAPTION>
OTHER FEATURES
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
Telephone Exchanges Telephone Exchanges Telephone Exchanges
Free Check Writing
</TABLE>
DIVIDENDS AND OTHER DISTRIBUTIONS
Dividends are declared daily and paid monthly for the Funds. Capital gains are
distributed at least annually.
NET ASSET VALUE
Determined twice daily for the Funds on each business day.
REDEEMING SHARES
Class A Shares of the Munder Funds and the Money Market Fund may be redeemed
by mail, telephone or check. Class A Shares of the Munder Funds are redeemable
at net asset value. Class B and Class C Shares of the Money Market Fund may be
redeemed by mail or telephone. Class A, B and C Shares of the Money Market Fund
are redeemable at net asset value less any applicable CDSC. See "How to Redeem
Shares."
INVESTMENT ADVISOR
As investment advisor for the Funds, Munder Capital Management provides
overall investment management for each Fund, provides research and credit
analysis, is responsible for all purchases and sales of portfolio securities,
maintains records relating to such purchases and sales, and provides reports to
the Boards of Trustees and Directors. See "Management--Investment Advisor."
DISTRIBUTOR
Funds Distributor, Inc.
5
<PAGE>
EXPENSE TABLE
The tables below set forth certain information concerning shareholder
transaction expenses and projected annual fund operating expenses for Class A
Shares of the Munder Funds and Class A, Class B and Class C Shares of the Money
Market Fund during the current fiscal year. There are no initial sales charges
imposed on the purchase of shares of the Funds.
<TABLE>
<CAPTION>
Class A Shares
------------------------------------------
Tax-Free U.S. Treasury Cash
------------- -------------- -----------
Money Market Money Market Investment
------------- -------------- -----------
Fund Fund Fund
------------- -------------- -----------
<S> <C> <C> <C>
Shareholder transaction expenses:
Maximum sales load on purchases........ None None None
Maximum sales load on reinvested None None None
dividends.............................
Maximum contingent deferred sales None None None
charge................................
Redemption fees........................ None None None
Exchange fees.......................... None None None
Annual Fund operating expenses:
(as a percentage of average net assets)
Advisory fees.......................... .35% .35% .35%
12b-1 fees............................. .25% .25% .25%
Other expenses......................... .18% .19% .18%
------- ------- --------
Total Fund Operating Expenses.......... .78% .79% .78%
======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
Money Market Fund
-----------------------------
Class A Class B Class C
------------- ------------- ----------
<S> <C> <C> <C>
Shareholder transaction expenses:
Maximum sales load on purchases........ None None None
Maximum sales load on reinvested
dividends............................. None None None
Maximum contingent deferred sales None* 5.00%** 1.00%***
charge................................
Redemption Fees........................ None None None
Exchange Fees.......................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Advisory fee........................... .40% .40% .40%
12b-1 fees............................. .25% 1.00% 1.00%
Other expenses......................... .22% .22% .22%
------------- -------------- -----------
Total Fund Operating Expenses.......... .87% 1.62% 1.62%
============= ============== ===========
</TABLE>
- ------------------------
*Class A, Class B and Class C Shares are available only pursuant to an
exchange of shares from the corresponding classes of other funds of the
Company or Munder. A deferred sales charge of 1% is imposed on certain
redemptions of Class A Shares in the event that a shareholder redeems the
shares within one year following the initial investment in the corresponding
class of the Company or Munder. A deferred sales charge of 1% is assessed on
certain redemptions of Class A Shares acquired through the exchange of Class
A Shares of the Company purchased on or before June 27, 1995 as part of an
investment of $500,000 or more. See "How to Redeem Shares."
**Maximum CDSC applicable to Class B Shares. Class B Shares acquired through
the exchange of Class B Shares of the Company purchased on or before June 27,
1995 are subject to a different CDSC schedule. See "How to Redeem Shares--
Contingent Deferred Sales Charge--Class B Shares." Waivers of CDSC are
described under "How to Redeem Shares."
***A deferred sales charge of 1% is assessed on redemptions made within the
first year following the initial investment in Class C Shares.
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.
"Other expenses" in the above tables 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.
With respect to each Fund, the amount of "Other Expenses" in the tables
above is based on amounts incurred during the most recent fiscal year. See
"Management" in this Prospectus and the financial statements and related notes
incorporated by reference in the Statement of Additional Information for a
further description of the Funds' operating expenses and of the nature of the
services for which a Fund is obligated to pay advisory fees. Any fees charged by
institutions directly to customer accounts for services provided in connection
with investments in shares
6
<PAGE>
of the Funds are in addition to the expenses shown in the above Expense Tables
and Examples shown below. The Transfer Agent may deduct a wire redemption fee of
$7.50 for wire redemptions under $5,000.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in Class A
Shares of the Funds, assuming (1) a hypothetical 5% annual return and (2)
redemption at the end of the following time periods:
<TABLE>
<CAPTION>
Class A Shares
----------------------------------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Fund................ $9 $28 $48 $107
Tax-Free Money Market Fund....... $8 $25 $43 $97
U.S. Treasury Money Market Fund.. $8 $25 $44 $98
Cash Investment Fund............. $8 $25 $43 $97
</TABLE>
An investor would pay the following expenses on a $1,000 investment in Class B
Shares (subject to the maximum CDSC), assuming (1) a hypothetical 5% annual
return and (2) redemption at the end of the following time periods and (3) no
redemption at the end of the following time periods:
<TABLE>
<CAPTION>
Class B Shares
------------------------------------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years*
------------------------ ------------------------ ------------------------ ------------------------
No No No No
Redemption Redemption Redemption Redemption Redemption Redemption Redemption Redemption
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market Fund... $66 $16 $101 $51 $138 $88 $107 $107
=== === ==== === ==== === ==== ====
</TABLE>
*Reflects conversion of Class B Shares to Class A Shares (which pay lower
ongoing expenses) approximately six years after date of original purchase. See
"How to Redeem Shares--Contingent Deferred Sales Charge--Class B Shares."
Class B Shares acquired through the exchange of Class B Shares of the Company
purchased on or before June 27, 1995 are subject to a different CDSC schedule.
See "How to Redeem Shares--Contingent Deferred Sales Charge--Class B
Shares."
An investor would pay the following expenses on a $1,000 investment in Class C
Shares (subject to the maximum CDSC), assuming (1) a hypothetical 5% annual
return and (2) redemption at the end of the following time periods:
<TABLE>
<CAPTION>
Class C Shares
----------------------------------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Fund.. $26 $51 $88 $192
=== === === ====
</TABLE>
The foregoing Expense Tables and Examples are intended to assist investors in
understanding the various shareholder transaction expenses and operating
expenses of the Funds that investors bear either directly or indirectly. As
stated below under "Management," the Advisor has agreed to an advisory fee
computed separately on a Fund-by-Fund basis at an annual rate of .40% of average
daily net assets of the Money Market Fund and .35% of average daily net assets
of each of the Munder Funds.
THE EXAMPLES SHOWN ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RETURN OR OPERATING EXPENSES. ACTUAL INVESTMENT RETURN AND
OPERATING EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
7
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the Funds' Financial
Statements audited by Ernst & Young LLP, independent auditors, except that, for
periods ended prior to June 30, 1995 for the Money Market Fund, such financial
highlights are derived from the financial statements audited by Arthur Andersen
LLP, independent auditors. No fees for distribution and support services under
the ''Class A Plan'' (as defined below) were paid by the Munder Funds for the
periods through December 31, 1993. The following data should be read in
conjunction with the financial statements, related notes, and other financial
information incorporated by reference in the Statement of Additional
Information. Further information about the Funds, including financial
information with respect to the Funds' other classes of shares is contained in
the Funds' Annual Reports to Shareholders dated June 30, 1996, which may be
obtained without charge by calling (800) 438-5789.
<TABLE>
<CAPTION>
Money Market Fund(a)
----------------------------------------------------------
Year Ended 6/30/96 Year Ended 6/30/96 Period Ended Period Ended
-------------------- ================== ================ ----------------
Class A Class B 6/30/95(b)(c) 12/31/94(g)
==================== ================== ---------------- ----------------
Class B Class B
---------------- ----------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period... $ 1.00 $ 1.00
------- ------
Income from Investment Operations:
Net investment income................ 0.020 0.03
------- ------
Total from investment operations..... 0.020 0.03
------- ------
Less Distributions:
Dividends from net investment income. (0.020) (0.03)
------- ------
Total distributions.................. (0.020) (0.03)
------- ------
Net Asset Value, End of Period......... $ 1.00 $ 1.00
======= ======
Total Return(d)...................... 1.99% 2.97%
======= ======
Ratios to Average Net
Assets/Supplemental Data
Net assets, end of period (in $ 371 $ 501
thousands)..........................
Ratio of expenses to average 1.60%(e) 1.60%(e)
net assets..................
Ratio of net investment 4.46%(e) 3.36%(e)
income to average net assets
Ratio of operating expenses 1.66%(e) 3.34%(e)
to average net assets
without waivers.............
Net investment income per share $ 0.02 $ 0.03
without waivers(f)..................
Average commission rate(h)...........
</TABLE>
- -------------------------
(a) The Fund is authorized to issue Class A Shares and Class C Shares. As of
June 30, 1995, the Fund had not begun selling Class A Shares and Class C
Shares.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was December 31.
(c) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the advisory businesses of Woodbridge Capital Management,
Inc. and Munder Capital Management, Inc.
(d) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(e) Annualized.
(f) Amount shown for the period prior to June 30, 1995 is unaudited.
(g) The Munder Money Market Fund Class B Shares commenced operations on February
16, 1994.
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
8
<PAGE>
<TABLE>
<CAPTION>
Tax-Free Money Market Fund(a)
=======================================================================
Year Ended Period Ended Year Ended Year Ended Period Ended
---------- ------------ ---------- ---------- ------------
6/30/96 6/30/95(b) 2/28/95(e) 2/28/94 2/28/93(f)
---------- ------------ ---------- ---------- ------------
Class A Class A Class A Class A Class A
---------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period... $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- -------- -------
Income from Investment Operations:
Net investment income................ 0.011 0.023 0.020 0.006
------- ------- -------- -------
Total from investment operations..... 0.011 0.023 0.020 0.006
------- ------- -------- -------
Less Distributions:
Dividends from net investment income. (0.011) (0.023) (0.020) (0.006)
------- ------- -------- -------
Total distributions.................. (0.011) (0.023) (0.020) (0.006)
------- ------- -------- -------
Net Asset Value, End of Period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======== =======
Total Return(c)...................... 1.09% 2.33% 1.99% 0.60%
======= ======= ======== =======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in $ 8,530 $ 4,539 $ 4,525 $ 761
thousands)..........................
Ratio of operating expenses to 0.79(d) 0.80% 0.58% 0.52%(d)
average net assets..................
Ratio of net investment income to 3.26%(d) 2.29% 1.95% 2.06%(d)
average net assets..................
Ratio of operating expenses to
average net assets without 0.84%(d) 0.85% 0.63% 0.57%(d)
waivers...........................
Net investment income per share $ 0.011 $ 0.023 $ 0.019 $ 0.005
without waivers.....................
Average commission rate(g)...........
</TABLE>
(a) Formerly, Ambassador Tax-Free Money Market Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day in February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory business of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) The Munder Tax-Free Money Market Fund Class A Shares commenced operations on
November 29, 1992.
(g) Average commission rate paid per share of securities purchased or sold by
Fund.
9
<PAGE>
<TABLE>
<CAPTION>
U.S. Treasury Money Market Fund(a)
----------------------------------------------------------------------
Year Ended Period Ended Year Ended Year Ended Period Ended
---------- ------------ ---------- ---------- ------------
6/30/96 6/30/95(b) 2/28/95(e) 2/28/94 2/28/93(f)
---------- ------------ ---------- -------- ------------
Class A Class A Class A Class A Class A
---------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period... $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- -------- -------
Income from Investment Operations:
Net investment income................ 0.017 0.037 0.025 0.007
------- ------- -------- -------
Total from investment operations..... 0.017 0.037 0.025 0.007
------- ------- -------- -------
Less Distributions:
Dividends from net investment income. (0.017) (0.037) (0.025) (0.007)
------- ------- -------- -------
Total distributions.................. (0.017) (0.037) (0.025) (0.007)
------- ------- -------- -------
Net Asset Value, End of Period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======== =======
Total Return(c)...................... 1.72% 3.72% 2.57% 0.74%
======= ======= ======== =======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in $ 1,117 $ 3,815 $ 725 $ 43
thousands)..........................
Ratio of operating expenses to 0.80%(d) 0.80% 0.61% 0.53%(d)
average net assets..................
Ratio of net investment income to 5.13%(d) 3.63% 2.53% 2.61%(d)
average net assets..................
Ratio of operating expenses to
average net assets without 0.85%(d) 0.85% 0.66% 0.58%(d)
waivers...........................
Net investment income per share $ 0.017 $ 0.036 $ 0.025 $ 0.003
without waivers.....................
Average commission rate(g)...........
</TABLE>
- --------------------
(a) Formerly, Ambassador U.S. Treasury Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day in February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory business of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) The Munder U.S. Treasury Money Market Fund Class A Shares commenced
operations on November 24, 1992.
(g) Average commission rate paid per share of securities purchased or sold by
the Fund.
10
<PAGE>
<TABLE>
<CAPTION>
Cash Investment Fund(a)
----------------------------------------------------------------------
Year Ended Period Ended Year Ended Year Ended Period Ended
---------- ------------ ---------- ---------- ------------
6/30/96 6/30/95(b) 2/28/95(e) 2/28/94 2/28/93(f)
---------- ------------ ---------- ---------- ------------
Class A Class A Class A Class A Class A
---------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period... $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- -------- -------
Income from Investment Operations:
Net investment income................ 0.018 0.039 0.026 0.007
------- ------- -------- -------
Total from investment operations..... 0.018 0.039 0.026 0.007
------- ------- -------- -------
Less Distributions:
Dividends from net investment income. (0.018) (0.039) (0.026) (0.007)
------- ------- -------- -------
Total distributions.................. (0.018) (0.039) (0.026) (0.007)
------- ------- -------- -------
Net Asset Value, End of Period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======== =======
Total Return(c)...................... 1.78% 3.97% 2.68% 0.69%
======= ======= ======== =======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in $52,530 $40,239 $ 32,913 $ 2,296
thousands)..........................
Ratio of operating expenses to 0.77%(d) 0.80% 0.59% 0.53%(d)
average net assets..................
Ratio of net investment income to 5.39%(d) 4.02% 2.68% 2.79%(d)
average net assets..................
Ratio of operating expenses to
average net assets without 0.79%(d) 0.83% 0.64% 0.58%(d)
waivers...........................
Net investment income per share $ 0.018 $ 0.039 $ 0.026 $ 0.007
without waivers.....................
Average commission rate(g)...........
- ------------------------------------
</TABLE>
(a) Formerly, Ambassador Money Market Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day in February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) The Munder Cash Investment Fund Class A Shares commenced operations on
December 1, 1992.
(g) Average commission rate paid per share of securities purchased or sold by
the Fund.
INVESTMENT OBJECTIVES AND POLICIES
This Prospectus describes the Tax-Free Money Market Fund, U.S. Treasury Money
Market Fund and Cash Investment Fund offered by the Company and the Money Market
Fund offered by Munder. Purchasing shares of any Fund should not be considered a
complete investment program, but an important segment of a well-diversified
investment program.
The investment objective of each of the U.S. Treasury Money Market Fund and
Cash Investment Fund is to provide as high a level of current interest income as
is consistent with maintaining liquidity and stability of principal. The
investment objective of the Tax-Free Money Market Fund is to provide as high a
level of current interest income exempt from Federal income taxes as is
consistent with maintaining liquidity and stability of principal. The investment
objective of the Money Market Fund is to provide current income consistent with
the preservation of capital and liquidity. The Money Market Fund's investment
objective is a fundamental policy and may not be changed without the
authorization of the holders of a majority (as defined in the Investment Company
Act of 1940, as amended (the "1940 Act")) of the Fund's outstanding shares.
Each Fund seeks to maintain a stable net asset value of $1.00 per share,
although there is no assurance that they will be able to do so on a continuous
basis. In pursuing its investment objective, the Cash Investment Fund and the
Money Market Fund each may invest in a broad range of short-term, high quality,
U.S. dollar-denominated instruments, such as bank, commercial and other
obligations (including Federal, state and local government obligations) that are
available in the money markets. The instruments in which the Cash Investment
Fund and the
11
<PAGE>
Money Market Fund may invest are described below under "Portfolio Instruments
and Practices and Associated Risk Factors." The U.S. Treasury Money Market
Fund seeks to achieve its objective by investing solely in short-term bonds,
bills and notes issued by the U.S. Treasury (including "stripped" securities
as described under "Portfolio Instruments and Practices and Associated Risk
Factors"), and in repurchase agreements relating to such obligations. The Tax-
Free Money Market Fund seeks to achieve its investment objective by investing
substantially all of its assets in a diversified portfolio of short-term, U.S.
dollar-denominated municipal obligations, the interest on which, in the opinion
of bond counsel or counsel to the issuer, is exempt from regular Federal income
tax.
Securities acquired by the Funds will be "Eligible Securities" as defined
by the SEC. Eligible Securities consist of securities that are determined by
the Advisor, under guidelines established by the Boards of Trustees and
Directors, to present minimal credit risks. The Appendix to the Statement of
Additional Information includes a description of applicable ratings.
Assets of the Funds will be invested solely in dollar-denominated debt
securities with remaining maturities of 397 days or less as defined by the SEC
(although securities subject to repurchase agreements, variable and floating
rate securities and certain other securities may bear longer maturities), and
the dollar-weighted average portfolio maturity of each Fund will not exceed 90
days.
Although the Money Market Fund, U.S. Treasury Money Market Fund and Cash
Investment Fund expect under normal market conditions to be as fully invested as
possible, each Fund may hold uninvested cash pending investment of late payments
for purchase orders (or other payments) or during temporary defensive periods.
Uninvested cash will not earn income. In general, investments in the Money
Market Fund, U.S. Treasury Money Market Fund and Cash Investment Fund will not
earn as high a level of current income as longer-term or lower quality
securities. Longer-term and lower quality securities, however, generally have
less liquidity, greater market risk and more fluctuation in market value.
Although the Tax-Free Money Market Fund may invest more than 25% of its net
assets in municipal revenue obligations the interest on which is paid solely
from revenues of similar projects, the Tax-Free Money Market Fund does not
intend to do so on a regular basis. If it does, the Fund will be subject to the
peculiar risks presented by the laws and economic conditions relating to such
projects to a greater extent than it would be if its assets were not so
concentrated.
Except during temporary defensive periods at least 80% of the net assets of
the Tax-Free Money Market Fund will be invested in municipal obligations, the
interest on which is exempt from regular Federal income tax. This policy is
fundamental and may be changed only with shareholder approval. A portion of the
Tax-Free Money Market Fund's dividends may be subject to Federal alternative
minimum tax. See "Taxes."
PORTFOLIO INSTRUMENTS AND PRACTICES AND ASSOCIATED RISK FACTORS
Corporate Obligations. The Cash Investment Fund may purchase commercial paper
and corporate bonds that meet the applicable quality and maturity limitations.
Commercial paper may include obligations issued by Canadian corporations and
Canadian counterparts of U.S. corporations and Europaper, which is U.S. dollar-
denominated commercial paper of a foreign issuer. The Money Market Fund may
purchase commercial paper, other short-term obligations and variable rate master
demand notes, bond debentures and notes.
Bank Obligations. The Money Market Fund and Cash Investment Fund may purchase
U.S. dollar-denominated bank obligations, including certificates of deposit,
bankers' acceptances, bank notes, deposit notes and interest-bearing savings and
time deposits, issued by U.S. or foreign banks or savings institutions having
total assets at the time of purchase in excess of $1 billion. For this purpose,
the assets of a bank or savings institution include the assets of both its
domestic and foreign branches. See "Foreign Securities" for a discussion of
the risks associated with investments in obligations of foreign banks and
foreign branches of domestic banks. The Money Market Fund and Cash Investment
Fund will invest in the obligations of domestic banks and savings institutions
12
<PAGE>
only if their deposits are federally insured. Investments by a Fund in the
obligations of foreign banks and foreign branches of domestic banks will not
exceed 25% of the Fund's total assets at the time of investment. Foreign bank
obligations include Eurodollar Certificates of Deposit ("ECDs"), Eurodollar
Time Deposits ("ETDs"), Canadian Time Deposits ("CTDs"), Schedule Bs, Yankee
Certificates of Deposit ("Yankee CDs") and Yankee Bankers' Acceptances
("Yankee BAs"). A discussion of these obligations appears in the Statement of
Additional Information under "Additional Information on Portfolio Investments--
Non-Domestic Bank Obligations."
Asset-Backed Securities. Subject to applicable maturity and credit criteria,
the Cash Investment Fund may purchase asset-backed securities (i.e., securities
backed by mortgages, installment sales contracts, credit card receivables or
other assets). The average life of asset-backed securities varies with the
maturities of the underlying instruments which, in the case of mortgages, have
maximum maturities of forty years. The average life of a mortgage-backed
instrument, in particular, is likely to be substantially less than the original
maturity of the mortgage pools underlying the securities as the result of
scheduled principal payments and mortgage prepayments. The rate of such mortgage
prepayments, and hence the life of the certificates, will be primarily a
function of current market rates and current conditions in the relevant housing
markets. The relationship between mortgage prepayment and interest rates may
give some high-yielding mortgage-related securities less potential for growth in
value than conventional bonds with comparable maturities. In addition, in
periods of falling interest rates, the rate of mortgage prepayment tends to
increase. During such periods, the reinvestment of prepayment proceeds by a Fund
will generally be at lower rates than the rates that were carried by the
obligations that have been prepaid. Because of these and other reasons, an
asset-backed security's total return may be difficult to predict precisely. To
the extent that a Fund purchases mortgage-related or mortgage-backed securities
at a premium, mortgage prepayments (which may be made at any time without
penalty) may result in some loss of the Fund's principal investment to the
extent of premium paid.
U.S. Government Obligations. The Money Market Fund, U.S. Treasury Money Market
Fund and Cash Investment Fund may purchase obligations issued or guaranteed by
the U.S. Government and, except in the case of the U.S. Treasury Money Market
Fund, U.S. Government agencies and instrumentalities. Obligations of certain
agencies and instrumentalities of the U.S. Government, such as those of the
Government National Mortgage Association, are supported by the full faith and
credit of the U.S. Treasury, others, such as those of the Export-Import Bank of
the United States, are supported by the right of the issuer to borrow from the
U.S. Treasury; and still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the agency or instrumentality
issuing the obligation. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
is not obligated to do so by law.
Stripped Securities. The Money Market, Tax-Free Money Market and Cash
Investment Funds may purchase participations in trusts that hold U.S. Treasury
and agency securities (such as TIGRs and CATS) and also may purchase Treasury
receipts and other stripped securities, which represent beneficial ownership
interests in either future interest payments or the future principal payments on
U.S. Government obligations. These instruments are issued at a discount to their
"face value" and may (particularly in the case of stripped mortgage-backed
securities) exhibit greater price volatility than ordinary debt securities
because of the manner in which their principal and interest are returned to
investors. The U.S. Treasury Money Market Fund may purchase only U.S. Treasury
issued stripped securities. Investments by the U.S. Treasury Money Market Fund
in such instruments, other than those recorded in the Federal Reserve book-entry
record keeping system, will not exceed 35% of the Fund's total assets at the
time of purchase. Stripped securities will normally be considered illiquid
investments and will be acquired subject to the limitation on illiquid
investments unless determined to be liquid under guidelines established by the
Board of Trustees/Directors.
Types of Municipal Obligations. The two principal classifications of municipal
obligations are "general obligation" securities and "revenue" securities.
General obligation securities are secured by the issuer's pledge of its full
faith, credit and taxing power for the payment of principal and interest.
Revenue securities are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific revenue source such as the user of the
facility being financed. Revenue securities include private activity bonds which
are not payable from the unrestricted revenues of the issuer. Consequently, the
credit quality of private activity bonds is usually directly related to the
credit standing of the corporate user of the
13
<PAGE>
facility involved.
Municipal obligations may also include "moral obligation" bonds, which are
normally issued by special purpose public authorities. If the issuer of moral
obligation bonds is unable to meet its debt service obligations from current
revenues, it may draw on a reserve fund, the restoration of which is a moral
commitment but not a legal obligation of the state or municipality which created
the issuer. The Advisor does not intend to invest more than 25% of the Tax-Free
Money Market Fund's total assets on a regular basis in securities whose issuers
are in the same state.
Repurchase Agreements. The Money Market, U.S. Treasury Money Market and Cash
Investment Funds may agree to purchase securities from financial institutions
such as member banks of the Federal Reserve System, any foreign bank or domestic
or foreign broker/dealer which 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 securities held
subject to a repurchase agreement may have stated maturities exceeding 397 days,
provided the repurchase agreement itself matures in 397 days. The Advisor will
continuously monitor the creditworthiness of the seller under a repurchase
agreement, and will require the seller to maintain liquid assets in a segregated
account in an amount that is greater than the repurchase price. Default by or
bankruptcy of the seller would, however, expose a Fund to possible loss because
of adverse market action or delays in connection with the disposition of the
underlying obligations, except with respect to repurchase agreements secured by
U.S. Government securities.
Reverse Repurchase Agreements. The U.S. Treasury Money Market and Cash
Investment Funds may borrow funds for temporary purposes by selling portfolio
securities to financial institutions such as banks and broker/dealers and
agreeing to repurchase them at a mutually specified date and price ("reverse
repurchase agreements"). Reverse repurchase agreements involve the risk that
the market value of the securities sold by a Fund may decline below the
repurchase price. A Fund would pay interest on amounts obtained pursuant to a
reverse repurchase agreement.
Lending of Portfolio Securities. To enhance the return on its portfolio, each
of the Funds may lend securities in its portfolio (subject to a limit of 25% of
each Munder Fund's total assets; and 33 1/3% of the Money Market Fund's total
assets) to securities firms and financial institutions, provided that each loan
is secured continuously by collateral in the form of cash, high quality money
market instruments or short-term U.S. Government securities adjusted daily to
have a market value at least equal to the current market value of the securities
loaned. These loans are terminable at any time, and the Funds will receive any
interest or dividends paid on the loaned securities. In addition, it is
anticipated that a Fund may share with the borrower some of the income received
on the collateral for the loan or the Fund will be paid a premium for the loan.
The risk in lending portfolio securities, as with other extensions of credit,
consists of possible delay in recovery of the securities or possible loss of
rights in the collateral should the borrower fail financially. In determining
whether the Funds will lend securities, the Advisor will consider all relevant
facts and circumstances. The Funds will only enter into loan arrangements with
broker-dealers, banks or other institutions which the Advisor has determined are
creditworthy under guidelines established by the Boards of Trustees and
Directors.
Variable and Floating Rate Securities. Each Fund may purchase variable and
floating rate securities which may have stated maturities in excess of the
Fund's maturity limitations but are deemed to have shorter maturities because
the Fund can demand payment of the principal of the securities at least once
within such periods on not more than thirty days' notice (this demand feature is
not required if the securities is guaranteed by the U.S. Government or an agency
or instrumentality thereof). These securities may include variable amount master
demand notes that permit the indebtedness to vary in addition to providing for
periodic adjustments in the interest rate. Unrated variable and floating rate
securities will be determined by the Advisor to be of comparable quality at the
time of purchase to rated instruments purchasable by a Fund. The absence of an
active secondary market, however, could make it difficult to dispose of the
instruments, and a Fund could suffer a loss if the issuer defaulted or during
periods that the Fund is not entitled to exercise its demand rights. Variable
and floating rate instruments held by a Fund will be subject to the Fund's
limitation on illiquid investments when the Fund may not
14
<PAGE>
demand payment of the principal amount within seven days absent a reliable
trading market.
Guaranteed Investment Contracts. The Cash Investment Fund may make limited
investments in guaranteed investment contracts ("GICs") issued by U.S.
insurance companies. Pursuant to such contracts, the Fund makes cash
contributions to a deposit fund of the insurance company's general account. The
insurance company then credits to the Fund on a monthly basis interest which is
based on an index (in most cases this index is expected to be the Salomon
Brothers CD Index), but is guaranteed not to be less than a certain minimum
rate. A GIC is normally a general obligation of the issuing insurance company
and not funded by a separate account. The purchase price paid for a GIC becomes
part of the general assets of the insurance company, and the contract is paid
from the company's general assets. The Fund will only purchase GICs from
insurance companies which, at the time of purchase, have assets of $1 billion or
more and meet quality and credit standards established by the Advisor pursuant
to guidelines approved by the Board of Trustees. Generally, GICs are not
assignable or transferable without the permission of the issuing insurance
companies, and an active secondary market in GICs does not currently exist.
Therefore, GICs will normally be considered illiquid investments, and will be
acquired subject to the limitation on illiquid investments.
Investment Company Securities. In connection with the management of their
daily cash positions, the Funds may invest in securities issued by other
investment companies which invest in short-term debt securities and which seek
to maintain a $1.00 net asset value per share (i.e., "money market funds").
Securities of other investment companies will be acquired within limits
prescribed by the 1940 Act. These limitations, among other matters, restrict
investments in securities of other investment companies to no more than 10% of
the value of a Fund's total assets, with no more than 5% invested in the
securities of any one investment company. As a shareholder of another investment
company, a Fund would bear, along with other shareholders, its pro rata portion
of the other investment company's expenses, including advisory fees. These
expenses would be in addition to the expenses a Fund bears directly in
connection with its own operations.
When-Issued Purchases and Forward Commitments. Each Fund may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"forward commitment" basis. These transactions, which involve a commitment by
a Fund to purchase or sell particular securities with payment and delivery
taking place at a future date (perhaps one or two months later), permit a Fund
to lock-in a price or yield on a security, regardless of future changes in
interest rates. When-issued and forward commitment transactions involve the risk
that the price or yield obtained may be less favorable than the price or yield
available when the delivery takes place. Each Fund will establish a segregated
account consisting of cash, U.S. Government securities or other high-grade debt
obligations in an amount equal to the amount of its when-issued purchases and
forward commitments. Each Fund's when-issued purchases and forward purchase
commitments are not expected to exceed 25% of the value of the particular Fund's
total assets absent unusual market conditions. The Funds do not intend to engage
in when-issued purchases and forward commitments for speculative purposes but
only in furtherance of their investment objectives.
Foreign Securities. The Cash Investment Fund may invest in the securities of
foreign issuers. There are certain risks and costs involved in investing in
securities of companies and governments of foreign nations, which are in
addition to the usual risks inherent in U.S. investments. Investments in foreign
securities involve higher costs than investment in U.S. securities, including
higher transaction costs as well as the imposition of additional taxes by
foreign governments. In addition, foreign investments may include additional
risks associated with the level of currency exchange rates, less complete
financial information about the issuers, less market liquidity, and political
instability. Future political and economic developments, the possible imposition
of withholding taxes on interest income, the possible seizure or nationalization
of foreign holdings, the possible establishment of exchange controls, or the
adoption of other governmental restrictions might adversely affect the payment
of principal and interest on foreign obligations. Additionally, foreign banks
and foreign branches of domestic banks may be subject to less stringent reserve
requirements, and to different accounting, auditing and record keeping
requirements.
Illiquid Securities. Each Fund will not invest more than 10% of the value of
its net assets (determined at the time of acquisition) in securities that are
illiquid. If, after the time of acquisition, events cause this limit to be
exceeded, a Fund will take steps to reduce the aggregate amount of illiquid
securities as soon as reasonably practicable in accordance with policies of the
SEC. Subject to this limitation are repurchase agreements and time
15
<PAGE>
deposits which do not provide for payment within seven days. Each Fund may
invest in commercial obligations issued in reliance on the "private placement"
exemption from registration afforded by Section 4(2) of the Securities Act of
1933, as amended ("Section 4(2) paper"). Each Fund may also purchase
securities that are not registered under the Securities Act of 1933, as amended,
but which can be sold to qualified institutional buyers in accordance with Rule
144A under that Act ("Rule 144A securities"). Section 4(2) paper is restricted
as to disposition under the Federal securities laws, and generally is sold to
institutional investors which agree that it is purchasing the paper for
investment and not with a view to public distribution. Any resale by the
purchaser must be in an exempt transaction. Section 4(2) paper normally is
resold to other institutional investors by the Funds through or with the
assistance of the issuer or investment dealers who make a market in the Section
4(2) paper, thus providing liquidity. Rule 144A securities generally must be
sold only to other qualified institutional buyers. If a particular investment in
Section 4(2) paper or Rule 144A securities is not determined to be liquid, that
investment will be included within a Fund's limitation on investments in
illiquid securities. The Advisor will determine the liquidity of such
investments pursuant to guidelines established by the Board of
Trustees/Directors.
Temporary Investments. The Tax-Free Money Market Fund may hold uninvested cash
if, in the opinion of the Advisor, suitable obligations bearing tax-exempt
interest are unavailable. Uninvested cash will not earn income. In addition, the
Tax-Free Money Market Fund may invest from time to time, to the extent
consistent with its investment objective, a portion of its assets on a temporary
basis or for temporary defensive purposes in short-term money market instruments
("Temporary Investments"), the income from which is subject to Federal income
tax.
Temporary Investments will generally not exceed 20% of the total assets of the
Tax-Free Money Market Fund, except when made for temporary defensive purposes,
and may include obligations of the U.S. Government or its agencies or
instrumentalities; debt securities (including commercial paper) of issuers
having, at the time of purchase, a quality rating within the two highest
categories of either Moody's Investor Services, Inc. ("Moody's") or Standard &
Poor's Corporation ("S&P"); certificates of deposit of bankers' acceptances of
domestic branches of U.S. banks with total assets at the time of purchase of $1
billion or more; and repurchase agreements with respect to such obligations.
Portfolio Transactions. All orders for the purchase or sale of securities on
behalf of a Fund are placed by the Advisor with broker/dealers or other
institutions that the Advisor selects. Short-term capital gains realized from
portfolio transactions are taxable to shareholders as ordinary income.
INVESTMENT LIMITATIONS
The investment objective and policies of a Munder Fund may be changed by the
Company's Board of Trustees without shareholder approval. However, shareholders
will be notified in writing at least thirty days in advance of any such material
change, except where notice is not required. The investment objective of the
Money Market Fund is a fundamental policy and may not be changed without
authorization of the holders of a majority (as defined in the 1940 Act) of the
Fund's outstanding shares. No assurance can be provided that a Fund will achieve
its investment objective.
Each Munder Fund has also adopted certain fundamental investment limitations
that may be changed only with the approval of a "majority of the outstanding
shares of a Fund" (as defined in the Statement of Additional Information). The
following descriptions summarize several of the Munder Funds' fundamental
investment policies, which are set forth in full in the Statement of Additional
Information.
No Munder Fund may:
(1) purchase securities (except U.S. Government securities) if more than 5%
of its total assets will be invested in the securities of any one issuer,
except that up to 25% of the Tax-Free Money Market Fund's total assets 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
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<PAGE>
activities in the same industry; and
(3) borrow money except for temporary purposes in amounts up to one-third
of the value of its total assets at the time of such borrowing. Whenever
borrowings exceed 5% of a Fund's total assets, the Fund will not make any
additional investments.
These investment limitations are applied at the time investment securities are
purchased.
HOW TO PURCHASE SHARES
GENERAL
This Prospectus offers to investors one class of shares of the Munder Funds,
Class A Shares. Class A Shares of the Munder Funds are sold without a sales
charge. The Money Market Fund offers Class A, Class B and Class C Shares which
may be acquired only through an exchange of shares of the corresponding classes
of another fund of the Company or Munder.
Shares of the Funds 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 Funds Distributor, Inc. (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 Funds. The Distributor is a registered broker/dealer with
principal offices at One Exchange Place, Boston, Massachusetts 02109.
Shares will be credited to a shareholder's account at the net asset value next
computed after an order is received by the Distributor or a dealer. The issuance
of shares is recorded on the books of the Funds, and share certificates are not
issued unless expressly requested in writing. Certificates are not issued for
the fractional shares. The Funds' management reserves the right to reject any
purchase order if in its opinion, it is in the Funds' 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 purchases of shares of each Fund is $1,000
and subsequent investments must be at least $50.
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 Shares of the
Munder Funds with a completed and signed Account Application Form to The Munder
Funds, c/o First Data, 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 net asset value of the Munder Fund shares next
computed following receipt of payment by the Transfer Agent. 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.
The completed investment application must indicate a valid taxpayer
identification number and must be certified as such. 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 a 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, P.O. Box 5130, Westborough, Massachusetts 01581-5130.
17
<PAGE>
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 Shares of the Munder Funds may arrange for periodic
investments in that Fund through automatic deductions from a checking or savings
account by completing the AIP application form. The minimum pre-authorized
investment amount is $50.
Pursuant to the Funds' Variable Pricing System, each Munder Fund issues two
additional classes of shares, Class K and Class Y Shares, and the Money Market
Fund issues Class Y Shares, in addition to the Classes described in this
Prospectus. 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.
HOW TO REDEEM SHARES
Generally, shareholders may require a Fund to redeem their shares by sending a
written request, signed by the record owner(s), to The Munder Funds, c/o First
Data, 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 applicable to Class A, B and C Shares
of the Money Market Fund.
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 12:00 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.
The Company, Munder, 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
18
<PAGE>
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, Munder, 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 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 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.
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
shareholders 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.
No redemption fee is charged for the redemption of Shares, but a contingent
deferred sales charge is imposed on certain redemptions of Class A, Class B and
Class C Shares of the Money Market Fund as described below.
REDEMPTION BY CHECK
Free check writing is available with respect to Class A Shares of the Funds.
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 check writing service after opening
an account, the shareholder must contact the Transfer Agent or his or her broker
to obtain an Account Application Form. Upon 30 days' prior written notice to
shareholders, the check writing privilege may be modified or terminated. An
investor cannot close an account in a Fund by writing a check.
INVOLUNTARY REDEMPTION
The Funds 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 Funds offer an Automatic Withdrawal Plan which may be used by holders of
Class A Shares of the Funds and Class B and Class C Shares of the Money Market
Fund, 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 a 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 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
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<PAGE>
and may not hold share certificates. Shareholders may change or cancel the AWP
at any time, upon written notice to the Transfer Agent. 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
Money Market Fund Class B Shares that are redeemed within six years of
original 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.
The CDSC will be waived for certain exchanges as described below. In addition,
Money Market Fund 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 gains 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. Since Class
B Shares may only be acquired through the exchange of Class B Shares of other
funds of the Company and Munder, the holding period of Class B Shares of the
Money Market Fund will be calculated from the date that the original Class B
Shares were initially purchased.
The amount of any applicable contingent deferred sales charge 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
Year Since Dollar Amount
Purchase Subject to Charge
----------- -------------------
<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.
Money Market Fund Class B Shares acquired through the exchange of Class B
Shares of other funds of the Company purchased on or before June 27, 1995 will
be subject to a CDSC calculated by multiplying the net asset value of shares
subject to the CDSC at the time of redemption or at the time of purchase,
whichever is lower, by the applicable percentage shown in the table below:
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<PAGE>
<TABLE>
<CAPTION>
Contingent Deferred Sales Charge
as a Percentage of the Lesser of
Net Asset Value at Redemption
Redemption During or the Original Purchase Price
----------------- ---------------------------------
<S> <C>
1st Year Since Purchase 4.00%
2nd Year Since Purchase 4.00%
3rd Year Since Purchase 3.00%
4th Year Since Purchase 3.00%
5th Year Since Purchase 2.00%
6th Year Since Purchase 1.00%
</TABLE>
The CDSC will be waived for certain exchanges, as described below. In
addition, the CDSC payable with respect to Class B Shares of the Money Market
Fund 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 a Fund's right to liquidate a shareholder's account
involuntarily. The CDSC will be waived with respect to Money Market Fund Class B
Shares acquired through the exchange of Class B Shares of other funds of the
Company purchased on or before June 27, 1995 in the following circumstances: (1)
total or partial redemptions made within one year following the death or
disability of a shareholder or registered joint owner; (2) minimum required
distributions made in connection with an IRA or other retirement plan following
attainment of age 59 1/2; and (3) redemptions pursuant to a Fund's right to
liquidate a shareholder's account involuntarily.
The CDSC will be waived on the following types of redemptions with respect to
Money Market Fund Class B Shares acquired through the exchange of Class B Shares
of other funds of the Company purchased on or before June 27, 1995: (1)
redemptions by investors who have invested a lump sum amount of $1 million or
more in the Fund; (2) redemptions by the officers, directors, and employees of
the Advisor or the Distributor and such persons' immediate families; (3) dealers
or brokers who have a sales agreement with the Distributor, for their own
accounts, or for retirement plans for their employees or sold to registered
representatives or full time employees (and their families) that certify to the
Distributor at the time of purchase that such purchase is for their own account
(or for the benefit of their families); (4) involuntary redemptions effected
pursuant to the Fund's right to liquidate shareholder accounts having an
aggregate net asset value of less than $500; and (5) redemptions the proceeds of
which are reinvested in the Fund within 90 days of the redemption.
CONTINGENT DEFERRED SALES CHARGE--CLASS A AND
CLASS C SHARES OF THE MONEY MARKET FUND
A CDSC of 1% applies to certain redemptions of such shares made within the
first year after investing. If a shareholder within one year after the date of
original purchase redeems any Money Market Fund Class A Shares acquired through
the exchange of Class A Shares of a fund of Munder or the Company that were
purchased without a sales charge in connection with an investment of $1,000,000
or more, a CDSC of 1% of the lower of the original purchase price or the net
asset value of such shares at the time of redemption will be charged. Class C
Shares of the Money Market Fund acquired pursuant to an exchange from a
corresponding class of a Fund of the Company or Munder are also subject to a
contingent deferred sales charge of 1% on redemptions within the first year
after the original investment.
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 of the Money
Market Fund also apply to the CDSC on Class A and Class C Shares.
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<PAGE>
The holding period of Class A or Class C Shares of the Money Market Fund
acquired through an exchange of the corresponding class of shares of a fund of
Munder or the Company will be calculated from the date that the Class A or Class
C Shares of the fund were initially acquired.
See the Statement of Additional Information for further information regarding
redemption of Fund shares.
Money Market Fund Class A Shares acquired through the exchange of Class A
Shares of a fund of the Company purchased on or before June 27, 1995 without a
sales charge by reason of a purchase of $500,000 or more are subject to a CDSC
of 1.00% of the lower of the original purchase price or the net asset value at
the time of redemption if such shares are redeemed within two years of the date
of purchase. Money Market Fund Class A Shares acquired through the exchange of
Class A Shares of a fund of the Company purchased on or before June 27, 1995
that are redeemed will not be subject to the CDSC to the extent that the value
of such shares represents: (1) reinvestment of dividends or other distributions;
(2) Class A Shares redeemed more than two years after their purchase; (3) a
minimum required distribution made in connection with IRA or other retirement
plans following attainment of age 59 1/2; or (4) total or partial redemptions
made within one year following the death or disability of a shareholder or
registered joint owner.
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 Money
Market Fund 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 MONEY MARKET FUND CLASS B SHARES
A shareholder's Money Market Fund Class B Shares will automatically convert to
Class A Shares in the Money Market Fund on the sixth anniversary of the issuance
of the Class B Shares occurs, together with a pro rata portion of all Class B
Shares representing dividends and other distributions paid in additional Class B
Shares. The holding periods for Class B Shares of other funds of the Company and
Munder exchanged for Class B Shares of the Money Market Fund will be counted
toward the six-year period. 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.
HOW TO EXCHANGE SHARES
GENERAL
Class A Shares of each Fund may be exchanged for Class A Shares of other funds
of the Company or Munder, based on their respective net asset values, subject to
any applicable sales charges.
Class A Shares of the Funds 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 or Munder for which a sales charge was
paid, can be exchanged for Class A Shares of a fund of the Company or Munder
subject to payment of differential sales charges as applicable.
Any share exchange must satisfy the requirements relating to the minimum
initial investment in an investment portfolio of the Company or Munder, 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
22
<PAGE>
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 Munder by contacting his or her
broker or the Funds at (800) 438-5789. Certain brokers may charge a fee for
handling exchanges.
The Company and Munder reserve the right to modify or terminate the exchange
privilege at any time. Notice will be given to shareholders of any material
modification or termination except where notice is not required.
EXCHANGES BY TELEPHONE
A shareholder may give exchange instructions to the shareholder's broker or by
telephone to the Funds at (800) 438-5789. Shareholders wishing to use this
telephone exchange privilege must check the appropriate box on the Account
Application Form. Telephone exchange privileges are not available to
shareholders who have custody of their share certificates. The Company and
Munder reserve 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 any Fund or its shareholders.
EXCHANGES 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 Funds expect 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 Funds is declared daily as a dividend. Generally, dividends are paid monthly
with respect to the Money Market Fund and within six business days of month-end
for the Munder Funds.
Shareholders of the Funds whose purchase orders are received and executed by
12:00 noon (Eastern time) receive dividends for that day. Shareholders whose
redemption orders have been received by 12:00 noon (Eastern time) will not
receive dividends for that day, while shareholders whose redemption orders are
received after 12:00 noon (Eastern time) will receive that day's dividends. See
"How to Purchase Shares" and "How to Redeem Shares."
Each 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 a 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 same 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 a Fund.
The per share dividends on Class B and Class C Shares of the Money Market Fund
generally will be lower than the per share dividends on Class A Shares of the
Fund as a result of higher annual service and distribution fees applicable to
Class B and Class C Shares.
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<PAGE>
Each 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 Trustees/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
Trustees'/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
Trustees in a manner that the Board determines to be fair and equitable. Any
general expenses of Munder that are not readily identifiable as belonging to a
particular fund of Munder are allocated among all funds of Munder 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 Funds' service contractors bear all expenses in
connection with the performance of their services and the Funds bear the
expenses incurred in their operations. The Advisor, Administrator, Custodian and
Transfer Agent may voluntarily waive all or a portion of their respective fees
from time to time.
Each Fund's net investment income available for distribution to the holders of
Shares will be reduced by the amount of service and distribution fees payable
under the Services and Distribution Plans described below.
NET ASSET VALUE
Net asset value for a particular share in a 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 Funds for the purpose of pricing purchase
and redemption orders and any distributions is determined as of 12:00 noon
(Eastern time) and 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. In
seeking to maintain a stable net asset value of $1.00 per share with respect to
each of these Funds, the Company values the Fund's portfolio securities
according to the amortized cost method of valuation. Under this method,
securities are valued initially at cost on the date of purchase. Thereafter,
absent unusual circumstances, a Fund assumes a constant proportionate
amortization of any premium or accretion of any discount until maturity of the
security.
The Company does not accept purchase and redemption orders on days in 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 TRUSTEES/DIRECTORS
The Company and Munder are managed under the direction of their governing
Boards of Trustees and Directors. The Statement of Additional Information
contains the name and background information of each Trustee/Director.
24
<PAGE>
INVESTMENT ADVISOR
The investment advisor of the Funds is Munder Capital Management, a Delaware
general partnership with its principal offices at 480 Pierce Street, Birmingham,
Michigan 48009. The Advisor was formed in December, 1994. On February 1, 1995,
the Advisor assumed the investment advisory duties with respect to the Funds
previously performed by Woodbridge Capital Management, Inc. ("Woodbridge") and
Old MCM, Inc. ("MCM"). The principal partners of the Advisor are MCM, 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 June 30, 1996, the Advisor and
its affiliates had approximately $34 billion in assets under management, of
which $17 billion were invested in equity securities, $6 billion were invested
in money market or other short-term instruments, and $11 billion were invested
in other fixed income securities.
Subject to the supervision of the Board of Trustees of the Company and the
Board of Directors of Munder, the Advisor provides overall investment management
for each Fund, provides research and credit analysis, is responsible for all
purchases and sales of portfolio securities, maintains books and records with
respect to each Fund's securities transactions and provides periodic and special
reports to the Board of Trustees of the Company and the Board of Directors of
Munder as requested.
For the advisory services provided and expenses assumed by it, the Advisor has
agreed to a fee from each Fund, computed daily and payable monthly on a separate
Fund-by-Fund basis, at an annual rate of .40% of average daily net assets of the
Money Market Fund and .35% of average daily net assets of each of the Tax-Free
Money Market, U.S. Treasury Money Market and Cash Investment Funds.
For the period July 1, 1995 to October 27, 1995, Advisor received fees, after
waivers, at the effective rate of .40% of the Money Market Fund's average daily
net assets and .35% of each of the Tax-Free Money Market, U.S. Treasury Money
Market and Cash Investment Funds' average daily net assets.
For the period October 28, 1995 to June 30, 1996, the Advisor received fees,
after waivers, at an effective rate of .40% of the Money Market Fund's average
daily net assets and .35% of each of the Tax-Free Money Market, U.S. Treasury
Money Market and Cash Investment Funds' average daily net assets.
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 Funds. First Data is a wholly-
owned subsidiary of First Data Corporation. The Administrator generally assists
the Funds in all aspects of its administration and operations, including the
maintenance of financial records and fund accounting.
First Data also serves as the Funds' transfer agent and dividend disbursing
agent ("Transfer Agent"). Shareholder inquiries may be directed to First Data at
P.O. Box 5130, Westborough, Massachusetts 01581-5130.
As compensation for these services, the Administrator, and Transfer Agent are
entitled to receive fees, based on the aggregate average daily net assets of the
Funds and certain other investment portfolios that are advised by the Advisor
and for which First Data provides services, computed daily and payable monthly
at the rate of .12% of the first $2.8 billion of net assets, plus .105% of the
next $2.2 billion of net assets, plus .10% of all net assets in excess of $5
billion with respect to the Administrator and .02% of the first $2.8 billion of
net assets, plus .015% of the next $2.2 billion of net assets, plus .01% of all
net assets in excess of $5 billion with respect to the Transfer Agent.
Administration fees payable by the Funds 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
25
<PAGE>
provides certain administrative services with respect to the Funds. The
Administrator pays the Distributor a fee for these services out of its own
resources at no cost to the Funds.
Comerica Bank (the "Custodian"), whose principal business address is One
Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226, provides custodial
services to the Funds. As compensation for its services, the Custodian is
entitled to receive fees, based on the aggregate average daily net assets of the
Funds 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 ARRANGEMENTS
The Company and Munder have each adopted a Distribution and Service Plan with
respect to Class A Shares of the Munder Funds and the Money Market Fund and
Class B and Class C Shares of the Money Market Fund, pursuant to which each 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 up to 0.25% and a distribution fee at an annual rate of
up to .75% of the value of average daily net assets of 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 Funds. These services include, among other things, processing new
shareholder account applications, preparing and transmitting to the Funds'
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 Funds and their transactions with the Funds.
The Class B and Class C Plans permit payments to be made by the Money Market
Fund to the Distributor for expenditures incurred by it in connection with the
distribution of Fund shares to investors and 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 Money Market 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 contingent deferred
sales charges 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 of the Money Market Fund,
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 of the
Money Market Fund is 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 Funds 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 Funds and will accordingly reduce each Fund's net
assets upon such accrual.
26
<PAGE>
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 Trustees and Munder's Board of Directors evaluate the
appropriateness of the Plans and their payment terms on a continuous basis and
in doing so will consider all relevant factors, including expenses incurred by
the Distributor and the amount received under the Plans and the proceeds of the
contingent deferred sales charges with respect to Class B and Class C Shares of
the Money Market Fund.
TAXES
Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
Such qualification generally relieves a Fund of liability for Federal income
taxes to the extent its earnings are distributed in accordance with the Code.
Qualification as a regulated investment company under the Code for a taxable
year requires, among other things, that each of the Cash Investment, U.S.
Treasury Money Market Fund and Money Market Fund distribute to its shareholders
an amount equal to at least 90% of its investment company taxable income for
such year. In general, a Fund's investment company income will be its taxable
income (including dividends, interest, and short-term capital gains) subject to
certain adjustments and excluding the excess of any net long-term capital gain
for the taxable year over the net short-term capital loss, if any, for such
year. Each of the Cash Investment Fund, U.S. Treasury Money Market Fund and
Money Market Fund intend to distribute substantially all of its investment
company taxable income each taxable year. Such distributions will be taxable as
ordinary income to the Funds' 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 net realized capital gains of the Cash Investment
Fund, U.S. Treasury Money Market Fund and Money Market Fund, if any, will be
distributed at least annually. The Funds will generally have no 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 capital
gains, no matter how long the shareholders have held their shares.
The Tax-Free Money Market Fund intends to pay substantially all of its
dividends as exempt-interest dividends. Under normal market conditions, at least
80% of the Fund's net assets will be invested in municipal obligations, the
interest on which is exempt from regular Federal income tax and does not
constitute an item of tax preference for purposes of the Federal alternative
minimum tax. Investors in the Fund should note, however, that taxpayers are
required to report the receipt of tax-exempt interest and exempt-interest
dividends on their Federal income tax returns and that in some circumstances
such amounts, while exempt from regular Federal income tax, are taxable to
persons subject to alternative minimum and environmental taxes.
First, tax-exempt interest and exempt interest dividends derived from certain
private activity bonds issued after August 7, 1986, will generally constitute an
item of tax preference for corporate and non-corporate taxpayers in determining
alternative minimum and environmental tax liability. During normal market
conditions the Tax-Free Money Market Fund may invest up to 20% of its net assets
in such private activity bonds.
Second, all dividends, including exempt interest dividends received by
corporate taxpayers must be taken into account by them in determining certain
adjustments for alternative minimum and environmental tax purposes. Shareholders
who are recipients of Social Security Act or Railroad Retirement Act benefits
should further note that all dividends, including exempt interest dividends
derived from a fund will be taken into account in determining the taxability of
their benefit payments.
The Tax-Free Money Market Fund will determine annually the percentages of its
net investment income which are exempt from the regular Federal income tax,
which constitute an item of tax preference for purposes of the Federal
alternative minimum tax, and which are fully taxable. The Fund will apply these
percentages uniformly to all distributions declared from net investment income
during that year. These percentages may differ
27
<PAGE>
significantly from the actual percentages for any particular day. On an annual
basis, the Company will send written notices to record owners of shares
regarding the Federal tax status of distributions made by each Fund.
Dividends paid by the Tax-Free Money Market Fund may be taxable to investors
under state or local law as dividend income even though all or a portion of such
dividends may be derived from interest on obligations which, if realized
directly, would be exempt from such income taxes. Moreover, to the extent, if
any, that dividends paid to shareholders are derived from taxable interest or
from capital gains, such dividends will be subject to Federal income tax.
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 a Fund on December 31 of such year if
such dividends are actually paid during January of the following year.
The foregoing summarizes some of the important tax considerations generally
affecting the Funds and their shareholders and is not intended as a substitute
for careful tax planning. State and local tax laws may differ from the Federal
laws summarized above. Accordingly, potential investors in the Funds should
consult their tax advisers with respect to their own tax situation.
DESCRIPTION OF SHARES
The Company was organized as a Massachusetts business trust on August 30,
1989, and is registered under the 1940 Act as an open-end management investment
company. The Company's Declaration of Trust authorizes the Trustees to classify
and reclassify any unissued shares into one or more classes of shares. Pursuant
to such authority, the Trustees have authorized the issuance of an unlimited
number of shares of beneficial interest in the Company, representing interests
in the Accelerating Growth, Small Company Growth Fund, International Equity,
Index 500, Growth & Income, Balanced, Bond, Intermediate Bond, U.S. Government
Income, Michigan Triple Tax-Free Bond, Tax-Free Bond, Tax-Free Intermediate
Bond, Tax-Free Money Market, U.S. Treasury Money Market and Cash Investment
Funds, respectively, each of which, except the Tax-Free Intermediate Bond Fund
and Michigan Triple Tax-Free Bond Fund, is classified as a diversified
investment company under the 1940 Act.
Munder 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.
Munder'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 interest in The Munder Multi-Season Growth Fund, Munder
Real Estate Equity Investment Fund, Munder Mid-Cap Growth Fund, Munder Value
Fund, Munder International Bond Fund, Munder Small-Cap Value Fund, Munder Equity
Selection Fund and Net Net Fund and the Munder Money Market Fund, respectively.
There is a possibility that the Company might become liable for any
misstatement, inaccuracy, or incomplete disclosure in this Prospectus concerning
Munder. There is a possibility that Munder might become liable for a
misstatement, inaccuracy, or incomplete disclosure in this Prospectus concerning
the Company.
The shares of each investment portfolio of the Company and Munder (other than
the Money Market Fund, Net Net Fund, Tax-Free Money Market Fund, U.S. Treasury
Money Market Fund and Cash Investment Fund) are offered as five separate
classes: Class A Shares, Class B Shares, Class C Shares, Class K Shares and
Class Y Shares. Class C Shares of the Index 500 Fund are not currently available
for purchase. The Tax-Free Money Market Fund, U.S. Treasury Money Market Fund
and Cash Investment Fund offer only Class A Shares, Class K Shares 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 or Munder) and Class Y Shares. The Net Net
Fund offers only one class of shares. These other classes of the Funds may have
different sales charges and expense levels, which will affect performance.
Investors may call the Funds at (800) 438-5789 for more information concerning
other classes of shares of the Funds. This Prospectus relates only to the Class
A Shares of the Tax-Free Money Market Fund, U.S. Treasury Money Market Fund and
Cash Investment Fund and Class A, Class B and Class C Shares of the Money Market
Fund.
28
<PAGE>
Each share of a Munder Fund has a par value of $.001, represents an equal
proportionate interest in the particular Fund with other Class A Shares and is
entitled to such dividends and distributions earned on such Fund's assets as are
declared in the discretion of the Trustees. Each share of a Fund offered by
Munder has a par value of $.01 per share and represents a proportionate interest
in the assets of a Fund.
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
Trustees or Directors determine that the matter to be voted upon affects only
the interests of the shareholders of a particular Fund. In addition,
shareholders of each of the Funds will vote in the aggregate and not by Class,
except as otherwise expressly required by law or when the Trustees or Directors
determine that the matter to be voted on affects only the interests of the
holders of a particular Class of Shares. The Funds are not required and do not
currently intend to hold annual meetings of shareholders for the election of
Trustees or Directors except as required under the 1940 Act. A meeting of
shareholders will be held upon the written request of at least 10% of the
outstanding shares of the Company or Munder. To the extent required by law, the
Funds will assist in shareholder communications in connection with such a
meeting. For a further discussion of the voting rights of shareholders, see
"Additional Information Concerning Shares" in the Statement of Additional
Information.
As of ___________, 1996, Comerica Bank held of record substantially all of
the outstanding shares of the Munder Funds as agent, custodian or trustee for
its customers. In addition, as of __________, 1996, Comerica Bank possessed
sole or shared voting or investment power for its customer accounts with respect
to the following percentages of the Funds' outstanding shares: Money Market
Fund -- __%; Tax-Free Money Market Fund -- __%; U.S. Treasury Money Market
Fund -- __%; and Cash Investment Fund -- __%.
REPORTS TO SHAREHOLDERS
The Funds have eliminated duplicate mailings of prospectuses and shareholder
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 Funds at (800) 438-5789.
PERFORMANCE
From time to time, the Funds may quote performance and yield data for shares
of the Funds in advertisements or in communications to shareholders.
The current yield of shares in the Funds refers to the net income generated by
an investment in Shares over a seven-day period (which period will be stated in
the advertisement). This income is then "annualized." That is, the amount of
income generated the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the investment.
"Effective yield" is calculated similarly but, when annualized, the income
earned by an investment in a class is assumed to be reinvested. The "effective
yield" will be slightly higher than the "yield" because of the compounding
effect of this assumed reinvestment. The "tax-equivalent yield" of shares of
the Tax-Free Money Market Fund may also be quoted from time to time, which shows
the level of taxable yield need to produce an after-tax equivalent to the tax-
free yield of a particular class. This is done by increasing the yield
(calculated as above) by the amount necessary to reflect the payment of Federal
and/or state income taxes at a stated rate. Yield quotations for Class A Shares
will reflect the fees for certain shareholder services or distribution and
support services.
The Funds 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, for example,
Lipper Analytical Services, Inc. and the Consumer Price Index. 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
29
<PAGE>
class of shares in a Fund.
Yield will fluctuate and any quotation of performance should not be considered
as representative of future performance of a class of shares in a Fund.
Shareholders should remember that performance is generally a function of the
kind and quality of the instruments held in a portfolio, portfolio maturity,
operating expenses and market conditions. Any fees charged by institutions
directly to their customers' accounts in connection with investments in a Fund
will not be included in calculations of performance.
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.
INVESTMENTS BY MAIL
Send the completed Account Application Form (if initial purchase) or letter
stating Fund name, shareholder's registered name and account number (if
subsequent purchase) with a check to:
First Data
The Munder Funds
P.O. Box 5130
Westborough, Massachusetts 01581-5130
INVESTMENTS BY BANK WIRE
An investor opening a new account should call the Funds 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 "Investments by Mail." Wire instructions must
state the Fund name, 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, shareholder's registered name and shareholder account
number)
Before wiring any funds an investor must call the Funds at (800) 438-5789 to
confirm the wire instructions.
EXCHANGE BY TELEPHONE
Call your broker or the Funds at (800) 438-5789.
30
<PAGE>
Class A Shares of the Munder Funds may be exchanged for Class A Shares of
another fund of the Company or Munder, subject to any applicable sales charge.
Class A, Class B and Class C Shares of the Money Market Fund may be acquired
only through an exchange of shares from the corresponding classes of other funds
of the Company or Munder.
REDEMPTIONS BY TELEPHONE
Call your broker or the Funds at (800) 438-5789.
REDEMPTIONS BY MAIL
Send complete instructions, including name of Fund, amount of redemption,
shareholder's registered name, account number, and, if a certificate has been
issued, an endorsed share certificate, to:
First Data
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 Funds at (800) 438-5789.
31
<PAGE>
PROSPECTUS
CLASS K SHARES
The Munder Funds Trust (the "Company") is an open-end investment company (a
mutual fund) that currently offers a selection of fifteen investment portfolios.
The Munder Funds, Inc. ("Munder") is an open-end investment company that
currently offers ten investment portfolios. This Prospectus describes Class K
Shares* of each of the investment portfolios offered by the Company (the "Munder
Funds") and eight of the investment portfolios offered by Munder (the "MFI
Funds") described below (collectively, the "Funds"):
Munder Multi-Season Growth Fund Munder Bond Fund
Munder Real Estate Equity
Investment Fund Munder Intermediate Bond Fund
Munder Accelerating Growth Fund Munder U.S. Government Income Fund
Munder Small Company Growth Fund Munder Michigan Triple Tax-Free Bond Fund**
Munder Mid-Cap Growth Fund Munder Tax-Free Bond Fund
Munder International Equity Fund Munder Tax-Free Intermediate Bond Fund
Munder Index 500 Fund Munder Tax-Free Money Market Fund
Munder Growth & Income Fund Munder U.S. Treasury Money Market Fund
Munder Value Fund Munder Cash Investment Fund
Munder Balanced Fund Munder Small-Cap Value Fund
Munder International Bond Fund Munder Equity Selection Fund
Munder Micro-Cap Equity Fund
* Class K Shares were formerly known as Investor Shares for the Munder Funds
and the Real Estate Equity Investment Fund.
** The Michigan Triple Tax-Free Bond Fund is offered only in the State of
Michigan.
Munder Capital Management (the "Advisor") serves as the investment advisor of
the Funds.
This Prospectus sets forth concisely information that a prospective investor
should know before investing. Investors are encouraged to read this Prospectus
and retain it for future reference. A Statement of Additional Information dated
__________, 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 Funds at (800) 438-5789.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR
ENDORSED BY ANY BANK, AND ARE NOT INSURED OR GUARANTEED BY
THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING
THE POSSIBLE LOSS
OF PRINCIPAL.
ALTHOUGH THE TAX-FREE MONEY MARKET FUND, U.S. TREASURY
MONEY MARKET FUND AND
CASH INVESTMENT FUND SEEK TO MAINTAIN A CONSTANT NET ASSET
VALUE OF $1.00 PER
SHARE, THERE CAN BE NO ASSURANCE THAT SUCH FUNDS CAN DO SO ON
A CONTINUING
BASIS.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED
OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is __________, 1996.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
The Funds
<S> <C>
Expense Table......................... 3
Financial Highlights.................. 6
Investment Objectives and Policies.... 25
Portfolio Instruments and Practices 38
and
Associated Risk Factors............. __
Investment Limitations................ 51
Purchase and Redemption of Shares..... 50
Dividends and Distributions........... 52
Other Information
Net Asset Value....................... 53
Management............................ 54
Taxes................................. 58
Description of Shares................. 61
Performance........................... 62
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION, OR TO
MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE
FUNDS' STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN
CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUNDS
OR FUNDS DISTRIBUTOR, INC. (THE "DISTRIBUTOR"). THIS PROSPECTUS
DOES NOT
CONSTITUTE AN OFFERING BY THE FUNDS OR BY THE DISTRIBUTOR IN
ANY JURISDICTION IN
WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
2
<PAGE>
EXPENSE TABLE
The table below sets forth certain information concerning shareholder
transaction expenses and projected annual operating expenses that investors will
incur, either directly or indirectly, as shareholders of the Class K Shares of
each of the Funds. The International Bond Fund did not commence operations
until __________, 1996 and the Small-Cap Value Fund, Micro-Cap Equity Fund and
Equity Selection Fund will not commence operations until __________, 1996;
therefore, the expense information set forth below is based on estimated
operating expenses for each such Fund. The expense information in the table has
been restated with respect to the Multi-Season Growth Fund and the Index 500
Fund to reflect anticipated fees and waivers. Class K Shares are sold without an
initial or contingent deferred sales charge to customers of banks and other
institutions, and to the immediate family members of such customers. See
"Purchase and Redemption of Shares."
<TABLE>
<CAPTION>
Real Estate Small
Multi-Season Equity Accelerating Company
Mid-Cap
Growth Investment Growth Growth
Growth
Fund Fund Fund Fund Fund
------------ ---------- ------------ ------- ------
<S> <C> <C> <C> <C>
<C> <C>
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Advisory Fees .75%* .74% .75% .75%
.74%
Other Expenses .51% .51% .45% .46%
.46%
---- ---- ---- ---- ----
Shareholder Servicing .25% .25% .25% .25%
.25%
All Other Expenses .26% .26% .20% .21%
.21%
---- ---- ---- ---- ----
Total Fund Operating Expenses 1.26%* 1.25% 1.20%
1.21% 1.20%
==== ==== ==== ====
====
Inter-
International Index 500 Growth &
Balanced national
Equity Fund Fund Income Fund Value Fund
Fund Bond Fund
------------- --------- ----------- ---------- --------
- ---------
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Advisory Fees .75% .07%* .75% .74%
.65% .50%
Other Expenses .51% .44% .46% .46%
.50% .60%
---- ---- ---- ---- ---- ----
Shareholder Servicing .25% .25% .25% .25%
.25% .25%
All Other Expenses .26% .19% .21% .21%
.25% .25%
---- ---- ---- ---- ---- ----
Total Fund Operating Expenses 1.26% .51%* 1.21%
1.20% 1.15% 1.10%
==== ==== ==== ====
==== ====
U.S Michigan
Tax-Free
Government Triple Tax-
Inter-
Intermediate Income Free Bond
Tax-Free mediate
Bond Fund Bond Fund Fund Fund
Bond Fund Bond Fund
--------- ------------ --------- ----------- ---------
- ---------
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Advisory Fees .50% .50% .50% .50%
.50% .50%
Other Expenses .45% .44% .47% .51%
.48% .46%
----- ----- ---- ---- ---- ----
Shareholder Servicing .25% .25% .25% .25%
.25% .25%
All Other Expenses .20% .19% .22% .26%
.23% .21%
----- ----- ---- ---- ---- ----
Total Fund Operating Expenses .95% .94% .97%
1.01% .98% .96%
===== ===== ==== ====
==== ====
Micro-
Tax-Free U.S. Treasury Cash
Equity Cap
Money Money Market Investment Small-Cap
Selection Equity
Market Fund Fund Fund Value Fund
Fund Fund
----------- ------------- ----------- ---------- --------
- - ------
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Advisory Fees .35% .35% .35% .75%
.75% 1.00%
Other Expenses .33% .34% .33% .50%
.50% .50%
----- ----- ---- ---- ---- ----
Shareholder Servicing .15% .15% .15% .25%
.25% .25%
All Other Expenses .18% .19% .18% .25%
.25% .25%
---- ----- ---- ---- ---- ----
Total Fund Operating Expenses .68% .69% .68%
1.25% 1.25% 1.50%
===== ===== ==== ====
==== ====
</TABLE>
- --------------------------
* Reflects advisory fee after waivers. Waivers are described on page 6.
3
<PAGE>
"Other expenses" in the above tables 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. With respect to each
Fund, the amount of "Other expenses" in the table above is based on amounts
incurred during the most recent fiscal year. See "Management" in this Prospectus
and the financial statements and related notes incorporated by reference in the
Statement of Additional Information for a further description of the Funds'
operating expenses and the nature of the services for which a Fund is obligated
to pay advisory fees. Any fees charged by institutions directly to customer
accounts for services provided in connection with investments in shares of the
Funds are in addition to the expenses shown in the above Expense Table and the
Example shown below.
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 Funds. These amounts are based on payments by
the Funds of operating expenses at the levels set forth in the above tables, and
are also based on the following assumptions:
An investor would pay the following expenses on a $1,000 investment, assuming
(1) a hypothetical 5% annual return and (2) redemption at the end of the
following time periods:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Multi-Season Growth Fund............ $13 $40 $69 $152
Real Estate Equity Investment Fund $13 $40 $69 $151
Accelerating Growth Fund............ $12 $38 $66 $145
Small Company Growth Fund........... $12 $38 $66 $147
Mid-Cap Growth Fund................. $12 $38 $66 $145
International Equity Fund........... $13 $40 $69 $152
Index 500 Fund...................... $ 5 $16 $29 $ 64
Growth & Income Fund................ $12 $38 $66 $147
Value Fund.......................... $12 $38 $66 $145
Balanced Fund....................... $12 $37 $63 $140
International Bond Fund............. $11 $35 N/A N/A
Small-Cap Value Fund................ $10 $32 N/A N/A
Equity Selection Fund............... $10 $32 N/A N/A
Micro-Cap Equity Fund............... $13 $40 N/A N/A
Bond Fund........................... $10 $30 $53 $117
Intermediate Bond Fund.............. $10 $30 $52 $115
U.S. Government Income Fund......... $10 $31 $54 $119
Michigan Triple Tax-Free Bond Fund $ 5 $16 $29 $ 64
Tax-Free Bond Fund.................. $10 $31 $54 $120
Tax-Free Intermediate Bond Fund..... $10 $31 $53 $118
Tax-Free Money Market Fund.......... $ 7 $22 $38 $ 85
U.S. Treasury Money Market Fund..... $ 7 $22 $38 $ 86
Cash Investment Fund................ $ 7 $22 $38 $ 85
</TABLE>
The foregoing Expense Table and Example are intended to assist investors in
understanding the various shareholder transaction expenses and operating
expenses of the Funds that investors bear either directly or indirectly. As
stated below under "Management," the Advisor has agreed to an advisory fee
computed separately on a Fund-by-Fund basis at an annual rate of 1.00% of the
first $500 million of average daily net assets and .75% of net assets in excess
of $500 million of the Multi-Season Growth Fund; 1.00% of average daily net
assets of Micro-Cap Equity Fund; .75% of average daily net assets of each of the
Accelerating Growth Fund, Small Company Growth Fund, International Equity Fund,
Growth & Income Fund, Small-Cap Value Fund and Equity Selection Fund; .74% of
the average daily net assets of each of the Real Estate Equity Investment Fund,
Mid-Cap Growth Fund and Value Fund; .65% of average daily net assets of the
Balanced Fund; .50% of average daily net assets of each of the Bond Fund,
Intermediate Bond Fund, U.S. Government Income Fund, Michigan Triple Tax-Free
Bond Fund, Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund and International
Bond Fund; .35% of average daily net assets of each of the Cash Investment Fund,
U.S. Treasury Money Market Fund and Tax-Free
4
<PAGE>
Money Market Fund; and .20% of the first $250 million of average daily net
assets, .12% of the next $250 million of net assets and .07% of net assets in
excess of $500 million of the Index 500 Fund. However, the Advisor expects to
waive a portion of its fees with respect to the Multi-Season Growth Fund and
Index 500 Fund during the current fiscal year. Without waivers, an investor in
Class K Shares of the Funds would pay the following expenses on a $1,000
investment, assuming redemption after one, three, five and ten years,
respectively, and assuming a hypothetical 5% annual return: $15, $48, $82 and
$180 for the Multi-Season Growth Fund; and $7, $22, $38 and $86 for the Index
500 Fund.
Without waivers, the total fund operating expenses an investor would pay for
Class K Shares would be 1.51% for the Multi-Season Growth Fund and .64% for the
Index 500 Fund.
The forgoing Expense Table and Example are intended to assist investors in
understanding the various shareholder transaction expenses and operating
expenses of the Funds that investors bear either directly or indirectly.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR
FUTURE INVESTMENT RETURN OR OPERATING EXPENSES. ACTUAL
INVESTMENT RETURN AND
OPERATING EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN. THE
HYPOTHETICAL
EXPENSES IN THE EXAMPLE REFLECT FEE WAIVERS AT THE ANTICIPATED
RATES.
5
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the Funds' Financial
Statements audited by Ernst & Young LLP, independent auditors. On November 20,
1992, the initial public sale of Class K Shares of the Munder Funds occurred;
however no shareholder servicing fees for services under the "Class K Plan" (as
defined below) were paid by the Funds for the periods through December 31, 1993.
Class K Shares of the Real Estate Equity Investment Fund, International Bond
Fund, Small-Cap Value Fund, Equity Selection Fund and Micro-Cap Equity Fund were
not offered during the periods shown and, accordingly, no financial information
is provided with respect to such shares. The following data should be read in
conjunction with the financial statements, related notes, and other financial
information incorporated by reference in the Statement of Additional
Information. Further information about the Funds, including financial
information with respect to the Funds' other classes of shares is contained in
the Funds' Annual Reports to Shareholders dated June 30, 1996, which may be
obtained without charge by calling (800) 438-5789. All financial highlights
pertain only to Class K Shares of the Funds.
<TABLE>
<CAPTION>
Multi-Season Growth Fund
Class K Shares
----------------------------
<S> <C> <C>
Year Ended Period Ended
6/30/96 6/30/95(a)(b)(c)
---------- ------------
Net Asset Value, Beginning of Period $ 12.20
---------
Income from Investment Operations:
Net investment income 0.00(d)
Net realized and unrealized loss on (0.18)
investments ---------
Total from investment operations (0.18)
---------
Less Distributions:
Dividends from net investment income --
---------
Total distributions --
---------
Net Asset Value, End of Period $ 12.02
=========
Total Return(e) (1.48)%
=========
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in $ 104,767.
thousands)
Ratio of operating expenses to 1.20%(f)
average net assets
Portfolio turnover rate 27%
Ratio of net investment income to 0.28%(f)
average net assets
Ratio of operating expenses to 1.58%(f)
average net assets without waivers
Net investment income per share $ 0.00(d)
without waivers
Average commission rate (h)
</TABLE>
- -----------------------------
(a) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
(b) Class K Shares commenced operations on June 23, 1995.
(c) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory business of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(d) Amount represents less than $0.01 per share.
(e) Total return represent aggregate total return for the period indicated.
(f) Annualized.
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
6
<PAGE>
<TABLE>
<CAPTION>
Accelerating Growth Fund(a) - Class K
Shares
-----------------------------------------------------
- ----
Year Period Year Year
Year
Ended Ended Ended Ended
Ended
6/30/96 6/30/95(b) 2/28/95(e) 2/28/94
2/28/93(g)
------- -------- -------- -------- -------
<S> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Period............................... $ 12.73 $ 13.98 $
12.08 $ 11.74
------- ------- -------- -------
Income from Investment Operations:
Net investment income (loss)...................................... (0.01) (0.03)
(0.00)(f) 0.01
Net realized and unrealized gain
(loss) on investments............................................ 2.10 (0.88) 2.17
0.62
Total from investment operations ................................ 2.09 (0.91)
2.17 0.63
------- ------- -------- -------
Less Distributions:
Dividends from net investment income.............................. -- --
(0.02) (0.01)
Distributions from net realized gains............................. -- (0.34) (0.25)
(0.28)
------- ------- -------- -------
Total distributions............................................... -- (0.34) (0.27)
(0.29)
------- ------- -------- -------
Net Asset Value, End of Period..................................... $ 14.82 $ 12.73 $
13.98 $ 12.08
======= ======= ========
=======
Total Return(c)................................................... 16.42% (6.45)% 18.00%
5.43%
======= ======= ========
=======
Ratios to Average Net Assets/Supplemental Data:
Net assets, end of period (in thousands).......................... $85,685 $71,406 $
53,914 $ 3,141
Ratio of operating expenses to average net assets................. 1.20%(d) 1.18%
1.03% 0.96%(d)
Ratio of net investment income (loss) to average net assets....... (0.21)%(d)
(0.25)% (0.03)% 0.18%(d)
Portfolio turnover rate........................................... 31% 90% 34%
56%
Ratio of operating expenses to average net assets without waivers. 1.44%(d)
1.41% 1.28% 1.21%(d)
Net investment income (loss) per share without waivers............ $ (0.02) $
(0.05) $ 0.00(f) $ 0.00(f)
Average commission rate (h).......................................
</TABLE>
- -------------------
(a) Formerly, Ambassador Growth Fund.
(b) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Amount represents less than $0.01 per share.
(g) Class K Shares commenced operations on November 23, 1992.
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
7
<PAGE>
<TABLE>
<CAPTION>
Small Company Growth Fund(a) - Class K
Shares
-----------------------------------------------------
Year Period Year Year
Period
Ended Ended Ended Ended
Ended
6/30/96 6/30/95(b) 2/28/95(e) 2/28/94
2/28/93(f)
------- -------- -------- -------- -------
<S> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Period................................ $ 13.89 $ 14.37 $
12.72 $12.32
------- ------- --------- ------
Income from Investment Operations:
Net investment income............................................. (0.02) (0.04) (0.05)
(0.01)
Net realized and unrealized (loss) on investments................. 1.41 (0.42)
1.97 0.41
------- ------- ------- -------
Total from investment operations.................................. 1.39 (0.46)
1.92 0.40
------- ------- -------- ------
Less Distributions:
Dividends from net investment income.............................. -- -- --
- --
Distributions from net capital gains.............................. -- (0.02)
(0.27) --
------- ------- -------- ------
Total distributions............................................... -- (0.02) (0.27)
- --
------- ------- -------- ------
Net Asset Value, End of Period...................................... $ 15.28 $ 13.89 $
14.37 $12.72
======= ======= ========
======
Total Return(c).................................................... 10.01% (3.21)%
15.11% 3.25%
======= ======= ========
======
Ratios to Average Net Assets/Supplemental Data:
Net assets, end of period (in thousands).......................... $52,077 $45,080
$ 32,431 $4,298
Ratio of operating expenses to average net assets................. 1.21%(d)
1.23% 1.02% 0.95%(d)
Ratio of net investment (loss) to average net assets.............. (0.41)%(d)
(0.40)% (0.38)% (0.28)%(d)
Portfolio turnover rate........................................... 39% 45% 47%
46%
Ratio of operating expenses to average net assets without waivers 1.46%(d)
1.48% 1.27% 1.20%(d)
Net investment (loss) per share without waivers................... $ (0.03) $ (0.06)
$ (0.08) $(0.02)
Average commission rate (g).......................................
</TABLE>
- --------------------
(a) Formerly, Ambassador Small Company Growth Fund.
(b) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Class K Shares commenced operations on November 23, 1992.
(g) Average commission rate paid per share of securities purchased or sold by
the Fund.
8
<PAGE>
<TABLE>
<CAPTION>
Munder Mid-Cap Growth Fund
Class K Shares
--------------------------
<S> <C>
Period
Ended
6/30/96
Net Asset Value, Beginning of Period...................................
Income from Investment Operations:
Net investment income................................................
Net realized and unrealized gain on investments......................
Total from investment operations.....................................
Less Distributions:
Dividends from net investment income.................................
Total distributions..................................................
Net Asset Value, End of Period.........................................
Total Return(e)......................................................
Ratios to Average Net Assets/Supplemental Data:........................
Net assets, end of period (in thousands).............................
Ratio of operating expenses to average net assets....................
Ratio of net investment loss to average net assets...................
Portfolio turnover rate..............................................
Ratio of operating expenses to average net assets without waivers.....
Net investment loss per share without waivers........................
Average commission rate (e)..........................................
</TABLE>
- --------------------
(a) The Munder Mid-Cap Growth Fund Class K Shares commenced operations on
October 2, 1995.
(b) Annualized.
(c) Total return represents aggregate total return for the period indicated.
(d) Amount represents less than $0.01 per share.
(e) Average commission rate per share of securities purchased or sold by the
Fund.
9
<PAGE>
<TABLE>
<CAPTION>
International Equity Fund(a) - Class K
Shares
--------------------------------------------------
- ----------
Year Period Year Year
Year
Ended Ended Ended Ended
Ended
6/30/96 6/30/95(b) 2/28/95(e)(f)
2/28/94 2/28/93(g)
------- -------- --------- -------- -----
- --
<S> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Period................................ $ 12.28 $ 13.68
$ 10.64 $10.46
------- ------- -------- ------
Income from Investment Operations:
Net investment income.............................................. 0.11 0.17
0.19 0.01
Net realized and unrealized gain................................... 1.03 (1.48)
2.85 0.30
(loss) on investments............................................. ------- ------- --------
- ------
Total from investment operations................................... 1.14 (1.31)
3.04 0.31
------- ------- -------- ------
Less Distributions:
Dividends from net investment income............................... -- (0.03)
- -- (0.11)
Distributions from net realized gains.............................. -- -- --
(0.02)
Distributions from capital......................................... -- (0.06) --
- --
------- ------- -------- ------
Total distributions................................................ -- (0.09) 0.00
(0.13)
------- ------- -------- ------
Net Asset Value, End of Period...................................... $ 13.42 $ 12.28
$ 13.68 $10.64
======= =======
======== ======
Total Return(c).................................................... 9.28% (9.68)%
28.57% 2.96%
======= =======
======== ======
Ratios to Average Net Assets/Supplemental Data:
Net assets, end of period (in thousands)........................... $73,168 $63,159
$37,536 $3,939
Ratio of operating expenses to average net assets.................. 1.21%(d)
1.18% 1.11% 1.03%(d)
Ratio of net investment income to average net
assets without waivers............................................ 2.57%(d) 1.31%
1.18% 0.39%(d)
Portfolio turnover rate............................................ 14% 20%
15% 1%
Ratio of operating expenses to average net assets
without waivers................................................... 1.46%(d) 1.43%
1.36% 1.28%(d)
Net investment income per share without waivers.................... $ 0.10 $
0.14 $ 0.15 $ 0.01
Average commission rate (h)........................................
</TABLE>
- --------------------------
(a) Formerly, Ambassador International Stock Fund.
(b) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Class K Shares commenced operations on November 23, 1992.
(h) Average commission rate per share of securities purchased or sold by the
Fund.
10
<PAGE>
<TABLE>
<CAPTION>
Index 500 Fund(a) - Class K Shares
---------------------------------------------------------
- -
Year Period Year Year Year
Ended Ended Ended Ended
Ended
6/30/96 6/30/95(b) 2/28/95(e)(f) 2/28/94
2/28/93(g)
------- ------- --------- -------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..................... $12.40 $12.06
$11.47 $11.60
------ ------ ------ ------
Income from Investment Operations:
Net investment income................................... 0.10 0.30 0.30
0.06
Net realized and unrealized gain on investments......... 1.44 0.50
0.59 0.21
------ ------ ------ ------
Total from investment operations........................ 1.54 0.80 0.89
0.27
------ ------ ------ ------
Less Distributions:
Dividends from net investment income.................... (0.14) (0.29)
(0.30) (0.07)
Distributions from net capital gains.................... -- (0.17) --
(0.33)
------ ------ ------ ------
Total Distributions..................................... (0.14) (0.46) (0.30)
(0.40)
------ ------ ------ ------
Net Asset Value, End of Period............................ $13.80 $12.40
$12.06 $11.47
====== ====== ======
======
Total Return(c)......................................... 12.49% 6.90% 7.89%
2.43%
====== ====== ======
======
Ratios to Average Net Assets/Supplemental Data:
Net assets, end of period (in thousands)................ $2,778 $1,746 $
922 $ 96
Ratio of operating expenses to
average net assets..................................... 0.50%(d) 0.50% 0.33%
0.25%(d)
Ratio of net investment income to
average net assets..................................... 2.41%(d) 2.49% 2.51%
2.74%(d)
Portfolio turnover rate................................. 6% 7% 2.51%
22%
Ratio of operating expenses to
average net assets without waivers..................... 0.63%(d) 0.64%
0.50% 0.38%(d)
Net investment income per share
without waivers........................................ $ 0.09 $ 0.28 $ 0.28 $
0.06
Average commission rate (h).............................
</TABLE>
- ----------------------------
(a) Formerly, Ambassador Indexed Stock Fund.
(b) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Class K Shares commenced operations on December 7, 1992.
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
11
<PAGE>
<TABLE>
<CAPTION>
Growth & Income Fund(a) - Class K Shares
----------------------------------------------
<S> <C> <C> <C>
Year Period Period
Ended Ended Ended
6/30/96 6/30/95(b) 2/29/95(e)(f)
------------ ------------ ------------
Net Asset Value, Beginning of Period... $ 10.43 $ 10.00
-------- --------
Income from Investment Operations:
Net investment income.................. 0.11 0.22
Net realized and unrealized gain on 0.78 0.36
investments........................... -------- -------
Total from investment operations....... 0.89 0.58
-------- --------
Less Distributions:
Dividends from net investment income... (0.18) (0.15)
Distributions from net realized gains.. -- (0.00)(g)
-------- --------
Total distributions.................... (0.18) (0.15)
-------- --------
Net Asset Value, End of Period......... $ 11.14 $ 10.43
======== ========
Total Return(c)........................ 8.57% 5.94%
======== ========
Ratios to Average
Assets/Supplemental Data:
Net assets, end of period (in
thousands)............................ $132,583 $105,629
Ratio of operating expenses to average
net assets............................ 1.09%(d) 0.53%(d)
Ratio of net investment income to
average net assets.................... 3.33%(d) 4.72%(d)
Portfolio turnover rate................ 13% 12%
Ratio of operating expenses to average
net assets without waivers............ 1.51%(d) 1.53%(d)
Net investment income per share
without waivers....................... $ 0.10 $ 0.17
Average commission rate (h)............
</TABLE>
- ----------------------------------
(a) Formerly, Ambassador Growth & Income Fund.
(b) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) Class K Shares commenced operations on July 5, 1994.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Amount represents less than $0.01 per share.
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
12
<PAGE>
<TABLE>
<CAPTION>
Munder Value Fund
Class K Shares
-----------------
<S> <C>
Period
Ended
6/30/96
Net Asset Value, Beginning of Period..... -------
Income from Investment Operations:
Net investment income..................
Net realized and unrealized loss on
investments...........................
Total from investment operations.......
Less Distributions:
Dividends from net investment income...
Total distributions....................
Net Asset Value, End of Period...........
Total Return(e)........................
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands)............................
Ratio of operating expenses to average
net assets............................
Ratio of net investment income to
average net assets....................
Portfolio turnover rate................
Ratio of operating expenses to average
net assets without waivers............
Net investment income per share
without waivers.......................
Average commission rate (g)............
</TABLE>
- -----------------------------
(a) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
(b) Class K Shares commenced operations on June 23, 1995.
(c) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(d) Amount represents less than $0.01 per share.
(e) Total return represents aggregate total return for the period indicated.
(f) Annualized.
(g) Average commission rate paid per share of securities purchased or sold by
the Fund.
13
<PAGE>
<TABLE>
<CAPTION>
Balanced Fund(a) - Class K Shares
--------------------------------------------
Year Period Year Period
Ended Ended Ended Ended
6/30/96 6/30/95(b) 2/28/95(e) 2/28/94(f)
------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.... $ 9.97 $ 10.35 $ 9.97
------ ------- ------
Income from Investment Operations:
Net investment income................. 0.07 0.21 0.16
Net realized and unrealized gain
(loss) on investments................ 0.86 (0.42) 0.34
------ ------- ------
Total from investment operations...... 0.93 (0.21) 0.50
------ ------- ------
Less Distributions:
Dividends from net investment income.. (0.12) (0.17) (0.12)
------ ------- ------
Total distributions................... (0.12) (0.17) (0.12)
------ ------- ------
Net Asset Value, End of Period........ $10.78 $ 9.97 $10.35
====== ======= ======
Total Return(c)....................... 9.33% (1.95)% 5.03%
====== ======= ======
Ratios to Average Net Assets/Supplemental
Data:
Net assets, end of period
(in thousands)....................... $ 168 $ 151 $ 102
Ratio of operating expenses to average
net assets........................... 1.16%(d) 1.22% 1.00%(d)
Ratio of net investment income to
average net assets................... 2.51%(d) 1.89% 1.68%(d)
Portfolio turnover rate............... 52% 116% 50%
Ratio of operating expenses to average
net assets without waivers........... 1.51%(d) 1.57% 1.25%(d)
Net investment income per share
without waivers...................... $ 0.06 $ 0.17 $ 0.14
Average commission rate(g)............
</TABLE>
- ------------------------
(a) Formerly, Ambassador Balanced Fund.
(b) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Class K Shares commenced operations on April 16, 1993.
(g) Average commission rate paid per share of securities purchased or sold by
the Fund.
14
<PAGE>
<TABLE>
<CAPTION>
Bond Fund(a) - Class K Shares
----------------------------------------------------------
Year Period Year Year Year
Ended Ended Ended Ended Ended
6/30/96 6/30/95(b) 2/28/95(e)(f) 2/28/94 2/28/93(g)
------- ---------- ------------- ------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period... $ 9.31 $ 9.91 $ 9.92 $ 9.66
------- ------- -------- ------
Income from Investment Operations:
Net investment income.................. 0.21 0.62 0.56 0.12
Net realized and unrealized gain
(loss) on investments................. 0.37 (0.64) (0.01) 0.38
------- ------- -------- ------
Total from investment operations....... 0.58 (0.02) 0.55 0.50
------- ------- -------- ------
Less Distributions:
Dividends from net investment income... (0.20) (0.58) (0.56) (0.15)
Distributions from net realized gains.. -- -- -- (0.09)
------- ------- -------- ------
Total distributions.................... (0.20) 0.58) (0.56) (0.24)
------- ------- -------- ------
Net Asset Value, End of Period......... $ 9.69 $ 9.31 $ 9.91 $ 9.92
======= ======= ======== ======
Total Return(c)........................ 6.28% 0.44% 5.61% 5.24%
======= ======= ======== ======
Ratios to Average Net Assets/Supplemental Data:
Net assets, end of period (in
thousands)............................ $36,718 $33,842 $ 26,458 $3,671
Ratio of operating expenses to average
net assets............................ 0.95%(d) 0.92% 0.88% 0.80%(d)
Ratio of net investment income to
average net assets.................... 6.47%(d) 6.57% 5.76% 5.32%(d)
Portfolio turnover rate................ 99% 165% 128% 77%
Ratio of operating expenses to average
net assets without waivers............ 1.19%(d) 1.16% 1.02%
0.94%(d)
Net investment income per share
without waivers....................... $ 0.20 $ 0.59 $ 0.55 $ 0.11
Average commission rate(h).............
</TABLE>
- ------------------------
(a) Formerly, Ambassador Bond Fund.
(b) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Class K Shares commenced operations on November 23, 1992.
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
15
<PAGE>
<TABLE>
<CAPTION>
Intermediate Bond Fund(a) - Class K Shares
----------------------------------------------------------
Year Period Year Year Year
Ended Ended Ended Ended Ended
6/30/96 6/30/95(b) 2/28/95(e) 2/28/94 2/28/93(f)
------- --------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period... $ 9.27 $ 9.91 $ 10.47 $ 10.26
-------- -------- -------- --------
Income from Investment Operations:
Net investment income.................. 0.22 0.56 0.59 0.17
Net realized and unrealized gain
(loss) on investments................. 0.24 (0.57) (0.20) 0.25
-------- -------- -------- --------
Total from investment operations....... 0.46 (0.01) 0.39 0.42
-------- -------- -------- --------
Less Distributions:
Dividends from net investment income... (0.22) (0.62) (0.58) (0.12)
Distributions from net realized gains.. -- (0.01) (0.37) (0.09)
-------- -------- -------- --------
Total distributions.................... (0.22) (0.63) (0.95) (0.21)
-------- -------- -------- --------
Net Asset Value, End of Period......... $ 9.51 $ 9.27 $ 9.91 $ 10.47
======== ======== ======== ========
Total Return(c)........................ 5.04% 0.54% 3.77% 4.15%
======== ======== ======== ========
Ratios to Average Net Assets/Supplemental
Data:
Net assets, end of period (in
thousands)............................ $300,596 $285,493 $112,332 $132,273
Ratio of operating expenses to average
net assets............................ 0.95%(d) 0.93% 0.84% 0.79%(d)
Ratio of net investment income to
average net assets.................... 7.12%(d) 6.71% 5.55% 5.56%(d)
Portfolio turnover rate................ 84% 80% 155% 104%
Ratio of operating expenses to average
net assets without waivers............ 1.19%(d) 1.18% 0.98%
0.93%(d)
Net investment income per share
without waivers....................... $ 0.22 $ 0.54 $ 0.58 $ 0.16
Average commission rate(g).............
</TABLE>
- ------------------------
(a) Formerly, Ambassador Intermediate Bond Fund.
(b) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Class K Shares commenced operations on November 20, 1992.
(g) Average commission rate paid per share of securities purchased or sold by
the Fund.
16
<PAGE>
<TABLE>
<CAPTION>
U.S. Government Income Fund(a)
--------------------------------
Class K Shares
------------------------
Year Period Period
Ended Ended Ended
6/30/96 6/30/95(b) 2/28/95(e)(f)
-------- --------- ---------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 9.89 $ 10.00
-------- --------
Income from Investment Operations:
Net investment income.................. 0.23 0.47
Net realized and unrealized gain
(loss) on investments................. 0.41 (0.12)
-------- --------
Total from investment operations....... 0.64 0.35
-------- --------
Less Distributions:
Dividends from net investment income... (0.23) (0.46)
-------- --------
Total distributions.................... (0.23) (0.46)
-------- --------
Net Asset Value, End of Period........... $ 10.30 $ 9.89
======== ========
Total Return(c)........................ 6.55% 3.68%
======== ========
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands)............................ $174,674 $165,298
Ratio of operating expenses to average
net assets............................ 0.97%(d) 0.95%(d)
Ratio of net investment income to
average net assets.................... 6.96%(d) 7.02%(d)
Portfolio turnover rate................ 42% 143%
Ratio of operating expenses to average
net assets without waivers............ 1.21%(d) 1.19%(d)
Net investment income per share
without waivers....................... $ 0.23 $ 0.45
Average commission rate (i)............
</TABLE>
- ----------------------
(a) Formerly, Ambassador Income Bond Fund.
(b) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(c) Total return represents aggregate total return for the period
indicated.
(d) Annualized.
(e) Class K Shares commenced operations on July 5, 1994.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Formerly, Ambassador Tax-Free Bond Fund.
(h) Per share amounts have been calculated using the monthly average share
method which more appropriately presents the per share data for the period
since the use of the undistributed net investment income method did accord
with results of operations.
(i) Average commission rate paid per share of securities purchased or sold by
the Fund.
17
<PAGE>
<TABLE>
<CAPTION>
Michigan Triple Tax-Free Bond Fund(a) - Class K
Shares
--------------------------------------------------------------
Year Period Year Period
Ended Ended Ended Ended
6/30/96 6/30/95(b)(c) 2/28/95(c)(f)
2/28/94(g)
----------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 9.24 $ 9.73
$ 10.00
------- ------- -------
Income from Investment Operations:
Net investment income.................. 0.16 0.44
0.05
Net realized and unrealized gain
(loss) on investments................. 0.10 (0.50)
(0.30)
------- ------- -------
Total from investment operations....... 0.26 (0.06)
(0.25)
------- ------- -------
Less Distributions:
Dividends from net investment income... (0.16) (0.43)
(0.02)
------- ------- -------
Total distributions.................... (0.16) (0.43) (0.02)
------- ------- -------
Net Asset Value, End of Period........... $ 9.34 $ 9.24 $
9.73
------- ------- -------
Total Return(d)......................... 2.84% (0.16)%
(2.48)%
======= =======
=======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands)............................. $ 25,549 $ 27,731 $
13,464
Ratio of operating expenses to average
net assets............................. 0.52%(e) 0.56%
0.46%(e)
Ratio of net investment income to
average net assets..................... 5.06%(e) 4.81%
3.48%(e)
Portfolio turnover rate................. 8% 53%
0%
Ratio of operating expenses to average
net assets without waivers............. 1.26%(e) 1.30%
1.20%(e)
Net investment income per share
without waivers........................ $ 0.14 $ 0.37 $
0.04
Average commission rate (h).............
</TABLE>
- -----------------------
(a) Formerly, Ambassador Michigan Tax-Free Bond Fund.
(b) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(c) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(d) Total return represents aggregate total return for the period
indicated.
(e) Annualized.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Class K Shares commenced operations on January 3, 1994.
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
18
<PAGE>
<TABLE>
<CAPTION>
Tax-Free Bond Fund(g)
-------------------------------------
Class K Shares
-------------------------------------
Year Period Period
Ended Ended Ended
6/30/96 6/30/95(b)(h) 2/28/95(e)(f)
------- --------- ---------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 10.14 $ 10.00
-------- --------
Income from Investment Operations:
Net investment income.................. 0.15 0.31
Net realized and unrealized gain
(loss) on investments................. 0.16 0.14
-------- --------
Total from investment operations....... 0.31 0.45
-------- --------
Less Distributions:
Dividends from net investment income... (0.15) (0.31)
-------- --------
Total distributions.................... (0.15) (0.31)
-------- --------
Net Asset Value, End of Period........... $ 10.30 $ 10.14
======== ========
Total Return(c)........................ 3.09% 4.64%
======== ========
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands)............................ $232,040 $251,636
Ratio of operating expenses to average
net assets............................. 1.02%(d) 0.93%(d)
Ratio of net investment income to
average net assets..................... 4.38%(d) 4.69%(d)
Portfolio turnover rate................. 12% 50%
Ratio of operating expenses to average
net assets without waivers............. 1.26%(d) 1.17%(d)
Net investment income per share
without waivers........................ $ 0.14 $ 0.29
Average commission rate (i).............
</TABLE>
- -------------------
(a) Formerly, Ambassador Income Bond Fund.
(b) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) Class K Shares commenced operations on July 5, 1994.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Formerly, Ambassador Tax-Free Bond Fund.
(h) Per share amounts have been calculated using the monthly average share
method which more appropriately presents the per share data for the period
since the use of the undistributed net investment income method did accord
with results of operations.
(i) Average commission rate paid per share of securities purchased or sold by
the Fund.
19
<PAGE>
<TABLE>
<CAPTION>
Tax-Free Intermediate Bond Fund(a) - Class K
Shares
------- -----------------------------------------------------------
- --------
Year Period Year Year Period
Year
Ended Ended Ended Ended Ended
Ended
6/30/96 6/30/95(b) 2/28/95(e) 2/28/94 2/28/93
7/31/92(f)
------- --------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Period....... $ 10.17 $ 10.44 $ 10.69 $
10.47 $ 10.04
Income from Investment Operations:
Net investment income.................... 0.14 0.38 0.42 0.23
0.49
Net realized and unrealized gain
(loss) on investments................... 0.20 (0.21) (0.14) 0.24
0.51
Total from investment operations......... 0.34 0.17 0.28 0.47
1.00
Less Distributions:
Dividends from net investment income..... (0.14) (0.42) (0.42)
(0.23) (0.49)
Distributions from net realized gains.... -- (0.02) (0.11) (0.02)
(0.08)
Total distributions...................... (0.14) (0.44) (0.53) (0.25)
(0.57)
Net Asset Value, End of Period............. $ 10.37 $ 10.17 $ 10.44 $
10.69 $ 10.47
Total Return(c).......................... 3.35% 2.05% 2.62% 5.30%
10.31%
Ratios to Average Net Assets/Supplemental
Data:
Net assets, end of period (in thousands). $333,067 $345,658 $107,335
$113,189 110,825
Ratio of operating expenses to average
net assets.............................. 0.98%(d) 0.95% 0.84%
0.71%(d) 0.69%
Ratio of net investment income to
average net assets...................... 4.01%(d) 4.19% 3.93%
4.36%(d) 4.83%
Portfolio turnover rate.................. 5% 52% 38% 57%
200%
Ratio of operating expenses to average
net assets without waivers.............. 1.22%(d) 1.19% 0.98%
0.77%(d) 0.99%
Net investment income per share.......... $ 0.13 $ 0.36 $ 0.41 $
0.22 $ 0.46
without waivers.........................
Average commission rate (h)..............
</TABLE>
<TABLE>
<CAPTION>
- -------------------------
-----------------------
Year Year
Ended Ended
7/31/91(f) 7/31/90(f)
-------- ----------
<S> <C> <C>
Net Asset Value, Beginning of Period....... $ 9.91 $ 9.93
Income from Investment Operations:
Net investment income.................... 0.55 0.60
Net realized and unrealized gain
(loss) on investments................... 0.26 (0.02)
Total from investment operations......... 0.81 0.58
Less Distributions:
Dividends from net investment income..... (0.55) (0.60)
Distributions from net realized gains.... (0.13) --
Total distributions...................... (0.68) (0.60)
Net Asset Value, End of Period............. $ 10.04 $ 9.91
Total Return(c).......................... 8.15% 6.02%
Ratios to Average Net Assets/Supplemental
Data:
Net assets, end of period (in thousands). 50,740 12,282
Ratio of operating expenses to average
net assets.............................. 0.61% 0.25%
Ratio of net investment income to
average net assets...................... 5.54% 6.13%
Portfolio turnover rate.................. 327% 119%
Ratio of operating expenses to average
net assets without waivers.............. 1.05% 1.05%
Net investment income per share.......... $ 0.51 $ 0.52
without waivers.........................
Average commission rate (h)..............
</TABLE>
- ------------------------
(a) Formerly, Ambassador Tax-Free Intermediate Bond Fund.
(b) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) This information represents results of operations of the St. Clair Tax-Free
Intermediate Fund, the predecessor fund of the Ambassador Tax-Free
Intermediate Bond Fund. The assets and liabilities of the St. Clair Tax-Free
Intermediate Fund, which was organized under the Maryland General
Corporation Law and commenced operations on February 9, 1987, were
transferred to Ambassador Funds on November 20, 1992. On June 22, 1992,
Woodbridge Capital Management replaced Manufacturers Bank, N.A. as
investment advisor for the Fund.
(g) Class K Shares commenced operations on February 9, 1987.
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
20
<PAGE>
<TABLE>
<CAPTION>
Tax-Free Intermediate Bond Fund
-----------------------------------------
Class K Shares (continued)
-----------------------------------------
Year Year
Ended Ended Year Ended
7/31/89(f) 7/31/88(f) 7/31/87(f)(g)
----------- ----------- -------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period....... $ 9.91 $ 9.99 $ 10.00
------ ------ ------
Income from Investment Operations:
Net investment income.................... 0.52 0.51 0.25
Net realized and unrealized gain 0.02 (0.08) (0.01)
(loss) on investments................... ------ ------ ------
Total from investment operations......... 0.54 0.43 0.24
------ ------ ------
Less Distributions:
Dividends from net investment income..... (0.52) (0.51) (0.25)
------ ------ ------
Distributions from net realized gains.... -- -- --
------ ------ ------
Total distributions...................... (0.52) (0.51) (0.25)
------ ------ ------
Net Asset Value, End of Period............. $ 9.93 $ 9.91 $ 9.99
====== ====== ======
Total Return(c).......................... 5.55% 4.43% 1.89%
====== ====== ======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands).............................. $ 1,350 $ 1,219 $ 1,888
Ratio of operating expenses to average 0.54% 0.60% 0.26%(d)
net assets..............................
Ratio of net investment income to 5.22% 5.17% 5.35%(d)
average net assets......................
Portfolio turnover rate.................. 37% 28% 105%
Ratio of operating expenses to average 3.58% 3.09% 1.06%(d)
net assets without waivers.............
Net investment income per share $ 0.22 $ 0.26 $ 0.21
without waivers........................
Average commission rate (h)..............
</TABLE>
- ---------------------------------
(a) Formerly, Ambassador Tax-Free Intermediate Bond Fund.
(b) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) This information represents results of operations of the St. Clair Tax-Free
Intermediate Fund, the predecessor fund of the Ambassador Tax-Free
Intermediate Bond Fund. The assets and liabilities of the St. Clair Tax-Free
Intermediate Fund, which was organized under the Maryland General
Corporation Law and commenced operations on February 9, 1987, were
transferred to Ambassador Funds on November 20, 1992. On June 22, 1992,
Woodbridge Capital Management replaced Manufacturers Bank, N.A. as
investment advisor for the Fund.
(g) Class K Shares commenced operations on February 9, 1987.
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
21
<PAGE>
<TABLE>
<CAPTION>
Tax-Free Money Market Fund(a) - Class K Shares
---------------------------------------------------------
Year Period Year Year Year
Ended Ended Ended Ended Ended
6/30/96 6/30/95(b) 2/28/95(e) 2/28/94 2/28/93(f)
------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period... $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------
Income from Investment Operations:
Net investment income................ 0.011 0.024 0.020 0.006
-------- -------- -------- --------
Total from investment operations..... 0.011 0.024 0.020 0.006
-------- -------- -------- --------
Less Distributions:
Dividends from net investment income. (0.011) (0.024) (0.020)
(0.006)
-------- -------- -------- --------
Total distributions.................. (0.011) (0.024) (0.020) (0.006)
-------- -------- -------- --------
Net Asset Value, End of Period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
Total Return(c)...................... 1.12% 2.44% 1.99% 0.61%
======== ======== ======== ========
Ratios to Average Net Assets/Supplemental
Data:
Net assets, end of period (in
thousands).......................... $195,730 $195,926 $211,832 $105,609
Ratio of operating expenses to
average net assets.................. 0.69%(d) 0.70% 0.57% 0.55%(d)
Ratio of net investment income to
average net assets.................. 3.36%(d) 2.39% 1.96% 2.24%(d)
Ratio of operating expenses to
average net assets without waivers.. 0.74%(d) 0.75% 0.62%
0.60%(d)
Net investment income per share
without waivers..................... $ 0.011 $ 0.024 $ 0.019 $ 0.003
Average commission rate(g)...........
</TABLE>
- ------------------------
(a) Formerly, Ambassador Tax-Free Money Market Fund.
(b) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Class K Shares commenced operations on November 23, 1992.
(g) Average commission rate paid per share of securities purchased or sold by
the Fund.
22
<PAGE>
<TABLE>
<CAPTION>
U.S. Treasury Money Market Fund(a) - Class K Shares
------------------------------------------------------------
Year Period Year Year Year
Ended Ended Ended Ended Ended
6/30/96 6/30/95(b) 2/28/95(e) 2/28/94 2/28/93(f)
-------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period... $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- -------- -------
Income from Investment Operations:
Net investment income................ 0.017 0.037 0.025 0.007
------- ------- -------- -------
Total from investment operations..... 0.017 0.037 0.025 0.007
------- ------- -------- -------
Less Distributions:
Dividends from net investment income. (0.017) (0.037) (0.025)
(0.007)
------- ------- -------- -------
Total distributions.................. (0.017) (0.037) (0.025) (0.007)
------- ------- -------- -------
Net Asset Value, End of Period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======== =======
Total Return(c)...................... 1.76% 3.83% 2.57% 0.74%
======= ======= ======== =======
Ratios to Average Net Assets/Supplemental
Data:
Net assets, end of period (in
thousands).......................... $74,210 $75,197 $ 72,433 $12,248
Ratio of operating expenses to
average net assets.................. 0.70%(d) 0.70% 0.57% 0.53%(d)
Ratio of net investment income to
average net assets.................. 5.23%(d) 3.73% 2.56% 2.60%(d)
Ratio of operating expenses to
average net assets without waivers.. 0.75%(d) 0.75% 0.62%
0.58%(d)
Net investment income per share
without waivers..................... $ 0.017 $ 0.037 $ 0.025 $ 0.007
Average commission rate(g)...........
</TABLE>
- ------------------------
(a) Formerly, Ambassador U.S. Treasury Fund.
(b) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Class K Shares commenced operations on November 25, 1992.
(g) Average commission rate paid per share of securities purchased or sold by
the Fund.
23
<PAGE>
<TABLE>
<CAPTION>
Cash Investment Fund(a) - Class K Shares
----------------------------------------------------------
Year Period Year Year Year
Ended Ended Ended Ended Ended
6/30/96 6/30/95(b) 2/28/95(e) 2/28/94 2/28/93(f)
------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period... $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------
Income from Investment Operations:
Net investment income................ 0.018 0.040 0.026 0.008
-------- -------- -------- --------
Total from investment operations..... 0.018 0.040 0.026 0.008
-------- -------- -------- --------
Less Distributions:
Dividends from net investment income. (0.018) (0.040) (0.026)
(0.008)
-------- -------- -------- --------
Total distributions.................. (0.018) (0.040) (0.026) (0.008)
-------- -------- -------- --------
Net Asset Value, End of Period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
Total Return(c)...................... 1.81% 4.08% 2.68% 0.74%
======== ======== ======== ========
Ratios to Average Net Assets/Supplemental
Data:
Net assets, end of period (in
thousands).......................... $558,628 $559,212 $293,827 $248,382
Ratio of operating expenses to
average net assets.................. 0.67%(d) 0.70% 0.56% 0.54%(d)
Ratio of net investment income to
average net assets.................. 5.49%(d) 4.12% 2.65% 2.85%(d)
Ratio of operating expenses to
average net assets without waivers.. 0.69%(d) 0.73% 0.61%
0.59%(d)
Net investment income per share
without waivers..................... $ 0.018 $ 0.040 $ 0.026 $ 0.008
Average commission rate(g)...........
</TABLE>
- ------------------------
(a) Formerly, Ambassador Money Market Fund.
(b) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Class K Shares commenced operations on November 23, 1992.
(g) Average commission rate paid per share of securities purchased or sold by
the Fund.
24
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
This Prospectus describes the following funds offered by the Company and
Munder: the Multi-Season Growth, Real Estate Equity Investment, Accelerating
Growth, Small Company Growth, Mid-Cap Growth, International Equity, Index 500,
Growth & Income, Value, Small-Cap Value, Equity Selection and Micro-Cap Equity
Funds (collectively, the "Equity Funds"); the Bond, Intermediate Bond and U.S.
Government Income Funds (collectively, the "Bond Funds"); the Michigan Triple
Tax-Free Bond, Tax-Free Bond and Tax-Free Intermediate Bond Funds (collectively,
the "Tax-Free Bond Funds"), Tax-Free Money Market Fund, U.S. Treasury Money
Market Fund and Cash Investment Fund (collectively, the "Money Market Funds");
the International Bond Fund and the Balanced Fund. Purchasing shares of any fund
should not be considered a complete investment program, but an important segment
of a well-diversified investment program.
MULTI-SEASON GROWTH FUND
The investment objective of the Multi-Season Growth Fund is to provide
shareholders with long-term capital appreciation. The Fund seeks to achieve this
objective by investing primarily in a diversified portfolio of equity securities
of companies that have demonstrated superior long-term earnings growth,
financial stability, attractive valuation and relative price momentum. Income is
not a primary consideration in the selection of investments. This style which
incorporates both growth investing and value constraints has been nationally
recognized as GARP (Growth at a Reasonable Price) and seeks to produce
attractive returns during various market environments.
The Advisor believes that superior investment returns are derived from
securities of financially stable companies that reward shareholders with
superior earnings growth, are attractively priced and enjoy relative price
momentum. Specifically, the Advisor will examine the earnings growth
characteristics of approximately 5,500 companies for each of the last five years
to determine earnings strength, consistency and momentum. Companies which have
demonstrated superior earnings growth will be further reviewed for financial
stability. Corporate balance sheets will be scrutinized to select those
companies which reinvest a significant portion of profits, demonstrate a high
return on equity and carry a relatively low debt load. Companies that meet these
earnings growth and financial stability criteria are further judged for their
value relative to these criteria and the market. Historically, the median
valuation of the portfolios managed by the Advisor has been no more than a
moderate premium to that of the Standard & Poor's 500 Index (the "S&P 500"), a
broad-based and widely used unmanaged index of common stocks. Once determined to
be attractive values, those securities exhibiting the strongest relative price
momentum to the S&P 500 normally will be chosen by the Advisor for the Fund.
Within these parameters, the Advisor typically will establish equity positions
in approximately 50 to 100 companies. Equity securities generally will be sold
from the Fund's portfolio when they consistently fail to achieve any two or more
of the four criteria stated above.
The Fund invests substantially all, and at least 65%, of its assets in equity
securities. Equity securities include common and preferred stocks and securities
convertible into or exchangeable for common stocks, such as convertible
preferred stocks, convertible debentures or warrants. No more than 25% of the
assets of the Fund will be invested in one industry group. In addition, the Fund
will not own more than 10% of the outstanding voting securities of a single
issuer. The Fund may also invest up to 20% of the value of its total assets in
equity securities of foreign issuers, including companies domiciled in
developing countries.
The Fund may also invest in short-term money market instruments. Under normal
market conditions, short-term money market instruments could comprise up to 35%
of the Fund's total assets. The Fund could invest a higher percentage of its
assets in money market instruments for temporary defensive purposes.
The Fund's investment objective is a fundamental policy and may not be changed
without the authorization of the holders of a majority (as defined in the
Investment Company Act of 1940, as amended (the "1940 Act")) of the Fund's
outstanding shares.
25
<PAGE>
REAL ESTATE EQUITY INVESTMENT FUND
The Real Estate Equity Investment Fund's investment objectives are to provide
shareholders with capital appreciation and current income. It seeks to achieve
these objectives by investing primarily in securities of United States companies
which are principally engaged in the real estate industry or which own
significant real estate assets. It will not invest directly in real estate.
Under normal conditions, the Fund will invest at least 65% of its total assets
in equity securities of companies listed on U.S. securities exchanges or NASDAQ
which are principally engaged in the real estate industry. Equity securities
include common stock, preferred stock and securities convertible into common
stock. A company is "principally engaged" in the real estate industry if at
least 50% of its assets, gross income or net profits are attributable to
ownership, construction, management or sale of residential, commercial or
industrial real estate. Real estate industry companies may include among others:
equity real estate investment trusts, which pool investors' funds for investment
primarily in commercial real estate properties; mortgage real estate investment
trusts, which invest pooled funds in real estate related loans; brokers, home
builders or real estate developers; and companies with substantial real estate
holdings, such as paper and lumber producers and hotel and entertainment
companies. The Fund will invest in real estate investment trusts only if they
are traded on major U.S. exchanges or NASDAQ. The Fund will not invest more than
15% of its total assets in equity real estate investment trusts, excluding self-
managed and/or self-administered trusts. The specific risks of investing in real
estate industry companies are summarized under "Portfolio Instruments and
Practices and Associated Risk Factors--Industry Concentration."
The Fund may also invest up to 35% of its total assets in equity securities of
issuers whose products and services are related to the real estate industry,
such as manufacturers and distributors of building supplies and financial
institutions which issue or service mortgages. The Fund will invest more than
25% of its total assets in the real estate and real estate related industries.
In addition to these securities, the Fund may invest up to 35% of its total
assets in securities of companies outside the real estate and real estate
related industries believed by the Advisor to be undervalued and to have capital
appreciation potential. Moreover, consistent with its objective of current
income, the Fund may invest in nonconvertible debt securities of companies
outside the real estate and real estate related industries. The debt securities
purchased (except for those described below) will be of investment grade or
better quality (e.g., rated no lower than Baa by Moody's Investor Services, Inc.
("Moody's") or BBB by Standard & Poor's Ratings Service, a division of McGraw
Hill Companies ("S&P") or if not so rated, believed by the Advisor to be of
comparable quality). From time to time, the Fund may invest up to 5% of its
total assets in securities rated below investment grade and in unrated debt
securities of issuers which are secured by real estate assets where the Advisor
believes that the securities are trading at a discount and that the underlying
collateral is sufficient to ensure repayment of principal. In such situations,
it is conceivable that the Fund could, in the event of default, end up holding
the underlying real estate directly.
The Fund may also invest in short-term money market securities. Under normal
market conditions, short-term money market securities could comprise up to 35%
of the Fund's total assets. The Fund could invest a higher percentage of its
assets in money market securities for temporary defensive purposes.
The Fund's investment objective is fundamental and may not be changed without
the authorization of the holders of a majority of the Fund's outstanding shares.
Unless otherwise noted, all other investment policies of the Fund are non-
fundamental and may be changed by the Board of Directors without shareholder
approval.
ACCELERATING GROWTH FUND
The investment objective of the Accelerating Growth Fund is to provide long-
term capital appreciation, with income a secondary consideration. The Fund seeks
to achieve its objective by investing primarily in equity securities and
instruments convertible or exchangeable into equity securities. The Fund's
investment portfolio will consist primarily of the stocks of companies
determined by the Advisor to demonstrate accelerating earnings
26
<PAGE>
growth and which are expected to continue expanding earnings at an accelerated
pace, maintain a substantial competitive advantage, have a focused management
team and a stable balance sheet.
Under normal market conditions, at least 65% of the Fund's total assets will
be invested in equity securities. In addition to investing in equity securities,
the Fund is authorized to invest in high quality short-term fixed income
securities as cash reserves or for defensive purposes. See "Portfolio
Instruments and Practices and Associated Risk Factors" for a description of
investment practices of the Fund, including limited investments in warrants,
foreign securities and stock index futures and options.
SMALL COMPANY GROWTH FUND
The investment objective of the Small Company Growth Fund is to provide long-
term capital appreciation. The Fund pursues its objective by investing primarily
in equity securities such as common stocks and instruments convertible or
exchangeable into common stocks.
Securities held by the Fund will generally be issued by smaller companies.
Smaller companies will be considered those companies with market capitalizations
that are less than the capitalization of companies which predominate the major
market indices, such as the S&P 500. The market capitalization of the issuers of
securities purchased by the Fund will be between $50 million and $1 billion at
the time of purchase. In managing the Fund, the Advisor seeks smaller companies
with above-average growth prospects. Factors considered in selecting such
issuers include participation in a fast growing industry, a strategic niche
position in a specialized market, adequate capitalization and fundamental value.
The Fund has been designed to provide investors with potentially greater long-
term rewards than those provided by an investment in a fund that seeks capital
appreciation from equity securities of larger, more established companies. Since
small capitalization companies are generally not as well-known to investors and
have less of an investor following than larger companies, they may provide
opportunities for greater investment gains as a result of inefficiencies in the
marketplace.
Small capitalization companies typically are subject to a greater degree of
change in earnings and business prospects than larger, more established
companies. In addition, securities of small capitalization companies are traded
in lower volume than those issued by larger companies and may be more volatile.
As a result, the Fund may be subject to greater price volatility than a fund
consisting of larger capitalization stocks. By maintaining a broadly diversified
portfolio, the Advisor will attempt to reduce this volatility. The Fund may not
be appropriate for investors requiring stability of principal or income flow
from their investments.
Under normal market conditions, at least 65% of the Fund's total assets will
be invested in small company equity securities. In addition to investing in
equity securities, the Fund is also authorized to invest in high quality short-
term fixed income securities as cash reserves or for defensive purposes. See
"Portfolio Instruments and Practices and Associated Risk Factors" for a
description of investment practices of the Fund, including limited investments
in warrants, foreign securities and stock index futures and options.
MID-CAP GROWTH FUND
The investment objective of the Mid-Cap Growth Fund is to provide shareholders
with long-term capital appreciation. It seeks to achieve this objective by
investing primarily in a diversified portfolio of equity securities of companies
that have market capitalizations between $100 million and $5 billion and have
demonstrated superior earnings growth, financial stability, attractive valuation
and relative price momentum. Income is not a primary consideration in the
selection of investments. This style which incorporates both growth investing
and value constraints has been nationally recognized as GARP (Growth at a
Reasonable Price) and seeks to produce attractive returns during various market
environments.
27
<PAGE>
The Advisor believes that superior investment returns are derived from
securities of financially stable companies that reward shareholders with
superior earnings growth, are attractively priced and enjoy relative price
momentum. Specifically, the Advisor will examine the earnings growth
characteristics of approximately 10,000 companies for each of the last three
years to determine earnings strength, consistency and momentum. Companies which
have demonstrated superior earnings growth will be further reviewed for
financial stability. Corporate balance sheets will be scrutinized to select
those companies which reinvest a significant portion of profits, demonstrate a
high return on equity and carry a relatively low debt load. Companies that meet
these earnings growth and financial stability criteria are further judged for
their value relative to these criteria and the market. Once determined to be
attractive values, those securities exhibiting relative price momentum to the
Standard & Poor's Mid-Cap Index generally will be favored by the Investment
Advisor for the Fund. Within these parameters, the Investment Advisor typically
will establish equity positions in approximately 50 to 100 companies. Equity
securities generally will be sold from the Fund's portfolio when they
consistently fail to achieve any two or more of the four criteria stated above.
The Fund invests substantially all, and at least 65%, of its assets in equity
securities of companies with market capitalizations that range between $100
million and $5 billion. Equity securities include common and preferred stocks
and securities convertible into or exchangeable for common stocks, such as
convertible preferred stocks, convertible debentures or warrants. No more than
25% of the assets of the Fund will be invested in one industry group. In
addition, the Fund will not own more than 10% of the outstanding voting
securities of a single issuer.
The Fund may also invest in short-term money market securities. Under normal
market conditions, short-term money market securities could comprise up to 35%
of the Fund's total assets. The Fund could invest a higher percentage of its
assets in money market securities for temporary defensive purposes.
INTERNATIONAL EQUITY FUND
The investment objective of the International Equity Fund is to provide long-
term capital appreciation by investing primarily in the equity securities of
foreign issuers. These securities will be held directly or in the form of
American Depository Receipts ("ADRs") or European Depository Receipts ("EDRs").
ADRs are receipts typically issued by a United States bank or trust company
evidencing ownership of the underlying foreign securities. EDRs are receipts
issued by a European financial institution evidencing a similar arrangement. The
Fund will emphasize companies with a market capitalization of at least $100
million. In selecting issuers, the Advisor may consider, among other factors,
the location of the issuer, its competitive stature, the issuer's past record
and future prospects for growth, and the marketability of its securities.
On a continuing basis, but at least quarterly, the Advisor creates a list of
securities eligible for purchase by the Fund. The Advisor then calculates the
adjusted market capitalization of all the equity securities, ADRs and EDRs
considered to be eligible for purchase. Market capitalization for equity
securities is calculated by multiplying the market price of the security by the
number of shares outstanding, adjusted for control blocks. A control block is
defined as a block of securities owned by another corporation. The primary
sources of information regarding the existence and size of control blocks are
the S&P Stock reports and the Morgan Stanley Capital International Perspective.
Control blocks will be updated each time the eligible list of securities is
created or a company is added to the eligible universe.
Following calculation of the adjusted market capitalization, the list of
eligible securities is then sorted in descending order of adjusted market
capitalization. Securities with market capitalizations greater than $100 million
are considered for purchase by the Fund. On a regular basis, securities will be
added to the eligible universe as new ADR and EDR facilities and exchange
listings occur, subject to meeting other eligibility requirements. Each time the
list of eligible securities is created, any security held by the Fund that does
not appear on the updated eligibility list will be sold as soon as practicable.
28
<PAGE>
Equity securities on the eligible securities list are continuously evaluated
on the basis of total return in relation to their respective local, regional and
global markets. From the list of eligible securities a portfolio is constructed
that is composed of two major sections. The first section is designed to provide
broad coverage of international markets. Securities representation generally
covers all major markets and industry sectors. The second section is designed to
complement the first section by increasing exposure to securities that are
expected to outperform their markets and industry sectors on a relative basis.
The blending of the two sections is designed to provide an international
portfolio that provides a broad market exposure to stock markets and has the
capability to enhance the value of the portfolio by adjusting allocations to
stocks that are expected to outperform their respective markets on a relative
basis.
The Fund will increase its exposure to the second section when the Advisor
identifies securities that are expected to outperform their markets and the Fund
will conversely increase its exposure to the first section when the Advisor
believes a broader market exposure is required. When the Advisor believes
broader market exposure will benefit the Fund, the Fund may allocate up to 80%
of its assets for investment in the first section securities. When the Advisor
identifies strong potential for specific securities to outperform their relative
benchmarks, the Fund may invest up to 50% of its total assets in the second
section securities.
The Advisor will determine section two allocation by examining the
relationship each security has with the economic environment of its respective
industry, country market and geographic region. A stock's economic environment
is analyzed by identifying relevant key economic factor relationships with each
stock, sector and market and then determining the level of influence the factors
have in influencing the stock price.
The Fund may invest in the securities of issuers located in the principal
trading market which is in countries which include, but are not limited to, the
following: Argentina, Australia, Belgium, Brazil, Canada, Chile, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Korea, Luxembourg,
Malaysia, Mexico, The Netherlands, New Zealand, Norway, Peru, The Philippines,
Portugal, Singapore, Spain, Sweden, Switzerland, Taiwan, Turkey and The United
Kingdom.
Under normal market conditions, at least 65% of the Fund's total assets will
be invested in the equity securities of foreign issuers and such issuers will be
located in at least three foreign countries. In addition to investing in stocks,
the Fund may, for the purpose of hedging its portfolio, purchase and write put
and call options on foreign stock indices listed on foreign and domestic stock
exchanges. The Fund may also invest in convertible securities, stock index
futures, and, to a limited extent, warrants. The Fund is also authorized to
invest in high quality short-term fixed income securities as cash reserves or
for defensive purposes. The Fund may not be appropriate for investors requiring
stability of principal or income flow from their investments. See "Portfolio
Instruments and Practices and Associated Risk Factors - Foreign
Securities."
INDEX 500 FUND
The investment objective of the Index 500 Fund is to provide price performance
and income that is comparable to the performance of the S&P 500 Index, an index
which emphasizes large capitalization companies. As of December 31, 1994, the
S&P 500 represented approximately 74% of the market capitalization of publicly
owned stocks in the United States. Although the Fund may not hold securities of
all 500 issuers included in the S&P 500 Index, it will normally hold the
securities of at least 80% of such issuers. Stock selections are based primarily
on market capitalization and industry weightings. The Fund may also invest in
Standard & Poor's Depository Receipts ("SPDRs"). SPDRs are securities traded on
the American Stock Exchange that represent ownership in the SPDR Trust, a long-
term unit investment trust which is intended to provide investment results that
generally correspond to the price and yield performance of the S&P 500 Index.
See "Portfolio Instruments and Practices and Associated Risk Factors--Investment
Company Securities." The Fund seeks quarterly performance within a .95
correlation with the S&P 500.
The Fund is managed through the use of a "quantitative" or "indexing"
investment approach, which attempts to duplicate the investment composition and
performance of the S&P 500 through statistical procedures. As a
29
<PAGE>
result, the Advisor does not employ traditional methods of fund investment
management, such as selecting securities on the basis of economic, financial and
market analysis.
The Index 500 Fund is not sponsored, endorsed, sold or promoted by S&P. S&P
makes no representation or warranty, express or implied, to the owners of the
Index 500 Fund or any member of the public regarding the advisability of
investing in securities generally or in the Index 500 Fund particularly or the
ability of the S&P 500 Index to track general stock market performance. S&P's
only relationship to the Company is the licensing of certain trademarks and
trade names of S&P and of the S&P 500 Index which is determined, composed and
calculated by S&P without regard to the Company or the Index 500 Fund. S&P has
no obligation to take the needs of the Company or the owners of the Index 500
Fund into consideration in determining, composing or calculating the S&P 500
Index. S&P is not responsible for and has not participated in the determination
of the prices and amount of the Index 500 Fund or the timing of the issuance or
sale of the Index 500 Fund or in the determination or calculation of the
equation by which the Index 500 Fund is to be converted into cash. S&P has no
obligation or liability in connection with the administration, marketing or
trading of the Index 500 Fund.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500
Index or any data included therein and S&P shall have no liability for any
errors, omissions, or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the Company, owners of the Index 500
Fund, or any other person or entity from the use of the S&P 500 Index or any
data included therein. S&P makes no express or implied warranties, and expressly
disclaims all warranties of merchantability or fitness for a particular purpose
or use with respect to the S&P 500 Index or any data included therein. Without
limiting any of the foregoing, in no event shall S&P have any liability for any
special, punitive, indirect, or consequential damages (including lost profits),
even if notified of the possibility of such damages.
"Standard & Poor's/(R)/", "S&P/(R)/", "S&P 500/(R)/", "Standard & Poor's 500",
and "500" are trademarks of McGraw-Hill, Inc. and have been licensed for use by
the Company. The Index 500 Fund is not sponsored, endorsed, sold or promoted by
S&P and S&P makes no representation regarding the advisability of investing in
the Index 500 Fund.
In addition to investing in stocks, the Index 500 Fund is also authorized to
invest in high quality short-term fixed income securities as cash reserves or
for defensive purposes. The Fund may also invest in stock index futures. See
"Portfolio Instruments and Practices and Associated Risk Factors" for a
description of investment practices of the Fund.
GROWTH & INCOME FUND
The investment objective of the Growth & Income Fund is to provide capital
appreciation and current income by investing primarily in dividend-paying equity
securities. The Fund is designed for investors seeking current income and
capital appreciation through the equity markets. The Fund will seek to achieve
its objectives principally by investing in a broadly diversified portfolio of
dividend-paying stocks of companies whose prospects for dividend growth and
capital appreciation are considered favorable by the Advisor. In general, the
Advisor selects large, well-known companies that it believes have above-average
and secure dividends. The Fund will seek to produce a current yield greater than
the S&P 500.
The Fund's investment philosophy is founded on the Advisor's belief that over
time, dividend income can account for a significant component of the total
return from equity investments. Over time, reinvested dividend income has
accounted for approximately one-half of the total return of the S&P 500. Second,
dividends are normally a more stable and predictable source of return than
capital appreciation. While the price of a company's stock generally increases
or decreases in response to short-term earnings and market fluctuations, its
dividends are generally less volatile. Finally, the Advisor believes that stocks
which distribute a high level of current income tend to have less price
volatility than those which do not.
30
<PAGE>
To achieve its objective, the Fund will invest under normal circumstances at
least 65% of its assets in income-producing common stocks and convertible
preferred stocks. The Fund also may invest in convertible bonds which are debt
securities convertible into or ultimately exchangeable for common stock. The
Fund may invest up to 20% of the value of its total assets in securities that
are rated below investment grade by S&P or Moody's. In addition to investing in
common stocks and convertible securities, the Fund is authorized to invest in
high quality short-term fixed income securities as cash reserves or for
defensive purposes. See "Portfolio Instruments and Practices and Associated Risk
Factors" for a description of these and other investment practices of the Fund,
including investments in warrants, foreign securities and in stock index futures
and options.
VALUE FUND
The investment objective of the Value Fund is to provide long-term capital
appreciation, with income a secondary objective. The Fund seeks to achieve its
objective by investing primarily in equity securities of well-established
companies with intermediate to large market capitalizations or capitalizations
which exceed $750 million. The Advisor will generally favor companies that are
believed by the Investment Advisor to be undervalued at the time of purchase.
Companies will also exhibit a stable or improving earnings record and sound
finances at the time of purchase.
Securities may become undervalued generally because they are temporarily out
of favor due to economic conditions, a market decline, industry conditions or
actual or anticipated developments affecting the company. The Fund may be
considered "contrarian" in nature because its investments may be considered out
of favor with general investors. Generally, the Fund will invest at least 65% of
its total assets in equity securities. The Fund will typically invest in
companies with lower price/earnings ratios, lower price/cash flow ratios and/or
lower price/book values than the equity markets in general, as measured by the
S&P 500. In addition, a company's valuation level will be compared to its own
historical valuation. The dividend yield of portfolio companies is expected to
approximate that of the general equity market. No more than 25% of the assets of
the Fund will be invested in one industry group. In addition, the Fund will not
own more than 10% of the outstanding voting securities of a single issuer.
It is the Advisor's intention to invest primarily in domestic equity
securities. In addition to investing in domestic common stocks, the Fund may
invest in other equity securities and equity equivalents. Other equity
securities and equity equivalents include securities that permit the Fund to
receive an equity interest in an issuer, the opportunity to acquire an equity
interest in an issuer, or the opportunity to receive a return on its investment
that permits the Fund to benefit from the growth over time in the equity of an
issuer. Examples of equity securities and equity equivalents include ADRs,
preferred stock, convertible preferred stock and convertible debt securities.
Equity equivalents may also include securities whose value or return is derived
from the value or return of a different security. An example of the type of
derivative security in which the Fund might invest includes depository receipts.
The Fund may also invest in short-term money market instruments.
The Fund will limit its purchase of convertible debt securities that, at the
time of purchase, are rated below investment grade by S&P or Moody's, or if not
rated by S&P or Moody's, are of equivalent investment quality as determined by
the Investment Advisor, to 5% of the value of the Fund's total assets. For more
detailed information with respect to such securities and the risks associated
with such investments see "Lower Rated Debt Securities" in the Statement of
Additional Information.
BALANCED FUND
The investment objective of the Balanced Fund is to provide an attractive
investment return through a combination of growth of capital and current income.
The Fund seeks to achieve its objective by allocating assets among three major
asset groups: equity securities, fixed income securities and cash equivalents.
In pursuing its
31
<PAGE>
investment objective, the Advisor will allocate the Fund's assets based upon its
evaluation of the relative attractiveness of the major asset groups.
The Fund's policy is to invest at least 25% of the value of its total assets
in fixed income securities including short-term obligations and no more than 75%
in equity securities at all times. The actual percentage of assets invested in
fixed income and equity securities will vary from time to time, depending on the
judgment of the Advisor as to general market and economic conditions, trends and
yields, interest rates and fiscal and monetary developments. The Fund will not
purchase a security if, as a result of such purchase, less than 25% of its total
assets would be in fixed income securities (including short and long-term debt
securities, preferred stocks, and convertible debt securities and preferred
stocks, to the extent their value is attributable to their fixed income
characteristics). This policy is not fundamental and may be changed by the Board
of Trustees without a vote of the majority of shareholders, but only with 30
days' prior shareholder notice and in accordance with the 1940 Act.
Subject to the above limitations, the Fund's assets may be invested in U.S.
Government and agency obligations, corporate bonds, senior debt securities,
preferred and common stocks in such proportions and of such type as are deemed
by the Advisor to be best adapted to the current economic and market outlook.
The Advisor may incorporate several considerations into its asset allocation
decision-making process including the Advisor's outlook for future returns on
each asset class, inflation, interest rates and long-term corporate earnings
growth. Investment returns are normally strongly influenced by such variables
and their expected changes over time. Therefore, the Advisor will attempt to
take advantage of changing economic conditions by increasing or decreasing the
ratio of stocks to fixed income obligations or cash equivalents in the Fund. For
example, if the Advisor expected more rapid economic growth leading to better
corporate earnings in the future, it would normally increase the Fund's equity
holdings while reducing its fixed income and cash equivalent holdings.
The Fund reserves the right to hold as a temporary defensive measure up to
100% of its total assets in cash and short-term obligations (having remaining
maturities of 18 months or less) at such times and in such proportions as, in
the opinion of the Advisor, prevailing market or economic conditions warrant.
Short-term obligations include, but are not limited to, domestic commercial
paper, bankers' acceptances, certificates of deposit, demand and time deposits
of domestic and foreign banks and savings and loan associations, repurchase
agreements, and obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities.
SMALL-CAP VALUE FUND
The investment objective of the Small-Cap Value Fund is long-term capital
appreciation, with income as a secondary objective. The Fund seeks to achieve
its objective by investing primarily (i.e. .65% of its total assets) in equity
securities of smaller companies with market capitalizations that are less than
the capitalization of companies which predominate the major market indices, such
as the S&P 500. These issuers generally have a market capitalization below $750
million at the time of purchase.
The Advisor will generally favor companies that are believed by the Advisor to
be undervalued at the time of purchase. Companies will also exhibit a stable or
improving earnings record and sound finances at the time of purchase. Factors
considered in selecting such issuers include participation in a fast growing
industry, a strategic niche position in a specialized market, adequate
capitalization and fundamental value.
Securities may become undervalued generally because they are temporarily
overlooked or out of favor due to economic conditions, a market decline,
industry conditions or actual or anticipated developments affecting the company.
The Fund may be considered "contrarian" in nature because its investments may be
considered out of favor with general investors.
The Fund will attempt to provide investors with potentially greater long-term
rewards than those provided by an investment in a fund that seeks capital
appreciation from equity securities of larger, more established companies.
Since small capitalization companies are generally not as well-known to
investors and have less of an
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investor following than larger companies, they may provide opportunities for
greater investment gains as a result of inefficiencies in the marketplace.
Small capitalization companies typically are subject to a greater degree of
change in earnings and business prospects than larger, more established
companies. In addition, securities of small capitalization companies are traded
in lower volume than those issued by larger companies and may be more volatile.
As a result, the Fund may be subject to greater price volatility than a fund
consisting of larger capitalization stocks. By maintaining a broadly
diversified portfolio, the Advisor will attempt to reduce this volatility.
Under normal market conditions, the Fund will invest at least 65% of its total
assets in equity securities. The Fund will typically invest in companies with
lower price/earnings ratios, lower price/cash flow ratios and/or lower
price/book values than the equity markets in general, as measured by the Russell
2000(R) Index of small stocks. In addition, a company's valuation level will be
compared to its own historical valuation. The dividend yield of portfolio
companies is expected to approximate that of the general equity market. No more
than 25% of the assets of the Fund will be invested in one industry group.
It is the Advisor's intention to invest primarily in domestic equity
securities. In addition to investing in domestic common stocks, the Fund may
invest in other equity securities and equity equivalents. Other equity
securities and equity equivalents include securities that permit the Fund to
receive an equity interest in an issuer, the opportunity to acquire an equity
interest in an issuer, or the opportunity to receive a return on its investment
that permits the Fund to benefit from the growth over time in the equity of an
issuer. Examples of equity securities and equity equivalents include ADRs,
preferred stock, convertible preferred stock and convertible debt securities.
Equity equivalents may also include securities whose value or return is derived
from the value or return of a different security. An example of the type of
derivative security in which the Fund might invest includes depository receipts.
In addition to investing in equity securities, the Fund is also authorized to
invest in high quality short-term fixed income securities as cash reserves or
for defensive purposes. See "Portfolio Instruments and Practices and Associated
Risk Factors" for a description of investment practices of the Fund, including
limited investments in warrants, foreign securities and stock index futures and
options.
EQUITY SELECTION FUND
The investment objective of the Equity Selection Fund is to provide
shareholders with long-term capital appreciation. The Fund seeks to achieve
this objective by investing in equity securities that a dedicated research team
believes to be of high quality and that, as determined through both fundamental
and technical analysis, are undervalued compared to equity securities of other
companies in the same industry. The Fund generally will invest in issuers that
have market capitalizations of at least $9 billion at the time of purchase. The
Fund will be diversified by industry with proportionate weightings approximately
the same as the S&P 500.
The Fund seeks long-term capital appreciation by investing primarily in common
stocks. Under normal market conditions, the Fund will invest at least 65% of its
total assets in equity securities. In addition to investing in equity
securities, the Fund is also authorized to invest in high quality short-term
fixed income securities as cash reserves or for defensive purposes. See
"Portfolio Instruments and Practices and Associated Risk Factors" for a
description of investment practices of the Fund, including limited investments
in warrants, foreign securities and stock index futures and options.
MICRO-CAP EQUITY FUND
The investment objective of the Micro-Cap Equity Fund is long-term capital
appreciation. The Fund seeks to achieve its objective by investing, under
normal market conditions, at least 65% of its total assets in equity securities
of smaller companies with market capitalizations that are less than the
capitalization of companies which
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predominate the major market indices, such as the S&P 500. These issuers
generally have a market capitalization of $200 million or less at the time of
purchase.
The Advisor will generally favor companies that it believes offer attractive
opportunities due to the inefficiencies of the micro-cap market and that the
Advisor believes, through internal research, will have the ability to grow
significantly over the next several years. The Fund will typically invest in
small-sized, emerging growth companies that are positioned to benefit from
changes in technologies, regulations, and/or secular trends. These companies
may still be in the developmental stage and may have limited product lines.
The Fund will attempt to provide investors with potentially greater long-term
rewards than those provided by an investment in a fund that seeks capital
appreciation from equity securities of larger, more established companies. Since
smaller capitalization companies are generally not as well-known to investors
and have less of an investor following than larger companies, they may provide
opportunities for greater investment gains as a result of inefficiencies in the
marketplace.
Smaller capitalization companies typically are subject to a greater degree of
change in earnings and business prospects than larger, more established
companies. In addition, securities of smaller capitalization companies are
traded in lower volume than those issued by larger companies and may be more
volatile. As a result, the Fund may be subject to greater price volatility than
a fund consisting of larger capitalization stocks. By maintaining a broadly
diversified portfolio, the Advisor will attempt to reduce this volatility.
Under normal market conditions, the Fund will invest at least 65% of its total
assets in equity securities. No more than 15% of the assets of the Fund will be
invested in one industry group. In addition to investing in equity securities,
the Fund is also authorized to invest in high quality short-term fixed income
securities such as cash reserves for defensive purposes. See "Portfolio
Investments and Practices and Associated Risk Factors" for a description of
investment practices of the Fund, including limited investments in warrants,
foreign securities and stock index futures and options.
INTERNATIONAL BOND FUND
The investment objective of the International Bond Fund is to realize a
competitive total return through a combination of current income and capital
appreciation. The Fund seeks to achieve its objective by investing primarily in
foreign debt obligations. As an international fund, the Fund may invest in
securities of any issuer and in any currency. Under normal market conditions,
at least 65% of the Fund's assets are invested in bonds of issuers located in at
least three countries other than the United States. The Fund will primarily
invest in foreign debt obligations denominated in foreign currencies, including
the European Currency Unit ("ECU"), which are issued by foreign governments and
governmental agencies, instrumentalities or political subdivisions; debt
securities issued or guaranteed by supranational organizations (e.g. European
Investment Bank, Inter-American Development Bank or the World Bank); corporate
debt securities; bank or bank holding company debt securities and other debt
securities including those convertible into foreign stock. For the purposes o
the 65% limitation with respect to the Fund's designation as an international
bond fund, the securities described in this paragraph are considered
"international bonds." There can be no assurance that the Fund will achieve its
investment objective. Purchasing shares of the Fund should not be considered a
complete investment program, but an important segment of a well-diversified
investment program.
The Fund's dollar-weighted average maturity will generally be between three
and fifteen years except during temporary defensive periods, and will be
adjusted by the Advisor according to market conditions. Pending investment, to
meet anticipated redemption requests, or as a temporary defensive measure if the
Advisor determines that market conditions warrant, the Fund may invest without
limitation in short-term U.S. Government obligations, high quality money market
instruments and repurchase agreements. Such obligations may include those
issued by foreign banks and foreign branches of U.S. banks. The Fund may also
invest in futures contracts and options and enter into interest rate swap
transactions. See "Portfolio Instruments and Practices and Associated
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Risk Factors -- Futures Contracts and Options" for a discussion of the risks
associated with the use of derivative instruments. A further description of the
types of obligations and the various investment techniques used by the Fund is
provided below under "Portfolio Instruments and Practices and Associated Risk
Factors."
BOND FUND, INTERMEDIATE BOND FUND AND U.S. GOVERNMENT INCOME
FUND (THE "BOND
FUNDS")
The investment objective of the Bond Fund is to provide a high level of
current income, and secondarily, capital appreciation. The Bond Fund's dollar-
weighted average maturity will generally be between six and fifteen years except
during temporary defensive periods, and will be adjusted by the Advisor
according to market conditions. The investment objective of the Intermediate
Bond Fund is to provide a competitive rate of return which over time exceeds the
rate of inflation and the return provided by money market instruments. The
Intermediate Bond Fund's dollar-weighted average maturity will generally be
between three and eight years and will be adjusted by the Advisor according to
market conditions. The investment objective of the U.S. Government Income Fund
is to provide high current income. Under normal market conditions, the U.S.
Government Income Fund's dollar-weighted average maturity will be six to fifteen
years, and will be adjusted by the Advisor according to market conditions.
Each Fund invests substantially all of its assets in debt obligations such as
bonds and debentures, obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities ("U.S. Government obligations"), debt
obligations of domestic and foreign corporations, debt obligations of foreign
governments and their political subdivisions, asset-backed securities and
various mortgage-related securities. The Bond Funds may purchase obligations
issued by or on behalf of states, territories and possessions of the United
States, the District of Columbia and their political subdivisions, agencies,
instrumentalities and authorities. For purposes of the 65% limitation with
respect to the Bond Fund and the Intermediate Bond Fund described below, the
securities described in this paragraph are considered "bonds."
Pending investment, to meet anticipated redemption requests, or as a temporary
defensive measure if the Advisor determines that market conditions warrant, the
Bond Funds may invest without limitation in short-term U.S. Government
obligations, high quality money market instruments and repurchase agreements.
Such obligations may include those issued by foreign banks and foreign branches
of U.S. banks.
The Bond Funds may also invest in futures contracts and options and enter into
interest rate swap transactions. See "Portfolio Instruments and Practices and
Associated Risk Factors--Futures Contracts and Options" for a discussion of the
risks associated with the use of derivative instruments. During normal market
conditions at least 65% of each of the Bond Fund's and the Intermediate Bond
Fund's total assets will be invested in bonds. During normal market conditions
at least 65% of the U.S. Government Income Fund's total assets will be invested
in U.S. Government obligations. A further description of the types of
obligations and the various investment techniques used by the Bond Funds is
provided below under "Portfolio Instruments and Practices and Associated Risk
Factors."
MICHIGAN TRIPLE TAX-FREE BOND FUND
The investment objective of the Michigan Triple Tax-Free Bond Fund is to
provide a high level of current interest income exempt from regular Federal
income taxes and to the extent possible Michigan state income tax and
intangibles tax as is consistent with prudent investment management and
preservation of capital. The Fund seeks to achieve its objective by investing in
a professionally managed portfolio of intermediate-term and long-term municipal
obligations, the interest on which, in the opinion of bond counsel or counsel to
the issuer, is exempt from regular Federal income tax and Michigan state income,
intangibles and single business taxes. The Fund will invest primarily in
obligations which have remaining maturities of between three and thirty years.
The Fund's dollar-weighted average maturity will generally be between ten and
twenty years except during temporary defensive periods, and will be adjusted
downward by the Advisor according to market conditions.
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Except during temporary defensive periods, at least 65% of the net assets of
the Fund will be invested in municipal obligations issued by the State of
Michigan and its political subdivisions ("Michigan Municipal Obligations").
Interest income from certain types of municipal securities may be subject to
Federal alternative minimum tax. The Fund will treat certain of these securities
as Michigan Municipal Obligations. See "Portfolio Instruments and Practices and
Associated Risk Factors--Michigan Municipal Obligations."
TAX-FREE BOND FUND
The investment objective of the Tax-Free Bond Fund is to provide a high level
of current interest income exempt from Federal income taxes and to generate a
competitive long-term rate of return as is consistent with prudent investment
management and preservation of capital. The Fund will seek to achieve its
objective by investing, under normal market conditions, in a professionally
managed portfolio of intermediate-term and long-term municipal obligations, the
interest on which, in the opinion of bond counsel or counsel to the issuer, is
exempt from regular Federal income tax. The Fund will invest primarily in
obligations which have remaining maturities of between three and thirty years.
The Fund's dollar-weighted average maturity will generally be between ten and
twenty years except during temporary defensive periods, and will be adjusted by
the Advisor according to market conditions.
The Tax-Free Bond Fund may purchase obligations issued by or on behalf of
states, territories and possessions of the United States, the District of
Columbia and their political subdivisions, agencies, instrumentalities and
authorities. For purposes of the 65% limitation with respect to the Tax-Free
Bond Fund described below, the securities described in this paragraph are
considered "bonds."
During normal market conditions at least 65% of the Tax-Free Bond Fund's total
assets will be invested in bonds. A further description of the types of
obligations and the various investment techniques used by the Tax-Free Bond Fund
is provided below under "Portfolio Instruments and Practices and Associated Risk
Factors."
Except during temporary defensive periods, at least 80% of the net assets of
the Tax-Free Bond Fund will be invested in municipal obligations, the interest
on which is exempt from regular Federal income tax. This policy is fundamental
and may be changed only with shareholder approval. A portion of the Fund's
dividends may be subject to Federal alternative minimum tax. See "Taxes--Tax-
Free Bond Funds."
TAX-FREE INTERMEDIATE BOND FUND
The Tax-Free Intermediate Bond Fund's investment objective is to provide a
competitive level of current interest income exempt from regular Federal income
taxes and a total return which, over time, exceeds the rate of inflation and the
return provided by tax-free money market instruments. The Fund invests
substantially all of its assets in a non-diversified portfolio of short-term and
intermediate-term municipal obligations, the interest on which, in the opinion
of bond counsel or counsel to the issuer, is exempt from regular Federal income
tax. "Municipal obligations" are obligations issued by or on behalf of states,
territories and possessions of the United States, the District of Columbia, and
their political subdivisions, agencies, instrumentalities and authorities. In
addition, in managing the Fund, the Advisor intends to invest, when possible,
the Fund's assets in Michigan Municipal Obligations, the interest on which may
be exempt from Michigan income tax, Michigan intangibles tax and Michigan single
business tax, provided the investment is consistent with the Fund's investment
objective and policies. All obligations purchased by the Fund will have
remaining maturities of ten years or less (although variable rate demand notes,
put option securities, and securities subject to repurchase agreements may bear
longer maturities). The portfolio's dollar-weighted average maturity will
generally be between three and eight years, and will be adjusted by the Advisor
according to market conditions. During certain periods, the dollar-weighted
average maturity may be longer than eight years but will not exceed ten years.
See "Portfolio Instruments and Practices and Associated Risk Factors--Michigan
Municipal Obligations."
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The Tax-Free Intermediate Bond Fund may purchase obligations issued by or on
behalf of states, territories and possessions of the United States, the District
of Columbia and their political subdivisions, agencies, instrumentalities and
authorities. For purposes of the 65% limitation with respect to the Tax-Free
Intermediate Bond Fund described below, the securities described in this
paragraph are considered "bonds."
During normal market conditions at least 65% of the Tax-Free Intermediate Bond
Fund's total assets will be invested in bonds. A further description of the
types of obligations and the various investment techniques used by the Tax-Free
Intermediate Bond Fund is provided below under "Portfolio Instruments and
Practices and Associated Risk Factors."
Except during temporary defensive periods, at least 80% of the net assets of
the Tax-Free Intermediate Bond Fund will be invested in municipal obligations,
the interest on which is exempt from regular Federal income tax. This policy is
fundamental and may be changed only with shareholder approval. A portion of the
Fund's dividends may be subject to Federal alternative minimum tax. See "Taxes--
Tax-Free Bond Funds."
TAX-FREE MONEY MARKET FUND
The Tax-Free Money Market Fund's investment objective is to provide as high a
level of current interest income exempt from Federal income taxes as is
consistent with maintaining liquidity and stability of principal. The Fund
invests substantially all of its assets in a diversified portfolio of short-term
U.S. dollar denominated municipal obligations, the interest on which, in the
opinion of bond counsel or counsel to the issuer, is exempt from the regular
Federal income tax. All obligations purchased by the Fund will have maturities
of 397 days or less as defined by the SEC (although securities subject to
repurchase agreements, variable and floating rate securities and certain other
securities may bear longer maturities), and the Fund's dollar-weighted average
portfolio maturity will not exceed 90 days. The Fund seeks to maintain a stable
net asset value of $1.00 per share, although there is no assurance that it will
be able to do so on a continuous basis.
Securities acquired by the Tax-Free Money Market Fund will be "Eligible
Securities" as defined by the SEC. Eligible Securities consist of securities
that are determined by the Advisor, under guidelines established by the Board of
Trustees, to present minimal credit risks. The Appendix to the Statement of
Additional Information includes a description of applicable ratings.
U.S. TREASURY MONEY MARKET FUND AND CASH INVESTMENT FUND
The investment objective of both the U.S. Treasury Money Market Fund and Cash
Investment Fund is to provide as high a level of current interest income as is
consistent with maintaining liquidity and stability of principal. Each Fund
seeks to maintain a stable net asset value of $1.00 per share, although there is
no assurance that they will be able to do so on a continuous basis. In pursuing
its investment objective, the Cash Investment Fund may invest in a broad range
of short-term, high quality, U.S. dollar-denominated instruments, such as bank,
commercial and other obligations (including Federal, state and local government
obligations), that are available in the money markets. The instruments in which
the Cash Investment Fund may invest are described below under "Portfolio
Instruments and Practices and Associated Risk Factors." The U.S. Treasury Money
Market Fund seeks to achieve its objective by investing solely in short-term
bonds, bills and notes issued by the U.S. Treasury (including "stripped"
securities as described under "Portfolio Instruments and Practices and
Associated Risk Factors"), and in repurchase agreements relating to such
obligations.
Securities acquired by the U.S. Treasury Money Market Fund and Cash Investment
Fund will be "Eligible Securities" as defined by the SEC. Eligible Securities
consist of securities that are determined by the Advisor, under guidelines
established by the Board of Trustees, to present minimal credit risks. The
Appendix to the Statement of Additional Information includes a description of
applicable ratings.
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Assets of the U.S. Treasury Money Market Fund and Cash Investment Fund will
be invested solely in U.S. dollar-denominated debt securities with remaining
maturities of 397 days or less as defined by the SEC (although securities
subject to repurchase agreements, variable and floating rate securities and
certain other securities may bear longer maturities), and the dollar-weighted
average portfolio maturity of each Fund will not exceed 90 days.
Although the U.S. Treasury Money Market Fund and Cash Investment Fund expect
under normal market conditions to be as fully invested as possible, each Fund
may hold uninvested cash pending investment of late payments for purchase orders
(or other payments) or during temporary defensive periods. Uninvested cash will
not earn income. In general, investments in the Funds will not earn as high a
level of current income as longer-term or lower-quality securities. Such
securities, however, generally have less liquidity, greater market risk and more
fluctuation in market value.
PORTFOLIO INSTRUMENTS AND PRACTICES AND ASSOCIATED RISK
FACTORS
Investment strategies that are available to the Funds are set forth below.
Additional information concerning certain of these strategies and their related
risks is contained in the Statement of Additional Information.
Equity Securities. The Balanced Fund and each Equity Fund will invest in
common stocks, and may invest in warrants and similar rights to purchase common
stock. A Fund may invest up to 5% of its net assets at the time of purchase in
warrants and similar rights to purchase common stock (other than those that have
been acquired in units or attached to other securities). Warrants represent
rights to purchase securities at a specific price valid for a specific period of
time. The prices of warrants do not necessarily correlate with the prices of the
underlying securities. The Small Company Growth Fund, Small-Cap Value Fund and
Micro-Cap Equity Fund each invests primarily in equity securities of smaller
companies with market capitalizations that are less than the capitalization of
companies which predominate the major market indices. Small capitalization
companies typically are subject to a greater degree of change in earnings and
business prospects than larger, more established companies. In addition,
securities of small capitalization companies are traded in lower volume than
those issued by larger companies and may be more volatile. As a result, the
Fund may be subject to greater price volatility than a fund consisting of larger
capitalization stocks. By maintaining a broadly diversified portfolio, the
Advisor will attempt to reduce this volatility. In addition, the Balanced Fund
and each Equity Fund (except the Index 500 Fund) may invest in convertible bonds
and convertible preferred stock. A convertible security is a security that may
be converted either at a stated price or rate within a specified period of time
into a specified number of shares of common stock. By investing in convertible
securities, a Fund seeks the opportunity, through the conversion feature, to
participate in the capital appreciation of the common stock into which the
securities are convertible, while earning higher current income than is
available from the common stock. Although a Fund may acquire convertible
securities that are rated below investment grade by S&P or Moody's, the Company
and Munder expect that, except for the Growth & Income Fund, investments in
lower-rated convertible securities will not exceed 5% of the value of the total
assets of a Fund at the time of purchase. The Growth & Income Fund may invest up
to 20% of the value of its total assets in securities that are rated below
investment grade by S&P or Moody's. These high yield, high risk securities are
commonly referred to as junk bonds. Securities that are rated "Ba" by Moody's or
"BB" by S&P have speculative characteristics with respect to the capacity to pay
interest and repay principal. Securities that are rated "B" generally lack
characteristics of a desirable investment, and assurance of interest and
principal payments over any long period of time may be small. Securities that
are rated "Caa" or "CCC" are of poor standing. These issues may be in default or
present elements of danger may exist with respect to principal or interest. In
light of the risks in evaluating the creditworthiness of an issue, the Advisor
will take various factors into consideration, which may include, as applicable,
the issuer's financial resources, its sensitivity to economic conditions and
trends and the ability of the issuer's management and regulatory matters. To the
extent a Fund purchases convertibles rated below investment grade or
convertibles that are not rated, a greater risk exists as to the timely
repayment of the principal of, and the timely payment of interest or dividends
on, such securities. Particular risks include (a) the sensitivity of such
securities to interest rate and economic changes, (b) the lower degree of
protection of principal and interest payments, (c) the relatively low trading
market liquidity for the securities, (d) the impact that legislation may have on
the market for these securities (and, in turn, on a Fund's net asset value)
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<PAGE>
and (e) the creditworthiness of the issuers of such securities. During an
economic downturn or substantial period of rising interest rates, highly
leveraged issuers may experience financial stress which would negatively affect
their ability to meet their principal and interest payment obligations, to meet
projected business goals and to obtain additional financing. An economic
downturn could also disrupt the market for lower-rated convertible securities
and negatively affect the value of outstanding securities and the ability of the
issuers to repay principal and interest. If the issuer of a convertible security
held by a Fund defaulted, the Fund could incur additional expenses to seek
recovery. Adverse publicity and investor perceptions, whether or not they are
based on fundamental analysis, could also decrease the values and liquidity of
lower-rated convertible securities held by a Fund, especially in a thinly traded
market.
Foreign Debt Securities. The International Bond Fund may purchase debt
obligations issued or guaranteed by a foreign sovereign government or one of its
agencies, authorities, instrumentalities or political subdivisions, including
foreign states, provinces or municipalities and corporate debt securities.
Investing in the securities of any foreign issuer involves special risk and
considerations not typically associated with investing in U.S. issuers. These
include differences in accounting, auditing and financial reporting standards;
different disclosure laws, which may result in less publicly available
information about foreign issuers than U.S. issuers; generally higher markups on
foreign portfolio transactions; the possibility of nationalization,
expropriation or confiscatory taxation; adverse changes in investment or
exchange control regulations (which may include suspension of the ability to
transfer currency from a country); political instability; less government
regulation of securities markets, brokers and issuers; possible difficulty in
obtaining and enforcing judgments in foreign courts; and imposition of
restrictions on foreign investments. Additionally, foreign securities and
interest payable on those securities may be subject to foreign taxes, including
taxes withheld from payments on those securities. Foreign securities often
trade with less frequency and volume than domestic securities and therefore may
exhibit greater price volatility. Additional costs associated with an
investment in foreign securities may include higher custodial fees than apply to
U.S. custodial arrangements, and transaction costs of foreign currency
conversions. Changes in foreign exchange rates will also affect the value of
securities denominated or quoted in currencies other than the U.S. dollar.
Foreign Securities. The Balanced Fund, the Cash Investment Fund, each Bond
Fund, the International Bond Fund and each Equity Fund (except the Real Estate
Equity Investment Fund) may invest in the securities of foreign issuers. The
Tax-Free Bond Fund may purchase securities backed by letters of credit or
guarantees issued by foreign financial institutions. There are certain risks and
costs involved in investing in securities of companies and governments of
foreign nations, which are in addition to the usual risks inherent in U.S.
investments. Investments in foreign securities involve higher costs than
investments in U.S. securities, including higher transaction costs as well as
the imposition of additional taxes by foreign governments. In addition, foreign
investments may include additional risks associated with the level of currency
exchange rates, less complete financial information about the issuers, less
market liquidity, and political instability. Future political and economic
developments, the possible imposition of withholding taxes on interest income,
the possible seizure or nationalization of foreign holdings, the possible
establishment of exchange controls, or the adoption of other governmental
restrictions might adversely affect the payment of principal and interest on
foreign obligations. Additionally, foreign banks and foreign branches of
domestic banks may be subject to less stringent reserve requirements, and to
different accounting, auditing and recordkeeping requirements.
The Multi-Season Growth Fund, Mid-Cap Growth Fund, Value Fund, Small-Cap Value
Fund, Equity Selection Fund, and Micro-Cap Equity Fund each may invest up to 20%
of its total assets in equity securities of foreign issuers, including companies
domiciled in developing countries. The International Equity Fund may also invest
in countries with emerging economies or securities markets located in the Asia-
Pacific region, Eastern Europe, Latin and South America and Africa. Political
and economic structures in many of these countries may be undergoing significant
evolution and rapid development, and such countries may lack the social,
political and economic stability characteristic of more developed countries. As
a result, the risks described above, including the risks of nationalization or
expropriation of assets, may be heightened, and the limited volume of trading in
securities in these countries may make such investments illiquid and
particularly volatile.
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Although the Balanced and Equity Funds may invest in securities denominated in
foreign currencies, portfolio securities and other assets held by the Funds are
valued in U.S. dollars. As a result, the net asset value of a Fund's shares may
fluctuate with U.S. dollar exchange rates as well as with price changes of its
portfolio securities in the various local markets and currencies. In addition to
favorable and unfavorable currency exchange-rate developments, the Funds are
subject to the possible imposition of exchange control regulations or freezes on
convertibility of currency.
Investments in foreign securities may be in the form of ADRs, EDRs or similar
securities. These securities may not be denominated in the same currency as the
securities they represent. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying foreign securities.
EDRs are receipts issued by a European financial institution evidencing a
similar arrangement. Generally, ADRs, in registered form, are designed for use
in United States securities markets, and EDRs, in bearer form, are designed for
use in the European securities markets. The Multi-Season Growth Fund and the
Mid-Cap Growth Fund typically will only purchase foreign securities which are
represented by sponsored or unsponsored ADRs listed on a domestic securities
exchange or included in the NASDAQ National Market System. Ownership of
unsponsored ADRs may not entitle a Fund to financial or other reports from the
issuer, to which it would be entitled as the owner of sponsored ADRs. Interest
or dividend payments on such securities may be subject to foreign withholding
taxes.
Forward Foreign Currency Exchange Contracts. The Balanced Fund and each Equity
Fund (except the Real Estate Equity Investment Fund) may enter into forward
currency exchange contracts in an effort to reduce the level of volatility
caused by changes in foreign currency exchange rates. A Fund may not enter into
these contracts for speculative purposes. A forward currency exchange contract
is an obligation to purchase or sell a specific currency at a future date, which
may be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of contract. A Fund will segregate cash or
liquid securities to cover its obligation to purchase foreign currency under or
forward foreign currency exchange contract. Although such contracts tend to
minimize the risk of loss due to a decline in the value of the hedged currency,
at the same time they tend to limit any potential gain that might be realized
should the value of such currency increase. The Mid-Cap Growth Fund and Value
Fund will not enter into forward foreign currency exchange contracts if as a
result, the Fund will have more than 20% of its total assets committed to
consummation of such forward foreign currency exchange contracts.
The International Bond Fund normally conducts its foreign currency exchange
transactions either on a spot (cash) basis at the spot rate prevailing in the
foreign currencies or on a forward basis. Under normal circumstances, the
Advisor expects that the Fund will enter into forward currency contracts. The
Fund generally will not enter into a forward contract with a term of greater
than one year. Although forward contracts are used primarily to protect the
Fund from adverse currency movements, they may also be used to increase exposure
to a currency, and involve the risk that anticipated currency movements will not
be accurately predicted and the Fund's total return will be adversely affected
as a result. Open positions in forward contracts are covered by the segregation
with the Fund's custodian of cash, U.S. Government securities or other high
grade debt obligations which are marked to market daily.
Futures Contracts and Options. Each Bond Fund, International Bond Fund and
each Equity Fund may invest in futures contracts and options on futures
contracts for hedging purposes or to maintain liquidity. However, a Fund may
not purchase or sell a futures contract unless immediately after any such
transaction the sum of the aggregate amount of margin deposits on its existing
futures positions and the amount of premiums paid for related options is 5% or
less of its total assets. The Multi-Season Growth Fund does not presently
anticipate engaging in transactions involving options on securities or stock
indices of options or stock index futures contracts, although it has the
authority to do so. The Real Estate Equity Investment Fund may, to a limited
extent, enter into financial futures contracts based on securities indices,
purchase and write put and call options, and engage in related closing
transactions to the extent available to hedge all or a portion of its portfolio,
or as an efficient means of regulating its exposure to the Equity markets. In
addition, the Real Estate Equity Investment Fund will not hedge more than 30% of
its total assets and will not write covered call options against more than 15%
of the value of the equity securities held in the portfolio.
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Futures contracts obligate a Fund, at maturity, to take or make delivery of
certain securities or the cash value of a bond or securities index. When
interest rates are rising, futures contracts can offset a decline in value of
the Fund's portfolio securities. When rates are falling, these contracts can
secure higher yields for securities the Fund intends to purchase.
A Fund may purchase and sell call and put options on futures contracts traded
on an exchange or board of trade. When a Fund purchases an option on a futures
contract, it has the right to assume a position as a purchaser or seller of a
futures contract at a specified exercise price at any time during the option
period. When the Fund sells an option on a futures contract, it becomes
obligated to purchase or sell a futures contract if the option is exercised. In
anticipation of a market advance, a Fund may purchase call options on futures
contracts as a substitute for the purchase of futures contracts to hedge against
a possible increase in the price of securities which the Fund intends to
purchase. Similarly, if the value of a Fund's portfolio securities is expected
to decline, the Fund might purchase put options or sell call options on futures
contracts rather than sell futures contracts. The International Bond Fund may
also enter into contracts for the purchase or sale for future delivery of
foreign currencies. In connection with a Fund's position in a futures contract
or option thereon, the Fund will create a segregated account of liquid assets or
will otherwise cover its position in accordance with applicable requirements of
the SEC.
In addition, the Balanced Fund, each Bond Fund, International Bond Fund and
each Equity Fund, may write covered call options, buy put options, buy call
options and write secured put options on particular securities or various stock
or bond indices. The International Bond Fund may also purchase and write put and
call options on foreign currencies (traded on U.S. and foreign exchanges or
over-the counter) to manage the Fund's exposure to changes in dollar exchange
rates. Options trading is a highly specialized activity which entails greater
than ordinary investment risks. A call option for a particular security gives
the purchaser of the option the right to buy, and a writer the obligation to
sell, the underlying security at the stated exercise price at any time prior to
the expiration of the option, regardless of the market price of the security.
The premium paid to the writer is in consideration for undertaking the
obligations under the option contract.
A put option for a particular security gives the purchaser the right to sell
the underlying security at the stated exercise price at any time prior to the
expiration date of the option, regardless of the market price of the security.
In contrast to an option on a particular security, an option on a stock index
provides the holder with the right to make or receive a cash settlement upon
exercise of the option. The use of derivative instruments exposes a Fund to
additional risks and transaction costs. Risks inherent in the use of derivative
instruments include: (1) the risk that interest rates, securities prices and
currency markets will not move in the direction that a portfolio manager
anticipates; (2) imperfect correlation between the price of derivative
instruments and movements in the prices of the securities, interest rates or
currencies being hedged; (3) the fact that skills needed to use these strategies
are different than those needed to select portfolio securities; (4) inability to
close out certain hedged positions to avoid adverse tax consequences; (5) the
possible absence of a liquid secondary market for any particular instrument and
possible exchange-imposed price fluctuation limits, either of which may make it
difficult or impossible to close out a position when desired; (6) leverage risk,
that is, the risk that adverse price movements in an instrument can result in a
loss substantially greater than a Fund's initial investment in that instrument
(in some cases, the potential loss is unlimited); and (7) particularly in the
case of privately-negotiated instruments, the risk that the counterparty will
fail to perform its obligations, which could leave a Fund worse off than if it
had not entered into the position.
When a Fund invests in a derivative instrument, it may be required to
segregate cash and other high-grade liquid debt securities or certain portfolio
securities to "cover" the Fund's position. Assets segregated or set aside
generally may not be disposed of so long as the Fund maintains the positions
requiring segregation or cover. Segregating assets could diminish a Fund's
return due to the opportunity losses of foregoing other potential investments
with the segregated assets.
A Fund is not a commodity pool, and all futures transactions engaged in by a
Fund must constitute bona fide hedging or other permissible transactions in
accordance with the rules and regulations promulgated by the Commodity Futures
Trading Commission. Successful use of futures and options is subject to special
risk
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considerations. See "Investment Objective and Policies and Associated Risks"
in the Statement of Additional Information. For a further discussion see
"Additional Information on Fund Investments" and Appendix B in the Statement
of Additional Information.
Corporate Obligations. The Balanced Fund, Cash Investment Fund, International
Bond Fund and each Bond Fund may purchase corporate bonds and commercial paper
that meet the applicable quality and maturity limitations. These investments may
include obligations issued by Canadian and other foreign corporations and
Canadian and other foreign counterparts of U.S. corporations and Europaper,
which is U.S. dollar-denominated commercial paper of a foreign issuer. The
International Bond Fund may also purchase commercial paper indexed to certain
specific foreign currency exchange rates.
The Balanced, International Bond Fund and each Bond Fund will purchase only
those securities which are considered to be investment grade or better (within
the four highest rating categories of S&P or Moody's or, if unrated, of
comparable quality). Obligations rated "Baa" by Moody's lack outstanding
investment characteristics and have speculative characteristics. Adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity of obligations rated "BBB" by S&P to pay interest and repay
principal than in the case of higher grade obligations. After purchase by a
Fund, a security may cease to be rated or its rating may be reduced below the
minimum required for purchase by the Fund. Neither event will require the Fund
to sell such security. However, the Advisor will reassess promptly whether the
security presents minimal credit risks and determine whether continuing to hold
the security is in the best interests of the Fund. To the extent that the
ratings given by Moody's, S&P or another nationally recognized statistical
rating organization for securities may change as a result of changes in the
rating systems or because of corporate reorganization of such rating
organizations, the Funds will attempt to use comparable ratings as standards for
its investments in accordance with the investment objective and policies of the
Fund. Descriptions of each rating category are included as Appendix A to the
Statement of Additional Information.
Short-term obligations purchased by the Cash Investment Fund will either have
short-term debt ratings at the time of purchase in the top two categories by one
or more unaffiliated nationally recognized statistical rating organizations or
will be issued by issuers with such ratings. Unrated instruments purchased by a
Fund will be of comparable quality as determined by the Advisor.
Bank Obligations. The Balanced Fund, Cash Investment Fund and each Bond Fund
may purchase U.S. dollar-denominated bank obligations, such as certificates of
deposit, bankers' acceptances and interest-bearing savings and time deposits,
issued by U.S. or foreign banks or savings institutions having total assets at
the time of purchase in excess of $1 billion. The International Bond Fund may
purchase debt obligations issued or guaranteed by supranational organizations
such as the World Bank, Asian Development Bank, European Investment Bank and
European Union; debt obligations of U.S. and foreign banks and bank holding
companies and U.S. dollar-denominated bank obligations, including certificates
of deposit, bankers' acceptances, bank notes, deposit notes and interest-bearing
savings and time deposits, issued by U.S. or foreign banks or savings
institutions having total assets at the time of purchase in excess of $1
billion. For this purpose, the assets of a bank or savings institution include
the assets of both its domestic and foreign branches. See "Foreign Securities"
and "Foreign Debt Securities" for a discussion of the risks associated with
investments in obligations of foreign banks and foreign branches of domestic
banks. The Cash Investment Fund will invest in the obligations of domestic banks
and savings institutions only if their deposits are federally insured.
Investments by a Fund in the obligations of foreign banks and foreign branches
of domestic banks will not exceed 25% of the Fund's total assets at the time of
investment. Foreign bank obligations include Eurodollar Certificates of Deposit
("ECDs"), Eurodollar Time Deposits ("ETDs"), Canadian Time Deposits ("CTDs"),
Schedule Bs, Yankee Certificates of Deposit ("Yankee CDs") and Yankee Bankers'
Acceptances ("Yankee BAs"). A discussion of these obligations appears in the
Statement of Additional Information under "Additional Information on Portfolio
Investments--Non-Domestic Bank Obligations."
Asset-Backed Securities. Subject to applicable credit criteria, the Balanced
Fund, Cash Investment Fund, International Bond Fund and the Bond Funds may
purchase asset-backed securities (i.e., securities backed by
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mortgages, installment sales contracts, credit card receivables or other
assets). The average life of asset-backed securities varies with the maturities
of the underlying instruments which, in the case of mortgages, have maximum
maturities of forty years. The average life of a mortgage-backed instrument, in
particular, is likely to be substantially less than the original maturity of the
mortgage pools underlying the securities as the result of unscheduled principal
payments and mortgage prepayments. The rate of such mortgage prepayments, and
hence the life of the certificates, will be primarily a function of current
market rates and current conditions in the relevant housing markets. In
calculating the average weighted maturity of the Bond Funds, the maturity of
mortgage-backed instruments will be based on estimates of average life. The
relationship between mortgage prepayment and interest rates may give some
high-yielding mortgage-related securities less potential for growth in value
than conventional bonds with comparable maturities. In addition, in periods of
falling interest rates, the rate of mortgage prepayment tends to increase.
During such periods, the reinvestment of prepayment proceeds by a Fund will
generally be at lower rates than the rates that were carried by the obligations
that have been prepaid. Because of these and other reasons, an asset-backed
security's total return may be difficult to predict precisely. To the extent
that a Fund purchases mortgage-related or mortgage-backed securities at a
premium, mortgage prepayments (which may be made at any time without penalty)
may result in some loss of the Fund's principal investment to the extent of
premium paid.
Presently there are several types of mortgage-backed securities issued or
guaranteed by U.S. Government agencies, including guaranteed mortgage pass-
through certificates, which provide the holder with a pro rata interest in the
underlying mortgages, and collateralized mortgage obligations ("CMOs"), which
provide the holder with a specified interest in the cash flow of a pool of
underlying mortgages or other mortgage-backed securities. Issuers of CMOs
frequently elect to be taxed as a pass-through entity known as real estate
mortgage investment conduits, or REMICs. CMOs are issued in multiple classes,
each with a specified fixed or floating interest rate and a final distribution
date. The relative payment rights of the various CMO classes may be structured
in many ways. In most cases, however, payments of principal are applied to the
CMO classes in the order of their respective stated maturities, so that no
principal payments will be made on a CMO class until all other classes having an
earlier stated maturity date are paid in full. The classes may include accrual
certificates (also known as "Z-Bonds"), which only accrue interest at a
specified rate until other specified classes have been retired and are converted
thereafter to interest-paying securities. They may also include planned
amortization classes ("PAC") which generally require, within certain limits,
that specified amounts of principal be applied on each payment date, and
generally exhibit less yield and market volatility than other classes. The Funds
will not purchase "residual" CMO interests, which normally exhibit the greatest
price volatility.
Interest Rate and Currency Swaps. For hedging purposes, the International
Bond Fund may enter into interest rate and currency swap transactions and
purchase or sell interest rate caps and floors. The Fund expects to enter into
these transactions primarily to preserve a return or spread on a particular
investment or portion of its portfolio, to protect against currency fluctuations
as a technique for managing the portfolio's duration (i.e., the price
sensitivity to changes in interest rates) or to protect against any increase in
the price of securities the Fund anticipates purchasing at a later date. An
interest rate or currency swap is a derivative instrument which involves an
agreement between the Fund and another party to exchange payments calculated as
if they were interest on a fictitious ("notional") principal amount (e.g., an
exchange of floating rate payments by one party for fixed rate payments by the
other). An interest rate cap or floor is a derivative instrument which entitles
the purchaser, in exchange for a premium, to receive payments of interest on a
notional principal amount from the seller of the cap or floor, to the extent
that a specified reference rate exceeds or falls below a predetermined level.
The Fund usually enters into such transactions on a "net" basis, with the Fund
receiving or paying, as the case may be, only the net amount of the two payment
streams. The net amount of the excess, if any, of the Fund's obligations over
its entitlements with respect to each swap is accrued on a daily basis and an
amount of cash or high-quality liquid securities having an aggregate net asset
value at least equal to the accrued excess is maintained in a segregated account
by the Fund's custodian. If the Fund enters into a swap on other than a net
basis, or sells caps or floors, the Fund maintains a segregated account in the
full amount accrued on a daily basis of the Fund's obligations with respect to
the transaction. Such segregated accounts are maintained in accordance with
applicable regulations of the SEC.
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The use of swaps, caps and floors is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If the Advisor's forecast of market
values, interest rates, currency rates of exchange and other applicable factors
is incorrect, the investment performance of the Fund will diminish compared with
the performance that could have been achieved if these investment techniques
were not used. Moreover, even if the Advisor's forecasts were correct, a Fund's
swap position may correlate imperfectly with the asset or liability being
hedged. In addition, in the event of a default by the other party to the
transaction, the Fund might incur a loss.
Municipal Obligations. Long-term instruments acquired by the Tax-Free Bond
Funds will be rated at the time of purchase "A" or better by Moody's or S&P or,
if unrated, will be of comparable quality as determined by the Advisor. Short-
term instruments acquired by these Funds will either have short-term debt
ratings at the time of purchase in the top two categories by one or more
unaffiliated NRSROs or will be issued by issuers with such ratings. Unrated
instruments purchased by a Fund will be of comparable quality as determined by
the Advisor.
Although each Tax-Free Bond Fund may invest more than 25% of its net assets
in municipal revenue obligations, the interest on which is paid solely from
revenues of similar projects, the Funds do not currently intend to do so on a
regular basis. If it does, a Fund will be subject to the peculiar risks
presented by the laws and economic conditions relating to such projects to a
greater extent that it would be if its assets were not so concentrated.
Except during temporary defensive periods, at least 80% of the net assets of
each of the Tax-Free Bond Funds and Tax-Free Money Market Fund will be invested
in municipal obligations, the interest on which is exempt from regular Federal
income tax. This policy is fundamental and may be changed only with shareholder
approval. A portion of a Fund's dividends may be subject to Federal alternative
minimum tax. See "Taxes--Tax-Free Bond Funds."
The two principal classifications of municipal obligations are "general
obligation" securities and "revenue" securities. General obligation securities
are secured by the issuer's pledge of its full faith, credit and taxing power
for the payment of principal and interest. Revenue securities are payable only
from the revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise tax or other specific
revenue source such as the user of the facility being financed. Revenue
securities include private activity bonds which are not payable from the
unrestricted revenues of the issuer. Consequently, the credit quality of private
activity bonds is usually directly related to the credit standing of the
corporate user of the facility involved.
Municipal obligations may also include "moral obligation" bonds, which are
normally issued by special purpose public authorities. If the issuer of moral
obligation bonds is unable to meet its debt service obligations from current
revenues, it may draw on a reserve fund, the restoration of which is a moral
commitment but not a legal obligation of the state or municipality which created
the issuer.
Michigan Municipal Obligations. As stated above, in managing the Tax-Free
Intermediate Bond Fund, the Advisor intends to invest, when possible, the Fund's
assets in Michigan Municipal Obligations, provided the investment is consistent
with the Fund's investment objective and policies. In managing the Michigan
Triple Tax-Free Bond Fund, the Advisor intends to concentrate in Michigan
Municipal Obligations. The number of Michigan municipal issuers is, however,
relatively limited, and the supply of municipal obligations issued by them that
meet the Fund's investment criteria is restricted. In addition, Comerica Bank
and its affiliates deal in certain Michigan obligations and, under the 1940 Act,
are prevented from entering into securities transactions with the Funds on a
principal basis. The 1940 Act also limits the Funds' ability to purchase
securities from underwriting syndicates in which either Comerica Bank or one of
its affiliates is a member. For these reasons the Advisor cannot predict
precisely what percentage of the Fund's portfolio will be invested in such
issuers. If the State of Michigan or any of its political subdivisions were to
suffer serious financial difficulties jeopardizing their ability to pay their
obligations, the marketability of obligations issued by the State or localities
within the State, and the value of the Funds' portfolio, could be adversely
affected.
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The principal sectors of Michigan's diversified economy are manufacturing of
durable goods (including automobiles and components and office equipment),
tourism and agriculture. As reflected in historical employment figures, the
State's economy has lessened its dependence upon durable goods manufacturing. In
1960, employment in such industry accounted for 33% of the State's work force.
By 1994, this figure had fallen to 17%. However, such manufacturing continues to
be an important part of the State's economy. The particular industries are
highly cyclical and in the period 1994-1995 are expected to operate at somewhat
less than full capacity. This factor generally adversely affects the revenue
streams of the State and its political subdivisions because it adversely impacts
tax sources, particularly sales, income and single business taxes.
In 1994, a ballot proposal ("Proposal A") to implement extensive property tax
and school finance reform measures was subject to voter approval and in fact
approved on March 15, 1994. Under Proposal A as approved, effective May 1, 1994,
the State sales and use tax increased from 4% to 6% and the State income tax
decreased from 4.6% to 4.4%. As of January 1, 1995, a 0.75% real estate transfer
tax also became effective. In 1994, a State education property tax of 6 mills
was imposed on all real and personal property currently subject to the general
property tax. In addition, all school boards can now, with voter approval, levy
up to the lesser of 18 mills or the number of mills levied in 1993 for school
operating purposes, on non-homestead property. Proposal A contained additional
provisions regarding the ability of local school districts to levy taxes as well
as a limit on assessment increases for each parcel of property, beginning in
1995 to the lesser of 5% or the rate of inflation. When property is subsequently
sold, its assessed value is adjusted to equal 50% of true cash value. Under
Proposal A, much of the additional revenue generated by these taxes is dedicated
to the State School Aid Fund.
Currently, the State's general obligation bonds are rated "A1" by Moody's and
"AA" by Fitch. To the extent that the portfolio of Michigan municipal bonds is
comprised of revenue or general obligations of local governments or authorities,
rather than general obligations of the State of Michigan itself, ratings on such
Michigan obligations will be different from those given to the State of Michigan
and their value may be independently affected by economic matters not directly
impacting the State. The Statement of Additional Information includes a further
discussion of Proposal A and economic conditions in Michigan.
Except as stated above with respect to investments by the Tax-Free
Intermediate Bond Fund and Michigan Triple Tax-Free Bond Fund in Michigan
Municipal Obligations, the Advisor does not intend to invest more than 25% of
any Fund's total assets on a regular basis in securities whose issuers are in
the same state.
U.S. Government Obligations. The Balanced Fund, U.S. Treasury Money Market
Fund, Cash Investment Fund, each Equity Fund, International Bond Fund, and each
Bond Fund may purchase obligations issued or guaranteed by the U.S. Government
and, except in the case of the U.S. Treasury Money Market Fund, U.S. Government
agencies and instrumentalities. Obligations of certain agencies and
instrumentalities of the U.S. Government, such as those of the Government
National Mortgage Association, are supported by the full faith and credit of the
U.S. Treasury. Others, such as those of the Export-Import Bank of the United
States, are supported by the right of the issuer to borrow from the U.S.
Treasury; and still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the agency or instrumentality
issuing the obligation. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
is not obligated to do so by law.
Stripped Securities. The Balanced Fund, Cash Investment Fund, U.S. Treasury
Money Market Fund, International Bond Fund and each of the Bond Funds may
purchase participations in trusts that hold U.S. Treasury and agency securities
(such as TIGRs and CATS) and also may purchase Treasury receipts and other
stripped securities, which represent beneficial ownership interests in either
future interest payments or the future principal payments on U.S. Government
obligations. These instruments are issued at a discount to their "face value"
and may (particularly in the case of stripped mortgage-backed securities)
exhibit greater price volatility than ordinary debt securities because of the
manner in which their principal and interest are returned to investors. The U.S.
Treasury Money Market Fund may purchase only U.S. Treasury issued stripped
securities. Investments by the U.S. Treasury Money Market Fund in such
instruments, other than those recorded in the Federal Reserve book-entry
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recordkeeping system, will not exceed 35% of the Fund's total assets at the
time of purchase. Stripped securities will normally be considered illiquid
investments and will be acquired subject to the limitation on illiquid
investments unless determined to be liquid under guidelines established by
the Board of Trustees/ Directors.
Repurchase Agreements. The Funds may agree to purchase securities from
financial institutions subject to the seller's agreement to repurchase them at
an agreed-upon time and price ("repurchase agreements"). With respect to the
U.S. Treasury Money Market Fund and the Cash Investment Fund, the securities
held subject to a repurchase agreement may have stated maturities exceeding 397
days months, provided the repurchase agreement itself matures in 397 days. The
financial institutions with which a Fund may enter into repurchase agreements
include member banks of the Federal Reserve System, any foreign bank or any
domestic or foreign broker/dealer which is recognized as a reporting government
securities dealer. The Advisor will review and continuously monitor the
creditworthiness of the seller under a repurchase agreement, and will require
the seller to maintain liquid assets in a segregated account in an amount that
is greater than the repurchase price. Default by or bankruptcy of the seller
would, however, expose a Fund to possible loss because of adverse market action
or delays in connection with the disposition of the underlying obligations.
Reverse Repurchase Agreements. The Balanced Fund, U.S. Treasury Money Market
Fund, Cash Investment Fund, International Bond Fund, each of the Bond Funds and
each of the Equity Funds (except the Multi-Season Growth Fund) may borrow funds
for temporary purposes by selling portfolio securities to financial institutions
such as banks and broker/dealers and agreeing to repurchase them at a mutually
specified date and price ("reverse repurchase agreements"). Reverse repurchase
agreements involve the risk that the market value of the securities sold by a
Fund may decline below the repurchase price. A Fund would pay interest on
amounts obtained pursuant to a reverse repurchase agreement.
Stand-by Commitments. Each Tax-Free Bond Fund and the Tax-Free Money Market
Fund may acquire "stand-by commitments" with respect to municipal obligations
held by them. Under a stand-by commitment, a dealer agrees to purchase, at the
Fund's option, specified municipal obligations at a specified price. The
acquisition of stand-by commitment may increase the cost, and thereby reduce the
yield, of the municipal obligations to which the commitment relates. The Funds
will acquire stand-by commitments solely to facilitate portfolio liquidity and
do not intend to exercise their rights thereunder for trading purposes.
Variable and Floating Rate Securities. Each Fund (other than the U.S. Treasury
Money Market Fund) may purchase variable and floating rate instruments which may
have stated maturities in excess of the Fund's maturity limitations but are
deemed to have shorter maturities because the Fund can demand payment of the
principal of the security at least once within such periods on not more than
thirty days' notice (this demand feature is not required if the security is
guaranteed by the U.S. Government or an agency or instrumentality thereof).
These securities may include variable amount master demand notes that permit the
indebtedness to vary in addition to providing for periodic adjustments in the
interest rate. Unrated variable and floating rate securities will be determined
by the Advisor to be of comparable quality at the time of purchase to rated
securities purchasable by a Fund. The absence of an active secondary market,
however, could make it difficult to dispose of the securities, and a Fund could
suffer a loss if the issuer defaulted or during periods that the Fund is not
entitled to exercise its demand rights. Variable and floating rate securities
held by a Fund will be subject to the Fund's limitation on illiquid investments
when the Fund may not demand payment of the principal amount within seven days
absent a reliable trading market.
When-Issued Purchases and Forward Commitments. Each Fund may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"forward commitment" basis. These transactions, which involve a commitment by a
Fund to purchase or sell particular securities with payment and delivery taking
place at a future date (perhaps one or two months later), permit the Fund to
lock-in a price or yield on a security, regardless of future changes in interest
rates. When-issued and forward commitment transactions involve the risk that the
price or yield obtained may be less favorable than the price or yield available
when the delivery takes place. Each Fund will establish a segregated account
consisting of cash, U.S. Government securities or other high-grade debt
securities in an amount equal to the amount of its when-issued purchases and
forward commitments. Each Fund's
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when-issued purchases and forward purchase commitments are not expected to
exceed 25% of the value of the particular Fund's total assets absent unusual
market conditions. The Funds do not intend to engage in when-issued purchases
and forward commitments for speculative purposes but only in furtherance of
their investment objectives.
Fixed Income Securities. Generally, the market value of fixed income
securities in the Balanced Fund, Cash Investment Fund, U.S. Treasury Money
Market Fund, International Bond Fund, Small-Cap Value Fund, Micro-Cap Equity
Fund and each of the Bond Funds can be expected to vary inversely to changes in
prevailing interest rates. Investors should also recognize that, in periods of
declining interest rates, the yields of investment portfolios composed primarily
of fixed income securities will tend to be higher than prevailing market rates
and, in periods of rising interest rates, yields will tend to be somewhat lower.
The market value of a Fund's investment will also change in response to the
relative financial strengths of each issuer. Changes in the financial strengths
of an issuer or charges in the ratings of a particular security may also affect
the value of those investments. Fluctuations in the market value of fixed income
securities subsequent to their acquisitions will not affect cash income from
such securities, but will be reflected in a Fund's net asset value.
The International Bond Fund and the Bond Funds may purchase zero-coupon bonds
(i.e., discount debt obligations that do not make periodic interest payments).
Zero-coupon bonds are subject to greater market fluctuations from changing
interest rates than debt obligations of comparable maturities which make current
distributions of interest.
Guaranteed Investment Contracts. The International Bond Fund, the Bond Funds
and the Cash Investment Fund may make limited investments in guaranteed
investment contracts ("GICs") issued by the U.S. insurance companies. Pursuant
to such contracts, a Fund makes cash contributions to a deposit fund of the
insurance company's general account. The insurance company then credits to the
Fund on a monthly basis interest which is based on an index (in most cases this
index is expected to be the Salomon Brothers CD Index), but is guaranteed not to
be less than a certain minimum rate. A GIC is normally a general obligation of
the issuing insurance company and not funded by a separate account. The purchase
price paid for a GIC becomes part of the general assets of the insurance
company, and the contract is paid from the company's general assets. A Fund will
only purchase GICs from insurance companies which, at the time of purchase, have
assets of $1 billion or more and meet quality and credit standards established
by the Advisor pursuant to guidelines approved by the Board of Trustees.
Generally, GICs are not assignable or transferable without the permission of the
issuing insurance companies, and an active secondary market in GICs does not
currently exist. Therefore, GICs will normally be considered illiquid
investments, and will be acquired subject to the limitation on illiquid
investments.
Investment Company Securities. In connection with the management of their
daily cash positions, the Funds may invest in securities issued by other
investment companies which invest in short-term debt securities and which seek
to maintain a $1.00 net asset value per share (i.e., "money market funds"). The
International Equity Fund may purchase shares of investment companies investing
primarily in foreign securities, including so called "country funds." Country
funds have portfolios consisting exclusively of securities of issuers located in
one or more foreign countries. The Index 500 Fund may also invest in SPDRs and
shares of other investment companies that are structured to seek a similar
correlation to the performance of the S&P 500 Index. Securities of other
investment companies will be acquired within limits prescribed by the 1940 Act.
These limitations, among other matters, restrict investments in securities of
other investment companies to no more than 10% of the value of a Fund's total
assets, with no more than 5% invested in the securities of any one investment
company. As a shareholder of another investment company, a Fund, other than the
Real Estate Equity Investment Fund, would bear, along with other shareholders,
its pro rata portion of the other investment company's expenses, including
advisory fees. These expenses would be in addition to the expenses each Fund
bears directly in connection with its own operations.
Liquidity Management. Pending investment, to meet anticipated redemption
requests, or as a temporary defensive measure if the Advisor determines that
market conditions warrant, each of the Equity Funds may also
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invest without limitation in short-term U.S. Government obligations, high
quality money market instruments, variable and floating rate instruments and
repurchase agreements as described above.
Temporary Investments. The Tax-Free Bond Funds and the Tax-Free Money Market
Fund may hold uninvested cash if, in the opinion of the Advisor, suitable
obligations bearing tax-exempt interest are unavailable. Uninvested cash will
not earn income. In addition, each of the Tax-Free Bond Funds may invest from
time to time, to the extent consistent with its investment objective, a portion
of its assets on a temporary basis or for temporary defensive purposes in short-
term money market instruments ("Temporary Investments"), the income from which
is subject to Federal income tax.
Temporary Investments will generally not exceed 20% of the total assets of a
Fund except when made for temporary defensive purposes, and may include
obligations of the U.S. Government or its agencies or instrumentalities; debt
securities (including commercial paper) of issuers having, at the time of
purchase, a quality rating within the two highest categories of either Moody's
or S&P; certificates of deposit or bankers' acceptances of domestic branches of
U.S. banks with total assets at the time of purchase of $1 billion or more; and
repurchase agreements with respect to such obligations.
Diversification. The Funds, other than the Tax-Free Intermediate Bond Fund,
the Michigan Triple Tax-Free Bond Fund and the International Bond Fund, are each
classified as a diversified investment company, under the 1940 Act; the Tax-Free
Intermediate Bond Fund, the Michigan Triple Tax-Free Bond Fund and the
International Bond Fund are each classified as non-diversified. Investment
return on a non-diversified portfolio typically is dependent upon the
performance of a smaller number of securities relative to the number held in a
diversified portfolio. Consequently, the change in value of any one security may
affect the overall value of a non-diversified portfolio more than it would a
diversified portfolio, and thereby subject the market-based net asset value per
share of the non-diversified portfolio to greater fluctuations. In addition, a
non-diversified portfolio may be more susceptible to economic, political and
regulatory developments than a diversified investment portfolio with similar
objectives. The Funds will, however, comply with the diversification
requirements imposed by the Internal Revenue Code of 1986, as amended (the
"Code").
Illiquid Securities. The Balanced Fund and each of the Equity, Bond,
International Bond and Tax-Free Bond Funds may invest up to 15% of the total
value of its net assets (determined at the time of acquisition) in securities
which are illiquid. Each of the Money Market Funds will not invest more than 10%
of their respective net assets (determined at the time of acquisition) in
securities which are illiquid. Illiquid securities would generally include
repurchase agreements and time deposits with notice/termination dates in excess
of seven days, and certain securities which are subject to trading restrictions
because they are not registered under the Securities Act of 1933, as amended.
If, after the time of acquisition, events cause this limit to be exceeded, a
Fund will take steps to reduce the aggregate amount of illiquid securities as
soon as reasonably practicable in accordance with the policies of the SEC.
Subject to these limitations are GICs and repurchase agreements and time
deposits which do not provide for payment within seven days.
Each of the Funds may invest in commercial obligations issued in reliance on
the "private placement" exemption from registration afforded by Section 4(2) of
the Securities Act of 1933, as amended ("Section 4(2) paper"). Each Fund may
also purchase securities that are not registered under the Securities Act of
1933, as amended, but which can be sold to qualified institutional buyers in
accordance with Rule 144A under that Act ("Rule 144A securities"). Section 4(2)
paper is restricted as to disposition under the Federal securities laws, and
generally is sold to institutional investors which agree that they are
purchasing the paper for investment and not with a view to public distribution.
Any resale by the purchaser must be in an exempt transaction. Section 4(2) paper
normally is resold to other institutional investors through or with the
assistance of the issuer or investment dealers which make a market in the
Section 4(2) paper, thus providing liquidity. Rule 144A securities generally
must be sold only to other qualified institutional buyers. If a particular
investment in Section 4(2) paper or Rule 144A securities is not determined to be
liquid, that investment will be included within a Fund's limitation on
investment in illiquid securities. The Advisor will determine the liquidity of
such investments pursuant to guidelines established by the Company's Board of
Trustees or Munder's Board of Directors. The Multi-Season
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Growth, Mid-Cap Growth and Value Funds' investments in restricted securities
will be limited to 5% of each Fund's total assets excluding Rule 144A
securities. The Real Estate Equity Investment Fund will limit its investment in
restricted securities to 10% of the Fund's assets, excluding Rule 144A
securities, and will limit its investment in all restricted securities including
Rule 144A securities, to 15% of its total assets.
Lending of Portfolio Securities. To enhance the return of each of their
respective portfolios, each Fund may lend securities in their portfolios
representing up to 25% of their total assets, taken at market value, to
securities firms and financial institutions, provided that each loan is secured
continuously by collateral in the form of cash, high quality money market
instruments or short-term U.S. Government securities adjusted daily to have a
market value at least equal to the current market value of the securities
loaned. The risk in lending portfolio securities, as with other extensions of
credit, consists of possible delay in the recovery of the securities or possible
loss of rights in the collateral should the borrower fail financially.
Borrowing. The Funds are authorized to borrow money in amounts up to 5% of the
value of each Fund's total assets at the time of such borrowing for temporary
purposes. However, a Fund is authorized to borrow money in amounts up to
33/1//3% of its assets, as permitted by the 1940 Act, for the purpose of meeting
redemption requests. Borrowing by a Fund creates an opportunity for greater
total return but, at the same time, increases exposure to capital risk. In
addition, borrowed funds are subject to interest costs that may offset or exceed
the return earned on the borrowed funds. However, a Fund will not purchase
portfolio securities while borrowings exceed 5% of the Fund's total assets. For
more detailed information with respect to the risks associated with borrowing,
see "Borrowing" in the Statement of Additional Information.
Portfolio Transactions and Turnover. All orders for the purchase or sale of
securities on behalf of a Fund are placed by the Advisor with broker/dealers
that the Advisor selects. Short-term capital gains realized from portfolio
transactions are taxable to shareholders as ordinary income. High portfolio
turnover rates involve larger brokerage commission expenses or transaction costs
which must be borne directly by each Fund. The Advisor will not consider
portfolio turnover rate a limiting factor in making investment decisions
consistent with the Funds' respective objectives and policies. It is anticipated
that the portfolio turnover rate of each of Small-Cap Value Fund, Micro-Cap
Equity Fund and Equity Selection Fund will not exceed 100% and the portfolio
turnover rate for the International Bond Fund will range from 200% to 300%. See
"Financial Highlights" for the portfolio turnover rate of each Fund other than
Small-Cap Value Fund, Micro-Cap Equity Fund, Equity Selection Fund and
International Bond Fund.
Industry Concentration. Because the Real Estate Equity Investment Fund invests
primarily in the real estate industry, it could conceivably own real estate
directly as result of a default on debt securities it owns. The Fund, therefore,
may be subject to certain risks associated with the direct ownership, as well as
indirect ownership, of real estate. These risk include: declines in the value of
real estate, risks related to general and local economic conditions,
overbuilding and increased competition, increases in property taxes and
operating expenses, changes in zoning laws, casualty or condemnation losses,
variations in rental income, changes in neighborhood values, the appeal of
properties to tenants and increase in interest rates. If the Fund has rental
income or income from the disposition of real property, the receipt of such
income may adversely affect its ability to regain its tax status as a regulated
investment company. See "Tax Status" in the Statement of Additional Information.
See "Tax Status" in the Statement of Additional Information. Because the Fund
may invest more than 25% of its total assets in any one sector of the real
estate or real estate related industries, it may be subject to greater risk and
market fluctuations than a portfolio representing a broader range of industries.
In addition, equity real estate investment trusts may be affected by changes
in the value of the underlying property owned by the trust, while mortgage real
estate investment trusts may be affected by the quality of credit extended.
Equity and mortgage real estate investment trusts are dependent upon management
skill, may not be diversified and are subject to the risk of financing projects.
Such trusts are also subject to heavy cash flow dependency, defaults by
borrowers, self liquidation and the possibility of failing to qualify for the
beneficial tax treatment available to real estate investment trusts under the
Code and to maintain exemption from the 1940 Act. Real estate investment trusts
may be subject to interest rate risks similar to fixed income securities. In
general,
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fixed income security prices vary inversely with interest rates (when
interest rates rise, prices fall; and, conversely, when interest rates fall,
prices rise). Additionally, while the Fund intends to primarily purchase
publicly traded real estate investment trusts, some real estate investment
trusts may be subject to lower market liquidity due to their small size. This
may impact the Fund's ability to sell the securities, or the price at which
such securities may be sold. Changes in prevailing interest rates may adversely
affect the value of the debt securities in which the Fund will invest. By
investing in real estate investment trusts indirectly through the Fund, a
shareholder will bear not only his or her proportionate share of expenses of
the Fund, but also, indirectly, similar expenses of the real estate investment
trusts.
INVESTMENT LIMITATIONS
Except for the policy to invest at least 80% of each Tax-Free Bond Fund's and
of the Tax-Free Money Market Fund's net assets in municipal obligations bearing
tax-exempt interest, and the Multi-Season Growth and Real Estate Equity
Investment Funds' investment objectives, the investment objectives and policies
stated above may be changed by the Company's Board of Trustees or Munder's Board
of Directors without approval by a majority of a Fund's outstanding shares.
However, shareholders will be notified in writing at least thirty days in
advance of any material change, except where notice is not required. No
assurance can be given that a Fund will achieve its investment objective.
Each Munder Fund has also adopted certain fundamental investment limitations
that may be changed only with the approval of a "majority of the outstanding
shares of a Fund" (as defined in the Statement of Additional Information). The
following descriptions summarize several of the Munder Funds' fundamental
investment policies, which are set forth in full in the Statement of Additional
Information. The MFI Funds' restrictions are set forth in the Statement of
Additional Information.
No Munder Fund may:
(1) purchase securities (except U.S. Government Securities) if more than 5%
of its total assets will be invested in the securities of any one issuer,
except that up to 25% of a Fund's total assets, and up to 50% in the case of
the Tax-Free Intermediate Bond Fund and Michigan Triple Tax-Free Bond Fund may
be invested without regard to this 5% limitation;
(2) subject to the foregoing exceptions, purchase more than 10% of the
outstanding voting securities of any issuer;
(3) invest 25% or more of its total assets in one or more issuers
conducting their principal business activities in the same industry
(securities issued or guaranteed by the United States Government, its agencies
or instrumentalities are not considered to represent industries); and
(4) borrow money or issue senior securities (as defined in the 1940 Act)
except (i) to borrow for temporary purposes in amounts not exceeding 5% of its
total assets and (ii) to meet redemption requests, in amounts (when aggregated
with amounts borrowed under clause (i)) not exceeding 33 /1//3% of its total
assets.
These investment limitations are applied at the time investment securities are
purchased.
PURCHASE AND REDEMPTION OF SHARES
Shares of each Fund are sold on a continuous basis for the Company and Munder
by the Distributor, Funds Distributor, Inc. The Distributor is a registered
broker/dealer with principal offices at One Exchange Place, Boston,
Massachusetts 02109.
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PURCHASE OF SHARES
Class K Shares of each Fund are sold without an initial or contingent sales
charge to customers ("Customers") of banks and other institutions, and the
immediate family members of such Customers, that have entered into agreements
with the Company or Munder to provide 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 Funds will
be governed by the Customers' account agreements with the institution. Investors
wishing to purchase shares of any Fund should contact their account
representatives.
Shares of each Fund are sold at net asset value per share next determined on
that day after receipt of a purchase order. Purchase orders by an institution
for shares in the Money Market Funds must be received, together with payment, by
the Distributor or Transfer Agent by 12:00 noon (Eastern time) on any business
day. A purchase order received by the Distributor or by the Transfer Agent after
such time will not be accepted; notice thereof will be given to the institution
placing the order, and any funds received will be returned promptly to the
sending institution.
Purchase orders by an institution for shares in the Balanced, Equity,
International Bond, Bond and Tax-Free Bond Funds must be received by the
Distributor or the Transfer Agent before the close of regular trading hours
(currently 4:00 p.m. Eastern time) on the New York Stock Exchange (the
"Exchange"), on any business day. Payment for such shares may be made by
institutions in Federal funds or other funds immediately available to the
Custodian no later than 4:00 p.m. (Eastern 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 Funds with
respect to the investments of its customers as described below under
"Management." With the exception of the Real Estate Equity Investment Fund,
payments for Shares of a Fund may, in the discretion of the Advisor, be made in
the form of securities that are permissible investments for that Fund. For
further information see "In-Kind Purchases" in the Statement of Additional
Information.
Purchases may be effected on days the Exchange is open for business (a
"Business Day"). The Funds reserve 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 Funds,
and share certificates are not issued unless expressly requested in writing.
Certificates are not issued for fractional shares.
Neither the Company, Munder, 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
and Munder will attempt to confirm that telephone instructions are genuine and
will use such procedures as are considered reasonable. To the extent that the
Company or Munder 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.
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REDEMPTION OF SHARES
Redemption orders are effected at the net asset value per share next
determined after receipt of the order by the Transfer Agent. Shares held by an
institution on behalf of its customers must be redeemed in accordance with
instructions and limitations pertaining to the account at the institution. The
Company and Munder intend to pay cash for all shares redeemed, but in unusual
circumstances may make payment wholly or partly in readily marketable 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 Transfer Agent and to credit its Customers' accounts with the
redemption proceeds on a timely basis. If a redemption order for shares of a
Fund (other than the Money Market Funds), is received by the Transfer Agent
before 4:00 p.m. Eastern time on a Business Day, payment is normally wired to
the redeeming institution the following business day. If a redemption order for
shares of the Cash Investment Fund, U.S. Treasury Money Market Fund or Tax-Free
Money Market Fund is received by the Transfer Agent before 12:00 noon Eastern
time on a business day, payment is normally wired on the same business day; if a
redemption order is received by the Transfer Agent between 12:00 noon Eastern
time and 4:00 p.m. Eastern time on a business day, payment is normally wired on
the next business day. The Company and Munder reserve the right to delay the
wiring of redemption proceeds for up to seven days after it receives a
redemption order if, in the judgment of the Advisor, an earlier payment could
adversely affect a Fund.
Free check writing is available with respect to Class K shares of the
following Munder Funds: Bond Fund, Intermediate Bond Fund, U.S. government
Income Fund, Michigan Triple Tax-Free Bond Fund, Tax-Free Bond Fund, Tax-Free
Intermediate Bond Fund, Tax-Free Money Market Fund, U.S. Treasury Money Market
Fund and Cash Investment Fund. With this service, a shareholder may write
checks in the amount of $500 or more. To establish this check writing service
after opening an account, the shareholder must contact the Transfer Agent or
his/her broker to obtain an Account Application Form. Upon 30 days' prior
written notice to shareholders, the check writing privilege may be modified or
terminated. An investor cannot close an account in a 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.
DIVIDENDS AND DISTRIBUTIONS
The Funds expect to pay dividends and distributions from the net income and
capital gains, if any, earned on investments held by the Funds. Dividends from
net investment income are declared and paid quarterly by the Balanced Fund, the
International Bond Fund and each of the Equity Funds, except the Multi-Season
Growth Fund, Real Estate Equity Investment Fund, Mid-Cap Growth Fund,
International Equity Fund, Value Fund, Small-Cap Value Fund, Micro-Cap Equity
Fund and Equity Selection Fund. Dividends from net income are declared and paid
at least annually by Multi-Season Growth Fund, Mid-Cap Growth Fund,
International Equity Fund, Value Fund, Small-Cap Value Fund, Equity Selection
Fund and Micro-Cap Equity Fund and monthly by the Real Estate Equity Investment
Fund. The net income of each of the Tax-Free Money Market Fund, U.S. Treasury
Money Market Fund and Cash Investment Fund is declared daily, and the net income
of each Bond Fund and each Tax-Free Bond Fund is declared monthly as a dividend,
and generally are paid within six business days of month-end.
Shareholders of the Money Market Funds whose purchase orders are received and
executed by 12:00 noon (Eastern time) receive dividends for that day.
Shareholders whose redemption orders have been received by 12:00 noon (Eastern
time) will not receive dividends for that day, while shareholders whose
redemption orders are received after 12:00 noon (Eastern time) will receive that
day's dividends. See "Purchase and Redemption of Shares."
Each Fund's net realized capital gains (including net short-term capital
gains), if any, are distributed at least annually.
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Dividends and capital gains are paid in the form of additional shares of the
same class of the same 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, 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 same 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 a Fund.
Each 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 Trustees/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
trustees' 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
Trustees in a manner that the Board determines to be fair and equitable. Any
general expenses of Munder that are not readily identifiable as belonging to a
particular fund of Munder are allocated among all funds of Munder by or under
the direction of the Board of Directors in a manner that the Board 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.
Each 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
to Institutions under the Class K Plan, described below.
NET ASSET VALUE
Net asset value for Class K Shares in the Funds 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 Balanced Fund, and each of the Equity,
International Bond, Bond and Tax-Free Bond Funds for the purpose of pricing
purchase and redemption orders is determined as of the close of regular trading
hours on the Exchange (currently 4:00 p.m., New York time) on each Business Day.
With respect to the Funds, securities that are 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.
Options will be valued at market value or fair value if no market exists.
Futures contracts will be valued in like manner, except that open futures
contract sales will be valued using the closing settlement price or, in the
absence of such a price, the most recently quoted asked price. Portfolio
securities primarily traded on the London Stock Exchange are generally valued at
the mid-price between the current bid and asked prices. Portfolio securities
which are primarily traded on foreign securities exchanges, other than the
London Stock Exchange, are generally valued at the preceding closing values of
such securities on their respective exchanges, except when an occurrence
subsequent to the time a value was so established is likely to have changed such
value. In such an event, the fair value of those securities will be determined
through the consideration of other factors by or under the direction of the
Boards of Trustees and
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Directors. 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 Boards of Trustees and Directors. Debt securities
with remaining maturities of 60 days or less are valued at amortized cost,
unless the Boards of Trustees and Directors determine 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 net asset value per share of each of the Money Market Funds for the
purpose of pricing purchase and redemption orders is determined as of 12:00 noon
(Eastern time) and as of the close of regular trading on the Exchange on each
business day. In seeking to maintain a net asset value of $1.00 per share with
respect to each of these Funds, the Company values the Fund's portfolio
securities according to the amortized cost method of valuation. Under this
method, securities are valued initially at cost on the date of purchase.
Thereafter, absent unusual circumstances, the Fund assumes a constant
proportionate amortization of any discount or premium until maturity of the
security.
The Funds do not accept purchase and redemption orders on days the Exchange is
closed. The Exchange is currently scheduled to be closed on New Year's Day,
Presidents' Day, Good Friday, Memorial Day, 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
BOARDS OF TRUSTEES AND DIRECTORS
The Company and Munder are managed under the direction of their governing
Boards of Trustees and Directors. The Statements of Additional Information
contains the name and background information of each Trustee and Director.
INVESTMENT ADVISOR
The investment advisor of the Funds is Munder Capital Management, a Delaware
general partnership with its principal offices at 480 Pierce Street, Birmingham,
Michigan 48009. The Advisor was formed in December, 1994. On February 1, 1995,
the Advisor assumed the investment advisory duties with respect to the Funds
previously performed by Woodbridge Capital Management, Inc. ("Woodbridge") and
Old MCM, Inc. ("MCM"). The principal partners of the Advisor are MCM, 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 June 30, 1996, the Advisor and
its affiliates had approximately $34 billion in assets under management, of
which $17 billion were invested in equity securities, $6 billion were invested
in money market or other short-term instruments, and $11 billion were invested
in other fixed income securities.
Subject to the supervision of the Board of Trustees of the Company and the
Board of Directors of Munder, the Advisor provides overall investment management
for each Fund, provides research and credit analysis, is responsible for all
purchases and sales of portfolio securities, maintains books and records with
respect to each Fund's securities transactions and provides periodic and special
reports to the Board of Trustees and the Board of Directors as requested.
The Portfolio Managers primarily responsible for the management of the
investment selections of the portfolios of the Funds (other than the Index 500,
and the Money Market Funds), together with information as to their principal
business occupations during the past five years, are shown below.
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Leonard J. Barr II, CFA, Senior Vice President and Director of Research of the
Advisor has co-managed the Multi-Season Growth Fund since its inception in
April, 1993 and has co-managed the Balanced Fund since February, 1995. Prior to
February, 1995, he was Vice President and Director of Research for MCM.
Ann J. Conrad, CFA, Vice President and Director of Specialty Equity Products
of the Advisor or Woodbridge since June, 1992, has managed the Accelerating
Growth Fund since the Fund's inception in December, 1991, and has co-managed the
Balanced Fund since the Fund's inception in March, 1993. Prior to June, 1992,
she was Director of Equity Strategy for Comerica Capital Management, Inc.
Arnold Kent Douville, began his investment career as an associate in the
Capital Markets group of the investment banking firm, Drexel Burnham Lambert.
Mr. Douville joined MCM in 1989 and now serves as a senior portfolio manager of
the Advisor and specializes in managing Mid-Cap Growth portfolios for
institutional clients. Mr. Douville has co-managed the Mid-Cap Growth Fund since
its inception in August, 1995. Prior to beginning his investment career, Mr.
Douville worked as a cost analyst for The Analytic Sciences Corporation (TASC).
Mr. Douville earned his B.S. degree in economics from the United States Air
Force Academy and his M.B.A. from the University of Chicago Graduate School of
Business.
Wendy B. Harries, Senior Fixed Income Portfolio Manager of the Advisor or
Woodbridge since June, 1992, is the portfolio manager primarily responsible for
the management of the investment selections of the portfolios of the Tax-Free
Bond Fund, Tax-Free Intermediate Bond Fund and Michigan Triple Tax-Free Bond
Fund. Ms. Harries has managed the Tax-Free Intermediate Bond Fund since May,
1993 and the Michigan Triple Tax-Free Bond Fund since its inception in January,
1994 and the Tax-Free Bond Fund since its inception in July, 1994. Prior to June
1992, she was Fixed Income Manager for Comerica Capital Management, Inc.
Otto Hinzmann, Jr., Vice President and Director of Equity Portfolio Management
of the Advisor or MCM since January, 1987, has managed the Growth & Income Fund
since February, 1995. Prior to 1987 he was Director of Equity Strategy for
Comerica Bank.
Anne K. Kennedy, Vice President and Director of Corporate Bond Trading of the
Advisor or MCM, has managed the Intermediate Bond Fund since March, 1995. In
addition to managing the corporate bond trading function, Ms. Kennedy is
responsible for managing institutional fixed income portfolios, most recently,
Ms. Kennedy has served as a portfolio manager for MCM's pension and insurance
assets. Prior to joining MCM in 1991, she was involved in several investment
related areas for Ford Motor Company.
Lee P. Munder, CFA, President and Chief Executive Officer of the Advisor or
MCM since MCM's inception in 1985. Manager of the Real Estate Equity Investment
Fund since its inception in September, 1994 and is co-manager of the Multi-
Season Growth Fund since its inception in April, 1993. Mr. Munder began his
investment career in 1969 as Chief Trust Investment Officer for Security Bank
and Trust of Southgate, Michigan. From 1973 to 1985 he served as portfolio
manager at Loomis Sayles & Co., Inc. serving in later years as Vice President
and Senior Partner. In 1985, Mr. Munder left Loomis Sayles & Co., Inc. and
founded MCM.
Todd B. Johnson, Director of Equity Management of the Advisor is currently the
Portfolio Manager of the International Equity Fund. Mr. Johnson previously
served as a portfolio manager at Woodbridge Capital Management and Manufacturers
Bank. Mr. Johnson received a B.A. in Finance from Michigan State University and
an M.B.A. from Wayne State University.
James C. Robinson, Vice President and Chief Investment Officer--Fixed Income
of the Advisor or MCM since 1987, has co-managed the Bond Fund, U.S. Government
Income Fund and Intermediate Bond Fund since March, 1995. Mr. Robinson has co-
managed the Balanced Fund since June, 1995. In his position, Mr. Robinson
oversees the Advisor's fixed income strategy and manages institutional
portfolios. Prior to his joining MCM in 1987, he was a Senior Fixed Income
Portfolio Manager for the National Bank of Detroit Trust Investment Department.
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Peter G. Root, Senior Portfolio Manager of the Advisor has managed the U.S.
Government Income Fund since March, 1995. Mr. Root joined MCM in 1991 and as a
Senior Portfolio Manager has been responsible for fixed income portfolios.
Gerald Seizert, Executive Vice President and Chief Investment Officer of all
equity management of the Advisor and manager of the Value Fund since its
inception in August, 1995 and the Small-Cap Value Fund upon commencement of
operations. Prior to joining the Advisor in 1995, Mr. Seizert served as Director
and Managing Partner of the Detroit office of Loomis, Sayles & Company, L.P.
Before his 1984 affiliation with Loomis, he served as Vice President, Trust
Investments for First of America Bank. Earlier, 1977-1979, Mr. Seizert served as
a Credit Analyst at Bank One of Columbus, N.A. Mr. Seizert received his B.B.A.
degree and an M.B.A. from The University of Toledo and is a Chartered Financial
Analyst and Chartered Investment Counselor.
Kurt R. Stalzer, Senior Portfolio Manager of the Advisor or Woodbridge since
June, 1992, has managed the Small Company Growth Fund since April, 1992.
Jeffrey A. Wrona, CFA, began his investment career as a Fixed Income Research
Analyst for the investment banking firm, Drexel Burnham Lambert. Mr. Wrona
joined MCM in 1990 and now serves as a senior portfolio manager of the Advisor
and specializes in managing Mid-Cap Growth portfolios for institutional clients.
Mr. Wrona has co-managed the Mid-Cap Growth Fund since its inception in August,
1995. Prior to beginning his investment career, Mr. Wrona worked as a product
design engineer for Ford Motor Company. Mr. Wrona earned his B.S. degree in
engineering from the University of Michigan and his M.B.A. from the University
of Michigan Graduate School of Business.
Gregory A. Prost, CFA, Senior Fixed Income Portfolio Manager of the Advisor or
MCM, has co-managed the Munder Bond Fund and Munder Balanced Fund since May,
1995 and the Munder International Bond Fund since __________, 1996. Prior to
joining MCM in 1995, he was a Vice President and Senior Fund Manager for First
of America Investment Corp.
Sharon E. Fayolle, Vice President and Director of Money Market Fund Trading
for the Advisor or MCM, is responsible for overseeing the management of cash
portfolios, money market funds and foreign currency trading since May, 1996.
She has co-managed the Munder International Bond Fund since __________, 1996.
Prior to joining MCM 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.
Investment decisions for the Equity Selection Fund and the Micro-Cap Equity
Fund will be made by a committee of portfolio managers employed by the Advisor.
For the advisory services provided and expenses assumed by it, the Advisor has
agreed to a fee from each Fund, computed daily and payable monthly on a separate
Fund-by-Fund basis, at an annual rate of 1.00% of the first $500 million of
average daily net assets and .75% of net assets in excess of $500 million of the
Multi-Season Growth Fund; 1.00% of average daily net assets of Micro-Cap Equity
Fund; .75% of net assets in excess of $500 million of each of the Accelerating
Growth Fund, Small Company Growth Fund, International Equity Fund, Growth &
Income Fund, Small-Cap Value Fund and Equity Selection Fund; .74% of average
daily net assets of each Real Estate Equity Investment Fund, Mid-Cap Growth Fund
and Value Fund; .65% of average daily net assets of the Balanced Fund; 50% of
average daily net assets of each of the Bond Fund, Intermediate Bond Fund, U.S.
Government Income Fund and International Bond Fund; Tax-Free Bond Fund, Tax-Free
Intermediate Bond Fund, Michigan Triple Tax-Free Bond Fund and International
Bond Fund; .35% of average daily net assets of each of the Tax-Free Money Market
Fund, U.S. Treasury Money Market Fund and Cash Investment Fund; and .20% of the
first $250 million of average daily net assets, .12% of the next $250 million of
net asset and .07% of net assets in excess of $500 million of the Index 500
Fund. The advisory fees payable by the Equity Funds (other than the Real Estate
Equity Investment Fund, Mid-Cap Growth Fund, Value Fund and Index 500 Fund) are
higher than the rate payable by most mutual funds.
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For the period July 1, 1995 to October 27, 1995, the Advisor received fees
after waivers, at an effective rate of .75% of the average daily net assets of
each of the Multi-Season Growth Fund, Accelerating Growth Fund, Small Company
Growth Fund, Growth & Income Fund, and International Equity Fund; .74% of the
average daily net assets of the Real Estate Equity Investment Fund; .65% of
average daily net assets of the Balanced Fund; .50% of average daily net assets
of each of the Intermediate Bond Fund, U.S. Government Fund, Tax-Free
Intermediate Fund, Tax-Free Bond Fund; .35% of the average daily net assets of
each of the Cash Investment Fund, U.S. Treasury Money Market Fund, and Tax-Free
Money Market Fund; and .07% of the average daily net assets of the Index 500
Fund; 0.00% of the average daily net assets of the Michigan Triple Tax-Free Bond
Fund.
For the period from August 14, 1995 to October 27, 1995 the Advisor received
fees after waivers, at an effective rate of .74% of the average daily net assets
of the Mid-Cap Growth Fund.
For the period from August 18, 1995 to October 27, 1995 the Advisor received
fees after waivers, at an effective rate of .74% of the average daily net assets
of the Value Fund.
For the period October 28, 1995 to June 30, 1996, the Adviser received fees,
after waivers, at an effective rate of .75% of the average daily net assets of
each of the Multi-Season Growth Fund Accelerating Growth Fund, Small Company
Growth Fund, Growth & Income Fund, and International Equity Fund; .73% of the
average daily net assets of the Value Fund; .71% of the average daily net assets
of Mid-Cap Growth Fund; .67% of the average daily net assets of the Real Estate
Equity Investment Fund; .65% of the average daily net assets of the Balanced
Fund, .50% of the average daily net assets of each of the Intermediate Bond
Fund, U.S. Government Income Fund, Bond Fund, Tax-Free Intermediate Bond Fund,
and Tax-Free Bond Fund; .35% of each of the average daily net assets of the Cash
Investment Fund, U.S. Treasury Money Market Fund, and Tax-Free Money Market
Fund.; 06% of the average daily net assets of the Index 500 Fund; 0.00% of the
of the average daily net assets of the Michigan Triple Tax-Free Bond Fund.
The Advisor expects to voluntarily waive a portion of its fee with respect to
the Multi-Season Growth Fund and Index 500 Fund during the current fiscal year.
However, the Advisor may discontinue such fee waivers at any time in its sole
discretion. The Advisor expects to receive, after waivers, an advisory fee at
the annual rate of .75% and .07% of the average daily net assets of the Multi-
Season Growth Fund and the Index 500 Fund, respectively, during the Company's
and Munder's current fiscal year.
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 Funds. First Data is a wholly
owned subsidiary of First Data Corporation. The Administrator generally assists
the Company and Munder in all aspects of its administration and operations,
including the maintenance of financial records and fund accounting.
First Data also serves as the Funds' transfer agent and dividend disbursing
agent ("Transfer Agent").
As compensation for their services, the Administrator and Transfer Agent are
entitled to receive fees, based on the aggregate average daily net assets of the
Funds 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 Funds 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 Transfer Agent and Administrator are also entitled to reimbursement
for out-of-pocket expenses. The Administrator has entered into a Sub-
Administration Agreement with the Funds' Distributor under which the Distributor
provides certain administrative services with respect to the Funds. The
Administrator pays the Distributor a fee for these services out of its own
resources at no cost to the Funds.
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Comerica Bank (the "Custodian"), whose principal business address is One
Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226, provides custodial
services to the Funds. The Custodian is a wholly-owned subsidiary of Comerica
Incorporated, a publicly-held bank holding company. As compensation for its
services, the Custodian is entitled to receive fees, based on the aggregate
average daily net assets of the Funds, 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. Because of
the additional custody and accounting charges associated with the investment in
foreign securities, the International Equity Fund incurred additional custody
and accounting fees during the Company's fiscal year ended June 30, 1996 equal
to __% of the Fund's average daily net assets.
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 Funds have adopted a Shareholder Servicing Plan (the "Class K Plan") under
which Class K Shares are sold through institutions which enter into shareholder
servicing agreements with the Funds. The agreements require the institutions to
provide shareholder services to their customers ("Customers") who from time to
time own of record or beneficially Class K Shares in return for payment by a
Fund at a rate not exceeding .25% (on an annualized basis) of the average daily
net asset value of the Class K Shares beneficially owned by the Customers. Class
K Shares bear all fees paid to institutions under the Class K Plan.
The services provided by institutions under the Class K Plan may include
processing purchase, exchange and redemption requests from Customers and placing
orders with the Transfer Agent; processing dividend and distribution payments
from the Funds on behalf of Customers; providing information periodically to
Customers showing their positions in Class K Shares; providing sub-accounting
with respect to Class K Shares beneficially owned by Customers or the
information necessary for sub-accounting; responding to 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 Funds understand 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 Funds. The agreements require an
institution to disclose to its Customers any compensation payable to the
institution by the Funds 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.
Payments under the Class K Plan are not tied exclusively to the shareholder
expenses actually incurred by the institutions and the payments may exceed
service expenses actually incurred. The Company's and Munder's Boards of
Trustees and Directors evaluate the appropriateness of the Class K Plan and its
payment terms on a periodic basis.
TAXES
GENERAL
Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Code. Such qualification generally relieves a Fund of
liability for Federal income taxes to the extent its earnings are distributed in
accordance with the Code.
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Qualification as a regulated investment company under the Code for a taxable
year requires, among other things, that a Fund distribute to its shareholders an
amount equal to at least the sum of 90% of its investment company taxable income
and 90% of its net tax-exempt interest income for such year. In general, a
Fund's investment company income will be its taxable income (including
dividends, interest, and short-term capital gains) subject to certain
adjustments and excluding the excess of any net long-term capital gain for the
taxable year over the net short-term capital loss, if any, for such year. Each
Fund intends to distribute substantially all of its investment company taxable
income each taxable year. 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.)
[The dividends received deduction for corporations will apply to such
distributions by the Balanced Fund and the Equity Funds to the extent of the
total qualifying dividends received by the distributing fund from domestic
corporations for the taxable year and if other applicable requirements are not
met.]
Substantially all of each of the Funds' net realized long-term capital gains,
if any, will be distributed at least annually. The Funds will generally have no
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 be realized by a holder of shares in the Funds upon
the redemption or transfer of shares depending upon the tax basis of the shares
and their price at the time of the transaction.
The International Bond Fund's gains and losses from investments in foreign
currency denominated debt securities and from certain other transactions may be
treated as ordinary income or loss rather than capital gain or loss. This may
have the effect of increasing ordinary dividends paid to shareholders (in the
case of such gains) or decreasing the amounts available for distribution as
dividends (in the case of such losses).
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 a Fund on December 31 of such year if
such dividends are actually paid during January of the following year.
Shareholders should be aware that redeeming shares of a Fund after tax-exempt
interest income has been accrued by a Fund but before that income has been
distributed as a dividend may be disadvantageous. Any gain on such redemption
will be taxable, even though the gain may be attributable in part to the accrued
tax-exempt interest that might have qualified as an exempt-interest dividend if
distributed as a dividend rather than as redemption proceeds.
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 Funds will send written notices to record owners of
shares regarding the Federal tax status of distributions made by each Fund.
Since this is not an exhaustive description of applicable tax consequences, and
since state and local taxes may be different than the Federal taxes described
below, investors may wish to contact their tax advisors concerning investments
in the Funds.
TAXES--FOREIGN INVESTMENTS
Income or gain from investments in foreign securities may be subject to
foreign withholding or other taxes. It is expected that the International Equity
Fund will, and the other Funds may, be subject to foreign withholding
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taxes with respect to income received from sources within foreign countries. If
more than 50% of the value of the International Equity Fund's total assets at
the close of a taxable year consists of stock or securities of foreign
corporations, the Fund may elect, for U.S. Federal income tax purposes, to treat
certain foreign taxes paid by it, including generally any withholding taxes and
other foreign income taxes, as paid by its shareholders. If the Fund makes this
election, the amount of such foreign taxes paid by the Fund will be included in
its shareholders' income pro rata (in addition to taxable distributions actually
received by them), and the shareholders would be entitled (a) to credit their
proportionate amount of such taxes against their U.S. Federal income tax
liabilities subject to certain limitations described in the Statement of
Additional Information, or (b) if they itemize their deductions, to deduct such
proportionate amount from their U.S. income.
If a Fund invests in certain "passive foreign investment companies" ("PFICs"),
it will be subject to Federal income tax (and possibly additional interest
charges) on a portion of any excess distribution or gain from the disposition of
such shares even if it distributes such income to its shareholders. If a Fund
elects to treat the PFIC as a qualified electing fund ("QEF") and the PFIC
furnishes certain financial information in the required form to such Fund, the
Fund will instead be required to include in income each year its allocable share
of the ordinary earnings and net capital gains on the QEF, regardless of whether
received, and such amounts will be subject to the various distribution
requirements described above.
The International Bond Fund's investments in derivative instruments are
subject to special tax rules, some of which are not entirely clear. As a
result, the Fund may be limited by tax considerations in the extent to which it
enters into such transactions. See the Statement of Additional Information for
further information.
TAXES--TAX-FREE BOND FUNDS AND TAX-FREE MONEY MARKET FUND
The Tax-Free Bond Funds and Tax-Free Money Market Fund intend to pay
substantially all of their dividends as exempt-interest dividends. Under normal
market conditions, at least 80% of each Fund's net assets will be invested in
municipal obligations, the interest on which is exempt from regular Federal
income tax and does not constitute an item of tax preference for purposes of the
Federal alternative minimum tax. Investors in the Funds should note, however,
that taxpayers are required to report the receipt of tax-exempt interest
dividends on their Federal income tax returns and that in some circumstances
such amounts, while exempt from regular Federal income tax, are taxable to
persons subject to alternative minimum and environmental taxes.
First, tax-exempt interest and exempt interest dividends derived from certain
private activity bonds issued after August 7, 1986, will generally constitute an
item of tax preference for corporate and non-corporate taxpayers in determining
alternative minimum and environmental tax liability. During normal market
conditions the Funds may invest up to 20% each of their net assets in such
private activity bonds.
Second, all dividends, including exempt interest dividends received by
corporate taxpayers must be taken into account by them in determining certain
adjustments for alternative minimum and environmental tax purposes. Shareholders
who are recipients of Social Security Act or Railroad Retirement Act benefits
should further note that all dividends, including exempt interest dividends
derived from a Fund will be taken into account in determining the taxability of
their benefit payments.
The Funds will determine annually the percentages of their net investment
income which are exempt from the regular Federal income tax, which constitute an
item of tax preference for purposes of the Federal alternative minimum tax, and
which are fully taxable. The Funds will apply these percentages uniformly to all
distributions declared from net investment income during that year. These
percentages may differ significantly from the actual percentages for any
particular day. On an annual basis, the Funds will send written notices to
record owners of shares regarding the Federal tax status of distributions made
by them.
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Dividends paid by each Fund may be taxable to investors under state or local
law as dividend income even though all or a portion of such dividends may be
derived from interest on obligations which, if realized directly, would be
exempt from such income taxes. Moreover, to the extent, if any, that dividends
paid to shareholders are derived from taxable interest or from capital gains,
such dividends will be subject to Federal income tax.
MICHIGAN TAXES--TAX-FREE INTERMEDIATE BOND FUND AND MICHIGAN
TRIPLE TAX-FREE
BOND FUND
Ordinary tax-exempt interest dividends paid by the Tax-Free Intermediate Bond
Fund and Michigan Triple Tax-Free Bond Fund that are derived from interest
attributable to tax-exempt obligations of the State of Michigan and its
political subdivisions, as well as certain U.S. territorial obligations, are
exempt from Michigan income tax, Michigan intangibles tax and Michigan single
business tax. Conversely, to the extent that the Funds' tax-exempt interest
dividends are derived from interest on other obligations, such dividends will be
subject to Michigan income, intangibles and single business taxes, even if
exempt for Federal income tax purposes. A Fund is unable to predict in advance
the exact portion of its tax-exempt dividends that will be derived from interest
on Michigan Municipal Obligations, but will advise shareholders at least
annually of the percentage of the tax-exempt dividends actually paid by it. Such
percentage will equal a Fund's tax-exempt interest from Michigan Municipal
Obligations divided by the total tax-exempt interest earned by the Fund, whether
or not the total tax-exempt interest earned by the Fund is distributed as
dividends. However, capital gains dividends (both short- and long-term) are
subject to Michigan income tax.
The taxability of dividends for Michigan income and intangibles taxes
generally follows the domicile of the owner/participant. Non-Michigan residents
are not subject to Michigan income and intangibles taxes on dividends received
from the Funds.
In addition, under Michigan's Uniform City Income Tax ordinance, which
authorizes Michigan cities to impose a local income tax, interest dividends from
Michigan municipal obligations, which are not subject to Michigan income tax
will similarly not be subject to the Michigan Uniform City Income Tax.
* * *
Since this is not an exhaustive discussion of applicable tax consequences,
investors may wish to contact their tax advisors concerning investments in the
Funds. Future legislative or administrative changes or court decisions may
materially affect the tax consequences of investing in the Funds.
DESCRIPTION OF SHARES
The Company was organized as a Massachusetts business trust on August 30,
1989, and is registered under the 1940 Act as an open-end management investment
company. The Company's Declaration of Trust authorizes the Trustees to classify
and reclassify any unissued shares into one or more classes of shares. Pursuant
to such authority, the Trustees have authorized the issuance of an unlimited
number of shares of beneficial interest in the Company, representing interests
in the Accelerating Growth, Small Company Growth Fund, International Equity,
Index 500, Growth & Income, Balanced, Bond, Intermediate Bond, U.S. Government
Income, Michigan Triple Tax-Free Bond, Tax-Free Bond, Tax-Free Intermediate
Bond, Tax-Free Money Market, U.S. Treasury Money Market and Cash Investment
Funds respectively, each of which, except the Tax-Free Intermediate Bond Fund
and Michigan Triple Tax-Free Bond Fund, is classified as a diversified
investment company under the 1940 Act. There is a possibility that Munder might
become liable for any misstatement, inaccuracy or incomplete disclosure in this
Prospectus concerning the Company.
Munder 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.
Munder's Articles of Incorporation authorize the
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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 Munder Multi-
Season Growth Fund, Munder Real Estate Equity Investment Fund, Munder Mid-Cap
Growth Fund, Munder Value Fund, Munder International Bond Fund, Munder Small-Cap
Value Fund, Munder Equity Selection Fund, Munder Micro-Cap Equity Fund, Net Net
Fund and Munder Money Market Fund, respectively, each of which, except Munder
International Bond Fund, is classified as a diversified investment company under
the 1940 Act. There is a possibility that the Company might become liable for
any misstatement, inaccuracy, or incomplete disclosure in this Prospectus
concerning Munder.
The shares of each Fund (other than the Money Market Funds, the Munder Money
Market Fund and the Net Net Fund) are offered as five separate classes: Class A
Shares, Class B Shares, Class C Shares, Class K Shares and Class Y Shares. Class
C Shares of the Index 500 Fund are not currently available for purchase. The
Money Market Funds offer only Class A Shares, Class K Shares and Class Y Shares.
The Munder Money Market Fund offers only Class A, Class B and Class C Shares
(which may be acquired only through an exchange from the corresponding classes
of other funds of the Company or Munder) and Class Y Shares. The Net Net Fund
offers only one class of shares. These other classes of the Funds may have
different sales charges and expense levels, which may affect performance.
Investors may call the Distributor at (800) 438-5789 for more information
concerning other classes of shares of the Funds. These other classes of the Fund
may have different sales charges and expense levels, which will affect
performance. This Prospectus relates only to Class K Shares of the Multi-Season
Growth Fund, Real Estate Equity Investment Fund, Accelerating Growth Fund, Small
Company Growth Fund, Mid-Cap Growth Fund, International Equity Fund, Index 500
Fund, Growth & Income Fund, Value Fund, Balanced Fund, International Bond Fund,
Small-Cap Value Fund, Equity Selection Fund, Micro-Cap Equity Fund, Bond Fund,
Intermediate Bond Fund, U.S. Government Income Fund, Michigan Triple Tax-Free
Bond Fund, Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund, Tax-Free Money
Market Fund, U.S. Treasury Money Market Fund and Cash Investment Fund.
Each share of a Munder Fund has a par value of $.001, represents an equal
proportionate interest in the particular Fund with other shares of the same
class and is entitled to such dividends and distributions earned on such Fund's
assets as are declared in the discretion of the Trustees. Each share of a MFI
Fund has a par value of $.01 per share and represents a proportionate interest
in the assets of the Fund.
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
Trustees or Directors determine that the matter to be voted upon affects only
the interests of the shareholders of a particular Fund. In addition,
shareholders of each of the Funds will vote in the aggregate and not by class,
except as otherwise expressly required by law or when the Trustees or Directors
determine that the matter to be voted on affects only the interests of the
holders of a particular class of shares. The Funds are not required and do 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 or Munder. To the extent required by law, the Funds will
assist in shareholder communications in connection with such a meeting. For a
further discussion of the voting rights of shareholders, see "Additional
Information Concerning Shares" in the Statement of Additional Information.
As of __________, 1996, Comerica Bank held of record substantially all of the
outstanding shares of the Funds as agent, custodian or trustee for its
customers. In addition, as of __________, 1996, Comerica Bank possessed sole or
shared voting or investment power for its customer accounts with respect to the
following percentages of the Funds' outstanding shares: International Bond Fund
- -- __; Multi-Season Growth Fund, --__%; Real Estate Equity Investment Fund --
__%, Mid-Cap Growth Fund -- __%; Accelerating Growth Fund -- __%; Small Company
Growth Fund -- __%; International Equity Fund -- __%; Index 500 Fund -- __%;
Growth & Income Fund -- __%; Balanced Fund -- __; Bond Fund -- __%; Intermediate
Bond Fund -- __%; U.S. Government Income Fund -- __%; Michigan Triple Tax-Free
Bond Fund -- __%; Tax-Free Bond Fund -- __%; Tax-Free Intermediate Bond Fund --
__%; Tax-Free Money Market Fund -- __%; U.S. Treasury Money Market Fund -- __%;
and Cash Investment Fund -- __%. The International Bond Fund did not commence
operations until
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__________, 1996 and the Small Cap Value Fund, Micro-Cap Equity
Fund and Equity Selection Fund will commence operating on __________.
Reports to Shareholders
The Funds have eliminated duplicate mailings of prospectuses and shareholder
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 Funds at (800) 438-5789.
PERFORMANCE
From time to time, the Funds may quote performance and yield data for Class K
Shares in advertisements or in communications to shareholders. The total return
of a class of shares in a 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 International Bond Fund, Bond Funds and
Tax-Free Bond Funds is computed based on the net income of such class in a 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 yield of a class of shares in the Tax-Free Money Market, U.S. Treasury
Money Market and Cash Investment Funds refers to the income generated by an
investment in a class over a seven-day period (which period will be stated in
the advertisement). This income is then "annualized." That is, the amount of
income generated by the investment during that week is assumed to be generated
each week over a 52-week period and is shown as a percentage of the investment.
"Effective yield" is calculated similarly but, when annualized, the income
earned by an investment in a class is assumed to be reinvested. The "effective
yield" will be slightly higher than the "yield" because of the compounding
effect of this assumed reinvestment.
The "tax-equivalent yields" of the Class K Shares in the Tax-Free Bond Funds
and Tax-Free Money Market Fund may also be quoted from time to time, which show
the level of taxable yield needed to produce an after-tax equivalent to the tax-
free yield of the particular class. This is done by increasing the yield
(calculated as above) by the amount necessary to reflect the payment of Federal
and/or state income taxes at a stated rate.
The Funds may compare the performance of the Investor 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 a Fund.
63
<PAGE>
Performance will fluctuate and any quotation of performance should not be
considered as representative of future performance of a class of shares in a
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 a 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 as described in this Prospectus.
64
<PAGE>
PROSPECTUS
CLASS Y SHARES*
The Munder Funds Trust (the "Company") is an open-end investment company (a
mutual fund) that currently offers a selection of fifteen investment portfolios.
The Munder Funds, Inc. ("Munder") is an open-end investment company that
currently offers ten investment portfolios. This Prospectus describes the Class
Y Shares of the investment portfolios offered by the Company (the "Munder
Funds") and nine of the investment portfolios offered by Munder (the "MFI
Funds") described below (collectively, the "Funds"):
Munder Multi-Season Growth Fund
Munder Bond Fund
Munder Real Estate Equity Investment Fund
Munder Intermediate Bond Fund
Munder Accelerating Growth Fund
Munder U.S. Government Income Fund
Munder Small Company Growth Fund
Munder Michigan Triple Tax-Free Bond Fund**
Munder Mid-Cap Growth Fund
Munder Tax-Free Bond Fund
Munder International Equity Fund
Munder Tax-Free Intermediate Bond Fund
Munder Index 500 Fund
Munder Money Market Fund
Munder Growth & Income Fund
Munder Tax-Free Money Market Fund
Munder Value Fund
Munder U.S. Treasury Money Market Fund
Munder Balanced Fund
Munder Cash Investment Fund
Munder International Bond Fund
Munder Small-Cap Value Fund
Munder Equity Selection Fund
Munder Micro-Cap Equity Fund
*Class Y Shares of the Multi-Season Growth Fund, Real Estate Equity Investment
Fund and Money Market Fund were formerly known as Class C Shares. Class Y
Shares of the Munder Funds were formerly known as Fiduciary Shares.
**The Michigan Triple Tax-Free Bond Fund is offered only in the State of
Michigan.
Munder Capital Management (the "Advisor") serves as the investment advisor of
each Fund.
This Prospectus sets forth concisely information that a prospective investor
should know before investing. Investors are encouraged to read this Prospectus
and retain it for future reference. A Statement of Additional Information dated
_________, 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 Funds at (800) 438-5789.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR
ENDORSED BY ANY BANK, AND ARE NOT INSURED OR GUARANTEED BY
THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING
THE POSSIBLE LOSS
OF PRINCIPAL.
ALTHOUGH THE MONEY MARKET FUND, TAX-FREE MONEY MARKET
FUND, U.S. TREASURY
MONEY MARKET FUND AND CASH INVESTMENT FUND SEEK TO MAINTAIN
A CONSTANT NET ASSET
VALUE OF $1.00 PER SHARE, THERE CAN BE NO ASSURANCE THAT SUCH
FUNDS CAN DO SO ON
A CONTINUING BASIS.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED
OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is _________, 1996.
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
The Funds
<S> <C>
Expense Table......................... 3
Financial Highlights.................. 7
Investment Objectives and Policies.... 26
Portfolio Instruments and Practices 41
and Associated Risk Factors..........
Investment Limitations................ 53
Purchase and Redemption of Shares..... 54
Dividends and Distributions........... 56
Other Information
Net Asset Value....................... 57
Management............................ 58
Taxes................................. 62
Description of Shares................. 65
Performance........................... 66
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION, OR TO
MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE
FUNDS' STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN
CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUNDS
OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFERING BY THE FUNDS
OR BY FUNDS DISTRIBUTOR, INC. (THE "DISTRIBUTOR") IN ANY
JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
2
<PAGE>
EXPENSE TABLE
The tables below set forth certain information concerning shareholder
transaction expenses and projected annual operating expenses that investors will
incur, either directly or indirectly, as shareholders of the Class Y Shares of
each of the Funds for the current fiscal year. The International Bond Fund did
not commence operations until __________, 1996; and the Small-Cap Value Fund,
Equity Selection Fund and Micro-Cap Equity Fund did not commence operations
until __________; therefore the expense information set forth below is based on
estimated operating expenses for each such Fund. The expense information in the
table has been restated with respect to the Multi-Season Growth Fund and the
Index 500 Fund to reflect anticipated fees and waivers. Class Y Shares are sold
without an initial or contingent deferred sales charge to fiduciary and
discretionary accounts of institutions, "institutional investors" (as defined
herein), directors, trustees, officers and employees of Munder, the Company, the
Advisor and Distributor and the Advisor's investment advisory clients.
<TABLE>
<CAPTION>
Real Estate Small
Multi-Season Equity Accelerating Company
Mid-Care
Growth Investment Growth Growth
Growth
Fund Fund Fund Fund
Fund
---------- -------- -------- ------- --------
<S> <C> <C> <C> <C>
<C>
Annual Fund Operating Expenses
(as a percentage of average net assets)
Advisory Fees........................ .75%* .74% .75% .75%
.74%
Other Expenses......................... .26% .26% .20% .21%
.21%
------ ----- ---- --- ---
Total Fund Operating Expenses.......... 1.01%* 1.00% .95%
.96% .95%
====== ===== ==== ===
===
</TABLE>
<TABLE>
<CAPTION>
International Growth &
Balanced Fund
Equity Index 500 Income Value
International
Fund Fund Fund Fund
Bond Fund
---------- -------- -------- ------- ----------
- ---
<S> <C> <C> <C> <C>
<C>
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Advisory Fees.......................... .75% .07%* .75% .74%
.65%
Other Expenses......................... .26% .21%
.25%
------ ----- ---- --- ---
.19% .21% .35%
Total Fund Operating Expenses.......... 1.01% .95%
.90%
====== ===== ==== ===
===
.26% .96% .85%
</TABLE>
<TABLE>
<CAPTION>
U.S. Michigan
Intermediate Government Triple
Bond Income Tax-Free Tax-Free
Fund Fund Bond Fund Bond-Fund
Bond Fund
---------- -------- --------- -------- --------
- --
<S> <C> <C> <C> <C>
<C>
Annual Fund Operating Expenses
(as a percentage of average net assets)
Advisory Fees.......................... .50% .50% .50% .50%
.50%
Other Expenses......................... .19% .22% .23% .23%
.20%
------ ----- ---- --- ---
Total Fund Operating Expenses.......... .64% .72% .73%
.73% .70%
====== ===== ==== ===
===
</TABLE>
<TABLE>
<CAPTION>
Tax-Free U.S.
Tax-Free Money Money Treasury
Cash
Intermediate Market Market Money
Investment
Bond Fund Fund Fund Fund
Fund
---------- -------- --------- -------- --------
- --
<S> <C> <C> <C> <C>
<C>
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Advisory Fees.......................... .50% .40% .35% .35%
.35%
Other Expenses......................... .21% .22% .18% .19%
.18%
------ ----- ---- --- ---
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
<C>
Total Fund Operating Expenses.......... .71% .62% .53% .54%
.53%
====== ===== ==== === ===
</TABLE>
<TABLE>
<CAPTION>
Equity Micro-Cap
------------- ----------- ------------
Small-Cap Selection Equity
------------- ----------- ------------
Value Fund Fund Fund
------------- ----------- ------------
<S> <C> <C> <C>
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Advisory Fees.......................... .75% .75% 1.00%
Other Expenses......................... .25% .25% .25%
------ ----- ----
Total Fund Operating Expenses 1.00% 1.00% 1.25%
====== ===== ====
</TABLE>
________________________________
*Reflects advisory fees after waivers. Waivers are described on page 4.
"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 services, the cost of
regulatory compliance, the costs of maintaining the Funds' legal existence and
the costs involved with communicating with shareholders. With respect to each
Fund, the amount of "Other expenses" in the tables above is based on amounts
incurred during the most recent fiscal year. See "Management" in this Prospectus
and the financial statements and related notes incorporated by reference in the
Statement of Additional Information for a further description of the Funds'
operating expenses and of the nature of the services for which a Fund is
obligated to pay advisory fees. Any fees charged by institutions directly to
customer accounts for services
4
<PAGE>
provided in connection with investments in shares of the Funds are in addition
to the expenses shown in the above Expense Table and the Example shown below.
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 Funds. These amounts are based on payments by
the Funds of operating expenses at the levels set forth in the above table, and
are also based on the following assumptions:
An investor would pay the following expenses on a $1,000 investment, assuming
(1) a hypothetical 5% annual return and (2) redemption at the end of the
following time periods:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Multi-Season Growth Fund............ $10 $32 $56 $124
Real Estate Equity Investment Fund.. $10 $32 $55 $122
Accelerating Growth Fund............ $10 $30 $53 $117
Small Company Growth Fund........... $10 $31 $53 $118
Mid-Cap Growth Fund................. $10 $30 $53 $117
International Equity Fund........... $10 $32 $56 $124
Index 500 Fund...................... $ 3 $ 8 $15 $ 33
Growth & Income Fund................ $10 $31 $53 $118
Value Fund.......................... $10 $30 $53 $117
Balanced Fund....................... $ 9 $29 $50 $111
International Bond Fund............. $ 9 $27 N/A N/A
Small-Cap Value Fund................ $10 $32 N/A N/A
Equity Selection Fund............... $10 $32 N/A N/A
Micro-Cap Equity Fund............... $13 $40 N/A N/A
Intermediate Bond Fund.............. $ 7 $22 $38 $ 86
U.S. Government Income Fund......... $ 7 $23 $40 $ 89
Michigan Triple Tax-Free Bond Fund.. $ 3 $ 8 $15 $ 33
Tax-Free Bond Fund.................. $ 7 $23 $41 $ 91
Bond Fund........................... $ 7 $22 $39 $ 87
Tax-Free Intermediate Bond Fund..... $ 7 $23 $40 $ 88
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Money Market Fund................... $ 6 $20 $35 $ 77
Tax-Free Money Market Fund.......... $ 5 $17 $30 $ 66
U.S. Treasury Money Market Fund..... $ 6 $17 $30 $ 68
Cash Investment Fund................ $ 5 $17 $30 $ 66
</TABLE>
The foregoing Expense Tables and Examples are intended to assist investors in
understanding the various shareholder transaction expenses and operating
expenses of the Funds that investors bear either directly or indirectly. As
stated below under "Management," the Advisor has agreed to an advisory fee
computed separately on a Fund-by-Fund basis at an annual rate of 1.00% of the
first $500 million of average daily net assets and .75% of net assets in excess
of $500 million of the Multi-Season Growth Fund; 1.00% of average daily net
assets of the Micro-Cap Equity Fund; .75% of average daily net assets of each of
the Accelerating Growth Fund, Small Company Growth Fund, International Equity
Fund, Growth & Income Fund, Small-Cap Value Fund and Equity Selection Fund; .74%
of average daily net assets of each of the Real Estate Equity Investment Fund,
Mid-Cap Growth Fund and Value Fund; .65% of average daily net assets of the
Balanced Fund; 50% of average daily net assets of each of the Bond Fund,
Intermediate Bond Fund, U.S. Government Income Fund, Michigan Triple Tax-Free
Bond Fund, Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund and International
Bond Fund; .40% of average daily net assets of the Money Market Fund; .35% of
average daily net assets of each of the Tax-Free Money Market Fund, U.S.
Treasury Money Market Fund and Cash Investment Fund; and .20% of the first $250
million of average daily net assets, .12% of the next $250 million of net assets
and .07% of net assets in excess of $500 million of the Index 500 Fund. However,
the Advisor expects to waive a portion of its fees with respect to the Multi-
Season Growth Fund, and Index 500 Fund during the current fiscal year. Without
waivers, an investor in Class Y Shares of the Funds would pay the following
expenses on a $1,000 investment assuming redemption at the end of one, three,
five and ten years, respectively, and assuming a hypothetical 5% annual return:
$13, $40, $69 and $152 for the Multi-Season Growth Fund; and $5, $14, $25 and
$55 for the Index 500 Fund.
Without waivers, the total fund operating expenses an investor would pay for
Class Y Shares would be 1.26% for the Multi-Season Growth Fund; and .39% for the
Index 500 Fund.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR
FUTURE INVESTMENT RETURN OR OPERATING EXPENSES. ACTUAL
INVESTMENT RETURN AND
OPERATING EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN. THE
HYPOTHETICAL
EXPENSES IN THE EXAMPLE REFLECT FEE WAIVERS AT THE ANTICIPATED
RATES.
6
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the Funds' Financial
Statements audited by Ernst & Young LLP, independent auditors, except that, for
periods ended prior to June 30, 1995 for the Multi-Season Growth Fund and Money
Market Fund, such financial highlights are derived from the financial statements
audited by another independent auditor. Class Y Shares of the International Bond
Fund, the Small-Cap Value Fund, the Equity Selection Fund and the Micro-Cap
Equity Fund were not offered during the periods shown and, accordingly, no
financial information is provided with respect to such shares. The following
data should be read in conjunction with the financial statements, related notes,
and other financial information incorporated by reference in the Statement of
Additional Information. Further information about the Funds, including financial
information with respect to the Funds' other classes of shares, is contained in
the Funds' Annual Reports to Shareholders dated June 30, 1996, which may be
obtained without charge by calling (800) 438-5789.
<TABLE>
<CAPTION>
Multi-Season Growth Fund(a)
--------------------------------------------------------
Year Ended Period Ended Year Ended Period Ended
6/30/96 6/30/95(b)(c) 12/31/94 12/31/93(h)
---------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period... $ 10.43 $ 10.70 $ 10.20
--------- --------- ---------
Income from Investment Operations:
Net investment income................ 0.00(d) .04 0.00(d)
Net realized and unrealized gain 1.67 (0.27) 0.50
(loss) on investments............... --------- --------- ---------
Total from investment operations..... 1.67 (0.23) 0.50
--------- --------- ---------
Less Distributions:
Dividends from net investment income. -- -- --
Distributions from net realized gains -- (0.04) --
--------- --------- ---------
Total distributions.................. -- (0.04) --
--------- --------- ---------
Net Asset Value, End of Period......... $ 12.10 $ 10.43 $ 10.70
========= ========= =========
Total Return(e)...................... 16.01% (2.17)% 4.90%
========= ========= =========
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in $ 87,604 $ 3,244 $ 2,322
thousands...........................
Ratio of operating expenses to average 1.40%(f) 1.50%
1.50%(f)
net assets..........................
Ratio of net investment income (loss) 0.53%(f) 0.29% 0.08%(f)
to average net assets...............
Portfolio turnover rate.............. 27% 48% 238%
Ratio of operating expenses to average 1.72%(f) 2.53%
2.70%(f)
net assets without waivers..........
Net investment income (loss) per share
without waivers(g).................. $ 0.00(d) $ (0.10) $ 0.00(d)
Average commission rate(i)............
</TABLE>
- ---------------------
(a) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and liabilities of the Ambassador Established Company Growth Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was December 31.
(c) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(d) Amount represents less than $0.01 per share.
(e) Total return represents aggregate total return for the period indicated.
(f) Annualized.
7
<PAGE>
(g) Amounts shown for periods prior to June 30, 1995 are unaudited.
(h) The Munder Multi-Season Growth Fund Class Y Shares commenced operations on
August 13, 1993. Class Y Shares were formerly known as Class C Shares.
8
<PAGE>
(i) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
Real Estate Equity Investment Fund
----------------------------------
Period ended Year ended
6/30/96 6/30/95(a)(b)
------------ -------------
<S> <C> <C>
Net Asset Value,
Beginning of Period.................... $ 10.00
Income from Investment
Operations:
Net investment income................. 0.37
Net realized and...................... 0.08
unrealized gain on................... -------
investments
Total from investment................. 0.45
operations........................... -------
Less Distributions:
Dividends from net.................... (0.36)
investment income.................... -------
Total distributions................... (0.36)
-------
Net Asset Value, End of................. $ 10.09
Period................................. =======
Total Return (c)...................... 4.64%
=======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period
(in thousands)...................... $ 4,989
Ratio of operating
expenses to average net
assets.............................. 1.25%(d)
Ratio of net investment
income to average net
assets.............................. 5.28%(d)
Portfolio turnover rate............... 3%
Ratio of operating
expenses to average net
assets without waivers.............. 6.98%(d)
Net investment loss per
share without waivers............... $ (0.03)
Average commission rate (e)...........
</TABLE>
_________________
(a) The Munder Real Estate Equity Investment Fund Class Y Shares commenced
operations on October 3, 1994. Class Y Shares were formerly known as Class C
Shares.
(b) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
9
<PAGE>
(e) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
Accelerating Growth Fund(a)
-------------------------------------------------------------------------
- --------------
Year Ended Period Ended Year Ended Year Ended
Year Ended Period Ended
6/30/96 6/30/95(b) 2/28/95(f) 2/28/94 2/29/93
2/29/92(g)
---------- ------------ ------------ ---------- ---------- ------
- ------
<S> <C> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Period... $ 12.77 $ 13.99 $ 12.08
$ 11.10 $ 10.00
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income................ 0.00(c) 0.00(c) 0.02 0.06
0.03
Net realized and unrealized gain
(loss) on investments.............. 2.11 (0.88) 2.16 1.26
1.08
-------- -------- -------- -------- --------
Total from investment operations..... 2.11 (0.88) 2.18
1.32 1.11
-------- -------- -------- -------- --------
Less Distributions:
Dividends from net investment income. -- -- (0.02)
(0.06) (0.01)
Distributions from net realized gains -- (0.34) (0.25)
(0.28) --
-------- -------- -------- -------- --------
Total distributions.................. -- (0.34) (0.27) (0.34)
(0.01)
-------- -------- -------- -------- --------
Net Asset Value, End of Period......... $ 14.88 $ 12.77 $ 13.99 $
12.08 $ 11.10
======== ======== ========
======== ========
Total Return(d)...................... 16.52% (6.22)% 18.08%
12.07% 11.13%
======== ======== ========
======== ========
Ratios to Average Net Assets/
Supplemental Data:
Net assets, End of Period $193,701 $177,584 $240,680
$172,217 $151,336
(in thousands)......................
Ratio of operating expenses to
average net assets................. 0.95%(e) 0.93% 0.95%
0.96% 0.20%(e)
Ratio of net investment income to
average net assets................. 0.04%(e) 0.00% 0.13%
0.40% 1.28%(e)
Portfolio turnover rate................ 31% 90% 34%
56% 73%
Ratio of operating expenses to average
net assets without waivers............ 1.19%(e) 1.16% 1.20%
1.21% 1.20%(e)
Net investment income (loss) per share
without waivers....................... $ (0.01) $ (0.04) $ (0.02) $ 0.02
$ 0.0
Average commission rate (h)
- --------------
</TABLE>
________________________
(a) Formerly, Ambassador Growth Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(c) Amount represents less than $0.01 per share.
(d) Total return represents aggregate total return for the period indicated.
(e) Annualized.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) The Munder Accelerating Growth Fund Class Y Shares commenced operations on
December 1, 1991.
10
<PAGE>
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
Small Company Growth Fund(a)
-------------------------------------------------------------------------
- ----------
Year ended Period Ended Year Ended Year Ended
Year Ended Period Ended
6/30/96 6/30/95(b) 2/28/95(e) 2/28/94 2/29/93
2/29/92(f)
---------- ------------ ---------- -------- -------- --------
- ----
<S> <C> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Period....... $ 13.93 $ 14.38 $ 12.72
$ 11.49 $ 10.00
------- ------- -------- -------- -------
Income from Investment Operations:
Net investment income (loss)............. (0.01) (0.02) (0.04)
0.04 0.03
Net realized and unrealized gain
(loss) on investments................... 1.41 (0.41) 1.97 1.23
1.47
------- ------- -------- -------- -------
Total from investment operations......... 1.40 (0.43) 1.93
1.27 1.50
------- ------- -------- -------- -------
Less Distributions:
Dividends from net investment income..... -- -- --
(0.04) (0.01)
Distributions from net realized gains.... -- (0.02) (0.27) --
- --
------- ------- -------- -------- -------
Total distributions...................... -- (0.02) (0.27) (0.04)
(0.01)
------- ------- -------- -------- -------
Net Asset Value, End of Period............. $ 15.33 $ 13.93 $ 14.38 $
12.72 $ 11.49
======= ======= ========
======== =======
Total Return(c).......................... 10.05% (3.00)% 15.19%
11.13% 15.01%
======= ======= ========
======== =======
Ratios to Average Net Assets/
Supplemental Data:
Net assets, end of period (in
thousands).............................. $79,968 $72,207 $ 64,466 $
48,569 $36,386
Ratio of operating expenses to average
net assets.............................. 0.96%(d) 0.98% 0.95% 0.96%
0.22%(d)
Ratio of net investment income (loss)
to average net assets................... (0.16)%(d) (0.15)% (0.28)%
0.10% 1.16%(d)
Portfolio turnover rate.................. 39% 45% 47%
46% 43%
Ratio of operating expenses to average
net assets without waivers.............. 1.21%(d) 1.23% 1.20%
1.16% 0.97%(d)
Net investment income (loss) per share
without waivers......................... $ (0.02) $ (0.04) $ (0.08) $ (0.08)
$ 0.01
Average commission rate(g)...............
</TABLE>
- ------------------------------
(a) Formerly, Ambassador Small Company Growth Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) The Munder Small Company Growth Fund Class Y Shares commenced operations on
December 1, 1991.
11
<PAGE>
(g) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
Munder Mid-Cap Growth Fund
----------------------------
Class Y Period Ended
Shares 6/30/96(a)
-------- -------------
<S> <C> <C>
Net Asset Value, Beginning of Period...
Income from Investment Operations:
Net investment income...............
Net realized and unrealized gain on
investments........................
Total from investment operations....
Less Distributions:
Dividends from net investment
income.............................
Total distributions.................
Net Asset Value, End of Period.........
Total Return(c).....................
Ratios to Average Net Assets/
Supplemental Data:
Net assets, end of period (in 000's).
Ratio of operating expenses to
average net assets..................
Ratio of net investment income (loss)
to average net assets...............
Portfolio turnover rate..............
Ratio of operating expenses to
average net assets without
reimbursements......................
Net investment loss per share
without reimbursements..............
Average commission rate(e)...........
</TABLE>
- -----------------
(a) The Munder Mid-Cap Growth Fund Class Y Shares commenced operations on August
14, 1995.
(b) Annualized.
(c) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(d) Amount represents less than $0.01 per share.
(e) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
International Equity Fund(a)
-------------------------------------------------------------------------
- --------------
Period Ended Year Ended Year Ended Year Ended
Year Ended Period Ended
6/30/96 6/30/95(b) 2/28/95(e)(f) 2/28/94
2/28/93 2/29/92(g)
------------ ------------ ------------ ----------- ---------- ---
- ---------
<S> <C> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Period... $ 12.30 $ 13.68 $ 10.64
$ 10.76 $ 10.00
Income from Investment Operations:
Net investment income............... 0.12 0.20 0.19 0.11
0.11
Net realized and unrealized gain
(loss) on investments.............. 1.03 (1.47) 2.85 (0.10)
0.67
------- ------- ------- ------- -------
Total from investment operations.... 1.15 (1.27) 3.04
0.01 0.78
------- ------- ------- ------- -------
Less Distributions:
Dividends from net investment
income............................. -- (0.05) -- (0.11)
(0.02)
Distributions from net realized
gains.............................. -- -- -- (0.02) --
Distribution from capital........... -- (0.06) -- --
- --
------- ------- ------- ------- -------
Total distributions................. -- (0.11) -- (0.13)
(0.02)
------- ------- ------- ------- -------
Net Asset Value, End of Period......... $ 13.45 $ 12.30 $ 13.68
$ 10.64 $ 10.76
======= ======= =======
======= =======
Total Return(c)..................... 9.35% (9.33)% 28.57%
0.09% 7.76%
======= ======= =======
======= =======
Ratios to Average Net Assets/Supplemental
Data:
Net assets, end of period (in
thousands)......................... $75,000 $68,263 $68,954
$42,740 $33,357
Ratio of operating expenses to
average net assets................. 0.96%(d) 0.93% 1.03%
1.02% 0.25%(d)
Ratio of net investment income to
average net assets................ 2.82%(d) 1.56% 1.65%
1.25% 4.16%(d)
Portfolio turnover rate............. 14% 20% 15%
1% 0%
Ratio of operating expenses to
average net assets without
waivers............................ 1.21%(d) 1.18% 1.28%
1.34% 1.33%(d)
Net investment income per share
without waivers.................... $ 0.11 $ 0.17 $ 0.16 $ 0.08
$ 0.08
Average commission rate(h).............
</TABLE>
- -----------------------
(a) Formerly, Ambassador International Stock Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(c) Total return represents aggregate total return for the period indicated.
12
<PAGE>
(d) Annualized.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) The Munder International Equity Fund Class Y Shares commenced operations on
December 1, 1991.
13
<PAGE>
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
Index 500 Fund(a)
-------------------------------------------------------------------------
- --------------
Period Ended Year Ended Year Ended Year Ended
Year Ended Period Ended
6/30/96 6/30/95(b) 2/28/95(e)(f) 2/28/94
2/28/93 2/29/92(g)
------------ ------------ ------------ ----------- ---------- ---
- ---------
<S> <C> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Period... $ 12.40 $ 12.07 $ 11.47
$ 11.02 $ 10.00
-------- -------- -------- -------- ------
- -
Income from Investment Operations:
Net investment income.............. 0.11 0.32 0.31 0.31
0.07
Net realized and unrealized gain on 1.46 0.50 0.59
0.78 0.97
investments...................... -------- -------- -------- -------- -
- ------
Total from investment operations... 1.57 0.82 0.90
1.09 1.04
-------- -------- -------- -------- ------
- -
Less Distributions:
Dividends from net investment
income............................. (0.16) (0.32) (0.30) (0.31)
(0.02)
Distributions from net realized
gains.............................. -- (0.17) -- (0.33) --
-------- -------- -------- -------- ------
- -
Total distributions................. (0.16) (0.49) (0.30) (0.64)
(0.02)
-------- -------- -------- -------- ------
- -
Net Asset Value, End of Period......... $ 13.81 $ 12.40 $ 12.07
$ 11.47 $ 11.02
======== ======== ========
======== =======
Total Return(c)..................... 12.69% 7.06% 7.97%
10.25% 10.44%
======== ======== ========
======== =======
Ratios to Average Net Assets/
Supplemental Data:
Net assets, end of period (in
thousands)......................... $124,902 $100,024 $ 85,269 $
58,164 $59,019
Ratio of operating expenses to
average net assets................. 0.25%(d) 0.25% 0.25%
0.25% 0.13%(d)
Ratio of net investment income to
average net assets................. 2.66%(d) 2.74% 2.61%
2.73% 2.59%(d)
Portfolio turnover rate............. 6% 7% 1%
22% 0%
Ratio of operating expenses to
average net assets without waivers. 0.38%(d) 0.39% 0.42%
0.47% 1.21%(d)
Net investment income per share
without waivers................... $ 0.11 $ 0.31 $ 0.29 $ 0.29
$ 0.04
Average commission rate(h).............
</TABLE>
- -----------------------
(a) Formerly, Ambassador Indexed Stock Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) The Munder Index 500 Fund Class Y Shares commenced operations on December 1,
1991.
14
<PAGE>
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
Growth & Income Fund(a)
----------------------------------------------
Period Ended Period Ended Period Ended
6/30/96 6/30/95(b) 2/28/95(e)(f)
------------ ------------ ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.... $10.43 $10.00
------ ------
Income from Investment Operations:
Net investment income................ 0.11 0.25
Net realized and unrealized gain on
investments......................... 0.79 0.34
------ ------
Total from investment operations..... 0.90 0.59
------ ------
Less Distributions:
Dividends from net investment
income.............................. (0.19) (0.16)
Distributions from net realized
gains............................... -- (0.00)(g)
------ ------
Total distributions.................. (0.19) (0.16)
------ ------
Net Asset Value, End of Period.......... $11.14 $10.43
====== ======
Total Return(c)...................... 8.69% 6.02%
====== ======
Ratios to Average Net Assets/Supplemental
Data:
Net assets, end of period (in
thousands).......................... $7,860 $4,142
Ratio of operating expenses to
average net assets.................. 0.84%(d) 0.28%(d)
Ratio of net investment income to
average net assets.................. 3.58%(d) 4.97%(d)
Portfolio turnover rate.............. 13% 12%
Ratio of operating expenses to
average net assets without waivers.. 1.26%(d) 1.28%(d)
Net investment income per share
without waivers..................... $ 0.09 $ 0.20
Average commission rate(h)...........
</TABLE>
- -----------------------
(a) Formerly, Ambassador Growth & Income Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) The Munder Growth & Income Fund Class Y Shares commenced operations on July
5, 1994.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Amount represents less than $0.01 per share.
15
<PAGE>
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
Munder Value Fund Class Y Shares
--------------------------------
Period Ended
6/30/96(a)
------------
<S> <C>
Net Asset Value, Beginning of Period................
Income from Investment Operations:
Net investment income.............................
Net realized and unrealized gain on
investments......................................
Total from investment operations..................
Less Distributions:
Dividends from net investment income..............
Total distributions...............................
Net Asset Value, End of Period....................
Total Return(c)...................................
Ratios to Average Net Assets/Supplemental
Data:..............................................
Net assets, end of period (in 000's)..............
Ratio of operating expenses to average
net assets.......................................
Ratio of net investment income (loss)
to average net assets............................
Portfolio turnover rate...........................
Ratio of operating expenses to average net assets.
without reimbursements...........................
Net investment loss per share without
reimbursements...................................
Average commission rate(d)........................
</TABLE>
- -------------------
(a) The Munder Value Fund Class Y Shares commenced operations on August 18,
1995.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
Balanced Fund(a)
---------------------------------------------------------
Year Ended Period Ended Year Ended Period Ended
6/30/96 6/30/95(b) 2/28/95(e) 2/28/94(f)
---------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.... $ 9.95 $ 10.36 $ 10.00
------- ------- -------
Income from Investment Operations:
Net investment income.................. 0.10 0.21 0.16
Net realized and unrealized gain 0.85 (0.42) 0.32
(loss) on investments................. ------- ------- -------
Total from investment operations....... 0.95 (0.21) 0.48
------- ------- -------
Less Distributions:
Dividends from net investment income... (0.13) (0.20) (0.12)
------- ------- -------
Total distributions.................... (0.13) (0.20) (0.12)
------- ------- -------
Net Asset Value, End of Period.......... $ 10.77 $ 9.95 $ 10.36
======= ======= =======
Total Return(c)........................ 9.57% (1.91)% 4.81%
======= ======= =======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in $48,844 $45,610 $43,997
thousands)............................
Ratio of operating expenses to average. 0.91%(d) 0.97%
0.95%(d)
net assets............................
Ratio of net investment income to 2.76%(d) 2.14%
1.78%(d)
average net assets...................
Portfolio turnover rate............... 52% 116% 50%
Ratio of operating expenses to average. 1.26%(d) 1.32%
1.20%(d)
net assets without waivers............
Net investment income per share $ 0.08 $ 0.18 $ 0.14
without waivers......................
Average commission rate(g).............
</TABLE>
- -----------------------
(a) Formerly, Ambassador Balanced Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) The Munder Balanced Fund Class Y Shares commenced operations on April 13,
1993.
16
<PAGE>
(g) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
Bond Fund(a)
-------------------------------------------------------------------------
- ---------------
Year Ended Period Ended Year Ended Year Ended
Year Ended Period Ended
6/30/96 6/30/95(b) 2/28/95(e)(f) 2/28/94 2/28/93
2/29/92(g)
---------- ------------ ---------- -------- -------- -------
- -----
<S> <C> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Period.... $ 9.31 $ 9.91 $ 9.92 $
10.13 $ 10.00
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income................. 0.21 0.64 0.58 0.77
0.20
Net realized and unrealized gain
(loss) on investments................ 0.39 (0.64) (0.03) (0.12)
0.07
-------- -------- -------- -------- --------
Total from investment operations...... 0.60 0.00 0.55
0.65 0.27
-------- -------- -------- -------- --------
Less Distributions:
Dividends from net investment income.. (0.21) (0.60) (0.56)
(0.77) (0.14)
Distributions from net realized gains. -- -- -- (0.09)
- --
-------- -------- -------- -------- --------
Total distributions................... (0.21) (0.60) (0.56) (0.86)
(0.14)
-------- -------- -------- -------- --------
Net Asset Value, End of Period.......... $ 9.70 $ 9.31 $ 9.91 $
9.92 $ 10.13
======== ======== ========
======== ========
Total Return(c)....................... 6.48% 0.70% 5.63%
6.75% 2.70%
======== ======== ========
======== ========
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands)........................... $146,741 $141,704 $147,770
$154,078 $145,120
Ratio of operating expenses to average
net assets........................... 0.70%(d) 0.67% 0.80% 0.76%
0.19%(d)
Ratio of net investment income to
average net assets................... 6.72%(d) 6.82% 5.70%
7.50% 8.32%(d)
Portfolio turnover rate............... 99% 165% 128%
77% 34%
Ratio of operating expenses to average
net assets without waivers........... 0.94%(d) 0.91% 0.94%
0.94% 0.93%(d)
Net investment income per share without
waivers.............................. $ 0.21 $ 0.61 $ 0.57 $ 0.75
$ 0.18
Average commission rate (h)
</TABLE>
- ----------------------------------
(a) Formerly, Ambassador Bond Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) The Munder Bond Fund Class Y Shares commenced operations on December 1,
1991.
17
<PAGE>
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
Intermediate Bond Fund(a)
------------------------------------------------------------------
- ----------
<S>
<C> <C> <C> <C> <C>
Year Ended Year Ended Year Ended Year
Ended Period Ended
6/30/95(b) 2/28/95(e) 2/28/94 2/28/93
2/29/92(f)
----------- ---------- -------- -------- ---------
- ---
Net Asset Value, Beginning of Period............. $ 9.27 $ 9.91 $ 10.47 $
10.07 $ 10.00
-------- -------- -------- -------- -------
- -
Income from Investment Operations:
Net investment income........................... 0.23 0.60 0.59 0.54
0.15
Net realized and unrealized gain
(loss) on investments.......................... 0.24 (0.59) (0.20) 0.49
0.02
-------- -------- -------- -------- -------
- -
Total from investment operations................ 0.47 0.01 0.39
1.03 0.17
-------- -------- -------- -------- -------
- -
Less Distributions:
Dividends from net investment income............ (0.23) (0.64) (0.58)
(0.54) (0.10)
Distributions from net realized gains........... -- (0.01) (0.37)
(0.09) --
-------- -------- -------- -------- -------
- -
Total distributions............................. (0.23) (0.65) (0.95) (0.63)
(0.10)
-------- -------- -------- -------- -------
- -
Net Asset Value, End of Period................... $ 9.51 $ 9.27 $ 9.91 $
10.47 $ 10.07
======== ======== ========
======== ========
Total Return(c)................................. 5.12% 0.78% 3.79%
10.56% 1.72%
======== ======== ========
======== ========
Ratios to Average Net Assets/Supplemental Data:
Net assets, end of period (in thousands)........ $157,484 $162,185 $162,738
$152,470 $114,014
Ratio of operating expenses to average
net assets..................................... 0.70%(d) 0.68% 0.80% 0.77%
0.19%(d)
Ratio of net investment income to
average net assets............................. 7.37%(d) 6.96% 5.63%
5.53% 6.17%(d)
Portfolio turnover rate......................... 84% 80% 155%
104% 23%
Ratio of operating expenses to average
net assets without waivers..................... 0.94%(d) 0.93% 0.94%
0.95% 0.93%(d)
Net investment income per share without
waivers........................................ $ 0.23 $ 0.58 $ 0.58 $ 0.52
$
0.13
Average
commission
rate
(g)
</TABLE>
- -----------------------------
(a) Formerly, Ambassador Intermediate Bond Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) The Munder Intermediate Bond Fund Class Y Shares commenced operations on
December 1, 1991.
18
<PAGE>
(g) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
U.S. Government Income Fund(a)
------------------------------
Year Ended Period Ended
6/30/95(b) 2/28/95(e)(f)
---------- --------------
<S> <C> <C>
Net Asset Value, Beginning of Period............ $ 9.89 $ 10.00
------- -------
Income from Investment Operations:
Net investment income.......................... 0.24 0.44
Net realized and unrealized gain
(loss) on investments......................... 0.41 (0.07)
------- -------
Total from investment operations............... 0.65 0.37
------- -------
Less Distributions:
Dividends from net investment income........... (0.24) (0.48)
------- -------
Total distributions............................ (0.24) (0.48)
------- -------
Net Asset Value, End of Period.................. $ 10.30 $ 9.89
======= =======
Total Return(c)................................ 6.64% 3.85%
======= =======
Ratios to Average Net Assets/Supplemental Data:
Net assets, end of period (in thousands)....... $12,862 $11,647
Ratio of operating expenses to average
net assets.................................... 0.72%(d) 0.70%(d)
Ratio of net investment income to average
net assets.................................... 7.21%(d) 7.27%(d)
Portfolio turnover rate........................ 42% 143%
Ratio of operating expenses to average
net assets without waivers.................... 0.96%(d) 0.94%(d)
Net investment income per share without
waivers....................................... $ 0.24 $
0.43 Average
commission rate
(g)
</TABLE>
_____________________________
(a) Formerly, Ambassador Income Bond Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) The Munder U.S. Government Income Fund Class Y Shares commenced operations
on July 5, 1994.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
19
<PAGE>
(g) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
Michigan Triple Tax-Free Bond Fund(a)
-------------------------------------------------
Year Ended Year Ended Period Ended
6/30/95(b) 2/28/95(e)(f) 2/28/94(g)
---------- ------------- --------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $ 9.24 $ 9.73 $ 10.00
------ ------ -------
Income from Investment Operations:
Net investment income........................... 0.17 0.50 0.05
Net realized and unrealized gain (loss)
on investments................................. 0.10 (0.54) (0.30)
------ ------ -------
Total from investment operations................ 0.27 (0.04) (0.25)
------ ------ -------
Less Distributions:
Dividends from net investment income............ (0.17) (0.45) (0.02)
------ ------ -------
Total distributions............................. (0.17) (0.45) (0.02)
------ ------ -------
Net Asset Value, End of Period.................... $ 9.34 $ 9.24 $ 9.73
====== ====== =======
Total Return(c)................................. 2.92% 0.10% (2.47)%
====== ====== =======
Ratios to Average Net Assets/Supplement Data:
Net assets, end of period (in thousands)........ $ 771 $ 604 $ 2,252
Ratio of operating expenses to average
net assets..................................... 0.27%(d) 0.31% 0.21%(d)
Ratio of net investment income to average
net assets..................................... 5.31%(d) 5.06% 3.67%(d)
Portfolio turnover rate......................... 8% 53% 0%
Ratio of operating expenses to average net
assets without waivers......................... 1.01%(d) 1.05% 0.95%(d)
Net investment income per share without
waivers........................................ $ 0.12 $ 0.42 $
0.04 Average
commission rate
(h)
</TABLE>
- -----------------------------
(a) Formerly, Ambassador Michigan Tax-Free Bond Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) The Munder Michigan Triple Tax-Free Bond Fund Class Y Shares commenced
operations on January 3, 1994.
20
<PAGE>
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
Tax-Free Bond Fund(a)
------------------------------------------------
<S> <C> <C> <C>
Period Ended Year Ended Period Ended
6/30/96(b)(c) 6/30/95(b)(c) 2/28/95(f)(g)
------------- ------------- -------------
Net Asset Value, Beginning of Period.... $10.13 $10.06
------ ------
Income from Investment Operations:
Net investment income.................. 0.16 0.30
Net realized and unrealized gain on
investments........................... 0.16 0.10
------ ------
Total from investment operations....... 0.32 0.40
------ ------
Less Distributions:
Dividends from net investment income... (0.16) (0.33)
------ ------
Total distributions.................... (0.16) (0.33)
------ ------
Net Asset Value, End of Period.......... $10.29 $10.13
====== ======
Total Return(d)........................ 3.17% 4.08%
====== ======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands)............................ $1,498 $ 953
Ratio of operating expenses to average
net assets........................... . 0.77%(e) 0.68%(e)
Ratio of net investment income to
average net assets.................... 4.63%(e) 4.94%(e)
Portfolio turnover rate................ 12% 50%
Ratio of operating expenses to average
net assets without waivers............ 1.01%(e) 0.92%(e)
Net investment income per share
without waivers....................... $ 0.15 $
0.29 Average
commission rate
(h)
</TABLE>
- ----------------------------
(a) Formerly, Ambassador Tax-Free Bond Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(c) Per share amounts have been calculated using the monthly average share
method which more appropriately presents per share data for the period since
the use of the undistributed net investment income method did not accord
with results of operations.
(d) Total return represents aggregate total return for the period indicated.
(e) Annualized.
(f) The Munder Tax-Free Bond Fund Class Y Shares commenced operations on July
21, 1994.
(g) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
21
<PAGE>
(h) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
Tax-Free Intermediate Bond Fund(a)
-------------------------------------------------------------------------
- -
<S> <C> <C> <C> <C> <C>
Year Ended Year Ended Year Ended Year Ended
Period Ended
6/30/96(b) 6/30/95(b) 2/28/95(e) 2/28/94
2/28/93(f)
---------- ---------- ---------- ---------- ------------
Net Asset Value, Beginning of Period.... $ 10.17 $ 10.44 $ 10.69
$10.40
------- ------- -------- ------
Income from Investment Operations:
Net investment income.................. 0.15 0.42 0.42 0.07
Net realized and unrealized gain (loss)
on investments........................ 0.20 (0.23) (0.14) 0.31
------- ------- -------- ------
Total from investment operations....... 0.35 0.19 0.28
0.38
------- ------- -------- ------
Less Distributions:
Dividends from net investment income... (0.15) (0.44) (0.42)
(0.07)
Distributions from net realized gains.. -- (0.02) (0.11)
(0.02)
------- ------- -------- ------
Total distributions.................... (0.15) (0.46) (0.53) (0.09)
------- ------- -------- ------
Net Asset Value, End of Period.......... $ 10.37 $ 10.17 $ 10.44
$10.69
======= ======= ========
======
Total Return(c)........................ 3.43% 2.34% 2.64%
3.68%
======= ======= ========
======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands)............................ $11,100 $10,709 $ 3,074 $ 489
Ratio of operating expenses to average
net assets............................ 0.73%(d) 0.70% 0.80%
0.79%(d)
Ratio of net investment income to
average net assets.................... 4.27%(d) 4.44% 3.99%
4.08%(d)
Portfolio turnover rate................ 5% 52% 38%
57%
Ratio of operating expenses to average
net assets without waivers............ 0.97%(d) 0.94% 0.94%
0.93%(d)
Net investment income per share
without waivers...................... $ 0.14 $ 0.39 $ 0.41 $
0.07 Average
commission rate
(g)
</TABLE>
- -------------------------------
(a) Formerly, Ambassador Intermediate Tax-Free Bond Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) The Munder Tax-Free Intermediate Bond Fund Class Y Shares commenced
operations on December 17, 1992.
22
<PAGE>
(g) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
Money Market Fund
--------------------------------------------------------------
Year Ended Period Ended Year Ended Period Ended
6/30/96 6/30/95(a)(b) 12/31/94 12/31/93(f)
---------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.... $ 1.00 $ 1.00 $ 1.00
-------- --------- --------
Income from Investment Operations:
Net investment income.................. 0.024 0.04 0.01
-------- --------- -------
Total from investment operations....... 0.024 0.04 0.01
-------- --------- -------
Less Distributions:
Dividends from net investment income... (0.024) (0.04) (0.01)
-------- --------- -------
Total distributions.................... (0.024) (0.04) (0.01)
-------- --------- -------
Net Asset Value, End of Period.......... $ 1.00 $ 1.00 $ 1.00
======== ========= =======
Total Return(c)........................ 2.44% 3.88% 0.96%
======== ========= =======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands)............................ $263,513 $ 145,685 $90,086
Ratio of operating expenses to average
net assets............................ 0.60%(d) 0.60% 0.60%(d)
Ratio of net investment income to
average net assets................... 5.46%(d) 3.81% 2.57%(d)
Ratio of operating expenses to
average net assets without waivers... 0.66%(d) 0.74%
0.73%(d)
Net investment income per share
without waivers(e)................... $ 0.024 $ 0.04 $
0.01 Average
commission rate
(g)
</TABLE>
- -----------------------------
(a) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was December 31.
(b) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) Amounts shown for periods prior to June 30, 1995 are unaudited.
(f) The Munder Money Market Fund Class Y Shares commenced operations on August
18, 1993. Class Y Shares were formerly known as Class C Shares.
23
<PAGE>
(g) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
Tax-Free Money Market Fund(a)
------------------------------------------------------------------------------
- -------------
Year Ended Period Ended Year Ended Year Ended Year
Ended Year Ended Period Ended
6/30/96 6/30/95(b) 2/28/95(e) 2/28/94 2/28/93
2/29/92 2/28/91(f)
---------- ----------- ---------- ---------- ---------- ---------- ---
- ---------
<S> <C> <C> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of
Period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
$ 1.00
------- ------- -------- -------- -------- -----
- --
Income from Investment
Operations:
Net investment income........... 0.012 0.026 0.020 0.025
0.039 0.051
------- ------- -------- -------- -------- -----
- --
Total from investment
operations..................... 0.012 0.026 0.020 0.025 0.039
0.051
------- ------- -------- -------- -------- -----
- --
Less Distributions:
Dividends from net investment
income......................... (0.012) (0.026) (0.020) (0.025)
(0.039) (0.051)
------- ------- -------- -------- -------- -----
- --
Total distributions............. (0.012) (0.026) (0.020) (0.025)
(0.039) (0.051)
------- ------- -------- -------- -------- -----
- --
Net Asset Value, End of Period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00
$ 1.00 $ 1.00
======= ======= ======== ========
======== =======
Total Return (c)................ 1.19% 2.59% 2.02% 2.50%
3.99% 5.28%
======= ======= ======== ========
======== =======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands)..................... $23,430 $30,884 $ 53,798 $ 94,749
$102,453 $94,546
Ratio of operating expenses to
average net assets............. 0.54%(d) 0.55% 0.54% 0.50%
0.44% 0.45%(d)
Ratio of net investment income
to average net assets.......... 3.51%(d) 2.54% 2.00% 2.45%
3.89% 5.30%(d)
Ratio of operating expenses to
average net assets without
waivers........................ 0.59%(d) 0.60% 0.59% 0.58%
0.62% 0.66%(d)
Net investment income per share
without waivers................ $ 0.012 $ 0.025 $ 0.020 $ 0.024 $
0.037 $ 0.050
Average commission rate(g)......
</TABLE>
- ------------------------------
(a) Formerly, Ambassador Tax-Free Money Market Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) The Munder Tax-Free Money Market Fund Class Y Shares commenced operations on
March 14, 1990.
24
<PAGE>
(g) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
U.S. Treasury Money Market Fund(a)
-------------------------------------------------------------------------------
- -----------------
Period Ended Year Ended Year Ended Year Ended Year
Ended Year Ended Period Ended
6/30/96 6/30/95(b) 2/28/95(e) 2/28/94 2/28/93
2/29/92 2/28/91(f)
------------- ---------- ---------- ---------- ---------- ----------
- ------------
<S> <C> <C> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of
Period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
$ 1.00
-------- -------- -------- -------- -------- ---
- ----
Income from Investment
Operations:
Net investment income........... 0.018 0.039 0.026 0.030
0.050 0.068
-------- -------- -------- -------- -------- ---
- ----
Total from investment
operations..................... 0.018 0.039 0.026 0.030
0.050 0.068
-------- -------- -------- -------- -------- ---
- ----
Less Distributions:
Dividends from net investment
income.......................... (0.018) (0.039) (0.026) (0.030)
(0.050) (0.068)
-------- -------- -------- -------- -------- ---
- ----
Total distributions............. (0.018) (0.039) (0.026) (0.030)
(0.050) (0.068)
-------- -------- -------- -------- -------- ---
- ----
Net Asset Value, End of Period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00
$ 1.00 $ 1.00
======== ======== ========
======== ======== =======
Total Return(c)................. 1.80% 4.01% 2.59% 3.05%
5.08% 6.97%
======== ======== ========
======== ======== =======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands)..................... $231,055 $240,590 $245,800 $102,429
$ 83,619 $88,498
Ratio of operating expenses to
average net assets............. 0.55%(d) 0.55% 0.53% 0.51%
0.44% 0.45%(d)
Ratio of net investment income
to average net assets.......... 5.38%(d) 3.88% 2.56% 2.98%
4.95% 6.94%(d)
Ratio of operating expenses to
average net assets without
waivers........................ 0.60%(d) 0.60% 0.58% 0.60%
0.63% 0.66%(d)
Net investment income per share
without waivers................ $ 0.018 $ 0.038 $ 0.025 $ 0.029 $
0.048 $ 0.066
Average commission rate(g)......
</TABLE>
------------------------
(a) Formerly, Ambassador U.S. Treasury Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) The Munder U.S. Treasury Money Market Fund Class Y Shares commenced
operations on March 14, 1990.
25
<PAGE>
(g) Average commission rate paid per share of securities purchased or sold by
the Fund.
<TABLE>
<CAPTION>
Cash Investment Fund(a)
------------------------------------------------------------------------------
- ----------------
Period Ended Year Ended Year Ended Year Ended Year
Ended Year Ended Period Ended
6/30/96 6/30/95(b) 2/28/95(e) 2/28/94 2/28/93
2/29/92 2/28/91(f)
------------ ---------- ---------- ---------- ---------- ---------- -
- -----------
<S> <C> <C> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of
Period.......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
$ 1.00
-------- -------- -------- -------- -------- -----
- ---
Income from Investment
Operations:
Net investment income.......... 0.019 0.042 0.027 0.031
0.052 0.073
-------- -------- -------- -------- -------- -----
- ---
Total from investment
operations.................... 0.019 0.042 0.027 0.031
0.052 0.073
-------- -------- -------- -------- -------- -----
- ---
Less Distributions:
Dividends from net investment
income........................ (0.019) (0.042) (0.027) (0.031)
(0.052) (0.073)
-------- -------- -------- -------- -------- -----
- ---
Total distributions............ (0.019) (0.042) (0.027) (0.031)
(0.052) (0.073)
-------- -------- -------- -------- -------- -----
- ---
Net Asset Value, End of Period... $ 1.00 $ 1.00 $ 1.00 $ 1.00
$ 1.00 $ 1.00
======== ======== ========
======== ======== ========
Total Return(c)................ 1.87% 4.23% 2.70% 3.17%
5.30% 7.56%
======== ======== ========
======== ======== ========
Ratios to Average Net Assets/
Supplemental Data:
Net assets, end of period (in
thousands).................... $340,394 $324,793 $282,363 $320,296
$317,943 $317,545
Ratio of operating expenses to
average net assets............ 0.52%(d) 0.55% 0.53% 0.48%
0.44% 0.45%(d)
Ratio of net investment income
to average net assets......... 5.64%(d) 4.27% 2.66% 3.12%
5.12% 7.43%(d)
Ratio of operating expenses to
average net assets without
waivers....................... 0.54%(d) 0.58% 0.58% 0.59%
0.63% 0.65%(d)
Net investment income per share
without waivers............... $ 0.019 $ 0.041 $ 0.026 $ 0.030 $
0.050 $ 0.071
Average commission rate(g).....
</TABLE>
- ------------------------
(a) Formerly, Ambassador Money Market Fund.
(b) Fiscal year end was changed to June 30. Prior to this, the fiscal year end
was the last day of February.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) The Munder Cash Investment Fund Class Y Shares commenced operations on March
14, 1990.
(g) Average commission rate paid per share of securities purchased or sold by
the Fund.
INVESTMENT OBJECTIVES AND POLICIES
This Prospectus describes the following funds offered by the Company and
Munder: the Multi-Season Growth, Real Estate Equity Investment, Accelerating
Growth, Small Company Growth, Mid-Cap Growth, International
26
<PAGE>
Equity, Index 500, Growth & Income, the Small-Cap Value Fund; the Equity
Selection Fund; the Micro-Cap Equity Fund and Value Funds (collectively, the
"Equity Funds"); the Bond, Intermediate Bond and U.S. Government Income Funds
(collectively, the "Bond Funds"); the Michigan Triple Tax-Free Bond, Tax-Free
Bond and Tax-Free Intermediate Bond Funds (collectively, the "Tax-Free Bond
Funds"); the Money Market Fund, Tax-Free Money Market Fund, U.S. Treasury Money
Market Fund and Cash Investment Fund (collectively, the "Money Market Funds");
the International Bond Fund and the Balanced Fund. Purchasing shares of any fund
should not be considered a complete investment program, but an important segment
of a well-diversified investment program.
MULTI-SEASON GROWTH FUND
The investment objective of the Multi-Season Growth Fund is to provide
shareholders with long-term capital appreciation. The Fund seeks to achieve this
objective by investing primarily in a diversified portfolio of equity securities
of companies that have demonstrated superior long-term earnings growth,
financial stability, attractive valuation and relative price momentum. Income is
not a primary consideration in the selection of investments. This style which
incorporates both growth investing and value constraints has been nationally
recognized as GARP (Growth at a Reasonable Price) and seeks to produce
attractive returns during various market environments.
The Advisor believes that superior investment returns are derived from
securities of financially stable companies that reward shareholders with
superior earnings growth, are attractively priced and enjoy relative price
momentum. Specifically, the Advisor will examine the earnings growth
characteristics of approximately 5,500 companies for each of the last five years
to determine earnings strength, consistency and momentum. Companies which have
demonstrated superior earnings growth will be further reviewed for financial
stability. Corporate balance sheets will be scrutinized to select those
companies which reinvest a significant portion of profits, demonstrate a high
return on equity and carry a relatively low debt load. Companies that meet these
earnings growth and financial stability criteria are further judged for their
value relative to these criteria and the market. Historically, the median
valuation of the portfolios managed by the Advisor has been no more than a
moderate premium to that of the Standard & Poor's 500 Index ("S&P 500"), a
broad-based and widely used unmanaged index of common stocks. Once determined to
be attractive values, those securities exhibiting the strongest relative price
momentum to the S&P 500 normally will be chosen by the Advisor for the Fund.
Within these parameters, the Advisor typically will establish equity positions
in approximately 50 to 100 companies. Equity securities generally will be sold
from the Fund's portfolio when they consistently fail to achieve any two or more
of the four criteria stated above.
The Fund invests substantially all, and at least 65%, of its assets in equity
securities. Equity securities include common and preferred stocks and securities
convertible into or exchangeable for common stocks, such as convertible
preferred stocks, convertible debentures or warrants. No more than 25% of the
assets of the Fund will be invested in one industry group. In addition, the Fund
will not own more than 10% of the outstanding voting securities of a single
issuer. The Fund may also invest up to 20% of the value of its total assets in
equity securities of foreign issuers, including companies domiciled in
developing countries.
The Fund may invest in short-term money market instruments. Under normal
market conditions, short-term money market instruments could comprise up to 35%
of the Fund's total assets. The Fund could invest a higher percentage of its
assets in money market instruments for temporary defensive purposes.
The Fund's investment objective is a fundamental policy and may not be changed
without the authorization of the holders of a majority (as defined in the
Investment Company Act of 1940, as amended (the "1940 Act")) of the Fund's
outstanding shares.
REAL ESTATE EQUITY INVESTMENT FUND
27
<PAGE>
The Real Estate Equity Investment Fund's investment objectives are to provide
shareholders with capital appreciation and current income. It seeks to achieve
these objectives by investing primarily in securities of United States companies
which are principally engaged in the real estate industry or which own
significant real estate assets. It will not invest directly in real estate.
Under normal conditions, the Fund will invest at least 65% of its total assets
in equity securities of companies listed on U.S. securities exchanges or NASDAQ
which are principally engaged in the real estate industry. Equity securities
include common stock, preferred stock and securities convertible into common
stock. A company is "principally engaged" in the real estate industry if at
least 50% of its assets, gross income or net profits are attributable to
ownership, construction, management or sale of residential, commercial or
industrial real estate. Real estate industry companies may include among others:
equity real estate investment trusts, which pool investors' funds for investment
primarily in commercial real estate properties; mortgage real estate investment
trusts, which invest pooled funds in real estate related loans; brokers, home
builders or real estate developers; and companies with substantial real estate
holdings, such as paper and lumber producers and hotel and entertainment
companies. The Fund will invest in real estate investment trusts only if they
are traded on major U.S. exchanges or NASDAQ. The Fund will not invest more than
15% of its total assets in equity real estate investment trusts, excluding self-
managed and/or self-administered trusts. The specific risks of investing in real
estate industry companies are summarized under "Portfolio Instruments and
Practices and Associated Risk Factors--Industry Concentration."
The Fund may also invest up to 35% of its total assets in equity securities of
issuers whose products and services are related to the real estate industry,
such as manufacturers and distributors of building supplies and financial
institutions which issue or service mortgages. The Fund will invest more than
25% of its total assets in the real estate and real estate related industries.
In addition to these securities, the Fund may invest up to 35% of its total
assets in securities of companies outside the real estate and real estate
related industries believed by the Advisor to be undervalued and to have capital
appreciation potential. Moreover, consistent with its objective of current
income, the Fund may invest in nonconvertible debt securities of companies
outside the real estate and real estate related industries. The debt securities
purchased (except for those described below) will be of investment grade or
better quality (e.g., rated no lower than Baa by Moody's Investor Services, Inc.
("Moody's") or BBB by Standard & Poor's Ratings Services, a division of McGraw-
Hill Companies ("S&P") or if not so rated, believed by the Advisor to be of
comparable quality). From time to time, the Fund may invest up to 5% of its
total assets in securities rated below investment grade and in unrated debt
securities of issuers which are secured by real estate assets where the Advisor
believes that the securities are trading at a discount and that the underlying
collateral is sufficient to ensure repayment of principal. In such situations,
it is conceivable that the Fund could, in the event of default, end up holding
the underlying real estate directly.
The Fund may also invest in short-term money market securities. Under normal
market conditions, short-term money market securities could comprise up to 35%
of the Fund's total assets. The Fund could invest a higher percentage of its
assets in money market securities for temporary defensive purposes.
The Fund's investment objective is fundamental and may not be changed without
the authorization of the holders of a majority of the Fund's outstanding shares.
Unless otherwise noted, all other investment policies of the Fund are non-
fundamental and may be changed by the Board of Directors without shareholder
approval.
ACCELERATING GROWTH FUND
The investment objective of the Accelerating Growth Fund is to provide long-
term capital appreciation, with income a secondary consideration. The Fund seeks
to achieve its objective by investing primarily in equity securities and
instruments convertible or exchangeable into equity securities. The Fund's
investment portfolio will consist primarily of the stocks of companies
determined by the Advisor to demonstrate accelerating earnings
28
<PAGE>
growth and which are expected to continue expanding earnings at an accelerated
pace, maintain a substantial competitive advantage, have a focused management
team and a stable balance sheet.
Under normal market conditions, at least 65% of the Fund's total assets will
be invested in equity securities. In addition to investing in equity securities,
the Fund is authorized to invest in high quality short-term fixed income
securities as cash reserves or for defensive purposes. See "Portfolio
Instruments and Practices and Associated Risk Factors" for a description of
investment practices of the Fund, including limited investments in warrants,
foreign securities and stock index futures and options.
SMALL COMPANY GROWTH FUND
The investment objective of the Small Company Growth Fund is to provide long-
term capital appreciation. The Fund pursues its objective by investing primarily
in equity securities such as common stocks and instruments convertible or
exchangeable into common stocks.
Securities held by the Fund will generally be issued by smaller companies.
Smaller companies will be considered those companies with market capitalizations
that are less than the capitalization of companies which predominate the major
market indices, such as the S&P 500. The market capitalization of the issuers of
securities purchased by the Fund will be between $50 million and $1 billion at
the time of purchase. In managing the Fund, the Advisor seeks smaller companies
with above-average growth prospects. Factors considered in selecting such
issuers include participation in a fast growing industry, a strategic niche
position in a specialized market, adequate capitalization and fundamental value.
The Fund has been designed to provide investors with potentially greater long-
term rewards than those provided by an investment in a fund that seeks capital
appreciation from equity securities of larger, more established companies. Since
small capitalization companies are generally not as well-known to investors and
have less of an investor following than larger companies, they may provide
opportunities for greater investment gains as a result of inefficiencies in the
marketplace.
Small capitalization companies typically are subject to a greater degree of
change in earnings and business prospects than larger, more established
companies. In addition, securities of small capitalization companies are traded
in lower volume than those issued by larger companies and may be more volatile.
As a result, the Fund may be subject to greater price volatility than a fund
consisting of larger capitalization stocks. By maintaining a broadly diversified
portfolio, the Advisor will attempt to reduce this volatility. The Fund may not
be appropriate for investors requiring stability of principal or income flow
from their investments.
Under normal market conditions, at least 65% of the Fund's total assets will
be invested in small company equity securities. In addition to investing in
equity securities, the Fund is also authorized to invest in high quality short-
term fixed income securities as cash reserves or for defensive purposes. See
"Portfolio Instruments and Practices and Associated Risk Factors" for a
description of investment practices of the Fund, including limited investments
in warrants, foreign securities and stock index futures and options.
MID-CAP GROWTH FUND
29
<PAGE>
The investment objective of the Mid-Cap Growth Fund is to provide shareholders
with long-term capital appreciation. It seeks to achieve this objective by
investing primarily in a diversified portfolio of equity securities of companies
that have market capitalizations between $100 million and $5 billion and have
demonstrated superior earnings growth, financial stability, attractive valuation
and relative price momentum. Income is not a primary consideration in the
selection of investments. This style which incorporates both growth investing
and value constraints has been nationally recognized as GARP (Growth at a
Reasonable Price) and seeks to produce attractive returns during various market
environments.
The Advisor believes that superior investment returns are derived from
securities of financially stable companies that reward shareholders with
superior earnings growth, are attractively priced and enjoy relative price
momentum. Specifically, the Advisor will examine the earnings growth
characteristics of approximately 10,000 companies for each of the last three
years to determine earnings strength, consistency and momentum. Companies which
have demonstrated superior earnings growth will be further reviewed for
financial stability. Corporate balance sheets will be scrutinized to select
those companies which reinvest a significant portion of profits, demonstrate a
high return on equity and carry a relatively low debt load. Companies that meet
these earnings growth and financial stability criteria are further judged for
their value relative to these criteria and the market. Once determined to be
attractive values, those securities exhibiting relative price momentum to the
Standard & Poor's Mid-Cap Index generally will be favored by the Advisor for the
Fund. Within these parameters, the Advisor typically will establish equity
positions in approximately 50 to 100 companies. Equity securities generally will
be sold from the Fund's portfolio when they consistently fail to achieve any two
or more of the four criteria stated above.
The Fund invests substantially all, and at least 65%, of its total assets in
equity securities of companies with market capitalizations that range between
$100 million and $5 billion. Equity securities include common and preferred
stocks and securities convertible into or exchangeable for common stocks, such
as convertible preferred stocks, convertible debentures or warrants. No more
than 25% of the assets of the Fund will be invested in one industry group. In
addition, the Fund will not own more than 10% of the outstanding voting
securities of a single issuer.
The Fund may also invest in short-term money market securities. Under normal
market conditions, short-term money market securities could comprise up to 35%
of the Fund's total assets. The Fund could invest a higher percentage of its
assets in money market securities for temporary defensive purposes.
INTERNATIONAL EQUITY FUND
The investment objective of the International Equity Fund is to provide long-
term capital appreciation by investing primarily in the equity securities of
foreign issuers. These securities will be held directly or in the form of
American Depositary Receipts ("ADRs") or European Depositary Receipts ("EDRs").
ADRs are receipts typically issued by a United States bank or trust company
evidencing ownership of the underlying foreign securities. EDRs are receipts
issued by a European financial institution evidencing a similar arrangement. The
Fund will emphasize companies with a market capitalization of at least $100
million. In selecting issuers, the Advisor may consider, among other factors,
the location of the issuer, its competitive stature, the issuer's past record
and future prospects for growth, and the marketability of its securities.
On a continuing basis, but at least quarterly, the Advisor creates a list of
securities eligible for purchase by the Fund. The Advisor then calculates the
adjusted market capitalization of all the equity securities, ADRs and EDRs
considered to be eligible for purchase. Market capitalization for equity
securities is calculated by multiplying the market price of the security by the
number of shares outstanding, adjusted for control blocks. A control block is
defined as a block of securities owned by another corporation. The primary
sources of information regarding the existence and size of control blocks are
the S&P Stock reports and the Morgan Stanley Capital International
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Perspective. Control blocks will be updated each time the eligible list of
securities is created or a company is added to the eligible universe.
Following calculation of the adjusted market capitalization, the list of
eligible securities is then sorted in descending order of adjusted market
capitalization. Securities with market capitalizations greater than $100 million
are considered for purchase by the Fund. On a regular basis, securities will be
added to the eligible universe as new ADR and EDR facilities and exchange
listings occur, subject to meeting other eligibility requirements. Each time the
list of eligible securities is created, any security held by the Fund that does
not appear on the updated eligibility list will be sold as soon as practicable.
Equity securities on the eligible securities list are continuously evaluated
on the basis of total return in relation to their respective local, regional and
global markets. From the list of eligible securities a portfolio is constructed
that is composed of two major sections. The first section is designed to provide
broad coverage of international markets. Securities representation generally
covers all major markets and industry sectors. The second section is designed to
complement the first section by increasing exposure to securities that are
expected to outperform their markets and industry sectors on a relative basis.
The blending of the two sections is designed to provide an international
portfolio that provides a broad market exposure to stock markets and has the
capability to enhance the value of the portfolio by adjusting allocations to
stocks that are expected to outperform their respective markets on a relative
basis.
The Fund will increase its exposure to the second section when the Advisor
identifies securities that are expected to outperform their markets and the Fund
will conversely increase its exposure to the first section when the Advisor
believes a broader market exposure is required. When the Advisor believes
broader market exposure will benefit the Fund, the Fund may allocate up to 80%
of its assets for investment in the first section securities. When the Advisor
identifies strong potential for specific securities to outperform their relative
benchmarks, the Fund may invest up to 50% of its total assets in the second
section securities.
The Advisor will determine section two allocation by examining the
relationship each security has with the economic environment of its respective
industry, country market and geographic region. A stock's economic environment
is analyzed by identifying relevant key economic factor relationships with each
stock, sector and market and then determining the level of influence the factors
have in influencing the stock price.
The Fund may invest in the securities of issuers located in the principal
trading market which is in countries which include, but are not limited to, the
following: Argentina, Australia, Belgium, Brazil, Canada, Chile, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Korea, Luxembourg,
Malaysia, Mexico, The Netherlands, New Zealand, Norway, Peru, The Philippines,
Portugal, Singapore, Spain, Sweden, Switzerland, Taiwan, Turkey and The United
Kingdom.
Under normal market conditions, at least 65% of the Fund's total assets will
be invested in the equity securities of foreign issuers and such issuers will be
located in at least three foreign countries. In addition to investing in stocks,
the Fund may, for the purpose of hedging its portfolio, purchase and write put
and call options on foreign stock indices listed on foreign and domestic stock
exchanges. The Fund may also invest in convertible securities, stock index
futures, and, to a limited extent, warrants. The Fund is also authorized to
invest in high quality short-term fixed income securities as cash reserves or
for defensive purposes. The Fund may not be appropriate for investors requiring
stability of principal or income flow from their investments. See "Portfolio
Instruments and Practices and Associated Risk Factors-Foreign Securities."
INDEX 500 FUND
The investment objective of the Index 500 Fund is to provide price performance
and income that is
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comparable to the performance of the S&P 500 Index, an index which emphasizes
large capitalization companies. As of December 31, 1994, the S&P 500 represented
approximately 74% of the market capitalization of publicly owned stocks in the
United States. Although the Fund may not hold securities of all 500 issuers
included in the S&P 500 Index, it will normally hold the securities of at least
80% of such issuers. Stock selections are based primarily on market
capitalization and industry weightings. The Fund may also invest in Standard &
Poor's Depository Receipts ("SPDRs"). SPDRs are securities traded on the
American Stock Exchange that represent ownership in the SPDR Trust, a long-term
unit investment trust which is intended to provide investment results that
generally correspond to the price and yield performance of the S&P 500 Index.
See "Portfolio Instruments and Practices and Associated Risk Factors--Investment
Company Securities." The Fund seeks quarterly performance within a .95
correlation with the S&P 500.
The Fund is managed through the use of a "quantitative" or "indexing"
investment approach, which attempts to duplicate the investment composition and
performance of the S&P 500 through statistical procedures. As a result, the
Advisor does not employ traditional methods of fund investment management, such
as selecting securities on the basis of economic, financial and market analysis.
The Index 500 Fund is not sponsored, endorsed, sold or promoted by S&P. S&P
makes no representation or warranty, express or implied, to the owners of the
Index 500 Fund or any member of the public regarding the advisability of
investing in securities generally or in the Index 500 Fund particularly or the
ability of the S&P 500 Index to trace general stock market performance. S&P's
only relationship to the Company is the licensing of certain trademarks and
trade names of S&P and of the S&P 500 Index which is determined, composed and
calculated by S&P without regard to the Company or the Index 500 Fund. S&P has
no obligation to take the needs of the Company or the owners of the Index 500
Fund into consideration in determining, composing or calculating the S&P 500
Index. S&P is not responsible for and has not participated in the determination
of the prices and amount of the Index 500 Fund or the timing of the issuance or
sale of the Index 500 Fund or in the determination or calculation of the
equation by which the Index 500 Fund is to be converted into cash. S&P has no
obligation or liability in connection with the administration, marketing or
trading of the Index 500 Fund.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500
Index or any data included therein and S&P shall have no liability for any
errors, omissions, or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the Company, owners of the Index 500
Fund, or any other person or entity from the use of the S&P 500 Index or any
data included therein. S&P makes no express or implied warranties, and expressly
disclaims all warranties of merchantability of fitness for a particular purpose
or use with respect to the S&P 500 Index or any data included therein. Without
limiting any of the foregoing, in no event shall S&P have any liability for any
special, punitive, indirect, or consequential damages (including lost profits),
even if notified of the possibility of such damages.
"Standard & Poor's/(R)/", "S&P/(R)/", "S&P 500/(R)/", "Standard & Poor's 500",
and "500" are trademarks of McGraw-Hill, Inc. and have been licensed for use by
the Company. The Index 500 Fund is not sponsored, endorsed, sold or promoted by
S&P and S&P makes no representation regarding the advisability of investing in
the Index 500 Fund.
In addition to investing in stocks, the Index 500 Fund is also authorized to
invest in high quality short-term fixed income securities as cash reserves or
for defensive purposes. The Fund may also invest in stock index futures. See
"Portfolio Instruments and Practices and Associated Risk Factors" for a
description of investment practices of the Fund.
GROWTH & INCOME FUND
The investment objective of the Growth & Income Fund is to provide capital
appreciation and current income
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by investing primarily in dividend-paying equity securities. The Fund is
designed for investors seeking current income and capital appreciation through
the equity markets. The Fund will seek to achieve its objectives principally by
investing in a broadly diversified portfolio of dividend-paying stocks of
companies whose prospects for dividend growth and capital appreciation are
considered favorable by the Advisor. In general, the Advisor selects large,
well-known companies that it believes have above-average and secure dividends.
The Fund will seek to produce a current yield greater than the S&P 500.
The Fund's investment philosophy is founded on the Advisor's belief that over
time, dividend income can account for a significant component of the total
return from equity investments. Over time, reinvested dividend income has
accounted for approximately one-half of the total return of the S&P 500. Second,
dividends are normally a more stable and predictable source of return than
capital appreciation. While the price of a company's stock generally increases
or decreases in response to short-term earnings and market fluctuations, its
dividends are generally less volatile. Finally, the Advisor believes that stocks
which distribute a high level of current income tend to have less price
volatility than those which do not.
To achieve its objective, the Fund will invest under normal circumstances at
least 65% of its assets in income-producing common stocks and convertible
preferred stocks. The Fund also may invest in convertible bonds which are debt
securities convertible into or ultimately exchangeable for common stock. The
Fund may invest up to 20% of the value of its total assets in securities that
are rated below investment grade by S&P or Moody's. In addition to investing in
common stocks and convertible securities, the Fund is authorized to invest in
high quality short-term fixed income securities as cash reserves or for
defensive purposes. See "Portfolio Instruments and Practices and Associated Risk
Factors" for a description of these and other investment practices of the Fund,
including investments in warrants, foreign securities and in stock index futures
and options.
VALUE FUND
The investment objective of the Value Fund is to provide long-term capital
appreciation, with income a secondary objective. The Fund seeks to achieve its
objective by investing primarily in equity securities of well-established
companies with intermediate to large market capitalizations or capitalizations
which exceed $750 million. The Advisor will generally favor companies that are
believed by the Advisor to be undervalued at the time of purchase. Companies
will also exhibit a stable or improving earnings record and sound finances at
the time of purchase.
Securities may become undervalued generally because they are temporarily out
of favor due to economic conditions, a market decline, industry conditions or
actual or anticipated developments affecting the company. The Fund may be
considered "contrarian" in nature because its investments may be considered out
of favor with general investors. Generally, the Fund will invest at least 65% of
its total assets in equity securities. The Fund will typically invest in
companies with lower price/earnings ratios, lower price/cash flow ratios and/or
lower price/book values than the equity markets in general, as measured by the
S&P 500. In addition, a company's valuation level will be compared to its own
historical valuation. The dividend yield of portfolio companies is expected to
approximate that of the general equity market. No more than 25% of the assets of
the Fund will be invested in one industry group. In addition, the Fund will not
own more than 10% of the outstanding voting securities of a single issuer.
It is the Advisor's intention to invest primarily in domestic equity
securities. In addition to investing in domestic common stocks, the Fund may
invest in other equity securities and equity equivalents. Other equity
securities and equity equivalents include securities that permit the Fund to
receive an equity interest in an issuer, the opportunity to acquire an equity
interest in an issuer, or the opportunity to receive a return on its investment
that permits the Fund to benefit from the growth over time in the equity of an
issuer. Examples of equity securities and equity equivalents include ADRs,
preferred stock, convertible preferred stock and convertible debt securities.
Equity equivalents may also include securities whose value or return is derived
from the value or return of a
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<PAGE>
different security. An example of the type of derivative security in which the
Fund might invest includes depositary receipts. The Value Fund may also invest
in short-term money market instruments.
The Fund will limit its purchase of convertible debt securities that, at the
time of purchase, are rated below investment grade by S&P or Moody's, or if not
rated by S&P or Moody's, are of equivalent investment quality as determined by
the Advisor, to 5% of the value of the Fund's total assets. For more detailed
information with respect to such securities and the risks associated with such
investments see "Lower Rated Debt Securities" in the Statement of Additional
Information.
BALANCED FUND
The investment objective of the Balanced Fund is to provide an attractive
investment return through a combination of growth of capital and current income.
The Fund seeks to achieve its objective by allocating assets among three major
asset groups: equity securities, fixed income securities and cash equivalents.
In pursuing its investment objective, the Advisor will allocate the Fund's
assets based upon its evaluation of the relative attractiveness of the major
asset groups.
The Fund's policy is to invest at least 25% of the value of its total assets
in fixed income securities including short-term obligations and no more than 75%
in equity securities at all times. The actual percentage of assets invested in
fixed income and equity securities will vary from time to time, depending on the
judgment of the Advisor as to general market and economic conditions, trends and
yields, interest rates and fiscal and monetary developments. The Fund will not
purchase a security if, as a result of such purchase, less than 25% of its total
assets would be in fixed income securities (including short and long-term debt
securities, preferred stocks, and convertible debt securities and preferred
stocks, to the extent their value is attributable to their fixed income
characteristics). This policy is not fundamental and may be changed by the Board
of Trustees without a vote of the majority of shareholders, but only with 30
days' prior shareholder notice and in accordance with the 1940 Act.
Subject to the above limitations, the Fund's assets may be invested in U.S.
Government and agency obligations, corporate bonds, senior debt securities,
preferred and common stocks in such proportions and of such type as are deemed
by the Advisor to be best adapted to the current economic and market outlook.
The Advisor may incorporate several considerations into its asset allocation
decision-making process including the Advisor's outlook for future returns on
each asset class, inflation, interest rates and long-term corporate earnings
growth. Investment returns are normally strongly influenced by such variables
and their expected changes over time. Therefore, the Advisor will attempt to
take advantage of changing economic conditions by increasing or decreasing the
ratio of stocks to fixed income obligations or cash equivalents in the Fund. For
example, if the Advisor expected more rapid economic growth leading to better
corporate earnings in the future, it would normally increase the Fund's equity
holdings while reducing its fixed income and cash equivalent holdings.
The Fund reserves the right to hold as a temporary defensive measure up to
100% of its total assets in cash and short-term obligations (having remaining
maturities of 18 months or less) at such times and in such proportions as, in
the opinion of the Advisor, prevailing market or economic conditions warrant.
Short-term obligations include, but are not limited to, domestic commercial
paper, bankers' acceptances, certificates of deposit, demand and time deposits
of domestic and foreign banks and savings and loan associations, repurchase
agreements, and obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities.
SMALL-CAP VALUE FUND
The investment objective of the Small-Cap Value Fund is long-term capital
appreciation, with income as a secondary objective. The Fund seeks to achieve
its objective by investing primarily (i.e. 65% of its total assets) in equity
securities of smaller companies with market capitalizations that are less than
the capitalization of companies which predominate the major market indices, such
as the S&P 500. These issuers generally have a market capitalization below $750
million at the time of purchase.
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The Advisor will generally favor companies that are believed by the Advisor to
be undervalued at the time of purchase. Companies will also exhibit a stable or
improving earnings record and sound finances at the time of purchase. Factors
considered in selecting such issuers include participation in a fast growing
industry, a strategic niche position in a specialized market, adequate
capitalization and fundamental value.
Securities may become undervalued generally because they are temporarily
overlooked or out of favor due to economic conditions, a market decline,
industry conditions or actual or anticipated developments affecting the company.
The Fund may be considered "contrarian" in nature because its investments may be
considered out of favor with general investors.
The Fund will attempt to provide investors with potentially greater long-term
rewards than those provided by an investment in a fund that seeks capital
appreciation from equity securities of larger, more established companies. Since
small capitalization companies are generally not as well-known to investors and
have less of an investor following than larger companies, they may provide
opportunities for greater investment gains as a result of inefficiencies in the
marketplace.
Small capitalization companies typically are subject to a greater degree of
change in earnings and business prospects than larger, more established
companies. In addition, securities of small capitalization companies are traded
in lower volume than those issued by larger companies and may be more volatile.
As a result, the Fund may be subject to greater price volatility than a fund
consisting of larger capitalization stocks. By maintaining a broadly diversified
portfolio, the Advisor will attempt to reduce this volatility.
Under normal market conditions, the Fund will invest at least 65% of its total
assets in equity securities. The Fund will typically invest in companies with
lower price/earnings ratios, lower price/cash flow ratios and/or lower
price/book values than the equity markets in general, as measured by the Russell
2000/R/ index of small stocks. In addition, a company's valuation level will be
compared to its own historical valuation. The dividend yield of portfolio
companies is expected to approximate that of the general equity market. No more
than 25% of the assets of the Fund will be invested in one industry group.
It is the Advisor's intention to invest primarily in domestic equity
securities. In addition to investing in domestic common stocks, the Fund may
invest in other equity securities and equity equivalents. Other equity
securities and equity equivalents include securities that permit the Fund to
receive an equity interest in an issuer, the opportunity to acquire an equity
interest in an issuer, or the opportunity to receive a return on its investment
that permits the Fund to benefit from the growth over time in the equity of an
issuer. Examples of equity securities and equity equivalents include ADRs,
preferred stock, convertible preferred stock and convertible debt securities.
Equity equivalents may also include securities whose value or return is derived
from the value or return of a different security. An example of the type of
derivative security in which the Fund might invest includes depositary receipts.
In addition to investing in equity securities, the Fund is also authorized to
invest in high quality short-term fixed income securities as cash reserves or
for defensive purposes. See "Portfolio Instruments and Practices and Associated
Risk Factors" for a description of investment practices of the Fund, including
limited investments in warrants, foreign securities and stock index futures and
options.
EQUITY SELECTION FUND
The investment objective of the Equity Selection Fund is to provide
shareholders with long-term capital appreciation. The Fund seeks to achieve this
objective by investing in equity securities that a dedicated research team
believes to be of high quality and that, as determined through both fundamental
and technical analysis, are undervalued compared to equity securities of other
companies in the same industry. The Fund generally will invest in issuers that
have market capitalizations of at least $9 billion at the time of purchase. The
Fund will be diversified by industry with proportionate weightings approximately
the same as those of the S&P 500.
The Fund seeks long-term capital appreciation by investing primarily in common
stocks. Under normal market conditions, the Fund will invest at least 65% of its
total assets in equity securities. In addition to investing in equity
securities, the Fund is also authorized to invest in high quality short-term
fixed income securities as cash reserves
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<PAGE>
or for defensive purposes. See "Portfolio Instruments and Practices and
Associated Risk Factors" for a description of investment practices of the Fund,
including limited investments in warrants, foreign securities and stock index
futures and options.
MICRO-CAP EQUITY FUND
The investment objective of the Micro-Cap Equity Fund is long-term capital
appreciation. The Fund seeks to achieve its objective by investing, under normal
market conditions, at least 65% of its total assets in equity securities of
smaller companies with market capitalizations that are less than the
capitalization of companies which predominate the major market indices, such as
the S&P 500. These issuers generally have a market capitalization of $200
million or less at the time of purchase.
The Advisor will generally favor companies that it believes offer attractive
opportunities due to the inefficiencies of the micro-cap market and that the
Advisor believes, through internal research, will have the ability to grow
significantly over the next several years. The Fund will typically invest in
small-sized, emerging growth companies that are positioned to benefit from
changes in technologies, regulations, and/or secular trends. These companies may
still be in the developmental stage and may have limited product lines.
The Fund will attempt to provide investors with potentially greater long-term
rewards than those provided by an investment in a fund that seeks capital
appreciation from equity securities of larger, more established companies. Since
smaller capitalization companies are generally not as well-known to investors
and have less of an investor following than larger companies, they may provide
opportunities for greater investment gains as a result of inefficiencies in the
marketplace.
Smaller capitalization companies typically are subject to a greater degree of
change in earnings and business prospects than larger, more established
companies. In addition, securities of smaller capitalization companies are
traded in lower volume than those issued by larger companies and may be more
volatile. As a result, the Fund may be subject to greater price volatility than
a fund consisting of larger capitalization stocks. By maintaining a broadly
diversified portfolio, the Advisor will attempt to reduce this volatility.
Under normal market conditions, the Fund will invest at least 65% of its total
assets in equity securities. No more than 25% of the assets of the Fund will be
invested in one industry group. In addition to investing in equity securities,
the Fund is also authorized to invest in high quality short-term fixed income
securities as cash reserves or for defensive purposes. See "Portfolio
Instruments and Practices and Associated Risk Factors" for a description of
investment practices of the Fund, including limited investments in warrants,
foreign securities and stock index futures and options.
INTERNATIONAL BOND FUND
The investment objective of the International Bond Fund is to realize a
competitive total return through a combination of current income and capital
appreciation. The Fund seeks to achieve its objective by investment primarily in
foreign debt obligations. As an international fund, the Fund may invest in
securities of any issuer and in any currency. Under normal market conditions, at
least 65% of the Fund's assets are invested in bonds of issuers located in at
least three countries other than the United States. The Fund will primarily
invest in foreign debt obligations denominated in foreign currencies, including
the European Currency Unit ("ECU"), which are issued by foreign governments and
governmental agencies, instrumentalities or political subdivisions; debt
securities issued or guaranteed by supranational organizations (e.g., European
Investment Bank, Inter-American Development Bank or the World Bank); corporate
debt securities; bank or bank holding company debt securities and other debt
securities including those convertible into foreign stock. For the purposes of
the 65% limitation with respect to the Fund's designation as an international
bond fund, the securities described in this paragraph are
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<PAGE>
considered "international bonds." There can be no assurance that the Fund will
achieve its investment objective. Purchasing shares of the Fund should not be
considered a complete investment program, but an important segment of a well-
diversified investment program.
The Fund's dollar-weighted average maturity will generally be between three
and fifteen years except during temporary defensive periods, and will be
adjusted by the Advisor according to market conditions. Pending investment, to
meet anticipated redemption requests, or as a temporary defensive measure if the
Advisor determines that market conditions warrant, the Fund may invest without
limitation in short-term U.S. Government obligations, high quality money market
instruments and repurchase agreements. Such obligations may include those issued
by foreign banks and foreign branches of U.S. banks. The Fund may also invest in
futures contracts and options and enter into interest rate swap transactions.
See "Portfolio Instruments and Practices and Associated Risk Factors-Futures
Contracts and Options" for a discussion of the risks associated with the use of
derivative instruments. A further description of the types of obligations and
the various investment techniques used by the Fund is provided below under
"Portfolio Instruments and Practices and Associated Risk Factors."
BOND FUND, INTERMEDIATE BOND FUND AND U.S. GOVERNMENT INCOME
FUND (THE "BOND
FUNDS")
The investment objective of the Bond Fund is to provide a high level of
current income, and secondarily, capital appreciation. The Bond Fund's dollar-
weighted average maturity will generally be between six and fifteen years except
during temporary defensive periods, and will be adjusted by the Advisor
according to market conditions. The investment objective of the Intermediate
Bond Fund is to provide a competitive rate of return which over time exceeds the
rate of inflation and the return provided by money market instruments. The
Intermediate Bond Fund's dollar-weighted average maturity will generally be
between three and eight years and will be adjusted by the Advisor according to
market conditions. The investment objective of the U.S. Government Income Fund
is to provide high current income. Under normal market conditions, the U.S.
Government Income Fund's dollar-weighted average maturity will be six to fifteen
years, and will be adjusted by the Advisor according to market conditions.
Each Fund invests substantially all of its assets in debt obligations such as
bonds and debentures, obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities ("U.S. Government obligations"), debt
obligations of domestic and foreign corporations, debt obligations of foreign
governments and their political subdivisions, asset-backed securities and
various mortgage-related securities. The Bond Funds may purchase obligations
issued by or on behalf of states, territories and possessions of the United
States, the District of Columbia and their political subdivisions, agencies,
instrumentalities and authorities. For purposes of the 65% limitation with
respect to the Bond Fund and the Intermediate Bond Fund described below, the
securities described in this paragraph are considered "bonds."
Pending investment, to meet anticipated redemption requests, or as a temporary
defensive measure if the Advisor determines that market conditions warrant, the
Bond Funds may invest without limitation in short-term U.S. Government
obligations, high quality money market instruments and repurchase agreements.
Such obligations may include those issued by foreign banks and foreign branches
of U.S. banks.
The Bond Funds may also invest in futures contracts and options and enter into
interest rate swap transactions. See "Portfolio Instruments and Practices and
Associated Risk Factors--Futures Contracts and Options" for a discussion of the
risks associated with the use of derivative instruments. During normal market
conditions at least 65% of each of the Bond Fund's and the Intermediate Bond
Fund's total assets will be invested in bonds. During normal market conditions
at least 65% of the U.S. Government Income Fund's total assets will be invested
in U.S. Government obligations. A further description of the types of
obligations and the various investment techniques used by the Bond Funds is
provided below under "Portfolio Instruments and Practices and Associated Risk
Factors."
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MICHIGAN TRIPLE TAX-FREE BOND FUND
The investment objective of the Michigan Triple Tax-Free Bond Fund is to
provide a high level of current interest income exempt from regular Federal
income taxes and to the extent possible Michigan state income tax and
intangibles tax as is consistent with prudent investment management and
preservation of capital. The Fund seeks to achieve its objective by investing in
a professionally managed portfolio of intermediate-term and long-term municipal
obligations, the interest on which, in the opinion of bond counsel or counsel to
the issuer, is exempt from regular Federal income tax and Michigan state income,
intangibles and single business taxes. The Fund will invest primarily in
obligations which have remaining maturities of between three and thirty years.
The Fund's dollar-weighted average maturity will generally be between ten and
twenty years except during temporary defensive periods, and will be adjusted
downward by the Advisor according to market conditions.
Except during temporary defensive periods, at least 65% of the net assets of
the Fund will be invested in municipal obligations issued by the State of
Michigan and its political subdivisions ("Michigan Municipal Obligations").
Interest income from certain types of municipal securities may be subject to
Federal alternative minimum tax. The Fund will treat certain of these securities
as Michigan Municipal Obligations. See "Portfolio Instruments and Practices and
Associated Risk Factors--Michigan Municipal Obligations."
TAX-FREE BOND FUND
The investment objective of the Tax-Free Bond Fund is to provide a high level
of current interest income exempt from Federal income taxes and to generate a
competitive long-term rate of return as is consistent with prudent investment
management and preservation of capital. The Fund will seek to achieve its
objective by investing, under normal market conditions, in a professionally
managed portfolio of intermediate-term and long-term municipal obligations, the
interest on which, in the opinion of bond counsel or counsel to the issuer, is
exempt from regular Federal income tax. The Fund will invest primarily in
obligations which have remaining maturities of between three and thirty years.
The Fund's dollar-weighted average maturity will generally be between ten and
twenty years except during temporary defensive periods, and will be adjusted by
the Advisor according to market conditions.
The Tax-Free Bond Fund may purchase obligations issued by or on behalf of
states, territories and possessions of the United States, the District of
Columbia and their political subdivisions, agencies, instrumentalities and
authorities. For purposes of the 65% limitation with respect to the Tax-Free
Bond Fund described below, the securities described in this paragraph are
considered "bonds."
During normal market conditions at least 65% of the Tax-Free Bond Fund's total
assets will be invested in bonds. A further description of the types of
obligations and the various investment techniques used by the Tax-Free Bond Fund
is provided below under "Portfolio Instruments and Practices and Associated Risk
Factors."
Except during temporary defensive periods, at least 80% of the net assets of
the Tax-Free Bond Fund will be invested in municipal obligations, the interest
on which is exempt from regular Federal income tax. This policy is fundamental
and may be changed only with shareholder approval. A portion of the Fund's
dividends may be subject to Federal alternative minimum tax. See "Taxes--Tax-
Free Bond Funds."
TAX-FREE INTERMEDIATE BOND FUND
The Tax-Free Intermediate Bond Fund's investment objective is to provide a
competitive level of current
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<PAGE>
interest income exempt from regular Federal income taxes and a total return
which, over time, exceeds the rate of inflation and the return provided by tax-
free money market instruments. The Fund invests substantially all of its assets
in a non-diversified portfolio of short-term and intermediate-term municipal
obligations, the interest on which, in the opinion of bond counsel or counsel to
the issuer, is exempt from regular Federal income tax. "Municipal obligations"
are obligations issued by or on behalf of states, territories and possessions of
the United States, the District of Columbia, and their political subdivisions,
agencies, instrumentalities and authorities. In addition, in managing the Fund,
the Advisor intends to invest, when possible, the Fund's assets in Michigan
Municipal Obligations, the interest on which may be exempt from Michigan income
tax, Michigan intangibles tax and Michigan single business tax, provided the
investment is consistent with the Fund's investment objective and policies. All
obligations purchased by the Fund will have remaining maturities of ten years or
less (although variable rate demand notes, put option securities, and securities
subject to repurchase agreements may bear longer maturities). The portfolio's
dollar-weighted average maturity will generally be between three and eight
years, and will be adjusted by the Advisor according to market conditions.
During certain periods, the dollar-weighted average maturity may be longer than
eight years but will not exceed ten years. See "Portfolio Instruments and
Practices and Associated Risk Factors--Michigan Municipal Obligations."
The Tax-Free Intermediate Bond Fund may purchase obligations issued by or on
behalf of states, territories and possessions of the United States, the District
of Columbia and their political subdivisions, agencies, instrumentalities and
authorities. For purposes of the 65% limitation with respect to the Tax-Free
Intermediate Bond Fund described below, the securities described in this
paragraph are considered "bonds."
During normal market conditions at least 65% of the Tax-Free Intermediate Bond
Fund's total assets will be invested in bonds. A further description of the
types of obligations and the various investment techniques used by the Tax-Free
Intermediate Bond Fund is provided below under "Portfolio Instruments and
Practices and Associated Risk Factors."
Except during temporary defensive periods, at least 80% of the net assets of
the Tax-Free Intermediate Bond Fund will be invested in municipal obligations,
the interest on which is exempt from regular Federal income tax. This policy is
fundamental and may be changed only with shareholder approval. A portion of the
Fund's dividends may be subject to Federal alternative minimum tax. See "Taxes--
Tax-Free Bond Funds."
MONEY MARKET FUND, U.S. TREASURY MONEY MARKET FUND AND CASH
INVESTMENT FUND
The investment objective of the Money Market Fund is to provide current income
consistent with the preservation of capital and liquidity. The investment
objective of both the U.S. Treasury Money Market Fund and Cash Investment Fund
is to provide as high a level of current interest income as is consistent with
maintaining liquidity and stability of principal. Each Fund seeks to maintain a
stable net asset value of $1.00 per share, although there is no assurance that
they will be able to do so on a continuous basis. In pursuing their respective
investment objectives, the Money Market Fund and Cash Investment Fund may invest
in a broad range of short-term, high quality, U.S. dollar-denominated
instruments, such as bank, commercial and other obligations (including Federal,
state and local government obligations), that are available in the money
markets. The securities in which the Money Market Fund and Cash Investment Fund
may invest are described below under "Portfolio Instruments and Practices and
Associated Risk Factors." The U.S. Treasury Money Market Fund seeks to achieve
its objective by investing solely in short-term bonds, bills and notes issued by
the U.S. Treasury (including "stripped" securities as described under "Portfolio
Instruments and Practices and Associated Risk Factors"), and in repurchase
agreements relating to such obligations.
Securities acquired by the Money Market Fund, U.S. Treasury Money Market Fund
and Cash Investment Fund will be "Eligible Securities" as defined by the SEC.
Eligible Securities consist of securities that are determined by the Advisor,
under guidelines established by the Boards of
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Trustees/Directors, to present minimal credit risks. The Appendix to the
Statement of Additional Information includes a description of applicable
ratings.
Assets of the Money Market Fund, U.S. Treasury Money Market Fund and Cash
Investment Fund will be invested solely in U.S. dollar-denominated debt
securities with remaining maturities of 397 days or less as defined by the SEC
(although securities subject to repurchase agreements, variable and floating
rate securities and certain other securities may bear longer maturities), and
the dollar-weighted average portfolio maturity of each Fund will not exceed 90
days.
Although the Money Market Fund, U.S. Treasury Money Market Fund and Cash
Investment Fund expect under normal market conditions to be as fully invested as
possible, each Fund may hold uninvested cash pending investment of late payments
for purchase orders (or other payments) or during temporary defensive periods.
Uninvested cash will not earn income. In general, investments in the Funds will
not earn as high a level of current income as longer-term or lower-quality
securities. Such securities, however, generally have less liquidity, greater
market risk and more fluctuation in market value.
TAX-FREE MONEY MARKET FUND
The Tax-Free Money Market Fund's investment objective is to provide as high a
level of current interest income exempt from Federal income taxes as is
consistent with maintaining liquidity and stability of principal. The Fund
invests substantially all of its assets in a diversified portfolio of short-term
U.S. dollar denominated municipal obligations, the interest on which, in the
opinion of bond counsel or counsel to the issuer, is exempt from the regular
Federal income tax. All obligations purchased by the Fund will have maturities
of 397 days or less as defined by the SEC (although securities subject to
repurchase agreements, variable and floating rate securities and certain other
securities may bear longer maturities), and the Fund's dollar-weighted average
portfolio maturity will not exceed 90 days. The Fund seeks to maintain a stable
net asset value of $1.00 per share, although there is no assurance that it will
be able to do so on a continuous basis.
Securities acquired by the Tax-Free Money Market Fund will be "Eligible
Securities" as defined by the SEC. Eligible Securities consist of securities
that are determined by the Advisor, under guidelines established by the Board of
Trustees, to present minimal credit risks,
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The Appendix to the Statement of Additional Information includes a description
of applicable ratings.
PORTFOLIO INSTRUMENTS AND PRACTICES AND ASSOCIATED RISK
FACTORS
Investment strategies that are available to the Funds are set forth below.
Additional information concerning certain of these strategies and their related
risks is contained in the Statement of Additional Information.
Equity Securities. The Balanced Fund, each Equity Fund, Small-Cap Value Fund,
Equity Selection Fund and Micro-Cap Equity Fund will invest in common stocks,
and may invest in warrants and similar rights to purchase common stock. A Fund
may invest up to 5% of its net assets at the time of purchase in warrants and
similar rights to purchase common stock (other than those that have been
acquired in units or attached to other securities). Warrants represent rights to
purchase securities at a specific price valid for a specific period of time. The
prices of warrants do not necessarily correlate with the prices of the
underlying securities. The Small Company Growth Fund, Small-Cap Value Fund and
the Micro-Cap Equity Fund each invest primarily in equity securities of smaller
companies with market capitalizations that are less than the capitalization of
companies which predominate the major market indices. Small capitalization
companies typically are subject to a greater degree of change in earnings and
business prospects than larger, more established companies. In addition,
securities of small capitalization companies are traded in lower volume than
those issued by larger companies and may be more volatile. As a result, these
Funds may be subject to greater price volatility than a fund consisting of
larger capitalization stocks. By maintaining a broadly diversified portfolio,
the Advisor will attempt to reduce this volatility. In addition, the Balanced
Fund and each Equity Fund (except the Index 500 Fund) may invest in convertible
bonds and convertible preferred stock. A convertible security is a security that
may be converted either at a stated price or rate within a specified period of
time into a specified number of shares of common stock. By investing in
convertible securities, a Fund seeks the opportunity, through the conversion
feature, to participate in the capital appreciation of the common stock into
which the securities are convertible, while earning higher current income than
is available from the common stock. Although a Fund may acquire convertible
securities that are rated below investment grade by S&P or Moody's, the Company
and Munder expect that, except for the Growth & Income Fund, investments in
lower-rated convertible securities will not exceed 5% of the value of the total
assets of a Fund at the time of purchase. The Growth & Income Fund may invest up
to 20% of the value of its total assets in securities that are rated below
investment grade by S&P or Moody's. These high yield, high risk securities are
commonly referred to as junk bonds. Securities that are rated Ba by Moody's or
BB by S&P have speculative characteristics with respect to the capacity to pay
interest and repay principal. Securities that are rated B generally lack
characteristics of a desirable investment, and assurance of interest and
principal payments over any long period of time may be small. Securities that
are rated Caa or CCC are of poor standing. These issues may be in default or
present elements of danger may exist with respect to principal or interest. In
light of the risks in evaluating the creditworthiness of an issue, the Advisor
will take various factors into consideration, which may include, as applicable,
the issuer's financial resources, its sensitivity to economic conditions and
trends and the ability of the issuer's management and regulatory matters. To the
extent a Fund purchases convertibles rated below investment grade or
convertibles that are not rated, a greater risk exists as to the timely
repayment of the principal of, and the timely payment of interest or dividends
on, such securities. Particular risks include (a) the sensitivity of such
securities to interest rate and economic changes, (b) the lower degree of
protection of principal and interest payments, (c) the relatively low trading
market liquidity for the securities, (d) the impact that legislation may have on
the market for these securities (and, in turn, on a Fund's net asset value) and
(e) the creditworthiness of the issuers of such securities. During an economic
downturn or substantial period of rising interest rates, highly leveraged
issuers may experience financial stress which would negatively affect their
ability to meet their principal and interest payment obligations, to meet
projected business goals and to obtain additional financing. An economic
downturn could also disrupt the market for lower-rated convertible securities
and negatively affect the value of outstanding securities and the ability of the
issuers to repay principal and interest. If the issuer of a convertible
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security held by a Fund defaulted, the Fund could incur additional expenses to
seek recovery. Adverse publicity and investor perceptions, whether or not they
are based on fundamental analysis, could also decrease the values and liquidity
of lower-rated convertible securities held by a Fund, especially in a thinly
traded market.
Foreign Debt Securities. The International Bond Fund may purchase debt
obligations issued or guaranteed by a foreign sovereign government or one of its
agencies, authorities, instrumentalities or political subdivisions, including
foreign states, provinces or municipalities and corporate debt securities.
Investing in the securities of any foreign issuer involves special risks and
considerations not typically associated with investing in U.S. issuers. These
include differences in accounting, auditing and financial reporting standards;
different disclosure laws, which may result in less publicly available
information about foreign issuers than U.S. issuers; generally higher markups on
foreign portfolio transaction; the possibility of nationalization, expropriation
or confiscatory taxation; adverse changes in investment or exchange control
regulations (which may include suspension of the ability to transfer currency
from a country); political instability; less government regulation of securities
markets, brokers and issuers; possible difficulty in obtaining and enforcing
judgments in foreign courts; and imposition of restrictions on foreign
investments. Additionally, foreign securities and interest payable on those
securities may be subject to foreign taxes, including taxes withheld from
payments on those securities. Foreign securities often trade with less frequency
and volume than domestic securities and therefore may exhibit greater price
volatility. Additional costs associated with an investment in foreign securities
may include higher custodial fees than apply to U.S. custodial arrangements, and
transaction costs of foreign currency conversions. Changes in foreign exchange
rates will also affect the value of securities denominated or quoted in
currencies other than the U.S. dollar.
Foreign Securities. The Balanced Fund, the Cash Investment Fund, the
International Bond Fund, each Bond Fund and each Equity Fund (except the Real
Estate Equity Investment Fund) may invest in the securities of foreign issuers.
The Tax-Free Bond Fund may purchase securities backed by letters of credit or
guarantees issued by foreign financial institutions. There are certain risks and
costs involved in investing in securities of companies and governments of
foreign nations, which are in addition to the usual risks inherent in U.S.
investments. Investments in foreign securities involve higher costs than
investments in U.S. securities, including higher transaction costs as well as
the imposition of additional taxes by foreign governments. In addition, foreign
investments may include additional risks associated with the level of currency
exchange rates, less complete financial information about the issuers, less
market liquidity, and political instability. Future political and economic
developments, the possible imposition of withholding taxes on interest income,
the possible seizure or nationalization of foreign holdings, the possible
establishment of exchange controls, or the adoption of other governmental
restrictions might adversely affect the payment of principal and interest on
foreign obligations. Additionally, foreign banks and foreign branches of
domestic banks may be subject to less stringent reserve requirements, and to
different accounting, auditing and recordkeeping requirements.
The Multi-Season Growth Fund, the Mid-Cap Growth Fund, Value Fund, Small-Cap
Value Fund, Equity Selection Fund and Micro-Cap Equity Fund each may invest up
to 20% of its total assets in equity securities of foreign issuers, including
companies domiciled in developing countries. The International Equity Fund may
also invest in countries with emerging economies or securities markets located
in the Asia-Pacific region, Eastern Europe, Latin and South America and Africa.
Political and economic structures in many of these countries may be undergoing
significant evolution and rapid development, and such countries may lack the
social, political and economic stability characteristic of more developed
countries. As a result, the risks described above, including the risks of
nationalization or expropriation of assets, may be heightened, and the limited
volume of trading in securities in these countries may make such investments
illiquid and particularly volatile.
Although the Balanced and Equity Funds may invest in securities denominated in
foreign currencies, portfolio securities and other assets held by the Funds are
valued in U.S. dollars. As a result, the net asset value of a Fund's shares may
fluctuate with U.S. dollar exchange rates as well as with price changes of its
portfolio securities in the various local markets and currencies. In addition to
favorable and unfavorable currency exchange-rate developments, the Funds are
subject to the possible imposition of exchange control regulations or freezes on
convertibility of currency.
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Investments in foreign securities may be in the form of ADRs, EDRs or similar
securities. These securities may not be denominated in the same currency as the
securities they represent. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying foreign securities.
EDRs are receipts issued by a European financial institution evidencing a
similar arrangement. Generally, ADRs, in registered form, are designed for use
in United States securities markets, and EDRs, in bearer form, are designed for
use in the European securities markets. The Multi-Season Growth Fund and Mid-Cap
Growth Fund typically will only purchase foreign securities which are
represented by sponsored or unsponsored ADRs listed on a domestic securities
exchange or included in the NASDAQ National Market System. Ownership of
unsponsored ADRs may not entitle a Fund to financial or other reports from the
issuer, to which it would be entitled as the owner of sponsored ADRs. Interest
or dividend payments on such securities may be subject to foreign withholding
taxes.
Forward Foreign Currency Exchange Contracts. The Balanced Fund, the
International Bond Fund and each Equity Fund (except the Real Estate Equity
Investment Fund) may enter into forward currency exchange contracts in an effort
to reduce the level of volatility caused by changes in foreign currency exchange
rates. A Fund may not enter into these contracts for speculative purposes. A
forward currency exchange contract is an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at a price set at the time
of contract. A Fund will segregate cash or liquid securities to cover its
obligation to purchase foreign currency under a forward foreign currency
contract. Although such contracts tend to minimize the risk of loss due to a
decline in the value of the hedged currency, at the same time they tend to limit
any potential gain that might be realized should the value of such currency
increase. The Value Fund and Mid-Cap Growth Fund will not enter into forward
foreign currency exchange contracts if as a result, the Fund will have more than
20% of its total assets committed to consummation of such forward foreign
currency exchange contracts.
The International Bond Fund normally conducts its foreign currency exchange
transactions either on a spot (cash) basis at the spot rate prevailing in the
foreign currencies or on a forward basis. Under normal circumstances, the
Advisor expects that the Fund will enter into forward currency contracts. The
Fund generally will not enter into a forward contract with a term of greater
than one year. Although forward contracts are used primarily to protect the Fund
from adverse currency movements, they may also be used to increase exposure to a
currency, and involve the risk that anticipated currency movements will not be
accurately predicted and the Fund's total return will be adversely affected as a
result. Open positions in forward contracts are covered by the segregation with
the Fund's custodian of cash, U.S. Government securities or other high grade
debt obligations which are marked to market daily.
Futures Contracts and Options. Each Bond Fund, the International Bond Fund,
and each Equity Fund may invest in futures contracts and options on futures
contracts for hedging purposes or to maintain liquidity. However, a Fund may not
purchase or sell a futures contract unless immediately after any such
transaction the sum of the aggregate amount of margin deposits on its existing
futures positions and the amount of premiums paid for related options is 5% or
less of its total assets. The Multi-Season Growth Fund does not presently
anticipate engaging in transactions involving options on securities or stock
indices of options or stock index futures contracts, although it has the
authority to do so. The Real Estate Equity Investment Fund may, to a limited
extent, enter into financial futures contracts based on securities indices,
purchase and write put and call options, and engage in related closing
transactions to the extent available to hedge all or a portion of its portfolio
or as an efficient means of regulating its exposure to the equity markets. In
addition, the Fund will not hedge more than 30% of its total assets and will not
write covered call options against more than 15% of the value of the equity held
in the portfolio.
Futures contracts obligate a Fund, at maturity, to take or make delivery of
certain securities or the cash value of a bond or securities index. When
interest rates are rising, futures contracts can offset a decline in value of
the Fund's portfolio securities. When rates are falling, these contracts can
secure higher yields for securities the Fund intends to purchase.
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A Fund may purchase and sell call and put options on futures contracts traded
on an exchange or board of trade. When a Fund purchases an option on a futures
contract, it has the right to assume a position as a purchaser or seller of a
futures contract at a specified exercise price at any time during the option
period. When the Fund sells an option on a futures contract, it becomes
obligated to purchase or sell a futures contract if the option is exercised. In
anticipation of a market advance, a Fund may purchase call options on futures
contracts as a substitute for the purchase of futures contracts to hedge against
a possible increase in the price of securities which the Fund intends to
purchase. Similarly, if the value of a Fund's portfolio securities is expected
to decline, the Fund might purchase put options or sell call options on futures
contracts rather than sell futures contracts. The International Bond Fund may
also enter into contracts for the purchase or sale for future delivery of
foreign currencies. In connection with a Fund's position in a futures contract
or option thereon, the Fund will create a segregated account of liquid assets or
will otherwise cover its position in accordance with applicable requirements of
the SEC.
In addition, the Balanced Fund, the International Bond Fund, each Bond Fund
and each Equity Fund, may write covered call options, buy put options, buy call
options and write secured put options on particular securities or various stock
or bond indices. The International Bond Fund may also purchase and write put and
call options on foreign currencies (traded on U.S. and foreign exchanges or
over-the-counter) to manage the Fund's exposure to changes in dollar exchange
rates. Options trading is a highly specialized activity which entails greater
than ordinary investment risks. A call option for a particular security gives
the purchaser of the option the right to buy, and a writer the obligation to
sell, the underlying security at the stated exercise price at any time prior to
the expiration of the option, regardless of the market price of the security.
The premium paid to the writer is in consideration for undertaking the
obligations under the option contract.
A put option for a particular security gives the purchaser the right to sell
the underlying security at the stated exercise price at any time prior to the
expiration date of the option, regardless of the market price of the security.
In contrast to an option on a particular security, an option on a stock index
provides the holder with the right to make or receive a cash settlement upon
exercise of the option.
The use of derivative instruments exposes a Fund to additional risks and
transaction costs. Risks inherent in the use of derivative instruments include:
(1) the risk that interest rates, securities prices and currency markets will
not move in the direction that a portfolio manager anticipates; (2) imperfect
correlation between the price of derivative instruments and movements in the
prices of the securities, interest rates or currencies being hedged; (3) the
fact that skills needed to use these strategies are different than those needed
to select portfolio securities; (4) inability to close out certain hedged
positions to avoid adverse tax consequences; (5) the possible absence of a
liquid secondary market for any particular instrument and possible exchange-
imposed price fluctuation limits, either of which may make it difficult or
impossible to close out a position when desired; (6) leverage risk, that is, the
risk that adverse price movements in an instrument can result in a loss
substantially greater than a Fund's initial investment in that instrument (in
some cases, the potential loss is unlimited); and (7) particularly in the case
of privately-negotiated instruments, the risk that the counterparty will fail to
perform its obligations, which could leave a Fund worse off than if it had not
entered into the position.
When a Fund invests in a derivative instrument, it may be required to
segregate cash and other high-grade liquid debt securities or certain portfolio
securities to "cover" the Fund's position. Assets segregated or set aside
generally may not be disposed of so long as the Fund maintains the positions
requiring segregation or cover. Segregating assets could diminish a Fund's
return due to the opportunity losses of foregoing other potential investments
with the segregated assets.
A Fund is not a commodity pool, and all futures transactions engaged in by a
Fund must constitute bona fide hedging or other permissible transactions in
accordance with the rules and regulations promulgated by the Commodity Futures
Trading Commission. Successful use of futures and options is subject to special
risk considerations. For a further discussion see "Additional Information on
Fund Investments" and Appendix B in the Statement of Additional Information.
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Corporate Obligations. The Balanced Fund, Cash Investment Fund, International
Bond Fund and each Bond Fund may purchase corporate bonds and commercial paper
that meet the applicable quality and maturity limitations. These investments may
include obligations issued by Canadian and other foreign corporations and
Canadian and other foreign counterparts of U.S. corporations and europaper,
which is U.S. dollar-denominated commercial paper of a foreign issuer. The Money
Market Fund may purchase commercial paper, other short term obligations and
variable rate master demand notes, bonds, debentures and notes.
The International Bond Fund may also purchase commercial paper indexed to
certain specific foreign currency exchange rates.
The Balanced Fund, International Bond Fund and each Bond Fund will purchase
only those securities which are considered to be investment grade or better
(within the four highest rating categories of S&P or Moody's or, if unrated, of
comparable quality). Obligations rated "Baa" by Moody's lack outstanding
investment characteristics and have speculative characteristics. Adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity of obligations rated "BBB" by S&P to pay interest and repay
principal than in the case of higher grade obligations. After purchase by a
Fund, a security may cease to be rated or its rating may be reduced below the
minimum required for purchase by a Fund. Neither event will require the Fund to
sell such security. However, the Advisor will reassess promptly whether the
security presents minimal credit risks and determine whether continuing to hold
the security is in the best interests of the Fund. To the extent that the
ratings given by Moody's, S&P or another nationally recognized statistical
rating organization for securities may change as a result of changes in the
rating systems or because of corporate reorganization of such rating
organizations, the Funds will attempt to use comparable ratings as standards for
its investments in accordance with the investment objective and policies of the
Fund. Descriptions of each rating category are included as Appendix A to the
Statement of Additional Information.
Short-term obligations purchased by the Money Market Fund and Cash Investment
Fund will either have short-term debt ratings at the time of purchase in the top
two categories by one or more unaffiliated nationally recognized statistical
rating organizations or will be issued by issuers with such ratings. Unrated
instruments purchased by a Fund will be of comparable quality as determined by
the Advisor.
Bank Obligations. The Balanced Fund, Money Market Fund, Cash Investment Fund
and each Bond Fund may purchase U.S. dollar-denominated bank obligations, such
as certificates of deposit, bankers' acceptances and interest-bearing savings
and time deposits, issued by U.S. or foreign banks or savings institutions
having total assets at the time of purchase in excess of $1 billion. The
International Bond Fund may purchase debt obligations issued or guaranteed by
supranational organizations such as the World Bank, Asian Development Bank,
European Investment Bank and European Union; debt obligations of U.S. and
foreign banks and bank holding companies and U.S. dollar-denominated bank
obligations, including certificates of deposit, bankers' acceptances, bank
notes, deposit notes and interest-bearing savings and time deposits, issued by
U.S. or foreign banks or savings institutions having total assets at the time of
purchase in excess of $1 billion. For this purpose, the assets of a bank or
savings institution include the assets of both its domestic and foreign
branches. See "Foreign Securities" and "Foreign Debt Securities" for a
discussion of the risks associated with investments in obligations of foreign
banks and foreign branches of domestic banks. The Money Market Fund and Cash
Investment Fund will invest in the obligations of domestic banks and savings
institutions only if their deposits are federally insured. Investments by a Fund
in the obligations of foreign banks and foreign branches of domestic banks will
not exceed 25% of the Fund's total assets at the time of investment. Foreign
bank obligations include Eurodollar Certificates of Deposit ("ECDs"), Eurodollar
Time Deposits ("ETDs"), Canadian Time Deposits ("CTDs"), Schedule Bs, Yankee
Certificates of Deposit ("Yankee CDs") and Yankee Bankers' Acceptances ("Yankee
BAs"). A discussion of these obligations appears in the Statement of Additional
Information under "Additional Information on Portfolio Investments--Non-Domestic
Bank Obligations."
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Asset-Backed Securities. Subject to applicable credit criteria, the Balanced
Fund, Cash Investment Fund, International Bond Fund and the Bond Funds may
purchase asset-backed securities (i.e., securities backed by mortgages,
installment sales contracts, credit card receivables or other assets). The
average life of asset-backed securities varies with the maturities of the
underlying instruments which, in the case of mortgages, have maximum maturities
of forty years. The average life of a mortgage-backed instrument, in particular,
is likely to be substantially less than the original maturity of the mortgage
pools underlying the securities as the result of unscheduled principal payments
and mortgage prepayments. The rate of such mortgage prepayments, and hence the
life of the certificates, will be primarily a function of current market rates
and current conditions in the relevant housing markets. In calculating the
average weighted maturity of the Bond Funds, the maturity of mortgage-backed
instruments will be based on estimates of average life. The relationship between
mortgage prepayment and interest rates may give some high-yielding mortgage-
related securities less potential for growth in value than conventional bonds
with comparable maturities. In addition, in periods of falling interest rates,
the rate of mortgage prepayment tends to increase. During such periods, the
reinvestment of prepayment proceeds by a Fund will generally be at lower rates
than the rates that were carried by the obligations that have been prepaid.
Because of these and other reasons, an asset-backed security's total return may
be difficult to predict precisely. To the extent that a Fund purchases mortgage-
related or mortgage-backed securities at a premium, mortgage prepayments (which
may be made at any time without penalty) may result in some loss of the Fund's
principal investment to the extent of premium paid.
Presently there are several types of mortgage-backed securities issued or
guaranteed by U.S. Government agencies, including guaranteed mortgage pass-
through certificates, which provide the holder with a pro rata interest in the
underlying mortgages, and collateralized mortgage obligations ("CMOs"), which
provide the holder with a specified interest in the cash flow of a pool of
underlying mortgages or other mortgage-backed securities. Issuers of CMOs
frequently elect to be taxed as a pass-through entity known as real estate
mortgage investment conduits, or REMICs. CMOs are issued in multiple classes,
each with a specified fixed or floating interest rate and a final distribution
date. The relative payment rights of the various CMO classes may be structured
in many ways. In most cases, however, payments of principal are applied to the
CMO classes in the order of their respective stated maturities, so that no
principal payments will be made on a CMO class until all other classes having an
earlier stated maturity date are paid in full. The classes may include accrual
certificates (also known as "Z-Bonds"), which only accrue interest at a
specified rate until other specified classes have been retired and are converted
thereafter to interest-paying securities. They may also include planned
amortization classes ("PAC") which generally require, within certain limits,
that specified amounts of principal be applied on each payment date, and
generally exhibit less yield and market volatility than other classes. The Funds
will not purchase "residual" CMO interests, which normally exhibit the greatest
price volatility.
Interest Rate and Currency Swaps. For hedging purposes, the International Bond
Fund may enter into interest rate and currency swap transactions and purchase or
sell interest rate caps and floors. The Fund expects to enter into these
transactions primarily to preserve a return or spread on a particular investment
or portion of its portfolio, to protect against currency fluctuations as a
technique for managing the portfolio's duration (i.e., the price sensitivity to
changes in interest rates) or to protect against any increase in the price of
securities the Fund anticipates purchasing at a later date. An interest rate or
currency swap is a derivative instrument which involves an agreement between the
Fund and another party to exchange payments calculated as if they were interest
on a fictitious ("notional") principal amount (e.g., an exchange of floating
rate payments by one party for fixed rate payments by the other). An interest
rate cap or floor is a derivative instrument which entitles the purchaser, in
exchange for a premium, to receive payments of interest on a notional principal
amount from the seller of the cap or floor, to the extent that a specified
reference rate exceeds or falls below a predetermined level.
The Fund usually enters into such transactions on a "net" basis, with the Fund
receiving or paying, as the case may be, only the net amount of the two payment
streams. The net amount of the excess, if any, of the Fund's obligations over
its entitlements with respect to each swap is accrued on a daily basis and an
amount of cash or high-quality liquid securities having an aggregate net asset
value at least equal to the accrued excess is maintained in a
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segregated account by the Fund's custodian. If the Fund enters into a swap on
other than a net basis, or sells caps or floors, the Fund maintains a segregated
account in the full amount accrued on a daily basis of the Fund's obligations
with respect to the transaction. Such segregated accounts are maintained in
accordance with applicable regulations of the SEC.
The use of swaps, caps and floors is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If the Advisor's forecast of market
values, interest rates, currency rates of exchange and other applicable factors
is incorrect, the investment performance of the Fund will diminish compared with
the performance that could have been achieved if these investment techniques
were not used. Moreover, even if the Advisor's forecasts were correct, a Fund's
swap position may correlate imperfectly with the asset or liability being
hedged. In addition, in the event of a default by the other party to the
transaction, the Fund might incur a loss.
Municipal Obligations. Long-term instruments acquired by the Tax-Free Bond
Funds will be rated at the time of purchase "A" or better by Moody's or S&P or,
if unrated, will be of comparable quality as determined by the Advisor. Short-
term instruments acquired by these Funds will either have short-term debt
ratings at the time of purchase in the top two categories by one or more
unaffiliated NRSRO or will be issued by issuers with such ratings. Unrated
instruments purchased by a Fund will be of comparable quality as determined by
the Advisor.
Although each Tax-Free Bond Fund may invest more than 25% of its net assets in
municipal revenue obligations, the interest on which is paid solely from
revenues of similar projects, the Funds do not currently intend to do so on a
regular basis. If it does, a Fund will be subject to the peculiar risks
presented by the laws and economic conditions relating to such projects to a
greater extent that it would be if its assets were not so concentrated.
Except during temporary defensive periods, at least 80% of the net assets of
each of the Tax-Free Bond Funds and Tax-Free Money Market Fund will be invested
in municipal obligations, the interest on which is exempt from regular Federal
income tax. This policy is fundamental and may be changed only with shareholder
approval. A portion of a Fund's dividends may be subject to Federal alternative
minimum tax. See "Taxes--Tax-Free Bond Funds."
The two principal classifications of municipal obligations are "general
obligation" securities and "revenue" securities. General obligation securities
are secured by the issuer's pledge of its full faith, credit and taxing power
for the payment of principal and interest. Revenue securities are payable only
from the revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise tax or other specific
revenue source such as the user of the facility being financed. Revenue
securities include private activity bonds which are not payable from the
unrestricted revenues of the issuer. Consequently, the credit quality of private
activity bonds is usually directly related to the credit standing of the
corporate user of the facility involved.
Municipal obligations may also include "moral obligation" bonds, which are
normally issued by special purpose public authorities. If the issuer of moral
obligation bonds is unable to meet its debt service obligations from current
revenues, it may draw on a reserve fund, the restoration of which is a moral
commitment but not a legal obligation of the state or municipality which created
the issuer.
Michigan Municipal Obligations. As stated above, in managing the Tax-Free
Intermediate Bond Fund, the Advisor intends to invest, when possible, the Fund's
assets in Michigan Municipal Obligations, provided the investment is consistent
with the Fund's investment objective and policies. In managing the Michigan
Triple Tax-Free Bond Fund, the Advisor intends to concentrate in Michigan
Municipal Obligations. The number of Michigan municipal issuers is, however,
relatively limited, and the supply of municipal obligations issued by them that
meet the Fund's investment criteria is restricted. In addition, Comerica Bank
and its affiliates deal in certain Michigan obligations and, under the 1940 Act,
are prevented from entering into securities transactions with the Funds on a
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principal basis. The 1940 Act also limits the Funds' ability to purchase
securities from underwriting syndicates in which either Comerica Bank or one of
its affiliates is a member. For these reasons the Advisor cannot predict
precisely what percentage of the Fund's portfolio will be invested in such
issuers. If the State of Michigan or any of its political subdivisions were to
suffer serious financial difficulties jeopardizing their ability to pay their
obligations, the marketability of obligations issued by the State or localities
within the State, and the value of the Funds' portfolio, could be adversely
affected.
The principal sectors of Michigan's diversified economy are manufacturing of
durable goods (including automobiles and components and office equipment),
tourism and agriculture. As reflected in historical employment figures, the
State's economy has lessened its dependence upon durable goods manufacturing. In
1960, employment in such industry accounted for 33% of the State's work force.
By 1994, this figure had fallen to 17%. However, such manufacturing continues to
be an important part of the State's economy. The particular industries are
highly cyclical and in the period 1994-1995 are expected to operate at somewhat
less than full capacity. This factor generally adversely affects the revenue
streams of the State and its political subdivisions because it adversely impacts
tax sources, particularly sales, income and single business taxes.
In 1994, a ballot proposal ("Proposal A") to implement extensive property tax
and school finance reform measures was subject to voter approval and in fact
approved on March 15, 1994. Under Proposal A as approved, effective May 1, 1994,
the State sales and use tax increased from 4% to 6% and the State income tax
decreased from 4.6% to 4.4%. As of January 1, 1995, a 0.75% real estate transfer
tax also became effective. In 1994, a State education property tax of 6 mills
was imposed on all real and personal property currently subject to the general
property tax. In addition, all school boards can now, with voter approval, levy
up to the lesser of 18 mills or the number of mills levied in 1993 for school
operating purposes, on non-homestead property. Proposal A contained additional
provisions regarding the ability of local school districts to levy taxes as well
as a limit on assessment increases for each parcel of property, beginning in
1995 to the lesser of 5% or the rate of inflation. When property is subsequently
sold, its assessed value is adjusted to equal 50% of true cash value. Under
Proposal A, much of the additional revenue generated by these taxes is dedicated
to the State School Aid Fund.
Currently, the State's general obligation bonds are rated A1 by Moody's and AA
by Fitch. To the extent that the portfolio of Michigan municipal bonds is
comprised of revenue or general obligations of local governments or authorities,
rather than general obligations of the State of Michigan itself, ratings on such
Michigan obligations will be different from those given to the State of Michigan
and their value may be independently affected by economic matters not directly
impacting the State. The Statement of Additional Information includes a further
discussion of Proposal A and economic conditions in Michigan.
Except as stated above with respect to investments by the Tax-Free
Intermediate Bond Fund and Michigan Triple Tax-Free Bond Fund in Michigan
Municipal Obligations, the Advisor does not intend to invest more than 25% of
any Fund's total assets on a regular basis in securities whose issuers are in
the same state.
U.S. Government Obligations. The Balanced Fund, Money Market Fund, U.S.
Treasury Money Market Fund, Cash Investment Fund, International Bond Fund, each
Equity Fund and each Bond Fund may purchase obligations issued or guaranteed by
the U.S. Government and, except in the case of the U.S. Treasury Money Market
Fund, U.S. Government agencies and instrumentalities. Obligations of certain
agencies and instrumentalities of the U.S. Government, such as those of the
Government National Mortgage Association, are supported by the full faith and
credit of the U.S. Treasury. Others, such as those of the Export-Import Bank of
the United States, are supported by the right of the issuer to borrow from the
U.S. Treasury; and still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the agency or instrumentality
issuing the obligation. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
is not obligated to do so by law.
Stripped Securities. The Balanced Fund, Money Market Fund, U.S. Treasury Money
Market Fund, Cash Investment Fund, International Bond Fund and each of the Bond
Funds may purchase participations in trusts that
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hold U.S. Treasury and agency securities (such as TIGRs and CATS) and also may
purchase Treasury receipts and other stripped securities, which represent
beneficial ownership interests in either future interest payments or the future
principal payments on U.S. Government obligations. These instruments are issued
at a discount to their "face value" and may (particularly in the case of
stripped mortgage-backed securities) exhibit greater price volatility than
ordinary debt securities because of the manner in which their principal and
interest are returned to investors. The U.S. Treasury Money Market Fund may
purchase only U.S. Treasury issued stripped securities. Investments by the U.S.
Treasury Money Market Fund in such instruments, other than those recorded in the
Federal Reserve book-entry recordkeeping system, will not exceed 35% of the
Fund's total assets at the time of purchase. Stripped securities will normally
be considered illiquid investments and will be acquired subject to the
limitation on illiquid investments unless determined to be liquid under
guidelines established by the Board of Trustees/Directors.
Repurchase Agreements. The Funds may agree to purchase securities from
financial institutions subject to the seller's agreement to repurchase them at
an agreed-upon time and price ("repurchase agreements"). With respect to the
Money Market Fund, U.S. Treasury Money Market Fund and Cash Investment Fund, the
securities held subject to a repurchase agreement may have stated maturities
exceeding 397 days, provided the repurchase agreement itself matures in 397
days. The financial institutions with which a Fund may enter into repurchase
agreements include member banks of the Federal Reserve System, any foreign bank
or any domestic or foreign broker/dealer which is recognized as a reporting
government securities dealer. The Advisor will review and continuously monitor
the creditworthiness of the seller under a repurchase agreement, and will
require the seller to maintain liquid assets in a segregated account in an
amount that is greater than the repurchase price. Default by or bankruptcy of
the seller would, however, expose a Fund to possible loss because of adverse
market action or delays in connection with the disposition of the underlying
obligations.
Reverse Repurchase Agreements. The Balanced Fund, U.S. Treasury Money Market
Fund, Cash Investment Fund, International Bond Fund, each of the Bond Funds and
each of the Equity Funds (except the Multi-Season Growth Fund) may borrow funds
for temporary purposes by selling portfolio securities to financial institutions
such as banks and broker/dealers and agreeing to repurchase them at a mutually
specified date and price ("reverse repurchase agreements"). Reverse repurchase
agreements involve the risk that the market value of the securities sold by a
Fund may decline below the repurchase price. A Fund would pay interest on
amounts obtained pursuant to a reverse repurchase agreement.
Stand-by Commitments. Each Tax-Free Bond Fund and the Tax-Free Money Market
Fund may acquire "stand-by commitments" with respect to municipal obligations
held by them. Under a stand-by commitment, a dealer agrees to purchase, at the
Fund's option, specified municipal obligations at a specified price. The
acquisition of stand-by commitment may increase the cost, and thereby reduce the
yield, of the municipal obligations to which the commitment relates. The Funds
will acquire stand-by commitments solely to facilitate portfolio liquidity and
do not intend to exercise their rights thereunder for trading purposes.
Variable and Floating Rate Securities. Each Fund (other than the U.S. Treasury
Money Market Fund) may purchase variable and floating rate securities which may
have stated maturities in excess of the Fund's maturity limitations but are
deemed to have shorter maturities because the Fund can demand payment of the
principal of the security at least once within such periods on not more than
thirty days' notice (this demand feature is not required if the security is
guaranteed by the U.S. Government or an agency or instrumentality thereof).
These securities may include variable amount master demand notes that permit the
indebtedness to vary in addition to providing for periodic adjustments in the
interest rate. Unrated variable and floating rate securities will be determined
by the Advisor to be of comparable quality at the time of purchase to rated
securities purchasable by a Fund. The absence of an active secondary market,
however, could make it difficult to dispose of the securities, and a Fund could
suffer a loss if the issuer defaulted or during periods that the Fund is not
entitled to exercise its demand rights. Variable and floating rate securities
held by a Fund will be subject to the Fund's limitation on illiquid investments
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when the Fund may not demand payment of the principal amount within seven days
absent a reliable trading market.
When-Issued Purchases and Forward Commitments. Each Fund may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"forward commitment" basis. These transactions, which involve a commitment by a
Fund to purchase or sell particular securities with payment and delivery taking
place at a future date (perhaps one or two months later), permit the Fund to
lock-in a price or yield on a security, regardless of future changes in interest
rates. When-issued and forward commitment transactions involve the risk that the
price or yield obtained may be less favorable than the price or yield available
when the delivery takes place. Each Fund will establish a segregated account
consisting of cash, U.S. Government securities or other high-grade debt
securities in an amount equal to the amount of its when-issued purchases and
forward commitments. Each Fund's when-issued purchases and forward purchase
commitments are not expected to exceed 25% of the value of the particular Fund's
total assets absent unusual market conditions. The Funds do not intend to engage
in when-issued purchases and forward commitments for speculative purposes but
only in furtherance of their investment objectives.
Fixed Income Securities. Generally, the market value of fixed income
securities in the Balanced Fund, Money Market Fund, U.S. Treasury Money Market
Fund, International Bond Fund, Small-Cap Value Fund, Micro-Cap Equity Fund, Cash
Investment Fund and each of the Bond Funds can be expected to vary inversely to
changes in prevailing interest rates. Investors should also recognize that, in
periods of declining interest rates, the yields of investment portfolios
composed primarily of fixed income securities will tend to be higher than
prevailing market rates and, in periods of rising interest rates, yields will
tend to be somewhat lower. The market value of a Fund's investment will also
change in response to the relative financial strengths of each issuer. Changes
in the financial strengths of an issuer or charges in the ratings of a
particular security may also affect the value of those investments. Fluctuations
in the market value of fixed income securities subsequent to their acquisitions
will not affect cash income from such securities, but will be reflected in a
Fund's net asset value.
The International Bond Fund and the Bond Funds may purchase zero-coupon bonds
(i.e., discount debt obligations that do not make periodic interest payments).
Zero-coupon bonds are subject to greater market fluctuations from changing
interest rates than debt obligations of comparable maturities which make current
distributions of interest.
Guaranteed Investment Contracts. The International Bond Fund, the Bond Funds
and the Cash Investment Fund may make limited investments in guaranteed
investment contracts ("GICs") issued by U.S. insurance companies. Pursuant to
such contracts a Fund makes cash contributions to a deposit fund of the
insurance company's general account. The insurance company then credits to the
Fund on a monthly basis interest which is based on an index (in most cases this
index is expected to be the Salomon Brothers CD Index), but is guaranteed not to
be less than a certain minimum rate. A GIC is normally a general obligation of
the issuing insurance company and not funded by a separate account. The purchase
price paid for a GIC becomes part of the general assets of the insurance
company, and the contract is paid from the company's general assets. A Fund will
only purchase GICs from insurance companies which, at the time of purchase, have
assets of $1 billion or more and meet quality and credit standards established
by the Advisor pursuant to guidelines approved by the Board of Trustees.
Generally, GICs are not assignable or transferable without the permission of the
issuing insurance companies, and an active secondary market in GICs does not
currently exist. Therefore, GICs will normally be considered illiquid
investments, and will be acquired subject to the limitation on illiquid
investments.
Investment Company Securities. In connection with the management of their
daily cash positions, the Funds may invest in securities issued by other
investment companies which invest in short-term debt securities and which seek
to maintain a $1.00 net asset value per share (i.e., "money market funds"). The
International Equity Fund may purchase shares of investment companies investing
primarily in foreign securities, including so called "country funds." Country
funds have portfolios consisting exclusively of securities of issuers located in
one or more foreign countries. The Index 500 Fund may also invest in SPDRs and
shares of other
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investment companies that are structured to seek a similar correlation to the
performance of the S&P 500 Index. Securities of other investment companies will
be acquired within limits prescribed by the 1940 Act. These limitations, among
other matters, restrict investments in securities of other investment companies
to no more than 10% of the value of a Fund's total assets, with no more than 5%
invested in the securities of any one investment company. As a shareholder of
another investment company, a Fund (other than the Real Estate Equity Investment
Fund) would bear, along with other shareholders, its pro rata portion of the
other investment company's expenses, including advisory fees. These expenses
would be in addition to the expenses each Fund bears directly in connection with
its own operations.
Liquidity Management. Pending investment, to meet anticipated redemption
requests, or as a temporary defensive measure if the Advisor determines that
market conditions warrant, each of the Equity Funds may also invest without
limitation in short-term U.S. Government obligations, high quality money market
instruments, variable and floating rate instruments and repurchase agreements as
described above.
Temporary Investments. The Tax-Free Bond Funds and the Tax-Free Money Market
Fund may hold uninvested cash if, in the opinion of the Advisor, suitable
obligations bearing tax-exempt interest are unavailable. Uninvested cash will
not earn income. In addition, each of the Tax-Free Bond Funds may invest from
time to time, to the extent consistent with its investment objective, a portion
of its assets on a temporary basis or for temporary defensive purposes in short-
term money market instruments ("Temporary Investments"), the income from which
is subject to Federal income tax.
Temporary Investments will generally not exceed 20% of the total assets of a
Fund except when made for temporary defensive purposes, and may include
obligations of the U.S. Government or its agencies or instrumentalities; debt
securities (including commercial paper) of issuers having, at the time of
purchase, a quality rating within the two highest categories of either Moody's
or S&P; certificates of deposit or bankers' acceptances of domestic branches of
U.S. banks with total assets at the time of purchase of $1 billion or more; and
repurchase agreements with respect to such obligations.
Diversification. The Funds, other than the Tax-Free Intermediate Bond Fund,
the Michigan Triple Tax-Free Bond Fund and the International Bond Fund, are each
classified as a diversified investment company under the 1940 Act; the Tax-Free
Intermediate Bond Fund, the Michigan Triple Tax-Free Bond Fund and the
International Bond Fund are each classified as non-diversified. Investment
return on a non-diversified portfolio typically is dependent upon the
performance of a smaller number of securities relative to the number held in a
diversified portfolio. Consequently, the change in value of any one security may
affect the overall value of a non-diversified portfolio more than it would a
diversified portfolio, and thereby subject the market-based net asset value per
share of the non-diversified portfolio to greater fluctuations. In addition, a
non-diversified portfolio may be more susceptible to economic, political and
regulatory developments than a diversified investment portfolio with similar
objectives. The Funds will, however, comply with the diversification
requirements imposed by the Internal Revenue Code of 1986, as amended (the
"Code").
Illiquid Securities. The Balanced Fund and each of the Equity, Bond,
International Bond and Tax-Free Bond Funds may invest up to 15% of the total
value of its net assets (determined at the time of acquisition) in securities
which are illiquid. Each of the Money Market Funds will not invest more than 10%
of their respective net assets (determined at the time of acquisition) in
securities which are illiquid. Illiquid securities would generally include
repurchase agreements and time deposits with notice/termination dates in excess
of seven days, and certain securities which are subject to trading restrictions
because they are not registered under the Securities Act of 1933, as amended.
If, after the time of acquisition, events cause this limit to be exceeded, a
Fund will take steps to reduce the aggregate amount of illiquid securities as
soon as reasonably practicable in accordance with the policies of the SEC.
Subject to these limitations are GICs and repurchase agreements and time
deposits which do not provide for payment within seven days.
Each of the Funds may invest in commercial obligations issued in reliance on
the "private placement"
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exemption from registration afforded by Section 4(2) of the Securities Act of
1933, as amended ("Section 4(2) paper"). Each Fund may also purchase securities
that are not registered under the Securities Act of 1933, as amended, but which
can be sold to qualified institutional buyers in accordance with Rule 144A under
that Act ("Rule 144A securities"). Section 4(2) paper is restricted as to
disposition under the Federal securities laws, and generally is sold to
institutional investors which agree that they are purchasing the paper for
investment and not with a view to public distribution. Any resale by the
purchaser must be in an exempt transaction. Section 4(2) paper normally is
resold to other institutional investors through or with the assistance of the
issuer or investment dealers which make a market in the Section 4(2) paper, thus
providing liquidity. Rule 144A securities generally must be sold only to other
qualified institutional buyers. If a particular investment in Section 4(2) paper
or Rule 144A securities is not determined to be liquid, that investment will be
included within a Fund's limitation on investment in illiquid securities. The
Advisor will determine the liquidity of such investments pursuant to guidelines
established by the Company's Board of Trustees or Munder's Board of Directors.
The Multi-Season Growth, Mid-Cap Growth and Value Funds' investments in
restricted securities will be limited to 5% of each Fund's total assets
excluding Rule 144A securities. The Real Estate Equity Investment Fund will
limit its investment in restricted securities to 10% of the Fund's assets,
excluding Rule 144A securities, and will limit its investment in all restricted
securities including Rule 144A securities to 15% of its total assets.
Lending of Portfolio Securities. To enhance the return of each of their
respective portfolios, each Fund, other than the Money Market Fund, may lend
securities in their portfolios (representing up to 25% of their total assets;
and one-third of the Money Market Fund's total assets), taken at market value,
to securities firms and financial institutions, provided that each loan is
secured continuously by collateral in the form of cash, high quality money
market instruments or short-term U.S. Government securities adjusted daily to
have a market value at least equal to the current market value of the securities
loaned. The risk in lending portfolio securities, as with other extensions of
credit, consists of possible delay in the recovery of the securities or possible
loss of rights in the collateral should the borrower fail financially.
Borrowing. The Funds are authorized to borrow money in amounts up to 5% of the
value of each Fund's total assets at the time of such borrowing for temporary
purposes. However, a Fund is authorized to borrow money in amounts up to
33 1/3% of its assets, as permitted by the 1940 Act, for the purpose of meeting
redemption requests. Borrowing by a Fund creates an opportunity for greater
total return but, at the same time, increases exposure to capital risk. In
addition, borrowed funds are subject to interest costs that may offset or exceed
the return earned on the borrowed funds. However, a Fund will not purchase
portfolio securities while borrowings exceed 5% of the Fund's total assets. For
more detailed information with respect to the risks associated with borrowing,
see "Borrowing" in the Statement of Additional Information.
Portfolio Transactions and Turnover. All orders for the purchase or sale of
securities on behalf of a Fund are placed by the Advisor with broker/dealers
that the Advisor selects. Short-term capital gains realized from portfolio
transactions are taxable to shareholders as ordinary income. High portfolio
turnover rates involve larger brokerage commission expenses or transaction costs
which must be borne directly by each Fund. The Advisor will not consider
portfolio turnover rate a limiting factor in making investment decisions
consistent with the Funds' respective objectives and policies. It is anticipated
that the portfolio turnover rate of each of the Small-Cap Value Fund, Micro-Cap
Equity Fund and Equity Selection Fund will not exceed 100% and that the
portfolio turnover rate of the International Bond Fund will not exceed 200% to
300%. See "Financial Highlights" for the portfolio turnover rate of each Fund
other than the International Bond Fund, Small-Cap Value Fund, Micro-Cap Equity
Fund and Equity Selection Fund.
Industry Concentration. Because the Real Estate Equity Investment Fund invests
primarily in the real estate industry, it could conceivably own real estate
directly as result of a default on debt securities it owns. The Fund, therefore,
may be subject to certain risks associated with the direct ownership, as well as
indirect ownership, of real estate. These risk include: declines in the value of
real estate, risks related to general and local economic conditions,
overbuilding and increased competition, increases in property taxes and
operating expenses, changes in
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zoning laws, casualty or condemnation losses, variations in rental income,
changes in neighborhood values, the appeal of properties to tenants and increase
in interest rates. If the Fund has rental income or income from the disposition
of real property, the receipt of such income may adversely affect its ability to
regain its tax status as a regulated investment company. See "Tax Status" in the
Statement of Additional Information. Because the Fund may invest more than 25%
of its total assets in any one sector of the real estate or real estate related
industries, it may be subject to greater risk and market fluctuations than a
portfolio representing a broader range of industries.
In addition, equity real estate investment trusts may be affected by changes
in the value of the underlying property owned by the trust, while mortgage real
estate investment trusts may be affected by the quality of credit extended.
Equity and mortgage real estate investment trusts are dependent upon management
skill, may not be diversified and are subject to the risk of financing projects.
Such trusts are also subject to heavy cash flow dependency, defaults by
borrowers, self liquidation and the possibility of failing to qualify for the
beneficial tax treatment available to real estate investment trusts under the
Internal Revenue Code of 1986, as amended (the "Code") and to maintain exemption
from the 1940 Act. Real estate investment trusts may be subject to interest rate
risks similar to fixed income securities. In general, fixed income security
prices vary inversely with interest rates (when interest rates rise, prices
fall; and, conversely, when interest rates fall, prices rise). Additionally,
while the Fund intends to primarily purchase publicly traded real estate
investment trusts, some real estate investment trusts may be subject to lower
market liquidity due to their small size. This may impact the Fund's ability to
sell the securities, or the price at which such securities may be sold. Changes
in prevailing interest rates may adversely affect the value of the debt
securities in which the Fund will invest. By investing in real estate investment
trusts indirectly through the Fund, a shareholder will bear not only his or her
proportionate share of expenses of the Fund, but also, indirectly, similar
expenses of the real estate investment trusts.
INVESTMENT LIMITATIONS
Except for the policy to invest at least 80% of each Tax-Free Bond Fund's and
of the Tax-Free Money Market Fund's net assets in municipal obligations bearing
tax-exempt interest, and the Multi-Season Growth and Real Estate Equity
Investment Funds' investment objectives, the investment objectives and policies
stated above may be changed by the Company's Board of Trustees or Munder's Board
of Directors without approval by a majority of a Fund's outstanding shares.
However, shareholders will be notified in writing at least thirty days in
advance of any material change, except where notice is not required. No
assurance can be given that a Fund will achieve its investment objective.
Each Munder Fund has also adopted certain fundamental investment limitations
that may be changed only with the approval of a "majority of the outstanding
shares of a Fund" (as defined in the Statement of Additional Information). The
following descriptions summarize several of the Munder Funds' fundamental
investment policies, which are set forth in full in the Statement of Additional
Information. The MFI Funds' restrictions are set forth in the Statement of
Additional Information.
No Munder Fund may:
(1) purchase securities (except U.S. Government Securities) if more than 5%
of its total assets will be invested in the securities of any one issuer,
except that up to 25% of a Fund's total assets, and up to 50% in the case of
the Tax-Free Intermediate Bond Fund and Michigan Triple Tax-Free Bond Fund may
be invested without regard to this 5% limitation;
(2) subject to the foregoing 25% exception, purchase more than 10% of the
outstanding voting securities of any issuer;
(3) invest 25% or more of its total assets in one or more issuers
conducting their principal business
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activities in the same industry (securities issued or guaranteed by the United
States Government, its agencies or instrumentalities are not considered to
represent industries); and
(4) borrow money or issue senior securities (as defined in the 1940 Act)
except (i) to borrow for temporary purposes in amounts not exceeding 5% of its
total assets and (ii) to meet redemption requests, in amounts (when aggregated
with amounts borrowed under clause (i)) not exceeding 33 1/3% of its total
assets.
These investment limitations are applied at the time investment securities are
purchased.
PURCHASE AND REDEMPTION OF SHARES
Shares of each Fund are sold on a continuous basis for the Company and Munder
by the Distributor, Funds Distributor, Inc. The Distributor is a registered
broker/dealer with principal offices at 60 State Street, Boston, Massachusetts
02109.
PURCHASE OF SHARES
Class Y Shares 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 Munder, the Company,
the Advisor and the Distributor and the Advisor's investment advisory clients.
"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
advisors; and broker-dealers acting for their own accounts or for the accounts
of such institutional investors. A minimum initial investment of $250,000 for
Class Y Shares of the Real Estate Equity Investment Fund and $500,000 for Class
Y Shares of all other Funds is required for fiduciary and discretionary accounts
of institutions and institutional investors.
Shares of each Fund are sold at net asset value per share next determined on
that day after receipt of a purchase order. Purchase orders by an institution
for shares in the Money Market Funds must be received, together with payment, by
the Distributor or Transfer Agent by 12:00 noon (Eastern time) on any business
day. A purchase order received by the Distributor or by the Transfer Agent after
such time will not be accepted; notice thereof will be given to the institution
placing the order, and any funds received will be returned promptly to the
sending institution.
Purchase orders by an institution for shares in the Balanced, the
International Bond, the Equity, Bond and Tax-Free Bond Funds must be received by
the Distributor or the Transfer Agent before the close of regular trading hours
(currently 4:00 p.m. Eastern time) on the New York Stock Exchange (the
"Exchange"), on any business day. Payment for such shares may be made by
Institutions in Federal funds or other funds immediately available to the
Custodian no later than 4:00 p.m. (Eastern 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 Funds with
respect to the investments of its customers as described below under
"Management." With the exception of the Real Estate Equity Investment Fund,
payments for Shares of a Fund may, in the discretion of the Advisor, be made
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in the form of securities that are permissible investments for that Fund. For
further information see "In-Kind Purchases" in the Statement of Additional
Information.
Purchases may be effected on days the Exchange is open for business (a
"Business Day"). The Company and Munder reserve 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
Funds, and share certificates are not issued unless expressly requested in
writing. Certificates are not issued for fractional shares.
Neither the Company, Munder, 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
and Munder will attempt to confirm that telephone instructions are genuine and
will use such procedures as are considered reasonable. To the extent that the
Company or Munder 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 Funds may arrange for periodic
investments in that 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
Company and Munder intend to pay cash for all shares redeemed, but in unusual
circumstances may make payment wholly or partly in readily marketable 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 Transfer Agent and to credit its Customers' accounts with the
redemption proceeds on a timely basis. If a redemption order for shares of a
Fund (other than the Money Market Funds) is received by the Transfer Agent
before 4:00 p.m. Eastern time on a Business Day, payment is normally wired to
the redeeming institution the following business day after receipt of the order
by the Transfer Agent. If a redemption order for shares of a Money Market Fund
is received by the Transfer Agent before 12:00 noon Eastern time on a business
day, payment is normally wired on the same business day; if a redemption order
is received by the Transfer Agent between 12:00 noon Eastern time and 4:00 p.m.
Eastern time on a business day, payment is normally wired on the next business
day. The Company and Munder reserve the right to delay the wiring of redemption
proceeds for up to seven days after it receives a redemption order if, in the
judgment of the Advisor, an earlier payment could adversely affect a Fund.
REDEMPTION BY CHECK
Free checkwriting is available with respect to Class Y Shares of the Bond
Funds, Tax-Free Bond Funds and Money Market Funds of the Company and Munder.
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
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the Funds 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 a 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 each Fund may be exchanged for Class Y Shares of other Funds
of the Company and Munder, based on their respective net asset values, without
imposition of any sales charges.
Any shares involved in an exchange must satisfy the requirements relating to
the minimum initial investment in an investment portfolio of the Company and
Munder, 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.
The Funds reserve the right to modify or terminate the exchange privilege at
any time. Notice will be given to shareholders of any material modification or
termination except where notice is not required.
DIVIDENDS AND DISTRIBUTIONS
The Funds expect to pay dividends and distributions from the net income and
capital gains, if any, earned on investments held by the Funds. Dividends from
net investment income are declared and paid quarterly by the Balanced Fund, the
International Bond Fund and each of the Equity Funds (except the Multi-Season
Growth Fund, Real Estate Equity Investment Fund, Mid-Cap Growth Fund,
International Equity Fund, Value Fund, Small-Cap Value Fund, Micro-Cap Equity
Fund and Equity Selection Fund). Dividends from net income are declared and paid
at least annually by the Multi-Season Growth Fund, Value Fund, Mid-Cap Growth
Fund, Small-Cap Value Fund, Equity Selection Fund, Micro-Cap Equity Fund and
International Equity Fund and monthly by the Real Estate Equity Investment Fund.
The net income of each of the Tax-Free Money Market Fund, U.S. Treasury Money
Market Fund and Cash Investment Fund is declared daily, and the net income of
each Bond Fund and each Tax-Free Bond Fund is declared monthly as a dividend,
and generally, are paid within six business days of month-end. The net income of
the Money Market Fund is declared daily and paid monthly.
Shareholders of the Money Market Funds whose purchase orders are received and
executed by 12:00 noon (Eastern time) receive dividends for that day.
Shareholders whose redemption orders have been received by 12:00 noon (Eastern
time) will not receive dividends for that day, while shareholders whose
redemption orders are received after 12:00 noon (Eastern time) will receive that
day's dividends. See "Purchase and Redemption of Shares."
Each 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 same 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, 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 same 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)
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no later than seven Business Days after a shareholder closes an account with the
Fund.
Each 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 Trustees/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
trustees' 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
Trustees in a manner that the Board determines to be fair and equitable. Any
general expenses of Munder that are not readily identifiable as belonging to a
particular fund of Munder are allocated among all funds of Munder by or under
the direction of the Board of Directors in a manner that the Board 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.
NET ASSET VALUE
Net asset value for Class Y Shares in the Funds 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 Balanced Fund, International Bond and
each of the Equity, Bond and Tax-Free Bond Funds for the purpose of pricing
purchase and redemption orders is determined as of the close of regular trading
hours on the Exchange (currently 4:00 p.m., New York time) on each Business Day.
With respect to the Funds, securities that are 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.
Options will be valued at market value or fair value if no market exists.
Futures contracts will be valued in like manner, except that open futures
contract sales will be valued using the closing settlement price or, in the
absence of such a price, the most recently quoted asked price. Portfolio
securities primarily traded on the London Stock Exchange are generally valued at
the mid-price between the current bid and asked prices. Portfolio securities
which are primarily traded on foreign securities exchanges, other than the
London Stock Exchange, are generally valued at the preceding closing values of
such securities on their respective exchanges, except when an occurrence
subsequent to the time a value was so established is likely to have changed such
value. In such an event, the fair value of those securities will be determined
through the consideration of other factors by or under the direction of the
Boards of Trustees and Directors. 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 Boards of Trustees and
Directors. Debt securities with remaining maturities of 60 days or less are
valued at amortized cost, unless the Boards of Trustees and Directors determine
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 net asset value per share of the Money Market Funds for the purpose of
pricing purchase and redemption orders is determined as of 12:00 noon (Eastern
time) and as of the close of regular trading on the Exchange on
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each business day. In seeking to maintain a stable net asset value of $1.00 per
share with respect to each of these Funds, the Company values the Fund's
portfolio securities according to the amortized cost method of valuation. Under
this method, securities are valued initially at cost on the date of purchase.
Thereafter, absent unusual circumstances, the Fund assumes a constant
proportionate amortization of any discount or premium until maturity of the
security.
The Funds do not accept purchase and redemption orders on days the Exchange is
closed. The Exchange is currently scheduled to be closed on New Year's Day,
Presidents' Day, Good Friday, Memorial Day, 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
BOARDS OF TRUSTEES AND DIRECTORS
The Company and Munder are managed under the direction of their governing
Boards of Trustees and Directors. The Statements of Additional Information
contains the name and background information of each Trustee and Director.
INVESTMENT ADVISOR
The investment advisor of the Funds is Munder Capital Management, a Delaware
general partnership with its principal offices at 480 Pierce Street, Birmingham,
Michigan 48009. The Advisor was formed in December, 1994. On February 1, 1995,
the Advisor assumed the investment advisory duties with respect to the Funds
previously performed by Woodbridge Capital Management, Inc. ("Woodbridge") and
Old MCM, Inc. ("MCM"). The principal partners of the Advisor are MCM, 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 June 30, 1996, the Advisor and
its affiliates had approximately $34 billion in assets under management, of
which $17 billion were invested in equity securities, $6 billion were invested
in money market or other short-term instruments, and $11 billion were invested
in other fixed income securities.
Subject to the supervision of the Board of Trustees of the Company and the
Board of Directors of Munder, the Advisor provides overall investment management
for each Fund, provides research and credit analysis, is responsible for all
purchases and sales of portfolio securities, maintains books and records with
respect to each Fund's securities transactions and provides periodic and special
reports to the Board of Trustees and the Board of Directors as requested.
The Portfolio Managers primarily responsible for the management of the
investment selections of the portfolios of the Funds (other than the Index 500
Fund and the Money Market Funds), together with information as to their
principal business occupations during the past five years, are shown below.
Leonard J. Barr II, CFA, Senior Vice President and Director of Research of the
Advisor has co-managed the Multi-Season Growth Fund since its inception in
April, 1993 and has co-managed the Balanced Fund since February, 1995. Prior to
February, 1995, he was Vice President and Director of Research for MCM.
Ann J. Conrad, CFA, Vice President and Director of Specialty Equity Products
of the Advisor or Woodbridge since June, 1992, has managed the Accelerating
Growth Fund since the Fund's inception in December, 1991, and
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has co-managed the Balanced Fund since the Fund's inception in March, 1993.
Prior to June, 1992, she was Director of Equity Strategy for Comerica Capital
Management, Inc.
Arnold Kent Douville began his investment career as an associate in the
Capital Markets group of the investment banking firm, Drexel Burnham Lambert.
Mr. Douville joined MCM in 1989 and now serves as a senior portfolio manager of
the Advisor and specializes in managing Mid-Cap Growth portfolios for
institutional clients. Mr. Douville has co-managed the Mid-Cap Growth Fund since
its inception in August, 1995. Prior to beginning his investment career, Mr.
Douville worked as a cost analyst for The Analytic Sciences Corporation (TASC).
Mr. Douville earned his B.S. degree in economics from the United States Air
Force Academy and his M.B.A. from the University of Chicago Graduate School of
Business.
Wendy B. Harries, Senior Fixed Income Portfolio Manager of the Advisor or
Woodbridge since June, 1992, is the portfolio manager primarily responsible for
the management of the investment selections of the portfolios of the Tax-Free
Bond Fund, Tax-Free Intermediate Bond Fund and Michigan Triple Tax-Free Bond
Fund. Ms. Harries has managed the Tax-Free Intermediate Bond Fund since May,
1993 and the Michigan Triple Tax-Free Bond Fund since its inception in January,
1994 and the Tax-Free Bond Fund since its inception in July, 1994. Prior to June
1992, she was a Senior Fixed Income Manager for Comerica Capital Management,
Inc.
Otto Hinzmann, Jr., Vice President and Director of Equity Portfolio Management
of the Advisor or MCM since January, 1987, has managed the Growth & Income Fund
since February, 1995. Prior to 1987, he was Director of Equity Strategy for
Comerica Bank.
Anne K. Kennedy, Vice President and Director of Corporate Bond Trading of the
Advisor or MCM, has managed the Intermediate Bond Fund since March, 1995. In
addition to managing the corporate bond trading function, Ms. Kennedy is
responsible for managing institutional fixed income portfolios. Prior to joining
MCM in 1991, she was involved in several investment related areas for Ford Motor
Company.
Lee P. Munder, CFA, President and Chief Executive Officer of the Advisor or
MCM since MCM's inception in 1985. Manager of the Real Estate Equity Investment
Fund since its inception in September, 1994, and co-manager of the Multi-Season
Growth Fund since its inception in April, 1993. Mr. Munder began his investment
career in 1969 as Chief Trust Investment Officer for Security Bank and Trust of
Southgate, Michigan. From 1973 to 1985 he served as portfolio manager at Loomis
Sayles & Co., Inc. serving in later years as Vice President and Senior Partner.
In 1985, Mr. Munder left Loomis Sayles & Co., Inc. and founded MCM.
Todd B. Johnson, Director of Equity Management of the Advisor is currently the
Portfolio Manager of the International Equity Fund. Mr. Johnson previously
served as a portfolio manager at Woodbridge Capital Management and Manufacturers
Bank. Mr. Johnson received a B.A. in Finance from Michigan State University and
an M.B.A. from Wayne State University.
James C. Robinson, Vice President and Chief Investment Officer--Fixed Income
of the Advisor or MCM since 1987, has co-managed the Bond Fund, U.S. Government
Income Fund and Intermediate Bond Fund since March, 1995. Mr. Robinson has co-
managed the Balanced Fund since June, 1995. In his position, Mr. Robinson
oversees the Advisor's fixed income strategy and manages institutional
portfolios. Prior to his joining MCM in 1987, he was a Senior Fixed Income
Portfolio Manager for the National Bank of Detroit Trust Investment Department.
Peter G. Root, Senior Portfolio Manager of the Advisor has managed the U.S.
Government Income Fund since March, 1995. Mr. Root joined MCM in 1991 and as a
Senior Portfolio Manager has been responsible for
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fixed income portfolios.
Gerald Seizert is Executive Vice President and Chief Investment Officer of all
equity management of the Advisor and manager of the Value Fund since its
inception in August, 1995 and the Small-Cap Value Fund upon commencement of
operations. Prior to joining the Advisor in 1995, Mr. Seizert served as Director
and Managing Partner of the Detroit office of Loomis, Sayles & Company, L.P.
Before his 1984 affiliation with Loomis, he served as Vice President, Trust
Investments for First of America Bank. Earlier, 1977-1979, Mr. Seizert served as
a Credit Analyst at Bank One of Columbus, N.A. Mr. Seizert received a his B.B.A.
degree and an M.B.A from The University of Toledo and is a Chartered Financial
Analyst and Chartered Investment Counselor.
Kurt R. Stalzer, Senior Portfolio Manager of the Advisor or Woodbridge since
June, 1992, has managed the Small Company Growth Fund since April, 1992. Prior
to June, 1992, he was a Portfolio Manager for the Trust Investment Department of
Manufacturers Bank, N.A.
Jeffrey A. Wrona, CFA, began his investment career as a Fixed Income Research
Analyst for the investment banking firm, Drexel Burnham Lambert. Mr. Wrona
joined MCM in 1990 and now serves as a senior portfolio manager of the Advisor
and specializes in managing Mid-Cap Growth portfolios for institutional clients.
Mr. Wrona has co-managed the Mid-Cap Growth Fund since its inception in August,
1995. Prior to beginning his investment career, Mr. Wrona worked as a product
design engineer for Ford Motor Company. Mr. Wrona earned his B.S. degree in
engineering from the University of Michigan and his M.B.A. from the University
of Michigan Graduate School of Business.
Gregory A. Prost, CFA, Senior Fixed Income Portfolio Manager of the Advisor or
MCM, has co-managed the Munder Bond Fund and Munder Balanced Fund since May,
1995 and The Munder International Bond Fund since __________, 1996. Prior to
joining MCM in 1995, he was a Vice President and Senior Fund Manager for First
of America Investment Corp.
Sharon E. Fayolle, Vice President and Director of Money Market Fund Trading
for the Advisor or MCM, is responsible for overseeing the management of cash
portfolios, money market funds and foreign currency trading since May, 1996. She
has co-managed The Munder International Bond Fund since __________, 1996. Prior
to joining MCM 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.
Investment decisions for the Equity Selection Fund and the Micro-Cap Equity
Fund will be made by a committee of portfolio managers employed by the Advisor.
For the advisory services provided and expenses assumed by it, the Advisor has
agreed to a fee from each Fund, computed daily and payable monthly on a separate
Fund-by-Fund basis, at an annual rate of 1.00% of the first $500 million of
average daily net assets and .75% of net assets in excess of $500 million of the
Multi-Season Growth Fund; .75% of average daily net assets of each of the
Accelerating Growth Fund, Small Company Growth Fund, International Equity Fund,
Growth & Income Fund; Small-Cap Value Fund, Equity Selection Fund and Micro-Cap
Equity Fund; .74% of average daily net assets of each Real Estate Equity
Investment Fund, Mid-Cap Growth Fund and Value Fund; .65% of average daily net
assets of the Balanced Fund; 50% of average daily net assets of each of the Bond
Fund, Intermediate Bond Fund, U.S. Government Income Fund, Michigan Triple Tax-
Free Bond Fund, Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund and
International Bond Fund; .40% of average daily net assets of the Money Market
Fund; .35% of average daily net assets of each of the Tax-Free Money Market
Fund, U.S. Treasury Money Market Fund and Cash Investment Fund and .20% of the
first $250 million of average daily net assets, .12% of the next $250 million of
net assets and .07% of net assets in excess of $500 million of the Index 500
Fund. The advisory fees payable by the Equity Funds (other than the Real Estate
Equity Investment Fund, Mid-Cap Growth Fund, Value Fund and Index 500 Fund) are
higher than the rate payable by most mutual funds.
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For the period July 1, 1995 to October 27, 1995, the Advisor received fees
after waivers, at an effective rate of .75% of the average daily net assets of
each of the Multi-Season Growth Fund, Accelerating Growth Fund, Small Company
Growth Fund, Growth & Income Fund and International Equity Fund, .74% of the
average daily net assets of the Real Estate Equity Investment Fund, .65% of
average daily net assets of the Balanced Fund, .50% of the average daily net
assets of each of the Intermediate Bond Fund, U.S. Government Fund, Tax-Free
Intermediate Fund andTax-Free Bond Fund, .07% of the average daily net assets of
the Index 500 Fund; and 0.00% of the average daily net assets of the Michigan
Triple Tax-Free Bond Fund, .35% of the average daily net assets of the Cash
Management Fund, the U.S. Treasury Money Market Fund and the Tax-Free Money
Market Fund.
For the period from August 14, 1995 to October 27, 1995 the Advisor received
fees after waivers, at an effective rate of .74% for the Mid-Cap Growth Fund.
For the period from August 18, 1995 to October 27, 1995 the Advisor received
fees after waivers, at an effective rate of .74% of the average daily net assets
of the Value Fund.
For the period October 28, 1996 to June 30, 1996, the Advisor received fees,
after waivers, at an effective rate of .75% of the average daily net assets of
each of the Multi-Season Growth Fund, Accelerating Growth Fund, Small Company
Growth Fund, Growth & Income Fund and International Equity Fund, .67% of the
Real Estate Equity Investment Fund, .73% of the average daily net assets of the
Value Fund, .71% of the average daily net assets of the Mid-Cap Growth Fund,
.65% of the average daily net assets of the Balanced Fund, .50% of the average
daily net assets of each of the Intermediate Bond Fund, U.S. Government Fund,
Bond Fund, Tax-Free Intermediate Bond Fund and Tax-Free Bond Fund, .06% of the
average daily net assets of the Index 500 Fund. 0.00% of the average daily net
assets of the Michigan Triple Tax-Free Bond Fund, .35% of the average daily net
assets of each of the Cash Investment Fund, U.S. Treasury Fund and Tax-Free
Money Market Fund.
The Advisor expects to voluntarily waive a portion of the fees payable to it
with respect to the Multi-Season Growth Fund and the Index 500 Fund during the
current fiscal year. However, the Advisor may discontinue such fee waivers at
any time, in its sole discretion. The Advisor expects to receive, after waivers,
an advisory fee at the annual rate of .75% and .07% of the average daily net
assets of the Multi-Season Growth Fund and the Index 500 Fund, respectively,
during the Company's and Munder's current fiscal year.
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 Funds. First Data is a wholly
owned subsidiary of First Data Corporation. The Administrator generally assists
the Company and Munder in all aspects of its administration and operations,
including the maintenance of financial records and fund accounting.
First Data also serves as the Funds' transfer agent and dividend disbursing
agent ("Transfer Agent").
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As compensation for their services, the Administrator and Transfer Agent are
entitled to receive fees, based on the aggregate average daily net assets of the
Funds 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 Funds 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 Transfer Agent and Administrator are also entitled to reimbursement
for out-of-pocket expenses. The Administrator has entered into a Sub-
Administration Agreement with the Funds' Distributor under which the Distributor
provides certain administrative services with respect to the Funds. The
Administrator pays the Distributor a fee for these services out of its own
resources at no cost to the Funds.
Comerica Bank (the "Custodian"), whose principal business address is One
Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226, provides custodial
services to the Funds. The Custodian is a wholly-owned subsidiary of Comerica
Incorporated, a publicly-held bank holding company. As compensation for its
services, the Custodian is entitled to receive fees, based on the aggregate
average daily net assets of the Funds 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. Because of
the additional custody and accounting charges associated with the investment in
foreign securities, the International Equity Fund incurred additional custody
and accounting fees during the Company's fiscal year ended June 30, 1996 to __%
of the Fund's average daily net assets.
For an additional description of the services performed by the Administrator,
Transfer Agent and Custodian, see the Statement of Additional Information.
TAXES
GENERAL
Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Code. Such qualification generally relieves a Fund of
liability for Federal income taxes to the extent its earnings are distributed in
accordance with the Code.
Qualification as a regulated investment company under the Code for a taxable
year requires, among other things, that a Fund distribute to its shareholders an
amount equal to at least the sum of 90% of its investment company taxable income
and 90% of its net tax-exempt interest income for such year. In general, a
Fund's investment company income will be its taxable income (including
dividends, interest, and short-term capital gains) subject to certain
adjustments and excluding the excess of any net long-term capital gain for the
taxable year over the net short-term capital loss, if any, for such year. Each
Fund intends to distribute substantially all of its investment company taxable
income each taxable year. 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.)
[The dividends received deduction for corporations will apply to such
distributions by the Balanced Fund and the Equity Funds to the extent of the
total qualifying dividends received by the distributing fund from domestic
corporations for the taxable year and if other applicable requirements are not
met.]
Substantially all of each of the Funds' net realized long-term capital gains,
if any, will be distributed at least annually. The Funds will generally have no
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
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matter how long the shareholders have held their shares.
A taxable gain or loss may be realized by a holder of shares in the Funds upon
the redemption or transfer of shares depending upon the tax basis of the shares
and their price at the time of the transaction.
The International Bond Fund's gains and losses from investments in foreign
currency denominated debt securities and from certain other transactions may be
treated as ordinary income or loss rather than capital gain or loss. This may
have the effect of increasing ordinary dividends paid to shareholders (in the
case of such gains) or decreasing the amounts available for distribution as
dividends (in the case of such losses).
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 a Fund on December 31 of such year if
such dividends are actually paid during January of the following year.
Shareholders should be aware that redeeming shares of a Fund after tax-exempt
interest income has been accrued by a Fund but before that income has been
distributed as a dividend may be disadvantageous. Any gain on such redemption
will be taxable, even though the gain may be attributable in part to the accrued
tax-exempt interest that might have qualified as an exempt-interest dividend if
distributed as a dividend rather than as redemption proceeds.
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 Funds will send written notices to record owners of
shares regarding the Federal tax status of distributions made by each Fund.
Since this is not an exhaustive description of applicable tax consequences, and
since state and local taxes may be different than the Federal taxes described
below, investors may wish to contact their tax advisors concerning investments
in the Funds.
TAXES--FOREIGN INVESTMENTS
Income or gain from investments in foreign securities may be subject to
foreign withholding or other taxes. It is expected that the International Equity
Fund will, and the other Funds may, be subject to foreign withholding taxes with
respect to income received from sources within foreign countries. If more than
50% of the value of the International Equity Fund's total assets at the close of
a taxable year consists of stock or securities of foreign corporations, the Fund
may elect, for U.S. Federal income tax purposes, to treat certain foreign taxes
paid by it, including generally any withholding taxes and other foreign income
taxes, as paid by its shareholders. If the Fund makes this election, the amount
of such foreign taxes paid by the Fund will be included in its shareholders'
income pro rata (in addition to taxable distributions actually received by
them), and the shareholders would be entitled (a) to credit their proportionate
amount of such taxes against their U.S. Federal income tax liabilities subject
to certain limitations described in the Statement of Additional Information, or
(b) if they itemize their deductions, to deduct such proportionate amount from
their U.S. income.
If a Fund invests in certain "passive foreign investment companies" ("PFICs"),
it will be subject to Federal income tax (and possibly additional interest
charges) on a portion of any excess distribution or gain from the disposition of
such shares even if it distributes such income to its shareholders. If a Fund
elects to treat the PFIC as a qualified electing fund ("QEF") and the PFIC
furnishes certain financial information in the required form to such Fund, the
Fund will instead be required to include in income each year its allocable share
of the ordinary earnings and net capital gains on the QEF, regardless of whether
received, and such
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<PAGE>
amounts will be subject to the various distribution requirements described
above.
The International Bond Fund's investments in derivative instruments are
subject to special tax rules, some of which are not entirely clear. As a result,
the Fund may be limited by tax considerations in the extent to which it enters
into such transactions. See the Statement of Additional Information for further
Information.
TAXES--TAX-FREE BOND FUNDS AND TAX-FREE MONEY MARKET FUND
The Tax-Free Bond Funds and Tax-Free Money Market Fund intend to pay
substantially all of their dividends as exempt-interest dividends. Under normal
market conditions, at least 80% of each Fund's net assets will be invested in
municipal obligations, the interest on which is exempt from regular Federal
income tax and does not constitute an item of tax preference for purposes of the
Federal alternative minimum tax. Investors in the Funds should note, however,
that taxpayers are required to report the receipt of tax-exempt interest
dividends on their Federal income tax returns and that in some circumstances
such amounts, while exempt from regular Federal income tax, are taxable to
persons subject to alternative minimum and environmental taxes.
First, tax-exempt interest and exempt interest dividends derived from certain
private activity bonds issued after August 7, 1986, will generally constitute an
item of tax preference for corporate and non-corporate taxpayers in determining
alternative minimum and environmental tax liability. During normal market
conditions the Funds may invest up to 20% each of their net assets in such
private activity bonds.
Second, all dividends, including exempt interest dividends received by
corporate taxpayers must be taken into account by them in determining certain
adjustments for alternative minimum and environmental tax purposes. Shareholders
who are recipients of Social Security Act or Railroad Retirement Act benefits
should further note that all dividends, including exempt interest dividends
derived from a Fund will be taken into account in determining the taxability of
their benefit payments.
The Funds will determine annually the percentages of their net investment
income which are exempt from the regular Federal income tax, which constitute an
item of tax preference for purposes of the Federal alternative minimum tax, and
which are fully taxable. The Funds will apply these percentages uniformly to all
distributions declared from net investment income during that year. These
percentages may differ significantly from the actual percentages for any
particular day. On an annual basis, the Funds will send written notices to
record owners of shares regarding the Federal tax status of distributions made
by them.
Dividends paid by each Fund may be taxable to investors under state or local
law as dividend income even though all or a portion of such dividends may be
derived from interest on obligations which, if realized directly, would be
exempt from such income taxes. Moreover, to the extent, if any, that dividends
paid to shareholders are derived from taxable interest or from capital gains,
such dividends will be subject to Federal income tax.
MICHIGAN TAXES--TAX-FREE INTERMEDIATE BOND FUND AND MICHIGAN
TRIPLE TAX-FREE
BOND FUND
Ordinary tax-exempt interest dividends paid by the Tax-Free Intermediate Bond
Fund and Michigan Triple Tax-Free Bond Fund that are derived from interest
attributable to tax-exempt obligations of the State of Michigan and its
political subdivisions, as well as certain U.S. territorial obligations, are
exempt from Michigan income tax, Michigan intangibles tax and Michigan single
business tax. Conversely, to the extent that the Funds' tax-exempt interest
dividends are derived from interest on other obligations, such dividends will be
subject to Michigan income, intangibles and single business taxes, even if
exempt for Federal income tax purposes. A Fund is unable to predict in advance
the exact portion of its tax-exempt dividends that will be derived from interest
on Michigan Municipal Obligations, but will advise shareholders at least
annually of the percentage of the tax-exempt dividends actually paid by it. Such
percentage will equal a Fund's tax-exempt interest from Michigan Municipal
Obligations
64
<PAGE>
divided by the total tax-exempt interest earned by the Fund, whether
or not the total tax-exempt interest earned by the Fund is distributed as
dividends. However, capital gains dividends (both short- and long-term) are
subject to Michigan income tax.
The taxability of dividends for Michigan income and intangibles taxes
generally follows the domicile of the owner/participant. Non-Michigan residents
are not subject to Michigan income and intangibles taxes on dividends received
from the Funds.
In addition, under Michigan's Uniform City Income Tax ordinance, which
authorizes Michigan cities to impose a local income tax, interest dividends from
Michigan municipal obligations, which are not subject to Michigan income tax
will similarly not be subject to the Michigan Uniform City Income Tax.
* * *
Since this is not an exhaustive discussion of applicable tax consequences,
investors may wish to contact their tax advisors concerning investments in the
Funds. Future legislative or administrative changes or court decisions may
materially affect the tax consequences of investing in the Funds.
DESCRIPTION OF SHARES
The Company was organized as a Massachusetts business trust on August 30,
1989, and is registered under the 1940 Act as an open-end management investment
company. The Company's Declaration of Trust authorizes the Trustees to classify
and reclassify any unissued shares into one or more classes of shares. Pursuant
to such authority, the Trustees have authorized the issuance of an unlimited
number of shares of beneficial interest in the Company, representing interests
in the Accelerating Growth, Small Company Growth, International Equity, Index
500, Growth & Income, Balanced, Bond, Intermediate Bond, U.S. Government Income,
Michigan Triple Tax-Free Bond, Tax-Free Bond, Tax-Free Intermediate Bond, Tax-
Free Money Market, U.S. Treasury Money Market, Cash Investment, respectively,
each of which, except the Tax-Free Intermediate Bond Fund and Michigan Triple
Tax-Free Bond Fund, is classified as a diversified investment company under the
1940 Act. There is a possibility that the Company might become liable for any
misstatement, inaccuracy or imcomplete disclosure in this Prospectus concerning
Munder.
Munder 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.
Munder'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 Munder Multi-Season Growth Fund, Munder Real
Estate Equity Investment Fund, Munder Mid-Cap Growth Fund, Munder Value Fund,
Munder International Bond Fund, Munder Small-Cap Value Fund, Munder Equity
Selection Fund, Munder Micro-Cap Equity Fund, Net Net Fund and Munder Money
Market Fund, respectively, each of which, except Munder International Bond Fund,
is classified as a diversified investment company under the 1940 Act. There is a
possibility that the Company might become liable for any misstatement,
inaccuracy, or incomplete disclosure in this Prospectus concerning Munder. There
is a possibility that Munder might become liable for any misstatement,
inaccuracy or incomplete disclosure in this Prospectus concerning the Company.
The shares of each Fund (other than the Money Market Funds and the Net Net
Fund) are offered as five separate classes: Class A Shares, Class B Shares,
Class C Shares, Class K Shares and Class Y Shares. Class C Shares of the Index
500 Fund are not currently available for purchase. 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
or Munder) and Class Y Shares. The Tax-Free Money Market Fund, U.S. Treasury
Money Market Fund and Cash Investment Fund offer only Class A Shares, Class
K
65
<PAGE>
Shares and Class Y Shares. The Net Net Fund offers only one class of shares.
These other classes of the Funds may have different sales charges and expense
levels, which may affect performance. Investors may call the Funds at (800) 438-
5789 for more information concerning other classes of shares of the Funds. This
Prospectus relates only to the Class Y Shares of the Multi-Season Growth Fund,
Real Estate Equity Investment Fund, Accelerating Growth Fund, Small Company
Growth Fund, Mid-Cap Growth Fund, International Equity Fund, Index 500 Fund,
Growth & Income Fund, Value Fund, Balanced Fund, Small-Cap Value Fund, Equity
Selection Fund, Micro-Cap Equity Fund, Bond Fund, Intermediate Bond Fund, U.S.
Government Income Fund, Michigan Triple Tax-Free Bond Fund, Tax-Free Bond Fund,
Tax-Free Intermediate Bond Fund, Money Market Fund, Tax-Free Money Market Fund,
U.S. Treasury Money Market Fund and Cash Investment Fund.
Each share of a Munder Fund has a par value of $.001, represents an equal
proportionate interest in the particular Fund with other shares of the same
class and is entitled to such dividends and distributions earned on such Fund's
assets as are declared in the discretion of the Trustees. Each share of a MFI
Fund has a par value of $.01 per share and represents a proportionate interest
in the assets of the Fund.
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
Trustees or Directors determine that the matter to be voted upon affects only
the interests of the shareholders of a particular Fund. In addition,
shareholders of each of the Funds will vote in the aggregate and not by class,
except as otherwise expressly required by law or when the Trustees or Directors
determine that the matter to be voted on affects only the interests of the
holders of a particular class of shares. The Funds are not required and do 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 or Munder. To the extent required by law, the Funds will
assist in shareholder communications in connection with such a meeting. For a
further discussion of the voting rights of shareholders, see "Additional
Information Concerning Shares" in the Statement of Additional Information.
As of _______, 1996, Comerica Bank held of record substantially all of the
outstanding shares of the Funds as agent, custodian or trustee for its
customers. In addition, as of _______, 1996, Comerica Bank possessed sole or
shared voting or investment power for its customer accounts with respect to the
following percentages of the Funds' outstanding shares: Multi-Season Growth
Fund--__%; Real Estate Equity Investment Fund--__%; Accelerating Growth Fund--
__%; Small Company Growth Fund--__%; Mid-Cap Growth Fund--__%; Value Fund--
__%;
International Equity Fund--__%; Index 500 Fund--__%; Growth & Income Fund--__%;
Balanced Fund--__%; Bond Fund--__%; Intermediate Bond Fund--__%; U.S.
Government
Income Fund--__%; Michigan Triple Tax-Free Bond Fund--__%; Tax-Free Bond Fund--
__%; Tax-Free Intermediate Bond Fund--__%; Money Market Fund--__%; Tax-Free
Money Market Fund--__%; U.S. Treasury Money Market Fund--__% and Cash
Investment
Fund--__%. The Small-Cap Value Fund, Equity Selection Fund and Micro-Cap Equity
Fund did not commence operations until _______.
REPORTS TO SHAREHOLDERS
The Funds have eliminated duplicate mailings of prospectuses and shareholder
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 Funds at (800) 438-5789.
PERFORMANCE
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<PAGE>
From time to time, the Funds may quote performance and yield data for Class Y
Shares in advertisements or in communications to shareholders. The total return
of a class of shares in a 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 International Bond Fund, Bond Funds and
Tax-Free Bond Funds is computed based on the net income of such class in a 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 yield of a class of shares in the Money Market Funds refers to the income
generated by an investment in a class over a seven-day period (which period will
be stated in the advertisement). This income is then "annualized." That is, the
amount of income generated by the investment during that week is assumed to be
generated each week over a 52-week period and is shown as a percentage of the
investment. "Effective yield" is calculated similarly but, when annualized, the
income earned by an investment in a class is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment.
The "tax-equivalent yields" of the Class Y Shares in the Tax-Free Funds and
Tax-Free Money Market Fund may also be quoted from time to time, which show the
level of taxable yield needed to produce an after-tax equivalent to the tax-free
yield of the particular class. This is done by increasing the yield (calculated
as above) by the amount necessary to reflect the payment of Federal and/or state
income taxes at a stated rate.
The Funds may compare the performance of the Class Y 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 a Fund.
Performance will fluctuate and any quotation of performance should not be
considered as representative of future performance of a class of shares in a
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 a Fund
will not be included in calculations of yield and performance.
67
MUNDER MULTI-SEASON GROWTH FUND MUNDER BOND FUND
MUNDER REAL ESTATE EQUITY INVESTMENT FUND MUNDER
INTERMEDIATE BOND FUND
MUNDER ACCELERATING GROWTH FUND MUNDER U.S.
GOVERNMENT INCOME FUND
MUNDER SMALL COMPANY GROWTH FUND MUNDER MICHIGAN
TRIPLE TAX-FREE BOND FUND
MUNDER MID-CAP GROWTH FUND MUNDER TAX-FREE BOND
FUND
MUNDER INTERNATIONAL EQUITY FUND MUNDER TAX-FREE
INTERMEDIATE BOND FUND
MUNDER INDEX 500 FUND MUNDER MONEY MARKET FUND
MUNDER GROWTH & INCOME FUND MUNDER TAX-FREE MONEY
MARKET FUND
MUNDER VALUE FUND MUNDER U.S. TREASURY MONEY
MARKET FUND
MUNDER BALANCED FUND MUNDER CASH INVESTMENT
FUND
MUNDER SMALL-CAP VALUE FUND MUNDER INTERNATIONAL
BOND FUND
MUNDER EQUITY SELECTION FUND
MUNDER MICRO-CAP EQUITY FUND
[/TABLE]
(collectively, the "Funds")
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information, which has been filed with the
Securities and Exchange Commission (the "SEC"), provides supplementary
information pertaining to all classes of shares representing interests in each
of the twenty-four investment portfolios listed above. The Munder Funds, Inc.
(the "Company") currently offers a selection of ten investment portfolios, nine
of which are offered in this Statement of Additional Information: the Munder
Multi-Season Growth Fund (the "Multi-Season Fund"), Munder Real Estate Equity
Investment Fund (the "Real Estate Fund"), Munder Mid-Cap Growth Fund (the "Mid-
Cap Fund"), Munder Value Fund (the "Value Fund"), Munder Small-Cap Value Fund
("Small-Cap Value Fund"), Munder Equity Selection Fund ("Equity Selection
Fund"), Munder Micro-Cap Equity Fund ("Micro-Cap Equity Fund"), Munder
International Bond Fund ("International Bond Fund") and Munder Money Market
Fund. The Net Net Fund is offered in a separate prospectus and Statement of
Additional Information. The Munder Funds Trust (the "Trust") currently offers a
selection of fifteen investment portfolios. This Statement of Additional
Information describes each of the investment portfolios offered by the Trust and
the Company. This Statement of Additional Information is not a prospectus, and
should be read only in conjunction with the Trust's and the Company's
Prospectuses dated _______, 1996. A copy of each Prospectus may be obtained
through Funds Distributor, Inc. (the "Distributor"), or by calling (800) 438-
5789. This Statement of Additional Information is dated _______, 1996.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR
ENDORSED BY ANY BANK, AND ARE NOT INSURED OR GUARANTEED BY
THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING
THE POSSIBLE LOSS
OF PRINCIPAL.
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
General......................................................................... 3
Fund Investments................................................................ 3
Risk Factors and Special Considerations -- Index 500 Fund....................... 20
Risk Factors and Special Considerations -- Tax-Free Intermediate Bond Fund and
Michigan Triple Tax-Free Bond Fund......................................... 22
Additional Investment Limitations............................................... 24
Trustees, Directors and Officers................................................ 28
Investment Advisory and Other Service Arrangements.............................. 33
Portfolio Transactions.......................................................... 46
Purchase and Redemption Information............................................. 49
Net Asset Value................................................................. 51
Performance Information......................................................... 52
Taxes........................................................................... 63
Additional Information Concerning Shares........................................ 69
Miscellaneous................................................................... 70
Financial Statements............................................................ 72
Appendix A...................................................................... A-1
Appendix B...................................................................... B-1
</TABLE>
No person has been authorized to give any information or to make any
representations not contained in this Statement of Additional Information or in
each Prospectus in connection with the offering made by each Prospectus and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Funds or the Distributor. The Prospectuses do not
constitute an offering by the Funds or by the Distributor in any jurisdiction in
which such offering may not lawfully be made.
2
<PAGE>
GENERAL
The Trust was organized on August 30, 1989 under the name "PDB Fund," which
was changed in November, 1989 to "Opportunity Funds", and in February, 1990 to
"Ambassador Funds" and in June, 1995 to The Munder Funds Trust. The Tax-Free
Intermediate Bond Fund originally commenced operations on February 9, 1987 as a
separate portfolio of the St. Clair Tax-Free Fund, Inc. On November 20, 1992,
the St. Clair Tax-Free Intermediate Bond Fund was reorganized as the Ambassador
Tax-Free Intermediate Bond Fund. The Company was organized as a Maryland
corporation on November 18, 1992.
As stated in each Prospectus, the investment advisor of each Fund is Munder
Capital Management (the "Advisor"). The principal partners of the Advisor are
Old MCM, Inc., Munder Group LLC, Woodbridge Capital Management, Inc. 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 each Prospectus.
FUND INVESTMENTS
The following supplements the information contained in each Prospectus
concerning the investment objectives and policies of the Funds. With the
exception of the policy to invest at least 80% of each of Tax-Free Bond Fund's
and Tax-Free Money Market Fund's assets in municipal obligations bearing tax-
exempt interest and the investment objectives of Multi-Season Fund and Real
Estate Fund, each Fund's investment objective is a non-fundamental policy and
may be changed without the authorization of the holders of a majority of the
Fund's outstanding shares. There can be no assurance that a Fund will achieve
its objective. A description of applicable credit ratings is set forth in
Appendix A hereto. For purposes of this Statement of Additional Information, the
"Multi-Season Fund, Real Estate Fund, Accelerating Growth Fund, Small Company
Growth Fund, Mid-Cap Fund, International Equity Fund, Index 500 Fund, Growth &
Income Fund, Value Fund, Small-Cap Value Fund, Micro-Cap Equity Fund and Equity
Selection Fund are referred to as the "Equity Funds;" and the Bond Fund,
Intermediate Bond Fund and U.S. Government Income Fund are referred to as the
"Bond Funds. "
BORROWING. The Funds are authorized to borrow money in amounts up to 5% of
the value of their total assets at the time of such borrowings for temporary
purposes, and are authorized to borrow money in excess of the 5% limit as
permitted by the Investment Company Act of 1940, as amended (the "1940 Act") to
meet redemption requests. This borrowing may be unsecured. The 1940 Act requires
the Funds to maintain continuous asset coverage of 300% of the amount borrowed.
If the 300% asset coverage should decline as a result of market fluctuations or
other reasons, the Funds may be required to sell some of their portfolio
holdings within three days to reduce the debt and restore the 300% asset
coverage, even though it may be disadvantageous from an investment standpoint to
sell securities at that time. Borrowing may exaggerate the effect on net asset
value of any increase or decrease in the market value of the Funds. Money
borrowed will be subject to interest costs which may or may not be recovered by
an appreciation of the securities purchased. The Funds 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 Funds may, in connection with permissible borrowings, transfer as
collateral, securities owned by the Funds.
3
<PAGE>
FOREIGN SECURITIES. The Multi-Season Fund and the Mid-Cap Fund may each
invest up to 20% of the value of its total assets in securities of foreign
issuers. The Balanced, Cash Investment, each Bond Fund and each Equity Fund of
the Trust may invest in the securities of foreign issuers. The Multi-Season Fund
and the Mid-Cap Fund typically will only purchase foreign securities which are
represented by American Depositary Receipts ("ADRs") listed on a domestic
securities exchange or included in the NASDAQ National Market System, or foreign
securities listed directly on a domestic securities exchange or included in the
NASDAQ National Market System. ADRs are receipts typically issued by a United
States bank or trust company evidencing ownership of the underlying foreign
securities. Certain such institutions issuing ADRs may not be sponsored by the
issuer. A non-sponsored depositary may not provide the same shareholder
information that a sponsored depositary is required to provide under its
contractual arrangements with the issuer.
Income and gains on such securities may be subject to foreign withholding
taxes. Investors should consider carefully the substantial risks involved in
securities of companies and governments of foreign nations, which are in
addition to the usual risks inherent in domestic investments.
Under normal market conditions, at least 65% of the International Bond
Fund's assets are invested in bonds of issuers located in at least three
countries other than the United States. The Fund will primarily invest in
foreign debt obligations denominated in foreign currencies, including the
European Currency Unit ("ECU"), which are issued by foreign governments and
governmental agencies, instrumentalities or political subdivisions; debt
securities issued or guaranteed by supranational organizations (as defined
below); corporate debt securities; bank or bank holding company debt securities
and other debt securities including those convertible into foreign stock. For
the purposes of the 65% limitation with respect to the Fund's designation as an
international bond fund, the securities described in this paragraph are
considered "international bonds. "
Investors should consider carefully the substantial risks involved in
securities of companies and governments of foreign nations, which are in
addition to the usual risks inherent in domestic investments.
There may be less publicly available information about foreign companies
comparable to the reports and ratings published about companies in the United
States. Foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards, and auditing practices and
requirements may not be comparable to those applicable to United States
companies. Foreign markets have substantially less volume than the New York
Stock Exchange and securities of some foreign companies are less liquid and more
volatile than securities of comparable United States companies. Commission rates
in foreign countries, which are generally fixed rather than subject to
negotiation as in the United States, are likely to be higher. In many foreign
countries there is less government supervision and regulation of stock
exchanges, brokers, and listed companies than in the United States.
Investments in companies domiciled in developing countries may be subject
to potentially higher risks than investments in developed countries. These risks
include (i) less social, political and economic stability; (ii) the small
current size of the markets for such securities and the currently low or
nonexistent volume of trading, which result in a lack of liquidity and in
greater price volatility; (iii) certain national policies which may restrict the
Fund's investment opportunities, including restrictions on investment in issuers
or industries deemed sensitive to national interest; (iv) foreign taxation; (v)
the absence of developed legal structures governing private or foreign
investment or allowing for judicial redress for injury to private property; (vi)
the absence, until recently in certain Eastern European countries, of a capital
market structure or market-oriented economy; and (vii) the possibility that
recent favorable
4
<PAGE>
economic developments in Eastern Europe may be slowed or reversed by
unanticipated political or social events in such countries.
Investments in Eastern European countries may involve risks of
nationalization, expropriation and confiscatory taxation. The Communist
governments of a number of East European countries expropriated large amounts of
private property in the past, in many cases without adequate compensation, and
there can be no assurance that such expropriation will not occur in the future.
In the event of such expropriation, the Fund could lose a substantial portion of
any investments it has made in the affected countries. Further, no accounting
standards exist in Eastern European countries. Finally, even though certain
Eastern European currencies may be convertible into United States dollars, the
conversion rates may be artificial to the actual market values and may be
adverse to Fund shareholders.
The Advisor endeavors to buy and sell foreign currencies on as favorable a
basis as practicable. Some price spread on currency exchange (to cover service
charges) may be incurred, particularly when the Fund changes investments from
one country to another or when proceeds of the sale of Fund shares in U.S.
dollars are used for the purchase of securities in foreign countries. Also, some
countries may adopt policies which would prevent the Fund from transferring cash
out of the country or withhold portions of interest and dividends at the source.
There is the possibility of expropriation, nationalization or confiscatory
taxation, withholding and other foreign taxes on income or other amounts,
foreign exchange controls (which may include suspension of the ability to
transfer currency from a given country), default in foreign government
securities, political or social instability or diplomatic developments that
could affect investments in securities of issuers in foreign nations.
A Fund may be affected either unfavorably or favorably by fluctuations in
the relative rates of exchange between the currencies of different nations, by
exchange control regulations and by indigenous economic and political
developments. Changes in foreign currency exchange rates will influence values
within a Fund from the perspective of U.S. investors, and may also affect the
value of dividends and interest earned, gains and losses realized on the sale of
securities, and net investment income and gains, if any, to be distributed to
shareholders by a Fund. The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand in the foreign
exchange markets. These forces are affected by the international balance of
payments and other economic and financial conditions, government intervention,
speculation and other factors. The Advisor will attempt to avoid unfavorable
consequences and to take advantage of favorable developments in particular
nations where, from time to time, it places a Fund's investments.
The exercise of this flexible policy may include decisions to purchase
securities with substantial risk characteristics and other decisions such as
changing the emphasis on investments from one nation to another and from one
type of security to another. Some of these decisions may later prove profitable
and others may not. No assurance can be given that profits, if any, will exceed
losses.
FORWARD FOREIGN CURRENCY TRANSACTIONS. In order to protect against a
possible loss on investments resulting from a decline or appreciation in the
value of a particular foreign currency against the U.S. dollar or another
foreign currency, the Balanced Fund, the International Bond Fund and the Equity
Funds (excluding the Real Estate Fund) and Bond Funds (except the Tax-Free
Intermediate Bond, Tax-Free Bond and Michigan Triple Tax-Free Bond Funds) are
authorized to enter into forward foreign currency exchange contracts ("forward
currency contracts"). These contracts involve an obligation to purchase or sell
a specified currency at a future date at a price set at the time of the
contract. Forward currency contracts do not eliminate fluctuations in the values
of portfolio securities but rather allow a Fund to establish a rate of exchange
for a future point in time.
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When entering into a contract for the purchase or sale of a security, a
Fund may enter into a forward foreign currency exchange contract for the amount
of the purchase or sale price to protect against variations, between the date
the security is purchased or sold and the date on which payment is made or
received, in the value of the foreign currency relative to the U.S. dollar or
other foreign currency.
When the Advisor anticipates that a particular foreign currency may
decline substantially relative to the U.S. dollar or other leading currencies,
in order to reduce risk, a Fund may enter into a forward contract to sell, for a
fixed amount, the amount of foreign currency approximating the value of some or
all of the Fund's securities denominated in such foreign currency. Similarly,
when the obligations held by a Fund create a short position in a foreign
currency, the Fund may enter into a forward contract to buy, for a fixed amount,
an amount of foreign currency approximating the short position. With respect to
any forward foreign currency contract, it will not generally be possible to
match precisely the amount covered by that contract and the value of the
securities involved due to the changes in the values of such securities
resulting from market movements between the date the forward contract is entered
into and the date it matures. In addition, while forward contracts may offer
protection from losses resulting from declines or appreciation in the value of a
particular foreign currency, they also limit potential gains which might result
from changes in the value of such currency. A Fund will also incur costs in
connection with forward foreign currency exchange contracts and conversions of
foreign currencies and U.S. dollars.
A separate account consisting of cash or liquid securities equal to the
amount of a Fund's assets that could be required to consummate forward contracts
will be established with the Funds' Custodian except to the extent the contracts
are otherwise "covered." For the purpose of determining the adequacy of the
securities in the account, the deposited securities will be valued at market or
fair value. If the market or fair value of such securities declines, additional
cash or securities will be placed in the account daily so that the value of the
account will equal the amount of such commitments by the Fund. A forward
contract to sell a foreign currency is "covered" if a Fund owns the currency (or
securities denominated in the currency) underlying the contract, or holds a
forward contract (or call option) permitting the Fund to buy the same currency
at a price no higher than the Fund's price to sell the currency. A forward
contract to buy a foreign currency is "covered" if a Fund holds a forward
contract (or call option) permitting the Fund to sell the same currency at a
price as high as or higher than the Fund's price to buy the currency.
FUTURES CONTRACTS AND RELATED OPTIONS. The Balanced Fund, the
International
Bond Fund and the Equity and Bond Funds (except the Tax-Free Intermediate Bond
Fund, Michigan Triple Tax-Free Bond Fund and Tax-Free Bond Fund) currently
expect that they may purchase and sell futures contracts on interest-bearing
securities or securities or bond indices, and may purchase and sell call and put
options on futures contracts. For a detailed description of futures contracts
and related options, see Appendix B to this Statement of Additional Information.
INTEREST RATE SWAP TRANSACTIONS. Each of the Bond Funds and the
International Bond Fund may enter into interest rate swap agreements for
purposes of attempting to obtain a particular desired return at a lower cost to
the Fund than if the Funds had invested directly in an instrument that yielded
that desired return. Interest rate swap transactions involve the exchange by the
Bond Funds and the International Bond Fund with another party of their
respective commitments to pay or receive interest, such as an exchange of fixed
rate payments for floating rate payments. Typically, the parties with which the
Bond Funds and the International Bond Fund will enter into interest rate swap
transactions will be brokers, dealers or other financial institutions known as
"counterparties." Certain Federal income tax requirements may, however, limit
the Bond Funds' and the International Bond Fund's ability to engage in certain
interest rate transactions. Gains from transaction in interest rate swaps
distributed to shareholders of the
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Bond Funds and the International Bond Fund will be taxable as ordinary income
or, in certain circumstances, as long-term capital gains to the shareholders.
Each of the Bond Funds' and the International Bond Fund's obligations (or
rights) under a swap agreement will generally be equal only to the net amount to
be paid or received under the agreement based on the relative values of the
positions held by each party to the agreement (the "net amount"). Each of the
Bond Funds' and the International Bond Fund's obligations under a swap agreement
will be accrued daily (offset against any amounts owed to the Fund). Accrued but
unpaid net amounts owed to a swap counterparty will be covered by the
maintenance of a segregated account consisting of cash, U.S. Government
securities or other high-grade debt securities, to avoid any potential
leveraging of each of the Bond Funds' and the International Bond Fund's
portfolios.
The Bond Funds and the International Bond Fund will not enter into any
interest rate swap transaction unless the credit quality of the unsecured senior
debt or the claims-paying ability of the other party to the transaction is rated
in one of the highest four rating categories by at least one nationally-
recognized statistical rating organization ("NRSRO") or is believed by the
Advisor to be equivalent to that rating. If the other party to a transaction
defaults, the Bond Funds and the International Bond Fund will have contractual
remedies pursuant to the agreements related to the transactions.
The use of interest rate swaps is a highly specialized activity that
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If the Advisor is incorrect in its
forecasts of market values, interest rates and other applicable factors, the
investment performance of the Bond Funds and the International Bond Fund would
be lower than it would have been if interest rate swaps were not used. The swaps
market has grown substantially in recent years with a large number of banks and
investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, the swaps market has become
relatively liquid in comparison with other similar instruments traded in the
interbank market. The swaps market is a relatively new market and is largely
unregulated. It is possible that developments in the swaps market, including
potential government regulation, could adversely affect the Bond Funds' and the
International Bond Fund's ability to terminate existing swap agreements or to
realize amounts to be received under such agreements.
INVESTMENT COMPANY SECURITIES. The Funds may invest in securities
issued by other investment companies. As a shareholder of another investment
company, a Fund (other than the Real Estate Fund) would bear its pro rata
portion of the other investment company's expenses, including advisory fees.
These expenses would be in addition to the expenses each Fund bears directly in
connection with its own operations. Each Fund currently intends to limit its
investments in securities issued by other investment companies so that, as
determined immediately after a purchase of such securities is made: (i) not
more than 5% of the value of the Fund's total assets will be invested in the
securities of any one investment company; (ii) not more than 10% of the value of
its total assets will be invested in the aggregate in securities of investment
companies as a group; and (iii) not more than 3% of the outstanding voting stock
of any one investment company will be owned by the Fund or by the Company or
Trust as a whole. It is the Funds' policy not to invest in securities issued by
other investment companies which pay asset-based fees to the Advisor, the
Administrator, the Custodian, the Distributor or their affiliates.
LENDING OF PORTFOLIO SECURITIES. To enhance the return on its portfolio,
each of the Funds may lend securities in its portfolio (subject to a limit of
25% of each Fund's, other than the Money Market Fund's, total assets; and 33
1/3% of the Money Market Fund's total assets) to securities firms and financial
institutions, provided that each loan is secured continuously by collateral in
the form of cash,
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high quality money market instruments or short-term U.S. Government securities
adjusted daily to have a market value at least equal to the current market value
of the securities loaned. These loans are terminable at any time, and the Funds
will receive any interest or dividends paid on the loaned securities. In
addition, it is anticipated that a Fund may share with the borrower some of the
income received on the collateral for the loan or the Fund will be paid a
premium for the loan. The risk in lending portfolio securities, as with other
extensions of credit, consists of possible delay in recovery of the securities
or possible loss of rights in the collateral should the borrower fail
financially. In determining whether the Funds will lend securities, the Advisor
will consider all relevant facts and circumstances. The Funds will only enter
into loan arrangements with broker-dealers, banks or other institutions which
the Advisor has determined are creditworthy under guidelines established by the
Boards of Trustees and Directors.
LOWER-RATED DEBT SECURITIES. The Growth & Income Fund may invest up
to 15%
of the value of its total assets and each of the Real Estate and Value Funds may
invest up to 5% of the value of its total assets in securities that are rated
below investment grade by Standard & Poor's or Moody's. Such securities are also
known as junk bonds. The yields on lower-rated debt and comparable unrated
securities generally are higher than the yields available on higher-rated
securities. However, investments in lower-rated debt and comparable unrated
securities generally involve greater volatility of price and risk of loss of
income and principal, including the possibility of default by or bankruptcy of
the issuers of such securities. Lower-rated debt and comparable unrated
securities (a) will likely have some quality and protective characteristics
that, in the judgment of the rating organization, are outweighed by large
uncertainties or major risk exposures to adverse conditions and (b) are
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. Accordingly,
it is possible that these types of factors could, in certain instances, reduce
the value of securities held in each Fund's portfolio, with a commensurate
effect on the value of each of the Fund's shares. Therefore, an investment in
the Growth & Income, Real Estate or Value Funds should not be considered as a
complete investment program and may not be appropriate for all investors.
While the market values of lower-rated debt and comparable unrated
securities tend to react more to fluctuations in interest rate levels than the
market values of higher-rated securities, the market values of certain lower
rated debt and comparable unrated securities also tend to be more sensitive to
individual corporate developments and changes in economic conditions than
higher-rated securities. In addition, lower-rated debt securities and comparable
unrated securities generally present a higher degree of credit risk. Issuers of
lower-rated debt and comparable unrated securities often are highly leveraged
and may not have more traditional methods of financing available to them so that
their ability to service their debt obligations during an economic downturn or
during sustained periods of rising interest rates may be impaired. The risk of
loss due to default by such issuers is significantly greater because lower-rated
debt and comparable unrated securities generally are unsecured and frequently
are subordinated to the prior payment of senior indebtedness. The Funds may
incur additional expenses to the extent that they are required to seek recovery
upon a default in the payment of principal or interest on their portfolio
holdings. The existence of limited markets for lower-rated debt and comparable
unrated securities may diminish each of the Funds' ability to (a) obtain
accurate market quotations for purposes of valuing such securities and
calculating its net asset value and (b) sell the securities at fair value either
to meet redemption requests or to respond to changes in the economy or in
financial markets.
Lower-rated debt securities and comparable unrated securities may have call
or buy-back features that permit their issuers to call or repurchase the
securities from their holders. If an issuer exercises these rights during
periods of declining interest rates, the Funds may have to replace the security
with a lower yielding security, thus resulting in a decreased return to the
Funds.
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MONEY MARKET INSTRUMENTS. As described in their Prospectuses, the Money
Market Fund, Tax-Free Money Market Fund, U.S. Treasury Money Market Fund and
Cash Investment Fund (collectively, the "Money Market Funds"), the Bond Funds,
the Equity Funds, the Balanced Fund, the Tax-Free Intermediate Bond Fund, Tax-
Free Bond, Michigan Triple Tax-Free Bond Fund and International Bond Fund may
invest from time to time in "money market instruments," a term that includes,
among other things, bank obligations, commercial paper, variable amount master
demand notes and corporate bonds with remaining maturities of 397 days or less.
Bank obligations include bankers' acceptances, negotiable certificates of
deposit and non-negotiable time deposits, including U.S. dollar-denominated
instruments issued or supported by the credit of U.S. or foreign banks or
savings institutions. Although the Funds will invest in obligations of foreign
banks or foreign branches of U.S. banks only where the Advisor deems the
instrument to present minimal credit risks, such investments may nevertheless
entail risks that are different from those of investments in domestic
obligations of U.S. banks due to differences in political, regulatory and
economic systems and conditions. All investments in bank obligations are limited
to the obligations of financial institutions having more than $1 billion in
total assets at the time of purchase, and investments by a Fund in the
obligations of foreign banks and foreign branches of U.S. banks will not exceed
25% of such Fund's total assets at the time of purchase.
Investments by a Fund in commercial paper will consist of issues rated at
the time A-1 and/or P-1 by Standard & Poor's Rating Service, a division of
McGraw-Hill Companies, Inc. ("S&P") or Moody's Investor Services, Inc.
("Moody's"). In addition, the Funds may acquire unrated commercial paper and
corporate bonds that are determined by the Advisor at the time of purchase to be
of comparable quality to rated instruments that may be acquired by such Fund as
previously described.
The Funds may also purchase variable amount master demand notes which are
unsecured instruments that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate. Although the notes are
not normally traded and there may be no secondary market in the notes, a Fund
may demand payment of the principal of the instrument at any time. The notes are
not typically rated by credit rating agencies, but issuers of variable amount
master demand notes must satisfy the same criteria as set forth above for
issuers of commercial paper. If an issuer of a variable amount master demand
note defaulted on its payment obligation, a Fund might be unable to dispose of
the note because of the absence of a secondary market and might, for this or
other reasons, suffer a loss to the extent of the default. The Funds invest in
variable amount master notes only when the Advisor deems the investment to
involve minimal credit risk.
MORTGAGE-RELATED SECURITIES. There are a number of important
differences
among the agencies and instrumentalities of the U.S. Government that issue
mortgage-related securities and among the securities that they issue. Mortgage-
related securities guaranteed by the Government National Mortgage Association
("GNMA") include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie
Maes") which are guaranteed as to the timely payment of principal and interest
by GNMA and such guarantee is backed by the full faith and credit of the United
States. GNMA is a wholly-owned U.S. Government corporation within the Department
of Housing and Urban Development. GNMA certificates also are supported by the
authority of GNMA to borrow funds from the U.S. Treasury to make payments under
its guarantee. Mortgage-related securities issued by the Federal National
Mortgage Association ("FNMA") include FNMA Guaranteed Mortgage Pass-Through
Certificates (also known as "Fannie Maes") which are solely the obligations of
the FNMA and are not backed by or entitled to the full faith and credit of the
United States, but are supported by the right of the issuer to borrow from the
Treasury. FNMA is a government-sponsored organization owned entirely by private
stockholders. Fannie Maes are
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guaranteed as to timely payment of the principal and interest by FNMA. Mortgage-
related securities issued by the Federal Home Loan Mortgage Corporation
("FHLMC") include FHLMC Mortgage Participation Certificates (also known as
"Freddie Macs" or "PCs"). FHLMC is a corporate instrumentality of the United
States, created pursuant to an Act of Congress, which is owned entirely by
Federal Home Loan Banks. Freddie Macs are not guaranteed by the United States or
by any Federal Home Loan Banks and do not constitute a debt or obligation of the
United States or of any Federal Home Loan Bank. Freddie Macs entitle the holder
to timely payment of interest, which is guaranteed by the FHLMC. FHLMC
guarantees either ultimate collection or timely payment of all principal
payments on the underlying mortgage loans. When FHLMC does not guarantee timely
payment of principal, FHLMC may remit the amount due on account of its guarantee
of ultimate payment of principal at any time after default on an underlying
mortgage, but in no event later than one year after it becomes payable.
MUNICIPAL OBLIGATIONS. Opinions relating to the validity of municipal
obligations and to the exemption of interest thereon from regular Federal income
tax are rendered by bond counsel or counsel to the respective issuers at the
time of issuance. Neither the Company nor the Advisor will review the
proceedings relating to the issuance of municipal obligations or the bases for
such opinions.
An issuer's obligations under its municipal obligations are subject to the
provisions of bankruptcy, insolvency and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any,
which may be enacted by Federal or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
enforcement of such obligations or upon the ability of municipalities to levy
taxes. The power or ability of an issuer to meet its obligations for the payment
of interest on and principal of its municipal obligations may be materially
adversely affected by litigation or other conditions.
From time to time proposals have been introduced before Congress for the
purpose of restricting or eliminating the Federal income tax exemption for
interest on municipal obligations. For example, under the Tax Reform Act of 1986
interest on certain private activity bonds must be included in an investor's
Federal alternative minimum taxable income, and corporate investors must include
all tax-exempt interest in their Federal alternative minimum taxable income. The
Trust cannot predict what legislation, if any, may be proposed in Congress in
the future as regards the Federal income tax status of interest on municipal
obligations in general, or which proposals, if any, might be enacted. Such
proposals, if enacted, might materially adversely affect the availability of
municipal obligations for investment by the Tax-Free Money Market Fund, Tax-Free
Intermediate Bond Fund, Tax-Free Bond Fund and Michigan Triple Tax-Free Bond
Fund and the liquidity and value of such Funds. In such an event the Board of
Trustees would reevaluate the Funds' investment objective and policies and
consider changes in its structure or possible dissolution.
The Cash Investment Fund may, when deemed appropriate by the Advisor in
light of the Fund's investment objective, invest in high quality municipal
obligations issued by state and local governmental issuers, the interest on
which may be taxable or tax-exempt for Federal income tax purposes, provided
that such obligations carry yields that are competitive with those of other
types of money market instruments of comparable quality. The Cash Investment
Fund does not expect to invest more than 5% of its net assets in such municipal
obligations during its current fiscal year.
NON-DOMESTIC BANK OBLIGATIONS. Non-domestic bank obligations include
Eurodollar Certificates of Deposit ("ECDs"), which are U.S. dollar-denominated
certificates of deposit issued by offices of foreign and domestic banks located
outside the United States; Eurodollar Time Deposits ("ETDs"), which are U.S.
dollar-denominated deposits in a foreign branch of a U.S. bank or a foreign
bank; Canadian
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Time Deposits ("CTDs"), which are essentially the same as ETDs except they are
issued by Canadian offices of major Canadian banks; Schedule Bs which are
obligations issued by Canadian branches of foreign or domestic banks; Yankee
Certificates of Deposit ("Yankee CDs"), which are U.S. dollar-denominated
certificates of deposit issued by a U.S. branch of a foreign bank and held in
the United States; and Yankee Bankers' Acceptances ("Yankee BAs"), which are
U.S. dollar-denominated bankers' acceptances issued by a U.S. branch of a
foreign bank and held in the United States.
OPTIONS. The Balanced Fund, Equity Funds, Bond Funds, Tax-Free
Intermediate Bond Fund, Michigan Triple Tax-Free Bond Fund and International
Bond Fund may write covered call options, buy put options, buy call options and
write secured put options in an amount not exceeding 5% of their net assets.
Such options may relate to particular securities and may or may not be listed on
a national securities exchange and issued by the Options Clearing Corporation.
Options trading is a highly specialized activity which entails greater than
ordinary investment risk. Options on particular securities may be more volatile
than the underlying securities, and therefore, on a percentage basis, an
investment in options may be subject to greater fluctuation than an investment
in the underlying securities themselves. For risks associated with options on
foreign currencies, see Appendix B to this Statement of Additional Information.
A call option for a particular security gives the purchaser of the option
the right to buy, and a writer the obligation to sell, the underlying security
at the stated exercise price at any time prior to the expiration of the option,
regardless of the market price of the security. The premium paid to the writer
is in consideration for undertaking the obligations under the option contract. A
put option for a particular security gives the purchaser the right to sell the
underlying security at the stated exercise price at any time prior to the
expiration date of the option, regardless of the market price of the security.
The writer of an option that wished to terminate its obligation may effect
a "closing purchase transaction." This is accomplished by buying an option of
the same series as the option previously written. The effect of the purchase is
that the writer's position will be canceled by the clearing corporation.
However, a writer may not effect a closing purchase transaction after being
notified of the exercise of an option. Likewise, an investor who is the holder
of an option may liquidate its position by effecting a "closing sale
transaction." The cost of such a closing purchase plus transaction costs may be
greater than the premium received upon the original option, in which event the
Fund will have incurred a loss in the transaction. There is no guarantee that
either a closing purchase or a closing sale transaction can be effected.
Effecting a closing transaction in the case of a written call option will
permit the Funds to write another call option on the underlying security with
either a different exercise price or expiration date or both, or in the case of
a written put option, will permit the Funds to write another put option to the
extent that the exercise price thereof is secured by deposited cash or short-
term securities. Also, effecting a closing transaction will permit the cash or
proceeds from the concurrent sale of any securities subject to the option to be
used for other Fund investments. If the Fund desires to sell a particular
security from its portfolio on which it has written a call option, it will
effect a closing transaction prior to or concurrent with the sale of the
security.
The Multi-Season, International Bond and Real Estate Funds may write
options in connection with buy-and-write transactions; that is, the Funds may
purchase a security and then write a call option against that security. The
exercise price of the call the Funds determine to write will depend upon the
expected price movement of the underlying security. The exercise price of a call
option may be below ("in-the-money"), equal to ("at-the-money") or above ("out-
of-the-money") the current value of the
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underlying security at the time the option is written. Buy-and-write
transactions using in-the-money call options may be used when it is expected
that the price of the underlying security will remain flat or decline moderately
during the option period. Buy-and-write transactions using out-of-the-money call
options may be used when it is expected that the premiums received from writing
the call option plus the appreciation in the market price of the underlying
security up to the exercise price will be greater than the appreciation in the
price of the underlying security alone. If the call options are exercised in
such transactions, the Multi-Season and Real Estate Funds' maximum gain will be
the premium received by it for writing the option, adjusted upwards or downwards
by the difference between the Fund's purchase price of the security and the
exercise price. If the options are not exercised and the price of the underlying
security declines, the amount of such decline will be offset in part, or
entirely, by the premium received.
The Funds (excluding the Multi-Season, Real Estate, Mid-Cap, International
Bond and Value Funds) will write call options only if they are "covered." In the
case of a call option on a security, the option is "covered" if a portfolio owns
the security underlying the call or has an absolute and immediate right to
acquire that security without additional cash consideration (or, if additional
cash consideration is required, cash or cash equivalents in such amount as are
held in a segregated account by its custodian) upon conversion or exchange of
other securities held by it. For a call option on an index, the option is
covered if a portfolio maintains with its Custodian cash or cash equivalents
equal to the contract value. A call option is also covered if a Fund holds a
call on the same security or index as the call written where the exercise price
of the call held is (i) equal to or less than the exercise price of the call
written, or (ii) greater than the exercise price of the call written provided
the difference is maintained by the portfolio in cash or cash equivalents in a
segregated account with its custodian. The Multi-Season, Real Estate, Mid-Cap
and Value Funds may also write call options that are not covered for cross-
hedging purposes. Each of the Multi-Season, Real Estate, Mid-Cap, International
Bond and Value Funds will limit its investment in uncovered put and call options
purchased or written by the Fund to 5% of the Fund's total assets. The
International Bond Fund will limit its investment in uncovered put and call
options purchased or written by the Fund to 25% of the Fund's total assets. The
Funds will write put options only if they are "secured" by cash or cash
equivalents maintained in a segregated account by the Funds' custodian in an
amount not less than the exercise price of the option at all times during the
option period.
The writing of covered put options is similar in terms of risk/return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and the Funds' gain will be limited to the premium
received. If the market price of the underlying security declines or otherwise
is below the exercise price, the Funds may elect to close the position or take
delivery of the security at the exercise price and the Fund's return will be the
premium received from the put option minus the amount by which the market price
of the security is below the exercise price.
Each of the Funds may purchase put options to hedge against a decline in
the value of its portfolio. By using put options in this way, the Funds will
reduce any profit it might otherwise have realized in the underlying security by
the amount of the premium paid for the put option and by transaction costs. Each
of the Funds may purchase call options to hedge against an increase in the price
of securities that it anticipates purchasing in the future. The premium paid for
the call option plus any transaction costs will reduce the benefit, if any,
realized by the Funds upon exercise of the option, and, unless the price of the
underlying security rises sufficiently, the option may expire worthless to the
Fund.
When a Fund purchases an option, the premium paid by it is recorded as an
asset of the Fund. When the Fund writes an option, an amount equal to the net
premium (the premium less the commission)
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received by the Fund is included in the liability section of the Fund's
statement of assets and liabilities as a deferred credit. The amount of this
asset or deferred credit will be subsequently marked-to-market to reflect the
current value of the option purchased or written. The current value of the
traded option is the last sale price or, in the absence of a sale, the average
of the closing bid and asked prices. If an option purchased by the Fund expires
unexercised the Fund realizes a loss equal to the premium paid. If the Fund
enters into a closing sale transaction on an option purchased by it, the Fund
will realize a gain if the premium received by the Fund on the closing
transaction is more than the premium paid to purchase the option, or a loss if
it is less. If an option written by the Fund expires on the stipulated
expiration date or if the Fund enters into a closing purchase transaction, it
will realize a gain (or loss if the cost of a closing purchase transaction
exceeds the net premium received when the option is sold) and the deferred
credit related to such option will be eliminated. If an option written by the
Fund is exercised, the proceeds of the sale will be increased by the net premium
originally received and the Fund will realize a gain or loss.
There are several risks associated with transactions in options on
securities and indices. For example, there are significant differences between
the securities and options markets that could result in an imperfect correlation
between these markets, causing a given transaction not to achieve its
objectives. An option writer, unable to effect a closing purchase transaction,
will not be able to sell the underlying security (in the case of a covered call
option) or liquidate the segregated account (in the case of a secured put
option) until the option expires or the optioned security is delivered upon
exercise with the result that the writer in such circumstances will be subject
to the risk of market decline or appreciation in the security during such
period.
There is no assurance that a Fund will be able to close an unlisted option
position. Furthermore, unlisted options are not subject to the protections
afforded purchasers of listed options by the Options Clearing Corporation, which
performs the obligations of its members who fail to do so in connection with the
purchase or sale of options.
In addition, a liquid secondary market for particular options, whether
traded over-the-counter or on a national securities exchange ("Exchange") may be
absent for reasons which include the following: there may be insufficient
trading interest in certain options; restrictions may be imposed by an Exchange
on opening transactions or closing transactions or both; trading halts,
suspensions or other restrictions may be imposed with respect to particular
classes or series of options or underlying securities; unusual or unforeseen
circumstances may interrupt normal operations on an Exchange; the facilities of
an Exchange or the Options Clearing Corporation may not at all times be adequate
to handle current trading value; or one or more Exchanges could, for economic or
other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that Exchange (or in that class or series of options)
would cease to exist, although outstanding options that had been issued by the
Options Clearing Corporation as a result of trades on that Exchange would
continue to be exercisable in accordance with their terms.
Currency transactions, including options on currencies and currency
futures, are subject to risks different from those of other portfolio
transactions. Because currency control is of great importance to the issuing
governments and influences economic planning and policy, purchases and sales of
currency and related instruments can be negatively affected by government
exchange controls, blockages, and manipulations or exchange restrictions imposed
by governments. These can result in losses to the Fund if it is unable to
deliver or receive currency or funds in settlement of obligations and could also
cause hedges it has entered into to be rendered useless, resulting in full
currency exposure as well as the incurring of transaction costs. Buyers and
sellers of currency futures are subject to the same risks that apply to the use
of futures generally. Further, settlement of a currency futures contract for the
purchase
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of most currencies must occur at a bank based in the issuing nation. Trading
options on currency futures is relatively new, and the ability to establish and
close out positions on such options is subject to the maintenance of a liquid
market which may not always be available. Currency exchange rates may fluctuate
based on factors extrinsic to that country's economy.
The Multi-Season Fund will not purchase put or call options if aggregate
premiums paid for such options would exceed 20% of the Fund's total assets. The
Real Estate Fund will not write covered call options against more than 30% of
the value of the equity securities held in the portfolio. The Mid-Cap Fund and
Value Fund will not purchase put or call options if aggregate premiums paid for
such options would exceed 25% of the Fund's total assets.
REAL ESTATE SECURITIES. The Real Estate Fund may invest without limit
in shares of real estate investment trusts ("REITs"). REITs pool investor's
funds for investment primarily in income producing real estate or real estate
loans or interests. A REIT is not taxed on income distributed to shareholders
if it complies with several requirements relating to its organization,
ownership, assets, and income and a requirement that it distribute to its
shareholders at least 95% of it taxable income (other than net capital gains)
for each taxable year. REITs can generally be classified as Equity REITs,
Mortgage REITs and Hybrid REITs. Equity REITs, which invest the majority of
their assets directly in real property, derive their income primarily from
rents. Equity REITs can also realize capital gains by selling properties that
have appreciated in value. Mortgage REITs, which invest the majority of their
assets in real estate mortgages, derive their income primarily from interest
payments. Hybrid REITs combine the characteristics of both Equity REITs and
Mortgage REITs. The Fund will not invest in real estate directly, but only in
securities issued by real estate companies. However, the Real Estate Fund may
be subject to risks similar to those associated with the direct ownership of
real estate (in addition to securities markets risks) because of its policy of
concentration in the securities of companies in the real estate industry. These
include declines in the value of real estate, risks related to general and local
economic conditions, dependency on management skill, heavy cash flow dependency,
possible lack of availability of mortgage funds, overbuilding, extended
vacancies of properties, increased competition, increases in property taxes and
operating expenses, changes in zoning laws, losses due to costs resulting from
the clean-up of environmental problems, liability to third parties for damages
resulting from environmental problems, casualty or condemnation losses,
limitations on rents, changes in neighborhood values and the appeal of
properties to tenants and changes in interest rates.
In addition to these risks, Equity REITs may be affected by changes in
the value of the underlying property owned by the trusts, while Mortgage REITs
may be affected by the quality of any credit extended. Further, Equity and
Mortgage REITs are dependent upon management skills and generally may not be
diversified. Equity and Mortgage REITs are also subject to heavy cash flow
dependency, defaults by borrowers and self-liquidation. In addition, Equity and
Mortgage REITs could possibly fail to qualify for the beneficial tax treatment
available to real estate investment trusts under the Internal Revenue Code of
1986, as amended (the "Code"), or to maintain their exemptions from registration
under the 1940 Act. The above factors may also adversely affect a borrower's or
a lessee's ability to meet its obligations to the REIT. In the event of a
default by a borrower or lessee, the REIT may experience delays in enforcing its
rights as a mortgagee or lessor and may incur substantial costs associated with
protecting investments.
REPURCHASE AGREEMENTS. The Funds may agree to enter into repurchase
agreements with 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
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agreement, and will require the seller to maintain liquid assets in a segregated
account in an amount that is greater than the repurchase price. Default by, or
bankruptcy of the seller would, however, expose a Fund to possible loss because
of adverse market action or delays in connection with the disposition of
underlying obligations except with respect to repurchase agreements secured by
U.S. Government securities. With respect to the Money Market Funds, the
securities held subject to a repurchase agreement may have stated maturities
exceeding thirteen months, provided the repurchase agreement itself matures in
one year.
The repurchase price under the repurchase agreements described in each
Prospectus generally equals the price paid by a Fund plus interest negotiated
on the basis of current short-term rates (which may be more or less than the
rate on the securities underlying the repurchase agreement).
Securities subject to repurchase agreements will be held by the Trust's
or Company's Custodian (or sub-custodian) in the Federal Reserve/Treasury
book-entry system or by another authorized securities depositary. Repurchase
agreements are considered to be loans by a Fund under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS. Each Fund (except the Multi-Season
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 a Fund may decline below the repurchase
price. A Fund will pay interest on amounts obtained pursuant to a reverse
repurchase agreement. While reverse repurchase agreements are outstanding, a
Fund will maintain 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.
RIGHTS AND WARRANTS. As stated in their Prospectuses, the Equity Funds and
the Balanced Fund may purchase warrants, which are privileges issued by
corporations enabling the owners to subscribe to and purchase a specified number
of shares of the corporation at a specified price during a specified period of
time. Subscription rights normally have a short life span to expiration. The
purchase of warrants involves the risk that a Fund could lose the purchase value
of a warrant if the right to subscribe to additional shares is not exercised
prior to the warrant's expiration. Also, the purchase of warrants involves the
risk that the effective price paid for the warrant added to the subscription
price of the related security may exceed the value of the subscribed security's
market price such as when there is no movement in the level of the underlying
security. The Balanced Fund and each Equity Fund will not invest more than 5% of
its total assets, taken at market value, in warrants, or more than 2% of its
total assets, taken at market value, in warrants not listed on the New York or
American Stock Exchanges. Warrants acquired by a Fund in units or attached to
other securities are not subject to this restriction.
STAND-BY COMMITMENTS. The Balanced Fund, the Cash Investment Fund, the
Tax-Free Money Market Fund, the Tax-Free Intermediate Bond Fund, the Tax-Free
Bond Fund and the Michigan Triple Tax-Free Bond Fund may each enter into
stand-by commitments with respect to municipal obligations held by it. Under a
stand-by commitment, a dealer agrees to purchase at the Fund's option a
specified municipal obligation at its amortized cost value to the Fund plus
accrued interest, if any. Stand-by commitments may be exercisable by a Fund at
any time before the maturity of the underlying municipal obligations and may be
sold, transferred or assigned only with the instruments involved.
The Company expects that stand-by commitments will generally be available
without the payment of any direct or indirect consideration. However, if
necessary or advisable, a Fund may pay for a stand-
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by commitment either separately in cash or by paying a higher price for
municipal obligations which are acquired subject to the commitment (thus
reducing the yield to maturity otherwise available for the same securities). The
total amount paid in either manner for outstanding stand-by commitments held by
a Fund will not exceed 1/2 of 1% of the value of such Fund's total assets
calculated immediately after each stand-by commitment is acquired.
The Cash Investment Fund, the Tax-Free Money Market Fund, Tax-Free
Intermediate Bond Fund, Tax-Free Bond Fund and the Michigan Triple Tax-Free Bond
Fund intend to enter into stand-by commitments only with dealers, banks and
broker/dealers which, in the Advisor's opinion, present minimal credit risks.
The Funds will acquire stand-by commitments solely to facilitate portfolio
liquidity and do not intend to exercise their rights thereunder for trading
purposes. The acquisition of a stand-by commitment will not affect the valuation
of the underlying municipal obligation. The actual stand-by commitment will be
valued at zero in determining net asset value. Accordingly, where a Fund pays
directly or indirectly for a stand-by commitment, its cost will be reflected as
an unrealized loss for the period during which the commitment is held by such
Fund and will be reflected in realized gain or loss when the commitment is
exercised or expires.
STOCK INDEX FUTURES, OPTIONS ON STOCK AND BOND INDICES AND
OPTIONS ON STOCK
AND BOND INDEX FUTURES CONTRACTS. The Balanced Fund, Equity Funds,
Bond Funds,
Tax-Free Intermediate Bond Fund and Michigan Triple Tax-Free Bond Funds may
purchase and sell stock index futures, options on stock and bond indices and
options on stock index futures contracts as a hedge against movements in the
equity and bond markets. The International Bond Fund may purchase and sell
options on bond index futures contracts as a hedge against movements in the bond
markets.
A stock index futures contract is an agreement in which one party agrees to
deliver to the other an amount of cash equal to a specific dollar amount times
the difference between the value of a specific stock index at the close of the
last trading day of the contract and the price at which the agreement is made.
No physical delivery of securities is made.
Options on stock and bond indices are similar to options on specific
securities, described above, except that, rather than the right to take or make
delivery of the specific security at a specific price, an option on a stock or
bond index gives the holder the right to receive, upon exercise of the option,
an amount of cash if the closing level of that stock or bond index is greater
than, in the case of a call option, or less than, in the case of a put option,
the exercise price of the option. This amount of cash is equal to such
difference between the closing price of the index and the exercise price of the
option expressed in dollars times a specified multiple. The writer of the option
is obligated, in return for the premium received, to make delivery of this
amount. Unlike options on specific securities, all settlements of options on
stock or bond indices are in cash, and gain or loss depends on general movements
in the stocks included in the index rather than price movements in particular
stocks.
If the Advisor expects general stock or bond market prices to rise, it
might purchase a stock index futures contract, or a call option on that index,
as a hedge against an increase in prices of particular securities it ultimately
wants to buy. If in fact the index does rise, the price of the particular
securities intended to be purchased may also increase, but that increase would
be offset in part by the increase in the value of the Funds' futures contract or
index option resulting from the increase in the index. If, on the other hand,
the Advisor expects general stock or bond market prices to decline, it might
sell a futures contract, or purchase a put option, on the index. If that index
does in fact decline, the value of some or all of the securities in the Funds'
portfolio may also be expected to decline, but that decrease would be offset in
part by the increase in the value of the Funds' position in such futures
contract or put option.
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Each Fund (other than International Bond Fund and the Tax-Free Bond Funds)
may purchase and write call and put options on stock index futures contracts and
each Fund (other than the Tax-Free Bond Funds) may purchase and write call and
put options on bond index futures contracts. Such Funds may use such options on
futures contracts in connection with its hedging strategies in lieu of
purchasing and selling the underlying futures or purchasing and writing options
directly on the underlying securities or indices. For example, such Funds may
purchase put options or write call options on stock and bond index futures (only
bond index futures in the case of the International Bond Fund), rather than
selling futures contracts, in anticipation of a decline in general stock or bond
market prices or purchase call options or write put options on stock or bond
index futures, rather than purchasing such futures, to hedge against possible
increases in the price of securities which such Funds intend to purchase.
In connection with transactions in stock or bond index futures, stock or
bond index options and options on stock index or bond futures, the Funds will be
required to deposit as "initial margin" an amount of cash and short-term U.S.
Government securities equal to from 5% to 8% of the contract amount. Thereafter,
subsequent payments (referred to as "variation margin") are made to and from the
broker to reflect changes in the value of the option or futures contract. The
Funds may not at any time commit more than 5% of its total assets to initial
margin deposits on futures contracts, index options and options on futures
contracts.
STRIPPED SECURITIES. The Balanced Fund, Cash Investment Fund, U.S.
Treasury Money Market Fund, Intermediate Bond Fund, U.S. Government Income Fund,
International Bond Fund and Bond Fund may acquire U.S. Government obligations
and their unmatured interest coupons that have been separated ("stripped") by
their holder, typically a custodian bank or investment brokerage firm. Having
separated the interest coupons from the underlying principal of the U.S.
Government obligations, the holder will resell the stripped securities in
custodial receipt programs with a number of different names, including "Treasury
Income Growth Receipts" ("TIGRs") and "Certificate of Accrual on Treasury
Securities" ("CATS"). The stripped coupons are sold separately from the
underlying principal, which is usually sold at a deep discount because the buyer
receives only the right to receive a future fixed payment on the security and
does not receive any rights to periodic interest (cash) payments. The underlying
U.S. Treasury bonds and notes themselves are held in book-entry form at the
Federal Reserve Bank or, in the case of bearer securities (i.e., unregistered
securities which are ostensibly owned by the bearer or holder), in trust on
behalf of the owners. Counsel to the underwriters of these certificates or other
evidences of ownership of U.S. Treasury securities have stated that, in their
opinion, purchasers of the stripped securities most likely will be deemed the
beneficial holders of the underlying U.S. Government obligations for federal tax
and securities purposes. The Trust is not aware of any binding legislative,
judicial or administrative authority on this issue.
Only instruments which are stripped by the issuing agency will be
considered U.S. Government obligations. Securities such as CATS and TIGRs which
are stripped by their holder do not qualify as U.S. Government obligations.
Within the past several years the Treasury Department has facilitated
transfers of ownership of zero coupon securities by accounting separately for
the beneficial ownership of particular interest coupon and principal payments or
Treasury securities through the Federal Reserve book-entry record-keeping
system. The Federal Reserve program as established by the Treasury Department is
known as "STRIPS" or "Separate Trading of Registered Interest and Principal of
Securities." Under the STRIPS program, a Fund is able to have its beneficial
ownership of zero coupon securities recorded directly in the book-entry
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record-keeping system in lieu of having to hold certificates or other evidences
of ownership of the underlying U.S. Treasury securities.
In addition, the Intermediate Bond Fund, the U.S. Government Income Fund,
the International Bond Fund and the Bond Fund may invest in stripped mortgage-
backed securities ("SMBS"), which represent beneficial ownership interests in
the principal distributions and/or the interest distributions on mortgage
assets. SMBS are usually structured with two classes that receive different
proportions of the interest and principal distributions on a pool of mortgage
assets. One type of SMBS will have one class receiving some of the interest and
most of the principal from the mortgage assets, while the other class will
receive most of the interest and the remainder of the principal. In the most
common case, one class of SMBS will receive all of the interest (the interest-
only or "IO" class), while the other class will receive all of the principal
(the principal-only or "PO" class). SMBS may be issued by FNMA or FHLMC.
The original principal amount, if any, of each SMBS class represents the
amount payable to the holder thereof over the life of such SMBS class from
principal distributions of the underlying mortgage assets, which will be zero in
the case of an IO class. Interest distributions allocable to a class of SMBS, if
any, consist of interest at a specified rate on its principal amount, if any, or
its notional principal amount in the case of an IO class. The notional principal
amount is used solely for purposes of the determination of interest
distributions and certain other rights of holders of such IO class and does not
represent an interest in principal distributions of the mortgage assets.
Yields on SMBS will be extremely sensitive to the prepayment experience on
the underlying mortgage loans, and there are other associated risks. For IO
classes of SMBS and SMBS that were purchased at prices exceeding their principal
amounts there is a risk that a Fund may not fully recover its initial
investment.
The determination of whether a particular government-issued IO or PO backed
by fixed-rate mortgages is liquid may be made under guidelines and standards
established by the Board of Trustees. Such securities may be deemed liquid if
they can be disposed of promptly in the ordinary course of business at a value
reasonably close to that used in the calculation of a fund's net asset value per
share.
SUPRANATIONAL BANK OBLIGATIONS. Supranational banks are international
banking institutions designed or supported by national governments to promote
economic reconstruction, development or trade between nations (e.g., The World
Bank). Obligations of supranational banks may be supported by appropriated but
unpaid commitments of their member countries and there is no assurance these
commitments will be undertaken or met in the future.
U.S. GOVERNMENT OBLIGATIONS. The Funds may purchase obligations issued
or
guaranteed by the U.S. Government and, except in the case of the U.S. Treasury
Money Market Fund, U.S. Government agencies and instrumentalities. Obligations
of certain agencies and instrumentalities of the U.S. Government, such as those
of the GNMA, are supported by the full faith and credit of the U.S. Treasury.
Others, such as those of the Export-Import Bank of the United States, are
supported by the right of the issuer to borrow from the U.S. Treasury; and still
others, such as those of the Student Loan Marketing Association, are supported
only by the credit of the agency or instrumentality issuing the obligation. No
assurance can be given that the U.S. Government would provide financial support
to U.S. government-sponsored instrumentalities if it is not obligated to do so
by law. Examples of the types of U.S. Government obligations that may be
acquired by the Funds include U.S. Treasury Bills, Treasury Notes and Treasury
Bonds and the obligations of Federal Home Loan Banks, Federal Farm Credit Banks,
Federal Land Banks, the Federal Housing Administration, Farmers Home
Administration, Export-Import
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Bank of the United States, Small Business Administration, FNMA, Government
National Mortgage Association, General Services Administration, Student Loan
Marketing Association, Central Bank for Cooperatives, FHLMC, Federal
Intermediate Credit Banks and Maritime Administration.
VARIABLE AND FLOATING RATE INSTRUMENTS. Debt instruments may be
structured
to have variable or floating interest rates. Variable and floating rate
obligations purchased by a Fund may have stated maturities in excess of a Fund's
maturity limitation if the Fund can demand payment of the principal of the
instrument at least once during such period on not more than thirty days' notice
(this demand feature is not required if the instrument is guaranteed by the U.S.
Government or an agency thereof). These instruments may include variable amount
master demand notes that permit the indebtedness to vary in addition to
providing for periodic adjustments in the interest rates. The Advisor will
consider the earning power, cash flows and other liquidity ratios of the issuers
and guarantors of such instruments and, if the instrument is subject to a demand
feature, will continuously monitor their financial ability to meet payment on
demand. Where necessary to ensure that a variable or floating rate instrument is
equivalent to the quality standards applicable to a Fund, the issuer's
obligation to pay the principal of the instrument will be backed by an
unconditional bank letter or line of credit, guarantee or commitment to lend.
The Money Market Funds will invest in variable and floating rate instruments
only when the Advisor deems the investment to involve minimal credit risk.
In determining average weighted portfolio maturity of the Funds, an
instrument will usually be deemed to have a maturity equal to the longer of the
period remaining until the next interest rate adjustment or the time the Fund
involved can recover payment of principal as specified in the instrument.
Variable rate U.S. Government obligations held by the Funds, however, will be
deemed to have maturities equal to the period remaining until the next interest
rate adjustment.
The absence of an active secondary market for certain variable and floating
rate notes could make it difficult to dispose of the instruments, and a Fund
could suffer a loss if the issuer defaulted or during periods that a Fund is not
entitled to exercise its demand rights.
Variable and floating rate instruments held by a Fund will be subject to
the Fund's limitation on illiquid investments when the Fund may not demand
payment of the principal amount within seven days absent a reliable trading
market.
GUARANTEED INVESTMENT CONTRACTS. The Bond Funds, the International
Bond
Fund and the Cash Investment Fund may make limited investments in guaranteed
investment contracts ("GICs") issued by U.S. insurance companies. Pursuant to
such contracts, a Fund makes cash contributions to a deposit fund of the
insurance company's general account. The insurance company then credits to the
Fund on a monthly basis interest which is based on an index (in most cases this
index is expected to be the Salomon Brothers CD Index), but is guaranteed not to
be less than a certain minimum rate. A GIC is normally a general obligation of
the issuing insurance company and not funded by a separate account. The purchase
price paid for a GIC becomes part of the general assets of the insurance
company, and the contract is paid from the company's general assets. A Fund will
only purchase GICs from insurance companies which, at the time of purchase, have
assets of $1 billion or more and meet quality and credit standards established
by the Advisor pursuant to guidelines approved by the Board of Trustees.
Generally, GICs are not assignable or transferable without the permission of the
issuing insurance companies, and an active secondary market in GICs does not
currently exist. Therefore, GICs will normally be considered illiquid
investments, and will be acquired subject to the limitation on illiquid
investments.
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WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS (DELAYED-
DELIVERY). When-
issued purchases and forward commitments (delayed-delivery) are commitments by a
Fund to purchase or sell particular securities with payment and delivery to
occur at a future date (perhaps one or two months later). These transactions
permit the Fund to lock-in a price or yield on a security, regardless of future
changes in interest rates.
When a Fund agrees to purchase securities on a when-issued or forward
commitment basis, the 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 a Fund's liquidity and ability
to manage its portfolio might be affected when it sets aside cash or portfolio
securities to cover such purchase commitments, the Advisor expects that its
commitments to purchase when-issued securities and forward commitments will not
exceed 25% of the value of a Fund's total assets absent unusual market
conditions.
A Fund will purchase securities on a when-issued or forward commitment
basis only with the intention of completing the transaction and actually
purchasing the securities. If deemed advisable as a matter of investment
strategy, however, a Fund may dispose of or renegotiate a commitment after it is
entered into, and may sell securities it has committed to purchase before those
securities are delivered to the Fund on the settlement date. In these cases the
Fund may realize a taxable capital gain or loss.
When a Fund engages in when-issued and forward commitment transactions, it
relies on the other party to consummate the trade. Failure of such party to do
so may result in the Fund's incurring a loss or missing an opportunity to obtain
a price considered to be advantageous.
The market value of the securities underlying a when-issued purchase or a
forward commitment to purchase securities, and any subsequent fluctuations in
their market value, are taken into account when determining the market value of
a Fund starting on the day the Fund agrees to purchase the securities. The Fund
does not earn interest on the securities it has committed to purchase until they
are paid for and delivered on the settlement date.
YIELDS AND RATINGS. The yields on certain obligations, including the money
market instruments in which each Fund may invest (such as commercial paper and
bank obligations), are dependent on a variety of factors, including general
money market conditions, conditions in the particular market for the obligation,
the financial condition of the issuer, the size of the offering, the maturity of
the obligation and the ratings of the issue. The ratings of S&P, Moody's, Duff &
Phelps Credit Rating Co., Thomson Bank Watch, Inc., and other nationally
recognized statistical NRSROs represent their respective opinions as to the
quality of the obligations they undertake to rate. Ratings, however, are general
and are not absolute standards of quality. Consequently, obligations with the
same rating, maturity and interest rate may have different market prices.
With respect to each of the Money Market Funds, securities (other than U.S.
Government securities) must be rated (generally, by at least two NRSROs) within
the two highest rating categories assigned to short-term debt securities. In
addition, the Cash Investment Fund and the Money Market Fund (a) will not invest
more than 5% of its total assets in securities rated in the second highest
rating category by such NRSROs and will not invest more than 1% of its total
assets in such securities of any
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one issuer, and (b) intends to limit investments in the securities of any single
issuer (other than securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities) to not more than 5% of the Fund's total assets at
the time of purchase, provided that the Fund may invest up to 25% of its total
assets in the securities of any one issuer for a period of up to three business
days. Unrated and certain single rated securities (other than U.S. Government
securities) may be purchased by the Money Market Funds, but are subject to a
determination by the Advisor, in accordance with procedures established by the
Boards of Trustees and Directors, that the unrated and single rated securities
are of comparable quality to the appropriate rated securities.
OTHER. Subsequent to its purchase by a Fund, a rated security may cease to
be rated or its rating may be reduced below the minimum rating required for
purchase by the Fund. The Boards of Trustees and Directors or the Advisor,
pursuant to guidelines established by the Boards, will consider such an event in
determining whether the Fund involved should continue to hold the security in
accordance with the interests of the Fund and applicable regulations of the SEC.
It is possible that unregistered securities purchased by a Fund in reliance
upon Rule 144A under the Securities Act of 1933, as amended could have the
effect of increasing the level of the Fund's illiquidity to the extent that
qualified institutional buyers become, for a period, uninterested in purchasing
these securities.
RISK FACTORS AND SPECIAL CONSIDERATIONS -- INDEX 500 FUND
Traditional methods of fund investment management typically involve
relatively frequent changes in a portfolio of securities on the basis of
economic, financial and market analysis. Index funds such as the Index 500 Fund
are not managed in this manner. Instead, with the aid of a computer program, the
Advisor purchases and sells securities for the Fund in an attempt to produce
investment results that substantially duplicate the performance of the common
stocks included in the S&P 500, taking into account redemptions, sales of
additional Fund shares, and other adjustments as described below.
The Fund does not expect to hold at any particular time all of the stocks
included in the S&P 500. The Advisor believes, however, that through the
application of capitalization weighing and sector balancing techniques it will
be able to construct and maintain the Fund's investment portfolio so that it
reasonably tracks the performance of the S&P 500. The Advisor will compare the
industry sector diversification of the stocks the Fund would acquire solely on
the basis of their weighted capitalizations with the industry sector
diversification of all issuers included in the S&P 500. This comparison is made
because the Advisor believes that, unless the Fund holds all stocks included in
the S&P 500, the selection of stocks for purchase by the Fund solely on the
basis of their weighted market capitalizations would tend to place heavier
concentration in certain industry sectors that are dominated by the larger
corporations, such as communications, automobile, oil and energy. As a result,
events disproportionately affecting such industries could affect the performance
of the Fund differently than the performance of the S&P 500. Conversely, if
smaller companies were not purchased by the Fund, the representation of
industries included in the S&P 500 that are not dominated by the most heavily
market-capitalized companies would be reduced or eliminated.
For these reasons, the Advisor will identify the sectors which are (or,
except for sector balancing, would be) most underrepresented in the Fund's
portfolio and will purchase balancing securities in these sectors until the
portfolio's sector weightings closely match those of the S&P 500. This process
continues until the portfolio is fully invested (except for cash holdings).
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Redemptions of a substantial number of shares of the Fund could reduce the
number of issuers represented in the Fund's investment portfolio, which could,
in turn, adversely affect the accuracy with which the Fund tracks the
performance of the S&P 500.
If an issuer drops in ranking, or is eliminated entirely from the S&P 500,
the Advisor may be required to sell some or all of the common stock of such
issuer then held by the Fund. Sales of portfolio securities may be made at times
when, if the Advisor were not required to effect purchases and sales of
portfolio securities in accordance with the S&P 500, such securities might not
be sold. Such sales may result in lower prices for such securities than may been
realized or in losses that may not have been incurred if the Advisor were not
required to effect the purchases and sales. The failure of an issuer to declare
or pay dividends, the institution against an issuer of potentially materially
adverse legal proceedings, the existence or threat of defaults materially and
adversely affecting an issuer's future declaration and payment of dividends, or
the existence of other materially adverse credit factors will not necessarily be
the basis for the disposition of portfolio securities, unless such event causes
the issuer to be eliminated entirely from the S&P 500. However, although the
Advisor does not intend to screen securities for investment by the Fund by
traditional methods of financial and market analysis, the Advisor will monitor
the Fund's investment with a view towards removing stocks of companies which
exhibit extreme financial distress or which may impair for any reason the Fund's
ability to achieve its investment objective.
The Fund will invest primarily in the common stocks that constitute the S&P
500 in accordance with their relative capitalization and sector weightings as
described above. It is possible, however, that the Fund will from time to time
receive, as part of a "spin-off" or other corporate reorganization of an issuer
included in the S&P 500, securities that are themselves outside the S&P 500.
Such securities will be disposed of by the Fund in due course consistent with
the Fund's investment objective.
In addition, the Index 500 Fund may invest in Standard & Poor's Depository
Receipts ("SPDRs"). SPDRs are securities that represent ownership in the SPDR
Trust, a long-term unit investment trust which is intended to provide investment
results that generally correspond to the price and yield performance of the S&P
500. SPDR holders are paid a "Dividend Equivalent Amount" that corresponds to
the amount of cash dividends accruing to the securities in the SPDR Trust, net
of certain fees and expenses charged to the Trust. Because of these fees and
expenses, the dividend yield for SPDRs may be less than that of the S&P 500.
SPDRs are traded on the American Stock Exchange.
The Fund may also purchase put and call options on the S&P 500 and S&P 100
stock indices, which are traded on national securities exchanges. In addition,
the Fund may enter into transactions involving futures contracts (and futures
options) on these two stock indices and may purchase securities of other
investment companies that are structured to seek a similar correlation to the
S&P 500. These transactions are effected in an effort to have fuller exposure to
price movements in the S&P 500 pending investment of purchase orders or while
maintaining liquidity to meet potential shareholder redemptions. Transactions in
option and stock index futures contracts may be desirable to hedge against a
price movement in the S&P 500 at times when the Fund is not fully invested in
stocks that are included in the S&P 500. For example, by purchasing a futures
contract, the Fund may be able to reduce the potential that cash inflows will
disrupt its ability to track the S&P 500, since the futures contracts may serve
as a temporary substitute for stocks which may then be purchased in an orderly
fashion. Similarly, because futures contracts only require a small initial
margin deposit, the Fund may be able, as an effective matter, to be fully
invested in the S&P 500 while keeping a cash reserve to meet potential
redemptions. See Appendix B to this Statement of Additional Information.
22
<PAGE>
RISK FACTORS AND SPECIAL CONSIDERATIONS -- TAX-FREE
INTERMEDIATE BOND FUND AND
MICHIGAN TRIPLE TAX-FREE BOND FUND
The information set forth below is derived in substantial part from the
official statements prepared in connection with the issuance of Michigan
municipal bonds and similar obligations and other sources that are generally
available to investors. The information is provided as general information
intended to give a recent historical description and is not intended to indicate
future or continuing trends in the financial or other positions of the State of
Michigan (the "State"). The Company has not independently verified this
information.
The State's Constitution limits the amount of total State revenues raised
from taxes and other sources. State revenues (excluding federal aid and revenues
for payment of principal and interest on general obligation bonds) in any fiscal
year are limited to a specified percentage of State personal income in the prior
calendar year or average of the prior three calendar years, whichever is
greater. The percentage is based upon the ratio of the 1978-79 fiscal year
revenues to total 1977 State personal income. If any fiscal year revenues exceed
the revenue limitation by 1%, the entire amount exceeding the limitation must be
rebated in the following fiscal year's personal income tax or single business
tax. Annual excesses of less than 1% may be transferred into the State's Budget
Stabilization Fund. The State may raise taxes in excess of the limit in
emergency situations.
The State Constitution limits the purposes for which State general
obligation debt may be issued. Such debt is limited to short-term debt for State
operating purposes, short and long-term debt for the purpose of making loans to
school districts and long-term debt for voter approved purposes. The State's
Constitution also directs or restricts the use of certain revenues.
The State finances its operations through the State's General Fund and
special revenue funds. The General Fund receives revenues of the State that are
not specifically required to be included in the special revenue funds. General
Fund revenues are obtained approximately 59% from the payment of State taxes and
41% from federal and non-tax revenue sources. Tax revenues credited to the
General Fund include the personal income tax, the single business tax and
approximately 15% of the sales tax collections.
Expenditures are not permitted by the State Constitution to exceed
available revenues. The State Constitution requires that the Governor, with the
approval of the appropriating committees of the State House and Senate, reduce
expenditures whenever it appears that the actual revenues will be less than the
originally projected revenues upon which the budget was based.
In 1994, a ballot proposal ("Proposal A") to implement extensive property
tax and school finance reform measures was subject to voter approval and in fact
approved on March 15, 1994. Under Proposal A as approved, effective May 1, 1994,
the State sales and use tax increased from 4% to 6%, the State income tax
decreased from 4.6% to 4.4%, the cigarette tax increased from $.25 to $.75 per
pack, and an additional tax of 16% of the wholesale price is imposed on certain
other tobacco products. As of January 1, 1995, a 0.75% real estate transfer tax
also became effective. In 1994, a State education property tax of 6 mills was
imposed on all real property and personal property currently subject to the
general property tax. In addition, all school boards can now, with voter
approval, levy up to the lesser of 18 mills or the number of mills levied in
1993 for school operating purposes, on non-homestead property. Proposal A
contained additional provisions regarding the ability of local school districts
to levy taxes as well as a limit on assessment increases for each parcel of
property, beginning in 1995 to the lesser of 5% or the rate of inflation. When
property is subsequently sold, its assessed value is adjusted equal to 50% of
true
23
<PAGE>
cash value. Under Proposal A, much of the additional revenue generated by these
taxes is dedicated to the State School Aid Fund.
Proposal A shifts significant portions of the cost of local school
operations from local school districts to the State and raises additional State
revenues to fund these additional State expenses. These additional revenues will
be included within the State's constitutional revenue limitations and may impact
the State's ability to raise additional revenues in the future.
The State is a party to various legal proceedings seeking damages or
injunctive or other relief. In addition to routine litigation, certain of these
proceedings could, if unfavorably resolved from the point of view of the State,
substantially affect State programs or finances. These lawsuits involve programs
generally in the areas of corrections, highway maintenance, social services, tax
collection, commerce and budgetary reductions to school districts and
governmental units and court funding.
The principal sectors of Michigan's diversified economy are manufacturing
of durable goods (including automobiles and components and office equipment),
tourism and agriculture. The health of the State's economy, and in particular
its durable goods manufacturing industry, is susceptible to a long-term increase
in the cost of energy and energy related products. As reflected in historical
employment figures, the State's economy has lessened its dependence upon durable
goods manufacturing. In 1960, employment in such industry accounted for 33% of
the State's work force. By 1994, this figure had fallen to 17%. However,
manufacturing (including auto-related manufacturing) continues to be an
important part of the State's economy. The particular industries are highly
cyclical and in the period 1994-1995 are expected to operate at somewhat less
than full capacity, but at higher levels than in the immediate prior years. This
factor can usually adversely affect the revenue streams of the State and its
political subdivisions because it adversely impacts tax sources, particularly
sales, income taxes and single business taxes.
As of the date of this Statement of Additional Information,, the State's
general obligation bonds are rated "A1" by Moody's and "AA" by Fitch. To the
extent that either the Tax-Free Intermediate Bond Fund or the Michigan Triple
Tax-Free Bond Fund is comprised of revenue or general obligations of local
governments or authorities, rather than general obligations of the State of
Michigan itself, ratings on such Michigan obligations will be different from
those given to the State of Michigan and their value may be independently
affected by economic matters not directly impacting the State.
ADDITIONAL INVESTMENT LIMITATIONS
In addition to the fundamental investment limitations disclosed in each
Prospectus, each Fund is subject to the investment limitations enumerated in
this section which may be changed with respect to a particular Fund only by a
vote of the holders of a majority of such Fund's outstanding shares (as defined
under "Miscellaneous - Shareholder Approvals").
No Fund of the Trust may:
1. Purchase or sell real estate, except that each Fund may purchase
securities of issuers which deal in real estate and may purchase
securities which are secured by interests in real estate.
24
<PAGE>
2. Acquire any other investment company or investment company security
except in connection with a merger, consolidation, reorganization or
acquisition of assets or where otherwise permitted by the 1940 Act.
3. Act as an underwriter of securities within the meaning of the
Securities Act of 1933, as amended except to the extent that the
purchase of obligations directly from the issuer thereof, or the
disposition of securities, in accordance with the Fund's investment
objective, policies and limitations may be deemed to be underwriting.
4. Write or sell put options, call options, straddles, spreads, or any
combination thereof except for transactions in options on securities,
securities indices, futures contracts, options on futures contracts
and transactions in securities on a when-issued or forward commitment
basis, and except that each Equity and Bond Fund may enter into
forward currency contracts in accordance with its investment
objectives and policies. Notwithstanding the above, the Tax-Free
Intermediate Bond Fund may not write or purchase options, including
puts, calls, straddles, spreads, or any combination thereof.
5. Purchase securities of companies for the purpose of exercising
control.
6. Purchase securities on margin, make short sales of securities or
maintain a short position, except that (a) this investment limitation
shall not apply to a Fund's transactions in futures contracts and
related options, a Fund's sale of securities short against the box or
a Fund's transactions in securities on a when-issued or forward
commitment basis, and (b) a Fund may obtain short-term credit as may
be necessary for the clearance of purchases and sales of portfolio
securities.
7. Purchase or sell commodity contracts, or invest in oil, gas or mineral
exploration or development programs, except that each Fund may, to the
extent appropriate to its investment policies, purchase publicly
traded securities of companies engaging in whole or in part in such
activities, may enter into futures contracts and related options, and
may engage in transactions in securities on a when-issued or forward
commitment basis, and except that each Equity and Bond Fund may enter
into forward currency contracts in accordance with its investment
objectives and policies.
8. Make loans, except that each Fund may purchase and hold debt
instruments (whether such instruments are part of a public offering or
privately negotiated), may enter into repurchase agreements and may
lend portfolio securities in accordance with its investment objective
and policies.
In addition, the Tax-Free Intermediate Bond Fund may not:
1. Purchase or retain securities of any issuer if the officers or
trustees of the Trust or its Advisor own beneficially more than one-
half of 1% of the securities of such issuer together own beneficially
more than 5% of such securities.
2. Invest more than 10% of its total assets in the securities of issuers
which together with any predecessors have a record of less than three
years continuous operation.
3. Participate on a joint or joint and several basis in any securities
trading account.
25
<PAGE>
In addition, the fundamental investment limitations listed below are
summarized in each Prospectus and are set forth below in their entirety.
No Fund of the Trust may:
1. Purchase securities of any one issuer (other than securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities
or certificates of deposit for any such securities) if more than 5% of
the value of the Fund's total assets (taken at current value) would be
invested in the securities of such issuer, or more than 10% of the
issuer's outstanding voting securities would be owned by the Fund or
the Trust, except that (a) with respect to each Fund, other than the
Tax-Free Intermediate Bond Fund and the Michigan Triple Tax-Free Bond
Fund, up to 25% of the value of the Fund's total assets (taken at
current value) may be invested without regard to these limitations and
(b) with respect to the Tax-Free Intermediate Bond Fund and the
Michigan Triple Tax-Free Bond Fund, up to 50% of the value of the
Fund's total assets may be invested without regard to these
limitations so long as no more than 25% of the value of the Fund's
total assets are invested in the securities of any one issuer. For
purposes of this limitation, a security is considered to be issued by
the entity (or entities) whose assets and revenues back the security.
A guarantee of a security is not deemed to be a security issued by the
guarantor when the value of all securities issued and guaranteed by
the guarantor, and owned by the Fund, does not exceed 10% of the value
of the Fund's total assets.
2. Borrow money or issue senior securities except that each Fund may
borrow from banks and enter into reverse repurchase agreements for
temporary purposes in amounts up to one-third of the value of its
total assets at the time of such borrowing; or mortgage, pledge or
hypothecate any assets, except in connection with any such borrowing
and then in amounts not in excess of one-third of the value of the
Fund's total assets at the time of such borrowing. No Fund will
purchase securities while its aggregate borrowings (including reverse
repurchase agreements and borrowing from banks) in excess of 5% of its
total assets are outstanding. Securities held in escrow or separate
accounts in connection with a Fund's investment practices are not
deemed to be pledged for purposes of this limitation.
3. Purchase any securities which would cause 25% or more of the value of
the Fund's total assets at the time of purchase to be invested in the
securities of one or more issuers conducting their principal business
activities in the same industry, provided that (a) there is no
limitation with respect to (i) instruments that are issued (as defined
in Investment Limitation No. 1 above) or guaranteed by the United
States, any state, territory or possession of the United States, the
District of Columbia or any of their authorities, agencies,
instrumentalities or political subdivisions, (ii) with respect to the
Money Market Funds only, instruments issued by domestic branches of
U.S. banks and (iii) repurchase agreements secured by the instruments
described in clauses (i) and, with respect to the Money Market Funds,
(ii); (b) wholly-owned finance companies will be considered to be in
the industries of their parents if their activities are primarily
related to financing the activities of the parents; and (c) utilities
will be divided according to their services, for example, gas, gas
transmission, electric and gas, electric and telephone will each be
considered a separate industry.
26
<PAGE>
No Fund of the Company may:
1. Invest more than 25% of its total assets in any one industry
(securities issued or guaranteed by the United States Government, its
agencies or instrumentalities are not considered to represent
industries) (except that the Real Estate Fund will invest more than
25% of its assets in securities of issuers in the real estate
industry);
2. (For each Fund except the International Bond Fund) with respect to 75%
of the Fund's assets, invest more than 5% of the Fund's assets (taken
at a market value at the time of purchase) in the outstanding
securities of any single issuer or own more than 10% of the
outstanding voting securities of any one issuer, in each case other
than securities issued or guaranteed by the United States Government,
its agencies or instrumentalities;
3. Borrow money or issue senior securities (as defined in the 1940 Act)
except that the Funds may borrow (i) for temporary purposes in amounts
not exceeding 5% of its total assets and (ii) to meet redemption
requests, in amounts (when aggregated with amounts borrowed under
clause (i)) not exceeding 33 1/3% of its total assets;
4. Pledge, mortgage or hypothecate its assets other than to secure
borrowings permitted by restriction 3 above (collateral arrangements
with respect to margin requirements for options and futures
transactions are not deemed to be pledges or hypothecations for this
purpose);
5. Make loans of securities to other persons in excess of 25% of a Fund's
total assets and 33 1/3% of the Money Market Fund's total assets;
provided the Funds may invest without limitation in short-term debt
obligations (including repurchase agreements) and publicly distributed
debt obligations;
6. Underwrite securities of other issuers, except insofar as a Fund may
be deemed an underwriter under the Securities Act of 1933, as amended
in selling portfolio securities;
7. (For each Fund except the Real Estate Fund) purchase or sell real
estate or any interest therein, including interests in real estate
limited partnerships, except securities issued by companies (including
real estate investment trusts) that invest in real estate or interests
therein. The Real Estate Fund may not buy or sell real estate;
however, this prohibition does not apply to the purchase or sale of
(i) securities which are secured by real estate, (ii) securities
representing interests in real estate, (iii) securities of companies
operating in the real estate industry including real estate investment
trusts, and (iv) the holding and sale of real estate acquired as a
result of the ownership of securities.
8. Purchase securities on margin, or make short sales of securities,
except for the use of short-term credit necessary for the clearance of
purchases and sales of portfolio securities, but the Funds (with the
exception of the Money Market Fund) may make margin deposits in
connection with transactions in options, futures and options on
futures;
9. Make investments for the purpose of exercising control or management;
or
10. Invest in commodities or commodity futures contracts, provided that
this limitation shall not prohibit the purchase or sale by the Multi-
Season, Real Estate, Mid-Cap, International
27
<PAGE>
Bond and Value Funds of forward foreign currency exchange contracts,
financial futures contracts and options on financial futures
contracts, and options on securities and on securities, foreign
currencies and on securities indices, as permitted by each Fund's
prospectus.
Additional investment restrictions adopted by each Fund of the Company,
which may be changed by the Board of Directors, provide that a Fund may not:
1. Invest more than 15% of its net assets (10% of net assets for the
Munder Money Market Fund) (taken at market value at the time of
purchase) in securities which cannot be readily resold because of
legal or contractual restrictions and (in the case of International
Bond Fund only) which are not otherwise marketable;
2. (For each Fund except the International Bond Fund) own more than 10%
(taken at market value at the time of purchase) of the outstanding
voting securities of any single issuer;
3. Purchase or sell interests in oil, gas or other mineral exploration or
development plans or leases;
4. Invest in warrants if at the time of acquisition more than 5% of its
total assets, taken at market value at the time of purchase, would be
invested in warrants, and if at the time of acquisition more than 2%
of its total assets, taken at market value at the time of purchase,
would be invested in warrants not traded on the New York Stock
Exchange or American Stock Exchange. For purposes of this
restriction, warrants acquired by the Fund in units or attached to
securities may be deemed to be without value;
5. Invest more than 5% of its total assets in securities of issuers which
together with any predecessors have a record of less than three years
of continuous operation. This restriction shall not apply with respect
to securities issued by a special purpose funding vehicle for a
company with a record of at least three years of continuous operation,
or to real estate investment trusts the sponsor of which has a record
of at least three years of continuous operation;
6. Invest in other investment companies except as permitted under the
1940 Act.
In addition, the International Bond Fund may not with respect to 50% of the
Fund's assets, invest more than 5% of the Fund's assets (taken at a market value
at the time of purchase) in the outstanding securities of any single issuer or
own more than 10% of the outstanding voting securities of any one issuer, in
each case other than securities issued or guaranteed by the United States
Government, its agencies or instrumentalities, at the close of each quarter of
its taxable year.
If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in the value of
a Fund's investments will not constitute a violation of such limitation, except
that any borrowing by a Fund that exceeds the fundamental investment limitations
stated above must be reduced to meet such limitations within the period required
by the 1940 Act (currently three days). Otherwise, a Fund may continue to hold
a security even though it causes the Fund to exceed a percentage limitation
because of fluctuation in the value of the Fund's assets.
28
<PAGE>
In order to permit the sale of shares in certain states, the Trust and the
Company may make commitments more restrictive than the investment policies and
limitations described above. The Trust has committed to the State Securities
Board of the State of Texas that (i) each Fund's investments in warrants, valued
at the lower of cost or market, will not exceed 5% of the value of such Fund's
net assets (included within that amount, but not to exceed 2% of the value of
such Fund's net assets, may be warrants which are not listed on the New York or
the American Stock Exchanges, provided that warrants acquired by such Fund in
units or attached to securities may be deemed to be without value for purposes
of this commitment); and (ii) the Funds will not engage in arbitrage
transactions. Should the Trust determine that these commitments are no longer in
the best interests of the Trust, it will revoke the commitment by terminating
sales of its shares in Texas.
TRUSTEES, DIRECTORS AND OFFICERS
The trustees, directors and executive officers of the Trust and the
Company, and their business addresses and principal occupations during the past
five years, are:
<TABLE>
<CAPTION>
Positions Principal Occupation
Name, Address and Age With Trust and Company During Past Five Years
- ------------------------- ------------------------ ------------------------------------------
<S> <C> <C>
Charles W. Elliott/1/ Chairman of the Board of Senior Advisor to the President -
Western
3338 Bronson Boulevard Trustees and Directors Michigan University since July
1995;
Kalamazoo, MI 49008 prior to that Executive Vice President -
Age: 62 Administration & Chief
Financial Officer, Kellogg Company from
January 1987 through June 1995; before
that Price Waterhouse. Board of
Directors, Steelcase Financial Corporation
John Rakolta, Jr. Trustee, Director and Vice Chairman, Walbridge Aldinger
Company
1876 Rathmor Chairman of the Boards of
Bloomfield Hills, MI 48304 Trustees and Directors
Age: 47
</TABLE>
- -------------------------
/1/Trustee/Director is an "interested person" of the Trust or the Company as
defined in the 1940 Act.
29
<PAGE>
<TABLE>
<CAPTION>
Positions Principal Occupation
Name, Address and Age With Trust and Company During Past Five Years
- -------------------------- ----------------------- -------------------------------------------
<S> <C> <C>
Thomas B. Bender Trustee and Director Investment Advisor, Financial &
7 Wood Ridge Road Investment Management Group
Glen Arbor, MI 49636 (since April, 1991); Vice President
Age: 61 Institutional Sales, Kidder, Peabody & Co.
(Retired April, 1991).
David J. Brophy Trustee and Director Professor, University of Michigan;
1025 Martin Place Director, River Place Financial
Ann Arbor, MI 48104 Corp.; Trustee, Renaissance Assets
Age: 58 Trust.
Dr. Joseph E. Champagne Trustee and Director Corporate and Executive Consultant
since
319 Snell Road September 1995; prior to that Chancellor,
Rochester, MI 48306 Lamar University from September 1994
Age: 56 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 Trustee and Director President and COO, Mid-Atlantic
10726 Falls Pointe Drive Group of Pulte Home Corporation
Great Falls, VA 22066
Age: 47
Jack L. Otto Trustee and Director Retired; Director of Standard
6532 W. Beech Tree Road Federal Bank; Executive Director,
Glen Arbor, MI 49636 McGregor Fund (a private philanthropic
Age: 69 foundation) 1981-1985; Managing Partner,
Detroit officer of Ernst & Young, until 1981.
Arthur DeRoy Rodecker Trustee and Director President, Rodecker & Company,
Investment
4000 Town Center Brokers, Inc. since November
Suite 101 1976; President, RAC Advisors, Inc.,
Southfield, MI 48075 Registered Investment Advisor since
Age: 68 February 1979; President and Trustee, Helen L.
DeRoy
Foundation, a charitable foundation;
Vice President and Trustee, DeRoy
Testamentary Foundation, a
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
charitable
foundation; Trustee, Providence
Hospital Foundation.
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Positions Principal Occupation
Name, Address and Age With Trust and Company During Past
Five Years
- ----------------------- ----------------------------------- ----------------------------------------
- ----------
<S> <C> <C>
Lee P. Munder President President and CEO of the Advisor;
Chief
480 Pierce Street, Executive Officer and President of Old
Suite 300, MCM; Chief Executive Officer of World
Birmingham, MI 48009 Asset Management; and Director,
LPM
Age: 50 Investment Services, Inc. ("LPM").
Terry H. Gardner Vice President, Vice President and Chief
Financial
480 Pierce Street, Chief Financial Officer Officer of the Advisor and
World Asset
Suite 300 and Treasurer Management; Vice President and
Chief
Birmingham, MI 48009 Financial Officer of Old MCM;
Audit
Age: 35 Manager Arthur Andersen & Co. (1991
to February 1993); Secretary of LPM
Paul Tobias Vice President Executive Vice President and Chief
480 Pierce Street Operating Officer of the
Suite 300 Advisor (since April 1995) and
Birmingham, MI 48009 Executive Vice President of
Age: 43 Comerica, Inc.
Gerald Seizert Vice President Executive Vice President and Chief
480 Pierce Street Investment Officer/Equities of the
Suite 300 Advisor (since April 1995);
Birmingham, MI 48009 Managing Director (1991-1995),
Age: 44 Director (1992-1995) and Vice President
(1984-1991) of Loomis, Sayles and
Company, L.P.
Elyse G. Essick Vice President Vice President and Director of
480 Pierce Street Marketing for the Advisor;
Suite 300 Vice President and Director of
Birmingham, MI 48009 Client Services of Old MCM
Age: 37 (August 1988 to December 1994).
James C. Robinson Vice President Vice President and Chief
Investment
480 Pierce Street Officer/Fixed Income for the Advisor;
Suite 300 Vice President and Director of Fixed
Birmingham, MI 48009 Income of Old MCM (1987-1994).
Age: 34
Leonard J. Barr, II Vice President Vice President and Director of
Core
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
480 Pierce Street Equity Research of the Advisor;
Suite 300 Director and Senior Vice President
Birmingham, MI 48009 of Old MCM (since 1988);
Age: 51 Director of LPM.
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
Positions Principal Occupation
Name, Address and Age With Trust and Company During Past Five Years
- ------------------------------ ------------------------ -----------------------------------------
<S> <C> <C>
Ann F. Putallaz Vice President Vice President and Director of
480 Pierce Street Fiduciary Services of the Advisor
Suite 300 (since January 1995); Director of
Birmingham, MI 48009 Client and Marketing Services of
Age: 50 Woodbridge.
Richard H. Rose Assistant Treasurer Senior Vice President, First Data
First Data Investor Services Investor Services Group, Inc.
Group, Inc. (since May 6, 1994). Formerly,
One Exchange Place Senior Vice President, The Boston
8th Floor Company Advisors, Inc. since
Boston, MA 02109 November 1989.
Age: 41
Lisa A. Rosen Secretary, Assistant General Counsel of the Advisor since
480 Pierce Street Treasurer May, 1996; Formerly, Counsel, First Data
Suite 300 Investor Services Group, Inc.; Assistant
Birmingham, MI 48009 Vice President and Counsel with The
Boston
Age: 28 Company Advisors, Inc.; Associate with
Hutchins,
Wheeler & Dittmar.
Teresa M.R. Hamlin Assistant Secretary Counsel, First Data Investor Services
First Data Investor Services Group, Inc. Formerly Paralegal Manager,
Group, Inc. The Boston Company Advisors, Inc.
One Exchange Place
8th Floor
Boston, MA 02109
Age: 32
</TABLE>
Trustees of the Trust and Directors of the Company receive an aggregate fee
from the Trust, the Company 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.
The following table summarizes the compensation paid by the Trust and the
Company to the Trustees of the Trust and Directors of the Company for the fiscal
year ended June 30, 1996.
<TABLE>
<CAPTION>
Aggregate Com- Pension Estimated
pensation from Retirement Annual
the Trust, Benefits Accrued Benefits Total
Name of Person the Company as Part of upon from the
Position and St. Clair Fund Expenses Retirement Fund Complex
- -------------------- -------------- ---------------- ---------- ------------
<S> <C> <C> <C> <C>
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Charles W. Elliott $14,000.00 None None $14,000.00
Chairman
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
Aggregate Com- Pension Estimated
pensation from Retirement Annual
the Trust, Benefits Accrued Benefits Total
Name of Person the Company as Part of upon from the
Position and St. Clair Fund Expenses Retirement Fund Complex
- ------------------------- -------------- ---------------- ---------- ------------
<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
Trustee and Director
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
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 Transfer Agent currently receives any compensation from the
Trust or the Company. [As of the date of this Statement of Additional
Information, the trustees and officers of the Trust and the Company, as a group,
owned less than 1% of the outstanding shares of any Fund of the Trust.]
As of _______, 1996, the Directors and officers of the Company, as a group,
owned ______ Class Y Shares of the ______ Fund, which represented less than 1%
of the outstanding Class Y Shares of that Fund.
Lee P. Munder and Terry H. Gardner are administrators of a pension plan for
employees of Munder Capital Management, which as of _______, 1996 owned ______
Class Y Shares of the _______ Fund, which represented 1% of the outstanding
Class Y Shares of that Fund.
Munder Capital Management and affiliates of Munder Capital Management,
through common ownership, owned beneficially ______ Class Y Shares of the
_______ Fund, which represented less than 1% of the outstanding Class Y Shares
of that Fund.
The Trust and the Company will not employ Rodecker & Company, Investment
Brokers, Inc. to effect brokerage transactions for the Funds.
36
<PAGE>
SHAREHOLDER AND TRUSTEE LIABILITY. Under Massachusetts law,
shareholders
of a business trust may, under certain circumstances, be held personally liable
as partners for the obligations of the trust. However, the Trust's Declaration
of Trust, as amended provides that shareholders shall not be subject to any
personal liability in connection with the assets of the Trust for the acts or
obligations of the Trust, and that every note, bond, contract, order or other
undertaking made by the Trust shall contain a provision to the effect that the
shareholders are not personally liable thereunder. The Declaration of Trust, as
amended provides for indemnification out of the trust property of any
shareholder held personally liable solely by reason of his or her being or
having been a shareholder and not because of his or her acts or omissions or
some other reason. The Declaration of Trust, as amended also provides that the
Trust shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Trust, and shall satisfy any
judgment thereon. Thus, the risk of a shareholder's incurring financial loss on
account of shareholder liability is limited to circumstances in which the Trust
itself would be unable to meet its obligations.
The Declaration of Trust, as amended further provides that all persons
having any claim against the trustees or the Trust shall look solely to the
trust property for payment; that no trustee of the Trust shall be personally
liable for or on account of any contract, debt, tort, claim, damage, judgment or
decree arising out of or connected with the administration or preservation of
the trust property or the conduct of any business of the Trust; and that no
trustee shall be personally liable to any person for any action or failure to
act except by reason of his own bad faith, willful misfeasance, gross negligence
or reckless disregard of his duties as a trustee. With the exception stated, the
Declaration of Trust, as amended provides that a Trustee is entitled to be
indemnified against all liabilities and expenses reasonably incurred by him in
connection with the defense or disposition of any proceeding in which he may be
involved or with which he may be threatened by reason of being or having been a
Trustee, and that the trustees will indemnify officers, representatives and
employees of the Trust to the same extent that Trustees are entitled to
indemnification.
INVESTMENT ADVISORY AND OTHER SERVICE ARRANGEMENTS
INVESTMENT ADVISOR. The Advisor of each Fund is Munder Capital
Management,
a Delaware general partnership. The Advisor replaced Woodbridge Capital
Management, Inc. as investment advisor to the investment portfolios of the Trust
and replaced Munder Capital Management, Inc. as investment advisor to the
investment portfolios of the Company on January 31, 1995, upon the closing of an
agreement (the "Joint Venture Agreement") among Old MCM, Inc., Comerica
Incorporated ("Comerica"), Woodbridge Capital Management, Inc. ("Woodbridge"),
and WAM, pursuant to which Old MCM, Inc. contributed its investment advisory
business and Comerica contributed the investment advisory businesses of its
indirect subsidiaries, Woodbridge and World Asset Management, to the Advisor.
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.
New Investment Advisory Agreements ("Advisory Agreements") between the
Advisor and the Trust on behalf of each investment portfolio of the Trust were
approved by the Board of Trustees of the Trust on November 23, 1994 and by the
shareholders of those funds at a meeting on March 29, 1995. Advisory Agreements
between the Advisor and the Company on behalf of the Multi-Season Fund, Real
Estate Fund and Money Market Fund, were approved by the Board of Directors of
the Company on November 9, 1994 and by the shareholders of those funds at a
meeting on February 24, 1995. The Advisory Agreements for the Mid-Cap Growth and
Value Funds were approved by the Board of
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Directors on July 31, 1995 and by shareholders on August 11, 1995. The Advisory
Agreement for the International Bond Fund was approved by the Board of Directors
on May 6, 1996 and by the shareholders on ______. The Advisory Agreements for
the Small-Cap Value Fund, Micro-Cap Equity Fund and Equity Selection Fund were
approved by the Board of Directors on August 6, 1996, respectively, and by the
shareholders of each Fund on ______. Under the terms of the Advisory Agreements,
the Advisor furnishes continuing investment supervision to the Funds and is
responsible for the management of the Funds' portfolios. The responsibility for
making decisions to buy, sell or hold a particular security rests with the
Advisor, subject to review by the Trust's and the Company's Boards of Trustees
and Directors.
For its services, the Advisor earns a monthly fee as set forth below. The
Advisor has also agreed to temporarily reimburse each Fund for certain operating
expenses to the extent necessary to limit these Funds' total operating expenses.
Advisory fees and temporary expense limitations for each Fund are reflected in
the following table.
For the advisory services provided and expenses assumed by it, the Advisor
has agreed to a fee from each Fund, computed daily and payable monthly on a
separate Fund-by-Fund basis, at an annual rate of 1.00% of the first $500
million of average daily net assets and .75% of net assets in excess of $500
million of the Multi-Season Fund; 1.00% of average daily net assets of the
Micro-Cap Equity Fund; .75% of average daily net assets of the Accelerating
Growth Fund, Small Company Growth Fund, International Equity Fund, Growth &
Income Fund, Small-Cap Value Fund, and Equity Selection Fund; .74% of average
daily net assets of each of the Real Estate Fund, the Mid-Cap Fund and the Value
Fund; .65% of average daily net assets of the Balanced Fund; 50% of average
daily net assets of the Bond Fund, Intermediate Bond Fund, International Bond
Fund, U.S. Government Income Fund, Tax-Free Intermediate Bond Fund, Tax-Free
Bond Fund, and Michigan Triple Tax-Free Bond Fund; .40% of average daily net
assets of the Money Market Fund; .35% of average daily net assets of the Cash
Investment Fund, U.S. Treasury Money Market Fund and Tax-Free Money Market Fund;
and .20% of the first $250 million of average daily net assets, .12% of the next
$250 million of net assets and .07% of net assets in excess of $500 million of
the Index 500 Fund. The Advisor expects to receive, after waivers, an advisory
fee at the annual rate of .75% and .07% of the average daily net assets of the
Multi-Season Fund and the Index 500 Fund during the Trust's and the Company's
current fiscal year.
For the period February 1, 1995 through February 28, 1995, the Advisor
received fees, after waivers, of: $144,906 - Accelerating Growth Fund,
$68,046 - Small Company Growth Fund, $75,502 - International Equity Fund,
$5,407 - Index 500 Fund, $0 - Growth & Income Fund, $22,937 - Balanced Fund,
$67,126 - Bond Fund, $172,014 - Intermediate Bond Fund, $67,252 - U.S.
Government Income Fund, $0 - Michigan Triple Tax-Free Bond Fund, $96,599 -
Tax-Free Bond Fund, $137,594 - Tax-Free Intermediate Bond Fund, $62,910 -
Tax-Free Money Market Fund, $83,125 - U.S. Treasury Money Market Fund and
$246,455 - Cash Investment Fund. For such period, the Advisor reimbursed
expenses for the _______ Funds, pursuant to voluntary expense limitations,
in the following amounts ________________. The Advisor waived all of its fees
with respect to the Growth & Income Fund and the Michigan Triple Tax-Free Bond
Fund for the period February 1, 1995 through February 28, 1995.
Net fees accrued to Old MCM, Inc., the Company's former investment advisor
for services provided pursuant to the former advisory agreements (which provided
for the same fee rates as the Advisory Agreements) for the year ended December
31, 1994 (and for the Real Estate Fund for the period from commencement of
operations to December 31, 1994) were $555,273 for the Multi-Season Fund, $3,166
for the Real Estate Fund and $542,666 for the Money Market Fund. For such
periods, the Advisor reimbursed expenses for the _______ Funds, pursuant to
voluntary expense limitations, in the following amounts ________________.
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For the period March 1, 1995 through June 30, 1995, the Advisor accrued
fees after waivers of: $659,256 - Accelerating Growth Fund, $316,025 - Small
Company Growth Fund, $357,460 - International Equity Fund, $27,024 - Index 500
Fund, $243,681 - Growth & Income Fund, $103,145 - Balanced Fund, $300,222 - Bond
Fund, $767,122 - Intermediate Bond Fund, $304,666 - U.S. Government Income Fund,
$0 - Michigan Triple Tax-Free Bond Fund, $410,093 - Tax-Free Bond Fund,
$593,601 - Tax-Free Intermediate Bond Fund, $273,285 - Tax-Free Money Market
Fund, $26,118 - U.S. Treasury Money Market Fund and $1,144,037 - Cash
Investment Fund. For such period, the Advisor reimbursed expenses for the
_______ Funds, pursuant to voluntary expense limitations, in the following
amounts ________________.
For the period from February 1, 1995 through June 30, 1995, the Advisor
received fees after waivers of $206,346 for the Multi-Season Fund, $0 for the
Real Estate Fund and $370,210 for the Money Market Fund. For such period, the
Advisor reimbursed expenses for the _______ Funds, pursuant to voluntary expense
limitations, in the following amounts ________________.
For the period from July 1, 1995 through October 27, 1995, the Advisor
received fees after waivers of $709,799 for the Accelerating Growth Fund,
$358,622 for the Small Company Growth Fund, $31,087 for the Index 500 Fund,
$364,938 for the Growth & Income Fund, $107,536 for the Balanced Fund, $379,355
for the International Equity Fund, $771,815 for the Intermediate Bond Fund,
$290,956 for the U.S. Government Fund, $300,502 for the Bond Fund, $572,916 for
the Tax-Free Intermediate Fund, $367,467 for the Tax-Free Bond Fund, $0.00 for
the Michigan Triple Tax-Free Bond Fund, $1,159,247 for the Cash Investment Fund,
$341,421 for the U.S. Treasury Money Market Fund, $266,552 for the Tax-Free
Money Market Fund, $27,134 for the Real Estate Fund, $365,237 for the Money
Market Fund, $658,953 for the Multi-Season Fund, $31,762 for the Value Fund and
$17,380 for the Mid-Cap Fund.
For the period from October 28, 1995 through June 30, 1996, the Advisor
received fees after waivers of $1,411,737 for the Accelerating Growth Fund,
$920,847 for the Small Company Growth Fund, $72,265 for the Index 500 Fund,
$970,328 for the Growth & Income Fund, $246,967 for the Balanced Fund, $946,880
for the International Equity Fund, $1,809,598 for the Intermediate Bond Fund,
$661,896 for the U.S. Government Fund, $537,663 for the Bond Fund, $1,185,441
for the Tax-Free Intermediate Fund, $709,274 for the Tax-Free Bond Fund, $0.00
for the Michigan Triple Tax-Free Bond Fund, $2,478,073 for the Cash Investment
Fund, $823,717 for the U.S. Treasury Money Market Fund, $610,215 for the Tax-
Free Money Market Fund, $87,196 for the Real Estate Fund, $660,687 for the Money
Market Fund, $1,616,516 for the Multi-Season Fund, $158,147 for the Value Fund
and $95,765 for the Mid-Cap Fund. For such period, the Advisor reimbursed
expenses for the _______ Funds, pursuant to voluntary expense limitations, in
the following amounts ________________.
The International Bond Fund did not commence operations until __________.
As of the date of this Statement of Additional Information the Small-Cap Value
Fund, Equity Selection Fund and Micro-Cap Equity Fund had not commenced
operations.
If the total expenses borne by any Fund in any fiscal year exceed the
expense limitations imposed by applicable state securities regulations, the
Advisor, Administrator, Custodian and Transfer Agent will bear the amount of
such excess to the extent required by such regulations in proportion to the fees
otherwise payable to them with respect to such Fund for such year. Such amount
borne will be limited to the amount of the fees paid to them for the applicable
period with respect to the Fund involved. As of the date of this Statement of
Additional Information, the most restrictive expense limitation applicable to
the
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Trust or the Company limits its aggregate annual expenses, including management
and advisory fees but excluding interest, taxes, brokerage commissions, and
certain other expenses, to 2-1/2% of the first $30 million of its average net
assets, 2% of the next $70 million, and 1-1/2% of its remaining average net
assets.
The Company's Advisory Agreements will continue in effect for a period of
two years from their effective dates. The Trust's Advisory Agreement was
approved for an initial period from January 1, 1995 to July 31, 1995. On July
31, 1995, the continuance of the Trust's Advisory Agreement was approved as
described below. If not sooner terminated, each Advisory Agreement will continue
in effect for successive one year periods thereafter, provided that each
continuance is specifically approved annually by (a) the vote of a majority of
the Board of Trustees/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 affected Fund, or (ii) the
vote of a majority of the Board of Trustees/Directors. Each Advisory Agreement
is terminable with respect to a Fund by vote of the Board of Trustees/Directors,
or by the holders of a majority of the outstanding voting securities of the
Fund, at any time without penalty, on 60 days' written notice to the Advisor.
The Advisor may also terminate its advisory relationship with respect to a Fund
without penalty on 90 days' written notice to the Trust or the Company, as
applicable. Each Advisory Agreement terminates automatically in the event of its
assignment (as defined in the 1940 Act).
DISTRIBUTION AGREEMENTS. The Trust and the Company have entered into
distribution agreements, under which the Distributor, as agent, sells shares of
each Fund on a continuous basis. The Distributor has agreed to use appropriate
efforts to solicit orders for the purchase of shares of each Fund, although it
is not obligated to sell any particular amount of shares. The Distributor pays
the cost of printing and distributing prospectuses to persons who are not
holders of shares of the Funds (excluding preparation and printing expenses
necessary for the continued registration of the shares) and of printing and
distributing all sales literature. The Distributor's principal offices are
located at One Exchange Place, Boston, Massachusetts 02109.
DISTRIBUTION SERVICES ARRANGEMENTS - CLASS A, CLASS B AND
CLASS C SHARES.
Each Fund has adopted a Service and Distribution Plan with respect to its Class
A Shares pursuant to which it uses its assets to finance activities relating to
the provision of certain shareholder services. Under the Service and
Distribution Plans for Class A Shares, the Distributor is paid an annual service
fee at the rate of 0.25% of the value of average daily net assets of the Class A
Shares of each Fund. Each Fund has also adopted a Service and Distribution Plan
with respect to its Class B and Class C Shares, pursuant to which it uses its
assets to finance activities relating to the distribution of its shares to
investors and provision of certain shareholder services. Under the Service and
Distribution Plans for Class B and Class C Shares, the Distributor is paid an
annual service fee of 0.25% of the value of average daily net assets of the
Class B and Class C Shares of each Fund and an annual distribution fee at the
rate of 0.75% of the value of average daily net assets of the Class B and Class
C Shares of each Fund.
Under the terms of the Service and Distribution Plans (collectively, the
"Plans"), each Plan continues from year to year, provided such continuance is
approved annually by vote of the Board of Trustees/Directors, including a
majority of the Board of Trustees/Directors who are not interested persons of
the Trust or the Company, as applicable, and who have no direct or indirect
financial interest in the operation of that Plan (the "Non-Interested Plan
Directors"). The Plans may not be amended to increase the amount to be spent for
the services provided by the Distributor without shareholder approval, and all
amendments of the Plans also must be approved by the Trustees/Directors in the
manner described above.
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Each Plan may be terminated at any time, without penalty, by vote of a majority
of the Non-Interested Plan Directors or by a vote of a majority of the
outstanding voting securities of the relevant class of the respective Fund (as
defined in the 1940 Act) on not more than 30 days' written notice to any other
party to the Plan. Pursuant to each Plan, the Distributor will provide the
Boards of Trustees and Directors periodic reports of amounts expended under the
Plan and the purpose for which such expenditures were made.
With respect to Class B and Class C Shares of each Fund, the Distributor
expects to pay sales commissions to dealers authorized to sell a Fund's Class B
and Class C Shares at the time of sale. The Distributor will use its own funds
(which may be borrowed) to pay such commissions pending reimbursement by the
relevant Service and Distribution Plan. In addition, the Advisor may use its own
resources to make payments to the Distributor or dealers authorized to sell the
Funds' shares to support their sales efforts.
SHAREHOLDER SERVICING ARRANGEMENTS - CLASS K SHARES. As stated
in each
Fund's Prospectus, Class K Shares are sold to investors through institutions
which enter into Shareholder Servicing Agreements with the Trust or the Company
to provide support services to their Customers who beneficially own Class K
Shares in consideration of the Funds' payment of not more than .25% (on an
annualized basis) of the average daily net asset value of the Class K Shares
beneficially owned by the Customers.
Services provided by institutions under their service agreements may
include: (i) aggregating and processing purchase and redemption requests for
Class K Shares from Customers and placing net purchase and redemption orders
with the Distributor; (ii) providing Customers with a service that invests the
assets of their accounts in Class K Shares pursuant to specific or pre-
authorized instructions; (iii) processing dividend payments on behalf of
Customers; (iv) providing information periodically to Customers showing their
positions in Class K Shares; (v) arranging for bank wires; (vi) responding to
Customer inquiries relating to the services performed by the institutions; (vii)
providing subaccounting with respect to Class K Shares beneficially owned by
Customers or the information necessary for subaccounting; (viii) if required by
law, forwarding shareholder communications from the Trust or the Company (such
as proxies, shareholder reports, annual and semi-annual financial statements and
dividend, distribution and tax notices) to Customers; (ix) forwarding to
Customers proxy statements and proxies containing any proposals regarding the
Trust's arrangements with institutions; and (x) providing such other similar
services as the Trust or the Company may reasonably request to the extent the
institutions are permitted to do so under applicable statutes, rules and
regulations.
Pursuant to the Trust's and the Company's agreements with such
institutions, the Boards of Trustees and Directors will review, at least
quarterly, a written report of the amounts expended under the Trust's and the
Company's agreements with Institutions and the purposes for which the
expenditures were made. In addition, the arrangements with Institutions must be
approved annually by a majority of the Boards of Trustees and Directors,
including a majority of the Trustees/Directors who are not "interested persons"
as defined in the 1940 Act, and have no direct or indirect financial interest in
such arrangements.
The Boards of Trustees and Directors have approved the arrangements with
Institutions based on information provided by the service contractors that there
is a reasonable likelihood that the arrangements will benefit the Funds and
their shareholders by affording the Funds greater flexibility in connection with
the servicing of the accounts of the beneficial owners of their shares in an
efficient manner.
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ADMINISTRATION AGREEMENT. First Data Investor Services Group, Inc. ("First
Data" or the "Administrator") located at 53 State Street, Boston, Massachusetts
02109 serves as administrator for the Trust and the Company pursuant to
administration agreements, (each, an "Administration Agreement"). First Data has
agreed to maintain office facilities for the Trust and the Company; provided
accounting and bookkeeping services for the Funds, including the computation of
each Fund's net asset value, net income and realized capital gains, if any;
furnish statistical and research data, clerical services, and stationery and
office supplies; prepare and file various reports with the appropriate
regulatory agencies; and prepare various materials required by the SEC or any
state securities commission having jurisdiction over the Trust or the Company.
Each 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.
Regarding the Administrator's agreement to reimburse the Trust or the
Company in the event the expenses of a Fund exceed applicable state expense
limitations, see "Investment Advisory and Other Service Arrangements - Advisory
Agreement."
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 Funds' assets pursuant to custodian
agreements (each, a "Custody Agreement") with each of the Trust and the Company.
Under each Custody Agreement, the Custodian (i) maintains a separate account in
the name of each Fund, (ii) holds and transfers portfolio securities on account
of each Fund, (iii) accepts receipts and makes disbursements of money on behalf
of each Fund, (iv) collects and receives all income and other payments and
distributions on account of each Fund's securities and (v) makes periodic
reports to the Boards of Trustees and Directors concerning each 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
Trust or the Company. In addition, the Trust and the Company and the Custodian
have entered into respective sub-custody agreements with Boston Safe Deposit and
Trust Company ("Boston Safe") relating to the custody of foreign securities held
by the Equity and Bond Funds of the Trust and each fund of the Company (except
the Real Estate Fund), and Boston Safe, in turn, has entered into additional
agreements with financial institutions and depositories located in foreign
countries with respect to the custody of such securities.
First Data also serves as the transfer and dividend disbursing agent for
the Funds pursuant to transfer agency agreements (the "Transfer Agency
Agreement") with each of the Trust and the Company, under which First Data (i)
issues and redeems shares of each Fund, (ii) addresses and mails all
communications by each Fund to its record owners, including reports to
shareholders, dividend and distribution notices and proxy materials for its
meetings of shareholders, (iii) maintains shareholder accounts, (iv) responds to
correspondence by shareholders of the Funds and (v) makes periodic reports to
the Boards of Trustees and Directors concerning the operations of each Fund.
Regarding the Custodian's and Transfer Agent's agreement to reimburse the
Trust or the Company in the event the expenses of a Fund exceed applicable state
expense limitations, see "Investment Advisory and Other Service Arrangements -
Advisory Agreement."
COMERICA. As stated in the Funds' Class K Shares Prospectus, Class K
Shares of the Funds are sold to customers of banks and other institutions. Such
banks and institutions may include Comerica Incorporated (a publicly-held bank
holding company), its affiliates and subsidiaries ("Comerica") and
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other institutions that have entered into agreements with the Trust 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.
It should be noted that future changes in either Federal or state statutes
and regulations relating to permissible activities of banks and their
subsidiaries or affiliates, as well as future judicial or administrative
decisions or interpretations of current and future statutes and regulations,
could prevent Comerica and certain other institutions from continuing to perform
certain services for Class K Shares of the Funds.
Should future legislative, judicial or administrative action prohibit or
restrict the activities of Comerica and/or other institutions in connection with
the provision of services on behalf of Class K Shares of the Funds, the Trust or
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 Funds' method of operations would affect the net
asset value per share of the Funds or result in a financial loss to any holder
of Class K Shares of the Funds.
OTHER INFORMATION PERTAINING TO DISTRIBUTION,
ADMINISTRATION, CUSTODIAN AND
TRANSFER AGENCY AGREEMENTS. As stated in each Prospectus, the
Administrator and
Transfer Agent each receive, as compensation for its services, fees from the
Funds based on the aggregate average daily net assets of the Funds and other
investment portfolios advised by the Advisor. The Custodian receives a separate
fee for its services. In approving the Administration Agreements and Transfer
Agency Agreements, the Boards of Trustees and 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 Trust and the Company in comparison to
the charges of competing vendors, the impact of the fees on the estimated total
ordinary operating expense ratio of each Fund and the fact that neither the
Administrator nor the Transfer Agent is affiliated with either the Trust, the
Company or the Advisor. The Boards also considered their responsibilities under
federal and state law in approving these agreements. In considering the
reasonableness of the fee, the Distributor's activities under its Distribution
Agreements were not considered by the Boards.
During the fiscal years ended February 28, 1994 and 1995, the period ended
June 30, 1995 and the fiscal year ended June 30, 1996, respectively, the
Distributor received the following amounts from sales of Class A Shares of the
following Funds: $_____, $_____, $______ and $18,646-Accelerating Growth Fund,
of which $_____, $_____, $_____ and $1,707, respectively, was retained by the
Distributor after dealer reallowances; $_____, $_____, $_____ and $11,659-Small
Company Growth Fund, of which $_____, $_____, $_____ and $1,109, respectively,
was retained by the Distributor after dealer reallowances; $______, $______,
$______ and $17,628-International Equity Fund, of which $_____, $_____, $_____
and $1,681, respectively, was retained by the Distributor after dealer
reallowances; $_____, $_____, $______ and $224,898-Index 500 Fund, of which
$_____, $_____,
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$_____ and $24,310, respectively, was retained by the Distributor after dealer
reallowances; $_____, $_____, $______ and $469-Bond Fund, of which $_____,
$_____, $_____ and $30, respectively, was retained by the Distributor after
dealer reallowances; $_____, $_____, $_____ and $5,220-Intermediate Bond Fund,
of which $_____, $_____, $_____ and $346, respectively, was retained by the
Distributor after dealer reallowances; and $_____, $_____, $______ and $1,117-
Tax-Free Intermediate Bond Fund, of which $_____, $_____, $_____ and $93,
respectively, was retained by the Distributor after dealer reallowances.
During the period ended February 28, 1994, during the fiscal year ended
February 28, 1995, during the period ended June 30, 1995 and during the fiscal
year ended June 30, 1995, respectively, the Distributor received $_____, $_____,
$_____ and $1,495 from sales of Class A Shares of the Balanced Fund, of which.
$_____, $_____, $_____ and $137, respectively, was retained by the Distributor
after dealer reallowances and $_____, $_____, $_____ and $297 from sales of
Class A Shares of Michigan Triple Tax-Free Bond Fund, of which $_____, $_____,
$_____ and $______, respectively, was retained after dealer reallowances.
During the fiscal year ended December 31, 1994, during the period
ended June 30, 1995 and during the fiscal year ended June 30, 1996,
respectively, the Distributor received $______, $______ and $20,485 from sales
of Class A Shares of Multi-Season Fund, of which $_____, $_____ and $1,974,
respectively, was retained by the Distributor after dealer reallowances.
During the period ended February 28, 1995, the period ended June 30, 1995
and the fiscal year ended June 30, 1996, respectively, the Distributor received
the following amounts from sales of Class A Shares of the following Funds:
$_____, $______ and $3,744-Growth & Income Fund, of which $_____, $_____ and
$346, respectively, was retained by the Distributor after dealer reallowances;
and $_____, $______ and $5-U.S. Government Income Fund, of which $_____, $_____
and $0, respectively, was retained by the Distributor after dealer reallowances.
During the period ended June 30, 1995 and the fiscal year ended June
30, 1996, the Distributor received $_____ and $2,014 from sales of Class A
Shares of the Real Estate Fund, of which $_____ and $179, respectively, was
retained after dealer reallowance.
During the period ended June 30, 1996, the Distributor received the
following amounts from sales of Class A Shares of the following Funds: $907-Mid-
Cap Fund, $55-Value Fund and $___-Tax-Free Bond Fund, of which amounts $84, $5
and $____ was retained by the Distributor after dealer reallowances.
During the fiscal year ended December 31, 1994, the period ended June 30,
1995 and the fiscal year ended June 30, 1996, respectively, the Distributor
received the following CDSCs upon certain redemptions of Class B and Class C
Shares of the Multi-Season Fund: $____, $_____ and $229,407-Class B, of which
$_____, $_____ and $155,014, respectively, was retained by the Distributor after
dealer reallowances; and $____, $_____ and $1,039-Class C, of which $_____,
$_____ and $______, respectively, was retained by the Distributor after dealer
reallowances. During those periods, respectively, the Distributor received
$____, $____ and $0 in CDSCs upon certain redemptions of Class B Shares of Money
Market Fund, of which $_____, $_____ and $0, respectively, was retained by the
Distributor after dealer reallowances.
During the period ended February 28, 1995, the period ended June 30,
1995 and the fiscal year ended June 30, 1996, respectively, the Distributor
received the following CDSCs upon certain redemptions of Class B Shares of the
following Funds: $_____, $_____ and $238-Accelerating Growth
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Fund, of which $_____, $_____ and $238, respectively, was retained by the
Distributor after dealer reallowances; $_____, $_____ and $100-Small Company
Growth Fund, of which $_____, $_____ and $100, respectively, was retained by the
Distributor after dealer reallowances; $_____, $_____ and $1,365-International
Equity Fund, of which $_____, $_____ and $1,008, respectively, was retained by
the Distributor after dealer reallowances; $_____, $_____ and $600-Growth &
Income Fund, of which $_____, $_____ and $300, respectively, was retained by the
Distributor after dealer reallowances; $_____, $_____ and $199-Balanced Fund, of
which $_____, $_____ and $199, respectively, was retained by the Distributor
after dealer reallowances; $_____, $_____ and $0-Intermediate Bond Fund, of
which $_____, $_____ and $0, respectively, was retained by the Distributor after
dealer reallowances; $_____, $_____ and $406-Michigan Triple Tax-Free Bond Fund,
of which $_____, $_____ and $406, respectively, was retained by the Distributor
after dealer reallowances; and $_____, $_____ and $979-Tax-Free Bond Fund, of
which $_____, $_____ and $979, respectively, was retained by the Distributor
after dealer reallowances.
During the period ended June 30, 1995 and the fiscal year ended June 30,
1996, the Distributor received the following in CDSCs $_____ and $0,
respectively, upon certain redemptions of Class B Shares of Real Estate Fund, of
which $_____ and $0, respectively, was retained after dealer reallowance; and
$____ and $_____, respectively, in CDSCs upon certain redemptions of Class B
Shares of Money Market Fund, of which $_____ and $______, respectively, was
retained after dealer reallowances.
During the period ended June 30, 1996, the Distributor received $0,
$182, $_____, $_____, $_____ and $_____, respectively, in CDSCs upon certain
redemptions of Class B Shares of the Mid-Cap Fund, Value Fund, Index 500 Fund,
Bond Fund, U.S. Government Income Fund and Tax-Free Intermediate Bond Fund, of
which $0, $182, $_____, $_____, $_____ and $_____, respectively, was retained by
the Distributor after dealer reallowances. During the period ended June 30,
1996, the Distributor received $2, $0, $____, $0, $_____ and $_____,
respectively, in CDSCs upon the redemption of Class C Shares of such Funds
(other than U.S. Government Income Fund and Tax-Free Intermediate Bond Fund), of
which $2, $0, $0 and $____, respectively, was retained after dealer
reallowances.
During the period ended June 30, 1996, the Distributor received the
following amounts in CDSCs upon certain redemptions of Class C Shares of the
following Funds: $8-Real Estate Fund, of which $8 was retained by the
Distributor after dealer reallowances; $189-Accelerating Growth Fund, of which
$189 was retained by the Distributor after dealer reallowances; $150-Small
Company Growth Fund, of which $150 was retained by the Distributor after dealer
reallowances; $294-International Equity Fund, of which $294 was retained by the
Distributor after dealer reallowances; $0-Growth & Income Fund, of which $0 was
retained by the Distributor after dealer reallowances; $100-Balanced Fund, of
which $100 was retained by the Distributor after dealer reallowances; and $0-
Intermediate Bond Fund, of which $0 was retained by the Distributor after dealer
reallowances.
A report of the amount expended pursuant to each Distribution Plan, and the
purposes for which such expenditures were incurred, must be made to the Boards
of Trustees and Directors at least quarterly.
During the period ended February 28, 1995, during the period ended June 30,
1995 and during the fiscal year ended June 30, 1996, the following Funds paid
the Distributor the following amounts pursuant to their respective Class B
Distribution plans: $201, $184, and $1691-Accelerating Growth Fund; $118, $144,
and $2,997-Small Company Growth Fund; $611, $415 and $4,175-International Equity
Fund; $109, $180 and $1,531-Growth & Income Fund; $752, $60 and $534-Balanced
Fund; $24, $27 and $275-Intermediate Bond Fund; $820, $842 and $2,565-Michigan
Triple Tax-Free Bond Fund; and $0, $4 and $176-Tax-Free Bond Fund.
45
<PAGE>
During the period ended June 30, 1995 and during the fiscal year ended June
30, 1996, respectively, each of the following Funds paid the Distributor,
pursuant to its respective Class B Distribution Plan: $_____ and $7,785 - Real
Estate Fund; and $_____ and $_____ - Money Market Fund.
During the fiscal years ended December 31, 1994 and 1995, during the period
ended June 30, 1996, the Multi-Season Fund paid the Distributor $481,940,
$249,851 and $605,598 pursuant to its Class B Distribution Plan and $_____,
$______ and $42,837 pursuant to its Class C Distribution Plan.
During the period ended June 30, 1996, the following Funds paid the
Distributor the following amounts pursuant to their respective Class B
Distribution Plans: $118-Mid-Cap Fund; $20,251- Index 500 Fund; $565-Value Fund;
$775 - Bond Fund; $4,864 - U.S. Government Income Fund; and $____ - Tax-Free
Intermediate Bond Fund.
During the period ended June 30, 1996, the following Funds paid the
Distributor the following amounts pursuant to their respective Class C
Distribution Plans: $18-Real Estate Fund; $351-Accelerating Growth Fund; $228-
Small Company Growth Fund; $172-Mid-Cap Fund; $4,781-International Equity Fund;
$______-Index 500 Fund; $118-Growth & Income Fund; $1,141-Value Fund; $5-
Balanced Fund; $123-Bond Fund; and $98-Intermediate Bond Fund.
The following amounts were paid by the Multi-Season Fund under its Class B
and Class C Distribution Plans, respectively, during the fiscal year ended June
30, 1996; advertising: $_____ and $_____, respectively; printing and mailing of
prospectuses to other than current shareholders: $_____ and $_____,
respectively; compensation to underwriters: $_____ and $_____, respectively;
compensation to dealers: $_____ and $_____, respectively; compensation to sales
personnel: $_____ and $_____, respectively; interest, carrying or other
financing charges: $_____ and $_____, respectively; and [specify other]: $_____
and $_____, respectively.
The following amounts were paid by the Real Estate Fund under its Class B
and Class C Distribution Plans, respectively, during the fiscal year ended June
30, 1996 and during the period ended June 30, 1996, respectively; advertising:
$_____ and $_____, respectively; printing and mailing of prospectuses to other
than current shareholders: $_____ and $_____, respectively; compensation to
underwriters: $_____ and $_____, respectively; compensation to dealers: $_____
and $_____, respectively; compensation to sales personnel: $_____ and $_____,
respectively; interest, carrying or other financing charges: $_____ and $_____,
respectively; and [specify other]: $_____ and $_____, respectively.
The following amounts were paid by the Accelerating Growth Fund under its
Class B and Class C Distribution Plans, respectively, during the fiscal year
ended June 30, 1996 and during the period ended June 30, 1996, respectively;
advertising: $_____ and $_____, respectively; printing and mailing of
prospectuses to other than current shareholders: $_____ and $_____,
respectively; compensation to underwriters: _____ and $_____, respectively;
compensation to dealers: $_____ and $_____, respectively; compensation to sales
personnel: $_____ and $_____, respectively; interest, carrying or other
financing charges: $_____ and $_____, respectively; and [specify other]: $_____
and $_____, respectively.
The following amounts were paid by the Small Company Growth Fund under its
Class B and Class C Distribution Plans, respectively, during the fiscal year
ended June 30, 1996 and during the period ended June 30, 1996, respectively;
advertising: $_____ and $_____, respectively; printing and mailing of
46
<PAGE>
prospectuses to other than current shareholders: $_____ and $_____,
respectively; compensation to underwriters: $_____ and $_____, respectively;
compensation to dealers: $_____ and $_____, respectively; compensation to sales
personnel: $_____ and $_____, respectively; interest, carrying or other
financing charges: $_____ and $_____, respectively; and [specify other]: $_____
and $_____, respectively.
The following amounts were paid by the Mid-Cap Fund under its Class B and
Class C Distribution Plans, respectively, during the period ended June 30, 1996;
advertising: $_____ and $_____, respectively; printing and mailing of
prospectuses to other than current shareholders: $_____ and $_____,
respectively; compensation to underwriters: $_____ and $_____, respectively;
compensation to dealers: $_____ and $_____, respectively; compensation to sales
personnel: $_____ and $_____, respectively; interest, carrying or other
financing charges: $_____ and $_____, respectively; and [specify other]: $_____
and $_____, respectively.
The following amounts were paid by the International Equity Fund under its
Class B and Class C Distribution Plans, respectively, during the fiscal year
ended June 30, 1996 and the period ended June 30, 1996, respectively;
advertising: $_____ and $_____, respectively; printing and mailing of
prospectuses to other than current shareholders: $_____ and $_____,
respectively; compensation to underwriters: $_____ and $_____, respectively;
compensation to dealers: $_____ and $_____, respectively; compensation to sales
personnel: $_____ and $_____, respectively; interest, carrying or other
financing charges: $_____ and $_____, respectively; and [specify other]: $_____
and $_____, respectively.
The following amounts were paid by the Index 500 Fund under its Class B
Distribution Plan, respectively, during the period ended June 30, 1996;
advertising: $_____; printing and mailing of prospectuses to other than current
shareholders: $_____; compensation to underwriters: $_____; compensation to
dealers: $_____; compensation to sales personnel: $_____; interest, carrying or
other financing charges: $_____; and [specify other]: $_____.
The following amounts were paid by the Growth & Income Fund under its Class
B and Class C Distribution Plans, respectively, during the fiscal year ended
June 30, 1996 and the period ended June 30, 1996, respectively; advertising:
$_____ and $_____, respectively; printing and mailing of prospectuses to other
than current shareholders: $_____ and $_____, respectively; compensation to
underwriters: $_____ and $_____, respectively; compensation to dealers: $_____
and $_____, respectively; compensation to sales personnel: $_____ and $_____,
respectively; interest, carrying or other financing charges: $_____ and $_____,
respectively; and [specify other]: $_____ and $_____, respectively.
The following amounts were paid by the Value Fund under its Class B and
Class C Distribution Plans, respectively, during the period ended June 30, 1996;
advertising: $_____ and $_____, respectively; printing and mailing of
prospectuses to other than current shareholders: $_____ and $_____,
respectively; compensation to underwriters: $_____ and $_____, respectively;
compensation to dealers: $_____ and $_____, respectively; compensation to sales
personnel: $_____ and $_____, respectively; interest, carrying or other
financing charges: $_____ and $_____, respectively; and [specify other]: $_____
and $_____, respectively.
The following amounts were paid by the Balanced Fund under its Class B and
Class C Distribution Plans, respectively, during the fiscal year ended June 30,
1996 and the period ended June 30, 1996, respectively; advertising: $_____ and
$_____, respectively; printing and mailing of prospectuses to other than current
shareholders: $_____ and $_____, respectively; compensation to underwriters:
$_____ and $_____, respectively; compensation to dealers: $_____ and $_____,
respectively; compensation to
47
<PAGE>
sales personnel: $_____ and $_____, respectively; interest, carrying or other
financing charges: $_____ and $_____, respectively; and [specify other]: $_____
and $_____, respectively.
The following amounts were paid by the Bond Fund under its Class B and
Class C Distribution Plans, respectively, during the period ended June 30, 1996;
advertising: $_____ and $_____, respectively; printing and mailing of
prospectuses to other than current shareholders: $_____ and $_____,
respectively; compensation to underwriters: $_____ and $_____, respectively;
compensation to dealers: $_____ and $_____, respectively; compensation to sales
personnel: $_____ and $_____, respectively; interest, carrying or other
financing charges: $_____ and $_____, respectively; and [specify other]: $_____
and $_____, respectively.
The following amounts were paid by the Intermediate Bond Fund under its
Class B and Class C Distribution Plans, respectively, during the fiscal year
ended June 30, 1996 and the period ended June 30, 1996, respectively;
advertising: $_____ and $_____, respectively; printing and mailing of
prospectuses to other than current shareholders: $_____ and $_____,
respectively; compensation to underwriters: $_____ and $_____, respectively;
compensation to dealers: $_____ and $_____, respectively; compensation to sales
personnel: $_____ and $_____, respectively; interest, carrying or other
financing charges: $_____ and $_____, respectively; and [specify other]: $_____
and $_____, respectively.
The following amounts were paid by the U.S. Government Income Fund under
its Class B Distribution Plan, respectively, during the period ended June 30,
1996; advertising: $_____; printing and mailing of prospectuses to other than
current shareholders: $_____; compensation to underwriters: $_____; compensation
to dealers: $_____; compensation to sales personnel: $_____; interest, carrying
or other financing charges: $_____; and [specify other]: $_____.
The following amounts were paid by the Michigan Triple Tax-Free Bond Fund
under its Class B Distribution Plan, during the fiscal year ended June 30, 1996:
advertising: $_____; printing and mailing of prospectuses to other than current
shareholders: $_____; compensation to underwriters: $_____; compensation to
dealers: $_____; compensation to sales personnel: $_____; interest, carrying or
other financing charges: $_____; and [specify other]: $_____.
The following amounts were paid by the Tax-Free Bond Fund under its Class B
Distribution Plan, during the fiscal year ended June 30, 1996: advertising:
$_____; printing and mailing of prospectuses to other than current shareholders:
$_____; compensation to underwriters: $_____; compensation to dealers: $_____;
compensation to sales personnel: $_____; interest, carrying or other financing
charges: $_____; and [specify other]: $_____.
The Following amounts were paid by the Tax-Free Intermediate Bond Fund
under its Class B Distribution Plan during the period ended June 30, 1996:
advertising: $_____; printing and mailing of prospectuses to other than current
shareholders: $_____; compensation to underwriters: $_____; compensation to
dealers: $_____; compensation to sales personnel: $_____; interest, carrying or
other financing charges: $_____ ; and [specify other]: $_____.
The Following amounts were paid by the Money Market Fund under its Class B
Distribution Plan during the year ended June 30, 1996: advertising: $_____;
printing and mailing of prospectuses to other than current shareholders: $_____;
compensation to underwriters: $_____; compensation to dealers: $_____;
compensation to sales personnel: $_____; interest, carrying or other financing
charges: $_____ ; and [specify other]: $_____.
48
<PAGE>
For the fiscal year ended February 28, 1994, each respective Fund bore
administration, transfer agency and custodian fees pursuant to the
administration, administration and accounting services, transfer agency and
custodian agreements then in effect. These fees were paid to The Boston Company
Advisors, Inc. ("TBCA") and PFPC, Inc. ("PFPC"), as the co-administrators, PNC
Bank, N.A. ("PNC") as custodian and PFPC, Inc. as transfer agent. The
administrators, custodian and transfer agent accrued fees for the fiscal year
ended February 28, 1994 of $808,657 for the Cash Investment Fund; $347,523 for
the Tax-Free Money Market Fund; and $452,202 for the U.S. Treasury Money Market
Fund, respectively (exclusive of out-of-pocket expenses). For the fiscal year
ended February 28, 1994 for the Accelerating Growth, Small Company Growth, Index
500, International Equity, Intermediate Bond and Bond Funds, the administrators,
custodian and transfer agent accrued fees of $336,669; $124,551; $111,867;
$120,447; $416,803; and $241,597, respectively (exclusive of out-of-pocket
expenses).
For the fiscal year ended February 28, 1994 for the Balanced, Tax-Free
Intermediate Bond and Michigan Triple Tax-Free Bond Funds, the administrators
accrued fees of $45,845 (exclusive of out-of-pocket expenses). For the fiscal
year ended February 28, 1993 and the fiscal year ended February 28, 1994, the
administrators, custodian and transfer agent voluntarily waived fees of $41,454
and $26,318 respectively, for the Index 500 Fund and $27,059 and $0
respectively, for the International Equity Fund.
On July 1, 1994, First Data became the Administrator and Transfer Agent for
the Growth & Income Fund, the U.S. Government Income Bond Fund and the Tax-Free
Bond Fund (the "New Funds"). Prior to the close of business on July 31, 1994,
First Data and PFPC (together, the "Co-Administrators") served as the Co-
Administrators to the Trust, excluding the New Funds. Prior to the close of
business on August 5, 1994, PFPC also served as transfer agent to the Funds,
excluding the New Funds. As compensation for their services, the Co-
Administrators and PFPC as transfer agent received a single fee, based on the
aggregate average daily net assets of the Funds computed daily and payable
monthly, at an annual rate of 0.12% of the first $1.8 billion of net assets,
plus 0.115% of the next $1 billion of net assets, plus 0.100% of the next $1
billion of net assets, plus 0.095% of all net assets in excess of $3.8 billion.
Prior to the close of business on May 6, 1994, TBCA and PFPC served as the
Trust's co-administrators and received a fee equivalent to the fee paid to First
Data and PFPC for their services as co-administrators and transfer agent.
For the period March 1, 1994 through July 31, 1994, the fees of the
Administrators accrued as follows: Accelerating Growth Fund - $24,031; Growth &
Income Fund - $0; Small Company Growth Fund - $38,003; Index 500 Fund - $23,865;
International Equity Fund - $41,742; Balanced Fund - $16,978; Bond Fund -
$71,113; Intermediate Bond Fund - $123,934; U.S. Government Income Fund - $0;
Tax-Free Bond Fund - $0; Tax-Free Intermediate Bond Fund - $50; Michigan Triple
Tax-Free Bond Fund - $6,417; Cash Investment Fund - $267,499; U.S. Treasury
Money Market Fund - $134,386; and Tax Free Money Market Fund-$104,713.
For the period ended February 28, 1995, the fees of the Administrator
accrued as follows: Accelerating Growth Fund - $198,140; Growth & Income Fund -
$41,047; Small Company Growth Fund - $83,027; Index 500 Fund - $69,871;
International Equity Fund - $94,485; Balanced Fund - $34,625; Bond Fund -
$133,388; Intermediate Bond Fund - $335,642; U.S. Government Income Fund -
$142,297; Tax-Free Bond Fund - $217,868; Tax-Free Intermediate Bond Fund -
$272,285; Michigan Triple Tax-Free Bond Fund - $17,168; Cash Investment Fund -
$669,287; U.S. Treasury Money Market Fund - $212,383; and Tax-Free Money Market
Fund $179,189.
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<PAGE>
For the period ended June 30, 1995 and the fiscal year ended June 30, 1996,
the fees of the Administrator accrued as follows: Accelerating Growth Fund -
$101,130 and $322,120; Small Company Growth Fund - $48,480 and $194,176;
International Equity Fund - $54,832 and $201,299; Index 500 Fund - $44,411 and
$188,416; Growth & Income Fund - $48,503 and $202,655; Balanced Fund - $18,258
and $62,095; Bond Fund - $69,084 and $190,967; Intermediate Bond Fund - $176,525
and $587,790; U.S. Government Income Fund - $70,106 and $216,970; Michigan
Triple Tax-Free Bond Fund - $10,784 and $31,899; Tax-Free Bond Fund - $94,378
and $245,271; Tax-Free Intermediate Bond Fund - $136,609 and $400,485; Tax-Free
Money Market Fund - $89,841 and $285,214; U.S. Treasury Money Market Fund -
$122,730 and $378,955; and Cash Investment Fund - $376,101 and $1,183,419,
respectively.
Prior to December 31, 1994, Old MCM, Inc. served as administrator to the
Company's Funds pursuant to administration agreements which provided for the
same fees as the current Administration Agreements. Net fees paid and accrued
for Old MCM, Inc. for services provided to the Money Market Fund pursuant to its
former administration agreement for the year ended December 31, 1994 were
$149,272. Net fees paid and accrued to Old MCM, Inc. for services provided to
the Multi-Season Fund pursuant to its former administration agreement for the
year ended December 31, 1994 were $89,099. Net fees paid and accrued to Old MCM,
Inc. for services provided to the Real Estate Fund pursuant to its former
administration agreement for the period from commencement of operations to
December 31, 1994 were $8,691.
From January 1, 1995 through May 1, 1995, State Street Bank and Trust
Company served as the Company's administrator. On May 1, 1995, First Data became
the Company's administrator.
For the period May 1, 1995 through June 30, 1995, fees of First Data
accrued were $17,266, $1,150 and $48,129, for the Multi-Season Fund, Real Estate
Fund and Money Market Fund, respectively.
For the fiscal year ended June 30, 1996, administration fees of First Data
accrued were: $345,388 - Multi-Season Fund, $19,100 - Real Estate Fund and
$292,172 - Money Market Fund.
For the period ended June 30, 1996, administration fees of First Data
accrued were: $29,705 - Value Fund and $18,006 - Mid-Cap Fund.
Comerica Bank provides custodial services to the Funds. As compensation for
its services, Comerica Bank is entitled to receive fees, based on the aggregate
average daily net assets of the Funds 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. Comerica Bank earned $650,517 for its services to the Funds for the period
ended June 30, 1996. Boston Safe serves as the sub-custodian of foreign
securities for the each Fund of the Company (except the Real Estate Fund) and
for Accelerating Growth Fund, the Small Company Growth Fund, the International
Equity Fund, the Bond Fund and the Intermediate Bond Fund of the Trust.
PORTFOLIO TRANSACTIONS
50
<PAGE>
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 each Fund.
Transactions on U.S. stock exchanges involve the payment of negotiated
brokerage commissions. On exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers. Transactions on foreign
stock exchanges involve payment for brokerage commissions which are generally
fixed.
For the fiscal year ended February 28, 1994 the Accelerating Growth Fund,
Small Company Growth Fund, Index 500 Fund, International Equity Fund and
Balanced Fund paid brokerage commissions in the following amounts: $281,465,
$94,291, $18,585, $169,977, and $89,315, respectively. The Accelerating Growth
Fund, Small Company Growth Fund, Index 500 Fund, International Equity Fund,
Balanced Fund and the Growth & Income Fund paid in brokerage commissions
$332,408, $70,561, $5,085, $116,312, $49,232 and $185,181, respectively, for the
fiscal year ended February 28, 1995. During the year ended December 31, 1994
(and, for the Real Estate Fund, for the period from the commencement of
operations to December 31, 1994), the Multi-Season Fund , the Real Estate Fund
and the Money Market Fund paid $94,803, $4,667 and $0, respectively, in
brokerage commissions. The other Funds did not pay any brokerage commissions
during these years.
For the period from February 28, 1995 to June 30, 1995, the Accelerating
Growth Fund, Small Company Growth Fund, Index 500 Fund, International Equity
Fund, Balanced Fund and Growth & Income Fund paid in brokerage commissions
$123,045, $65,661, $5,047, $127,871, $13,238 and $62,706, respectively. The
other Funds of the Trust did not pay brokerage commissions for the period from
February 28, 1995 to June 30, 1995.
For the period from January 1, 1995 to June 30, 1995, the Real Estate Fund
and the Multi-Season Fund paid $14,627 and $62,889, respectively, in brokerage
commissions. The other Funds of the Company did not pay brokerage commissions
for the period from January 1, 1995 to June 30, 1995.
For the fiscal year ended June 30, 1996, the Funds paid brokerage
commissions as follows: $424,980 - Multi-Season Fund, $40,182 - Real Estate
Fund, $474,252 - Accelerating Growth Fund, $203,936 - Small Company Growth Fund,
$428,699 - International Equity Fund, $41,009 - Index 500 Fund, $202,292 -Growth
& Income Fund, $52,376-Balanced Fund. The other Funds did not pay brokerage
commissions during the fiscal year ended June 30, 1996.
For the period ended June 30, 1996, the Value Fund and the Mid-Cap Fund
paid brokerage commissions of $169,335 and $83,397, respectively.
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.
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<PAGE>
The Funds may participate, if and when practicable, in bidding for the
purchase of portfolio securities directly from an issuer in order to take
advantage of the lower purchase price available to members of a bidding group.
The Funds will engage in this practice, however, only when the Advisor believes
such practice to be in the Funds' interests.
Since the Money Market Funds will invest only in short-term debt
instruments, their annual portfolio turnover rates will be relatively high, but
brokerage commissions are normally not paid on money market instruments, and
portfolio turnover is not expected to have a material effect on the net
investment income of a Money Market Fund. The portfolio turnover rate of a Fund
is calculated by dividing the lesser of a Fund's annual sales or purchases of
portfolio securities (exclusive of purchases or sales of securities whose
maturities at the time of acquisition were thirteen months or less for the Money
Market Funds or one year or less for the Equity and Bond Funds) by the monthly
average value of the securities held by the Fund during the year. The Equity and
Bond Funds may engage in short-term trading to achieve their investment
objectives. Portfolio turnover may vary greatly from year to year as well as
within a particular year.
In its Advisory Agreements, the Advisor agrees to select broker-
dealers in accordance with guidelines established by the Trust's Board of
Trustees and 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 Trust's Board of Trustees and the
Company's Board of Directors, to cause the Funds to pay a broker-dealer which
furnishes brokerage and research services a higher commission than that which
might be charged by another broker-dealer for effecting the same transaction,
provided that the Advisor determines in good faith that such commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker-dealer, viewed in terms of either the particular
transaction or the overall responsibilities of the Advisor to the Funds. Such
brokerage and research services might consist of reports and statistics on
specific companies or industries, general summaries of groups of bonds and their
comparative earnings and yields, or broad overviews of the securities markets
and the economy.
Supplementary research information so received is in addition to, and
not in lieu of, services required to be performed by the Advisor and does not
reduce the advisory fees payable to the Advisor by the Funds. It is possible
that certain of the supplementary research or other services received will
primarily benefit one or more other investment companies or other accounts for
which investment discretion is exercised. Conversely, a Fund may be the primary
beneficiary of the research or services received as a result of portfolio
transactions effected for such other account or investment company.
Portfolio securities will not be purchased from or sold to the
Advisor, the Distributor or any affiliated person (as defined in the 1940 Act)
of the foregoing entities except to the extent permitted by SEC exemptive order
or by applicable law.
Investment decisions for each Fund and for other investment accounts
managed by the Advisor are made independently of each other in the light of
differing conditions. However, the same investment decision may be made for two
or more of such accounts. In such cases, simultaneous transactions are
inevitable. Purchases or sales are then averaged as to price and allocated as to
amount in a manner deemed equitable to each such account. While in some cases
this practice could have a detrimental effect on the price or value of the
security as far as a Fund is concerned, in other cases it is believed to be
52
<PAGE>
beneficial to a Fund. To the extent permitted by law, the Advisor may aggregate
the securities to be sold or purchased for a Fund with those to be sold or
purchased for other investment companies or accounts in executing transactions.
A Fund will not purchase securities during the existence of any
underwriting or selling group relating to such securities of which the Advisor
or any affiliated person (as defined in the 1940 Act) thereof is a member except
pursuant to procedures adopted by the Trust's Board of Trustees and the
Company's Board of Directors in accordance with Rule 10f-3 under the 1940 Act.
The Trust and the Company are required to identify the securities of
their regular brokers or dealers (as defined in Rule 10b-1 under the 1940) Act
or their parents held by them as of the close of their most recent fiscal year.
As of June 30, 1996: the Cash Investment Fund held 40,000,000 shares of Bank of
Nova Scotia, 10,000,000 shares of General Motors and 50,000,000 shares of Sanwa
Business Credit Co.; the Money Market Fund held 10,000,000 shares of Bear
Stearns; the Index 500 Fund held 7,000 shares of Merrill Lynch & Co., Inc.,
4,300 shares of Salomon, Inc. and 5,600 shares of Mellon Bank.
Except as noted in the Prospectuses and this Statement of Additional
Information the Funds' service contractors bear all expenses in connection with
the performance of their services and the Funds bear the expenses incurred in
their operations. These expenses include, but are not limited to, fees paid to
the Advisor, Administrator, Custodian and Transfer Agent; fees and expenses of
officers and Board of Trustees/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
Administrators. Any general expenses of the Trust or the Company that are not
readily identifiable as belonging to a particular investment portfolio of the
Trust or the Company are allocated among all investment portfolios of the Trust
or the Company by or under the direction of the Boards of Trustees and Directors
in a manner that the Boards of Trustees and Directors determine to be fair and
equitable. The Advisor, Administrator, Custodian and Transfer Agent may
voluntarily waive all or a portion of their respective fees from time to time.
PURCHASE AND REDEMPTION INFORMATION
Purchases and redemptions are discussed in the Funds' Prospectuses and
such information is incorporated herein by reference.
PURCHASES. In addition to the methods of purchasing shares described
in the Prospectuses, the Funds also offer a pre-authorized checking plan by
which investors may accumulate shares of the Funds 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 Funds at (800) 438-5789. Such a
plan is voluntary and may be discontinued by the shareholder at any time or by
the Trust on 30 days' written notice to the shareholder.
53
<PAGE>
LETTER OF INTENT. Purchasers who intend to invest $25,000 or more in
Class A Shares of the Funds of the Equity Funds or $100,000 or more in Class A
Shares of the Income Funds 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 charges 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.
RETIREMENT PLANS. Shares of any of the Funds may be purchased in
connection with various types of tax deferred retirement plans, including
individual retirement accounts ("IRAs"), qualified plans, deferred compensation
for public schools and charitable organizations (403(b) plans) and simplified
employee pension IRAs. An individual or organization considering the
establishment of a retirement plan should consult with an attorney and/or an
accountant with respect to the terms and tax aspects of the plan. A $10.00
annual custodial fee is also charged on IRAs. This custodial fee is due by
December 15 of each year and may be paid by check or shares liquidated from a
shareholder's account.
REDEMPTIONS
SYSTEMATIC WITHDRAWALS. In addition to the methods of redemption
described in the Funds' Prospectuses, a systematic withdrawal plan is available
in which a shareholder of the Funds 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
54
<PAGE>
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, change the amount on an existing account by calling the
Funds at (800) 438-5789. The Funds may terminate the plan on 30 days' written
notice to the shareholder.
OTHER INFORMATION. The Funds reserve 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 Funds 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.
EXCHANGES. In addition to the method of exchanging shares described in
the Funds' Prospectuses, a shareholder exchanging at least $1,000 of shares (for
which certificates have not been issued) and who has authorized expedited
exchanges on the application form filed with the Transfer Agent may exchange
shares by telephoning the Funds at (800) 438-5789. Telephone exchange
instructions must be received by the Transfer Agent by 4:00 p.m., New York City
time. The Funds, Distributor and Transfer Agent reserve the right at any time to
suspend or terminate the expedited exchange procedure or to impose a fee for
this service. During periods of unusual economic or market changes, shareholders
may experience difficulties or delays in effecting telephone exchanges. Neither
the Funds nor the Transfer Agent will be responsible for any loss, damages,
expense or cost arising out of any telephone exchanges effected upon
instructions believed by them to be genuine. The Transfer Agent has instituted
procedures that it believes are reasonably designed to insure that exchange
instructions communicated by telephone are genuine, and could be liable for
losses caused by unauthorized or fraudulent instructions in the absence of such
procedures. The procedures currently include a recorded verification of the
shareholder's name, social security number and account number, followed by the
mailing of a statement confirming the transaction, which is sent to the address
of record.
NET ASSET VALUE
MONEY MARKET FUNDS. The value of the portfolio securities of the Money
Market Funds is calculated using the amortized cost method of valuation. Under
this method the market value of an instrument is approximated by amortizing the
difference between the acquisition cost and value at maturity of the instrument
on a straight-line basis over the remaining life of the instrument. The effect
of changes in the market value of a security as a result of fluctuating interest
rates is not taken into account. The market value of debt securities usually
reflects yields generally available on securities of similar quality. When such
yields decline, market values can be expected to increase, and when yields
increase, market values can be expected to decline.
55
<PAGE>
As indicated, the amortized cost method of valuation may result in
the value of a security being higher or lower than its market price, the price a
Fund would receive if the security were sold prior to maturity. The Boards of
Trustees and Directors have established procedures reasonably designed, taking
into account current market conditions and the Funds' investment objectives, for
the purpose of maintaining a stable net asset value of $1.00 per share for each
Fund for purposes of sales and redemptions. These procedures include a review by
the Board of Trustees and Directors, at such intervals as they deem appropriate,
of the extent of any deviation of net asset value per share, based on available
market quotations, from the $1.00 amortized cost per share. Should that
deviation exceed 1/2 of 1% for a Fund, the Boards of Trustees and Directors will
promptly consider whether any and, if any, what action should be initiated. If
the Board of Trustees or Directors believes that the extent of any deviation
from a Fund's $1.00 amortized cost price per share may result in material
dilution of other unfair results to new or existing investors, it will take such
steps as it considers appropriate to eliminate or reduce any such dilution or
unfair results to the extent reasonably practicable. Such action may include
redeeming shares in kind, selling portfolio securities prior to maturity,
reducing or withholding dividends, shortening the average portfolio maturity,
reducing the number of outstanding shares without monetary consideration, and
utilizing a net asset value per share as determined by using available market
quotations.
Pursuant to Rule 2a-7, each of the Money Market Funds will maintain a
dollar-weighted average portfolio maturity appropriate to its objective of
maintaining a stable net asset value per share, provided that such Funds will
not purchase any security with a remaining maturity (within the meaning of Rule
2a-7 under the 1940 Act) greater than 397 days (securities subject to repurchase
agreements, variable and floating rate securities, and certain other securities
may bear longer maturities), nor maintain a dollar-weighted average portfolio
maturity which exceeds 90 days. In addition, the Funds may acquire only U.S.
dollar-denominated obligations that present minimal credit risks and that are
"First Tier Securities" at the time of investment. First Tier Securities are
those that are rated in the highest rating category by at least two nationally
recognized security rating organizations ("NRSROs") or by one if it is the only
NRSRO rating such obligation or, if unrated, determined to be of comparable
quality. A security is deemed to be rated if the issuer has any security
outstanding of comparable priority and security which has received a short-term
rating by an NRSRO. The Advisor will determine that an obligation presents
minimal credit risks or that unrated investments are of comparable quality, in
accordance with guidelines established by the Board of Directors or Trustees.
There can be no assurance that a constant net asset value will be maintained for
each Money Market Fund.
ALL FUNDS. In determining the approximate market value of portfolio
investments, the Trust or the Company may employ outside organizations, which
may use matrix or formula methods that take into consideration market indices,
matrices, yield curves and other specific adjustments. This may result in the
securities being valued at a price different from the price that would have been
determined had the matrix or formula methods not been used. All cash,
receivables and current payables are carried on the Trust's or the Company's
books at their face value. Other assets, if any, are valued at fair value as
determined in good faith under the supervision of the Board Members.
IN-KIND PURCHASES
With the exception of the Real Estate Fund, payment for shares may, in
the discretion of the Advisor, be made in the form of securities that are
permissible investments for the Funds as described in the Prospectuses. Shares
of the Real Estate Fund will not be issued for consideration other than cash.
For further information about this form of payment please contact the Transfer
Agent. In connection with an in-kind securities payment, a Fund will require,
among other things, that the securities (a) meet the investment objectives and
policies of the Funds; (b) are acquired for investment and not for resale; (c)
are
56
<PAGE>
liquid securities that are not restricted as to transfer either by law or
liquidity of markets; (d) have a value that is readily ascertainable by a
listing on a nationally recognized securities exchange; and (e) are valued on
the day of purchase in accordance with the pricing methods used by the Fund and
that the Fund receive satisfactory assurances that (i) it will have good and
marketable title to the securities received by it; (ii) that the securities are
in proper form for transfer to the Fund; and (iii) adequate information will be
provided concerning the basis and other tax matters relating to the securities.
PERFORMANCE INFORMATION
YIELD OF THE MONEY MARKET FUNDS
The Money Market Funds' current and effective yields are computed
using standardized methods required by the SEC. The annualized yield is
computed by: (a) determining the net change in the value of a hypothetical
account having a balance of one share at the beginning of a seven-calendar day
period; (b) dividing the net change by the value of the account at the beginning
of the period to obtain the base period return; and (c) annualizing the results
(i.e., multiplying the base period return by 365/7). The net change in the
value of the account reflects the value of additional shares purchased with
dividends declared and all dividends declared on both the original share and
such additional shares, but does not include realized gains and losses or
unrealized appreciation and depreciation. Compound effective yields are
computed by adding 1 to the base period return (calculated as described above),
raising the sum to a power equal to 365/7 and subtracting 1. Based on the
foregoing computations, the annualized yields for all share classes of the Money
Market, Cash Investment, Tax-Free Money Market and U.S. Treasury Money Market
Funds for the seven-day period ended June 30, 1996 were 4.56% (Class A), 3.82%
(Class B), and 4.81% (Class Y) for the Money Market Fund; 4.84% (Class Y) and
4.69% (Class K) and 4.59% (Class A) for the Cash Investment Fund; 2.83% (Class
Y), 2.68% (Class K) and 2.58% (Class A) for the Tax-Free Money Market Fund; and
4.70% (Class Y), 4.55% (Class K) and 4.45% (Class A) for the U.S. Treasury Money
Market Fund.
In addition, a standardized "tax-equivalent yield" may be quoted for
the Tax-Free Money Market Fund, which is computed by: (a) dividing the portion
of the Fund's yield (as calculated above) that is exempt from Federal income tax
by one minus a stated Federal income tax rate; and (b) adding the figure
resulting from (a) above to that portion, if any, of the yield that is not
exempt from Federal income tax. For the seven-day period ended June 30, 1996,
the tax-equivalent yield for Class Y, Class K and Class A Shares of the Tax-Free
Money Market Fund was 4.10% (Class Y), 3.88% (Class K) and 3.74% (Class A) for
all share classes based on a stated tax rate of 31%. The fees which may be
imposed by institutions on their Customers are not reflected in the calculations
of yields for the Funds.
Yield may fluctuate daily and does not provide a basis for determining
future yields. Because the yields of each Fund will fluctuate, they cannot be
compared with yields on savings accounts or other investment alternatives that
provide an agreed to or guaranteed fixed yield for a stated period of time.
However, yield information may be useful to an investor considering temporary
investments in money market instruments. In comparing the yield of one money
market fund to another, consideration should be given to each fund's investment
policies including the types of investments made, lengths of maturities of the
portfolio securities, and whether there are any special account charges which
may reduce the effective yield.
YIELD AND PERFORMANCE OF THE NON-MONEY MARKET FUNDS
57
<PAGE>
The Bond Funds' and International Bond Fund's 30-day (or one month)
standard yield described in the applicable Prospectus is calculated for each
Fund in accordance with the method prescribed by the SEC for mutual funds:
a - b
YIELD = 2[(-----+1)/6/- 1]
cd
Where: a = dividends and interest earned by a Fund during the period;
b = expenses accrued for the period (net of 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 a Fund at a discount or premium (variable "a" in the formula), each
Fund computes the yield to maturity of such instrument based on the market value
of the obligation (including actual accrued interest) at the close of business
on the last business day of each month, or, with respect to obligations
purchased during the month, the purchase price (plus actual accrued interest).
Such yield is then divided by 360 and the quotient is multiplied by the market
value of the obligation (including actual accrued interest) in order to
determine the interest income on the obligation for each day of the subsequent
month that the obligation is in the portfolio. It is assumed in the above
calculation that each month contains 30 days. The maturity of a debt obligation
with a call provision is deemed to be the next call date on which the obligation
reasonably may be expected to be called or, if none, the maturity date. For the
purpose of computing yield on equity securities held by a Fund, dividend income
is recognized by accruing 1/360 of the stated dividend rate of the security for
each day that the security is held by the Fund.
Interest earned on tax-exempt obligations that are issued without
original issue discount and have a current market discount is calculated by
using the coupon rate of interest instead of the yield to maturity. In the case
of tax-exempt obligations that are issued with original issue discount but which
have discounts based on current market value that exceed the then-remaining
portion of the original issue discount (market discount), the yield to maturity
is the imputed rate based on the original issue discount calculation. On the
other hand, in the case of tax-exempt obligations that are issued with original
issue discount but which have the discounts based on current market value that
are less than the then-remaining portion of the original issue discount (market
premium), the yield to maturity is based on the market value.
With respect to mortgage or other receivables-backed debt obligations
purchased at a discount or premium, the formula generally calls for amortization
of the discount or premium. The amortization schedule will be adjusted monthly
to reflect changes in the market value of such debt obligations. Expenses
accrued for the period (variable "b" in the formula) include all recurring fees
charged by a Fund to all shareholder accounts in proportion to the length of the
base period and the Fund's mean (or median) account size. Undeclared earned
income will be subtracted from the offering price per share (variable "d" in the
formula). A Fund's maximum offering price per share for purposes of the formula
includes the maximum sales charge imposed -- currently 5.50% of the per share
offering price for Class A Shares of the Equity Funds (with the exception of the
Index 500 Fund) and 4.00% of the per share offering price for Class A Shares of
the Bond and Tax-Free Bond Funds. Effective September 20, 1995, the maximum
sales charge imposed by Class A Shares of the Index 500 Fund was reduced from
5.50% to 2.50% of
58
<PAGE>
the per share offering price of such shares. The tax-equivalent yield for each
Fund below is based on a stated federal tax rate of 31% and, with respect to
Michigan Triple Tax-Free Bond Fund, a Michigan state tax rate of 4%.
CLASS A SHARES
- --------------
Based on the foregoing calculation, the standard yields and/or tax-
equivalent yields for Class A Shares of the following "Income Funds" for the 30-
day period ended June 30, 1996 were:
<TABLE>
<CAPTION>
30-Day Tax-Equivalent
Yield 30-Day Yield
------ --------------
<S> <C> <C>
Bond Fund 5.49% N/A
Intermediate Bond Fund 5.56% N/A
U.S. Government Income Fund 5.90% 8.55%
Michigan Triple Tax-Free Bond Fund 5.00% 7.69%
Tax-Free Bond Fund 4.45% 6.45%
Tax-Free Intermediate Bond Fund 3.76% 5.45%
</TABLE>
Without the waiver of fees by the Advisor the standard yields and/or tax-
equivalent of the Class A Shares of such Income Funds for the 30-day period
ended June 30, 1996 would have been:
<TABLE>
<CAPTION>
30-Day Tax-Equivalent
Yield 30-Day Yield
------ --------------
<S> <C> <C>
Bond Fund 5.49% 7.96%
Intermediate Bond Fund 5.56% 8.06%
U.S. Government Income Fund 5.90% 8.55%
Michigan Triple Tax-Free Bond Fund 5.00% 6.15%
Tax-Free Bond Fund 4.45% 6.45%
Tax-Free Intermediate Bond Fund 3.76% 5.45%
</TABLE>
59
<PAGE>
CLASS B SHARES
- --------------
Based on the foregoing calculation, the standard yields and/or tax
equivalent yields for Class B Shares of the Income Funds for the 30-day period
ended June 30, 1996 were:
<TABLE>
<CAPTION>
30-Day Tax-Equivalent
Yield 30-Day Yield
------- ---------------
<S> <C> <C>
Bond Fund 4.98% 7.22%
Intermediate Bond Fund 5.05% 7.32%
U.S. Government Income Fund 5.40% 7.83%
Michigan Triple Tax-Free Bond Fund 4.47% 6.88%
Tax-Free Bond Fund 3.86% 5.59%
Tax-Free Intermediate Bond Fund 3.17% 4.59%
</TABLE>
Without the waiver of fees by the Advisor the standard yields and/or
tax-equivalent of the Class B Shares of such Funds for the 30-day period ended
June 30, 1996 would have been:
<TABLE>
<CAPTION>
30-Day Tax-Equivalent
Yield 30-Day Yield
------- ---------------
<S> <C> <C>
Bond Fund 4.98% N/A
Intermediate Bond Fund 5.05% 7.22%
U.S. Government Income Fund 5.40% 7.83%
Michigan Triple Tax-Free Bond Fund 3.47% 5.34%
Tax-Free Bond Fund 3.86% 5.59%
Tax-Free Intermediate Bond Fund 3.17% 4.59%
</TABLE>
CLASS C SHARES
- --------------
Based on the foregoing calculation, the standard yields and/or tax
equivalent yields for Class C Shares of the Income Funds for the 30-day period
ended June 30, 1996 were:
<TABLE>
<CAPTION>
30-Day Tax-Equivalent
Yield 30-Day Yield
------- --------------
<S> <C> <C>
Bond Fund 4.98% N/A
Intermediate Bond Fund 5.04% N/A
U.S. Government Income Fund N/A N/A
Michigan Triple Tax-Free Bond Fund N/A N/A
Tax-Free Bond Fund N/A N/A
Tax-Free Intermediate Bond Fund N/A N/A
</TABLE>
60
<PAGE>
Without the waiver of fees by the Advisor the standard yields and/or tax-
equivalent of the Class C Shares of such Funds for the 30-day period ended June
30, 1996 would have been:
<TABLE>
<CAPTION>
30-Day Tax-Equivalent
Yield 30-Day Yield
------- --------------
<S> <C> <C>
Bond Fund 4.98% N/A
Intermediate Bond Fund 5.04% N/A
U.S. Government Income Fund N/A N/A
Michigan Triple Tax-Free Bond Fund N/A N/A
Tax-Free Bond Fund N/A N/A
Tax-Free Intermediate Bond Fund N/A N/A
</TABLE>
CLASS K SHARES
- --------------
Based on the foregoing calculation, the standard yields and/or tax
equivalent yields for Class K Shares of the Income Funds for the 30-day period
ended June 30, 1996 were:
<TABLE>
<CAPTION>
30-Day Tax-Equivalent
Yield 30-Day Yield
------- ---------------
<S> <C> <C>
Bond Fund 5.73% 8.30%
Intermediate Bond Fund 5.79% 8.39%
U.S. Government Income Fund 6.15% 8.91%
Michigan Triple Tax-Free Bond Fund 5.22% 8.03%
Tax-Free Bond Fund 4.62% 6.70%
Tax-Free Intermediate Bond Fund 3.92% 5.68%
</TABLE>
Without the waiver of fees by the Advisor the standard yields and/or tax-
equivalent of the Class K Shares of such Funds for the 30-day period ended June
30, 1996 would have been:
<TABLE>
<CAPTION>
30-Day Tax-Equivalent
Yield 30-Day Yield
------- ---------------
<S> <C> <C>
Bond Fund 5.73% 8.30%
Intermediate Bond Fund 5.79% 8.39%
U.S. Government Income Fund 6.15% 8.91%
Michigan Triple Tax-Free Bond Fund 4.22% 6.49%
Tax-Free Bond Fund 4.62% 6.70%
Tax-Free Intermediate Bond Fund 3.92% 5.68%
</TABLE>
61
<PAGE>
CLASS Y SHARES
- --------------
Based on the foregoing calculation, the standard yields and/or tax-
equivalent yields for Class Y Shares of the Income Funds for the 30-day period
ended June 30, 1996 were:
<TABLE>
<CAPTION>
30-Day Tax-Equivalent
Yield 30-Day Yield
------- ---------------
<S> <C> <C>
Bond Fund 5.98% 8.67%
Intermediate Bond Fund 6.04% 8.75%
U.S. Government Income Fund 6.40% 9.28%
Michigan Triple Tax-Free Bond Fund 5.46% 8.40%
Tax-Free Bond Fund 4.88% 7.07%
Tax-Free Intermediate Bond Fund 4.17% 6.04%
</TABLE>
Without the waiver of fees by the Advisor the standard yields and/or tax-
equivalent of the Class Y Shares of such Funds for the 30-day period ended June
30, 1996 would have been:
<TABLE>
<CAPTION>
30-Day Tax-Equivalent
Yield 30-Day Yield
------- ---------------
<S> <C> <C>
Bond Fund 5.98% 8.67%
Intermediate Bond Fund 6.04% 8.75%
U.S. Government Income Fund 6.40% 9.28%
Michigan Triple Tax-Free Bond Fund 4.46% 6.86%
Tax-Free Bond Fund 4.88% 7.07%
Tax-Free Intermediate Bond Fund 4.17% 6.04%
</TABLE>
Each Fund that advertises its "average annual total return" computes such
return by determining the average annual compounded rate of return during
specified periods that equates the initial amount invested to the ending
redeemable value of such investment according to the following formula:
T = (ERV)/1/n/ -1
---
P
Where: T = average annual total return;
ERV = ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the
1, 5 or 10 year (or other) periods at the
end of the applicable period (or a fractional
portion thereof);
P = hypothetical initial payment of $1,000; and
n = period covered by the computation, expressed
in years.
62
<PAGE>
Each Fund that advertises its "aggregate total return" computes such
returns by determining the aggregate compounded rates of return during specified
periods that likewise equate the initial amount invested to the ending
redeemable value of such investment. The formula for calculating aggregate total
return is as follows:
(ERV) - 1
-----
Aggregate Total Return = P
The calculations are made assuming that (1) all dividends and capital gain
distributions are reinvested on the reinvestment dates at the price per share
existing on the reinvestment date, (2) all recurring fees charged to all
shareholder accounts are included, and (3) for any account fees that vary with
the size of the account, a mean (or median) account size in the Fund during the
periods is reflected. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment after deduction of all non-recurring charges at the end of the
measuring period. The Funds' average annual total return and 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
Funds' average annual total return and aggregate total return quotations for
Class B Shares will reflect any applicable CDSC; provided that the Funds may
also advertise total return data without reflecting any applicable or 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.
Based on the foregoing calculation, set forth below are the average annual
total return figures for the Class A, B, C, K and Y Shares of each of the
following Funds for the period ended June 30, 1996 and since commencement of
operations.
<TABLE>
<CAPTION>
FUND-INCEPTION DATE
- ---------------------
12 Month Inception 12 Month Inception
MULTI-SEASON Period Ended through Period Ended through
GROWTH FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- --------------------- ------------ --------- ------------ ----------
<S> <C> <C> <C> <C>
Class A-8/4/93 27.56% 15.36% 20.54% 13.13%
Class B-4/29/93 26.66% 13.80% 21.66% 13.08%
Class C-9/20/93 26.64% 15.14% 25.64 15.14%
Class K-6/23/95 27.56% N/A N/A N/A
Class Y-8/16/93 27.85% 15.74% N/A N/A
12 Month Inception 12 Month Inception
REAL ESTATE EQUITY Period Ended through Period Ended through
INVESTMENT FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- --------------------- ------------ --------- ------------ ----------
Class A-9/30/94 15.92% 11.54% 9.54% 8.00%
Class B-10/3/94 15.05% 10.76% 10.05% 8.62%
Class C-1/5/96 N/A 6.08% N/A 5.08%
Class Y-10/3/94 16.20% 11.88% N/A N/A
</TABLE>
63
<PAGE>
<TABLE>
<CAPTION>
12 Month Inception 12 Month Inception
MUNDER ACCELERATING Period Ended through Period Ended through
GROWTH FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- ----------------------- ------------ --------- ------------ ---------
<S> <C> <C> <C> <C>
Class A-11/23/92 22.03% 14.98% 15.32% 13.19%
Class B-4/25/94 21.05% 17.43% 16.05% 16.29%
Class C-9/26/95 N/A 10.22% N/A 9.28%
Class K-11/23/92 22.03% 14.98% N/A N/A
Class Y-12/1/91 22.31% 15.90% N/A N/A
12 Month Inception 12 Month Inception
MUNDER SMALL COMPANY Period Ended through Period Ended through
GROWTH FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- ----------------------- ------------ --------- ------------ ---------
Class A-11/23/92 48.28% 19.09% 40.12% 17.23%
Class B-4/28/94 47.26% 25.92% 42.26% 24.86%
Class C-9/26/95 N/A 31.97% N/A 30.97%
Class K-11/23/92 48.28% 19.09% N/A N/A
Class Y-12/1/91 48.65% 20.35% N/A N/A
12 Month Inception 12 Month Inception
MUNDER MID-CAP Period Ended through Period Ended through
GROWTH FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- ----------------------- ------------ --------- ------------ ---------
Class A-12/22/95 N/A 9.57% N/A 3.55%
Class B-1/26/96 N/A 9.08% N/A 4.08%
Class C-11/9/95 N/A 10.67% N/A 9.67%
Class K-10/2/95 N/A 9.78% N/A N/A
Class Y-8/14/95 N/A 15.80% N/A N/A
12 Month Inception 12 Month Inception
MUNDER INTERNATIONAL Period Ended through Period Ended through
EQUITY FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- ----------------------- ------------ --------- ------------ ---------
Class A-11/30/92 13.37% 11.18% 7.13% 9.44%
Class B-3/9/94 12.53% 5.14% 7.53% 3.91%
Class C-9/29/95 N/A 7.06% N/A 6.06%
Class K-11/23/92 13.29% 11.53% N/A N/A
Class Y-12/1/91 13.63% 10.23% N/A N/A
12 Month Inception 12 Month Inception
Period Ended through Period Ended through
MUNDER INDEX 500 FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- ----------------------- ------------ --------- ------------ ---------
Class A-12/9/92 25.51% 15.43% 22.38% 14.61%
Class B-10/31/95 N/A 16.51% N/A 13.51%
Class K-12/7/92 25.37% 15.40% N/A N/A
Class Y-12/1/91 25.61% 16.24% N/A N/A
</TABLE>
64
<PAGE>
<TABLE>
<CAPTION>
12 Month Inception 12 Month Inception
MUNDER GROWTH Period Ended through Period Ended through
& INCOME FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- ----------------------- ------------- --------- ------------ ---------
<S> <C> <C> <C> <C>
Class A-8/8/94 20.90% 18.38% 14.25% 14.90%
Class B-8/9/94 20.09% 17.58% 15.09% 15.74%
Class C-12/5/95 N/A 5.57% N/A 4.57%
Class K-7/5/94 20.97% 18.09% N/A N/A
Class Y-7/5/94 21.26% 18.34% N/A N/A
12 Month Inception 12 Month Inception
Period Ended through Period Ended through
MUNDER VALUE FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- ----------------------- ------------- --------- ------------ ---------
Class A-9/14/95 N/A 11.95% N/A 5.79%
Class B-9/19/95 N/A 11.09% N/A 6.09%
Class C-2/9/96 N/A 1.90% N/A .90%
Class K-11/30/95 N/A 7.33% N/A N/A
Class Y-8/18/95 N/A 16.52% N/A N/A
12 Month Inception 12 Month Inception
Period Ended through Period Ended through
MUNDER BALANCED FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- ----------------------- ------------ --------- ------------ ---------
Class A-4/30/93 17.06% 9.48% 10.62% 7.55%
Class B-6/21/94 16.24% 15.01% 11.24% 13.72%
Class C-1/24/96 N/A 6.20% N/A 5.20%
Class K-4/16/93 17.17% 9.03% N/A N/A
Class Y-4/13/93 17.35% 9.07% N/A N/A
</TABLE>
65
<PAGE>
<TABLE>
<CAPTION>
12 Month Inception 12 Month Inception
Period Ended through Period Ended through
MUNDER BOND FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- ----------------------- ------------ --------- ------------ ---------
<S> <C> <C> <C> <C>
Class A-12/9/92 4.24% 6.17% .07% 4.96%
Class B-3/13/96 N/A .22% N/A (4.70)%
Class C-3/25/96 N/A (.49)% N/A (1.49)%
Class K-11/23/92 4.35% 6.11% N/A N/A
Class Y-12/1/91 4.50% 5.85% N/A N/A
12 Month Inception 12 Month Inception
MUNDER INTERMEDIATE Period Ended through Period Ended through
BOND FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- ----------------------- ------------ --------- ------------ ---------
Class A-11/24/92 3.92% 4.88% (.23)% 3.70%
Class B-10/25/94 3.22 6.83% (1.67)% 4.54%
Class C-4/19/96 N/N .39% N/A (.61)%
Class K-11/20/92 4.04% 4.87% N/A N/A
Class Y-12/1/91 4.29% 5.70% N/A N/A
MUNDER U.S. 12 Month Inception 12 Month Inception
GOVERNMENT Period Ended through Period Ended through
INCOME FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- ----------------------- ------------ --------- ------------ ---------
Class A-7/28/94 4.34% 7.51% .16% 5.26%
Class B-9/6/95 N/A 2.42% N/A N/A
Class K-7/5/94 4.32% 7.41% N/A N/A
Class Y-7/5/94 4.58% 7.67% N/A N/A
MUNDER MICHIGAN 12 Month Inception 12 Month Inception
TRIPLE TAX-FREE Period Ended through Period Ended through
BOND FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- ----------------------- ------------ --------- ------------ ---------
Class A-2/15/94 5.25% 2.44% 1.04% .70%
Class B-7/5/94 4.46% 5.51% (.54)% 3.58%
Class K-1/3/94 5.14% 2.08% N/A N/A
Class Y-1/3/94 5.51% 2.37% N/A N/A
12 Month Inception 12 Month Inception
MUNDER TAX-FREE Period Ended through Period Ended through
BOND FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- ----------------------- ------------ --------- ------------ ---------
Class A-10/9/95 N/A 1.87% N/A (2.20)%
Class B-12/6/94 4.36% 8.15% (.64)% 5.69%
Class K-7/5/94 5.12% 6.53% N/A N/A
Class Y-7/21/94 5.38% 6.57% N/A N/A
</TABLE>
66
<PAGE>
<TABLE>
<CAPTION>
MUNDER TAX-FREE 12 Month 5 year Inception
INTERMEDIATE- Period Ended Period Ended Through
BOND FUND 6/30/96* 6/30/96* 6/30/96*
- ------------------ ------------ ------------ ---------
<S> <C> <C> <C>
Class A-11/30/92 3.79% N/A 4.38%
Class B-5/16/96 N/A N/A .39%
Class K-2/9/87 3.69% 5.59% 5.64%
Class Y-12/17/92 3.95% N/A 4.56%
MUNDER TAX-FREE 12 Month 5 Year Inception
INTERMEDIATE- Period Ended Period Ended Through
BOND FUND 6/30/96** 6/30/96** 6/30/96**
- ------------------ ------------ ------------ ---------
Class A-11/30/92 (.36)% N/A 3.20%
Class B-5/16/96 N/A N/A (4.60)%
Class K-2/9/87 N/A N/A N/A
Class Y-12/17/92 N/A N/A N/A
</TABLE>
- ----------------
* Figures do not include the effect of the sales charge.
** Figures include the effect of the applicable sales charge.
+ Effective September 20, 1995, the maximum front-end sales charge applicable
to Class A Shares of the Index 500 Fund was reduced from 5.50% to 2.50%.
++ Class C Shares of the Multi-Season Fund and Real Estate Fund were formerly
known as Class D Shares.
As of June 30, 1996, the following Classes had not commenced operations:
Class B Shares of the Tax-Free Intermediate Bond Fund; Class C Shares of each of
U.S. Government Income, Michigan Triple Tax-Free Bond, Tax-Free Bond and Tax-
Free Intermediate Bond Funds and the Class K Shares of the Real Estate Fund.
The International Bond Fund did not commence operations until _______. As
of the date of this Statement of Additional Information, the Small-Cap Value
Fund, the Equity Selection Fund and the Micro-Cap Growth Fund had not commenced
operations.
ALL FUNDS. The performance of any investment is generally a function of
portfolio quality and maturity, type of investment and operating expenses.
From time to time, in advertisements or in reports to shareholders, a
Fund's yields or total returns may be quoted and compared to those of other
mutual funds with similar investment objectives and to stock or other relevant
indices. For example, a Fund's yield may be compared to the IBC/Donoghue's
Money Fund Average, which is an average compiled by Donoghue's MONEY FUND
REPORT
of Holliston, MA 01746, a widely recognized independent publication that
monitors the performance of money market funds, or to the data prepared by
Lipper Analytical Services, Inc., a widely recognized independent service that
monitors the performance of mutual funds. In addition, as stated in the Fund's
Prospectuses, the tax-equivalent yield (and hypothetical examples illustrating
the effect of tax-equivalent yields) of a Fund may be quoted in advertisements
or reports to shareholders. Hypothetical examples showing the difference
between a taxable and a tax-free investment may also be provided to
shareholders.
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<PAGE>
The foregoing performance data reflects the imposition of the maximum sales
load on Class A Shares but does not reflect payments under the Trust's Class K
Plan or Class A Plan, which were not imposed before December 31, 1993.
TAXES
The following summarizes certain additional tax considerations generally
affecting the Funds and their shareholders that are not described in the Funds'
Prospectuses. No attempt is made to present a detailed explanation of the tax
treatment of the Funds or their shareholders, and the discussion here and in the
applicable Prospectus is not intended as a substitute for careful tax planning.
Potential investors should consult their tax Advisors with specific reference to
their own tax situations.
GENERAL. Each Fund will elect to be taxed separately as a regulated
investment company under Subchapter M, of the Internal Revenue Code of 1986, as
amended (the "Code"). As a regulated investment company, each Fund generally is
exempt from Federal income tax on its net investment income and realized capital
gains which it distributes to shareholders, provided that it distributes an
amount equal to the sum of (a) at least 90% of its investment company taxable
income (net investment income and the excess of net short-term capital gain over
net long-term capital loss), if any, for the year and (b) at least 90% of its
net tax-exempt interest income, if any, for the year (the "Distribution
Requirement") and satisfies certain other requirements of the Code that are
described below. Distributions of investment company taxable income and net tax-
exempt interest income made during the taxable year or, under specified
circumstances, within twelve months after the close of the taxable year will
satisfy the Distribution Requirement.
In addition to satisfaction of the Distribution Requirement, each Fund must
derive with respect to a taxable year at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans and gains
from the sale or other disposition of stock or securities or foreign currencies,
or from other income derived 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 a Fund at maturity or on disposition of a security held
for less than three months will not be treated (in contrast to other income
which is attributable to realized market appreciation) as gross income from the
sale or other disposition of securities held for less than three months for this
purpose.
In addition to the foregoing requirements, at the close of each quarter of
its taxable year, at least 50% of the value of each Fund's assets must consist
of cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and securities of other issuers (as to which a
Fund has not invested more than 5% of the value of its total assets in
securities of such issuer and as to which a Fund does not hold more than 10% of
the outstanding voting securities of such issuer) and no more than 25% of the
value of each Fund's total assets may be invested in the securities of any one
issuer (other than U.S. Government securities and securities of other regulated
investment companies), or in two or more issuers which such Fund controls and
which are engaged in the same or similar trades or businesses.
Distributions of net investment income received by a Fund from investments
in debt securities (other than interest on tax-exempt municipal obligations held
by the Tax-Free Money Market Fund, Tax-Free Intermediate Bond Fund, Tax-Free
Bond Fund and Michigan Triple Tax-Free Bond Fund) and any
68
<PAGE>
net realized short-term capital gains distributed by a Fund will be taxable to
shareholders as ordinary income and will not be eligible for the dividends
received deduction for corporations.
Each Fund intends to distribute to shareholders any excess of net long-term
capital gain over net short-term capital loss ("net capital gain") for each
taxable year. Such gain is distributed as a capital gain dividend and is
taxable to shareholders as 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 gains dividends are not eligible for the
dividends received deduction for corporations.
In the case of corporate shareholders, distributions of a Fund for any
taxable year generally qualify for the dividends received deduction to the
extent of the gross amount of "qualifying dividends" received by such Fund for
the year and if certain holding period requirements are met. Generally, a
dividend will be treated as a "qualifying dividend" if it has been received from
a domestic corporation.
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 any Fund does not qualify as a regulated investment
company, all of its taxable income will be subject to tax at regular corporate
rates without any deduction for distributions to shareholders. In such event,
all distributions (whether or not derived from exempt-interest income) would be
taxable as ordinary income and would be eligible for the dividends received
deduction in the case of corporate shareholders to the extent of such Fund's
current and accumulated earnings and profits.
Shareholders will be advised annually as to the Federal income tax
consequences of distributions made by the Funds each year.
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). Each Fund intends to make sufficient
distributions or deemed distributions of its ordinary taxable income and capital
gain net income each calendar year to avoid liability for this excise tax.
The Trust and 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 Trust 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
69
<PAGE>
expressed herein, and any such changes or decisions may have a retroactive
effect with respect to the transactions contemplated herein.
Although each Fund expects to qualify as a "regulated investment company"
and to be relieved of all or substantially all Federal income taxes, depending
upon the extent of its activities in states and localities in which its offices
are maintained, in which its agents or independent contractors are located or in
which it is otherwise deemed to be conducting business, each Fund may be subject
to the tax laws of such states or localities.
TAX-FREE MONEY MARKET FUND, TAX-FREE INTERMEDIATE BOND
FUND, TAX-FREE BOND
FUND AND MICHIGAN TRIPLE TAX-FREE BOND FUND. The Tax-Free Money
Market Fund,
Tax-Free Intermediate Bond Fund, Tax-Free Bond Fund and Michigan Triple Tax-Free
Bond Fund are designed to provide investors with current tax-exempt interest
income. Shares of the Funds would not be suitable for tax-exempt institutions
and may not be suitable for retirement plans qualified under Section 401 of the
Code, H.R. 10 plans and individual retirement accounts since such plans and
accounts are generally tax-exempt and, therefore, not only would not gain any
additional benefit from the Funds' dividends being tax-exempt but also such
dividends would be taxable when distributed to the beneficiary. In addition, the
Funds may not be an appropriate investment for entities which are "substantial
users" of facilities financed by private activity bonds or "related persons"
thereof. "Substantial user" is defined under U.S. Treasury Regulations to
include a non-exempt person who regularly uses a part of such facilities in his
trade or business and (a) whose gross revenues derived with respect to the
facilities financed by the issuance of bonds are more than 5% of the total
revenues derived by all users of such facilities, (b) who occupies more than 5%
of the entire usable area of such facilities, or (c) for whom such facilities or
a part thereof were specifically constructed, reconstructed or acquired.
"Related persons" include certain related natural persons, affiliated
corporations, a partnership and its partners and an S corporation and its
shareholders.
In order for the Funds to pay exempt-interest dividends with respect to any
taxable year, at the close of each quarter of each Fund's taxable year at least
50% of the value of the Fund's assets must consist of exempt-interest
obligations. Exempt-interest dividends distributed to shareholders are not
included in the shareholder's gross income for regular Federal income tax
purposes. However, all shareholders required to file a Federal income tax return
are required to report the receipt of exempt-interest dividends and other
exempt-interest on their returns. Moreover, while such dividends and interest
are exempt from regular Federal income tax, they may be subject to alternative
minimum tax (currently imposed at the rate of 26-28% in the case of non-
corporate taxpayers and at the rate of 20% in the case of corporate taxpayers),
in two circumstances. First, exempt-interest dividends derived from certain
"private activity" bonds issued after August 7, 1986 will generally constitute
an item of tax preference for both corporate and non-corporate taxpayers.
Second, exempt-interest dividends derived from all bonds, regardless of the date
of issue, must be taken into account by corporate taxpayers in determining the
amount of certain adjustments for alternative minimum tax purposes. Receipt of
exempt-interest dividends may result in collateral Federal income tax
consequences to certain other taxpayers, including financial institutions,
property and casualty insurance companies, individual recipients of Social
Security or Railroad Retirement benefits, and foreign corporations engaged in a
trade or business in the United States. Prospective investors should consult
their own tax advisors as to such consequences.
The percentage of total dividends paid by the Fund with respect to any
taxable year which qualifies as Federal exempt-interest dividends will be the
same for all shareholders receiving dividends during such year. If a shareholder
receives an exempt-interest dividend with respect to any share and such share is
held for six months or less, any loss on the sale or exchange of such share will
be disallowed to the extent of the amount of such dividends.
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<PAGE>
Interest on indebtedness incurred by a shareholder to purchase or carry
shares of the Funds generally is not deductible for Federal income tax purposes
if the Funds distribute exempt-interest dividends during the shareholder's
taxable year.
MICHIGAN TAX CONSIDERATIONS - TAX-FREE INTERMEDIATE BOND
FUND AND MICHIGAN
TRIPLE TAX-FREE BOND FUND. As stated in the Tax-Free Intermediate Bond Fund
Prospectus and the Michigan Triple Tax-Free Bond Fund Prospectus, dividends paid
by the Fund that are derived from interest attributable to tax-exempt Michigan
Municipal Obligations will be exempt from Michigan Income Tax, Michigan
Intangibles Tax and Michigan Single Business Tax. Conversely, to the extent that
the Fund's dividends are derived from interest on obligations other than
Michigan Municipal Obligations, such dividends will be subject to Michigan
Income, Intangibles and Michigan Single Business Taxes, even though the
dividends may be exempt for Federal Income Tax purposes.
In particular, gross interest income and dividends derived from obligations
or securities of the State of Michigan and its political subdivisions, exempt
from Federal Income Tax, are exempt from Michigan Income Tax under Act No. 281,
Public Acts of Michigan, 1967, as amended, and are exempt from Michigan Single
Business Tax under Act No. 228, Public Acts of Michigan, 1975, as amended. The
Michigan Income Tax act levies a flat-rate income tax on individuals, estates,
and trusts. The Single Business Tax Act levies a tax upon the "adjusted tax
base" of most individuals, corporations, financial organizations, partnerships,
joint ventures, estates, and trusts with "business activity" in Michigan.
Bonds or other similar obligations of the State of Michigan or of a
political subdivision of the State of Michigan are exempt from Michigan
Intangibles Tax under Act No. 301, Public Acts of Michigan, 1939, as amended. In
1986, the Michigan Department of Treasury issued a Bulletin stating that holders
of interests in investment companies who are subject to the Michigan intangibles
tax will be exempt from the tax to the extent that the investment portfolio
consists of items such as Michigan Municipal Obligations.
The transfer of obligations or securities of the State of Michigan and its
political subdivisions by the Fund, as well as the transfer of Fund shares by a
shareholder, is subject to Michigan taxes measured by gain on the sale, payment,
or other disposition thereof.
INTERNATIONAL EQUITY FUND AND INTERNATIONAL BOND FUND.
Income received by
the International Equity Fund and the International Bond Fund from sources
within foreign countries may be subject to withholding and other foreign taxes.
The payment of such taxes will reduce the amount of dividends and distributions
paid to the Funds' shareholders. So long as the Funds qualify as regulated
investment companies, certain distribution requirements are satisfied, and more
than 50% of the value of the Funds' assets at the close of the taxable year
consists of securities of foreign corporations, the Funds may elect, for U.S.
Federal income tax purposes, to treat foreign income taxes paid by the Funds
that can be treated as income taxes under U.S. income tax principles as paid by
its shareholders. The Funds may qualify for and make this election in some, but
not necessarily all, of its taxable years. If the Funds were to make an
election, an amount equal to the foreign income taxes paid by the Funds would be
included in the income of its shareholders and the shareholders would be
entitled to credit their portions of this amount against their U.S. tax due, if
any, or to deduct such portions from their U.S taxable income, if any. Shortly
after any year for which it makes such an election, the Funds will report to its
shareholders, in writing, the amount per share of such foreign tax that must be
included in each shareholder's gross income and the amount which will be
available for deduction or credit. No deduction for foreign taxes may be claimed
by a shareholder who does not itemize deductions. Certain
71
<PAGE>
limitations are imposed on the extent to which the credit (but not the
deduction) for foreign taxes may be claimed.
Shareholders who choose to utilize a credit (rather than a deduction) for
foreign taxes will be subject to the limitation that the credit may not exceed
the shareholder's United States tax (determined without regard to the
availability of the credit) attributable to his or her total foreign source
taxable income. For this purpose, the portion of dividends and distributions
paid by the Fund from its foreign source income will be treated as foreign
source income. The Fund's gains and losses from the sale of securities will
generally be treated as derived from United States sources and certain foreign
currency gains and losses likewise will be treated as derived from United States
sources. The limitation on the foreign tax credit is applied separately to
foreign source "passive income", such as the portion of dividends received from
the Fund which qualifies as foreign source income. In addition, only a portion
of the foreign tax credit will be allowed to offset any alternative minimum tax
imposed on corporations and individuals. Because of these limitations,
shareholders may be unable to claim a credit for the full amount of their
proportionate shares of the foreign income taxes paid by the Fund.
TAXATION OF CERTAIN FINANCIAL INSTRUMENTS. Special rules govern the
Federal
income tax treatment of financial instruments that may be held by some of the
Funds. These rules may have a particular impact on the amount of income or gain
that the Funds must distribute to their respective shareholders to comply with
the Distribution Requirement, on the income or gain qualifying under the Income
Requirement and on their ability to comply with the Short-Gain Test, all
described above.
Generally, futures contracts, options on futures contracts and certain
foreign currency contracts held by the Funds (collectively, the "Instruments")
at the close of their taxable year are treated for Federal income tax purposes
as sold for their fair market value on the last business day of such year, a
process known as "marking-to-market." Forty percent of any gain or loss
resulting from such constructive sales will be treated as short-term capital
gain or loss and 60% of such gain or loss will be treated as long-term capital
gain or loss without regard to the period the Funds hold the Instruments ("the
40%-60% rule"). The amount of any capital gain or loss actually realized by the
Funds in a subsequent sale or other disposition of those Instruments is adjusted
to reflect any capital gain or loss taken into account by the Funds in a prior
year as a result of the constructive sale of the Instruments. Losses with
respect to futures contracts to sell, related options and certain foreign
currency contracts which are regarded as parts of a "mixed straddle" because
their values fluctuate inversely to the values of specific securities held by
the Funds are subject to certain loss deferral rules which limit the amount of
loss currently deductible on either part of the straddle to the amount thereof
which exceeds the unrecognized gain (if any) with respect to the other part of
the straddle, and to certain wash sales regulations. Under short sales rules,
which are also applicable, the holding period of the securities forming part of
the straddle will (if they have not been held for the long-term holding period)
be deemed not to begin prior to termination of the straddle. With respect to
certain Instruments, deductions for interest and carrying charges may not be
allowed. Notwithstanding the rules described above, with respect to futures
contracts which are part of a "mixed straddle" to sell related options, and
certain foreign currency contracts which are properly identified as such, the
Funds may make an election which will exempt (in whole or in part) those
identified futures contracts, options and foreign currency contracts from the
Rules of Section 1256(g) of the Code including "the 40%-60% rule" and the mark-
to-market on gains and losses being treated for Federal income tax purposes as
sold on the last business day of each Fund's taxable year, but gains and losses
will be subject to such short sales, wash sales and loss deferral rules and the
requirement to capitalize interest and carrying charges. Under Temporary
Regulations, the Funds would be allowed (in lieu of the foregoing) to elect to
either (1) offset gains or losses from portions which are part of a mixed
straddle by separately identifying each mixed straddle to which such treatment
applies, or (2) establish a mixed straddle account
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<PAGE>
for which gains and losses would be recognized and offset on a periodic basis
during the taxable year. Under either election, "the 40%-60% rule" will apply to
the net gain or loss attributable to the Instruments, but in the case of a mixed
straddle account election, not more than 50% of any net gain may be treated as
long-term and no more than 40% of any net loss may be treated as short-term.
A foreign currency contract must meet the following conditions in order to
be subject to the marking-to-market rules described above: (1) the contract must
require delivery of a foreign currency of a type in which regulated futures
contracts are traded or upon which the settlement value of the contract depends;
(2) the contract must be entered into at arm's length at a price determined by
reference to the price in the interbank market; and (3) the contract must be
traded in the interbank market. The Treasury Department has broad authority to
issue regulations under the provisions respecting foreign currency contracts. As
of the date of this Statement of Additional Information, the Treasury Department
has not issued any such regulations. Other foreign currency contracts entered
into by a Fund may result in the creation of one or more straddles for Federal
income tax purposes, in which case certain loss deferral, short sales, and wash
sales rules and the requirement to capitalize interest and carrying charges may
apply.
Some of the non-U.S. dollar denominated investments that the Funds may
make, such as foreign securities, European Deposit Receipts and foreign currency
contracts, may be subject to the provisions of Subpart J of the Code, which
govern the Federal income tax treatment of certain transactions denominated in
terms of a currency other than the U.S. dollar or determined by reference to the
value of one or more currencies other than the U.S dollar. The types of
transactions covered by these provisions include the following: (1) the
acquisition of, or becoming the obligor under, a bond or other debt instrument
(including, to the extent provided in Treasury regulations, preferred stock);
(2) the accruing of certain trade receivables and payables; and (3) the entering
into or acquisition of any forward contract, futures contract, option and
similar financial instrument, if such instrument is not marked to market. The
disposition of a currency other than the U.S. dollar by a U.S. taxpayer is also
treated as a transaction subject to the special currency rules. However, foreign
currency-related regulated futures contracts and non equity options are
generally not subject to the special currency rules if they are or would be
treated as sold for their fair market value at year-end under the marking-to-
market rules unless an election is made to have such currency rules apply. With
respect to transactions covered by the special rules, foreign currency gain or
loss is calculated separately from any gain or loss on the underlying
transaction and is normally taxable as ordinary gain or loss. A taxpayer may
elect to treat as capital gain or loss foreign currency gain or loss arising
from certain identified forward contracts, futures contracts and options that
are capital assets in the hands of the taxpayer and which are not part of a
straddle. In accordance with Treasury regulations, certain transactions that are
part of a "Section 988 hedging transaction" (as defined in the Code and Treasury
regulations) may be integrated and treated as a single transaction or otherwise
treated consistently for purposes of the Code. "Section 988 hedging
transactions" are not subject to the marking-to-market or loss deferral rules
under the Code. Gain or loss attributable to the foreign currency component of
transactions engaged in by the Funds which are not subject to the special
currency rules (such as foreign equity investments other than certain preferred
stocks) is treated as capital gain or loss and is not segregated from the gain
or loss on the underlying transaction.
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 Requirement 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
73
<PAGE>
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.
If the Fund invests in certain "passive foreign investment companies"
("PFICs"), it will be subject to Federal income tax (and possibly additional
interest charges) on a portion of any "excess distribution" or gain from the
disposition of such shares even if it distributes such income to its
shareholders. If the Fund elects to treat the PFIC as a "qualified electing
fund" ("QEF") and the PFIC furnishes certain financial information in the
required form to the Fund, the Fund will instead be required to include in
income each year its allocable share of the ordinary earnings and net capital
gains on the QEF, regardless of whether received, and such amounts will be
subject to the various distribution requirements described above.
The Funds may be subject to U.S. Federal income tax on a portion of any
"excess distribution" or a gain from the distribution of passive foreign
investment companies.
ADDITIONAL INFORMATION CONCERNING SHARES
The Trust is a Massachusetts business trust. Under the Trust's Declaration
of Trust, the beneficial interest in the Trust may be divided into an unlimited
number of full and fractional transferable shares. The Company is a Maryland
corporation. The Trust's Declaration of Trust and the Company's Articles of
Incorporation authorize the Boards of Trustees and Directors to classify or
reclassify any unissued shares of the Trust and the Company into one or more
classes by setting or changing, in any one or more respects, their respective
designations, preferences, conversion or other rights, voting powers,
restrictions, limitations, qualifications and terms and conditions of
redemption. Pursuant to such authority, the Trust's Board of Trustees has
authorized the issuance of an unlimited number of shares of beneficial interest
in the Trust, representing interests in the Accelerating Growth, Small Company
Growth, Growth & Income, International Equity, Index 500, Balanced,
Intermediate Bond, U.S. Government Income, Bond, Tax-Free Intermediate Bond,
Cash Investment, Tax-Free Money Market, U.S. Treasury Money Market, Tax-Free
Bond and Michigan Triple Tax-Free Bond Funds. The shares of each Fund (other
than the Cash Investment Fund, U.S. Treasury Money Market Fund and Tax-Free
Money Market Fund) are offered in five separate classes: Class A, Class B,
Class C, Class K and Class Y Shares. Class C Shares of the Index 500 Fund are
not currently available for purchase. The Cash Investment Fund, U.S. Treasury
Money Market Fund and Tax-Free Money Market Fund offer only Class Y Shares,
Class K Shares and Class A Shares. Pursuant to the authority of the Company's
Articles of Incorporation, the Directors have authorized the issuance of shares
of common stock representing interests in the Multi-Season Fund, the Real Estate
Fund, the Mid-Cap Fund, the Value Fund, the International Bond Fund, the Small-
Cap Value Fund, the Equity Selection Fund, the Micro-Cap Equity Fund , the Net
Net Fund and the Money Market Fund, respectively. The Shares of each Fund
(other than the Money Market Fund and the Net Net Fund) are offered in five
separate classes: Class A, Class B, Class C, Class K and Class Y Shares. The
Money Market Fund offers only Class A, Class B and Class C Shares (which may be
acquired only through an exchange of shares from the corresponding classes of
other funds of the Trust and the Company) and Class Y Shares. The Net Net Fund
offers only one class of shares.
In the event of a liquidation or dissolution of each of the Trust or the
Company or an individual Fund, shareholders of a particular Fund would be
entitled to receive the assets available for distribution belonging to such
Fund, and a proportionate distribution, based upon the relative net asset values
of the Trust's respective Funds, of any general assets not belonging to any
particular Fund which are available
74
<PAGE>
for distribution. Shareholders of a Fund are entitled to participate in the net
distributable assets of the particular Fund involved on liquidation, based on
the number of shares of the Fund that are held by each shareholder.
Holders of all outstanding shares of a particular Fund will vote together
in the aggregate and not by class on all matters, except that only Class A
Shares of a Fund will be entitled to vote on matters submitted to a vote of
shareholders pertaining to the Fund's Class A Plan, only Class B Shares will be
entitled to vote on matters submitted to a vote of shareholders pertaining to
the Fund's Class B Plan, only Class C Shares of a Fund will be entitled to vote
on matters submitted to a vote of shareholders pertaining to the Fund's Class C
Plan, and only Class K Shares of a Fund will be entitled to vote on matters
submitted to a vote of shareholders pertaining to the Class K Plan. Further,
shareholders of all of the Funds, as well as those of any other investment
portfolio now or hereafter offered by the Trust or the Company, will vote
together in the aggregate and not separately on a Fund-by-Fund basis, except as
otherwise required by law or when permitted by the Boards of Trustees and
Directors. Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Trust or the Company shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each Fund affected by the matter. A Fund is affected by a
matter unless it is clear that the interests of each Fund in the matter are
substantially identical 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 fundamental investment policy would be effectively acted upon with
respect to a Fund only if approved by a majority of the outstanding shares of
such Fund. However, the Rule also provides that the ratification of the
appointment of independent auditors, the approval of principal underwriting
contracts and the election of trustees may be effectively acted upon by
shareholders of the Trust or the Company voting together in the aggregate
without regard to a particular Fund.
Shares of each of the Trust and the Company have noncumulative voting
rights and, accordingly, the holders of more than 50% of each of the Trust's and
the Company's outstanding shares (irrespective of class) may elect all of the
trustees or directors. Shares have no preemptive rights and only such conversion
and exchange rights as the Board may grant in its discretion. When issued for
payment as described in the applicable Prospectus, shares will be fully paid and
non-assessable by each of the Trust and the Company.
Shareholder meetings to elect trustees or directors will not be held unless
and until such time as required by law. At that time, the trustees then in
office will call a shareholders' meeting to elect trustees. Except as set forth
above, the trustees will continue to hold office and may appoint successor
trustees. Meetings of the shareholders of the Trust or the Company shall be
called by the trustees or directors upon the written request of shareholders
owning at least 10% of the outstanding shares entitled to vote.
The Trust's Declaration of Trust, as amended authorizes the Trust's Board
of Trustees, without shareholder approval (unless otherwise required by
applicable law), to: (i) sell and convey the assets belonging to a class of
shares to another management investment company for consideration which may
include securities issued by the purchaser and, in connection therewith, to
cause all outstanding shares of such class to be redeemed at a price which is
equal to their net asset value and which may be paid in cash or by distribution
of the securities or other consideration received from the sale and conveyance;
(ii) sell and convert the assets belonging to one or more classes of shares into
money and, in connection therewith, to cause all outstanding shares of such
class to be redeemed at their net asset value; or (iii) combine the assets
belonging to a class of shares with the assets belonging to one or more other
classes of
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shares if the Board of Trustees reasonably determines that such combination will
not have a material adverse effect on the shareholders of any class
participating in such combination and, in connection therewith, to cause all
outstanding shares of any such class to be redeemed or converted into shares of
another class of shares at their net asset value. However, the exercise of such
authority may be subject to certain restrictions under the 1940 Act. The Trust's
Board of Trustees may authorize the termination of any class of shares after the
assets belonging to such class have been distributed to its shareholders.
MISCELLANEOUS
COUNSEL. The law firm of Dechert Price & Rhoads, 1500 K Street, N.W.,
Washington, DC 20005, has passed upon certain legal matters in connection with
the shares offered by the Funds and serves as counsel to the Trust and Company.
INDEPENDENT AUDITORS. Ernst & Young LLP, serves as the Trust's and the
Company's independent auditors. The Trust's financial statements of the Cash
Investment Fund, Tax-Free Money Market Fund, U.S. Treasury Money Market Fund,
Accelerating Growth Fund, Small Company Growth Fund, Growth & Income Fund, U.S.
Government Income Fund, Index 500 Fund, International Equity Fund, Balanced
Fund, Intermediate Bond Fund, Bond Fund, Tax-Free Intermediate Bond Fund and
Michigan Triple Tax-Free Bond Fund and the Company's financial statements of the
Multi-Season Fund, Real Estate Fund and Money Market Fund for the fiscal year
ended June 30, 1996, incorporated by reference in this Statement of Additional
Information, have been audited by Ernst & Young LLP, independent auditors, and
the information under the caption "Financial Highlights" of the Funds for the
period from commencement of operations through June 30, 1995, appearing in the
related Prospectuses dated _______, 1996 have been derived from the financial
statements audited by Ernst & Young LLP except for periods ended prior to June
30, 1996 for the Multi-Season Fund and Money Market Fund, such financial
highlights are derived from the financial statements audited by Arthur Andersen
LLP, independent auditors. Such financial statements and financial highlights
are included or incorporated by reference herein in reliance upon their reports
given upon the authority of such firms as experts in accounting and auditing.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES. As of
_________,
Comerica Bank, One Detroit Center, 500 Woodward Ave., Detroit, Michigan 48226,
held of record substantially all of the outstanding shares of the Funds as
agent, custodian or trustee for its customers. As of such date, the following
persons were beneficial owners of 5% or more of the outstanding shares of a Fund
because they possessed voting or investment power with respect to such shares:
Percent of
Name of Name and Total Shares
Fund Address Outstanding
---- ------- ------------
____%
____%
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In addition, as of ______, 1996, Comerica Bank possessed sole or
shared voting or investment power for its customer accounts with respect to the
following percentages of the Funds' outstanding shares:
_________________________________.
As of ______, 1996, the following persons owned of record five percent
or more of the outstanding shares of a class of the ______ Fund:
_______________________________________________.
As of that date, the following persons owned of record five percent or
more of the outstanding shares of a class of the ______ Fund:
____________________________________________________.
As of that date, the following persons owned of record five percent or
more of the outstanding shares of a class of the ______ Fund:
____________________________________________________.
BANKING LAWS. Banking laws and regulations currently prohibit a bank
holding company registered under the Federal Bank Holding Company Act of 1956 or
any bank or non-bank affiliate thereof from sponsoring, organizing, controlling
or distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from underwriting securities, but such banking laws and regulations do not
prohibit such a holding company or affiliate or banks generally from acting as
investment Advisor, administrator, transfer agent or custodian to such an
investment company, or from purchasing shares of such a company as agent for and
upon the order of customers. The Advisor and the Custodian are subject to such
banking laws and regulations.
The Advisor and the Custodian believe they may perform the services
for the Trust and the Company contemplated by their respective agreements with
the Trust and 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 Trust and 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 Trust and the Company, the Trust and 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 Trust's or the Company's method of operations would
affect the net asset value per share of any Fund or result in a financial loss
to any Customer.
SHAREHOLDER APPROVALS. As used in this Statement of Additional
Information and in each Prospectus, a "majority of the outstanding shares" of a
Fund or investment portfolio means the lesser of (a) 67% of the shares of the
particular Fund or portfolio represented at a meeting at which the holders of
more than 50% of the outstanding shares of such Fund or portfolio are present in
person or by proxy, or (b) more than 50% of the outstanding shares of such Fund
or portfolio.
REGISTRATION STATEMENT
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This Statement of Additional Information and each of the Fund's
Prospectuses do not contain all the information included in the Fund's
registration statement filed with the SEC under the 1933 Act with respect to the
securities offered hereby, certain portions of which have been omitted pursuant
to the rules and regulations of the SEC. The registration statement, including
the exhibits filed therewith, may be examined at the offices of the SEC in
Washington, D.C.
Statements contained herein and in each of the Fund's Prospectuses as to
the contents of any contract of other documents referred to are not necessarily
complete, and, in such instance, reference is made to the copy of such contract
or other documents filed as an exhibit to the Fund's registration statement,
each such statement being qualified in all respects by such reference.
FINANCIAL STATEMENTS
The financial statements for the Trust and the Company including the
notes thereto, dated June 30, 1996 have been audited by Ernst & Young LLP and
are incorporated by reference in this Statement of Additional Information from
the Annual Reports of the Trust and the Company dated as of June 30, 1996.
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APPENDIX A
----------
- RATED INVESTMENTS -
CORPORATE BONDS
- ---------------
Excerpts from MOODY'S INVESTORS SERVICES, INC. ("MOODY'S") description
of
its bond ratings:
"AAA": Bonds that are rated "Aaa" are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
"AA": Bonds that are rated "Aa" are judged to be of high-quality by all
standards. Together with the "Aaa" group they comprise what are generally known
as "high-grade" bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in "Aaa"
securities.
"A": Bonds that are rated "A" possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
"BAA": Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appears adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
"BA": Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
"B": Bonds which are rated B generally lack characteristics of
desirable investments. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
"CAA": Bonds that are rated Caa are of poor standing. These issues may be
in default or present elements of danger may exist with respect to principal or
interest.
Moody's applies numerical modifiers (1, 2 and 3) with respect to bonds
rated "Aa" through "B". The modifier 1 indicates that the bond being rated ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the bond ranks in the lower
end of its generic rating category.
A-1
<PAGE>
Excerpts from STANDARD & POOR'S CORPORATION ("S&P") description of its
bond
ratings:
"Aaa": Debt rated "Aaa" has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
"Aa": Debt rated "Aa" has a very strong capacity to pay interest and repay
principal and differs from "Aaa" issues by a small degree.
"A": Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
"BBB": Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
"BB, B AND CCC": Bonds rated BB and B are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligations. BB represents a lower
degree of speculation than B and CCC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
To provide more detailed indications of credit quality, the "AA" or "A"
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
COMMERCIAL PAPER
- ----------------
The rating "PRIME-1" is the highest commercial paper rating assigned by
MOODY'S. These issues (or related supporting institutions) are considered to
have a superior capacity for repayment of short-term promissory obligations.
Issues rated "PRIME-2" (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics of "Prime-1" rated issues, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
Commercial paper ratings of S&P are current assessments of the likelihood
of timely payment of debt having original maturities of no more than 365 days.
Commercial paper rated "A-1" by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted "A-1+."
Commercial paper rated "A-2" by S&P indicates that capacity for timely payment
is strong. However, the relative degree of safety is not as high as for issues
designated "A-1."
A-2
<PAGE>
APPENDIX A
----------
- RATED INVESTMENTS -
COMMERCIAL PAPER
- ----------------
Rated commercial paper purchased by the Fund must have (at the time of
purchase) the highest quality rating assigned to short-term debt securities or,
if not rated, or rated by only one agency, are determined to be of comparative
quality pursuant to guidelines approved by the Fund's Board of Directors.
Highest quality ratings for commercial paper for Moody's and S & P are as
follows:
MOODY'S: The rating "PRIME-1" is the highest commercial paper rating
category assigned by Moody's. These issues (or related supporting institutions)
are considered to have a superior capacity for repayment of short-term
promissory obligations.
S&P: Commercial paper ratings of S&P are current assessments of the
likelihood of timely payment of debts having original maturities of no more than
365 days. Commercial paper rated in the "A-1" category by S&P indicates that the
degree of safety regarding timely payment is either overwhelming or very strong.
Those issues determined to possess overwhelming safety characteristics are
denoted "A-1+".
A-3
<PAGE>
APPENDIX B
As stated in the applicable Prospectuses, the Balanced, Equity and Bond
Funds may enter into certain futures transactions and options for hedging
purposes. Such transactions are described in this Appendix.
I. Interest Rate Futures Contracts
-------------------------------
Use of Interest Rate Futures Contracts. Bond prices are established in both
the cash market and the futures market. In the cash market, bonds are purchased
and sold with payment for the full purchase price of the bond being made in
cash, generally within five business days after the trade. In the futures
market, only a contract is made to purchase or sell a bond in the future for a
set price on a certain date. Historically, the prices for bonds established in
the futures markets have tended to move generally in the aggregate in concert
with the cash market prices and have maintained fairly predictable
relationships. Accordingly, the Funds may use interest rate futures contracts as
a defense, or hedge, against anticipated interest rate changes and not for
speculation. As described below, this would include the use of futures contract
sales to protect against expected increases in interest rates and futures
contract purchases to offset the impact of interest rate declines.
The Funds presently could accomplish a similar result to that which it
hopes to achieve through the use of futures contracts by selling bonds with long
maturities and investing in bonds with short maturities when interest rates are
expected to increase, or conversely, selling short-term bonds and investing in
long-term bonds when interest rates are expected to decline. However, because of
the liquidity that is often available in the futures market, the protection is
more likely to be achieved, perhaps at a lower cost and without changing the
rate of interest being earned by the Funds, through using futures contracts.
Description of Interest Rate Futures Contracts. An interest rate futures
contract sale would create an obligation by a Fund, as seller, to deliver the
specific type of financial instrument called for in the contract at a specific
future time for a specified price. A futures contract purchase would create an
obligation by the Fund, as purchaser, to take delivery of the specific type of
financial instrument at a specific future time at a specific price. The specific
securities delivered or taken, respectively, at settlement date, would not be
determined until or at near that date. The determination would be in accordance
with the rules of the exchange on which the futures contract sale or purchase
was made.
Although interest rate futures contracts by their terms call for actual
delivery or acceptance of securities, in most cases the contracts are closed out
before the settlement date without making or taking of delivery of securities.
Closing out a futures contract sale is effected by the Fund's entering into a
futures contract purchase for the same aggregate amount of the specific type of
financial instrument and the same delivery date. If the price of the sale
exceeds the price of the offsetting purchase, the Fund is immediately paid the
difference and thus realizes a gain. If the offsetting purchase price exceeds
the sale price, the Fund pays the difference and realizes a loss. Similarly, the
closing out of a futures contract purchase is effected by the Fund entering into
a futures contract sale. If the offsetting sale price exceeds the purchase
price, the Fund realizes a gain, and if the purchase price exceeds the
offsetting sale price, the Fund realizes a loss.
Interest rate futures contracts are traded in an auction environment on the
floors of several exchanges -- principally, the Chicago Board of Trade, the
Chicago Mercantile Exchange and the New York Futures Exchange. The Funds would
deal only in standardized contracts on recognized exchanges.
B-1
<PAGE>
Each exchange guarantees performance under contract provisions through a
clearing corporation, a nonprofit organization managed by the exchange
membership.
A public market now exists in futures contracts covering various financial
instruments including long-term United States Treasury Bonds and Notes;
Government National Mortgage Association (GNMA) modified pass-through mortgage
backed securities; three-month United States Treasury Bills; and ninety-day
commercial paper. The Funds may trade in any interest rate futures contracts for
which there exists a public market, including, without limitation, the foregoing
instruments.
Example of Futures Contract Sale. The Funds would engage in an interest
rate futures contract sale to maintain the income advantage from continued
holding of a long-term bond while endeavoring to avoid part or all of the loss
in market value that would otherwise accompany a decline in long-term securities
prices. Assume that the market value of a certain security held by a particular
Fund tends to move in concert with the futures market prices of long-term United
States Treasury bonds ("Treasury Bonds"). The adviser wishes to fix the current
market value of the portfolio security until some point in the future. Assume
the portfolio security has a market value of 100, and the adviser believes that,
because of an anticipated rise in interest rates, the value will decline to 95.
The fund might enter into futures contract sales of Treasury bonds for an
equivalent of 98. If the market value of the portfolio security does indeed
decline from 100 to 95, the equivalent futures market price for the Treasury
bonds might also decline from 98 to 93.
In that case, the five point loss in the market value of the portfolio
security would be offset by the five point gain realized by closing out the
futures contract sale. Of course, the futures market price of Treasury bonds
might well decline to more than 93 or to less than 93 because of the imperfect
correlation between cash and futures prices mentioned below.
The adviser could be wrong in its forecast of interest rates and the
equivalent futures market price could rise above 98. In this case, the market
value of the portfolio securities, including the portfolio security being
protected, would increase. The benefit of this increase would be reduced by the
loss realized on closing out the futures contract sale.
If interest rate levels did not change, the Fund in the above example might
incur a loss of 2 points (which might be reduced by an offsetting transaction
prior to the settlement date). In each transaction, transaction expenses would
also be incurred.
Example of Futures Contract Purchase. The Funds would engage in an interest
rate futures contract purchase when they are not fully invested in long-term
bonds but wish to defer for a time the purchase of long-term bonds in light of
the availability of advantageous interim investments, e.g., shorter term
securities whose yields are greater than those available on long-term bonds. A
Fund's basic motivation would be to maintain for a time the income advantage
from investing in the short-term securities; the Fund would be endeavoring at
the same time to eliminate the effect of all or part of an expected increase in
market price of the long-term bonds that the Fund may purchase.
For example, assume that the market price of a long-term bond that the Fund
may purchase, currently yielding 10% , tends to move in concert with futures
market prices of Treasury bonds. The adviser wishes to fix the current market
price (and thus 10% yield) of the long-term bond until the time (four months
away in this example) when it may purchase the bond. Assume the long-term bond
has a market price of 100, and the adviser believes that, because of an
anticipated fall in interest rates, the price will have risen to 105 (and the
yield will have dropped to about 91/2%) in four months. The Fund might enter
into futures contracts purchases of Treasury bonds for an equivalent price of
98. At the same time,
B-2
<PAGE>
the Fund would assign a pool of investments in short-term securities that are
either maturing in four months or earmarked for sale in four months, for
purchase of the long-term bond at an assumed market price of 100. Assume these
short-term securities are yielding 15%. If the market price of the long-term
bond does indeed rise from 100 to 105, the equivalent futures market price for
Treasury bonds might also rise from 98 to 103. In that case, the 5 point
increase in the price that the Fund pays for the long-term bond would be offset
by the 5 point gain realized by closing out the futures contract purchase.
The adviser could be wrong in its forecast of interest rates; long-term
interest rates might rise to above 10%; and the equivalent futures market price
could fall below 98. If short-term rates at the same time fall to 10% or below,
it is possible that the Fund would continue with its purchase program for long-
term bonds. The market price of available long-term bonds would have decreased.
The benefit of this price decrease, and thus yield increase, will be reduced by
the loss realized on closing out the futures contract purchase.
If, however, short-term rates remained above available long-term rated, it
is possible that the Fund would discontinue its purchase program for long-term
bonds. The yield on short-term securities in the portfolio, including those
originally in the pool assigned to the particular long-term bond, would remain
higher than yields on long-term bonds. The benefit of this continued incremental
income will be reduced by the loss realized on closing out the futures contract
purchase. In each transaction, expenses would also be incurred.
II. Index Futures Contracts
-----------------------
General. A bond index assigns relative values of the bonds included in the
index bind the index fluctuates with changes in the market values of the bonds
included. The Chicago Board of Trade has designed a futures contract based on
the Bond Buyer Municipal Bond Index. This Index is composed of 40 term revenue
and general obligation bonds and its composition is updated regularly as new
bonds meeting the criteria of the Index are issued and existing bonds mature.
The Index is intended to provide an accurate indicator of trends and changes in
the municipal bond market. Each bond in the Index is independently priced by six
dealer-to-dealer municipal bond brokers daily. The 40 prices then are averaged
and multiplied by a coefficient. The coefficient is used to maintain the
continuity of the Index when its composition changes.
Astock index assigns relative values to the stocks included in the index
and the index fluctuates with changes in the market values of the stocks
included. Some stock index futures contracts are based on broad market indexed,
such as the Standard & Poor's 500 or the New York Stock Exchange Composite
Index. In contrast, certain exchanges offer futures contracts on narrower market
indexes, such as the Standard & Poor's 100 or indexes based on an industry or
market segment, such as oil and gas stocks.
Futures contracts are traded on organized exchanges regulated by the
Commodity Futures Trading Commission. Transactions on such exchanges are cleared
through a clearing corporation, which guarantees the performance of the parties
to each contract.
A Fund will sell index futures contracts in order to offset a decrease in
market value of its portfolio securities that might otherwise result from a
market decline. A Fund will purchase index futures contracts in anticipation of
purchases of securities. In a substantial majority of these transactions, a Fund
will purchase such securities upon termination of the long futures position, but
a long futures position may be terminated without a corresponding purchase of
securities.
B-3
<PAGE>
In addition, a Fund may utilize index futures contracts in anticipation of
changes in the composition of its portfolio holdings. For example, in the event
that a Fund expects to narrow the range of industry groups represented in its
holdings it may, prior to making purchases of the actual securities, establish a
long futures position based on a more restricted index, such as an index
comprised of securities of a particular industry group. A Fund may also sell
futures contracts in connection with this strategy, in order to protect against
the possibility that the value of the securities to be sold as part of the
restructuring of the portfolio will decline prior to the time of sale.
B-4
<PAGE>
Examples of Stock Index Futures Transactions. The following are examples
of transactions in stock index futures (net of commissions and premiums, if
any).
ANTICIPATORY PURCHASE HEDGE: Buy the Future
Hedge Objective: Protect Against Increasing Price
<TABLE>
<CAPTION>
Portfolio Futures
--------- -------
<S> <C>
-Day Hedge is Placed-
Anticipate buying $62,500 in Equity Buying 1 Index Futures at 125
Securities Value of Futures = $62,500/Contract
-Day Hedge is Lifted-
Buy Equity Securities with Actual Cost Sell 1 Index Futures at 130
= $65,000 Value of Futures = $65,000/Contract
Increase in Purchase Price = $2,500 Gain on Futures = $2,500
</TABLE>
HEDGING A STOCK PORTFOLIO: Sell the Future
Hedge Objective: Protect Against Declining
Value of the Portfolio
Factors:
Value of Stock Portfolio = $1,000,000
Value of Futures Contract - 125 X $500 = $62,500
Portfolio Beta Relative to the Index = 1.0
<TABLE>
<CAPTION>
Portfolio Futures
--------- -------
<S> <C>
-Day Hedge is Placed-
Anticipate Selling $1,000,000 in Equity Sell 16 Index Futures at 125
Securities Value of Futures = $1,000,000
-Day Hedge is Lifted-
Equity Securities - Own Stock Buy 16 Index Futures at 120
with Value = $960,000 Value of Futures = $960,000
Loss in Portfolio Value = $40,000 Gain on Futures = $40,000
</TABLE>
III. Margin Payments
Unlike purchase or sales of portfolio securities, no price is paid or
received by a Fund upon the purchase or sale of a futures contract. Initially,
the Fund will be required to deposit with the broker or in a segregated account
with the Custodian an amount of cash or cash equivalents, known as initial
margin, based on the value of the contract. The nature of initial margin in
futures transactions is different from that of margin in security transactions
in that futures contract margin does not involve the borrowing of funds by the
customer to finance the transactions. Rather, the initial margin is in the
nature of a performance bond or good faith deposit on the contract which is
returned to the Fund upon termination of the futures contract assuming all
contractual obligations have been satisfied. Subsequent payments, called
variation margin, to and from the broker, will be made on a daily basis as the
price of the underlying instruments fluctuates making the long and short
positions in the futures contract more or less valuable, a
B-5
<PAGE>
process known as marking-to-the-market. For example, when a particular Fund has
purchased a futures contract and the price of the contract has risen in response
to a rise in the underlying instruments, that position will have increased in
value and the Fund will be entitled to receive from the broker a variation
margin payment equal to that increase in value. Conversely, where the Fund has
purchased a futures contract and the price of the futures contract has declined
in response to a decrease in the underlying instruments, the position would be
less valuable and the Fund would be required to make a variation margin payment
to the broker. At any time prior to expiration of the futures contract, the
adviser may elect to close the position by taking an opposite position, subject
to the availability of a secondary market, which will operate to terminate the
Fund's position in the futures contract. A final determination of variation
margin is then made, additional cash is required to be paid by or released to
the Fund, and the Fund realizes a loss or gain.
IV. Risks of Transactions in Futures Contracts
There are several risks in connection with the use of futures by the Funds
as hedging devices. One risk arises because of the imperfect correlation
between movements in the price of the futures and movements in the price of the
instruments which are the subject of the hedge. The price of the future may
move more than or less than the price of the instruments being hedged. If the
price of the futures moves less than the price of the instruments which are the
subject of the hedge, the hedge will not be fully effective but, if the price of
the instruments being hedged has moved in an unfavorable direction, the Fund
would be in a better position than if it had not hedged at all. If the price of
the instruments being hedged has moved in a favorable direction, this advantage
will be partially offset by the loss on the futures. If the price of the
futures moves more than the price of the hedged instruments, the Fund involved
will experience either a loss or gain on the futures which will not be
completely offset by movements in the price of the instruments which are the
subject of the hedge. To compensate for the imperfect correlation of movements
in the price of instruments being hedged and movements in the price of futures
contracts, the Fund may buy or sell futures contracts in a greater dollar amount
than the dollar amount of instruments being hedged if the volatility over a
particular time period of the prices of such instruments has been greater than
the volatility over such time period of the futures, or if otherwise deemed to
be appropriate by the Adviser. Conversely, the Funds may buy or sell fewer
futures contracts if the volatility over a particular time period of the prices
of the instruments being hedged is less than the volatility over such time
period of the futures contract being used, or if otherwise deemed to be
appropriate by the Adviser. It is also possible that, when the Fund had sold
futures to hedge its portfolio against a decline in the market, the market may
advance and the value of instruments held in the Fund may decline. If this
occurred, the Fund would lose money on the futures and also experience a decline
in value in its portfolio securities.
Where futures are purchased to hedge against a possible increase in the
price of securities before a Fund is able to invest its cash (or cash
equivalents) in an orderly fashion, it is possible that the market may decline
instead; if the Fund then concludes not to invest its cash at that time because
of concern as to possible further market decline or for other reasons, the Funds
will realize a loss on the futures contract that is not offset by a reduction in
the price of the instruments that were to be purchased.
In instances involving the purchase of futures contracts by the Funds, an
amount of cash and cash equivalents, equal to the market value of the futures
contracts, will be deposited in a segregated account with the Custodian and/or
in a margin account with a broker to collateralize the position and thereby
insure that the use of such futures is unleveraged.
In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the futures and the instruments
being hedged, the price of futures may not correlate
B-6
<PAGE>
perfectly with movement in the cash market due to certain market distortions.
Rather than meeting additional margin deposit requirements, investors may close
futures contracts through off-setting transactions which could distort the
normal relationship between the cash and futures markets. Second, with respect
to financial futures contracts, the liquidity of the futures market depends on
participants entering into off-setting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced thus producing distortions. Third, from
the point of view of speculators, the deposit requirements in the futures market
are less onerous than margin requirements in the securities market. Therefore,
increased participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of price distortion in the
futures market, and because of the imperfect correlation between the movements
in the cash market and movements in the price of futures, a correct forecast of
general market trends or interest rate movements by the adviser may still not
result in a successful hedging transaction over a short time frame.
Positions in futures may be closed out only on an exchange or board of
trade which provides a secondary market for such futures. Although the Funds
intend to purchase or sell futures only on exchanges or boards of trade where
there appear to be active secondary markets, there is no assurance that a liquid
secondary market on any exchange or board of trade will exist for any particular
contract or at any particular time. In such event, it may not be possible to
close a futures investment position, and in the event of adverse price
movements, the Funds would continue to be required to make daily cash payments
of variation margin. However, in the event futures contracts have been used to
hedge portfolio securities, such securities will not be sold until the futures
contract can be terminated. In such circumstances, an increase in the price of
the securities, if any, may partially or completely offset losses on the futures
contract. However, as described above, there is no guarantee that the price of
the securities will in fact correlate with the price movements in the futures
contract and thus provide an offset on a futures contract.
Further, it should be noted that the liquidity of a secondary market in a
futures contract may be adversely affected by "daily price fluctuation limits"
established by commodity exchanges which limit the amount of fluctuation in a
futures contract price during a single trading day. Once the daily limit has
been reached in the contract, no trades may be entered into at a price beyond
the limit, thus preventing the liquidation of open futures positions. The
trading of futures contracts is also subject to the risk of trading halts,
suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal activity, which could at times make it difficult or
impossible to liquidate existing positions or to recover excess variation margin
payments.
Successful use of futures by the Funds is also subject to the adviser's
ability to predict correctly movements in the direction of the market. For
example, if a particular Fund has hedged against the possibility of a decline in
the market adversely affecting securities held by it and securities prices
increase instead, the Fund will lose part or all of the benefit to the increased
value of its securities which it has hedged because it will have offsetting
losses in its futures positions. In addition, in such situations, if the Fund
has insufficient cash, it may have to sell securities to meet daily variation
margin requirements. Such sales of securities may be, but will not necessarily
be, at increased prices which reflect the rising market. The Funds may have to
sell securities at a time when they may be disadvantageous to do so.
V. Options on Futures Contracts
The Funds may purchase and write options on the futures contracts described
above. A futures option gives the holder, in return for the premium paid, the
right to buy (call) from or sell (put) to the writer of the option a futures
contract at a specified price at any time during the period of the option.
B-7
<PAGE>
Upon exercise, the writer of, the option is obligated to pay the difference
between the cash value of the futures contract and the exercise price. Like the
buyer or seller of a futures contract, the holder, or writer, of an option has
the right to terminate its position prior to the scheduled expiration of the
option by selling, or purchasing an option of the same series, at which time the
person entering into the closing transaction will realize a gain or loss. A Fund
will be required to deposit initial margin and variation margin with respect to
put and call options on futures contracts written by it pursuant to brokers'
requirements similar to those described above. Net option premiums received will
be included as initial margin deposits.
Investments in futures options involve some of the same considerations that
are involved in connection with investments in future contracts (for example,
the existence of a liquid secondary market). In addition, the purchase or sale
of an option also entails the risk that changes in the value of the underlying
futures contract will not correspond to changes in the value of the option
purchased. Depending on the pricing of the option compared to either the
futures contract upon which it is based, or upon the price of the securities
being hedged, an option may or may not be less risky than ownership of the
futures contract or such securities. In general, the market prices of options
can be expected to be more volatile than the market prices on underlying futures
contract. Compared to the purchase or sale of futures contracts, however, the
purchase of call or put options on futures contracts may frequently involve less
potential risk to the Fund because the maximum amount at risk is the premium
paid for the options (plus transaction costs). The writing of an option on a
futures contract involves risks similar to those risks relating to the sale of
futures contracts.
VI. Currency Transactions
The Fund may engage in currency transactions in order to hedge the value of
portfolio holdings denominated in particular currencies against fluctuations in
relative value. Currency transactions include forward currency contracts,
currency futures, options on currencies, and currency swaps. A forward currency
contract involves a privately negotiated obligation to purchase or sell (with
delivery generally required) a specific currency at a future date, which may be
any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. A currency swap is an
agreement to exchange cash flows based on the notional difference among two or
more currencies and operates similarly to an interest rate swap as described in
the Statement of Additional Information. The Fund may enter into currency
transactions with counterparties which have received (or the guarantors of the
obligations which have received) a credit rating of A-1 or P-1 by S&P or
Moody's, respectively, or that have an equivalent rating from a NRSRO or are
determined to be of equivalent credit quality by the Advisor.
The Fund's dealings in forward currency contracts and other currency
transactions such as futures, options, options on futures and swaps will be
limited to hedging involving either specific transactions or portfolio
positions. Transaction hedging is entering into a currency transaction with
respect to specific assets or liabilities of the Fund, which will generally
arise in connection with the purchase or sale of its portfolio securities or the
receipt of income therefrom. Position hedging is entering into a currency
transaction with respect to portfolio security positions denominated or
generally quoted in that currency.
The Fund will not enter into a transaction to hedge currency exposure to an
extent greater after netting all transactions intended wholly or partially to
offset other transactions, than the aggregate market value (at the time of
entering into the transaction) of the securities held in its portfolio that are
denominated or generally quoted in or currently convertible into such currency,
other than with respect to proxy hedging as described below.
B-8
<PAGE>
The Fund may also cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which the Fund has or in which the Fund expects
to have portfolio exposure.
To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, the Fund may also engage proxy
hedging. Proxy hedging is often used when the currency to which the Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar.
Proxy hedging entails entering into a commitment or option to sell a currency
whose changes in value are generally considered to be correlated to a currency
or currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, in exchange for U.S. dollars. The amount of the
commitment or option would not exceed the value of the Fund's securities
denominated in correlated currencies. For example, if the Advisor considers
that the Austrian schilling is correlated to the German deutschemark (the "D-
mark"), the Fund holds securities denominated in shillings and the Advisor
believes that the value of the schillings will decline against the U.S. dollar,
the Advisor may enter into a commitment or option to sell D-marks and buy
dollars. Currency hedging involves some of the same risks and considerations as
other transactions with similar instruments. Currency transactions can result
in losses to the Fund if the currency being hedged fluctuates in value to a
degree or in a direction that is not anticipated. Further, there is the risk
that the perceived correlation between various currencies may not be present or
may not be present during the particular time that the Fund is engaging in proxy
hedging. If a Fund enters into a currency hedging transaction, the Fund will
comply with the asset segregation requirements. Under such requirements, the
Fund will segregate liquid, high grade assets with the custodian to the extent
the Fund's obligations are not otherwise "covered" through ownership of the
underlying currency.
Currency transactions are subject to risks different from those of other
portfolio transactions. Because currency control is of great importance to the
issuing governments and influences economic planning and policy, purchases and
sales of currency and related instruments can be negatively affected by
government exchange controls, blockages, and manipulations or exchange
restrictions imposed by governments. These can result in losses to the Fund if
it is unable to deliver or receive currency or funds in settlement of
obligations and could also cause hedges it has entered into to be rendered
useless, resulting in full currency exposure as well as incurring transaction
costs. Buyers and sellers of currency futures are subject to the same risks
that apply to the use of futures generally. Further, settlement of a currency
futures contract for the purchase of most currencies must occur at a bank based
in the issuing nation. Trading options on currency futures is relatively new,
and the ability to establish and close to positions on such options is subject
to the maintenance of a liquid market which may not always be available.
Currency exchange rates may fluctuate based on factors extrinsic to that
country's economy.
VII. Other Matters
Accounting for futures contracts will be in accordance with generally
accepted accounting principles.
B-9
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
---------------------------------
(a) Part A: Financial Highlights to be filed by
amendment
Part B: Audited Financial Statements as of June
30, 1996 to be filed by amendment
Part C: Consent of Independent Auditors to be
filed by amendment
No financial statements are incorporated in Part A or
Part B for The Munder International Bond Fund, The Munder Small-
Cap Value Fund, The Munder Micro-Cap Equity Fund, The Munder
Equity Selection Fund.
(b) Exhibits (the number of each exhibit relates to the
exhibit designation in Form N-1A):
(1) (a) Articles of Incorporation is filed
herein1
(b) Articles of Amendment is filed herein
(c) Articles Supplementary are filed
herein
(2) By-Laws1
(3) Not Applicable
(4) Specimen security for The Munder Multi-
Season Growth Fund2
(5) (a) Form of Investment Advisory Agreement for
The Munder Multi-Season Growth Fund7
(b) Form of Investment Advisory Agreement for
The Munder Money Market Fund7
(c) Form of Investment Advisory Agreement for
The Munder Real Estate Equity Investment Fund7
(d) Investment Advisory Agreement for The
Munder Value Fund12
(e) Investment Advisory Agreement for The
Munder Mid-Cap Growth Fund12
(f) Form of Investment Advisory Agreement for
The Munder International Bond Fund is filed herein
(g) Form of Investment Advisory Agreement for
the Net Net Fund13
(h) Form of Investment Advisory Agreement for
The Munder Small-Cap Value Fund is filed herein
(i) Form of Investment Advisory Agreement for
The Munder Micro-Cap Equity Fund is filed herein
(j) Form of Investment Advisory Agreement for
The Munder Equity Selection Fund is filed herein
(6) (a) Underwriting Agreement12
(b) Notice to Underwriting Agreement with
respect to The Munder Value Fund and The Munder Mid-Cap Growth
Fund12
(c) Notice to Underwriting Agreement with
respect to The Munder International Bond Fund 12
(d) Notice to Underwriting Agreement with
respect to the The Munder Small-Cap Value Fund, the Munder Equity
Selection Fund, the Munder Micro-Cap Equity Fund, and the Net Net
Fund is filed herein
(7) Not Applicable
(8) (a) Form of Custodian Contract12
(b) Notice to Custodian Contract with respect
to The Munder Value Fund and The Munder Mid-Cap Growth Fund12
(c) Notice to Custodian Contract with respect
to The Munder International Bond Fund12
(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 Net Net Fund is
filed herein
(e) Form of Subcustodian Agreement*
(f) Notice to Subcustody Agreement with
respect to The Munder International Bond Fund*
(g) Notice to Subcustody Agreement with
respect to the the Munder
Small-Cap Value Fund,the
Munder Equity Selection Fund, the Munder
Micro-Cap Equity Fund and the Net Net Fund*
(9) (a) Transfer Agency and Service Agreement12
(b) Notice to Transfer Agency and Service
Agreement with respect to The Munder Value Fund and The Munder
Mid-Cap Growth Fund12
(c) Notice to Transfer Agency and Service
Agreement with respect to The Munder International Bond Fund12
(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 Net Net Fund is filed herein
(e) Administration Agreement12
(f) Notice to Administration Agreement with
respect to The Munder Value and The Munder Mid-Cap Growth Fund12
(g) Notice to Administration Agreement with
respect to The Munder International Bond Fund12
(h) 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 Net Net
Fund is filed herein [/R]
(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 Fund5
(c) Opinion and Consent of Counsel with
respect to The Munder Real Estate Equity Investment Fund4
(d) Opinion and Consent of Counsel with
respect to The Munder Value Fund and The Munder Mid-Cap Growth
Fund12
(e) Opinion and Consent of Counsel with
respect to The Munder International Bond Fund12
(f) Opinion and Consent of Counsel with
respect to The Net Net Fund13
(g) Opinion and Consent of Counsel with
respect to the Munder Small-Cap Value Fund, the Munder Equity
Selection Fund, the Munder Micro-Cap Equity Fund*
(11) (a) Consent of Dechert Price & Rhoads11
(b) Consent of Ernst & Young LLP*
(c) Consent of Arthur Andersen LLP11
(d) Letter of Arthur Andersen LLP regarding
change in independent auditor required by Item 304 of Regulation
S-K.11
(e) Powers of Attorney13
(12) Not Applicable
(13) Initial Capital Agreement2
(14) Not Applicable
(15) (a) Service Plan for The Munder Multi-Season
Growth Fund Class A Shares7
(b) Service and Distribution Plan for The
Munder Multi-Season Growth Fund Class B Shares7
(c) Service and Distribution Plan for The
Munder Multi-Season Growth Fund Class D Shares7
(d) Service Plan for The Munder Money Market
Fund Class A Shares7
(e) Service and Distribution Plan for The
Munder Money Market Fund Class B Shares7
(f) Service and Distribution Plan for The
Munder Money Market Fund Class D Shares7
(g) Service Plan for The Munder Real Estate
Equity Investment Fund Class A Shares7
(h) Service and Distribution Plan for The
Munder Real Estate Equity Investment Fund Class B Shares7
(i) Service and Distribution Plan for The
Munder Real Estate Equity Investment Fund Class D Shares7
(j) Form of Service Plan for The Munder Multi-
Season Growth Fund Investor Shares8
(k) Form of Service Plan for Class K Shares of
The Munder Funds, Inc. is filed herein
(l) Form of Service Plan for Class A Shares of
The Munder Funds, Inc. is filed herein
(m) Form of Distribution and Service Plan for
Class B Shares for The Munder Funds, Inc. is filed herein
(n) Form of Distribution and Service Plan for
Class C Shares for The Munder Funds, Inc. is filed herein
(o) Form of Distribution and Service Plan for
the Net Net Fund13 (/R>
(16) Schedule for Computation of Performance
Quotations6
(17) Financial Data Schedules*
(18) Multi-Class Plan8
- --------------------------------
* To be filed by Amendment
- --------------------------------
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. 3 to the Registrant's
Registration Statement on July 28, 1993 and incorporated by
reference herein.
4. Filed in Post-Effective Amendment No. 7 to the Registrant's
Registration Statement on August 26, 1994 and incorporated by
reference herein.
5. Filed in Post-Effective Amendment No. 2 to the Registrant's
Registration Statement on July 9, 1993 and incorporated by
reference herein.
6. Filed in Post-Effective Amendment No. 5 to the Registrant's
Registration Statement on March 28, 1994 and incorporated by
reference herein.
7. Filed in Post-Effective Amendment No. 8 to the Registrant's
Registration Statement on February 28, 1995 and incorporated by
reference herein.
8. Filed in Post-Effective Amendment No. 9 to the Registrant's
Registration Statement on April 13, 1995 and incorporated by
reference herein.
9. Filed in Post-Effective Amendment No. 10 to the Registrant's
Registration Statement on May 2, 1995 and incorporated by
reference herein.
10. Filed in Post-Effective Amendment No. 11 to the Registrant's
Registration Statement on May 31, 1995 and incorporated by
reference herein.
11. Filed in Post-Effective Amendment No. 12 to the Registrant's
Registration Statement on August 29, 1995 and incorporated by
reference herein.
12. Filed in Post-Effective Amendment No. 16 to the Registrant's
Registration Statement on June 25, 1996 and incorporated by
reference herein.
13. Filed in Post-Effective Amendment No. 17 to the Registrant's
Registration Statement on August 9, 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 July 29, 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 383 1626 8 8 146 91
The Munder Money
Market Fund 6 9 2 0 69
The Munder Real Estate
Equity Investment Fund 7 18 2 3 19
The Munder Mid-Cap
Growth Fund 7 17 2 3 19
The Munder Value Fund 4 17 2 3 19
The Munder International
Bond Fund 4 17 2 3 19
Item 27. Indemnification.
---------------
Reference is made to Article 7.6 in the Registrant's
Articles of Incorporation, which are incorporated by reference
herein.
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. BEA Investment Funds, Inc.
BJB Investment Funds Fremont Mutual Funds
PanAgora Funds RCM Capital Funds, Inc.
RCM Equity Funds, Inc.
Waterhouse Investors Cash Management Fund, Inc.
LKCM Funds
Pierpont Funds
JPM Advisors Funds
JPM Institutional Funds
[/R]
(b) The following is a list of officers, directors and
partners of FDI. The principal address of all officers and
directors is 60 State Street Boston, Massachusetts 02109.
Positions and
Positions and
Offices with
Offices with
Name FDI
Registrant
- ---- ------------- ------
- -------
William J. Nutt Chairman None
Marie E. Connolly President, Chief None
Executive Officer
and Director
John E. Pelletier Senior Vice None
President, General
Counsel,
Secretary
Rui M. Moura First Vice None
President
Joseph F. Tower, III Senior Vice None
President, Treasurer,
Chief Financial Officer
Richard W. Ingram Senior Vice President None
Donald R. Roberson Senior Vice President None
Bernard A. Whalen First Vice President None
John W. Gomez Director None
(c) Not Applicable
The information required by this Item 29 with respect
to each director and officer of FDI is incorporated by reference
to Schedule A of Form BD filed by FDI pursuant to the Securities
Exchange Act of 1934 (SEC File No. 20518).
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 Munder Capital Management at 480
Pierce Street, Birmingham, MI 48009, or at 255 East Brown Street,
Street, Birmingham, Michigan, 48009, State Street Bank and Trust
Company, c/o National Financial Data Services, 1004 Baltimore,
Kansas City, Missouri 64105-1807 or at First Data Investor
Services Group, Inc. (f/k/a The Shareholder Services Group, Inc.),
One Exchange Place, Boston, Massachusetts 02109.
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, 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 has duly caused this
Post-Effective
Amendment No. 18 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
14th day of August, 1996.
The Munder Funds, Inc.
By: *
Lee P. Munder
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 August 14, 1996
Lee P. Munder Executive Officer
* Director August 14, 1996
Charles W. Elliott
* Director August 14, 1996
Joseph E. Champagne
* Director August 14, 1996
Arthur DeRoy Rodecker
* Director August 14, 1996
Jack L. Otto
* Director August 14, 1996
Thomas B. Bender
* Director August 14, 1996
Thomas D. Eckert
* Director August 14, 1996
John Rakolta, Jr.
* Director August 14, 1996
David J. Brophy
* Vice President, August 14, 1996
Terry H. Gardner Treasurer and
Chief Financial
Officer
* By: /s/ Teresa M.R. Hamlin
Teresa M.R. Hamlin
as Attorney-in-Fact
EXHIBIT INDEX
Exhibit Description
(1) (a) Articles of Incorporation
(b) Articles of Amendment
(c) Articles Supplementary
(5) (f) Form of Investment Advisory Agreement for
the
Munder International Bond Fund
(h) Form of Investment Advisory Agreement for
The Munder Small-Cap Value Fund
(i) Form of Investment Advisory Agreement for
The Munder Micro-Cap Equity Fund
(j) Form of Investment Advisory Agreement for
The Munder Equity Selection Fund
(6) (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 Net Net Fund
(8) (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 Net Net Fund
(9) (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 Fund and the
Net Net Fund
(h) 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 Net Net
Fund
(15) (k) Form of Service Plan for the Class K
Shares of The Munder Funds, Inc.
(l) Form of Service Plan for the Class A
Shares of The Munder Funds, Inc.
(m) Form of Distribution and Service Plan for
the Class B Shares of The Munder Funds, Inc.
(n) Form of Distribution and Service Plan for
Class C Shares of The Munder Funds, Inc.
shared/bankgrp/munder/parta/pea18.doc
G:\SHARED\BANKGRP\MUNDER\PARTA\PEA12.DOC
ARTICLES OF INCORPORATION
OF
THE MUNDER FUNDS, INC.
ARTICLE I
INCORPORATOR
THE UNDERSIGNED, Paul F. Roye, whose post office address is 1500 K
Street, N.W., Washington, D.C. 20005, being at least eighteen (18)
years of age, does hereby act as incorporator to form a
corporation under and by virtue of the Maryland General
Corporation Law.
ARTICLE II
NAME
2.1 Name. The name of the corporation is The Munder Funds, Inc.
(the "Corporation").
2.2 Name Reservation. The Corporation acknowledges that it uses
the word "Munder" in its corporate name and in the name of any
series designated pursuant to Article V hereof only with the
permission of Munder Capital Management, Inc., a Michigan
corporation ("Munder Capital"), investment adviser to the
Corporation, and agrees that Munder Capital shall control the use
of the word "Munder" by the Corporation. The Corporation further
agrees that if Munder Capital, its successors or assigns should at
any time cease to be investment adviser to the Corporation, the
Corporation shall, at the written request of Munder Capital or its
successors or assigns eliminate the word "Munder" from its
corporate name and any materials or documents referring to the
Corporation, and will not henceforth use the word "Munder" in the
conduct of the Corporation's business, except to any extent
specifically agreed to by Munder Capital. The Corporation further
acknowledges that Munder Capital reserves the right to grant the
non-exclusive right to use the word "Munder" to any other persons
or entities, including other investment companies, whether now in
existence or hereafter created. The provisions of this paragraph
are binding on the Corporation, its successors and assigns and on
its directors, officers, stockholders, creditors and all other
persons claiming under or through it.
ARTICLE III
CORPORATE PURPOSES AND POWERS
The purpose or purposes for which the Corporation is formed is to
act as an investment company under the federal Investment Company
Act of 1940, and to exercise and enjoy all the powers, rights and
privileges granted to, or conferred upon, corporations by the
General Laws of the State of Maryland. The Corporation shall
exercise and enjoy all such powers, rights and privileges to the
extent not inconsistent with these Articles of Incorporation.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
The post office address of the principal office of the Corporation
in the State of Maryland is c/o The Corporation Trust
Incorporated, 32 South Street, Baltimore, Maryland 21202-3242. The
name of the Corporation's resident agent in the State of Maryland
is The Corporation Trust Incorporated, a corporation of the State
of Maryland, and the post office address of the resident agent is
32 South Street, Baltimore, Maryland 21202-3242.
ARTICLE V
CAPITAL STOCK
5.1 Authorized Shares. The total number of shares of capital
stock which the Corporation shall have authority to issue is one
hundred million (100,000,000) shares of the par value of one cent
($0.01) per share and of the aggregate par value of One Million
Dollars ($1,000,000), all of which shares are designated Common
Stock.
5.2 Authorization of Stock Issuance. The Board of Directors may
authorize the issuance and sale of capital stock of the
Corporation, including stock of any class or series, from time to
time in such amounts and on such terms and conditions, for such
purposes and for such amount or kind of consideration as the Board
of Directors shall determine, subject to any limits required by
then applicable law. All shares shall be issued on a fully paid
and non-assessable basis.
5.3 Fractional Shares. The Corporation may issue fractional
shares. Any fractional share shall carry proportionately the
rights of a whole share, excepting the right to receive a
certificate evidencing such fractional share, but including,
without limitation, the right to vote and the right to receive
dividends.
5.4 Power to Classify. The Board of Directors of the Corporation
may classify and reclassify any unissued shares of capital stock
into one or more additional or other classes or series as may be
established from time to time by setting or changing in any one or
more respects the designations, preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms of such shares of stock and pursuant to
such classification or reclassification to increase or decrease
the number of authorized shares of stock, or shares of any
existing class or series of stock. Except as otherwise provided
herein, all references herein to capital stock shall apply without
discrimination to the shares of each class or series of stock.
Pursuant to such power, the Board of Directors has initially
designated 20,000,000 shares of its capital stock as follows:
Number of Shares
Name of Series Initially Allocated
The Munder Multi-Seasons 20,000,000
Growth Fund
5.5 Classes and Series - General. The relative preferences,
conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and
conditions of redemption of each class or series of stock of the
Corporation shall be as follows, unless otherwise provided in
Articles Supplementary hereto:
(a) Assets Belonging to Class or Series. All consideration
received by the Corporation for the issue or sale of stock of a
particular class or series, together with all assets in which such
consideration is invested or reinvested, all income, earnings,
profits and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to that
class or series for all purposes, subject only to the rights of
creditors, and shall be so recorded on the books of account of the
Corporation. Any assets, income, earnings, profits or proceeds
thereof, funds or payments which are not readily attributable to a
particular class or series shall be allocated to and among any one
or more classes or series in such manner and on such basis as the
Board of Directors, in its sole discretion, shall deem fair and
equitable, and items so allocated to a particular class or series
shall belong to that class or series. Each such allocation shall
be conclusive and binding upon the stockholders of all classes and
series for all purposes.
(b) Liabilities Belonging to Class or Series. The assets
belonging to each class or series shall be charged with the
liabilities of the Corporation in respect of that class or series
and with all expenses, costs, charges and reserves attributable to
that class or series and shall be so recorded on the books of
account of the Corporation. Any general liabilities, expenses,
costs, charges or reserves of the Corporation which are not
readily identifiable as belonging to any particular class or
series shall be allocated and charged to and among any one or more
of the classes or series in such manner and on such basis as the
Board of Directors in its sole discretion deems fair and
equitable, and any items so allocated to a particular class or
series shall be charged to, and shall be a liability belonging to,
that class or series. Each such allocation shall be conclusive
and binding upon the stockholders of all classes and series for
all purposes.
(c) Income. The Board of Directors shall have full discretion,
to the extent not inconsistent with the General Laws of the State
of Maryland and the Investment Company Act of 1940, to determine
which items shall be treated as income and which items shall be
treated as capital. Each such determination shall be conclusive
and binding.
(d) Dividends and Distributions. The holders of each class or
series of capital stock of record as of a date determined by the
Board of Directors from time to time shall be entitled, from funds
or other assets legally available therefor, to dividends and
distributions, including distributions of capital gains, in such
amounts and at such times as may be determined by the Board of
Directors. Any such dividends or distributions may be declared
payable in cash, property or shares of the class or series, as
determined by the Board of Directors or pursuant to a standing
resolution or program adopted or approved by the Board of
Directors. Dividends and distributions may be declared with such
frequency, including daily, as the Board of Directors may
determine and in any reasonable manner, including by standing
resolution, by resolutions adopted only once or with such
frequency as the Board of Directors may determine, or by formula
or other similar method of determination, whether or not the
amount of the dividend or distribution so declared can be
calculated at the time of such declaration. The Board of
Directors may establish payment dates for such dividends and
distributions on any basis, including payment that is less
frequent than the effectiveness of such declarations. The Board
of Directors shall have the discretion to designate for such
dividends and distributions amounts sufficient to enable the
Corporation or any class or series thereof to qualify as a
"regulated investment company" under the Internal Revenue Code of
1986 or any successor or comparable statute, and regulations
promulgated thereunder (collectively, the "IRC"), and to avoid
liability of the Corporation or any class or series for Federal
income tax in respect of a given year and to make other
appropriate adjustments in connection therewith. Nothing in the
foregoing sentence shall limit the authority of the Board of
Directors to designate greater or lesser amounts for such
dividends or distributions. The amounts of dividends and
distributions declared and paid with respect to the various
classes or series of capital stock and the timing of declaration
and payment of such dividends and distributions may vary among
such classes and series.
(e) Tax Elections. The Board of Directors shall have the power,
in its discretion, to make such elections as to the tax status of
the Corporation or any series or class of the Corporation as may
be permitted or required by the IRC without the vote of
stockholders of the Corporation or any series or class.
(f) Liquidation. At any time there are no shares outstanding for
a particular class or series, the Board of Directors may liquidate
such class or series in accordance with applicable law. In the
event of the liquidation or dissolution of the Corporation, or of
a class or series thereof when there are shares outstanding of the
Corporation or of such class or series, as applicable, the
stockholders of such, or of each, class or series, as applicable,
shall be entitled to receive, when and as declared by the Board of
Directors, the excess of the assets of that class or series over
the liabilities of that class or series, determined as provided
herein and including assets and liabilities allocated pursuant to
sections (a) and (b) of this Article 5.5. Any such excess amounts
will be distributed to each stockholder of the applicable class or
series in proportion to the number of outstanding shares of that
class or series held by that stockholder and recorded on the books
of the Corporation. Subject to the requirements of applicable
law, dissolution of a class or series may be accomplished by
distribution of assets to stockholders of that class or series as
provided herein, by the transfer of assets of that class or series
to another class or series of the Corporation, by the exchange of
shares of that class or series for shares of another class or
series of the Corporation, or in any other legal manner.
(g) Voting Rights. On each matter submitted to a vote of
stockholders, each holder of a share of capital stock of the
Corporation shall be entitled to one vote for each full share, and
a fractional vote for each fractional share of stock standing in
such holder's name on the books of the Corporation, irrespective
of the class or series thereof, and all shares of all classes and
series shall vote together as a single class, provided that (a)
when the Maryland General Corporation Law or the Investment
Company Act of 1940 requires that a class or series vote
separately with respect to a given matter, the separate voting
requirements of the applicable law shall govern with respect to
the affected class(es) or series and other classes or series shall
vote as a single class or series and (b) unless otherwise required
by those laws, no class or series shall vote on any matter which
does not affect the interest of that class or series.
(h) Quorum. The presence in person or by proxy of the holders of
one-third of the shares of stock of the Corporation entitled to
vote thereat, without regard to class, shall constitute a quorum
at any meeting of the stockholders, except with respect to any
matter which, under applicable statutes or regulatory
requirements, requires approval by a separate vote of one or more
classes of stock, in which case the presence in person or by proxy
of the holders of one-third of the shares of stock of each class
required to vote as a class on the matter shall constitute a
quorum. If at any meeting of the stockholders there shall be less
than a quorum present, the stockholders present at such meeting
may, without further notice, adjourn the same from time to time
until a quorum shall be present.
5.6 Authorizing Vote. Notwithstanding any provision of the
General Laws of the State of Maryland requiring for any purpose a
proportion greater than a majority of the votes of all classes or
series, the affirmative vote of the holders of a majority of the
total number of shares of the Corporation, or of a series of the
Corporation, as applicable, outstanding and entitled to vote under
such circumstances pursuant to these Articles of Incorporation and
the By-Laws of the Corporation shall be effective for such
purpose, except to the extent otherwise required by the Investment
Company Act of 1940 and rules thereunder; provided that, to the
extent consistent with the General Laws of the State of Maryland
and other applicable law, the By-Laws may provide for
authorization to be by the vote of a proportion less than a
majority of the votes of the Corporation, or of a class or series.
5.7 Preemptive Rights. No stockholder of the Corporation shall
be entitled as of right to subscribe for, purchase, or otherwise
acquire any shares of any classes or series, or any other
securities of the Corporation which the Corporation proposes to
issue or sell; and any or all of such shares or securities of the
Corporation, whether now or hereafter authorized or created, may
be issued, or may be reissued or transferred if the same have been
required, and sold to such persons, firms, corporations and
associations, and for such lawful consideration, and on such terms
as the Board of Directors in its discretion may determine, without
first offering the same, or any thereof, to any said stockholder.
5.8 Redemption.
(a) The Board of Directors shall authorize the Corporation, to the
extent it has funds or other property legally available therefor
and subject to such reasonable conditions as the directors may
determine, to permit each holder of shares of capital stock of the
Corporation, or of any class or series, to require the Corporation
to redeem all or any part of the shares standing in the name of
such holder on the books of the Corporation, at the applicable
redemption price of such shares (which may reflect such fees and
charges as the Board of Directors may establish from time to time)
determined in accordance with procedures established by the Board
of Directors of the Corporation from time to time in accordance
with applicable law.
(b) Without limiting the generality of the foregoing, the Board of
Directors may authorize the Corporation, at its option and to the
extent permitted by and in accordance with the conditions of
applicable law, to redeem stock of the Corporation, or of any
class or series, owned by any stockholder under circumstances
deemed appropriate by the Board of Directors in its sole
discretion from time to time, such circumstances including but not
limited to (l) failure to provide the Corporation with a tax
identification number and (2) failure to maintain ownership of a
specified minimum number or value of shares of any class or series
of stock of the Corporation, such redemption to be effected at
such price, at such time and subject to such conditions as may be
required or permitted by applicable law.
(c) Payment for redeemed stock shall be made in cash unless, in
the opinion of the Board of Directors, which shall be conclusive,
conditions exist which make it advisable for the Corporation to
make payment wholly or partially in securities or other property
or assets of the class or series of the shares being redeemed.
Payment made wholly or partially in securities or other property
or assets may be delayed to such reasonable extent, not
inconsistent with applicable law, as is reasonably necessary under
the circumstances. No stockholder shall have the right, except as
determined by the Board of Directors, to have his shares redeemed
in such securities, property or other assets.
(d) All rights of a stockholder with respect to a share redeemed,
including the right to receive dividends and distributions with
respect to such share, shall cease and determine as of the time as
of which the redemption price to be paid for such shares shall be
fixed, in accordance with applicable law, except the right of such
stockholder to receive payment for such shares as provided herein.
(e) Notwithstanding any other provision of this Article 5.8, the
Board of Directors may suspend the right of stockholders of any or
all classes or series of shares to require the Corporation to
redeem shares held by them for such periods and to the extent
permitted by, or in accordance with, the Investment Company Act of
1940. The Board of Directors may, in the absence of a ruling by a
responsible regulatory official, terminate such suspension at such
time as the Board of Directors, in its discretion, shall deem
reasonable, such determination to be conclusive.
(f) Shares of any class or series which have been redeemed shall
constitute authorized but unissued shares subject to
classification and reclassification as provided in these Articles
of Incorporation.
5.9 Repurchase of Shares. The Board of Directors may by
resolution from time to time authorize the Corporation to purchase
or otherwise acquire, directly or through an agent, shares of any
class or series of its outstanding stock upon such terms and
conditions and for such consideration as permitted by applicable
law and determined to be reasonable by the Board of Directors and
to take all other steps deemed necessary in connection therewith.
Shares so purchased or acquired shall have the status of
authorized but unissued shares.
5.10 Valuation. Subject to the requirements of applicable law,
the Board of Directors may, in its absolute discretion, establish
the basis or method, timing and frequency for determining the
value of assets belonging to each class or series and for
determining the net asset value of each share of each class or
series for purposes of sales, redemptions, repurchases or
otherwise. Without limiting the foregoing, the Board of Directors
may determine that the net asset value per share of any class or
series should be maintained at a designated constant value and may
establish procedures, not inconsistent with applicable law, to
accomplish that result. Such procedures may include a
requirement, in the event of a net loss with respect to the
particular class or series from time to time, for automatic pro
rata capital contributions from each stockholder of that class or
series in amounts sufficient to maintain the designated constant
share value.
5.11 Certificates. Subject to the requirements of the Maryland
General Corporation Law, the Board of Directors may authorize the
issuance of some or all of the shares of any or all classes or
series without certificates and may establish such conditions as
it may determine in connection with the issuance of certificates.
5.12 Shares Subject to Articles and Bylaws. All persons who
shall acquire shares of capital stock in the Corporation shall
acquire the same subject to the provisions of these Articles of
Incorporation and the By-Laws of the Corporation, as each may be
amended, supplemented and/or restated from time to time.
5.13 Equality. Each share of each class or series shall be equal
to each other share of that class or series and shall represent an
equal proportionate interest in the assets belonging to that class
or series, subject to the liabilities belonging to that class or
series. The Board of Directors may from time to time divide or
combine the shares of any particular class or series into a
greater or lesser number of shares of that class or series without
thereby changing the proportionate beneficial interest in the
assets belonging to that class or series in any way affecting the
rights of shares of any other class or series.
5.14 Conversion or Exchange Rights. Subject to compliance with
the requirements of the Investment Company Act of 1940, the Board
of Directors shall have the authority to provide that holders of
shares of any class or series shall have the right to convert or
exchange such shares into shares of one or more other classes or
series in accordance with such requirements and procedures as may
be established by the Board of Directors.
ARTICLE VI
BOARD OF DIRECTORS
6.1 Number of Directors. Prior to the issuance of stock, the
number of directors of the Corporation shall be two and after the
issuance of stock shall be as provided in the By-Laws, provided
that the By-Laws may, subject to the limitations of the Maryland
General Corporation Law, fix a different number of directors and
may authorize a majority of the directors to increase or decrease
the number of directors set by these Articles or the By-Laws
within limits set by the By-Laws and to fill vacancies created by
an increase in the number of directors. Unless otherwise provided
by the By-Laws, the directors of the Corporation need not be
stockholders of the Corporation. The names of the directors who
will serve until the first annual meeting and until their
successors are elected and qualify are:
Lee P. Munder
Leonard J. Barr
6.2 Removal of Directors. Subject to the limits of the
Investment Company Act of 1940 and unless otherwise provided by
the By-Laws, a director may be removed, with or without cause, by
the affirmative vote of a majority of (a) the Board of Directors,
(b) a committee of the Board of Directors appointed for such
purpose, or (c) the stockholders by vote of a majority of the
outstanding shares of the Corporation.
6.3 Liability of Directors and Officers.
(a) To the fullest extent permitted by the Maryland General
Corporation Law and the Investment Company Act of 1940, no
director or officer of the Corporation shall be liable to the
Corporation or to its stockholders for money damages. No amendment
to these Articles of Incorporation or repeal of any of its
provisions shall limit or eliminate the benefits provided to
directors and officers under this provision with respect to any
act or omission which occurred prior to such amendment or repeal.
(b) In performance of his duties, a director is entitled to rely
on any information, opinion, report, or statement, including any
financial statement or other financial data, prepared by others,
to the extent not inconsistent with the General Laws of the State
of Maryland. A person who performs his duties in accordance with
the standards of Article 2-405.1 of the Maryland General
Corporation Law or otherwise in accordance with applicable law
shall have no liability by reason of being or having been a
director of the Corporation.
6.4 Powers of Directors. In addition to any powers conferred
herein or in the By-Laws, the Board of Directors may, subject to
any express limitations contained in these Articles of
Incorporation or in the By-Laws, exercise the full extent of
powers conferred by the General Laws of the State of Maryland or
other applicable law upon corporations or directors thereof and
the enumeration and definition of particular powers herein or in
the By-Laws shall in no way be deemed to restrict or otherwise
limit those lawfully conferred powers. In furtherance and without
limitation of the foregoing, the Board of Directors shall have
power:
(a) to make, alter, amend or repeal from time to time the By-Laws
of the Corporation except as otherwise provided by the By-Laws;
(b) subject to requirements of the Investment Company Act of 1940
and the General Laws of the State of Maryland, to authorize the
Corporation to enter into contracts with any person, including any
firm, corporation, trust or association in which a director,
officer, employee or stockholder of the Corporation may be
interested. Such contracts may be for any lawful purpose, whether
or not such purpose involves delegating functions normally
performed by the board of directors or officers of a corporation,
including, but not limited to, the provision of investment
management for the Corporation's investment portfolio, the
distribution of securities issued by the Corporation, the
administration of the Corporation's affairs, the provision of
transfer agent services with respect to the Corporation's shares
of capital stock, and the custody of the Corporation's assets.
Any person (including its affiliates) may be retained in multiple
capacities pursuant to one or more contracts and may also perform
services, including similar or identical services, for others,
including other investment companies. Subject to the requirements
of applicable law, such contracts may provide for compensation to
be paid by the Corporation in such amounts, including payments of
multiple amounts for persons (including their affiliates) acting
in multiple capacities, as the Board of Directors shall determine
in its discretion to be proper and reasonable.
(c) to authorize from time to time the payment of compensation to
the Directors for services to the Corporation, including fees for
attendance at meetings of the Board of Directors and committees
thereof.
6.5 Determinations by Board of Directors. Any determination made
by or pursuant to the direction of the Board of Directors and in
accordance with the standards set by the General Laws of the State
of Maryland shall be final and conclusive and shall be binding
upon the Corporation and upon all stockholders, past, present and
future, of each class and series.
ARTICLE VII
PROVISIONS FOR DEFINING, LIMITING AND REGULATING
THE POWERS OF THE CORPORATION AND THE DIRECTORS
AND STOCKHOLDERS
7.1 Location of Meetings, Offices and Books. Both directors and
stockholders may hold meetings within or without the State of
Maryland and abroad, and the Corporation may have one or more
offices and may keep its books within or without the State of
Maryland and abroad at such places as the directors shall
determine.
7.2 Meetings of Shareholders. Except as otherwise provided in
the By-Laws, in accordance with applicable law, the Corporation
shall not be required to hold an annual meeting of shareholders in
any year unless required by applicable law. Election of
directors, whether by the directors or by stockholders, need not
be by ballot unless the By-Laws so provide.
7.3 Liability of Stockholders. The stockholders of the
Corporation shall not be liable for, and their private property
shall not be subject to, claim, levy or other encumbrance on
account of debts or liabilities of the Corporation, to any extent
whatsoever.
7.4 Owner of Shares. The Corporation shall be entitled to treat
the person in whose name any share of the capital stock of the
Corporation is registered as the owner thereof for purposes of
dividends and other distributions in the course of business or in
the course of recapitalization, consolidation, merger,
reorganization, liquidation, sale of the property and assets of
the Corporation, or otherwise, and for the purpose of votes,
approvals and consents by stockholders, and for the purpose of
notices to stockholders, and for all other purposes whatever; and
the Corporation shall not be bound to recognize any equitable or
other claim to or interest in such share, on the part of any other
person, whether or not the Corporation shall have notice thereof,
save as expressly required by law.
7.5 Inspection of Records. Stockholders of the Corporation shall
have only such rights to inspect and copy the records, documents,
accounts and books of the Corporation and to request statements
regarding its affairs as are provided by the Maryland General
Corporation Law, subject to such reasonable regulations, not
contrary to the General Laws of the State of Maryland, as the
Board of Directors may from time to time adopt regarding the
conditions and limits of such rights.
7.6 Indemnification. The Corporation, 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. The By-Laws may provide that the Corporation shall
indemnify its employees and/or agents in any manner and within
such limits as permitted by applicable law. Such indemnification
shall be in addition to any other right or claim to which any
director, officer, employee or agent may otherwise be entitled.
The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of
the Corporation or is or was serving at the request of the
Corporation 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 Corporation would have had the power to
indemnify against such liability. The rights provided to any
person by this Article 7.4 shall be enforceable against the
Corporation by such person who shall be presumed to have relied
upon such rights in serving or continuing to serve in the
capacities indicated herein. No amendment of these Articles of
Incorporation shall impair the rights of any person arising at any
time with respect to events occurring prior to such amendment.
7.7 Wholly Owned Subsidiaries. The Corporation may own all or
any portion of the securities of, make loans to, or contribute to
the costs or other financial requirements of any company which is
wholly owned by the Corporation or by the Corporation and by one
or more other investment companies and is primarily engaged in the
business of providing, at cost, management, administrative or
related services to the Corporation or to the Corporation and
other investment companies.
7.8 Merger or Consolidation. In connection with the acquisition
of all or substantially all the assets or stock of another
investment company or investment trust, the Board of Directors may
issue or cause to be issued shares of capital stock of the
Corporation and accept in payment therefor, in lieu of cash, such
assets at their market value, or such stock at the market value of
the assets held by such investment company or investment trust,
either with or without adjustment for contingent costs or
liabilities, provided such assets are of the character in which
the Corporation is permitted to invest.
7.9 Amendments. The Corporation reserves the right to amend,
alter, change or repeal any provision of these Articles of
Incorporation, and all rights conferred upon stockholders herein
are granted subject to this reservation.
7.10 References to Statutes Articles and By-Laws. All
references herein to statutes, to these Articles of Incorporation
or to the By-Laws shall be deemed to refer to those statutes,
Articles or By-Laws as they are amended and in effect from time to
time.
IN WITNESS WHEREOF, the undersigned incorporator of The Munder
Funds, Inc. hereby executes the foregoing Articles of
Incorporation and acknowledges the same to be his act.
Dated this 18th day of November, 1992.
/s/ Paul F. Roye Paul F. Roye
10
shared/bankgrp/munder/charter/mfiaoi.doc
THE MUNDER FUNDS, INC.
ARTICLES OF AMENDMENT
The Munder Funds, Inc., a Maryland corporation having its
principal office in the State of Maryland in Baltimore City,
Maryland (hereinafter the "Corporation"), certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: The Articles of Incorporation of the
Corporation., as presently stated, are hereby amended by amending
Article V, Section 5.4 to redesignate the series of shares
previously designated as "The Munder Multi-Seasons Growth Fund" to
"The Munder Multi-Season Growth Fund."
SECOND: The amendment to the Articles of Incorporation of
the Corporation as hereinabove set forth has been duly approved by
a majority of the entire Board of Directors and no stock entitled
to be voted on this matter was outstanding or subscribed for at
the time of approval.
IN WITNESS WHEREOF, THE MUNDER FUNDS, INC. has caused these
Articles of Amendment to be signed in its name and on its behalf
by its duly authorized officers who acknowledge that these
Articles of Amendment are the act of the Corporation, that to the
best of their knowledge, information and belief, the matters and
facts set forth herein as to authorization and approval are true
in all material respects and that this statement is made under the
penalties of perjury.
Date: February 12, 1993
THE MUNDER FUNDS, INC.
[Corporate Seal]
/s/ Lee P. Munder
Lee P. Munder
Chief Executive Officer and
President
Attest:
By: /s/Leonard J. Barr, II
Leonard J. Barr, II
Secretary
shared/bankgrp/munder/charter/mfiaoa.doc
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
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: The Board of Directors of the Corporation, by
resolution dated July 20, 1993, classified as "Class B" shares of The
Munder Multi-Season Growth Fund the twenty million (20,000,000)
shares previously designated as "The Munder Multi-Season Growth Fund"
shares and designated an additional four hundred and eighty million
(480,000,000) shares as Class B shares as set forth below. The Board
of Directors also adopted a resolution to increase the total number
of shares which the Corporation shall have the authority to issue to
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); and designated
one billion four hundred million (1,400,000,000) (including the
20,000,000 shares previously designated as Class B shares of The
Munder Multi-Season Growth Fund) of such shares into Series and
classified the shares of each .Series as follows
Number of
Name of Series Name of Class of Series Shares Allocated
The Munder Multi-Season
Growth Fund Class A 200,000,000
Class B 500,000,000
Class C 100,000,000
Class D 150,000,000
The Munder Money
Market Fund Class A 50,000,000
Class B 50,000,000
Class C 300,000,000
Class D 50,000,000
SECOND: The shares of the Corporation authorized and
classified pursuant to Article First of these Articles Supplementary
have been so authorized and 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 one hundred million
(100,000,000) shares of Common Stock of the par value of $0.01 per
share and of the aggregate par value of one million dollars
($1,000,000), of which the Board of Directors had designated twenty
million (20,000,000) shares as "The Munder Multi-Season Growth Fund"
shares. 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 four hundred million (1,400,000,000) of such
shares into Series and classified the shares of each Series as
follows:
Number of
Name of Series Name of Class of Series Shares Allocated
The Munder Multi-Season
Growth Fund Class A 200,000,000
Class B 500,000,000
Class C 100,000,000
Class D 150,000,000
The Munder Money
Market Fund Class A 50,000,000
Class B 50,000,000
Class C 300,000,000
Class D 50,000,000
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 C shares
and Class D 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)(1) 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)(l)
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: July 20, 1993
THE MUNDER FUNDS, INC.
[CORPORATE SEAL]
By: /s/ Lee P. Munder
Lee P. Munder
President
Attest:
/s/ Leonard J. Barr
Leonard J. Barr, II
Secretary
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
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: The Board of Directors of the Corporation, by
resolution dated June 13, 1994, reclassified 190,000,000 shares
previously designated as The Munder Multi-Season Growth Fund Class A
shares, 440,000,000 shares previously designated as The Munder Multi-
Season Growth Fund Class B shares, 80,000,000 shares previously
designated as The Munder Multi-Season Growth Fund Class C shares,
140,000 shares previously designated as The Munder Multi-Season
Growth Fund Class D shares, 30,000,000 shares previously designated
as The Munder Money Market Fund Class A shares, 30,000,000 shares
previously designated as The Munder Money Market Class B shares, and
30,000,000 shares previously designated as The Munder Money Market
Fund Class D shares as follows:
Newly Classified Shares
Authorized
Name of Series Shares by Class (in millions)
A B C D
The Munder Money Market Fund 200
The Munder Real Estate Equity Investment Fund 10 50 10 10
The Munder Strategic U.S. Government Securities Fund 10 25 10
10
The Munder Strategic Bond Fund 10 25 20 10
The Munder Strategic Intermediate Bond Fund 10 25 10 10
The Munder World Growth Fund 20 50 20 10
The Munder World Bond Fund 20 50 20 10
The Munder Multi-Season Balanced Fund 10 10 20 10
The Munder Mid-Cap Opportunity Fund 10 10 10 10
The Munder Emerging Opportunity Fund 10 10 10 10
The Munder Tax-Advantaged Bond Fund 10 20 10 10
The Munder Michigan High Yield Bond Fund 10 25 10 10
The Munder Michigan Triple Tax-Advantaged Bond Fund 10 20 10
10
SECOND: The shares of the Corporation authorized and
classified pursuant to Article First of these Articles Supplementary
have been so authorized and 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 into Series and classified the shares of each Series as
follows:
Previously Classified Shares
Authorized
Shares by Class (in millions)
Name of Series A B C D
The Munder Multi-Season Growth Fund 200 500 100 150
The Munder Money Market Fund 50 50 300 50
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, four hundred million (1,400,000,000) into Series and
classified the shares of each Series as follows:
Current Classification of Shares
Authorized
Shares by Class (in millions)
Name of Series A B C D
The Munder Multi-Season Growth Fund 10 60 20 10
The Munder Money Market Fund 20 20 500 20
The Munder Real Estate Equity Investment Fund 10 50 10 10
The Munder Strategic U.S. Government Securities Fund 10 25 10
10
The Munder Strategic Bond Fund 10 25 20 10
The Munder Strategic Intermediate Bond Fund 10 25 10 10
The Munder World Growth Fund 20 50 20 10
The Munder World Bond Fund 20 50 20 10
The Munder Multi-Season Balanced Fund 10 10 20 10
The Munder Mid-Cap Opportunity Fund 10 10 10 10
The Munder Emerging Opportunity Fund 10 10 10 10
The Munder Tax-Advantaged Bond Fund 10 20 10 10
The Munder Michigan High Yield Bond Fund 10 25 10 10
The Munder Michigan Triple Tax-Advantaged Bond Fund 10 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, Class B, Class C and Class D 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)(1) 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: August 9, 1994
THE MUNDER FUNDS, INC.
[CORPORATE SEAL]
By: /s/ Lee P. Munder
Lee P. Munder
President
Attest:
/s/ Leonard J. Barr, II
Leonard J. Barr, II
Secretary
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
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: The Board of Directors of the Corporation, by
resolution dated April 26, 1995, reclassified 10 million shares, 25
million shares, 10 million shares, and 10 million shares previously
classified as The Munder Strategic U.S. Government Securities Fund
Class A shares, Class B shares, Class C shares and Class D shares,
respectively; 10 million shares, 25 million shares, 20 million
shares, and 10 million shares previously classified as The Munder
Strategic Bond Fund Class A shares, Class B shares, Class C shares,
and Class D shares, respectively; 10 million shares, 25 million
shares, 10 million shares, and 10 million shares previously
classified as The Munder Strategic Intermediate Bond Fund Class A
shares, Class B shares, Class C shares, and Class D shares,
respectively; 10 million shares previously classified as The Munder
World Growth Fund Class B shares; 10 million shares previously
classified as The Munder World Bond Fund Class B shares; 10 million
shares, 10 million shares, 20 million shares, and 10 million shares
previously classified as The Munder Multi-Season Balanced Fund Class
A shares, Class B shares, Class C shares, and Class D shares,
respectively; 10 million shares, 10 million shares, 10 million
shares, and 10 million shares previously classified as The Munder
Mid-Cap Opportunity Fund Class A shares, Class B shares, Class C
shares and Class D shares, respectively; 10 million shares, 10
million shares, 10 million shares, and 10 million shares previously
classified as The Munder Emerging Opportunity Fund Class A shares,
Class B shares, Class C shares and Class D shares, respectively; 10
million shares, 20 million shares, 10 million shares, and 10 million
shares previously classified as The Munder Tax-Advantaged Bond Fund
Class A shares, Class B shares, Class C shares, and Class D shares,
respectively; 10 million shares previously classified as The Munder
Michigan High Yield Bond Fund Class B shares; and 10 million shares,
20 million shares, 10 million shares, and 10 million shares
previously classified as The Munder Michigan Triple Tax-Advantaged
Bond Fund Class A shares, Class B shares, Class C shares, and Class D
shares, respectively, as set forth in the table below:
Newly Classified Shares
Newly Classified
Name of Shares Shares by Class (in millions)
A B C D K
The Munder Multi-Season Growth Fund 30 50
The Munder Money Market Fund 35 200
The Munder Real Estate Equity Investment Fund
10
The Munder World Growth Fund 10
The Munder World Bond Fund 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
SECOND: The shares of the Corporation authorized and classified
pursuant to Article First of these Articles Supplementary have been
so authorized and 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, four hundred million (l,400,000,000) shares
into Series and classified the shares of each Series as follows:
Previously Classified Shares
Authorized
Name of Shares Shares by Class (in millions)
A B C D
The Munder Multi-Season Growth Fund 10 60 20 10
The Munder Money Market Fund 20 20 500 20
The Munder Real Estate Equity Investment Fund 10 50 10 10
The Munder Strategic U.S. Government Securities Fund 10 25 10
10
The Munder Strategic Bond Fund 10 25 20 10
The Munder Strategic Intermediate Bond Fund 10 25 10 10
The Munder World Growth Fund 20 50 20 10
The Munder World Bond Fund 20 50 20 10
The Munder Multi-Season Balanced Fund 10 10 20 10
The Munder Mid-Cap Opportunity Fund 10 10 10 10
The Munder Emerging Opportunity Fund 10 10 10 10
The Munder Tax-Advantaged Bond Fund 10 20 10 10
The Munder Michigan High Yield Bond Fund 10 25 10 10
The Munder Michigan Triple Tax-Advantaged Bond Fund 10 20 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 $0.0l 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, four hundred million (1,400,000,000) shares into Series
and classified the shares of each Series as follows:
Current Classification of Shares
Authorized
Name of Shares Shares by Class (in millions)
A B C D 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 World 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
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 C shares,
Class D 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 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)(l)
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: April 26, 1995
THE MUNDER FUNDS, INC.
[CORPORATE SEAL]
By: /s/ Lee P. Munder
Lee P. Munder
President
Attest:
/s/ Patricia L. Bickimer
Patricia L. Bickimer
Secretary
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
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: The Board of Directors of the Corporation, by
resolution dated April 26, 1995 and effective on June 28, 1995,
reclassified all Class C shares of each Series as Class Y shares of
that Series; and reclassified all Class D shares of each Series as
Class C shares of that Series.
SECOND: The shares of the Corporation reclassified pursuant to
Article First of these Articles Supplementary have been so
reclassified 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, four hundred million (1,400,000,000) shares
into Series and classified the shares of each Series as follows:
Previously Classified Shares
Authorized
Name of Shares Shares by Class (in millions)
A B C D 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 World 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
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, four hundred million (1,400,000,000) shares into Series
and classified the shares of each Series as follows:
Current Classification of Shares
Authorized
Name of Shares 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 World Growth Fund 20 40 20 10 10
The Munder World 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
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: June 27, 1995
THE MUNDER FUNDS, INC.
[CORPORATE SEAL]
By: : /s/ Lee P. Munder
Lee P. Munder
President
Attest:
/s/ Patricia L. Bickimer
Patricia L. Bickimer
Secretary
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") as 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: The Board of Directors of the Corporation, by
resolution dated May 6, 1996 has changed the name of "The Munder
World Bond Fund", a previously designated series of the Corporation,
including each class thereof to "The Munder International Bond Fund"
pursuant to Section 2-605(a)(4) of Maryland General Corporate Law.
SECOND: The Corporation is registered as an open-end
investment company under the 1940 Act.
IN WITNESS WHEREOF, The Corporation 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: June __, 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
Assistant Secretary
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INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made this day of , 1996,
between The Munder Funds, Inc. (the "Company") on behalf of The
Munder International Bond 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");
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 Prospectus and the Statement of
Additional Information filed with the Securities and Exchange
Commission, as they may be, amended from time to time; (b) make
investment decisions for the 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.
(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;
(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 is 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 o fits obligations an 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 .50% 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 Prospectus 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. Reduction of Fees or Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Fund
(including fees pursuant to this Agreement and the Fund's
administration agreement, but excluding distribution fees,
interest, taxes, brokerage and extraordinary expenses) exceed the
expense limitation of any state having jurisdiction over the Fund,
the Adviser will reduce its fees or reimburse the Fund for such
excess expense in the same proportion as its advisory fee bears to
the Fund's combined fee for investment advice and administration.
The Adviser's obligation to reduce its fees or reimburse the Fund
will be limited to the amount of its fees received pursuant to
this Agreement. Such reduction in fees or reimbursement, if any,
will be estimated, reconciled and, in the case of reimbursement,
paid on a monthly basis.
10. 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.
11. 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 he 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 he 1940 Act).
12. Amendment
No provision of this Agreement 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 the
Company, including a majority of Directors who are not interested
persons 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.
13. 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.
14. 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: /s/ Lee Munder
MUNDER CAPITAL MANAGEMENT
By: /s/ Lisa A. Rosen
- -5-
shared/bankgrp/munder/agreemen/adviosry/inadv.doc
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made this day of , 1996,
between The Munder Funds, Inc. (the "Company") on behalf of The
Munder Small-Cap Value 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");
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.
(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;
(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 is 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 o fits obligations an 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 0.75% 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. Reduction of Fees or Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Fund
(including fees pursuant to this Agreement and the Fund's
administration agreement, but excluding distribution fees,
interest, taxes, brokerage and extraordinary expenses) exceed the
expense limitation of any state having jurisdiction over the Fund,
the Adviser will reduce its fees or reimburse the Fund for such
excess expense in the same proportion as its advisory fee bears to
the Fund's combined fee for investment advice and administration.
The Adviser's obligation to reduce its fees or reimburse the Fund
will be limited to the amount of its fees received pursuant to
this Agreement. Such reduction in fees or reimbursement, if any,
will be estimated, reconciled and, in the case of reimbursement,
paid on a monthly basis.
10. 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.
11. 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 he 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).
12. Amendment
No provision of this Agreement 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 the
Company, including a majority of Directors who are not interested
persons 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.
13. 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.
14. 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: /s/
MUNDER CAPITAL MANAGEMENT
By: /s/
P:\SHARED\BANKGRP\MUNDER\AGREEMEN\ADVISORY\SMALLCAP.DOC 5
P:\SHARED\BANKGRP\MUNDER\AGREEMEN\ADVISORY\SMALLCAP.DOC
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made this day of , 1996,
between The Munder Funds, Inc. (the "Company") on behalf of The
Munder Micro-Cap Equity 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");
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.
(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;
(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 is 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 o fits obligations an 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 1.00% 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. Reduction of Fees or Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Fund
(including fees pursuant to this Agreement and the Fund's
administration agreement, but excluding distribution fees,
interest, taxes, brokerage and extraordinary expenses) exceed the
expense limitation of any state having jurisdiction over the Fund,
the Adviser will reduce its fees or reimburse the Fund for such
excess expense in the same proportion as its advisory fee bears to
the Fund's combined fee for investment advice and administration.
The Adviser's obligation to reduce its fees or reimburse the Fund
will be limited to the amount of its fees received pursuant to
this Agreement. Such reduction in fees or reimbursement, if any,
will be estimated, reconciled and, in the case of reimbursement,
paid on a monthly basis.
10. 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.
11. 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 he 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).
12. Amendment
No provision of this Agreement 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 the
Company, including a majority of Directors who are not interested
persons 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.
13. 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.
14. 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: /s/
MUNDER CAPITAL MANAGEMENT
By: /s/
P:\SHARED\BANKGRP\MUNDER\AGREEMEN\ADVISORY\MICROCAP.DOC 5
P:\SHARED\BANKGRP\MUNDER\AGREEMEN\ADVISORY\MICROCAP.DOC
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made this day of , 1996,
between The Munder Funds, Inc. (the "Company") on behalf of The
Munder Equity Selection 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");
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.
(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;
(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 is 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 o fits obligations an 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 0.75% 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. Reduction of Fees or Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Fund
(including fees pursuant to this Agreement and the Fund's
administration agreement, but excluding distribution fees,
interest, taxes, brokerage and extraordinary expenses) exceed the
expense limitation of any state having jurisdiction over the Fund,
the Adviser will reduce its fees or reimburse the Fund for such
excess expense in the same proportion as its advisory fee bears to
the Fund's combined fee for investment advice and administration.
The Adviser's obligation to reduce its fees or reimburse the Fund
will be limited to the amount of its fees received pursuant to
this Agreement. Such reduction in fees or reimbursement, if any,
will be estimated, reconciled and, in the case of reimbursement,
paid on a monthly basis.
10. 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.
11. 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 he 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).
12. Amendment
No provision of this Agreement 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 the
Company, including a majority of Directors who are not interested
persons 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.
13. 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.
14. 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: /s/
MUNDER CAPITAL MANAGEMENT
By: /s/
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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 four additional investment portfolios of The
Munder Funds, Inc., The Munder Small-Cap Value Fund, The Munder
Micro-Cap Fund, The Munder Equity Selection Fund and the Net Net
Fund (the "New Portfolios").
We request that you act as Underwriter under the Agreement
with respect to the New Portfolios.
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: /s/
Accepted:
Funds Distributor, Inc.
Date: By: /s/
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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 four additional investment portfolios of The
Munder Funds, Inc., The Munder Small-Cap Value Fund, The Munder
Micro-Cap Equity Fund, The Munder Equity Selection Fund and the
Net Net Fund (the "New Portfolios").
We request that you act as Custodian under the Agreement
with respect to the New Portfolios.
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: /s/
Accepted:
Comerica Bank
Date: By: /s/
P:\SHARED\BANKGRP\MUNDER\AGREEMEN\CUSTODY\NOTC896.DOC 1
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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 four additional investment portfolios of The
Munder Funds, Inc., The Munder Small-Cap Value Fund, The Munder
Micro-Cap Equity Fund, The Munder Equity Selection Fund and the
Net Net Fund (the "New Portfolios").
We request that you act as Transfer Agent under the
Agreement with respect to the New Portfolios.
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: /s/
Accepted:
First Data Investor Services Group, Inc.
Date: By: /s/
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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 four additional investment portfolios of The
Munder Funds, Inc., The Munder Small-Cap Value Fund, The Munder
Micro-Cap Equity Fund, The Munder Equity Selection Fund, and the
Net Net Fund (the "New Portfolios").
We request that you act as Administrator under the Agreement
with respect to the New Portfolios.
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: /s/
Accepted:
First Data Investor Services Group, Inc.
Date: By: /s/
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THE MUNDER FUNDS, INC.
SERVICE PLAN
Section 1. Upon the recommendation of The Shareholder
Services Group, Inc. ("TSSG"), the administrator of The Munder
Funds, Inc. (the "Company"), any officer of the Company is
authorized to execute and deliver, in the name and on behalf of
the Company, written agreements based on the form attached hereto
as Appendix A or any other form duly approved by the Company's
Board of Directors ("Agreements") with institutional investors
("Shareholder Organizations") which are shareholders or dealers of
record or which have a servicing relationship with the beneficial
owners of shares of the Class K Shares of any Fund of the Company.
Pursuant to such Agreements, Shareholder Organizations shall
provide support services as set forth therein to their clients who
beneficially own Class K Shares in consideration of a fee,
computed monthly in the manner set forth in the Agreements, at an
annual rate of up to .25% of the average daily net asset value of
the Class K Shares beneficially owned by such clients. Comerica
Bank and its affiliates are eligible to become Shareholder
Organizations and to receive fees under this Plan.
Section 2. TSSG shall monitor the arrangements pertaining
to the Company's Agreements with Shareholder Organizations in
accordance with the terms of TSSG's agreement with the Company.
TSSG shall not, however, be obligated by this Plan to recommend,
and the Company shall not be obligated to execute, any Agreement
with any qualifying Shareholder Organization.
Section 3. So long as this Plan is in effect, TSSG shall
provide to the Company's Board of Directors, and the Directors
shall review, at least quarterly, a written report of the amounts
expended pursuant to this Plan and the purposes for which such
expenditures were made.
Section 4. This Plan shall become effective immediately
with respect to each class of Class K Shares upon the approval of
the Plan (and the form of Agreement attached hereto) by a majority
of the Company's Board of Directors, including a majority of the
Directors who are not "interested persons," as defined in the
Investment Company Act of 1940, as amended (the "Act"), of the
Company and have no direct or indirect financial interest in the
operation of this Plan or in any Agreement related to this Plan
(the "Disinterested Directors"), pursuant to a vote cast in person
at a meeting called for the purpose of voting on the approval of
this Plan (and form of Agreement).
Section 5. Unless sooner terminated, this Plan shall
continue in effect for so long as its continuance is approved at
least annually in the manner set forth in Section 4.
Section 6. This Plan may be amended at any time with
respect to any class of Class K Shares by the Company's Board of
Directors, provided that any material amendment of the terms of
this Plan shall become effective only upon the approvals set forth
in Section 4.
Section 7. This Plan is terminable at any time with respect
to any class of Class K Shares by vote of a majority of the
Disinterested Directors.
Section 8. While this Plan is in effect, the selection and
nomination of those trustees who are not "interested persons" (as
defined in the Act) of the Company shall be committed to the
discretion of such non-interested Directors.
Section 9. The Company adopted this Plan as of July 31,
1995.
THE MUNDER FUNDS, INC.
SERVICING AGREEMENT
To: Comerica Investment Service, Inc.
We wish to enter into this Servicing Agreement with you
concerning the provision of support services to your clients
("Clients") who may from time to time beneficially own shares of
Class K ("Shares") of the portfolio series of The Munder Funds,
Inc. (the "Funds") offered by us.
The terms and conditions of this Servicing Agreement are as
follows:
1. You agree to provide the following support services to
Clients who may from time to time beneficially own Shares: (i)
establishing and maintaining accounts and records relating to
Clients that invest in Shares; (ii) processing dividend and
distribution payments from us on behalf of Clients; (iii)
providing information periodically to Clients showing their
positions in Shares and integrating such statements with those of
other transactions and balances in Client's other accounts
serviced by you; (iv) arranging for bank wires; (v) responding
to Client inquiries relating to the services performed by you;
(vi) responding to routine inquiries from Clients concerning
their investments in Shares; (vii) providing subaccounting with
respect to Shares beneficially owned by Clients or the information
to us necessary for subaccounting; (viii) if required by law,
forwarding shareholder communications from us (such proxies,
shareholder reports, annual and semi-annual financial statements
and dividend, distribution and tax notices) to clients; (ix)
assisting in processing purchase, exchange and redemption requests
from Clients and in placing such orders with our service
contractors; (x) assisting Clients in changing dividend options,
account designations and addresses; (xi) providing Clients with
a service that invests the assets of their accounts in Shares
pursuant to specific or pre-authorized instructions; and (xii)
providing such other similar services as we may reasonably request
to the extent you are permitted to do so under applicable
statutes, rules and regulations.
Section 2. You will provide such office space and
equipment, telephone facilities and personnel (which may be any
part of the space, equipment and facilities currently used in your
business, or any personnel employed by you) as may be reasonably
necessary or beneficial in order to provide the aforementioned
services and assistance to Clients.
Section 3. Neither you nor any of your officers, employees
or agents are authorized to make any representations concerning us
or the Shares except those contained in our then current
prospectuses and statement of additional information for Shares,
copies of which will be supplied by us to you, or in such
supplemental literature or advertising as may be authorized by us
in writing.
Section 4. For all purposes of this Agreement you will be
deemed to be an independent contractor, and will have no authority
to act as agent for us in any matter or in any respect. By your
written acceptance of this Agreement, you agree to and do release,
indemnify and hold us harmless from and against any and all direct
or indirect liabilities or losses resulting from requests,
directions, actions or inactions of or by you or your officers,
employees or agents regarding your responsibilities hereunder or
the purchase, redemption, transfer or registration of Shares (or
orders relating to the same) by or on behalf of Clients. You and
your employees will, upon request, be available during normal
business hours to consult with us or our designees concerning the
performance of your responsibilities under this Agreement.
Section 5. In consideration of the services and facilities
provided by you hereunder, we will pay to you, and you will accept
as full payment therefor, a fee at the annual rate of .25 of 1% of
the average daily net asset value of the Shares beneficially owned
by your Clients for whom you are the dealer of record or holder of
record or with whom you have a servicing relationship (the
"Clients' Shares"), which fee will be computed daily and payable
monthly. For purposes of determining the fees payable under this
Section 5, the average daily net asset value of the Clients'
Shares will be computed in the manner specified in our
Registration Statement (as the same is in effect from time to
time) in connection with the computation of the net asset value of
Shares for purposes of purchases and redemptions. By your written
acceptance of this Agreement, you agree to and do waive such
portion of any fee payable to you hereunder to the extent
necessary to assure that such fee and other expenses required to
be accrued by us on any day with respect to the Client's Shares in
any Fund that declares its net investment income as a dividend to
shareholders on a daily basis does not exceed the income to be
accrued by us to such Shares on that day. The fee rate stated
above may be prospectively increased or decreased by us, in our
sole discretion, at any time upon notice to you. Further, we may,
in our discretion and without notice, suspend or withdraw the sale
of Shares, including the sale of Shares to you for the account of
any Client or Clients.
Section 6. Any person authorized to direct the disposition
of monies paid or payable by us pursuant to this Agreement will
provide to our Board of Directors, and our Directors will review,
at least quarterly, a written report of the amounts so expended
and the purposes for which such expenditures were made. In
addition, you will furnish us or our designees with such
information as we or they may reasonably request (including,
without limitation, periodic certifications confirming the
provision to Clients of the services described herein), and will
otherwise cooperate with us and our designees (including, without
limitation, any auditors designated by us), in connection with the
preparation of reports to our Board of Directors concerning this
Agreement and the monies paid or payable by us pursuant hereto, as
well as any other reports or filings that may be required by law.
Section 7. We may enter into other similar Servicing
Agreements with any other persons without your consent.
Section 8. By your written acceptance of this Agreement,
you represent, warrant and agree that: (i) the compensation
payable to you in connection with the investment of your Clients'
assets in Shares will be disclosed by you to your Clients, will be
authorized by your Clients and will not be excessive; (ii) the
services provided by you under this Agreement will in no event be
primarily intended to result in the sale of Shares; and (iii) in
the event an issue pertaining to our Service Plan is submitted for
shareholder approval, you will vote any shares held for your own
account in the same proportion as the vote of those shares held
for your Client's accounts.
Section 9. This agreement will become effective on the date
a fully executed copy of this Agreement is received by us or our
designee. Unless sooner terminated, this Agreement will continue
until __________, 1996, and thereafter will continue automatically
for successive annual periods provided such continuance is
specifically approved at least annually by us in the manner
described in Section 12. This Agreement is terminable with
respect to the Shares, without penalty, at any time by us (which
termination may be by vote or a majority of the Disinterested
Directors as defined in Section 12) or by you upon written notice
to the other party hereto.
Section 10. All notices and other communications to either
you or us will be duly given if mailed, telegraphed, telexed or
transmitted by similar telecommunications device to the
appropriate address stated herein, or to such other address as
either party shall so provide the other.
Section 11. This Agreement will be construed in accordance
with the laws of the State of Massachusetts and is non-assignable
by the parties hereto.
Section 12. This Agreement has been approved by vote of a
majority of (i) our Board of Directors and (ii) those Directors
who are not "interested persons" (as defined in the Investment
Company Act of 1940) of us and have no direct or indirect
financial interest in the operation of the Service Plan adopted by
us regarding the provision of support services to the beneficial
owners of Shares or in any agreement related thereto cast in
person at a meeting called for the purpose of voting on such
approval ("Disinterested Directors").
If you agree to be legally bound by the provisions of this
Agreement, please sign a copy of this letter where indicated below
and promptly return it to us, c/o First Data Investor Services
Group, Inc. One Exchange Place, 8th Floor, Boston, Massachusetts
02109-2873.
Very truly yours,
THE MUNDER FUNDS, INC.
Date: By: /s/
(Authorized Officer)
Accepted and Agreed to:
COMERICA INVESTMENT
SERVICE, INC.
By: /s/
Date: _____________________ (Authorized
Officer)
Address of Shareholder Organization:
___________________________
___________________________
___________________________
. Services may be modified or omitted in the particular case and items
renumbered.
4
SHARED/BANKGRP/MUNDER/AGREEMENTS/SERVPLN/KPLANINC.DOC
Form of Service Plan
for The Munder Funds, Inc.
Class A Shares
FORM OF SERVICE PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in
business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as
amended (the "Act");
WHEREAS, shares of common stock of the Company are currently
divided into series of shares, one of which is designated as
__________________ (the "Fund");
WHEREAS, shares of common stock of the Fund are divided into
classes of shares, one of which is designated Class A;
WHEREAS, the Company employs Funds Distributor, Inc. (the
"Distributor") as distributor of the securities of which it is the
issuer; and
WHEREAS, the Company and the Distributor have entered into
an Underwriting Agreement pursuant to which the Company has
employed the Distributor in such capacity during the continuous
offering of shares of the Company.
WHEREAS, this Service Plan (the "Plan") was adopted and
approved by the Company and its shareholders on _______________,
and is hereby amended and restated in order to specifically
designate Funds Distributor, Inc. as the Distributor hereunder.
NOW, THEREFORE, the Company hereby adopts on behalf of the
Fund with respect to its Class A shares, and the Distributor
hereby agrees to the terms of, the Plan, in accordance with Rule
12b-l under the Act on the following terms and conditions:
1. The Fund shall pay to the Distributor, as the
distributor of the Class A shares of the Fund, a service fee at
the rate of ____% on an annualized basis of the average daily net
assets of the Fund's Class A shares, provided that, at any time
such payment is made, whether or not this Plan continues in
effect, the making thereof will not cause the limitation upon such
payments established by this Plan to be exceeded. Such fee shall
be calculated and accrued daily and paid at such intervals as the
Board of Directors shall determine, subject to any applicable
restriction imposed by rules of the National Association of
Securities Dealers, Inc.
2. The amount set forth in paragraph 1 of this Plan may
be used by the Distributor to pay securities dealers (which may
include the Distributor itself) and other financial institutions
and organizations for servicing shareholder accounts, including a
continuing fee which may accrue immediately after the sale of
shares.
3. The Plan shall not take effect with respect to the
Class A shares of the Fund until it has been approved by a vote of
the then sole shareholder of the Class A shares of the Fund.
4. This Plan shall not take effect until it, together
with any related agreements, has been approved by votes of a
majority of both (a) the Directors of the Company and (b) those
Directors of the Company who are not "interested persons" of the
Company (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-l Directors"), cast in person at a
meeting (or meetings) called for the purpose of voting on this
Plan and such related agreements.
5. After approval as set forth in paragraphs 3 and 4,
this Plan shall take effect. The Plan shall continue in full
force and effect as to the Class A shares of the Fund for so long
as such continuance is specifically approved at least annually in
the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the
Company, and the Directors shall review, at least quarterly, a
written report of the amounts so expended and the purposes for
which such expenditures were made.
7. This Plan may be terminated as to the Fund at any
time, without payment of any penalty, by vote of the Directors of
the Company, by vote of a majority of the Rule 12b-l Directors, or
by a vote of a majority of the outstanding voting securities of
Class A shares of the Fund on not more than 30 days' written
notice to any other party to the Plan.
8. This Plan may not be amended to increase materially
the amount of service fee provided for in paragraph 1 hereof
unless such amendment is approved in the manner provided for
initial approval in paragraph 3 hereof, and no material amendment
to the Plan shall be made unless approved in the manner provided
for approval and annual renewal in paragraph 4 hereof.
9. While this Plan is in effect, the selection and
nomination of Directors who are not interested persons (as defined
in the Act) of the Company shall be committed to the discretion of
the Directors who are not such interested persons.
10. The Company shall preserve copies of this Plan and any
related agreements and al reports made to paragraph 6 hereof, for
a period of not less than six years from the date of this plan,
any such agreement of any such report, as the case may be, the
first two years in any easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and
the Distributor have executed this Service Plan as of the _____
day of _____.
THE MUNDER FUNDS, INC.
By: /s/
FUNDS DISTRIBUTOR, INC.
By: /s/
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Form of Service and Distribution Plan for
The Munder Funds, Inc.
Class B Shares
FORM OF SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in
business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as
amended (the "Act");
WHEREAS, shares of common stock of the Company are currently
divided into series of shares, one of which is designated as
_______________________ (the "Fund");
WHEREAS, shares of common stock of the Fund are divided into
classes of shares, one of which is designated Class B;
WHEREAS, the Company employs Funds Distributor, Inc. (the
"Distributor") as distributor of the securities of which it is the
issuer; and
WHEREAS, the Company and the Distributor have entered into
an Underwriting Agreement pursuant to which the Company has
employed the Distributor in such capacity during the continuous
offering of shares of the Company.
WHEREAS, this Service and Distribution Plan (the "Plan") was
adopted and approved by the Company and its shareholders on
_______________, and is hereby amended and restated in order to
specifically designate Funds Distributor, Inc. as the Distributor
hereunder.
NOW, THEREFORE, the Company hereby adopts on behalf of the
Fund with respect to its Class B shares, and the Distributor
hereby agrees to the terms of, the Plan, in accordance with Rule
12b-l under the Act on the following terms and conditions:
1. A. The Fund shall pay to the Distributor, as the
distributor of the Class B shares of the Fund, a fee for
distribution of the shares at the rate of ____% on an annualized
basis of the average daily net assets of the Fund's Class B
shares, provided that, at any time such payment is made, whether
or not this Plan continues in effect, the making thereof will not
cause the limitation upon such payments established by this Plan
to be exceeded. Such fee shall be calculated and accrued daily
and paid at such intervals as the Board of Directors shall
determine, subject to any applicable restriction imposed by rules
of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the
distributor of the Class B shares of the Fund, a service fee at
the rate of _____% on an annualized basis of the average daily net
assets of the Fund's Class B shares, provided that, at any time
such payment is made, whether or not this Plan continues in
effect, the making thereof will not cause the limitation upon such
payments established by this Plan to be exceeded. Such fee shall
be calculated and accrued daily and paid at such intervals as the
Board of Directors shall determine, subject to any applicable
restriction imposed by rules of the National Association of
Securities Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan
shall be paid for the Distributor's services as distributor of the
shares of the Fund in connection with any activities or expenses
primarily intended to result in the sale of the Class B shares of
the Fund, including, but not limited to, payment of compensation,
including incentive compensation, to securities dealers (which may
include the Distributor itself) and other financial institutions
and organizations (collectively, the "Service Organizations") to
obtain various distribution related and/or administrative 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
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, this
Plan hereby authorizes payment by the Fund of the cost of
preparing, printing and distributing Fund Prospectuses and
Statements of Additional Information to prospective investors and
of implementing and operating the Plan. Distribution expenses
also include an allocation of overhead of the Distributor and
accruals for interest on the amount of distribution expenses that
exceed distribution fees and contingent deferred sales charges
received by the Distributor. Payments under the Plan are not tied
exclusively to actual distribution and service expenses, and the
payments may exceed distribution and service expenses actually
incurred.
The amount set forth in paragraph 1.B. of this Plan may be
used by the Distributor to pay securities dealers (which may
include the Distributor itself) and other financial institutions
and organizations for servicing shareholder accounts, including a
continuing fee which may accrue immediately after the sale of
shares.
3. The Plan shall not take effect with respect to the
Class B shares of the Fund until it has been approved by a vote of
the then sole shareholder of the Class B shares of the Fund.
4. This Plan shall not take effect until it, together
with any related agreements, has been approved by votes of a
majority of both (a) the Directors of the Company and (b) those
Directors of the Company who are not "interested persons" of the
Company (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-l Directors"), cast in person at a
meeting (or meetings) called for the purpose of voting on this
Plan and such related agreements.
5. After approval as set forth in paragraphs 3 and 4,
this Plan shall take effect. The Plan of Distribution shall
continue in full force and effect as to the Class B shares of the
Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in
paragraph 4.
6. The Distributor shall provide to the Directors of the
Company, and the Directors shall review, at least quarterly, a
written report of the amounts so expended and the purposes for
which such expenditures were made.
7. This Plan may be terminated as to the Fund at any
time, without payment of any penalty, by vote of the Directors of
the Company, by vote of a majority of the Rule 12b-l Directors, or
by a vote of a majority of the outstanding voting securities of
Class B shares of the Fund on not more than 30 days' written
notice to any other party to the Plan.
8. This Plan may not be amended to increase materially
the amount of distribution fee (including any service fee)
provided for in paragraph 1 hereof unless such amendment is
approved in the manner provided for initial approval in paragraph
3 hereof, and no material amendment to the Plan shall be made
unless approved in the manner provided for approval and annual
renewal in paragraph 4 hereof.
9. While this Plan is in effect, the selection and
nomination of Directors who are not interested persons (as defined
in the Act) of the Company shall be committed to the discretion of
the Directors who are not such interested persons.
10. The Company shall preserve copies of this Plan and any
related and related agreements and all reports made pursuant to
paragraph 6 hereof, for a period of not less than six years from
the date of this plan, any such agreement or any such report, as
the case may be, the first two years in an easily accessible
place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and
the Distributor have executed this Service and Distribution Plan
as of the _____ day of _____, 1996.
THE MUNDER FUNDS, INC.
By: /s/
FUNDS DISTRIBUTOR, INC.
By: /s/
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Form of Service and Distribution Plan for
The Munder Funds, Inc.
Class C Shares
FORM OF SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in
business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as
amended (the "Act");
WHEREAS, shares of common stock of the Company are currently
divided into series of shares, one of which is designated as
______________________(the "Fund");
WHEREAS, shares of common stock of the Fund are divided into
classes of shares, one of which is designated as Class C;
WHEREAS, the Company employs Funds Distributor, Inc. (the
"Distributor") as distributor of the securities of which it is the
issuer; and
WHEREAS, the Company and the Distributor have entered into
an Underwriting Agreement pursuant to which the Company has
employed the Distributor in such capacity during the continuous
offering of shares of the Company; and
WHEREAS, this Service and Distribution Plan (the "Plan") was
adopted and approved by the Company and its shareholders on
_______________, and is hereby amended and restated in order to
specifically designate Funds Distributor, Inc. as Distributor
hereunder.
NOW, THEREFORE, the Company hereby adopts on behalf of the
Fund with respect to its Class C shares, and the Distributor
hereby agrees to the terms of, the Plan, in accordance with Rule
12b-l under the Act on the following terms and conditions:
1. A. The Fund shall pay to the Distributor, as the
distributor of the Class C shares of the Fund, a fee for
distribution of the shares at the rate of ___% on an annualized
basis of the average daily net assets of the Fund's Class C
shares, provided that, at any time such payment is made, whether
or not this Plan continues in effect, the making thereof will not
cause the limitation upon such payments established by this Plan
to be exceeded. Such fee shall be calculated and accrued daily
and paid at such intervals as the Board of Directors shall
determine, subject to any applicable restriction imposed by rules
of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the
distributor of the Class C shares of the Fund, a service fee at
the rate of ____% on an annualized basis of the average daily net
assets of the Fund's Class C shares, provided that, at any time
such payment is made, whether or not this Plan continues in
effect, the making thereof will not cause the limitation upon such
payments established by this Plan to be exceeded. Such fee shall
be calculated and accrued daily and paid at such intervals as the
Board of Directors shall determine, subject to any applicable
restriction imposed by rules of the National Association of
Securities Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan
shall be paid for the Distributor's services as distributor of the
shares of the Fund in connection with any activities or expenses
primarily intended to result in the sale of the Class C shares of
the Fund, including, but not limited to, payment of compensation,
including incentive compensation, to securities dealers (which may
include the Distributor itself) and other financial institutions
and organizations (collectively, the "Service Organizations") to
obtain various distribution related and/or administrative 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
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, this
Plan hereby authorizes payment by the Fund of the cost of
preparing, printing and distributing Fund Prospectuses and
Statements of Additional Information to prospective investors and
of implementing and operating the Plan. Distribution expenses
also include an allocation of overhead of the Distributor and
accruals for interest on the amount of distribution expenses that
exceed distribution fees and contingent deferred sales charges
received by the Distributor. Payments under the Plan are not tied
exclusively to actual distribution and service expenses, and the
payments may exceed distribution and service expenses actually
incurred.
The amount set forth in paragraph 1.B. of this Plan may be
used by the Distributor to pay securities dealers (which may
include the Distributor itself) and other financial institutions
and organizations for servicing shareholder accounts, including a
continuing fee which may accrue immediately after the sale of
shares.
3. The Plan shall not take effect with respect to the
Class C shares of the Fund until it has been approved by a vote of
the then sole shareholder of the Class C shares of the Fund.
4. This Plan shall not take effect until it, together
with any related agreements, has been approved by votes of a
majority of both (a) the Directors of the Company and (b) those
Directors of the Company who are not "interested persons" of the
Company (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-l Directors"), cast in person at a
meeting (or meetings) called for the purpose of voting on this
Plan and such related agreements.
5. After approval as set forth in paragraphs 3 and 4,
this Plan shall take effect. The Plan of Distribution shall
continue in full force and effect as to the Class C shares of the
Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in
paragraph 4.
6. The Distributor shall provide to the Directors of the
Company, and the Directors shall review, at least quarterly, a
written report of the amounts so expended and the purposes for
which such expenditures were made.
7. This Plan may be terminated as to the Fund at any
time, without payment of any penalty, by vote of the Directors of
the Company, by vote of a majority of the Rule 12b-l Directors, or
by a vote of a majority of the outstanding voting securities of
Class C shares of the Fund on not more than 30 days' written
notice to any other party to the Plan.
8. This Plan may not be amended to increase materially
the amount of distribution fee (including any service fee)
provided for in paragraph 1 hereof unless such amendment is
approved in the manner provided for initial approval in paragraph
3 hereof, and no material amendment to the Plan shall be made
unless approved in the manner provided for approval and annual
renewal in paragraph 4 hereof.
9. While this Plan is in effect, the selection and
nomination of Directors who are not interested persons (as defined
in the Act) of the Company shall be committed to the discretion of
the Directors who are not such interested persons.
10. The Company shall preserve copies of this Plan and any
related agreements and all reports made pursuant to paragraph 6
hereof, for a period of not less than six years from the date of
this Plan, any such agreement or any such report, as the case may
be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and
the Distributor have executed this Service and Distribution Plan
as of the ____ day of ___________, 199_.
THE MUNDER FUNDS, INC.
By: /s/
FUNDS DISTRIBUTOR, INC.
By: /s/
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