As filed with the Securities and Exchange Commission
on October 28, 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. 20 [ X ]
----
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940[ X ]
Amendment No. 22 [ X ]
----
(Check appropriate box or boxes)
The Munder Funds, Inc.
(Exact Name of Registrant as Specified in Charter)
480 Pierce Street, Birmingham, Michigan 48009
(Address of Principal Executive Offices) (Zip code)
Registrant's Telephone Number: (810) 647-9200
Teresa M.R. Hamlin, Esq.
First Data Investor Services Group, Inc.
One Exchange Place, 8th Floor
Boston, Massachusetts 02109
Copies to:
Lisa Anne Rosen, Esq. Paul F. Roye, Esq.
Munder Capital Management Dechert Price & Rhoads
480 Pierce Street 1500 K Street, NW
Birmingham, Michigan 48009 Washington, DC 20005
[X] It is proposed that this filing will become effective
October 28, 1996 pursuant to paragraph (b) of Rule 485
The Registrant has elected to register an indefinite number
of shares under the Securities Act of 1933 pursuant to Rule 24f-2
under the Investment Company Act of 1940. Registrant filed the
notice required by Rule 24f-2 with respect to its fiscal year
ended June 30, 1996 on August 29, 1996.
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(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
3. Condensed Financial Information
Financial
Highlights
4. General Description of Registrant Cover
Page; 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 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 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
(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
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 to The Munder Funds
(Class Y Shares)
Part A
- ------
Item Heading
---- -------
1. Cover Page Cover Page
2. Synopsis Expense
Table
3. Condensed Financial Information
Financial
Highlights
4. General Description of Registrant Cover
Page; 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 and Other
Service Arrangements; See Prospectus --"Management"
17. Brokerage Allocation and Other
Portfolio
Practices Transactions
18. Capital Stock and Other Securities See
Prospectus --"Description of Shares" and "Management;" Additional
Information Concerning Shares
19. Purchase, Redemption and Pricing
Purchase and
of Securities Being Offered
Redemption Information; Net Asset Value; Additional
Information Concerning Shares
20. Tax Status Taxes
21. Underwriters
Investment Advisory
and Other
Service
Agreements
22. Calculation of Performance Data
Performance Information
23. Financial Statements
Financial
Statements
THE MUNDER FUNDS INC.
The purpose of this Post-Effective Amendment filing is to respond
to the Staff's comments with respect to Post-Effective Amendment
No. 18 to the Company's Registration Statement and to bring the
financial statements and other information up to date under
Section 10(a)(3) of the Securities Act of 1933, as amended.
This filing does not include the Prospectuses and Statements of
Additional Information for the NetNet Fund or the Short-Term
Treasury Fund. The Prospectuses and Statements of Additional
Information for such Funds are included in Post-Effective
Amendment No. 17 and No. 19, respectively, and are incorporated by
reference.
<PAGE>
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 Cash Investment Fund
Munder Money Market Fund
Munder Tax-Free Money Market Fund
Munder U.S. Treasury Money Market Fund
Munder Capital Management (the "Advisor") serves as the investment advisor
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 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 October 28, 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. In addition, the SEC maintains
a Web site (http://www.sec.gov) that contains the Statement of Additional
Information and other information regarding the Fund.
SHARES OF THE 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 OCTOBER 28, 1996.
<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................................................... 16
How to Redeem Shares..................................................... 17
Conversion of Money Market Fund Class B Shares........................... 21
How to Exchange Shares................................................... 21
Dividends and Distributions.............................................. 22
Other Information
Net Asset Value.......................................................... 23
Management............................................................... 23
Taxes.................................................................... 26
Description of Shares.................................................... 27
Performance.............................................................. 28
Shareholder Account Information.......................................... 29
</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 Cash
Investment and U.S. Treasury Money Market 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 Cash Investment Fund and the Money Market 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."
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
3
<PAGE>
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.
OTHER FEATURES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------- -------------- --------------
<S> <C> <C>
Automatic Investment Plan Automatic Investment Plan Automatic Investment Plan
Automatic Withdrawal Plan Automatic Withdrawal Plan Automatic Withdrawal Plan
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
4
<PAGE>
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 Cash Investment Fund, Tax-Free Money Market Fund and U.S.
Treasury Money Market Fund 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
------------------------------------
U.S.
CASH TAX-FREE TREASURY
INVESTMENT MONEY MARKET MONEY MARKET
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. None None None
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% .18% .19%
---- ----- -----
Total Fund Operating Expenses............ .78% .78% .79%
==== ===== =====
<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 charge. None* 5.00%** 1.00%***
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
6
<PAGE>
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 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>
Cash Investment Fund............................ $ 8 $25 $43 $ 97
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
</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
REDEMP- REDEMP- REDEMP- REDEMP- REDEMP- REDEMP- REDEMP- REDEMP-
TION TION TION TION TION TION TION TION
------- ------- ------- ------- ------- ------- ------- -------
<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, (2) redemption at the end of the following time periods and (3) no
redemption at the end of one year:
<TABLE>
<CAPTION>
CLASS C SHARES
----------------------------------------------
1 YEAR
---------------------
NO
REDEMPTION REDEMPTION 3 YEARS 5 YEARS 10 YEARS
---------- ---------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Money Market Fund................ $26 $16 $51 $88 $192
</TABLE>
Because of the Rule 12b-1 fees paid by the Money Market Fund 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 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
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. 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>
CASH INVESTMENT FUND
------------------------------------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED YEAR ENDED ENDED ENDED
6/30/96 6/30/95(A) 2/28/95(D) 2/28/94 2/28/93(E)
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 $ 1.00
-------- ------- ------- ------- ------
Income from Investment
Operations:
Net investment income.. 0.049 0.018 0.039 0.026 0.007
-------- ------- ------- ------- ------
Total from investment
operations............ 0.049 0.018 0.039 0.026 0.007
-------- ------- ------- ------- ------
Less Distributions:
Dividends from net
investment income..... (0.049) (0.018) (0.039) (0.026) (0.007)
-------- ------- ------- ------- ------
Total distributions.... (0.049) (0.018) (0.039) (0.026) (0.007)
-------- ------- ------- ------- ------
Net Asset Value, End of
Period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======= ======= ======
Total Return(b)........ 5.02% 1.78% 3.97% 2.68% 0.69%
======== ======= ======= ======= ======
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands). $116,622 $52,530 $40,239 $32,913 $2,296
Ratio of operating
expenses to average
net assets............ 0.78% 0.77%(c) 0.80% 0.59% 0.53%(c)
Ratio of net investment
income to average net
assets................ 4.88% 5.39%(c) 4.02% 2.68% 2.79%(c)
Ratio of operating
expenses to average
net assets without
waivers............... 0.78% 0.79%(c) 0.83% 0.64% 0.58%(c)
Net investment income
per share without
waivers............... $ 0.049 $ 0.018 $ 0.039 $ 0.026 $0.007
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) The Munder Cash Investment Fund Class A Shares commenced operations on
December 1, 1992.
8
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND(A)
-----------------------------------------------------
PERIOD ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED
6/30/96(G) 6/30/96 6/30/95(B,C) 12/31/94(G)
CLASS A CLASS B CLASS B CLASS B
------------ ---------- ------------ ------------
<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.... 0.048 0.041 0.020 0.030
------- ------- ------- -------
Total from investment
operations.............. 0.048 0.041 0.020 0.030
------- ------- ------- -------
Less Distributions:
Dividends from net
investment income....... (0.048) (0.041) (0.020) (0.030)
------- ------- ------- -------
Total distributions...... (0.048) (0.041) (0.020) (0.030)
------- ------- ------- -------
Net Asset Value, End of
Period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= =======
Total Return(d).......... 4.83% 4.13% 1.99% 2.97%
======= ======= ======= =======
Ratios to Average Net
Assets/Supplemental Data
Net assets, end of period
(in thousands).......... $ 23 $ 124 $ 371 $ 501
Ratio of operating
expenses to average net
assets.................. 0.87%(e) 1.62% 1.60%(e) 1.60%(e)
Ratio of net investment
income to average net
assets.................. 4.84%(e) 4.09% 4.46%(e) 3.36%(e)
Ratio of operating
expenses to average net
assets without waivers.. 0.87%(e) 1.62% 1.66%(e) 3.34%(e)
Net investment income per
share without
waivers(f).............. $ 0.048 $ 0.041 $ 0.020 $ 0.030
</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) Fiscal year end 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 for periods prior to June 30, 1995 are unaudited.
(g) The Munder Money Market Fund Class A and Class B Shares commenced
operations on July 3, 1995 and February 16, 1994, respectively.
9
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
----------------------------------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED YEAR ENDED ENDED ENDED
6/30/96 6/30/95(A) 2/28/95(D) 2/28/94 2/28/93(E)
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 $ 1.00
------- ------ ------ ------ ------
Income from Investment
Operations:
Net investment income... 0.029 0.011 0.023 0.020 0.006
------- ------ ------ ------ ------
Total from investment
operations............. 0.029 0.011 0.023 0.020 0.006
------- ------ ------ ------ ------
Less Distributions:
Dividends from net
investment income...... (0.029) (0.011) (0.023) (0.020) (0.006)
------- ------ ------ ------ ------
Total distributions..... (0.029) (0.011) (0.023) (0.020) (0.006)
------- ------ ------ ------ ------
Net Asset Value, End of
Period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ====== ====== ====== ======
Total Return(b)......... 2.89% 1.09% 2.33% 1.99% 0.60%
======= ====== ====== ====== ======
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands).. $10,582 $8,530 $4,539 $4,525 $ 761
Ratio of operating
expenses to average net
assets................. 0.78% 0.79%(c) 0.80% 0.58% 0.52%(c)
Ratio of net investment
income to average net
assets................. 2.89% 3.26%(c) 2.29% 1.95% 2.06%(c)
Ratio of operating
expenses to average net
assets without waivers. 0.80% 0.84%(c) 0.85% 0.63% 0.57%(c)
Net investment income
per share without
waivers................ $ 0.029 $0.011 $0.023 $0.019 $0.005
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) The Munder Tax-Free Money Market Fund Class A Shares commenced operations
on November 29, 1992.
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND
----------------------------------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED YEAR ENDED ENDED ENDED
6/30/96 6/30/95(A) 2/28/95(D) 2/28/94 2/28/93(E)
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 $ 1.00
------ ------ ------ ------ ------
Income from Investment
Operations:
Net investment income.... 0.047 0.017 0.037 0.025 0.007
------ ------ ------ ------ ------
Total from investment
operations.............. 0.047 0.017 0.037 0.025 0.007
------ ------ ------ ------ ------
Less Distributions:
Dividends from net
investment income....... (0.047) (0.017) (0.037) (0.025) (0.007)
------ ------ ------ ------ ------
Total distributions...... (0.047) (0.017) (0.037) (0.025) (0.007)
------ ------ ------ ------ ------
Net Asset Value, End of
Period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total Return(b).......... 4.77% 1.72% 3.72% 2.57% 0.74%
====== ====== ====== ====== ======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period
(in thousands).......... $1,620 $1,117 $3,815 $ 725 $ 43
Ratio of operating
expenses to average net
assets.................. 0.79% 0.80%(c) 0.80% 0.61% 0.53%(c)
Ratio of net investment
income to average net
assets.................. 4.64% 5.13%(c) 3.63% 2.53% 2.61%(c)
Ratio of operating
expenses to average net
assets without waivers.. 0.81% 0.85%(c) 0.85% 0.66% 0.58%(c)
Net investment income per
share without waivers... $0.047 $0.017 $0.036 $0.025 $0.003
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) The Munder U.S. Treasury Money Market Fund Class A Shares commenced
operations on November 24, 1992.
10
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
This Prospectus describes the Cash Investment Fund, Tax-Free Money Market
Fund and U.S. Treasury Money Market 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 Cash Investment Fund and U.S.
Treasury Money Market Fund is to provide as high a level of current interest
income as is consistent with maintaining liquidity and stability of principal.
The 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 Money Market Fund may invest are described below under
"Portfolio Instruments and Practices and Associated Risk Factors." 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. 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 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.
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 Cash Investment Fund, Money Market Fund and U.S. Treasury Money
Market Fund expect under normal market conditions to be as fully invested as
possible, each Fund may hold uninvested cash pending investment of late
payments for purchase orders (or other payments) or during temporary defensive
periods. Uninvested cash will not earn income. In general, investments in the
Cash Investment Fund, Money Market Fund and U.S. Treasury Money Market Fund
will not earn as high a level of current income as longer-term or lower
quality securities. Longer-term and lower quality securities, however,
generally have less liquidity, greater market risk and more fluctuation in
market value.
Although the Tax-Free Money Market Fund may invest more than 25% of its net
assets in municipal revenue obligations the interest on which is paid solely
from revenues of similar projects, the Tax-Free Money Market Fund does not
intend to do so on a regular basis. If it does, the Fund will be 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.
11
<PAGE>
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 Cash Investment Fund and Money Market 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 Cash Investment Fund and Money Market
Fund will invest in the obligations of domestic banks and savings institutions
only if their deposits are federally insured. Investments by a Fund 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 Cash Investment Fund, Money Market Fund and
U.S. Treasury Money Market 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
12
<PAGE>
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 Cash Investment, Money Market and Tax-Free Money
Market 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 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 Cash Investment, Money Market and U.S. Treasury
Money Market 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 Cash Investment and U.S. Treasury Money
Market 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.
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
13
<PAGE>
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. Leveraging by means of borrowing may exaggerate the effect of
any increase or decrease in the value of portfolio securities on the Fund's net
asset value. In addition, borrowed funds are subject to interest costs that may
offset or exceed the return earned on the borrowed funds. However, 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 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
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
14
<PAGE>
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 up to 10% of its
total assets 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 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
15
<PAGE>
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 advance 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 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). These
fundamental investment policies are set forth in full in the Statement of
Additional Information.
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 60 State Street, 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.
16
<PAGE>
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.
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.
17
<PAGE>
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
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 Funds ordinarily will make payment for all shares redeemed within seven
business days after the receipt of the redemption request by the Transfer Agent
in proper form. However, the right of redemption and payment of redemption
proceeds are subject to suspension for any period during which the New York
Stock Exchange is closed, or when trading 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.
18
<PAGE>
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 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 THE
LESSER OF NET ASSET
VALUE AT REDEMPTION
OR THE ORIGINAL
YEAR SINCE PURCHASE PURCHASE PRICE
------------------- -------------------
<S> <C>
First................................................. 5.00%
Second................................................ 4.00%
Third................................................. 3.00%
Fourth................................................ 3.00%
Fifth................................................. 2.00%
Sixth................................................. 1.00%
Seventh............................................... 0.00%
</TABLE>
For Federal income tax purposes, the amount of the CDSC will reduce the gain
or increase the loss, as the case may be, on the amount recognized on the
redemption of shares. The amount of any CDSC will be paid to the Distributor.
19
<PAGE>
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:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS A
PERCENTAGE OF THE LESSER
OF NET ASSET VALUE AT
REDEMPTION OR THE
REDEMPTION DURING 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
20
<PAGE>
(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.
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.
21
<PAGE>
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.
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.
22
<PAGE>
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.
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 and Munder value 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 Funds do 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.
23
<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 Services and Distribution Plans described below.
INVESTMENT ADVISOR
Munder Capital Management, a Delaware general partnership with its principal
offices at 480 Pierce Street, Birmingham, Michigan 48009, serves as the Funds'
investment advisor. The Advisor was formed in December, 1994. 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 Cash Investment, Tax-Free Money Market and U.S. Treasury Money Market
Funds.
For the period July 1, 1995 to October 27, 1995, Advisor received fees,
after waivers, if any, at the effective rate of .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
at a rate of .35% of each of the Cash Investment, Tax-Free Money Market and
U.S. Treasury Money Market Funds' average daily net assets.
For the fiscal year ended June 30, 1996, the Advisor received a fee at a
rate of .40% of average daily net assets of the Money Market Fund.
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
24
<PAGE>
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 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 and certain other investment portfolios that are advised by
the Advisor for which the Custodian provides services, computed daily and
payable monthly at an annual rate of .03% of the first $100 million of average
daily net assets, .02% of the next $500 million of net assets and .01% of net
assets in excess of $600 million. The Custodian also receives certain
transaction based fees. For an additional description of the services performed
by the Administrator, Transfer Agent and Custodian, see the Statement of
Additional Information.
DISTRIBUTION SERVICES 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.
25
<PAGE>
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 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 a Fund distribute to its shareholders
an amount equal to at least 90% of its investment company taxable income and
90% of its net tax-exempt interest income for such year. In general, a Fund's
investment company taxable 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 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 Funds' net realized 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 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.
26
<PAGE>
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 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, Balanced, Growth & Income,
Index 500, International Equity, Small Company Growth, Bond, Intermediate
Bond, U.S. Government Income, Michigan Triple Tax-Free Bond, Tax-Free Bond,
Tax-Free Intermediate Bond, Cash Investment, Tax-Free Money Market and U.S.
Treasury Money Market Funds, respectively, each of which, except the Michigan
Triple Tax-Free Bond Fund and Tax-Free Intermediate 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 interests in the Equity Selection,
Micro-Cap Equity, Mid-Cap Growth, Multi-Season Growth, Real Estate Equity
Investment, Small-Cap Value, Value, International Bond, Money Market and
NetNet Funds, 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 Cash Investment, Money Market, Tax-Free Money Market, U.S. Treasury
Money Market and NetNet Funds) 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 Cash Investment, Tax-Free Money Market and U.S. Treasury Money Market
Funds 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
27
<PAGE>
of shares from the corresponding classes of other funds of the Company or
Munder) and Class Y Shares. The NetNet 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 Cash Investment,
Tax-Free Money Market and U.S. Treasury Money Market Funds and Class A, Class
B and Class C Shares of the Money Market Fund.
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 October 1, 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 October 1, 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: Cash Investment
Fund--97%; Money Market Fund--0%; Tax-Free Money Market Fund--91% and U.S.
Treasury Money Market Fund--56%.
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
28
<PAGE>
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 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 Investor Services Group, Inc.
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.
29
<PAGE>
EXCHANGE BY TELEPHONE
Call your broker or the Funds at (800) 438-5789.
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 Investor Services Group, Inc.
The Munder Funds
P.O. Box 5130
Westborough, Massachusetts 01581-5130
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures may call the Funds at (800) 438-5789.
30
<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 Accelerating Growth Fund Munder Value Fund
Munder Bond Fund
Munder Balanced Fund
Munder Intermediate Bond Fund
Munder Equity Selection Fund
Munder Growth & Income Fund Munder International Bond Fund
Munder U.S. Government Income Fund
Munder Index 500 Fund
Munder International Equity Fund Munder Michigan Triple Tax-Free Bond
Fund*
Munder Micro-Cap Equity Fund Munder Tax-Free Bond Fund
Munder Mid-Cap Growth Fund Munder Tax-Free Intermediate Bond
Munder Multi-Season Growth Fund Fund
Munder Real Estate Equity Investment Fund
Munder Small-Cap Value Fund Munder Cash Investment Fund
Munder Small Company Growth Fund Munder Tax-Free Money Market Fund
- -------- Munder U.S. Treasury Money Market
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 October 28, 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. In addition, the SEC maintains a Web site (http://www.sec.gov) that
contains the Statement of Additional Information and other information
regarding the Funds.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.
ALTHOUGH EACH OF THE CASH INVESTMENT FUND, TAX-FREE MONEY MARKET FUND AND
U.S. TREASURY MONEY MARKET FUND SEEKS TO MAINTAIN A CONSTANT NET ASSET VALUE
OF $1.00 PER SHARE, THERE CAN BE NO ASSURANCE THAT EACH FUND CAN DO SO ON A
CONTINUING BASIS.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE DATE OF THIS PROSPECTUS IS OCTOBER 28, 1996.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Funds
Expense Table............................................................ 3
Financial Highlights..................................................... 6
Investment Objectives and Policies....................................... 24
Portfolio Instruments and Practices and Associated Risk Factors.......... 36
Investment Limitations................................................... 48
Purchase and Redemption of Shares........................................ 48
Dividends and Distributions.............................................. 50
Other Information
Net Asset Value.......................................................... 51
Management............................................................... 52
Taxes.................................................................... 57
Description of Shares.................................................... 60
Performance.............................................................. 61
</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 annual operating expenses that investors will incur,
either directly or indirectly, as shareholders of the Class K Shares of each
of the Funds for the current fiscal year. The International Bond Fund did not
commence operations until October 2, 1996 and the Equity Selection Fund,
Micro-Cap Equity Fund and Small-Cap Value Fund had not commenced operations as
of the date of this Prospectus; 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 Index 500 Fund,
Multi-Season Growth Fund, Mid-Cap Growth Fund, Real Estate Equity Investment
Fund and Value Fund to reflect anticipated fees, waivers and/or expense
reimbursements; and with respect to the Michigan Triple Tax-Free Bond Fund to
reflect the discontinuation of the voluntary advisory fee waiver effective as
of the date of this Prospectus. 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>
EQUITY GROWTH &
ACCELERATING BALANCED SELECTION INCOME INDEX 500
GROWTH FUND FUND FUND FUND FUND
------------ -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Fund Operating
Expenses (as a
percentage of average
net assets)
Advisory Fees.......... .75% .65% .75% .75% .07%*
Other Expenses......... .45% .50% .50% .46% .44%
------ ----- ----- ----- -----
Shareholder Servicing.. .25% .25% .25% .25% .25%
All Other Expenses
(after expense
reimbursements)....... .20% .25% .25% .21% .19%+
----- ---- ---- ---- ----
Total Fund Operating
Expenses (after
expense
reimbursements)....... 1.20% 1.15% 1.25% 1.21% .51%*+
====== ===== ===== ===== =====
<CAPTION>
REAL
MULTI- ESTATE
INTER- MICRO-CAP MID-CAP SEASON EQUITY
NATIONAL EQUITY GROWTH GROWTH INVESTMENT SMALL-CAP
EQUITY FUND FUND FUND FUND FUND VALUE FUND
----------- --------- ------- ------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Fund Operating
Expenses (as a
percentage of average
net assets)
Advisory Fees.......... .75% 1.00% .74% .75%* .74% .75%
Other Expenses......... .51% .50% .46% .51% .51% .50%
------ ----- ----- ----- ----- -----
Shareholder Servicing.. .25% .25% .25% .25% .25% .25%
All Other Expenses
(after expense
reimbursements)....... .26% .25% .21%+ .26% .26%+ .25%
----- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (after
expense
reimbursements)....... 1.26% 1.50% 1.20%+ 1.26%* 1.25%+ 1.25%
====== ===== ===== ===== ===== =====
<CAPTION>
U.S. GOV-
SMALL INTER- INTER- ERNMENT
COMPANY MEDIATE NATIONAL INCOME
GROWTH FUND VALUE FUND BOND FUND BOND FUND BOND FUND FUND
----------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Fund Operating
Expenses (as a
percentage of average
net assets)
Advisory Fees.......... .75% .74% .50% .50% .50% .50%
Other Expenses......... .46% .46% .45% .44% .50% .47%
------ ----- ----- ----- ----- -----
Shareholder Servicing.. .25% .25% .25% .25% .25% .25%
All Other Expenses
(after expense
reimbursements)....... .21% .21%+ .20% .19% .25% .22%
----- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (after
expense
reimbursements)....... 1.21% 1.20%+ .95% .94% 1.00% .97%
====== ===== ===== ===== ===== =====
<CAPTION>
U.S.
MICHIGAN TAX-FREE TAX-FREE TREASURY
TRIPLE INTER- CASH MONEY MONEY
TAX-FREE TAX-FREE MEDIATE INVESTMENT MARKET MARKET
BOND FUND BOND FUND BOND FUND FUND FUND FUND
--------- --------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Fund Operating
Expenses (as a
percentage of average
net assets)
Advisory Fees.......... .50% .50% .50% .35% .35% .35%
Other Expenses......... .51% .48% .46% .33% .33% .34%
------ ----- ----- ----- ----- -----
Shareholder Servicing.. .25% .25% .25% .15% .15% .15%
All Other Expenses
(after expense
reimbursements)....... .26% .23% .21% .18% .18% .19%
----- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (after expense
reimbursements)........ 1.01% .98% .96% .68% .68% .69%
====== ===== ===== ===== ===== =====
</TABLE>
- -------
* Reflects advisory fee after waivers. Waivers are described on page 5.
+ The Advisor voluntarily reimbursed the Fund for certain operating expenses.
In the absence of such expense reimbursements, total fund operating expenses
would have been as follows: .69% for the Index 500 Fund, 1.38% for the Mid-
Cap Growth Fund, 1.52% for the Real Estate Equity Investment Fund and 1.30%
for the Value Fund.
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 (other than the Equity Selection, Micro-Cap Equity, Small-Cap Value and
International Bond Funds), the amount of "Other expenses" in the table above
is based on amounts incurred during the most recent fiscal year. With respect
to the Equity Selection, Micro-Cap Equity, Small-Cap Value and International
Bond Funds, the amount of "Other expenses" 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 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>
Accelerating Growth Fund........................ $12 $38 $66 $145
Balanced Fund................................... $12 $37 $63 $140
Equity Selection Fund........................... $13 $40 N/A N/A
Growth & Income Fund............................ $12 $38 $66 $147
Index 500 Fund.................................. $ 5 $16 $29 $ 64
International Equity Fund....................... $13 $40 $69 $152
Micro-Cap Equity Fund........................... $15 $47 N/A N/A
Mid-Cap Growth Fund............................. $12 $38 $66 $145
Multi-Season Growth Fund........................ $13 $40 $69 $152
Real Estate Equity Investment Fund.............. $13 $40 $69 $151
Small-Cap Value Fund............................ $13 $40 N/A N/A
Small Company Growth Fund....................... $12 $38 $66 $147
Value Fund...................................... $12 $38 $66 $145
Bond Fund....................................... $10 $30 $53 $117
Intermediate Bond Fund.......................... $10 $30 $52 $115
International Bond Fund......................... $11 $35 N/A N/A
U.S. Government Income Fund..................... $10 $31 $54 $119
Michigan Triple Tax-Free Bond Fund.............. $10 $32 $56 $124
Tax-Free Bond Fund.............................. $10 $31 $54 $120
Tax-Free Intermediate Bond Fund................. $10 $31 $53 $118
Cash Investment Fund............................ $ 7 $22 $38 $ 85
Tax-Free Money Market Fund...................... $ 7 $22 $38 $ 85
U.S. Treasury Money Market Fund................. $ 7 $22 $38 $ 86
</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. The
voluntary advisory fee waiver previously in effect for the Michigan Triple
Tax-Free Bond Fund was discontinued as of the date of this Prospectus.
4
<PAGE>
The Advisor expects to waive a portion of its fees with respect to the Index
500 Fund and Multi-Season Growth Fund and reimburse expenses with respect to
the Index 500 Fund, Mid-Cap Growth Fund, Real Estate Equity Investment Fund
and Value Fund during the current fiscal year. The Advisor may discontinue
such waivers and/or expense reimbursements at any time in its sole discretion.
Without waivers and/or expense reimbursements, 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: $7, $22, $38 and $86 for the Index 500 Fund;
$15, $48, $82 and $180 for the Multi-Season Growth Fund; $14, $44, $76 and
$166 for the Mid-Cap Growth Fund, $15, $48, $83 and $181 for the Real Estate
Equity Investment Fund and $13, $41, $71 and $157 for the Value Fund. Without
waivers and/or expense reimbursements, the total fund operating expenses an
investor would pay for Class K Shares would be .69% for the Index 500 Fund,
1.51% for the Multi-Season Growth Fund, 1.38% for the Mid-Cap Growth Fund,
1.52% for the Real Estate Equity Investment Fund and 1.30% for the Value 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.
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 Equity Selection Fund, Micro-Cap Equity Fund, Real
Estate Equity Investment Fund, Small-Cap Value Fund and International Bond
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>
ACCELERATING GROWTH FUND
------------------------------------------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED YEAR ENDED ENDED ENDED
6/30/96 6/30/95(A) 2/28/95(D) 2/28/94 2/28/93(F)
-------- ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period...................... $ 14.82 $ 12.73 $ 13.98 $ 12.08 $11.74
-------- ------- ------- ------- ------
Income from Investment
Operations:
Net investment
income/(loss).............. (0.05) (0.01) (0.03) (0.00)(e) 0.01
Net realized and unrealized
gain/(loss) on investments. 2.92 2.10 (0.88) 2.17 0.62
-------- ------- ------- ------- ------
Total from investment
operations................. 2.87 2.09 (0.91) 2.17 0.63
-------- ------- ------- ------- ------
Less Distributions:
Dividends from net
investment income.......... -- -- -- (0.02) (0.01)
Distributions from net
realized gains............. (2.33) -- (0.34) (0.25) (0.28)
-------- ------- ------- ------- ------
Total distributions......... (2.33) -- (0.34) (0.27) (0.29)
-------- ------- ------- ------- ------
Net Asset Value, End of
Period...................... $ 15.36 $ 14.82 $ 12.73 $ 13.98 $12.08
======== ======= ======= ======= ======
Total Return(b)............. 22.03% 16.42% (6.45)% 18.00% 5.43%
======== ======= ======= ======= ======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period
(in thousands)............. $110,273 $85,685 $71,406 $53,914 $3,141
Ratio of operating expenses
to average net assets...... 1.20% 1.20%(c) 1.18% 1.03% 0.96%(c)
Ratio of net investment
income/(loss) to average
net assets................. (0.42)% (0.21)%(c) (0.25)% (0.03)% 0.18%(c)
Portfolio turnover rate..... 112% 31% 90% 34% 56%
Ratio of operating expenses
to average net assets
without waivers............ 1.27% 1.44%(c) 1.41% 1.28% 1.21%(c)
Net investment income/(loss)
per share without waivers.. $ (0.06) $ (0.02) $ (0.05) $ 0.00(e) $ 0.00(e)
Average commission rate paid
(g)........................ $ 0.0548 N/A N/A N/A N/A
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Amount represents less than $0.01 per share.
(f) Class K Shares commenced operations on November 23, 1992.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
6
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
---------------------------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/96(G) 6/30/95(A) 2/28/95(D) 2/28/94(E)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period........................ $ 10.78 $ 9.97 $10.35 $ 9.97
------- ------ ------ ------
Income from Investment
Operations:
Net investment income......... 0.28 0.07 0.21 0.16
Net realized and unrealized
gain/(loss) on investments... 1.56 0.86 (0.42) 0.34
------- ------ ------ ------
Total from investment
operations................... 1.84 0.93 (0.21) 0.50
------- ------ ------ ------
Less Distributions:
Dividends from net investment
income....................... (0.25) (0.12) (0.17) (0.12)
------- ------ ------ ------
Total distributions........... (0.25) (0.12) (0.17) (0.12)
------- ------ ------ ------
Net Asset Value, End of
Period....................... $ 12.37 $10.78 $ 9.97 $10.35
======= ====== ====== ======
Total Return(b)............... 17.17% 9.33% (1.95)% 5.03%
======= ====== ====== ======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands)................... $ 1,718 $ 168 $ 151 $ 102
Ratio of operating expenses to
average net assets........... 1.15% 1.16%(c) 1.22% 1.00%(c)
Ratio of net investment income
to average net assets........ 2.29% 2.51%(c) 1.89% 1.68%(c)
Portfolio turnover rate....... 197% 52% 116% 50%
Ratio of operating expenses to
average net assets without
waivers...................... 1.26% 1.51%(c) 1.57% 1.25%(c)
Net investment income per
share without waivers........ $ 0.27 $ 0.06 $ 0.17 $ 0.14
Average commission rate (f)... $0.0586 N/A N/A N/A
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Class K Shares commenced operations on April 16, 1993.
(f) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
7
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND
-------------------------------------
YEAR PERIOD PERIOD
ENDED ENDED ENDED
6/30/96(H) 6/30/95(A) 2/29/95(D,E)
---------- ---------- ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period... $ 11.14 $ 10.43 $ 10.00
-------- -------- --------
Income from Investment Operations:
Net investment income................. 0.32 0.11 0.22
Net realized and unrealized gain on
investments.......................... 1.99 0.78 0.36
-------- -------- --------
Total from investment operations...... 2.31 0.89 0.58
-------- -------- --------
Less Distributions:
Dividends from net investment income.. (0.31) (0.18) (0.15)
Distributions from net realized gains. (0.09) -- (0.00)(f)
-------- -------- --------
Total distributions................... (0.40) (0.18) (0.15)
-------- -------- --------
Net Asset Value, End of Period......... $ 13.05 $ 11.14 $ 10.43
======== ======== ========
Total Return(b)....................... 20.97% 8.57% 5.94%
======== ======== ========
Ratios to Average Net
Assets/Supplemental Data:............
Net assets, end of period (in
thousands)........................... $192,592 $132,583 $105,629
Ratio of operating expenses to average
net assets........................... 1.21% 1.09%(c) 0.53%(c)
Ratio of net investment income to
average net assets................... 2.56% 3.33%(c) 4.72%(c)
Portfolio turnover rate............... 37% 13% 12%
Ratio of operating expenses to average
net assets without waivers........... 1.28% 1.51%(c) 1.53%(c)
Net investment income per share
without waivers...................... $ 0.31 $ 0.10 $ 0.17
Average commission rate paid (g)...... $ 0.0591 N/A N/A
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Class K Shares commenced operations on July 5, 1994.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
8
<PAGE>
<TABLE>
<CAPTION>
INDEX 500 FUND
--------------------------------------------------------
YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/96(D) 6/30/95(A) 2/28/95(D,E) 2/28/94 2/28/93(F)
---------- ---------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 13.80 $12.40 $12.06 11.47 $11.60
------- ------ ------ ------ ------
Income from Investment
Operations:
Net investment income.. 0.33 0.10 0.30 0.30 0.06
Net realized and
unrealized gain on
investments........... 3.07 1.44 0.50 0.59 0.21
------- ------ ------ ------ ------
Total from investment
operations............ 3.40 1.54 0.80 0.89 0.27
------- ------ ------ ------ ------
Less Distributions:
Dividends from net
investment income..... (0.32) (0.14) (0.29) (0.30) (0.07)
Distributions from net
realized gains........ (0.72) -- (0.17) -- (0.33)
------- ------ ------ ------ ------
Total Distributions.... (1.04) (0.14) (0.46) (0.30) (0.40)
------- ------ ------ ------ ------
Net Asset Value, End of
Period................. $ 16.16 $13.80 $12.40 $12.06 $11.47
======= ====== ====== ====== ======
Total Return(b)........ 25.37% 12.49% 6.90% 7.89% 2.43%
======= ====== ====== ====== ======
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands). $17,068 $2,778 $1,746 $ 922 $ 96
Ratio of operating
expenses to average
net assets............ 0.51% 0.50%(c) 0.50% 0.33% 0.25%(c)
Ratio of net investment
income to average net
assets................ 2.12% 2.41%(c) 2.49% 2.51% 2.74%(c)
Portfolio turnover
rate.................. 8% 6% 7% 1% 22%
Ratio of operating
expenses to average
net assets without
waivers and/or
expenses reimbursed... 0.69% 0.63%(c) 0.64% 0.50% 0.38%(c)
Net investment income
per share without
waivers and/or
expenses reimbursed... $ 0.30 $ 0.09 $ 0.28 $ 0.28 $ 0.06
Average commission rate
paid (g).............. $0.0240 N/A N/A N/A N/A
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(e) 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 December 7, 1992.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
9
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
---------------------------------------------------------
YEAR PERIOD YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/96(D) 6/30/95(A) 2/28/95(D,E) 2/28/94 2/28/93(F)
---------- ---------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 13.42 $ 12.28 $ 13.68 $ 10.64 $10.46
-------- ------- ------- ------- ------
Income from Investment
Operations:
Net investment income.. 0.15 0.11 0.17 0.19 0.01
Net realized and
unrealized gain/(loss)
on investments........ 1.63 1.03 (1.48) 2.85 0.30
-------- ------- ------- ------- ------
Total from investment
operations............ 1.78 1.14 (1.31) 3.04 0.31
-------- ------- ------- ------- ------
Less Distributions:
Dividends from net
investment income..... (0.12) -- (0.03) -- (0.11)
Distributions from net
realized gains........ -- -- -- -- (0.02)
Distributions from
capital............... -- -- (0.06) -- --
-------- ------- ------- ------- ------
Total distributions.... (0.12) -- (0.09) -- (0.13)
-------- ------- ------- ------- ------
Net Asset Value, End of
Period................. $ 15.08 $ 13.42 $ 12.28 $ 13.68 $10.64
======== ======= ======= ======= ======
Total Return(b)........ 13.29% 9.28% (9.68)% 28.57% 2.96%
======== ======= ======= ======= ======
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands). $116,053 $73,168 $63,159 $37,536 $3,939
Ratio of operating
expenses to average
net assets............ 1.26% 1.21%(c) 1.18% 1.11% 1.03%(c)
Ratio of net investment
income to average net
assets................ 1.07% 2.57%(c) 1.31% 1.18% 0.39%(c)
Portfolio turnover
rate.................. 75% 14% 20% 15% 1%
Ratio of operating
expenses to average
net assets without
waivers............... 1.33% 1.46%(c) 1.43% 1.36% 1.28%(c)
Net investment income
per share without
waivers............... $ 0.14 $ 0.10 $ 0.14 $ 0.15 $ 0.01
Average commission rate
paid (g).............. $ 0.0288 N/A N/A N/A N/A
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(e) 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 and sold by
the Fund.
10
<PAGE>
<TABLE>
<CAPTION>
MID-CAP
GROWTH FUND
------------
PERIOD
ENDED
6/30/96(A,E)
------------
<S> <C>
Net Asset Value, Beginning of Period............................ $$10.53
-------
Income from Investment Operations:
Net investment loss............................................ (0.04)
Net realized and unrealized gain on investments................ 1.07
-------
Total from investment operations............................... 1.03
-------
Less Distributions:
Dividends from net investment income........................... --
Total distributions............................................ --
-------
Net Asset Value, End of Period.................................. $ 11.56
=======
Total Return(c)................................................ 9.78%
=======
Ratios to Average Net Assets/Supplemental Data:
Net assets, end of period (in thousands)....................... $ 421
Ratio of operating expenses to average net assets.............. 1.20%(b)
Ratio of net investment loss to average net assets............. (0.53)%(b)
Portfolio turnover rate........................................ 247%
Ratio of operating expenses to average net assets without
waivers and expenses reimbursed............................... 1.38%(b)
Net investment loss per share without waivers and expenses
reimbursed.................................................... $ (0.05)
Average commission rate paid(d)................................ $0.0600
</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) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
11
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND
-------------------------
YEAR PERIOD
ENDED ENDED
6/30/96(H) 6/30/95(A,B,C)
---------- --------------
<S> <C> <C>
Net Asset Value, Beginning of Period................ $ 12.02 $ 12.20
-------- --------
Income from Investment Operations:
Net investment income.............................. 0.06 0.00(d)
Net realized and unrealized gain/(loss) on
investments....................................... 3.20 (0.18)
-------- --------
Total from investment operations................... 3.26 (0.18)
-------- --------
Less Distributions:
Dividends from net investment income............... (0.05) --
Distributions from net realized gains.............. (0.40) --
-------- --------
Total distributions................................ (0.45) --
-------- --------
Net Asset Value, End of Period...................... $ 14.83 $ 12.02
======== ========
Total Return(e).................................... 27.56% (1.48)%
======== ========
Ratios to Average Net Assets/Supplemental Data:
Net assets, end of period (in thousands)........... $140,833 $104,767
Ratio of operating expenses to average net assets.. 1.26% 1.20%(f)
Ratio of net investment income to average net
assets............................................ 0.44% 0.28%(f)
Portfolio turnover rate............................ 54% 27%
Ratio of operating expenses to average net assets
without waivers................................... 1.51% 1.58%(f)
Net investment income per share without waivers.... $ 0.03 $ 0.00(d)
Average commission rate paid (g)................... $ 0.0592 N/A
</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 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 represent aggregate total return for the period indicated.
(f) Annualized.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
12
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND
-----------------------------------------------------------
YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/96(G) 6/30/95(A) 2/28/95(D) 2/28/94 2/28/93(E)
---------- ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 15.28 $ 13.89 $ 14.37 $ 12.72 $12.32
-------- ------- ------- ------- ------
Income from Investment
Operations:
Net investment loss.... (0.12) (0.02) (0.04) (0.05) (0.01)
Net realized and
unrealized gain/(loss)
on investments........ 7.16 1.41 (0.42) 1.97 0.41
-------- ------- ------- ------- ------
Total from investment
operations............ 7.04 1.39 (0.46) 1.92 0.40
-------- ------- ------- ------- ------
Less Distributions:
Distributions from net
realized gains........ (1.24) -- (0.02) (0.27) --
-------- ------- ------- ------- ------
Total distributions.... (1.24) -- (0.02) (0.27) --
-------- ------- ------- ------- ------
Net Asset Value, End of
Period................. $ 21.08 $ 15.28 $ 13.89 $ 14.37 $12.72
======== ======= ======= ======= ======
Total Return(b)........ 48.28% 10.01% (3.21)% 15.11% 3.25%
======== ======= ======= ======= ======
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands). $111,669 $52,077 $45,080 $32,431 $4,298
Ratio of operating
expenses to average
net assets............ 1.21% 1.21%(c) 1.23% 1.02% 0.95%(c)
Ratio of net investment
loss to average net
assets................ (0.66)% (0.41)%(c) (0.40)% (0.38)% (0.28)%(c)
Portfolio turnover
rate.................. 98% 39% 45% 47% 46%
Ratio of operating
expenses to average
net assets without
waivers............... 1.28% 1.46%(c) 1.48% 1.27% 1.20%(c)
Net investment loss per
share without waivers. $ (0.13) $ (0.03) $ (0.06) $ (0.08) $(0.02)
Average commission rate
paid(f)............... $ 0.0551 N/A N/A N/A N/A
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Class K Shares commenced operations on November 23, 1992.
(f) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
13
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND
------------
PERIOD
ENDED
6/30/96(A,E)
------------
<S> <C>
Net Asset Value, Beginning of Period............................. $ 10.83
-------
Income from Investment Operations:
Net investment income........................................... 0.05
Net realized and unrealized gain on investments................. 0.74
-------
Total from investment operations................................ 0.79
-------
Less Distributions:
Dividends from net investment income............................ (0.05)
-------
Total distributions............................................. (0.05)
-------
Net Asset Value, End of Period................................... $ 11.57
=======
Total Return(b)................................................. 7.33%
=======
Ratios to Average Net Assets/Supplemental Data:
Net assets, end of period (in thousands)........................ $ 1,018
Ratio of operating expenses to average net assets............... 1.20%(c)
Ratio of net investment income to average net assets............ 0.64%(c)
Portfolio turnover rate......................................... 223%
Ratio of operating expenses to average net assets without
waivers and expenses reimbursed................................ 1.30%(c)
Net investment income per share without waivers and/or expenses
reimbursed..................................................... $ 0.04
Average commission rate paid(d)................................. $0.0602
</TABLE>
- --------
(a) Class K Shares commenced operations on November 30, 1995.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
14
<PAGE>
<TABLE>
<CAPTION>
BOND FUND
-------------------------------------------------------
YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/96 6/30/95(A) 2/28/95(D,E) 2/28/94 2/28/93(F)
------- ---------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 9.69 $ 9.31 $ 9.91 $ 9.92 $ 9.66
------- ------- ------- ------- ------
Income from Investment
Operations:
Net investment income.. 0.61 0.21 0.62 0.56 0.12
Net realized and
unrealized gain/(loss)
on investments........ (0.19) 0.37 (0.64) (0.01) 0.38
------- ------- ------- ------- ------
Total from investment
operations............ 0.42 0.58 (0.02) 0.55 0.50
------- ------- ------- ------- ------
Less Distributions:
Dividends from net
investment income..... (0.58) (0.20) (0.58) (0.56) (0.15)
Distributions from net
realized gains........ -- -- -- -- (0.09)
------- ------- ------- ------- ------
Total distributions.... (0.58) (0.20) (0.58) (0.56) (0.24)
------- ------- ------- ------- ------
Net Asset Value, End of
Period................. $ 9.53 $ 9.69 $ 9.31 $ 9.91 $ 9.92
======= ======= ======= ======= ======
Total Return(b)........ 4.35% 6.28% 0.44% 5.61% 5.24%
======= ======= ======= ======= ======
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands). $32,211 $36,718 $33,842 $26,458 $3,671
Ratio of operating
expenses to average
net assets............ 0.95% 0.95%(c) 0.92% 0.88% 0.80%(c)
Ratio of net investment
income to average net
assets................ 6.26% 6.47%(c) 6.57% 5.76% 5.32%(c)
Portfolio turnover
rate.................. 507% 99% 165% 128% 77%
Ratio of operating
expenses to average
net assets without
waivers............... 1.04% 1.19%(c) 1.16% 1.02% 0.94%(c)
Net investment income
per share without
waivers............... $ 0.61 $ 0.20 $ 0.59 $ 0.55 $ 0.11
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(e) 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.
15
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
-------------------------------------------------------
YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/96 6/30/95(A) 2/28/95(D) 2/28/94 2/28/93(E)
-------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 9.51 $ 9.27 $ 9.91 $ 10.47 $ 10.26
-------- -------- -------- -------- --------
Income from Investment
Operations:
Net investment income.. 0.58 0.22 0.56 0.59 0.17
Net realized and
unrealized gain/(loss)
on investments........ (0.20) 0.24 (0.57) (0.20) 0.25
-------- -------- -------- -------- --------
Total from investment
operations............ 0.38 0.46 (0.01) 0.39 0.42
-------- -------- -------- -------- --------
Less Distributions:
Dividends from net
investment income..... (0.58) (0.22) (0.62) (0.58) (0.12)
Distributions from net
realized gains........ -- -- (0.01) (0.37) (0.09)
-------- -------- -------- -------- --------
Total distributions.... (0.58) (0.22) (0.63) (0.95) (0.21)
-------- -------- -------- -------- --------
Net Asset Value, End of
Period................. $ 9.31 $ 9.51 $ 9.27 $ 9.91 $ 10.47
======== ======== ======== ======== ========
Total Return(b)........ 4.04% 5.04% 0.54% 3.77% 4.15%
======== ======== ======== ======== ========
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands). $370,493 $300,596 $285,493 $112,332 $132,273
Ratio of operating
expenses to average
net assets............ 0.94% 0.95%(c) 0.93% 0.84% 0.79%(c)
Ratio of net investment
income to average net
assets................ 6.08% 7.12%(c) 6.71% 5.55% 5.56%(c)
Portfolio turnover
rate.................. 494% 84% 80% 155% 104%
Ratio of operating
expenses to average
net assets without
waivers............... 1.02% 1.19%(c) 1.18% 0.98% 0.93%(c)
Net investment income
per share without
waivers............... $ 0.57 $ 0.22 $ 0.54 $ 0.58 $ 0.16
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Class K Shares commenced operations on November 20, 1992.
16
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME FUND
-------------------------------------
YEAR PERIOD PERIOD
ENDED ENDED ENDED
6/30/96(F) 6/30/95(A) 2/28/95(D,E)
---------- ---------- ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period... $ 10.30 $ 9.89 $ 10.00
-------- -------- --------
Income from Investment Operations:
Net investment income................. 0.71 0.23 0.47
Net realized and unrealized
gain/(loss) on investments........... (0.27) 0.41 (0.12)
-------- -------- --------
Total from investment operations...... 0.44 0.64 0.35
-------- -------- --------
Less Distributions:
Dividends from net investment income.. (0.68) (0.23) (0.46)
Distributions from net realized gains. (0.08) -- --
-------- -------- --------
Total distributions................... (0.76) (0.23) (0.46)
-------- -------- --------
Net Asset Value, End of Period......... $ 9.98 $ 10.30 $ 9.89
======== ======== ========
Total Return(b)....................... 4.32% 6.55% 3.68%
======== ======== ========
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands)........................... $158,948 $174,674 $165,298
Ratio of operating expenses to average
net assets........................... 0.97% 0.97%(c) 0.95%(c)
Ratio of net investment income to
average net assets................... 6.92% 6.96%(c) 7.02%(c)
Portfolio turnover rate............... 133% 42% 143%
Ratio of operating expenses to average
net assets without waivers........... 1.04% 1.21%(c) 1.19%(c)
Net investment income per share
without waivers...................... $ 0.70 $ 0.23 $ 0.45
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Class K Shares commenced operations on July 5, 1994.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with results of operations.
17
<PAGE>
<TABLE>
<CAPTION>
MICHIGAN TRIPLE TAX-FREE BOND FUND
---------------------------------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/96(B) 6/30/95(A,B) 2/28/95(B,E) 2/28/94(F)
---------- ------------ ------------ ----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period................. $ 9.34 $ 9.24 $ 9.73 $ 10.00
------- ------- ------- -------
Income from Investment
Operations:
Net investment income..... 0.48 0.16 0.44 0.05
Net realized and
unrealized gain/(loss) on
investments.............. 0.00(g) 0.10 (0.50) (0.30)
------- ------- ------- -------
Total from investment
operations............... 0.48 0.26 (0.06) (0.25)
------- ------- ------- -------
Less Distributions:
Dividends from net
investment income........ (0.48) (0.16) (0.43) (0.02)
------- ------- ------- -------
Total distributions....... (0.48) (0.16) (0.43) (0.02)
------- ------- ------- -------
Net Asset Value, End of
Period.................... $ 9.34 $ 9.34 $ 9.24 $ 9.73
------- ------- ------- -------
Total Return(c)........... 5.14% 2.84% (0.16)% (2.48)%
======= ======= ======= =======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period
(in thousands)........... $29,476 $25,549 $27,731 $13,464
Ratio of operating
expenses to average net
assets................... 0.51% 0.52%(d) 0.56% 0.46%(d)
Ratio of net investment
income to average net
assets................... 5.01% 5.06%(d) 4.81% 3.48%(d)
Portfolio turnover rate... 31% 8% 53% 0%
Ratio of operating
expenses to average net
assets without waivers... 1.09% 1.26%(d) 1.30% 1.20%(d)
Net investment income per
share without waivers.... $ 0.42 $ 0.14 $ 0.37 $ 0.04
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(b) 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.
(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 January 3, 1994.
(g) Amount represents less than $0.01 per share.
18
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE BOND FUND
--------------------------------------
YEAR PERIOD PERIOD
ENDED ENDED ENDED
6/30/96(F) 6/30/95(A,F) 2/28/95(D,E)
---------- ------------ ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.. $ 10.30 $ 10.14 $ 10.00
-------- -------- --------
Income from Investment Operations:
Net investment income................ 0.46 0.15 0.31
Net realized and unrealized gain on
investments......................... 0.07 0.16 0.14
-------- -------- --------
Total from investment operations..... 0.53 0.31 0.45
-------- -------- --------
Less Distributions:
Dividends from net investment income. (0.47) (0.15) (0.31)
Dividends from net realized gains.... (0.01) -- --
-------- -------- --------
Total distributions.................. (0.48) (0.15) (0.31)
======== ======== ========
Net Asset Value, End of Period........ $ 10.35 $ 10.30 $ 10.14
======== ======== ========
Total Return(b)...................... 5.12% 3.09% 4.64%
======== ======== ========
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands).......................... $196,645 $232,040 $251,636
Ratio of operating expenses to
average net assets.................. 0.98% 1.02%(c) 0.93%(c)
Ratio of net investment income to
average net assets.................. 4.42% 4.38%(c) 4.69%(c)
Portfolio turnover rate.............. 15% 12% 50%
Ratio of operating expenses to
average net assets without waivers.. 1.06% 1.26%(c) 1.17%(c)
Net investment income per share
without waivers..................... $ 0.45 $ 0.14 $ 0.29
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Class K Shares commenced operations on July 5, 1994.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with results of operations.
19
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE BOND FUND
---------------------------------------------------------------------
YEAR PERIOD YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/96(F) 6/30/95(A) 2/28/95(D) 2/28/94 2/28/93 7/31/92(E)
---------- ---------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 10.37 $ 10.17 $ 10.44 $ 10.69 $ 10.47 $ 10.04
-------- -------- -------- -------- -------- --------
Income from Investment
Operations:
Net investment income.. 0.41 0.14 0.38 0.42 0.23 0.49
Net realized and
unrealized gain/(loss)
on investments........ (0.03) 0.20 (0.21) (0.14) 0.24 0.51
-------- -------- -------- -------- -------- --------
Total from investment
operations............ 0.38 0.34 0.17 0.28 0.47 1.00
-------- -------- -------- -------- -------- --------
Less Distributions:
Dividends from net
investment income..... (0.41) (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.... (0.41) (0.14) (0.44) (0.53) (0.25) (0.57)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of
Period................. $ 10.34 $ 10.37 $ 10.17 $ 10.44 $ 10.69 $ 10.47
======== ======== ======== ======== ======== ========
Total Return(b)........ 3.69% 3.35% 2.05% 2.62% 5.30% 10.31%
======== ======== ======== ======== ======== ========
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands). $333,768 $333,067 $345,658 $107,335 $113,189 $110,825
Ratio of operating
expenses to average
net assets............ 0.96% 0.98%(c) 0.95% 0.84% 0.71%(c) 0.69%
Ratio of net investment
income to average net
assets................ 3.91% 4.01%(c) 4.19% 3.93% 4.36%(c) 4.83%
Portfolio turnover
rate.................. 20% 5% 52% 38% 57% 200%
Ratio of operating
expenses to average
net assets without
waivers............... 1.04% 1.22%(c) 1.19% 0.98% 0.77%(c) 0.99%
Net investment income
per share without
waivers............... $ 0.40 $ 0.13 $ 0.36 $ 0.41 $ 0.22 $ 0.46
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) This information represents results of operations of the St. Clair Tax-
Free Intermediate Fund, the predecessor fund of the Munder Tax-Free
Intermediate Bond Fund. The assets and liabilities of the St. Clair Tax-
Free Intermediate Fund were transferred to The Munder Funds Trust on
November 20, 1992. On June 22, 1992, Woodbridge Capital Management
replaced Manufacturers Bank, N.A. as investment advisor for the Fund.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(g) Class K Shares commenced operations on February 9, 1987.
20
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE BOND FUND
--------------------------------------------------------
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
7/31/91(E) 7/31/90(E) 7/31/89(E) 7/31/88(E) 7/31/87(E,G)
---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 9.91 $ 9.93 $ 9.91 $ 9.99 $10.00
------- ------- ------ ------ ------
Income from Investment
Operations:
Net investment income.. 0.55 0.60 0.52 0.51 0.25
Net realized and
unrealized gain/(loss)
on investments........ 0.26 (0.02) 0.02 (0.08) (0.01)
------- ------- ------ ------ ------
Total from investment
operations............ 0.81 0.58 0.54 0.43 0.24
------- ------- ------ ------ ------
Less Distributions:
Dividends from net
investment income..... (0.55) (0.60) (0.52) (0.51) (0.25)
Distributions from net
realized gains........ (0.13) -- -- -- --
------- ------- ------ ------ ------
Total distributions.... (0.68) (0.60) (0.52) (0.51) (0.25)
------- ------- ------ ------ ------
Net Asset Value, End of
Period................. $ 10.04 $ 9.91 $ 9.93 $ 9.91 $ 9.99
======= ======= ====== ====== ======
Total Return(b)........ 8.15% 6.02% 5.55% 4.43% 1.89%
======= ======= ====== ====== ======
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands). $50,740 $12,282 $1,350 $1,219 $1,888
Ratio of operating
expenses to average
net assets............ 0.61% 0.25% 0.54% 0.60% 0.26%(c)
Ratio of net investment
income to average net
assets................ 5.54% 6.13% 5.22% 5.17% 5.35%(c)
Portfolio turnover
rate.................. 327% 119% 37% 28% 105%
Ratio of operating
expenses to average
net assets without
waivers............... 1.05% 1.05% 3.58% 3.09% 1.06%(c)
Net investment income
per share without
waivers............... $ 0.51 $ 0.52 $ 0.22 $ 0.26 $ 0.21
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) This information represents results of operations of the St. Clair Tax-
Free Intermediate Fund, the predecessor fund of the Munder Tax-Free
Intermediate Bond Fund. The assets and liabilities of the St. Clair Tax-
Free Intermediate Fund, were transferred to The Munder Funds Trust on
November 20, 1992. On June 22, 1992, Woodbridge Capital Management
replaced Manufacturers Bank, N.A. as investment advisor for the Fund.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(g) Class K Shares commenced operations on February 9, 1987.
21
<PAGE>
<TABLE>
<CAPTION>
CASH INVESTMENT FUND
-------------------------------------------------------
YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/96 6/30/95(A) 2/28/95(D) 2/28/94 2/28/93(E)
-------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from Investment
Operations:
Net investment income.. 0.050 0.018 0.040 0.026 0.008
-------- -------- -------- -------- --------
Total from investment
operations............ 0.050 0.018 0.040 0.026 0.008
-------- -------- -------- -------- --------
Less Distributions:
Dividends from net
investment income..... (0.050) (0.018) (0.040) (0.026) (0.008)
-------- -------- -------- -------- --------
Total distributions.... (0.050) (0.018) (0.040) (0.026) (0.008)
-------- -------- -------- -------- --------
Net Asset Value, End of
Period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return(b)........ 5.10% 1.81% 4.08% 2.68% 0.74%
======== ======== ======== ======== ========
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands). $547,523 $558,628 $559,212 $293,827 $248,382
Ratio of operating
expenses to average
net assets............ 0.68% 0.67%(c) 0.70% 0.56% 0.54%(c)
Ratio of net investment
income to average net
assets................ 4.98% 5.49%(c) 4.12% 2.65% 2.85%(c)
Ratio of operating
expenses to average
net assets without
waivers............... 0.68% 0.69%(c) 0.73% 0.61% 0.59%(c)
Net investment income
per share without
waivers............... $ 0.050 $ 0.018 $ 0.040 $ 0.026 $ 0.008
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Class K Shares commenced operations on November 23, 1992.
22
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
-------------------------------------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED YEAR ENDED ENDED ENDED
6/30/96 6/30/95(A) 2/28/95(D) 2/28/94 2/28/93(E)
-------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from Investment
Operations:
Net investment income.. 0.030 0.011 0.024 0.020 0.006
-------- -------- -------- -------- --------
Total from investment
operations............ 0.030 0.011 0.024 0.020 0.006
-------- -------- -------- -------- --------
Less Distributions:
Dividends from net
investment income..... (0.030) (0.011) (0.024) (0.020) (0.006)
-------- -------- -------- -------- --------
Total distributions.... (0.030) (0.011) (0.024) (0.020) (0.006)
-------- -------- -------- -------- --------
Net Asset Value, End of
Period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return(b)........ 3.00% 1.12% 2.44% 1.99% 0.61%
======== ======== ======== ======== ========
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands). $192,591 $195,730 $195,926 $211,832 $105,609
Ratio of operating
expenses to average
net assets............ 0.68% 0.69%(c) 0.70% 0.57% 0.55%(c)
Ratio of net investment
income to average net
assets................ 2.99% 3.36%(c) 2.39% 1.96% 2.24%(c)
Ratio of operating
expenses to average
net assets without
waivers............... 0.70% 0.74%(c) 0.75% 0.62% 0.60%(c)
Net investment income
per share without
waivers............... $ 0.030 $ 0.011 $ 0.024 $ 0.019 $ 0.003
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Class K Shares commenced operations on November 23, 1992.
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND
-----------------------------------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED YEAR ENDED ENDED ENDED
6/30/96 6/30/95(A) 2/28/95(D) 2/28/94 2/28/93(E)
------- ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
Income from Investment
Operations:
Net investment income.. 0.048 0.017 0.037 0.025 0.007
------- ------- ------- ------- -------
Total from investment
operations............ 0.048 0.017 0.037 0.025 0.007
------- ------- ------- ------- -------
Less Distributions:
Dividends from net
investment income..... (0.048) (0.017) (0.037) (0.025) (0.007)
------- ------- ------- ------- -------
Total distributions.... (0.048) (0.017) (0.037) (0.025) (0.007)
------- ------- ------- ------- -------
Net Asset Value, End of
Period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total Return(b)........ 4.89% 1.76% 3.83% 2.57% 0.74%
======= ======= ======= ======= =======
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands). $62,133 $74,210 $75,197 $72,433 $12,248
Ratio of operating
expenses to average
net assets............ 0.69% 0.70%(c) 0.70% 0.57% 0.53%(c)
Ratio of net investment
income to average net
assets................ 4.74% 5.23%(c) 3.73% 2.56% 2.60%(c)
Ratio of operating
expenses to average
net assets without
waivers............... 0.71% 0.75%(c) 0.75% 0.62% 0.58%(c)
Net investment income
per share without
waivers............... $ 0.048 $ 0.017 $ 0.037 $ 0.025 $ 0.007
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day in February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Class K Shares commenced operations on November 25, 1992.
23
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
This Prospectus describes the following funds offered by the Company and
Munder: the Accelerating Growth, Equity Selection, Growth & Income, Index 500,
International Equity, Micro-Cap Equity, Mid-Cap Growth, Multi-Season Growth,
Real Estate Equity Investment, Small-Cap Value, Small Company Growth 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"), Cash Investment Fund, Tax-Free
Money Market Fund and U.S. Treasury Money Market Fund (collectively, the
"Money Market Funds"); the Balanced Fund and the International Bond Fund.
Purchasing shares of any fund should not be considered a complete investment
program, but an important segment of a well-diversified investment program.
Unless otherwise specified in this Prospectus or the Statement of Additional
Information, up to 35% of each Equity Fund's net assets may be invested in the
instruments described under "Portfolio Instruments and Practices and
Associated Risk Factors."
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 temporary 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.
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
24
<PAGE>
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.
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 $3 billion at the time of purchase. The
Fund will be diversified by industry with proportionate weightings
approximately the same as the Standard & Poor's 500 Composite Stock Price Index
(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 temporary 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.
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.
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 Standard & Poor's Ratings Service ("S&P"),
a division of McGraw-Hill Companies, Inc., or Moody's Investor Services, Inc.
("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 temporary defensive purposes.
25
<PAGE>
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.
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, 1995, the S&P 500 represented approximately 69% 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 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 temporary 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.
26
<PAGE>
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.
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 the second section 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 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. It is expected that these
securities will be traded in the principal trading market in such countries.
27
<PAGE>
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 temporary defensive purposes. See "Portfolio Instruments and
Practices and Associated Risk Factors--Foreign Securities."
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 micro-cap companies that generally have a market capitalization of $200
million or less at the time of purchase. Such issuers have market
capitalizations that are less than the capitalization of companies which
predominate the major market indices, such as the S&P 500.
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 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.
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.
28
<PAGE>
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 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.
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.
MULTI-SEASON GROWTH FUND
The investment objective of the Multi-Season Growth Fund is to provide
shareholders with long-term capital appreciation. The Fund seeks to achieve
this objective by investing primarily in a diversified portfolio of equity
securities of companies that have demonstrated superior long-term earnings
growth, financial stability, attractive valuation and relative price momentum.
Income is not a primary consideration in the selection of investments. This
style which incorporates both growth investing and value constraints has been
nationally recognized as GARP (Growth at a Reasonable Price) and seeks to
produce attractive returns during various market environments.
The Advisor believes that superior investment returns are derived from
securities of financially stable companies that reward shareholders with
superior earnings growth, are attractively priced and enjoy relative price
momentum. Specifically, the Advisor will examine the earnings growth
characteristics of approximately 5,500 companies for each of the last five
years to determine earnings strength, consistency and momentum. Companies which
have demonstrated superior earnings growth will be further reviewed for
financial stability. Corporate balance sheets will be scrutinized to select
those companies which reinvest a significant portion of profits, demonstrate a
high return on equity and carry a relatively low debt load. Companies that meet
these earnings growth and financial stability criteria are further judged for
their value relative to these criteria and the market. Historically, the median
valuation of the portfolios managed by the Advisor has been no more than a
moderate premium to that of the S&P 500, 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.
29
<PAGE>
The Fund's investment objective is a fundamental policy and may not be
changed without the authorization of the holders of a majority (as defined in
the Investment Company Act of 1940, as amended (the "1940 Act")) of the Fund's
outstanding shares.
REAL ESTATE EQUITY INVESTMENT FUND
The Real Estate Equity Investment Fund's investment objectives are to
provide shareholders with capital appreciation and current income. It seeks to
achieve these objectives by investing primarily in securities of United States
companies which are principally engaged in the real estate industry or which
own significant real estate assets. It will not invest directly in real
estate.
Under normal conditions, the Fund will invest at least 65% of its total
assets in equity securities of companies listed on U.S. securities exchanges
or NASDAQ which are principally engaged in the real estate industry. Equity
securities include common stock, preferred stock and securities convertible
into common stock. A company is "principally engaged" in the real estate
industry if at least 50% of its assets, gross income or net profits are
attributable to ownership, construction, management or sale of residential,
commercial or industrial real estate. Real estate industry companies may
include among others: equity real estate investment trusts, which pool
investors' funds for investment primarily in commercial real estate
properties; mortgage real estate investment trusts, which invest pooled funds
in real estate related loans; brokers, home builders or real estate
developers; and companies with substantial real estate holdings, such as paper
and lumber producers and hotel and entertainment companies. The Fund will
invest in real estate investment trusts only if they are traded on major U.S.
exchanges or NASDAQ. The Fund will not invest more than 15% of its total
assets in equity real estate investment trusts, excluding self-managed and/or
self-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 or BBB by
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.
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 at least 65% of its total assets in equity
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securities of small-cap companies that generally have a market capitalization
below $750 million at the time of purchase. Such issuers have market
capitalizations that are less than the capitalization of companies which
predominate the major market indices, such as the S&P 500.
The Advisor will generally favor companies that it believes 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 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 temporary 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.
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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 below
$750 million at the time of purchase. In managing the Fund, the Advisor seeks
smaller companies with above-average growth prospects. Factors considered in
selecting such issuers include participation in a fast growing industry, a
strategic niche position in a specialized market, adequate capitalization and
fundamental value.
The Fund has been designed to provide investors with potentially greater
long-term rewards than those provided by an investment in a fund that seeks
capital appreciation from equity securities of larger, more established
companies. Since small capitalization companies are generally not as well-known
to investors and have less of an investor following than larger companies, they
may provide opportunities for greater investment gains as a result of
inefficiencies in the marketplace.
Small capitalization companies typically are subject to a greater degree of
change in earnings and business prospects than larger, more established
companies. In addition, securities of small capitalization companies are traded
in lower volume than those issued by larger companies and may be more volatile.
As a result, the Fund may be subject to greater price volatility than a fund
consisting of larger capitalization stocks. By maintaining a broadly
diversified portfolio, the Advisor will attempt to reduce this volatility.
Under normal market conditions, at least 65% of the Fund's total assets will
be invested in small company equity securities. In addition to investing in
equity securities, the Fund is also authorized to invest in high quality short-
term fixed income securities as cash reserves or for temporary 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.
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 it
believes 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.
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.
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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 "Fund Investments--Lower Rated Debt Securities" in the
Statement of Additional Information.
BOND FUND, INTERMEDIATE BOND FUND AND U.S. GOVERNMENT INCOME FUND
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 Bond 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."
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
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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."
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. "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. 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."
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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 and Tax-Free Money Market Fund."
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. 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 and Tax-Free Money Market Fund."
CASH INVESTMENT FUND AND U.S. TREASURY MONEY MARKET FUND
The investment objective of both the Cash Investment Fund and U.S. Treasury
Money Market 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
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(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 Cash Investment Fund and U.S. Treasury 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.
Assets of the Cash Investment Fund and U.S. Treasury Money Market 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 Cash Investment Fund and U.S. Treasury Money Market Fund expect
under normal market conditions to be as fully invested as possible, each Fund
may hold uninvested cash pending investment of late payments for purchase
orders (or other payments) or during temporary defensive periods. Uninvested
cash will not earn income. In general, investments in the 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. 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. Each Equity Fund and the Balanced 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 Micro-Cap Equity Fund, Small-
Cap Value Fund and Small Company Growth 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, each Equity Fund (except the Index 500 Fund) and the Balanced
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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
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 Securities. Each Equity Fund (except the Real Estate Equity
Investment Fund), the Balanced Fund, each Bond Fund, the International Bond
Fund and the Cash Investment Fund may invest in the securities of foreign
issuers. The Tax-Free Bond Funds may purchase securities 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. 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.
Additionally, foreign banks and foreign branches
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of domestic banks may be subject to less stringent reserve requirements, and to
different accounting, auditing and recordkeeping requirements.
The Equity Selection Fund, Micro-Cap Equity Fund, Mid-Cap Growth Fund, Multi-
Season Growth Fund, Small-Cap Value Fund and Value Fund each may invest up to
20%, and each other Equity Fund (except the International Equity Fund) may
invest up to 10% of its total assets in equity securities of foreign issuers,
including companies domiciled in developing countries. Each Bond Fund, the
Balanced Fund, the Cash Investment Fund and each Tax-Free Bond Fund may invest
up to 10% of its assets in foreign securities. Under normal market conditions,
the International Equity Fund and the International Bond Fund each will invest
at least 65% of its total assets in equity securities and bonds, respectively,
of issuers located in at least three countries other than the United States.
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 Equity, Balanced and International Bond 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 Mid-Cap Growth
Fund and the Multi-Season 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. Each Equity Fund (except the
Real Estate Equity Investment Fund), the Balanced Fund, the Bond Funds and the
International Bond Fund may enter into forward foreign 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 foreign 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. 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 the Fund's
total return will be adversely affected as a result. Open positions in forward
contracts are covered by the segregation with a Fund's custodian of cash, U.S.
Government securities or other high grade debt obligations which are marked to
market daily. Each of 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 Bond Funds and the
International Bond Fund normally conduct their 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 Bond Funds and the International Bond Fund will enter
into forward currency contracts. Such Funds generally will not enter into a
forward contract with a term of greater than one year.
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Futures Contracts and Options. Each Equity Fund, the Balanced Fund, each
Bond Fund and the International Bond 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.
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 Equity Funds, the Balanced Fund, 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 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, each Equity Fund, the Balanced Fund, each Bond Fund and the
International Bond 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,
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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 "Fund Investments"
and Appendix B in the Statement of Additional Information.
Corporate Obligations. The Balanced Fund, each Bond Fund, the International
Bond Fund and the Cash Investment 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 Fund, each Bond Fund and the International 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 Equity Funds, the Balanced Fund, each Bond Fund and
the Cash Investment 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,
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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 the above-referenced Funds
in the obligations of foreign banks and foreign branches of domestic banks will
not exceed 25% of each 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, Bond Funds, International Bond Fund and 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 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 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 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
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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.
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 and Tax-Free Money Market Fund."
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.
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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. In managing the Michigan Triple Tax-Free
Bond Fund, the Advisor intends to concentrate in Michigan Municipal
Obligations. Additionally, 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. 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.
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 1996-1997 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 "AA" 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 Michigan Triple
Tax-Free Bond Fund and Tax-Free Intermediate 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. Each Equity Fund, the Balanced Fund, each Bond
Fund, the International Bond Fund, the Cash Investment Fund and the U.S.
Treasury Money Market Fund may purchase obligations
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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, each of the Bond Funds, the
International Bond Fund, the Cash Investment Fund and the Tax-Free Money
Market 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. 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
Cash Investment Fund and U.S. Treasury Money Market Fund, the securities held
subject to a repurchase agreement may have stated maturities exceeding 397
days, provided the repurchase agreement itself matures in 397 days. 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, except with respect to repurchase agreements secured by U.S.
government securities.
Reverse Repurchase Agreements. Each of the Equity Funds (except the Multi-
Season Growth Fund), the Balanced Fund, each of the Bond Funds, the
International Bond Fund, the Cash Investment Fund and the U.S. Treasury Money
Market 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.
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,
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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 when-issued purchases and
forward purchase commitments are not expected to exceed 25% of the value of
the particular Fund's total assets absent unusual market conditions. The Funds
do not intend to engage in when-issued purchases and forward commitments for
speculative purposes but only in furtherance of their investment objectives.
Fixed Income Securities. Generally, the market value of fixed income
securities held by the Balanced Fund, Micro-Cap Equity Fund, Small-Cap Value
Fund, each of the Bond Funds, International Bond Fund, Cash Investment Fund
and U.S. Treasury Money Market 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 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 Equity Funds, the Balanced Fund, each of the Bond Funds and the
International Bond Fund 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 Bond Funds, International Bond Fund and
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/Directors. 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
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"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 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 International Bond Fund, Michigan
Triple Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund, are each
classified as a diversified investment company, under the 1940 Act; the
International Bond Fund, Michigan Triple Tax-Free Bond Fund and Tax-Free
Intermediate 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. Each of the Equity Funds, the Balanced Fund, each of
the Bond Funds, the International Bond Fund and each of the 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.
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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 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 its 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. Leveraging by means of borrowing may exaggerate the effect of any
increase or decrease in the value of portfolio securities on the Fund's net
asset value. In addition, borrowed funds are subject to interest costs that
may offset or exceed the return earned on the borrowed funds. However, 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. 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 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
annual 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 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
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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
"Taxes" 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, 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 of the 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 advance
notice is not required. No assurance can be given that a Fund will achieve its
investment objective.
Each Fund has also adopted certain fundamental investment limitations that
may be changed only with the approval of a "majority of the outstanding shares
of a Fund" (as defined in the Statement of Additional Information). These
restrictions are set forth in the Statement of Additional Information.
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 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
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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) or 4:00 p.m.
(Eastern time) on any Business Day as defined below. 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 each of the Equity, the
Balanced, each of the Bond, the International Bond and each of the 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.
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 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.
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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, Tax-Free Money Market
Fund or U.S. Treasury 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 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, Cash Investment Fund, Tax-Free Money Market Fund and
U.S. Treasury Money Market 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 Equity
Selection Fund, International Equity Fund, Micro-Cap Equity Fund, Mid-Cap
Growth Fund, Multi-Season Growth Fund, Real Estate Equity Investment Fund,
Small-Cap Value Fund and Value Fund). Dividends from net income are declared
and paid at least annually by the Equity Selection Fund, International Equity
Fund, Micro-Cap Equity Fund, Mid-Cap Growth Fund, Multi-Season Growth Fund,
Small-Cap Value Fund and Value Fund. Dividends from net investment income are
declared and paid monthly by the Real Estate Equity Investment Fund. The net
income of each of the Cash Investment Fund, Tax-Free Money Market Fund and
U.S. Treasury Money Market 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.
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
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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 each of the Equity Funds, the Balanced
Fund, each of the Bond Funds, each of the Tax-Free Bond Funds and the
International Bond Fund 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).
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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
Munder Capital Management, a Delaware general partnership with its principal
offices at 480 Pierce Street, Birmingham, Michigan 48009, serves as the Funds'
investment advisor. The Advisor was formed in December, 1994. 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.
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. From
April, 1988 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. From December,
1965, she was Director of Equity Strategy for Comerica Capital Management,
Inc.
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Arnold Kent Douville, Senior Portfolio Manager of the Advisor, 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 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
Michigan Triple Tax-Free Bond Fund, Tax-Free Bond Fund and Tax-Free
Intermediate 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. From February, 1980 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. From June, 1987 to September, 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. Mr. Munder has co-managed the Multi-Season
Growth Fund since its inception in April, 1993 and managed the Real Estate
Equity Investment Fund from its inception to October, 1996. 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, Chief Investment Officer of the Advisor, is currently the
co-manager of the International Equity Fund (previously, from January, 1996 to
October, 1996, was the portfolio manager) and the Index 500 Fund (previously,
from July, 1992 to October, 1996, was the portfolio manager). Mr. Johnson
previously served as a portfolio manager at Woodbridge Capital Management
(June, 1992 to December, 1994) and Manufacturers Bank (June, 1986 to June,
1992). Mr. Johnson received a B.A. in Finance from Michigan State University
and 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, Intermediate
Bond Fund and U.S. Government Income 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 fixed income portfolios.
From August, 1988 to February, 1991, he was Investment Manager for Society
National Bank.
Gerald Seizert, CFA, CIC, Executive Vice President and Chief Investment
Officer of all equity management of the Advisor and has managed 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
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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. Prior
to June, 1992, he was a Portfolio Manager for the Trust Investment Department
of Manufacturers Bank, N.A. (January, 1981 to June, 1992).
Jeffrey A. Wrona, CFA, Senior Portfolio Manager of the Advisor, 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
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 (September, 1987 to August,
1988). 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 Balanced Fund and the Bond Fund since May, 1995 and
the International Bond Fund since October, 1996. Prior to joining MCM in 1995,
he was a Vice President and Senior Fund Manager for First of America
Investment Corp. (May, 1987 to May, 1995).
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 International Bond Fund since October, 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 (August, 1981 to April, 1996).
Edward Eberle, Value Portfolio Manager of the Advisor, has been co-manager
of the Value Fund since October, 1996. Prior to being appointed co-manager,
Mr. Eberle acted as the primary analyst for the Fund, assisting the manager
with portfolio decisions. He is also a member of the Advisor's asset
allocation team. Prior to joining the Advisor in 1995, Mr. Eberle served as
Executive Vice President and Portfolio Manager for Westpointe Financial
Corporation and as a member of the Board of Directors for Westpointe Capital
Management and Dart Investors Bermuda Limited. Mr. Eberle received a B.A. in
Finance from Michigan State University.
Carl Wilk, Senior Portfolio Manager of the Advisor, has been co-manager of
the Small Company Growth Fund since October, 1996. Prior to being appointed
co-manager, Mr. Wilk acted as the primary analyst for the Fund assisting the
manager with portfolio decisions. Prior to joining the Advisor in 1995, Mr.
Wilk was a Senior Equity Research Analyst at Woodbridge. Prior
responsibilities include experience as an Investment Analyst at Manufacturers
Bank. N.A. from 1986 to 1992 for their core growth equity investment process.
In addition, Mr. Wilk performed various financial positions in the banking and
brokerage industry from 1984 to 1986. Mr. Wilk received a B.S. in Finance,
M.B.A. from Wayne State University and is a Certified Financial Planner.
Peter K. Hoglund, CFA, Portfolio Manager/Strategic Projects of the Advisor,
has been manager of the Real Estate Equity Investment Fund since October,
1996. Prior to being appointed as manager, Mr. Hoglund acted as the primary
analyst for this Fund, assisting the former manager with portfolio decisions.
Prior to joining MCM in May, 1993, Mr. Hoglund was in the Investment Banking
Division of Morgan Stanley & Co., Inc. (July, 1988 to July, 1990) where he was
a financial analyst. Mr. Hoglund received both his B.A. and M.B.A. from the
University of Michigan and is a Chartered Financial Analyst.
Theodore Miller, Senior Portfolio Manager of the Advisor, has been co-
manager of the International Equity Fund since October, 1996. Prior to being
appointed co-manager, Mr. Miller acted as the primary analyst for the Fund,
assisting the manager with portfolio decisions. Prior to joining the Advisor,
Mr. Miller worked in
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Derivatives Marketing for Interacciones Global Inc (1993-1995), in Equity
Sales/Trader for McDonald & Co. Securities Inc. (1991-1993) and started his
career in 1986 and was a derivative and equity transaction execution
specialist with various New York investment banks. Mr. Miller received his
B.S. from the University of Pittsburgh and his M.B.A. from Indiana University.
Robert J. Samrah, Senior Portfolio Manager of the Advisor, has been co-
manager of the Index 500 Fund since October, 1996. Prior to being appointed
co-manager, Mr. Samrah assisted the manager with portfolio decisions. Prior to
joining the Advisor, Mr. Samrah was an Asset/Liability Manager for First of
America Bank Corporation (1993-1994), a Senior Consultant for Deloitte &
Touche Management Consulting (1992-1993) and started his career in 1985 at
GMAC as an Analyst. Mr. Samrah received his B.B.A. and M.B.A. from Wayne State
University.
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 average daily 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, Equity Selection Fund, Growth & Income Fund,
International Equity Fund, Small-Cap Value Fund and Small Company Growth Fund;
.74% of average daily net assets of each of the Mid-Cap Growth Fund, Real
Estate Equity Investment 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, International Bond Fund, U.S. Government Income
Fund, Michigan Triple Tax-Free Bond Fund, Tax-Free Bond Fund and Tax-Free
Intermediate Bond Fund; .35% of average daily net assets of each of the Cash
Investment Fund, Tax-Free Money Market Fund and U.S. Treasury Money Market
Fund; and .20% of the first $250 million of average daily net assets, .12% of
the next $250 million of average daily net assets and .07% of average daily
net assets in excess of $500 million of the Index 500 Fund. The voluntary
advisory fee waiver previously in effect for the Michigan Triple Tax-Free Bond
Fund was discontinued as of the date of this Prospectus.
For the period July 1, 1995 to October 27, 1995, the Advisor received fees,
after waivers, if any, at an effective rate of .75% of the average daily net
assets of each of the Accelerating Growth Fund, Growth & Income Fund,
International Equity Fund, and Small Company Growth 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,
Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund; .35% of the average
daily net assets of each of the Cash Investment Fund, Tax-Free Money Market
Fund and U.S. Treasury 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 October 28, 1995 to June 30, 1996, the Adviser received fees,
after waivers, if any, at an effective rate of .75% of the average daily net
assets of each of the Accelerating Growth Fund, Growth & Income Fund,
International Equity Fund and Small Company Growth Fund; .65% of the average
daily net assets of the Balanced Fund, .50% of the average daily net assets of
each of the Bond Fund, Intermediate Bond Fund, U.S. Government Income Fund,
Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund; .35% of each of the
average daily net assets of the Cash Investment Fund, Tax-Free Money Market
Fund and U.S. Treasury Money Market 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.
For the fiscal year ended June 30, 1996 (and for the Mid-Cap Growth Fund and
Value Fund for the period of commencement of operations to June 30, 1996), the
Advisor received fees, after waivers, if any, at an effective rate of .75% of
average daily net assets of the Multi-Season Growth Fund; .68% of average
daily net assets of the Real Estate Equity Investment Fund; .73% of average
daily net assets of the Value Fund and .71% of average daily net assets of the
Mid-Cap Growth Fund.
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The International Bond Fund did not commence operations until October 2, 1996
and the Equity Selection, Micro-Cap Equity and Small-Cap Value Funds had not
commenced operations as of the date of this Prospectus.
The Advisor expects to voluntarily waive a portion of its fee with respect to
the Index 500 Fund and Multi-Season Growth 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 .07% and .75% of the average daily net assets of the Index
500 Fund and the Multi-Season Growth Fund, respectively, during the Company's
and Munder's current fiscal year.
The Advisor may, from time to time, make payments to banks, broker-dealers or
other financial institutions for certain services to the Funds and/or their
shareholders, including sub-administration, sub-transfer agency and shareholder
servicing. Such payments are made out of the Advisor's own resources and do not
involve additional costs to the Funds or their shareholders.
ADMINISTRATOR, CUSTODIAN AND TRANSFER AGENT
First Data Investor Services Group, Inc. ("First Data"), whose principal
business address is 53 State Street, Boston, Massachusetts 02109, 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.
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 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 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 and certain other investment
portfolios that are advised by the Advisor for which the Custodian provides
services, computed daily and payable monthly at an annual rate of .03% of the
first $100 million of average daily net assets, .02% of the next $500 million
of net assets and .01% of net assets in excess of $600 million. The Custodian
also receives certain transaction based fees. 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 .033% 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 who from time
to time own of record
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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.
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 taxable 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 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.
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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 and International Bond 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 each of the
International Equity Fund's and International Bond 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.
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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--MICHIGAN TRIPLE TAX-FREE BOND FUND AND TAX-FREE INTERMEDIATE
BOND FUND
Ordinary tax-exempt interest dividends paid by the Michigan Triple Tax-Free
Bond Fund and Tax-Free Intermediate 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.
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* * *
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, Balanced, Growth & Income, Index 500, International
Equity, Small Company Growth Fund, Bond, Intermediate Bond, U.S. Government
Income, Michigan Triple Tax-Free Bond, Tax-Free Bond, Tax-Free Intermediate
Bond, Cash Investment, Tax-Free Money Market and U.S. Treasury Money Market
Funds, respectively, each of which, except the Michigan Triple Tax-Free Bond
Fund and Tax-Free Intermediate 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 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 Equity Selection, Micro-Cap Equity,
Mid-Cap Growth, Multi-Season Growth, Real Estate Equity Investment, Small-Cap
Value, Value, International Bond, Money Market, and NetNet Funds, respectively,
each of which, except 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 and the NetNet
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
(other than the Money Market 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 from the
corresponding classes of other funds of the Company or Munder) and Class Y
Shares. The NetNet 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
Accelerating Growth, Balanced, Equity Selection, Growth & Income, Index 500,
International Equity, Micro-Cap Equity, Mid-Cap Growth, Multi-Season Growth,
Real Estate Equity Investment, Small-Cap Value, Small Company Growth, Value,
Bond, Intermediate Bond, International Bond, U.S. Government Income, Michigan
Triple Tax-Free Bond, Tax-Free Bond, Tax-Free Intermediate Bond, Cash
Investment, Tax-Free Money Market and U.S. Treasury Money Market Funds.
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
60
<PAGE>
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 October 1, 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 October 1, 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: Accelerating Growth
Fund--87%; Balanced Fund--88%; Growth & Income Fund--98%; Index 500 Fund--68%;
International Equity Fund--90%; Mid-Cap Growth Fund--91%; Multi-Season Growth
Fund--63%; Real Estate Equity Investment Fund--83%; Small Company Growth Fund--
86%; Value Fund--91%; Bond Fund--98%; Intermediate Bond Fund--98%; U.S.
Government Income Fund--99%; Michigan Triple Tax-Free Bond Fund--97%; Tax-Free
Bond Fund--98%; Tax-Free Intermediate Bond Fund--98%; Cash Investment Fund--
97%; Tax-Free Money Market Fund--91%; and U.S. Treasury Money Market Fund--56%.
The International Bond Fund did not commence operations until October 2, 1996
and as of the date of this Prospectus the Equity Selection Fund, Micro-Cap
Equity Fund and Small Cap Value Fund had not commenced operations.
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 Bond Funds, International Bond Fund 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 Cash Investment, Tax-Free Money Market
and U.S. Treasury 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
61
<PAGE>
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 Class K Shares to the
performance of other mutual funds with similar investment objectives and to
other relevant indices or to rankings prepared by independent services or other
financial or industry publications that monitor the performance of mutual
funds, including, for example, Lipper Analytical Services, Inc., the Lehman
Brothers Government/Corporate Bond Index, a recognized unmanaged index of
government and corporate bonds, the Standard & Poor's 500 Index, an unmanaged
index of a group of common stocks, the Consumer Price Index, or the Dow Jones
Industrial Average, an unmanaged 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.
Quotations of total return for Class K Shares will reflect the fees for
certain shareholder services as described in this Prospectus.
62
<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 Accelerating Growth Fund
Munder Balanced Fund
Munder Equity Selection Fund
Munder Growth & Income Fund
Munder Index 500 Fund*
Munder International Equity Fund
Munder Micro-Cap Equity Fund
Munder Mid-Cap Growth Fund
Munder Multi-Season Growth Fund
Munder Real Estate Equity Investment Fund
Munder Small-Cap Value Fund
Munder Small Company Growth Fund
- -------- Munder Value Fund
*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 October 28, 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. In addition, the SEC maintains a Web site (http://www.sec.gov) that
contains the Statement of Additional Information and other information
regarding the Funds.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE DATE OF THIS PROSPECTUS IS OCTOBER 28, 1996.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................... 3
The Funds
Expense Table............................................................ 7
Financial Highlights..................................................... 13
Investment Objectives and Policies....................................... 30
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..................................................... 52
Conversion of Class B Shares............................................. 57
How to Exchange Shares................................................... 57
Dividends and Distributions.............................................. 58
Other Information
Net Asset Value.......................................................... 59
Management............................................................... 60
Taxes.................................................................... 64
Description of Shares.................................................... 66
Performance.............................................................. 67
Shareholder Account Information.......................................... 68
</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 Balanced Fund, Growth & Income Fund and Index 500
Fund, seeks capital appreciation. The Balanced Fund seeks to provide an
attractive investment return through a combination of growth of capital and
current income. 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 Price Index ("S&P
500"). 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, Equity Selection Fund,
International Equity Fund, Micro-Cap Equity Fund, Mid-Cap Growth Fund, Multi-
Season Growth Fund, Small-Cap Value Fund, Small Company Growth Fund and Value
Fund seek to provide shareholders long-term capital appreciation.
PRINCIPAL INVESTMENTS
The Funds, other than the Balanced Fund, invest primarily in equity
securities, with each Fund implementing a different investment strategy. The
Balanced Fund allocates its assets primarily among three major asset groups:
equity securities, fixed income securities and cash equivalents.
INVESTMENT PROGRAM
The 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 Balanced Fund allocates its assets primarily among equity
securities, fixed income securities and cash equivalents to provide growth of
capital and current income. The 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. 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 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 International Equity Fund invests
primarily in the equity securities of foreign companies selected for their
long-term growth potential. The Micro-Cap Equity Fund and Small-Cap Value 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 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 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 Small Company Growth Fund
focuses on stocks of smaller companies with the potential for significant
long-term capital appreciation. 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. 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
3
<PAGE>
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 Micro-Cap Equity Fund and the Small-Cap Value Fund each invest 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. The Micro-Cap Equity Fund, Mid-Cap Growth Fund, Multi-
Season Growth Fund and Small Company Growth Fund may invest in the securities
of emerging growth companies, which may involve greater price volatility and
risk than those incurred by funds that do not invest in such companies. In
addition, the Real Estate Equity Investment Fund invests primarily in the real
estate industry and could conceivably own real estate directly as a result of
a default on debt securities it owns. The Fund, therefore, may be subject to
certain risks associated with the direct ownership of real estate. There is no
assurance that any Fund will achieve its investment objective. See "Portfolio
Instruments and Practices 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 offered at net 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
4
<PAGE>
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.
OTHER FEATURES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
- ------------------------- ------------------------- -------------------------
<S> <C> <C>
Automatic Investment Plan Automatic Investment Plan Automatic Investment Plan
Automatic Withdrawal Plan Automatic Withdrawal Plan Automatic Withdrawal Plan
Retirement Plans Retirement Plans Retirement Plans
Telephone Exchanges Telephone Exchanges Telephone Exchanges
Rights of Accumulation Reinvestment Privilege Reinvestment Privilege
Letter of Intent
Quantity Discounts
Reinvestment Privilege
</TABLE>
DIVIDENDS AND OTHER DISTRIBUTIONS
Dividends from net investment income are declared and paid quarterly for all
Funds, except the Equity Selection Fund, International Equity Fund, Micro-Cap
Equity Fund, Mid-Cap Growth Fund, Multi-Season Growth Fund, Small-Cap Value
Fund and Value 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."
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 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 Index 500 Fund, Multi-Season Growth
Fund, Mid-Cap Growth Fund, Real Estate Equity Investment Fund and Value Fund
to reflect anticipated fees, waivers and/or expense reimbursements. The Equity
Selection Fund, the Micro-Cap Equity Fund and the Small-Cap Value Fund had not
commenced operations as of the date of this Prospectus and therefore the
expense information set forth below is based on estimated operating expenses
for each such Fund.
<TABLE>
<CAPTION>
CLASS A SHARES
-----------------------------------------------------------------------
INTER- MICRO-
ACCELERATING EQUITY GROWTH & INDEX NATIONAL CAP MID-CAP
GROWTH BALANCED SELECTION INCOME 500 EQUITY EQUITY GROWTH
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% 2.50% 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% .65% .75% .75% .07%+ .75% 1.00% .74%
12b-1 fees............................ .25% .25% .25% .25% .10%+ .25% .25% .25%
Other expenses (after expense
reimbursements)...................... .20% .25% .25% .21% .19%+ .26% .25% .21%++
----- ----- ----- ----- ----- ----- ----- -----
Total fund operating expenses (after
expense reimbursements).............. 1.20% 1.15% 1.25% 1.21% .36%+ 1.26% 1.50% 1.20%++
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
CLASS A SHARES
---------------------------------------
REAL
MULTI- ESTATE SMALL- SMALL
SEASON EQUITY CAP COMPANY
GROWTH INVESTMENT VALUE GROWTH VALUE
FUND FUND FUND FUND FUND
------ ---------- ------ ------- -----
<S> <C> <C> <C> <C> <C>
Shareholder transaction expenses:
Maximum sales load on purchases*..... 5.50% 5.50% 5.50% 5.50% 5.50%
Maximum sales load on reinvested
dividends........................... None None None None None
Maximum contingent deferred sales
charge **........................... None None None None None
Redemption fees...................... None None None None None
Exchange fees........................ None None None None None
Annual Fund operating expenses:
(as a percentage of average net
assets)
Advisory fees........................ .75%+ .74% .75% .75% .74%
12b-1 fees........................... .25% .25% .25% .25% .25%
Other expenses (after expense
reimbursements)..................... .26% .26%++ .25% .21% .21%++
----- ----- ----- ----- -----
Total fund operating expenses (after
expense reimbursements)............. 1.26%+ 1.25%++ 1.25% 1.21% 1.20%++
===== ===== ===== ===== =====
</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."
+The Advisor voluntarily waived advisory and 12b-1 fees and reimbursed the
Index 500 Fund for certain operating expenses, which are described on page
12. Without waivers and expense reimbursements the ratio of advisory fees
to average net assets would be .20%, the ratio of 12b-1 fees to average net
assets would be .25% and total operating expenses would have been .69%.
+Reflects waivers as described on page 12. Without waivers, the ratio of
advisory fees to average net assets would be 1.00% for the Multi-Season
Growth Fund. Without waivers, total fund operating expenses would be 1.51%
for the Multi-Season Growth Fund.
++The Advisor voluntarily reimbursed the Fund for certain operating expenses.
In the absence of such expense reimbursements, total fund operating
expenses would have been 1.38% for the Mid-Cap Growth Fund, 1.52% for the
Real Estate Equity Investment Fund and 1.30% for the Value Fund.
7
<PAGE>
<TABLE>
<CAPTION>
CLASS B SHARES
---------------------------------------------------------------
INTER- MICRO-
EQUITY GROWTH & INDEX NATIONAL CAP
ACCELERATING BALANCED SELECTION INCOME 500 EQUITY EQUITY
GROWTH FUND FUND FUND FUND FUND FUND 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*............... 5.00% 5.00% 5.00% 5.00% 3.00% 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.......... .75% .65% .75% .75% .07%+ .75% 1.00%
12b-1 fees............. 1.00% 1.00% 1.00% 1.00% .45%+ 1.00% 1.00%
Other expenses (after
expense
reimbursements)....... .20% .25% .25% .21% .19%+ .26% .25%
----- ----- ------ ----- ----- ----- -----
Total fund operating
expenses (after
expense
reimbursements)....... 1.95% 1.90% 2.00% 1.96% .71%+ 2.01% 2.25%
===== ===== ====== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
CLASS B SHARES
------------------------------------------------
REAL
MID- MULTI- ESTATE SMALL- SMALL-
CAP SEASON EQUITY CAP COMPANY
GROWTH GROWTH INVESTMENT VALUE GROWTH VALUE
FUND FUND FUND FUND FUND FUND
------ ------ ---------- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
Shareholder transaction
expenses:
Maximum sales load on
purchases................... None None None None None None
Maximum sales load on
reinvested dividends........ None None None None None None
Maximum contingent deferred
sales charge*............... 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
Redemption fees.............. None None None None None None
Exchange fees................ None None None None None None
Annual Fund operating
expenses:
(as a percentage of average
net assets)
Advisory fees................ .74% .75%+ .74% .75% .75% .74%
12b-1 fees................... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Other expenses (after expense
reimbursements)............. .21%++ .26% .26%++ .25% .21% .21%++
----- ----- ----- ------ ----- -----
Total fund operating expenses
(after expense
reimbursements)............. 1.95%++ 2.01%+ 2.00%++ 2.00% 1.96% 1.95%++
===== ===== ===== ====== ===== =====
</TABLE>
- --------
*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."
+The Advisor voluntarily waived advisory and 12b-1 fees and reimbursed the
Index 500 Fund for certain operating expenses which are described on page
12. Without waivers and expense reimbursements, the ratio of advisory fees
to average net assets would be .20%, the ratio of 12b-1 fees to average net
assets would be 1.00% and total operating expenses would have been 1.44%.
+Reflects waivers as described on page 12. Without waivers, the ratio of
advisory fees to average net assets would be 1.00% for the Multi- Season
Growth Fund. Without waivers, total fund operating expenses would be 2.26%
for the Multi-Season Growth Fund.
++The Advisor voluntarily reimbursed the Fund for certain operating expenses.
In the absence of such expense reimbursements, total fund operating
expenses would have been: 2.13% for the Mid-Cap Growth Fund, 2.27% for the
Real Estate Equity Investment Fund and 2.05% for the Value Fund.
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
-----------------------------------------------------------------------
MICRO-
ACCELERATING EQUITY GROWTH & CAP
GROWTH BALANCED SELECTION INCOME INDEX 500 INTERNATIONAL EQUITY
FUND FUND FUND FUND FUND EQUITY FUND 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 operating
expenses:
(as a percentage of
average net assets)
Advisory fees.......... .75% .65% .75% .75% .07%+ .75% 1.00%
12b-1 fees............. 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Other expenses (after
expense
reimbursements)....... .20% .25% .25% .21% .19%+ .26% .25%
----- ----- ----- ----- ----- ----- -----
Total fund operating
expenses (after
expense
reimbursements)....... 1.95% 1.90% 2.00% 1.96% 1.26%+ 2.01% 2.25%
===== ===== ===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES
------------------------------------------------
REAL
MID- MULTI- ESTATE SMALL- SMALL
CAP SEASON EQUITY CAP COMPANY
GROWTH GROWTH INVESTMENT VALUE GROWTH VALUE
FUND FUND FUND FUND FUND FUND
------ ------ ---------- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
Shareholder transaction
expenses:
Maximum sales load on
purchases................... None None None None None None
Maximum sales load on
reinvested dividends........ None None None None None None
Maximum contingent deferred
sales charge*............... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Redemption fees.............. None None None None None None
Exchange fees................ None None None None None None
Annual operating expenses:
(as a percentage of average
net assets)
Advisory fees................ .74% .75%+ .74% .75% .75% .74%
12b-1 fees................... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Other expenses (after expense
reimbursements)............. .21%++ .26% .26%++ .25% .21% .21%++
----- ----- ----- ----- ----- -----
Total fund operating expenses
(after expense
reimbursements)............. 1.95%++ 2.01%+ 2.00%++ 2.00% 1.96% 1.95%++
===== ===== ===== ===== ===== =====
</TABLE>
- --------
* A deferred sales charge of 1.00% is assessed on redemptions of Class C
Shares made within the first year of investing.
+The Advisor voluntarily waived advisory fees and reimbursed the Index 500
Fund for certain operating expenses, which are described on page 12.
Without waivers and reimbursements, the ratio of advisory fees to average
daily net assets would be .20% and total operating expenses would have been
1.44%.
+ Reflects advisory fees after waiver. Without waivers, the ratio of advisory
fees to average net assets would be 1.00% for the Multi-Season Growth Fund.
Without waivers, total fund operating expenses would be 2.26% for the
Multi-Season Growth Fund. Waivers are described on page 12.
++The Advisor voluntarily reimbursed the Fund for certain operating expenses.
In the absence of such expense reimbursements, total fund operating
expenses would have been 2.13% for the Mid-Cap Growth Fund, 2.27% for the
Real Estate Equity Investment Fund and 2.05% for the Value Fund.
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.
9
<PAGE>
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 tables 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' legal existence and the costs involved
with communicating with shareholders. With respect to each Fund (other than
the Equity Selection, Micro-Cap Equity and Small-Cap Value Funds), the amount
of "Other expenses" in the tables above is based on amounts incurred in the
most recent fiscal year. With respect to the Equity Selection, Micro-Cap
Equity and Small-Cap Value Funds, the amount of "Other expenses" 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 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>
Accelerating Growth Fund........................ $67 $ 91 $117 $193
Balanced Fund................................... $66 $ 90 $115 $187
Equity Selection Fund........................... $67 $ 93 N/A N/A
Growth & Income Fund............................ $67 $ 91 $118 $194
Index 500 Fund.................................. $29 $ 36 $ 45 $ 69
International Equity Fund....................... $67 $ 93 $120 $199
Micro-Cap Equity Fund........................... $69 $100 N/A N/A
Mid-Cap Growth Fund............................. $67 $ 91 $117 $193
Multi-Season Growth Fund........................ $67 $ 93 $120 $199
Real Estate Equity Investment Fund.............. $67 $ 93 $120 $198
Small-Cap Value Fund............................ $67 $ 93 N/A N/A
Small Company Growth Fund....................... $67 $ 91 $118 $194
Value Fund...................................... $67 $ 91 $117 $193
</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 and (2) redemption at the end of the following time periods and
(3) no redemption at the end of the following periods:
<TABLE>
<CAPTION>
CLASS B SHARES
---------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS*
--------------- --------------- --------------- ---------------
NO NO NO NO
REDEMP- REDEMP- REDEMP- REDEMP- REDEMP- REDEMP- REDEMP- REDEMP-
TION TION TION TION TION TION TION TION
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Accelerating Growth
Fund................... $70 $20 $ 91 $61 $125 $105 $145 $145
Balanced Fund........... $69 $19 $ 90 $60 $123 $103 $140 $140
Equity Selection Fund... $70 $20 $ 93 $63 N/A N/A N/A N/A
Growth & Income Fund.... $70 $20 $ 92 $62 $126 $106 $147 $147
Index 500 Fund.......... $37 $ 7 $ 43 $23 $ 50 $ 40 $ 45 $ 45
International Equity
Fund................... $70 $20 $ 93 $63 $128 $108 $152 $152
Micro-Cap Equity Fund... $73 $23 $100 $70 N/A N/A N/A N/A
Mid-Cap Growth Fund..... $70 $20 $ 91 $61 $125 $105 $145 $145
Multi-Season Growth
Fund................... $70 $20 $ 93 $63 $128 $108 $152 $152
Real Estate Equity
Investment Fund........ $70 $20 $ 93 $63 $128 $108 $151 $151
Small-Cap Value Fund.... $70 $20 $ 93 $63 N/A N/A N/A N/A
Small Company Growth
Fund................... $70 $20 $ 92 $62 $126 $106 $147 $147
Value Fund.............. $70 $20 $ 91 $61 $125 $105 $145 $145
</TABLE>
- --------
*Reflects conversion of Class B Shares to Class A Shares (which pay lower
ongoing expenses) six years after purchase. See "How to Redeem Shares--
Contingent Deferred Sales Charge--Class B Shares." Class B Shares of the
Munder Funds purchased on or before June 27, 1995 are subject to a
different CDSC schedule. See "How to Redeem Shares--Contingent Deferred
Sales Charge--Class B Shares."
An investor would pay the following expenses on a $1,000 investment in Class
C Shares (subject to the applicable CDSC), assuming (1) a hypothetical 5%
annual return, (2) redemption at the end of the following time periods and (3)
no redemption at the end of one year:
<TABLE>
<CAPTION>
CLASS C SHARES
----------------------------------------
1 YEAR
---------------
NO
REDEMP- REDEMP-
TION TION 3 YEARS 5 YEARS 10 YEARS
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Accelerating Growth Fund............... $30 $20 $61 $105 $228
Balanced Fund.......................... $29 $19 $60 $103 $223
Equity Selection Fund.................. $30 $20 $63 N/A N/A
Growth & Income Fund................... $30 $20 $62 $106 $229
Index 500 Fund......................... $23 $13 $40 $ 69 $152
International Equity Fund.............. $30 $20 $63 $108 $234
Micro-Cap Equity Fund.................. $33 $23 $70 N/A N/A
Mid-Cap Growth Fund.................... $30 $20 $61 $105 $228
Multi-Season Growth Fund............... $30 $20 $63 $108 $234
Real Estate Equity Investment Fund..... $30 $20 $63 $108 $233
Small-Cap Value Fund................... $30 $20 $63 N/A N/A
Small Company Growth Fund.............. $30 $20 $62 $106 $229
Value Fund............................. $30 $20 $61 $105 $228
</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 Index 500 Fund, Multi-
Season Growth Fund, Mid-Cap Growth Fund, Real Estate Equity Investment Fund
and Value Fund has been restated to reflect
11
<PAGE>
anticipated fees, waivers and/or expense reimbursements.
As noted above, the Advisor expects to waive a portion of its fees with
respect to the Index 500 Fund and Multi-Season Growth Fund and reimburse
expenses with respect to the Index 500 Fund, Mid-Cap Growth Fund, Real Estate
Equity Investment Fund and Value 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/or the Distributor may discontinue such waivers and/or
expense reimbursements at any time in their sole discretion. Without waivers
and/or expense reimbursements, an investor in the Index 500 Fund, Multi-Season
Growth Fund, Mid-Cap Growth Fund, Real Estate Equity Investment Fund and Value
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: $62, $76, $91 and $136 for Class A Shares of the Index 500
Fund; $70, $100, $133 and $226 for Class A Shares of the Multi-Season Growth
Fund; $68, $96, $127 and $212 for Class A Shares of the Mid-Cap Growth Fund;
$70, $100, $133, and $227 for Class A Shares of the Real Estate Equity
Investment Fund and $68, $94, $122 and $203 for Class A Shares of the Value
Fund assuming the maximum sales load and redemption at the end of each time
period; $45, $66, $89 and $136 for Class B Shares of the Index 500 Fund; $73,
$101, $141 and $180 for Class B Shares of the Multi-Season Growth Fund; $72,
$97, $134 and $166 for Class B Shares of the Mid-Cap Growth Fund; $73, $101,
$142 and $181 for Class B Shares of the Real Estate Equity Investment Fund and
$71, $94, $130 and $157 for Class B Shares of the Value Fund, assuming
redemption at the end of each time period and deduction at the time of
redemption of the maximum CDSC applicable and $25, $46, $79 and $172 for Class
C Shares of the Index 500 Fund; $33, $71, $121 and $260 for Class C Shares of
the Multi-Season Growth Fund; $32, $67, $114 and $246 for Class C Shares of
the Mid-Cap Growth Fund; $33, $71, $122 and $212 for Class C Shares of the
Real Estate Equity Investment Fund and $31, $64, $110 and $238 for Class C
Shares of the Value Fund, assuming redemption at the end of each time period.
Without waivers and/or expense reimbursements, the total fund operating
expenses an investor would pay for the Index 500 Fund, Multi-Season Growth
Fund, Mid-Cap Growth Fund, Real Estate Equity Investment Fund and Value Fund
is as follows: For Class A Shares .69%, 1.51%, 1.38%, 1.52% and 1.30%
respectively, for Class B Shares 1.44%, 2.26%, 2.13%, 2.27% and 2.05%
respectively, and for Class C Shares 1.44%, 2.26%, 2.13%, 2.27% and 2.05%,
respectively.
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, 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 Equity
Selection Fund, the Micro-Cap Equity Fund or the Small-Cap Value 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>
ACCELERATING GROWTH FUND
------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
6/30/96 6/30/96 6/30/96(E)
CLASS A CLASS B CLASS C
------- ------- ----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period......... $ 14.82 $ 14.70 $ 16.30
------- ------- -------
Income from Investment Operations:.
Net investment loss......................... (0.05) (0.05) (0.05)
Net realized and unrealized gain on
investments................................ 2.92 2.76 1.33
------- ------- -------
Total from investment operations............ 2.87 2.71 1.28
------- ------- -------
Less Distributions:.
Dividends from net investment income........ -- -- --
Distributions from net realized gains....... (2.33) (2.33) (2.33)
------- ------- -------
Total distributions......................... (2.33) (2.33) (2.33)
------- ------- -------
Net Asset Value, End of Period............... $ 15.36 $ 15.08 $ 15.25
======= ======= =======
Total Return(b)............................. 22.03% 21.05% 10.22%
======= ======= =======
Ratios to Average Net Assets/Supplemental
Data:.......................................
Net Assets, End of Period (in thousands).... $ 6,098 $ 286 $ 118
Ratio of operating expenses to average net
assets..................................... 1.20% 1.95% 1.95%(c)
Ratio of net investment loss to average net
assets..................................... (0.42)% (1.17)% (1.17)%(c)
Portfolio turnover rate..................... 112% 112% 112%
Ratio of operating expenses to average net
assets without waivers..................... 1.27% 2.02% 2.02%(c)
Net investment loss per share without
waivers.................................... $ (0.06) $ (0.06) $ (0.06)
Average commission rate (g)................. $0.0548 $0.0548 $0.0548
</TABLE>
- --------
(a) Fiscal year changed to June 30. Prior to this, the fiscal year end was the
last day of February.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) The Munder Accelerating Growth Fund Class A Shares, Class B Shares and
Class C Shares commenced operations on November 23, 1992, April 25, 1994
and September 26, 1995, respectively.
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
13
<PAGE>
<TABLE>
<CAPTION>
ACCELERATING GROWTH FUND
----------------------------------------------------------------------------
PERIOD PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/95(A) 6/30/95(A) 2/28/95(D) 2/28/95(D,E) 2/28/94 2/28/93(E)
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)(f) 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(b)........ 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%(c) 1.95%(c) 1.18% 1.88%(c) 1.03% 0.96%(c)
Ratio of net investment
income/(loss) to
average net assets.... (0.21)%(c) (0.96)%(c) (0.25)% (0.95)%(c) (0.02)% 0.18%(c)
Portfolio turnover
rate.................. 31% 31% 90% 90% 34% 56%
Ratio of operating
expenses to average
net assets without
waivers............... 1.44%(c) 2.19%(c) 1.41% 2.11%(c) 1.28% 1.21%(c)
Net investment
income/(loss) per
share without waivers. $(0.02) $(0.02) $(0.07) $(0.08) $ 0.00 (f) $ 0.00(f)
Average commission
rate(g)............... N/A N/A N/A N/A N/A N/A
</TABLE>
- --------
(a) Fiscal year changed to June 30. Prior to this, the fiscal year end was the
last day of February.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) The Munder Accelerating Growth Fund Class A Shares, Class B Shares and
Class C Shares commenced operations on November 23, 1992, April 25, 1994
and September 26, 1995, respectively.
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
14
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
----------------------------------
YEAR ENDED YEAR ENDED PERIOD ENDED
6/30/96(G) 6/30/96(G) 6/30/96(E,G)
CLASS A CLASS B CLASS C
---------- ---------- ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period....... $ 10.77 $ 10.76 $ 11.67
------- ------- -------
Income from Investment Operations:
Net investment income..................... 0.27 0.18 0.05
Net realized and unrealized gain on
investments.............................. 1.55 1.56 0.67
------- ------- -------
Total from investment operations.......... 1.82 1.74 0.72
------- ------- -------
Less Distributions:
Dividends from net investment income...... (0.24) (0.17) (0.04)
------- ------- -------
Total distributions....................... (0.24) (0.17) (0.04)
------- ------- -------
Net Asset Value, End of Period............. $ 12.35 $ 12.33 $ 12.35
======= ======= =======
Total Return(b)........................... 17.06% 16.24% 6.20%
======= ======= =======
Ratios to Average Net Assets/Supplemental
Data:
Net Assets, End of Period (in thousands).. $ 375 $ 75 $ 3
Ratio of operating expenses to average net
assets................................... 1.15% 1.90% 1.90%(c)
Ratio of net investment income to average
net assets............................... 2.29% 1.54% 1.54%(c)
Portfolio turnover rate................... 197% 197% 197%
Ratio of operating expenses to average net
assets without waivers................... 1.26% 2.01% 2.01%(c)
Net investment income per share without
waivers.................................. $ 0.26 $ 0.17 $ 0.04
Average commission rate(f)................ $0.0586 $0.0586 $0.0586
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) The Munder Balanced Fund Class A Shares, Class B Shares and Class C Shares
commenced operations on April 30, 1993, June 21, 1994 and January 24,
1996, respectively.
(f) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
15
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
---------------------------------------------------------------
PERIOD PERIOD
ENDED ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED
6/30/95(A) 6/30/95(A) 2/28/95(D) 2/28/95(D,E) 2/28/94(E,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(b)........ 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%(c) 1.91%(c) 1.22% 1.85%(c) 1.02%(c)
Ratio of net investment
income to average net
assets................ 2.51%(c) 1.76%(c) 1.89% 1.26%(c) 1.67%(c)
Portfolio turnover
rate.................. 52% 52% 116% 116% 50%
Ratio of operating
expenses to average
net assets without
waivers............... 1.51%(c) 2.26%(c) 1.57% 2.20%(c) 1.27%(c)
Net investment income
per share without
waivers............... $ 0.07 $ 0.05 $ 0.16 $0.05 $ 0.12
Average commission
rate(f)............... N/A N/A N/A N/A N/A
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) The Munder Balanced Fund Class A Shares, Class B Shares and Class C Shares
commenced operations on April 30, 1993, June 21, 1994 and January 24,
1996, respectively.
(f) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
16
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND
----------------------------------
YEAR ENDED YEAR ENDED PERIOD ENDED
6/30/96(H) 6/30/96(H) 6/30/96(D,H)
CLASS A CLASS B CLASS C
---------- ---------- ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period....... $ 11.14 $ 11.13 $ 12.60
------- ------- -------
Income from Investment Operations:
Net investment income..................... 0.32 0.23 0.14
Net realized and unrealized gain on
investments.............................. 1.98 1.99 0.55
------- ------- -------
Total from investment operations.......... 2.30 2.22 0.69
------- ------- -------
Less Distributions:
Dividends from net investment income...... (0.31) (0.24) (0.19)
Distributions from net realized gains..... (0.09) (0.09) (0.09)
------- ------- -------
Total distributions....................... (0.40) (0.33) (0.28)
------- ------- -------
Net Asset Value, End of Period............. $ 13.04 $ 13.02 $ 13.01
======= ======= =======
Total Return(b)........................... 20.90% 20.09% 5.57%
======= ======= =======
Ratios to Average Net Assets/Supplemental
Data:
Net Assets, End of Period (in thousands).. $ 1,025 $ 228 $ 31
Ratio of operating expenses to average net
assets................................... 1.21% 1.96% 1.96%(c)
Ratio of net investment income to average
net assets............................... 2.56% 1.81% 1.81%(c)
Portfolio turnover rate................... 37% 37% 37%
Ratio of operating expenses to average net
assets without waivers................... 1.28% 2.03% 2.03%(c)
Net investment income per share without
waivers.................................. $ 0.31 $ 0.22 $ 0.13
Average commission rate(g)................ $0.0591 $0.0591 $0.0591
</TABLE>
- --------
(a) Fiscal year changed to June 30. Prior to this, the fiscal year end was the
last day of February.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) The Munder Growth & Income Fund Class A Shares, Class B Shares and Class C
Shares commenced operations on August 8, 1994, August 9, 1994, and
December 5, 1995, respectively.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
17
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND
------------------------------------------------------
PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
6/30/95(A) 6/30/95(A) 2/28/95(D,E) 2/28/95(D,E)
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)(f) (0.00)(f)
------ ------ ------ ------
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(b)........ 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%(c) 1.84%(c) 0.53%(c) 1.27%(c)
Ratio of net investment
income to average net
assets................ 3.33%(c) 2.58%(c) 4.72%(c) 3.96%(c)
Portfolio turnover
rate.................. 13% 13% 12% 12%
Ratio of operating
expenses to average
net assets without
waivers............... 1.51%(c) 2.26%(c) 1.53%(c) 2.27%(c)
Net investment income
per share without
waivers............... $ 0.09 $ 0.08 $ 0.18 $ 0.14
Average commission
rate(g)............... N/A N/A N/A N/A
</TABLE>
- --------
(a) Fiscal year changed to June 30. Prior to this, the fiscal year end was the
last day of February.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) The Munder Growth & Income Fund Class A Shares, Class B Shares and Class C
Shares commenced operations on August 8, 1994, August 9, 1994, and
December 5, 1995, respectively.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
18
<PAGE>
<TABLE>
<CAPTION>
INDEX 500 FUND(A)
-----------------------------
YEAR ENDED PERIOD ENDED
6/30/96(E) 6/30/96(E,G)
CLASS A CLASS B
---------- ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $ 13.80 $ 14.76
------- -------
Income from Investment Operations:
Net investment income............................ 0.33 0.20
Net realized and unrealized gain on investments.. 3.09 2.15
------- -------
Total from investment operations................. 3.42 2.35
------- -------
Less Distributions:
Dividends from net investment income............. (0.34) (0.23)
Distributions from net realized gains............ (0.72) (0.72)
------- -------
Total distributions.............................. (1.06) (0.95)
------- -------
Net Asset Value, End of Period.................... $ 16.16 $ 16.16
======= =======
Total Return(c).................................. 25.51% 16.51%
======= =======
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands)......... $21,800 $14,811
Ratio of operating expenses to average net
assets.......................................... 0.36% 0.71%(d)
Ratio of net investment income to average net
assets.......................................... 2.28% 1.93%(d)
Portfolio turnover rate.......................... 8% 8%
Ratio of operating expenses to average net assets
without waivers and/or expenses reimbursed...... 0.54% 0.89%(d)
Net investment income per share without waivers
and/or expenses reimbursed...................... $ 0.30 $ 0.17
Average commission rate(h)....................... $0.0240 $0.0240
</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) Fiscal year end 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
and does not reflect any applicable sales charges.
(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 A Shares and Class B Shares commenced
operations on December 9, 1992 and October 31, 1995, respectively.
(h) Average commission rate paid per share of securities purchased and sold by
the Fund.
19
<PAGE>
<TABLE>
<CAPTION>
INDEX 500 FUND(A)
-----------------------------------------------
PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/95(B) 2/28/95(E,F) 2/28/94 2/28/93(G)
CLASS A CLASS A CLASS A CLASS A
---------- ------------ ------- ----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period...................... $12.39 $12.06 $11.47 $11.61
------ ------ ------ ------
Income from Investment
Operations:
Net investment income....... 0.09 0.29 0.30 0.06
Net realized and unrealized
gain on investments........ 1.46 0.50 0.59 0.20
------ ------ ------ ------
Total from investment
operations................. 1.55 0.79 0.89 0.26
------ ------ ------ ------
Less Distributions:
Dividends from net
investment income.......... (0.14) (0.29) (0.30) (0.07)
Distributions from net
realized gains............. -- (0.17) -- (0.33)
------ ------ ------ ------
Total distributions......... (0.14) (0.46) (0.30) (0.40)
------ ------ ------ ------
Net Asset Value, End of
Period...................... $13.80 $12.39 $12.06 $11.47
====== ====== ====== ======
Total Return(c)............. 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 %(d) 0.50 % 0.31 % 0.25 %(d)
Ratio of net investment
income to average net
assets..................... 2.41 %(d) 2.49 % 2.51 % 2.54 %(d)
Portfolio turnover rate..... 6 % 7 % 1 % 22 %
Ratio of operating expenses
to average net assets
without waivers and/or
expenses reimbursed........ 0.63 %(d) 0.64 % 0.48 % 0.38 %(d)
Net investment income per
share without waivers
and/or expenses reimbursed. $ 0.09 $ 0.28 $ 0.28 $ 0.06
Average commission rate(h).. N/A N/A N/A N/A
</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) Fiscal year end 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
and does not reflect any applicable sales charges.
(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 A Shares and Class B Shares commenced
operations on December 9, 1992 and October 31, 1995, respectively.
(h) Average commission rate paid per share of securities purchased and sold by
the Fund.
20
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
----------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
6/30/96(D) 6/30/96(D) 6/30/96(D,F)
CLASS A CLASS B CLASS C
---------- ---------- ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period....... $ 13.42 $ 13.35 $ 14.13
------- ------- -------
Income from Investment Operations:
Net investment income..................... 0.15 0.05 0.04
Net realized and unrealized gain on
investments.............................. 1.64 1.62 0.95
------- ------- -------
Total from investment operations.......... 1.79 1.67 0.99
------- ------- -------
Less Distributions:
Dividends from net investment income...... (0.12) (0.11) (0.10)
Distributions from net realized gains..... -- -- --
Distributions from capital................ -- -- --
------- ------- -------
Total distributions....................... (0.12) (0.11) (0.10)
------- ------- -------
Net Asset Value, End of Period............. $ 15.09 $ 14.91 $ 15.02
======= ======= =======
Total Return(b)........................... 13.37% 12.53% 7.06%
======= ======= =======
Ratios to Average Net Assets/Supplemental
Data:
Net Assets, End of Period (in thousands).. $ 4,767 $ 957 $ 1,584
Ratio of operating expenses to average net
assets................................... 1.26% 2.01% 2.01%(c)
Ratio of net investment income to average
net assets............................... 1.07% 0.32% 0.32%(c)
Portfolio turnover rate................... 75% 75% 75%
Ratio of operating expenses to average net
assets without waivers................... 1.33% 2.08% 2.08%(c)
Net investment income per share without
waivers.................................. $ 0.14 $ 0.04 $ 0.03
Average commission rate(h)................ $0.0288 $0.0288 $0.0288
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(e) 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 International Equity Fund Class A, Class B and Class C Shares
commenced operations on November 30, 1992, March 9, 1994, and September
29, 1995, respectively.
(g) Amount represents less than $0.01 per share.
(h) Average commission rate paid per share of securities purchased and sold by
the Fund.
21
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
-------------------------------------------------------------------------
PERIOD PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/95(A) 6/30/95(A) 2/28/95(D,E) 2/28/95(D,E,F) 2/28/94 2/28/93(F)
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 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)(g) -- (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(b)........ 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%(c) 1.96%(c) 1.18% 1.88%(c) 1.13% 1.03%(c)
Ratio of net investment
income to average net
assets................ 2.57%(c) 1.82%(c) 1.31% 0.61%(c) 0.80% 0.42%(c)
Portfolio turnover
rate.................. 14% 14% 20% 20% 15% 1%
Ratio of operating
expenses to average
net assets without
waivers............... 1.46%(c) 2.21%(c) 1.43% 2.13%(c) 1.38% 1.28%(c)
Net investment income
per share without
waivers............... $ 0.11 $ 0.07 $ 0.14 $ 0.05 $ 0.13 $ 0.01
Average commission
rate(h)............... N/A N/A N/A N/A N/A N/A
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(e) 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 International Equity Fund Class A, Class B and Class C Shares
commenced operations on November 30, 1992, March 9, 1994, and September
29, 1995, respectively.
(g) Amount represents less than $0.01 per share.
(h) Average commission rate paid per share of securities purchased and sold by
the Fund.
22
<PAGE>
<TABLE>
<CAPTION>
MID-CAP GROWTH FUND
--------------------------------------------
PERIOD PERIOD PERIOD
ENDED ENDED ENDED
6/30/96(A,E) 6/30/96(A,E) 6/30/96(A,E)
CLASS A CLASS B CLASS C
------------ ------------ ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of
Period........................... $ 10.55 $ 10.57 $ 10.40
------- ------- -------
Income from Investment Operations:
Net investment loss.............. (0.04) (0.08) (0.09)
Net realized and unrealized gain
on investments.................. 1.05 1.04 1.20
------- ------- -------
Total from investment operations. 1.01 0.96 1.11
------- ------- -------
Less Distributions:
Dividends from net investment
income.......................... -- -- --
------- ------- -------
Total distributions.............. -- -- --
------- ------- -------
Net Asset Value, End of Period.... $ 11.56 $ 11.53 $ 11.51
------- ------- -------
Total Return(b).................. 9.57% 9.08% 10.67%
======= ======= =======
Ratios to Average Net
Assets/Supplemental Data:
Net Assets, End of Period (in
000's).......................... $ 202 $ 53 $ 53
Ratio of operating expenses to
average net assets.............. 1.20%(c) 1.95%(c) 1.95%(c)
Ratio of net investment loss to
average net assets.............. (0.53)%(c) (1.28)%(c) (1.28)%(c)
Portfolio turnover rate.......... 247% 247% 247%
Ratio of operating expenses to
average net assets without
waivers and expenses reimbursed. 1.38%(c) 2.13%(c) 2.13%(c)
Net investment loss per share
without waivers and expenses
reimbursed...................... $ (0.05) $ (0.09) $ (0.10)
Average commission rate(d)....... $0.0600 $0.0600 $0.0600
</TABLE>
- --------
(a) The Munder Mid-Cap Growth Fund Class A Shares, Class B Shares and Class C
Shares commenced operations on December 22, 1995, January 26, 1996 and
November 9, 1995, respectively.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
23
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND
---------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
6/30/96(J) 6/30/96(J) 6/30/96(J) 6/30/95(A,B,C) 6/30/95(A,B,C) 6/30/95(A,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.... $ 12.02 $ 11.85 $ 11.86 $10.38 $ 10.27 $10.28
------- ------- ------- ------ ------- ------
Income from Investment
Operations:
Net investment
income/(loss)......... 0.06 (0.04) (0.04) 0.01 (0.03) (0.02)
Net realized and
unrealized gain on
investments........... 3.20 3.15 3.15 1.63 1.61 1.60
------- ------- ------- ------ ------- ------
Total from investment
operations............ 3.26 3.11 3.11 1.64 1.58 1.58
------- ------- ------- ------ ------- ------
Less Distributions:
Dividends from net
investment income..... (0.05) -- -- -- -- --
Distributions from net
realized gains........ (0.40) (0.40) (0.40) -- -- --
------- ------- ------- ------ ------- ------
Total distributions.... (0.45) (0.40) (0.40) -- -- --
------- ------- ------- ------ ------- ------
Net Asset Value, End of
Period................. $ 14.83 $ 14.56 $ 14.57 $12.02 $ 11.85 $11.86
======= ======= ======= ====== ======= ======
Total Return(d)........ 27.56% 26.66% 26.64% 15.80% 15.38% 15.37%
======= ======= ======= ====== ======= ======
Ratios to Average Net
Assets/Supplemental
Data:
Net Assets, End of
Period (in thousands). $ 9,544 $66,630 $ 5,605 $9,409 $54,349 $3,207
Ratio of operating
expenses to average
net assets............ 1.26% 2.01% 2.01% 1.65%(e) 2.40%(e) 2.40%(e)
Ratio of net investment
income/(loss) to
average net assets.... 0.44% (0.31)% (0.31)% 0.28%(e) (0.47)%(e) (0.47)%(e)
Portfolio turnover
rate.................. 54% 54% 54% 27% 27% 27%
Ratio of operating
expenses to average
net assets without
waivers............... 1.51% 2.26% 2.26% 1.97%(e) 2.72%(e) 2.72%(e)
Net investment
income/(loss) per
share without
waivers(f)............ $ 0.03 $ (0.07) $ (0.07) $(0.00)(g) $ (0.05) $(0.04)
Average commission
rate(i)............... $0.0592 $0.0592 $0.0592 N/A N/A N/A
</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 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.
(i) Average commission rate paid per share of securities purchased and sold by
the Fund.
(j) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
24
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND (CONTINUED)
------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
12/31/94 12/31/94 12/31/94 12/31/93(H) 12/31/93(H) 12/31/93(H)
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..... $10.68 $ 10.65 $10.66 $10.16 $ 10.00 $10.19
------ ------- ------ ------ ------- ------
Income from Investment
Operations:
Net investment
income/(loss).......... 0.01 (0.07) (0.07) (0.01) (0.04) (0.01)
Net realized and
unrealized loss on
investments............ (0.27) (0.27) (0.27) 0.53 0.69 0.48
------ ------- ------ ------ ------- ------
Total from investment
operations............. (0.26) (0.34) (0.34) 0.52 0.65 0.47
------ ------- ------ ------ ------- ------
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 $10.68 $ 10.65 $10.66
====== ======= ====== ====== ======= ======
Total Return(d)......... (2.45)% (3.21)% (3.21)% 5.12% 6.50% 4.61%
====== ======= ====== ====== ======= ======
Ratios to Average Net
Assets/Supplemental
Data:
Net Assets, End of
Period (in thousands).. $2,829 $46,549 $2,071 $2,104 $46,860 $ 249
Ratio of operating
expenses to average net
assets................. 1.75% 2.50% 2.50% 1.75%(e) 2.50%(e) 2.50%(e)
Ratio of net investment
income/(loss) to
average net assets..... 0.04% (0.71)% (0.65)% (0.18)%(e) (0.69)%(e) (0.99)%(e)
Portfolio turnover rate. 48% 48% 48% 238% 238% 238%
Ratio of operating
expenses to average net
assets without waivers. 3.05% 2.89% 4.57% 3.32%(e) 2.94%(e) 15.47%(e)
Net investment loss per
share without
waivers(f)............. $(0.32) $ (0.11) $(0.29) $(0.10) $ (0.07) $(0.14)
Average Commission
Rate(i)................ N/A N/A N/A N/A N/A N/A
</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 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.
(i) Average commission rate paid per share of securities purchased and sold by
the Fund.
(j) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
25
<PAGE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY INVESTMENT FUND
---------------------------------------------------------------
YEAR ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
6/30/96(F) 6/30/96(F) 6/30/96(A,F) 6/30/95(A,B) 6/30/95(A,B)
CLASS A CLASS B CLASS C CLASS A CLASS B
---------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 10.09 $ 10.09 $ 10.76 $10.00 $10.00
------- ------- ------- ------ ------
Income from Investment
Operations:
Net investment income.. 0.45 0.38 0.18 0.36 0.30
Net realized and
unrealized gain on
investments........... 1.12 1.11 0.47 0.07 0.07
------- ------- ------- ------ ------
Total from investment
operations............ 1.57 1.49 0.65 0.43 0.37
------- ------- ------- ------ ------
Less Distributions:
Dividends from net
investment income..... (0.44) (0.36) (0.16) (0.34) (0.28)
------- ------- ------- ------ ------
Total distributions.... (0.44) (0.36) (0.16) (0.34) (0.28)
------- ------- ------- ------ ------
Net Asset Value, End of
Period................. $ 11.22 $ 11.22 $ 11.25 $10.09 $10.09
======= ======= ======= ====== ======
Total Return(c)........ 15.92% 15.05% 6.08% 4.45% 3.87%
======= ======= ======= ====== ======
Ratios to Average Net
Assets/Supplemental
Data:
Net Assets, End of
Period (in thousands). $ 267 $ 1,707 $ 4 $ 223 $1,496
Ratio of operating
expenses to average
net assets............ 1.25% 2.00% 2.00%(d) 1.50%(d) 2.25%(d)
Ratio of net investment
income to average net
assets................ 4.25% 3.50% 3.50%(d) 5.03%(d) 4.28%(d)
Portfolio turnover
rate.................. 17% 17% 17% 3% 3%
Ratio of operating
expenses to average
net assets without
waivers and/or
expenses reimbursed... 1.52% 2.27% 2.27%(d) 7.23%(d) 7.98%(d)
Net investment
income/(loss) per
share without waivers
and/or expenses
reimbursed............ $ 0.42 $ 0.35 $ 0.15 $(0.05) $(0.10)
Average commission
rate(e)............... $0.0600 $0.0600 $0.0600 N/A N/A
</TABLE>
- --------
(a) The Munder Real Estate Equity Investment Fund Class A Shares, Class B
Shares and Class C Shares commenced operations on September 30, 1994,
October 3, 1994 and January 5, 1996, respectively.
(b) 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
and does not reflect any applicable sales charges.
(d) Annualized.
(e) Average commission rate paid per share of securities purchased and sold by
the Fund.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
26
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND
------------------------------------
YEAR ENDED YEAR ENDED PERIOD ENDED
6/30/96(G) 6/30/96(G) 6/30/96(E,G)
CLASS A CLASS B CLASS C
---------- ---------- ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period...... $ 15.28 $ 15.15 $ 17.05
------- ------- -------
Income from Investment Operations:
Net investment loss...................... (0.12) (0.26) (0.21)
Net realized and unrealized gain on
investments............................. 7.16 7.09 5.33
------- ------- -------
Total from investment operations......... 7.04 6.83 5.12
------- ------- -------
Less Distributions:
Dividends from net investment income..... -- -- --
Distributions from net realized gains.... (1.24) (1.24) (1.24)
------- ------- -------
Total distributions...................... (1.24) (1.24) (1.24)
------- ------- -------
Net Asset Value, End of Period............ $ 21.08 $ 20.74 $ 20.93
======= ======= =======
Total Return(b).......................... 48.28% 47.26% 31.97%
======= ======= =======
Ratios to Average Net Assets/Supplemental
Data:
Net Assets, End of Period (in thousands). $ 4,832 $ 990 $ 76
Ratio of operating expenses to average
net assets.............................. 1.21% 1.96% 1.96%(c)
Ratio of net investment loss to average
net assets.............................. (0.66)% (1.41)% (1.41)%(c)
Portfolio turnover rate.................. 98% 98% 98%
Ratio of operating expenses to average
net assets without waivers.............. 1.28% 2.03% 2.03%(c)
Net investment loss per share without
waivers................................. $ (0.13) $ (0.27) $ (0.22)
Average commission rate(f)............... $0.0551 $0.0551 $0.0551
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) The Munder Small Company Growth Fund Class A Shares, Class B Shares and
Class C Shares commenced operations on November 23, 1992, April 28, 1994
and September 26, 1995, respectively.
(f) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
27
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND
--------------------------------------------------------------------------
PERIOD PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/95(A) 6/30/95(A) 2/28/95(D) 2/28/95(D,E) 2/28/94 2/28/93(E)
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS A
---------- ---------- ---------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $13.89 $13.81 $14.37 $13.54 $12.72 $12.32
------ ------ ------ ------ ------ ------
Income from Investment
Operations:
Net investment loss..... (0.02) (0.05) (0.07) (0.05) (0.05) (0.01)
Net realized and
unrealized gain/(loss)
on investments......... 1.41 1.39 (0.39) 0.34 1.97 0.41
------ ------ ------ ------ ------ ------
Total from investment
operations............. 1.39 1.34 (0.46) 0.29 1.92 0.40
------ ------ ------ ------ ------ ------
Less Distributions:
Distributions from net
realized gains......... -- -- (0.02) (0.02) (0.27) --
------ ------ ------ ------ ------ ------
Total distributions..... -- -- (0.02) (0.02) (0.27) --
------ ------ ------ ------ ------ ------
Net Asset Value, End of
Period.................. $15.28 $15.15 $13.89 $13.81 $14.37 $12.72
====== ====== ====== ====== ====== ======
Total Return(b)......... 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%(c) 1.96%(c) 1.23% 1.85%(c) 1.01% 0.96%(c)
Ratio of net investment
loss to average net
assets................. (0.41)%(c) (1.16)%(c) (0.40)% (1.02)%(c) (0.36)% (0.29)%(c)
Portfolio turnover rate. 39% 39% 45% 45% 47% 46%
Ratio of operating
expenses to average net
assets without waivers. 1.46%(c) 2.21%(c) 1.48% 2.10%(c) 1.26% 1.21%(c)
Net investment loss per
share without waivers.. $(0.03) $(0.06) $(0.11) $(0.06) $(0.08) $(0.02)
Average commission
rate(f)................ N/A N/A N/A N/A N/A N/A
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) The Munder Small Company Growth Fund Class A Shares, Class B Shares and
Class C Shares commenced operations on November 23, 1992, April 28, 1994
and September 26, 1995, respectively.
(f) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
28
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND
-------------------------------------------
PERIOD ENDED PERIOD ENDED PERIOD ENDED
6/30/96(D,E) 6/30/96(D,E) 6/30/96(D,E)
CLASS A CLASS B CLASS C
------------ ------------ ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of
Period............................ $ 10.38 $ 10.41 $ 11.35
------- ------- -------
Income from Investment Operations:
Net investment income/(loss)...... 0.05 (0.01) (0.01)
Net realized and unrealized gain
on investments................... 1.19 1.16 0.23
------- ------- -------
Total from investment operations.. 1.24 1.15 0.22
------- ------- -------
Less Distributions:
Dividends from net investment
income........................... (0.05) (0.01) (0.03)
------- ------- -------
Total distributions............... (0.05) (0.01) (0.03)
------- ------- -------
Net Asset Value, End of Period..... $ 11.57 $ 11.55 $ 11.54
======= ======= =======
Total Return(a)................... 11.95% 11.09% 1.90%
======= ======= =======
Ratios to Average Net
Assets/Supplemental Data:
Net Assets, End of Period (in
000's)........................... $ 424 $ 103 $ 348
Ratio of operating expenses to
average net assets............... 1.20%(c) 1.95%(c) 1.95(c)
Ratio of net investment
income/(loss) to average net
assets........................... 0.64%(c) (0.11)%(c) (0.11)%(c)
Portfolio turnover rate........... 223% 223% 223%
Ratio of operating expenses to
average net assets without
waivers and/or expenses
reimbursed....................... 1.30%(c) 2.05%(c) 2.05%(c)
Net investment income/(loss) per
share without waivers and/or
expenses reimbursed.............. $ 0.04 $ (0.02) $ (0.02)
Average commission rate(b)........ $0.0602 $0.0602 $0.0602
</TABLE>
- --------
(a) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(b) Average commission rate paid per share of securities purchased and sold by
the Fund.
(c) Annualized.
(d) The Munder Value Fund Class A Shares, Class B Shares and Class C Shares
commenced operations on September 14, 1995, September 19, 1995 and
February 9, 1996, respectively.
(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.
29
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
This Prospectus describes the following Funds: the Accelerating Growth Fund,
Balanced Fund, Growth & Income Fund, Index 500 Fund, International Equity Fund
and Small Company Growth Fund offered by Munder; and the Equity Selection
Fund, Micro-Cap Equity Fund, Mid-Cap Growth Fund, Multi-Season Growth Fund,
Real Estate Equity Investment Fund, Small-Cap Value Fund and Value 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. Unless otherwise specified in this Prospectus or the
Statement of Additional Information, up to 35% of a Fund's net assets may be
invested in the instruments described under "Portfolio Instruments and
Practices and Associated Risk Factors."
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 temporary 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.
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.
30
<PAGE>
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.
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 $3 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 temporary 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.
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 Standard & Poor's Ratings Service, a
division of McGraw-Hill Companies, Inc. ("S&P") or Moody's Investor Services,
Inc. ("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 temporary 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.
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
31
<PAGE>
December 31, 1995, the S&P 500 represented approximately 69% 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.
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", "S&P", "S&P 500", "Standard & Poor's 500", and "500"
are trademarks of McGraw-Hill, Inc. and have been licensed for use by the
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 temporary 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.
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
32
<PAGE>
securities. EDRs are receipts issued by a European financial institution
evidencing a similar arrangement. The Fund will emphasize companies with a
market capitalization of at least $100 million. In selecting issuers, the
Advisor may consider, among other factors, the location of the issuer, its
competitive stature, the issuer's past record and future prospects for growth,
and the marketability of its securities.
On a continuing basis, but at least quarterly, the Advisor creates a list of
securities eligible for purchase by the Fund. The Advisor then calculates the
adjusted market capitalization of all the equity securities, ADRs and EDRs
considered to be eligible for purchase. Market capitalization for equity
securities is calculated by multiplying the market price of the security by
the number of shares outstanding, adjusted for control blocks. A control block
is defined as a block of securities owned by another corporation. The primary
sources of information regarding the existence and size of control blocks are
the S&P Stock reports and the Morgan Stanley Capital International
Perspective. Control blocks will be updated each time the eligible list of
securities is created or a company is added to the eligible universe.
Following calculation of the adjusted market capitalization, the list of
eligible securities is then sorted in descending order of adjusted market
capitalization. Securities with market capitalizations greater than $100
million are considered for purchase by the Fund. On a regular basis,
securities will be added to the eligible universe as new ADR and EDR
facilities and exchange listings occur, subject to meeting other eligibility
requirements. Each time the list of eligible securities is created, any
security held by the Fund that does not appear on the updated eligibility list
will be sold as soon as practicable.
Equity securities on the eligible securities list are continuously evaluated
on the basis of total return in relation to their respective local, regional
and global markets. From the list of eligible securities a portfolio is
constructed that is composed of two major sections. The first section is
designed to provide broad coverage of international markets. Securities
representation generally covers all major markets and industry sectors. The
second section is designed to complement the first section by increasing
exposure to securities that are expected to outperform their markets and
industry sectors on a relative basis. The blending of the two sections is
designed to provide an international portfolio that provides a broad market
exposure to stock markets and has the capability to enhance the value of the
portfolio by adjusting allocations to stocks that are expected to outperform
their respective markets on a relative basis.
The Fund will increase its exposure to the second section when the Advisor
identifies securities that are expected to outperform their markets and the
Fund will conversely increase its exposure to the first section when the
Advisor believes a broader market exposure is required. When the Advisor
believes broader market exposure will benefit the Fund, the Fund may allocate
up to 80% of its assets for investment in the first section securities. When
the Advisor identifies strong potential for specific securities to outperform
their relative benchmarks, the Fund may invest up to 50% of its total assets
in the second section securities.
The Advisor will determine the second section 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 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. It is expected that these
securities will be traded in the principal trading market in such countries.
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
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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 temporary defensive purposes.
See "Portfolio Instruments and Practices and Associated Risk Factors--Foreign
Securities."
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 micro-cap companies that generally have a market capitalization
of $200 million or less at the time of purchase. Such issuers have market
capitalizations that are less than the capitalization of companies which
predominate the major market indices, such as the S&P 500.
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.
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 temporary 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
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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.
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.
MULTI-SEASON GROWTH FUND
The investment objective of the Multi-Season Growth Fund is to provide
shareholders with long-term capital appreciation. The Fund seeks to achieve
this objective by investing primarily in a diversified portfolio of equity
securities of companies that have demonstrated superior long-term earnings
growth, financial stability, attractive valuation and relative price momentum.
Income is not a primary consideration in the selection of investments. This
style which incorporates both growth investing and value constraints has been
nationally recognized as GARP (Growth at a Reasonable Price) and seeks to
produce attractive returns during various market environments.
The Advisor believes that superior investment returns are derived from
securities of financially stable companies that reward shareholders with
superior earnings growth, are attractively priced and enjoy relative price
momentum. Specifically, the Advisor will examine the earnings growth
characteristics of approximately 5,500 companies for each of the last five
years to determine earnings strength, consistency and momentum. Companies
which have demonstrated superior earnings growth will be further reviewed for
financial stability. Corporate balance sheets will be scrutinized to select
those companies which reinvest a significant portion of profits, demonstrate a
high return on equity and carry a relatively low debt load. Companies that
meet these earnings growth and financial stability criteria are further judged
for their value relative to these criteria and the market. Historically, the
median valuation of the portfolios managed by the Advisor has been no more
than a moderate premium to that of the S&P 500. Once determined to be
attractive values, those securities exhibiting the strongest relative price
momentum to the S&P 500 normally will be chosen by the Advisor for the Fund.
Within these parameters, the Advisor typically will establish equity positions
in approximately 50 to 100 companies. Equity securities generally will be sold
from the Fund's portfolio when they consistently fail to achieve any two or
more of the four criteria stated above.
The Fund invests substantially all, and at least 65%, of its assets in
equity securities. Equity securities include common and preferred stocks and
securities convertible into or exchangeable for common stocks, such as
convertible preferred stocks, convertible debentures or warrants. No more than
25% of the assets of the Fund will be invested in one industry group. In
addition, the Fund will not own more than 10% of the outstanding voting
securities of a single issuer. The Fund may also invest up to 20% of the value
of its total assets in equity securities of foreign issuers, including
companies domiciled in developing countries.
The Fund may also invest in short-term money market instruments. Under
normal market conditions, short-term money market instruments could comprise
up to 35% of the Fund's total assets. The Fund could invest a higher
percentage of its assets in money market instruments for temporary defensive
purposes.
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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."
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 or BBB by
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.
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 at least 65% of its total assets in equity
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securities of small-cap companies that generally have a market capitalization
below $750 million at the time of purchase. Such issuers have market
capitalizations that are less than the capitalization of companies which
predominate the major market indices, such as the S&P 500.
The Advisor will generally favor companies that it believes 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.
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 temporary 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.
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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
below $750 million at the time of purchase. In managing the Fund, the Advisor
seeks smaller companies with above-average growth prospects. Factors
considered in selecting such issuers include participation in a fast growing
industry, a strategic niche position in a specialized market, adequate
capitalization and fundamental value.
The Fund has been designed to provide investors with potentially greater
long-term rewards than those provided by an investment in a fund that seeks
capital appreciation from equity securities of larger, more established
companies. Since small capitalization companies are generally not as well-
known to investors and have less of an investor following than larger
companies, they may provide opportunities for greater investment gains as a
result of inefficiencies in the marketplace.
Small capitalization companies typically are subject to a greater degree of
change in earnings and business prospects than larger, more established
companies. In addition, securities of small capitalization companies are
traded in lower volume than those issued by larger companies and may be more
volatile. As a result, the Fund may be subject to greater price volatility
than a fund consisting of larger capitalization stocks. By maintaining a
broadly diversified portfolio, the Advisor will attempt to reduce this
volatility.
Under normal market conditions, at least 65% of the Fund's total assets will
be invested in small company equity securities. In addition to investing in
equity securities, the Fund is also authorized to invest in high quality
short-term fixed income securities as cash reserves or for temporary 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.
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.
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.
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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 "Fund Investments--Lower Rated Debt
Securities" in the Statement of Additional Information.
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 Micro-
Cap Equity Fund, Small-Cap Value Fund and Small Company Growth 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 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.
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Fixed Income Securities. Generally, the market value of fixed-income
securities in a 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.
The Equity Selection Fund, Micro-Cap Equity Fund, Mid-Cap Growth Fund,
Multi-Season Growth Fund, Small-Cap Value Fund and Value Fund, each may invest
up to 20% of its total assets, and each other Fund (except the International
Equity Fund) may invest up to 10% of its total assets, in equity securities of
foreign issuers, including companies domiciled in developing countries. Under
normal market conditions, the International Equity Fund will invest at least
65% of its total assets in the equity securities of foreign issuers and such
issuers will be located in at least three foreign 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.
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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 Mid-Cap Growth Fund and the Multi-Season 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 foreign 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. Each of the Mid-Cap Growth Fund and Value
Fund will not enter into forward foreign currency exchange contracts if as a
result, the Fund will have more than 20% of its total assets committed to
consummation of such forward foreign currency exchange contracts.
Futures Contracts and Options. Each Fund may invest in futures contracts and
options on futures contracts for hedging purposes or to maintain liquidity.
However, a Fund may not purchase or sell a futures contract unless immediately
after any such transaction the sum of the aggregate amount of margin deposits
on its existing futures positions and the amount of premiums paid for related
options is 5% or less of its total assets. The Multi-Season Growth Fund does
not presently anticipate engaging in transactions involving options on
securities, or stock indices or options on stock index futures contracts,
although it has the authority to do so. The Real Estate Equity Investment Fund
may to a limited extent, enter into financial futures contracts including
futures contracts based on securities indices, purchase and write put and call
options and engage in related closing transactions to the extent available to
hedge all or a portion of its portfolio or as an efficient means of regulating
its exposure to the equity markets. In addition, the Real Estate Equity
Investment Fund will not hedge more than 30% of its total assets and will not
write covered call options against more than 15% of the value of the equity
securities held in the portfolio.
Futures contracts obligate a Fund, at maturity, to take or make delivery of
certain securities or the cash value of a bond or securities index. When
interest rates are rising, futures contracts can offset a decline in value of
the Fund's portfolio securities. When rates are falling, these contracts can
secure higher yields for securities the Fund intends to purchase.
The Funds may purchase and sell call and put options on futures contracts
traded on an exchange or board of trade. When a Fund purchases an option on a
futures contract, it has the right to assume a position as a purchaser or
seller of a futures contract at a specified exercise price at any time during
the option period. When the Fund sells an option on a futures contract, it
becomes obligated to purchase or sell a futures contract if the option is
exercised. In anticipation of a market advance, a Fund may purchase call
options on futures contracts as a substitute for the purchase of futures
contracts to hedge against a possible increase in the price of securities
which the Fund intends to purchase. Similarly, if the value of a Fund's
portfolio securities is expected to decline, the Fund might purchase put
options or sell call options on futures contracts rather than sell futures
contracts. In connection with a Fund's position in a futures contract or
option thereon, the Fund will create a segregated account of liquid assets or
will otherwise cover its position in accordance with applicable requirements
of the SEC.
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<PAGE>
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.
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, except with respect to repurchase agreements secured by U.S.
government securities.
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
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<PAGE>
the repurchase price. A Fund would pay interest on amounts obtained pursuant
to a reverse repurchase agreement.
Investment Company Securities. In connection with the management of their
daily cash positions, the Funds may invest in securities issued by other
investment companies which invest in short-term debt securities and which seek
to maintain a $1.00 net asset value per share (i.e., "money market funds").
The International Equity Fund may purchase shares of investment companies
investing primarily in foreign securities, including so called "country
funds." Country funds have portfolios consisting exclusively of securities of
issuers located in one or more foreign countries. The Index 500 Fund may also
invest in SPDRs and shares of other investment companies that are structured
to seek a similar correlation to the performance of the S&P 500. Securities of
other investment companies will be acquired within limits prescribed by the
1940 Act. These limitations, among other matters, restrict investments in
securities of other investment companies to no more than 10% of the value of a
Fund's total assets, with no more than 5% invested in the securities of any
one investment company. As a shareholder of another investment company, a
Fund, other than the Real Estate Equity Investment Fund, would bear, along
with other shareholders, its pro rata portion of the other investment
company's expenses, including advisory fees. These expenses would be in
addition to the expenses each Fund bears directly in connection with its own
operations.
Liquidity Management. Pending investment, to meet anticipated redemption
requests, or as a temporary defensive measure if the Advisor determines that
market conditions warrant, the Funds may also invest without limitation in
short-term U.S. Government obligations, high quality money market instruments,
variable and floating rate instruments and repurchase agreements as described
above. The Balanced Fund may also invest in these securities in furtherance of
its investment objective.
High quality money market instruments may include obligations issued by
Canadian corporations and Canadian counterparts of U.S. corporations and
Europaper, which is U.S. dollar-denominated commercial paper of a foreign
issuer. The Funds may also purchase U.S. dollar-denominated bank obligations,
such as certificates of deposit, bankers' acceptances and interest-bearing
savings and time deposits, issued by U.S. or foreign banks or savings
institutions having total assets at the time of purchase in excess of $1
billion. Short-term obligations purchased by a Fund will either have short-
term debt ratings at the time of purchase in the top two categories by one or
more unaffiliated nationally recognized statistical rating organizations
("NRSROs") or be issued by issuers with such ratings. Unrated instruments
purchased by a Fund will be of comparable quality as determined by the
Advisor.
Illiquid Securities. Each Fund may invest up to 15% of the total value of
its net assets (determined at time of acquisition) in securities which are
illiquid. Illiquid securities would generally include repurchase agreements
and time deposits with notice/termination dates in excess of seven days, and
certain securities which are subject to trading restrictions because they are
not registered under the Securities Act of 1933, as amended (the "Act"). If,
after the time of acquisition, events cause this limit to be exceeded, a Fund
will take steps to reduce the aggregate amount of illiquid securities as soon
as reasonably practicable in accordance with the policies of the SEC.
Each of the Funds may invest in commercial obligations issued in reliance on
the "private placement" exemption from registration afforded by Section 4(2)
of the Securities Act of 1933, as amended ("Section 4(2) paper"). Each Fund
may also purchase securities that are not registered under the Securities Act
of 1933, as amended, but which can be sold to qualified institutional buyers
in accordance with Rule 144A under that Act ("Rule 144A securities"). Section
4(2) paper is restricted as to disposition under the Federal securities laws,
and generally is sold to institutional investors which agree that they are
purchasing the paper for investment and not with a view to public
distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) paper normally is resold to other institutional investors through
or with the assistance of the issuer or investment dealers which make a market
in the Section 4(2) paper, thus providing liquidity. Rule 144A securities
generally must be sold only to other qualified institutional buyers. If a
particular investment in Section 4(2) paper or Rule 144A securities is not
determined to be liquid, that investment will be included within a Fund's
limitation on investment in illiquid securities. The Advisor will determine
the liquidity of such investments pursuant to
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<PAGE>
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 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 Balanced Fund will purchase only those securities which are considered
to be investment grade or better (within the four highest rating categories of
S&P or Moody's or, if unrated, of comparable quality). Obligations rated "Baa"
by Moody's lack outstanding investment characteristics and have speculative
characteristics. Adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of obligations rated "BBB" by S&P
to pay interest and repay principal than in the case of higher grade
obligations. After purchase by the Fund, a security may cease to be rated or
its rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require the Fund to sell such security. However, the
Advisor will reassess promptly whether the security represents minimal credit
risk and determine if continuing to hold the security is in the best interests
of the Fund. To the extent that the ratings given by Moody's or S&P or another
nationally recognized statistical ratings organization for securities may
change as a result of changes in the ratings 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 objective and policies of the Fund. Descriptions of each rating
category are included as Appendix A to the Statement of Additional
Information.
In addition, debt securities with longer maturities, which tend to produce
higher yields, are subject to potentially greater capital appreciation and
depreciation than obligations with shorter maturities. The market value of the
Balanced Fund's investments will change in response to changes in interest
rates and the relative financial strength of each issuer. During periods of
falling interest rates, the values of long-term fixed income securities
generally rise. Conversely, during periods of rising interest rates the values
of such securities generally decline. Changes in the financial strength of an
issuer or changes in the ratings of any particular security may also affect
the value of these investments. Fluctuations in the market value of fixed
income securities subsequent to their acquisitions will not affect cash income
from such securities but will be reflected in the Balanced Fund's net asset
value.
The Balanced Fund may also purchase zero-coupon bonds (i.e., discount debt
obligations that do not make periodic interest payments). Zero-coupon bonds
are subject to greater market fluctuations from changing interest rates than
debt obligations of comparable maturities which make current distributions of
interest.
Asset-Backed Securities. The Balanced Fund may purchase investment grade
asset-backed securities (i.e., securities backed by mortgages, installment
sales contracts, credit card receivables or other assets). The average life of
asset-backed securities varies with the maturities of the underlying
instruments which, in the case of mortgages, have maximum maturities of forty
years. The average life of a mortgage-backed instrument, in particular, is
likely to be substantially less than the original maturity of the mortgage
pools underlying the securities as the result of scheduled principal payments
and mortgage prepayments. The rate of such mortgage prepayments, and hence the
life of the certificates, will be primarily a function of current market rates
and current conditions in the relevant housing markets. The relationship
between mortgage prepayment and interest rates may give some high-yielding
mortgage-related securities less potential for growth in value than
conventional bonds with comparable maturities. In addition, in periods of
falling interest rates, the rate of mortgage prepayment tends to increase.
During such periods, the reinvestment of prepayment proceeds by the Balanced
Fund will generally be at lower rates than the rates that were carried by the
obligations that have been prepaid.
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<PAGE>
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. Leveraging by means of borrowing may exaggerate the effect of any
increase or decrease in the value of portfolio securities on the Fund's net
asset value. In addition, borrowed funds are subject to interest costs that
may offset or exceed the return earned on the borrowed funds. However, a Fund
will not purchase portfolio securities while borrowings exceed 5% of a Fund's
total assets. For more detailed information with respect to the risks
associated with borrowing, see the heading "Borrowing" in the Statement of
Additional Information.
Lending of Portfolio Securities. To enhance the return of each of their
respective portfolios, each Fund may lend securities in their portfolios
representing up to 25% of their total assets, taken at market value, to
securities firms and financial institutions, provided that each loan is
secured continuously by collateral in the form of cash, high quality money
market instruments or short-term U.S. Government securities adjusted daily to
have a market value at least equal to the current market value of the
securities loaned. The risk in lending portfolio securities, as
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<PAGE>
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 Equity Selection Fund, Micro-Cap Equity Fund and Small-Cap Value Fund.,
Industry Concentration. Because the Real Estate Equity Investment Fund
invests primarily in the real estate industry, it could conceivably own real
estate directly as a result of a default on debt securities it owns. The Fund,
therefore, may be subject to certain risks associated with the direct
ownership, as well as indirect ownership, of real estate. These risks include:
declines in the value of real estate, risks related to general and local
economic conditions, overbuilding and increased competition, increases in
property taxes and operating expenses, changes in zoning laws, casualty or
condemnation losses, variations in rental income, changes in neighborhood
values, the appeal of properties to tenants and increase in interest rates. If
the Fund has rental income or income from the disposition of real property,
the receipt of such income may adversely affect its ability to retain its tax
status as a regulated investment company. See "Tax Status" in the Statement of
Additional Information. Because the Fund may invest more than 25% of its total
assets in any one sector of the real estate or real estate related industries,
it may be subject to greater risk and market fluctuations than a portfolio
representing a broader range of industries.
In addition, equity real estate investment trusts may be affected by changes
in the value of the underlying property owned by the trust, while mortgage
real estate investment trusts may be affected by the quality of credit
extended. Equity and mortgage real estate investment trusts are dependent upon
management skill, may not be diversified and are subject to the risk of
financing projects. Such trusts are also subject to heavy cash flow
dependency, defaults by borrowers, self liquidation and the possibility of
failing to qualify for the beneficial tax treatment available to real estate
investment trusts under the Internal Revenue Code of 1986, as amended (the
"Code") and to maintain exemption from the 1940 Act. Real estate investment
trusts may be subject to interest rate risks similar to fixed income
securities. In general, fixed income security prices vary inversely with
interest rates (when interest rates rise, prices fall; and, conversely, when
interest rates fall, prices rise). Additionally, while the Fund intends to
primarily purchase publicly traded real estate investment trusts, some real
estate investment trusts may be subject to lower market liquidity due to their
small size. This may impact the Fund's ability to sell the securities, or the
price at which such securities may be sold. Changes in prevailing interest
rates may adversely affect the value of the debt securities in which the Fund
will invest. By investing in real estate investment trusts indirectly through
the Fund, a shareholder will bear not only his or her proportionate share of
expenses of the Fund, but also, indirectly, similar expenses of the real
estate investment trusts.
INVESTMENT LIMITATIONS
Except for the Multi-Season Growth and Real Estate Equity Investment Funds'
investment objectives, the investment objectives and policies stated above may
be changed by the Company's Board of Trustees or Munder's Board of Directors,
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 advance notice is not
required. No assurance can be given that a Fund will achieve its investment
objective.
Each Fund has also adopted certain fundamental investment limitations that
may be changed only with the approval of a "majority of the outstanding shares
of a Fund" (as defined in the Statement of Additional Information). These
restrictions are set forth in the Statement of Additional Information.
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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.
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 AVERAGE DAILY NET
SALES CHARGE ASSETS) OTHER INFORMATION
------------ ------------------------- -----------------
<S> <C> <C> <C>
Class A Maximum initial sales Service fee of 0.25% Initial sales charge
charge of (0.10% for the Index 500 waived or
5.5% of the public offer- Fund) reduced for certain pur-
ing price chases
(2.5% for the Index 500
Fund)
Class B Maximum CDSC of 5% of Service fee of 0.25% CDSC charge waived for
redemption proceeds (3% (0.10% for the Index 500 certain redemptions,
for Fund); distribution fee of shares convert to Class A
the Index 500 Fund); de- 0.75% Shares approximately six
clines (0.35% for the Index 500 years after issuance,
to zero after six years Fund) 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 another class
redemptions made within 0.75%
the
first year after purchase
</TABLE>
FACTORS TO CONSIDER IN CHOOSING A CLASS OF SHARES
In deciding which class of shares to purchase, investors should consider the
cost of sales charges together with the cost of the ongoing annual expenses
described below, as well as any other relevant facts and circumstances:
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
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<PAGE>
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.
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
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<PAGE>
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 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.
49
<PAGE>
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.
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>
SALES CHARGE DISCOUNT TO
AS A PERCENTAGE OF SELECTED
-------------------------- DEALERS AS
NET AMOUNT A PERCENTAGE
OFFERING INVESTED OF OFFERING
AMOUNT OF PURCHASE 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>
SALES CHARGE AS A DISCOUNT TO
PERCENTAGE OF SELECTED
-------------------------- DEALERS AS
NET AMOUNT A PERCENTAGE
OFFERING INVESTED OF OFFERING
AMOUNT OF PURCHASE 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.
50
<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 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:
<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
51
<PAGE>
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.
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.
52
<PAGE>
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 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 Funds ordinarily will make payment for all Shares redeemed within seven
business days after the receipt of the redemption request by the Transfer
Agent in proper form, however the right of redemption and payment of
redemption proceeds are subject to suspension for any period during which the
New York Stock Exchange is closed, or when trading 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.
53
<PAGE>
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, 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.
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 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 were initially purchased.
54
<PAGE>
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 THE LESSER OF
NET ASSET VALUE AT REDEMPTION OR
YEAR SINCE PURCHASE THE ORIGINAL PURCHASE PRICE
- ------------------- --------------------------------
<S> <C>
First.......................................... 5.00%
Second......................................... 4.00%
Third.......................................... 3.00%
Fourth......................................... 3.00%
Fifth.......................................... 2.00%
Sixth.......................................... 1.00%
Seventh........................................ 0.00%
</TABLE>
CLASS B SHARES OF THE INDEX 500 FUND
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE
AS A PERCENTAGE OF THE LESSER OF
NET ASSET VALUE AT REDEMPTION OR
YEAR SINCE PURCHASE THE ORIGINAL PURCHASE PRICE
- ------------------- --------------------------------
<S> <C>
First.......................................... 3.00%
Second......................................... 2.50%
Third.......................................... 2.00%
Fourth......................................... 1.50%
Fifth.......................................... 1.00%
Sixth.......................................... 0.50%
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 4.0% 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 OFTHE LESSER OF
NET ASSET VALUE AT REDEMPTION OR
REDEMPTION DURING 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 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
55
<PAGE>
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.
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
56
<PAGE>
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.
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.
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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.
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 Equity Selection Fund,
International Equity Fund, Micro-Cap Equity Fund, Mid-Cap Growth Fund, Multi-
Season Growth Fund, Real Estate Equity Investment Fund, Small-Cap Value Fund
and Value 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 Equity Selection Fund,
International Equity Fund, Micro-Cap Equity Fund, Mid-Cap Growth Fund, Multi-
Season Growth Fund, Small-Cap Value Fund and Value 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
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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
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
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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.
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
BOARDS OF TRUSTEES AND 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
Munder Capital Management, a Delaware general partnership with its principal
offices at 480 Pierce Street, Birmingham, Michigan 48009, serves as the Funds'
investment advisor. The Advisor was formed in December, 1994. 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. From
April 1988 to February, 1995, he was Vice President and Director of Research
for MCM.
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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. From December
1965 to June, 1992, she was Director of Equity Strategy for Comerica Capital
Management, Inc.
Arnold Kent Douville, Senior Portfolio Manager of the Advisor, 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 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.
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. Mr. Munder has co-managed the Multi-Season
Growth Fund since its inception in April, 1993 and managed the Real Estate
Equity Investment Fund from its inception to October 1996. 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, Chief Investment Officer of the Advisor, is currently the
co-manager of the International Equity Fund (previously, from January, 1996 to
October, 1996, was the portfolio manager) and the Index 500 Fund (previously,
from July, 1992 to October, 1996, was the portfolio manager). Mr. Johnson
previously served as a portfolio manager at Woodbridge Capital Management
(June 1992 to December 1994) and Manufacturers Bank (June 1986 to June 1992).
Mr. Johnson received a B.A. in Finance from Michigan State University and an
M.B.A. from Wayne State University.
Gerald Seizert, CFA, CIC, is Executive Vice President and Chief Investment
Officer of all equity management at MCM and has managed 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, 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. (January 1981 to June 1992).
Jeffrey A. Wrona, CFA, Senior Portfolio Manager of the Advisor, 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
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 (September 1987 to August
1988). 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.
Edward Eberle, Value Portfolio Manager of the Advisor, has been co-manager
of the Value Fund since October, 1996. Prior to being appointed co-manager,
Mr. Eberle acted as the primary analyst for the Fund, assisting the manager
with portfolio decisions. He is also a member of the Advisor's asset
allocation team. Prior to joining the Advisor in 1995, Mr. Eberle served as
Executive Vice President and Portfolio Manager for Westpointe Financial
Corporation and as a member of the Board of Directors for Westpointe Capital
Management and Dart Investors Bermuda Limited. Mr. Eberle received a B.A. in
Finance from Michigan State University.
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Carl Wilk, Senior Portfolio Manager of the Advisor, has been co-manager of
the Small Company Growth Fund since October, 1996. Prior to being appointed
co-manager, Mr. Wilk acted as the primary analyst for the Fund assisting the
manager with portfolio decisions. Prior to joining the Advisor in 1995, Mr.
Wilk was a Senior Equity Research Analyst at Woodbridge. Prior
responsibilities include experience as an Investment Analyst at Manufacturers
Bank, N.A. from 1986 to 1992 for their core growth equity investment process.
In addition, Mr. Wilk performed various financial positions in the banking and
brokerage industry from 1984 to 1986. Mr. Wilk received a B.S. in Finance,
M.B.A. from Wayne State University and is a Certified Financial Planner.
Peter K. Hoglund, CFA, Portfolio Manager/Strategic Projects of the Advisor,
has been manager of the Real Estate Equity Investment Fund since October,
1996. Prior to being appointed as manager, Mr. Hoglund acted as the primary
analyst for this Fund, assisting the former manager with portfolio decisions.
Prior to joining MCM in May, 1993, Mr. Hoglund was in the Investment Banking
Division of Morgan Stanley & Co., Inc. (July, 1988 to July, 1990) where he was
a financial analyst. Mr. Hoglund received both his B.A. and M.B.A. from the
University of Michigan and is a Chartered Financial Analyst.
Theodore Miller, Senior Portfolio Manager of the Advisor, has been co-
manager of the International Equity Fund since October, 1996. Prior to being
appointed co-manager, Mr. Miller acted as the primary analyst for the Fund,
assisting the manager with portfolio decisions. Prior to joining the Advisor,
Mr. Miller worked in Derivatives Marketing for Interacciones Global Inc (1993-
1995), in Equity Sales/Trader for McDonald & Co. Securities Inc. (1991-1993)
and started his career in 1986 and was a derivative and equity transaction
execution specialist with various New York investment banks. Mr. Miller
received his B.S. from the University of Pittsburgh and his M.B.A. from
Indiana University.
Robert J. Samrah, Senior Portfolio Manager of the Advisor, has been co-
manager of the Index 500 Fund since October, 1996. Prior to being appointed
co-manager, Mr. Samrah assisted the manager with portfolio decisions. Prior to
joining the Advisor, Mr. Samrah was an Asset/Liability Manager for First of
America Bank Corporation (1993-1994), a Senior Consultant for Deloitte &
Touche Management Consulting (1992-1993) and started his career in 1985 at
GMAC as an Analyst. Mr. Samrah received his B.B.A. and M.B.A. from Wayne State
University.
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, Equity Selection Fund, Growth & Income Fund,
International Equity Fund, Small-Cap Value Fund, and Small Company Growth
Fund; .74% of the average daily net assets of each of the Mid-Cap Growth Fund,
Real Estate Equity Investment Fund and Value Fund; .65% of average daily net
assets of the Balanced Fund; and .20% of the first $250 million of average
daily net assets, .12% of the next $250 million of average daily net assets
and .07% of average daily net assets in excess of $500 million of the Index
500 Fund.
For the period July 1, 1995 to October 27, 1995, the Advisor received fees,
after waivers, if any, at an effective rate of .75% of the average daily net
assets of each of the Accelerating Growth Fund, Growth & Income Fund,
International Equity Fund, and Small Company Growth 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 October 28, 1995 to June 30, 1996, the Advisor received fees,
after waivers, if any, at an effective rate of .75% of the average daily net
assets of the Accelerating Growth Fund, Growth & Income Fund, International
Equity Fund, and Small Company Growth Fund; and .06% of the average daily net
assets of the Index 500 Fund.
For the fiscal year ended June 30, 1996 (and for the Mid-Cap Growth Fund and
Value Fund for the period of commencement of operations to June 30, 1996) the
Advisor received fees, after waivers, if any, at an effective rate of .75% of
average daily net assets of the Multi-Season Growth Fund; .68% of average
daily net assets of the
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Real Estate Equity Investment Fund; .73% of average daily net assets of the
Value Fund and .71% of average daily net assets of the Mid-Cap Growth Fund.
The Equity Selection, Micro-Cap Equity and Small-Cap Value Funds had not
commenced operations as of the date of this Prospectus.
The Advisor expects to voluntarily waive a portion of the fees payable to it
with respect to the Index 500 Fund and Multi-Season Growth 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 .07% and .75% of the average
daily net assets of the Index 500 Fund and the Multi-Season Growth 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 and certain other investment portfolios that are advised by the
Advisor for which they provide services, 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.
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 and certain other investment portfolios that are
advised by the Advisor for which the Custodian provides services computed
daily and payable monthly at an annual rate of .03% of the first $100 million
of average daily net assets, .02% of the next $500 million of net assets and
.01% of net assets in excess of $600 million. The Custodian also receives
certain transaction based fees. 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 .033%.
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
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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.
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 taxable 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
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<PAGE>
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.
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.
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<PAGE>
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, Balanced, Growth & Income,
Index 500, International Equity, Small Company Growth, Bond, Intermediate
Bond, U.S. Government Income, Michigan Triple Tax-Free Bond, Tax-Free Bond,
Tax-Free Intermediate Bond, Cash Investment, Tax-Free Money Market and U.S.
Treasury Money Market Funds, respectively, each of which, except the Michigan
Triple Tax-Free Bond Fund and Tax-Free Intermediate 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 interests in the Equity Selection,
Micro-Cap Equity, Mid-Cap Growth, Multi-Season Growth, Real Estate Equity
Investment, Small-Cap Value, Value, International Bond, Money Market and
NetNet Funds, 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 Cash Investment, Money Market, Tax-Free Money Market, U.S. Treasury
Money Market and NetNet Funds) 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 Cash Investment, Tax-
Free Money Market and U.S. Treasury Money Market Funds offer only Class A
Shares, Class K Shares and Class Y Shares. The NetNet 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 Accelerating Growth, Balanced, Equity Selection, Growth
& Income, Index 500, International Equity, Micro-Cap Equity, Mid-Cap Growth,
Multi-Season Growth, Real Estate Equity Investment, Small-Cap Value, Small
Company Growth and Value Funds.
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
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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 October 1, 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 October 1, 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: Accelerating
Growth Fund--87%; Balanced Fund--87%; Growth & Income Fund--98%; Index 500
Fund--68%; International Equity Fund--90%; Mid-Cap Growth Fund--91%; Multi-
Season Growth Fund--63%; Real Estate Equity Investment Fund--83%; Small
Company Growth Fund--86%; and Value Fund--91%. The Equity Selection Fund,
Micro-Cap Equity Fund and Small-Cap Value Fund had not commenced operations as
of the date of this Prospectus.
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.
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<PAGE>
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:
First Data Investor Services Group, Inc.
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.
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<PAGE>
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.
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 Investor Services Group, Inc.
The Munder Funds
P.O. Box 5130
Westborough, Massachusetts 01581-5130
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures may call the Funds at (800) 438-5789.
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<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 the International Bond Fund offered by Munder described below
(collectively, the "Funds"):
Munder Bond Fund
Munder Intermediate Bond Fund
Munder International Bond Fund
Munder U.S. Government Income Fund
Munder Michigan Triple Tax-Free Bond Fund*
Munder Tax-Free Bond Fund
Munder Tax-Free Intermediate Bond Fund
- --------
*The Michigan Triple Tax-Free Bond Fund is offered only in the State of
Michigan.
Munder Capital Management (the "Advisor") serves as the investment advisor
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 October 28, 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. In addition, the SEC maintains
a Web site (http://www.sec.gov) that contains the Statement of Additional
Information and other information regarding the Funds.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE DATE OF THIS PROSPECTUS IS OCTOBER 28, 1996.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................... 3
The Funds
Expense Table............................................................ 6
Financial Highlights..................................................... 11
Investment Objectives and Policies....................................... 17
Portfolio Instruments and Practices and Associated Risk Factors.......... 19
Investment Limitations................................................... 27
How to Do Business with Us
How to Purchase Shares................................................... 28
How to Redeem Shares..................................................... 33
Conversion of Class B Shares............................................. 37
How to Exchange Shares................................................... 37
Dividends and Distributions.............................................. 38
Other Information
Net Asset Value.......................................................... 39
Management............................................................... 40
Taxes.................................................................... 43
Description of Shares.................................................... 45
Performance.............................................................. 47
Shareholder Account Information.......................................... 47
</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 Intermediate Bond Fund seeks a competitive rate
of return which exceeds the inflation rate and the return provided by money
market instruments; 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; the U.S. Government Income Fund seeks to provide high current
income; and the Michigan Triple Tax-Free Bond Fund, Tax-Free Bond Fund and
Tax-Free Intermediate Bond Fund (the "Tax-Free Bond Funds") seek current
interest income exempt from Federal income taxes.
PRINCIPAL INVESTMENTS
The Bond Fund, the Intermediate Bond Fund and the U.S. Government Income
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 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. 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.
INVESTMENT PROGRAM
Each of the Bond, Intermediate Bond and U.S. Government Income 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 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. 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 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. 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, 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
3
<PAGE>
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 International Bond Fund, the Michigan Triple Tax-Free
Bond Fund and the Tax-Free Intermediate 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
"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."
4
<PAGE>
REINVESTMENT
Automatic reinvestment of dividends and capital gains without a sales charge
unless a shareholder elects to receive cash.
OTHER FEATURES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------- -------------- --------------
<S> <C> <C>
Automatic Investment Plan Automatic Investment Plan Automatic Investment Plan
Automatic Withdrawal Plan Automatic Withdrawal Plan Automatic Withdrawal Plan
Retirement Plans Retirement Plans Retirement Plans
Telephone Exchanges Telephone Exchanges Telephone Exchanges
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, if any, 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."
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.
- --------
*Excluding the International Bond Fund
5
<PAGE>
EXPENSE TABLE
The tables below set forth certain information concerning shareholder
transaction expenses and 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 International Bond Fund did not
commence operations until October 2, 1996 and therefore the expense
information set forth below is based on estimated operating expenses for such
Fund. The expense information in the tables with respect to the Michigan
Triple Tax-Free Bond Fund has been restated to reflect the discontinuation of
the voluntary advisory fee waiver effective as of the date of this Prospectus.
<TABLE>
<CAPTION>
CLASS A SHARES
-----------------------------------------------------------------------------
MICHIGAN
U.S. TRIPLE TAX-FREE
BOND INTERMEDIATE INTERNATIONAL GOVERNMENT TAX-FREE TAX-FREE INTERMEDIATE
FUND BOND FUND BOND FUND INCOME 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% .35% .22% .26% .23% .21%
---- ---- ---- ---- ---- ---- ----
Total fund operating
expenses.............. .95% .94% 1.10% .97% 1.01% .98% .96%
==== ==== ==== ==== ==== ==== ====
</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."
6
<PAGE>
<TABLE>
<CAPTION>
CLASS B SHARES
-----------------------------------------------------------------------------
MICHIGAN
U.S. TRIPLE TAX-FREE
BOND INTERMEDIATE INTERNATIONAL GOVERNMENT TAX-FREE TAX-FREE INTERMEDIATE
FUND BOND FUND BOND FUND INCOME FUND BOND 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*......... 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% .35% .22% .26% .23% .21%
---- ---- ---- ---- ---- ---- ----
Total fund operating
expenses.............. 1.70% 1.69% 1.85% 1.72% 1.76% 1.73% 1.71%
==== ==== ==== ==== ==== ==== ====
</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."
7
<PAGE>
<TABLE>
<CAPTION>
CLASS C SHARES
-----------------------------------------------------------------------
MICHIGAN
U.S. TRIPLE TAX-
GOVERNMENT TAX-FREE FREE TAX-FREE
BOND INTERMEDIATE INTERNATIONAL INCOME BOND BOND INTERMEDIATE
FUND BOND FUND BOND FUND FUND FUND FUND BOND 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
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% .35% .22% .26% .23% .21%
---- ---- ---- ---- ---- ---- ----
Total fund operating
expenses.............. 1.70% 1.69% 1.85% 1.72% 1.76% 1.73% 1.71%
==== ==== ==== ==== ==== ==== ====
</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 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 (other than the
International Bond Fund), the amount of "Other expenses" in the expense tables
above is based on amounts incurred during the most recent fiscal year. With
respect to the International Bond Fund, the amount of "Other expenses" 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:
8
<PAGE>
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> <C> <C> <C> <C>
Bond Fund...................... $49 $69 $91 $152
Intermediate Bond Fund......... $49 $69 $90 $151
International Bond Fund........ $51 $74 N/A N/A
U.S. Government Income Fund.... $50 $70 $92 $154
Michigan Triple Tax-Free Bond
Fund.......................... $50 $71 $94 $159
Tax-Free Bond Fund............. $50 $70 $92 $156
Tax-Free Intermediate Bond
Fund.......................... $49 $69 $91 $153
</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, (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 $84 $54 $112 $92 $117 $117
Intermediate Bond Fund.. $67 $17 $83 $53 $112 $92 $115 $115
International Bond Fund. $69 $19 $88 $58 N/A N/A N/A N/A
U.S. Government Income
Fund................... $67 $17 $84 $54 $113 $93 $119 $119
Michigan Triple Tax-Free
Bond Fund.............. $68 $18 $85 $55 $115 $95 $124 $124
Tax-Free Bond Fund...... $68 $18 $84 $54 $114 $94 $120 $120
Tax-Free Intermediate
Bond Fund.............. $67 $17 $84 $54 $113 $93 $118 $118
</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."
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, (2) redemption at the end of the following time periods and (3)
no redemption at the end of one year:
<TABLE>
<CAPTION>
CLASS C SHARES
----------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------- ------- ------- --------
NO
REDEMPTION REDEMPTION
---------- ----------
<S> <C> <C> <C> <C> <C>
Bond Fund....................... $27 $17 $54 $92 $201
Intermediate Bond Fund.......... $27 $17 $53 $92 $200
International Bond Fund......... $29 $19 $58 N/A N/A
U.S. Government Income Fund..... $27 $17 $54 $93 $203
Michigan Triple Tax-Free Bond
Fund........................... $28 $18 $55 $95 $208
Tax-Free Bond Fund.............. $28 $18 $54 $94 $204
Tax-Free Intermediate Bond Fund. $27 $17 $54 $93 $202
</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.
9
<PAGE>
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. The
voluntary advisory fee waiver previously in effect for the Michigan Triple Tax-
Free Bond Fund was discontinued as of the date of this Prospectus.
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.
10
<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. 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
--------------------------------------------------------------------------------
YEAR PERIOD PERIOD PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/96 6/30/96(F) 6/30/96(F) 6/30/95(A) 2/28/95(D,E) 2/28/94 2/28/93(F)
CLASS A CLASS B CLASS C CLASS A CLASS A CLASS A CLASS A
------- ---------- ---------- ---------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 9.70 $ 9.68 $ 9.74 $ 9.31 $ 9.91 $ 9.92 $ 9.61
------ ------ ------ ------ ------ ------ ------
Income from Investment
Operations:
Net investment income.. 0.61 0.16 0.16 0.21 0.61 0.58 0.11
Net realized and
unrealized gain/(loss)
on investments........ (0.20) (0.14) (0.21) 0.38 (0.63) (0.03) 0.38
------ ------ ------ ------ ------ ------ ------
Total from investment
operations............ 0.41 0.02 (0.05) 0.59 (0.02) 0.55 0.49
------ ------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from net
investment income..... (0.58) (0.17) (0.17) (0.20) (0.58) (0.56) (0.09)
Distributions from net
realized gains........ -- -- -- -- -- -- (0.09)
------ ------ ------ ------ ------ ------ ------
Total Distributions.... (0.58) (0.17) (0.17) (0.20) (0.58) (0.56) (0.18)
------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of
Period................. $ 9.53 $ 9.53 $ 9.52 $ 9.70 $ 9.31 $ 9.91 $ 9.92
====== ====== ====== ====== ====== ====== ======
Total Return(b)........ 4.24% 0.22% (0.49)% 6.39% 0.45% 5.61% 5.19%
====== ====== ====== ====== ====== ====== ======
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands). $ 895 $ 294 $ 51 $ 919 $ 880 $1,318 $ 116
Ratio of operating
expenses to average
net assets............ 0.95% 1.70%(c) 1.70%(c) 0.95%(c) 0.92% 0.87% 0.76%(c)
Ratio of net investment
income to average net
assets................ 6.26% 5.51%(c) 5.51%(c) 6.47%(c) 6.57% 5.76% 5.05%(c)
Portfolio turnover
rate.................. 507% 507% 507% 99% 165% 128% 77%
Ratio of operating
expenses to average
net assets without
waivers............... 1.04% 1.79%(c) 1.79%(c) 1.19%(c) 1.16% 1.01% 0.90%(c)
Net investment income
per share without
waivers............... $ 0.61 $ 0.16 $ 0.16 $ 0.20 $ 0.59 $ 0.57 $ 0.10
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(e) 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 Bond Fund Class A Shares, Class B Shares and Class C Shares
commenced operations on December 9, 1992, March 13, 1996 and March 25,
1996, respectively.
11
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
----------------------------------------------------------------------------------------------------
YEAR YEAR PERIOD PERIOD PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/96 6/30/96 6/30/96(E) 6/30/95(A) 6/30/95(A) 2/28/95(D) 2/28/95(D,E) 2/28/94 2/28/93(E)
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS A CLASS B CLASS A CLASS A
------- ------- ---------- ---------- ---------- ---------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 9.52 $9.51 $9.40 $ 9.27 $9.27 $ 9.91 $9.22 $10.47 $10.26
------ ----- ----- ------ ----- ------ ----- ------ ------
Income from Investment
Operations:
Net investment income.. 0.58 0.49 0.10 0.22 0.20 0.59 0.19 0.59 0.17
Net realized and
unrealized
gain/(loss) on
investments........... (0.21) (0.19) (0.06) 0.25 0.24 (0.61) 0.11 (0.20) 0.25
------ ----- ----- ------ ----- ------ ----- ------ ------
Total from investment
operations............ 0.37 0.30 0.04 0.47 0.44 (0.02) 0.30 0.39 0.42
------ ----- ----- ------ ----- ------ ----- ------ ------
Less Distributions:
Dividends from net
investment income..... (0.58) (0.51) (0.13) (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.... (0.58) (0.51) (0.13) (0.22) (0.20) (0.62) (0.25) (0.95) (0.21)
------ ----- ----- ------ ----- ------ ----- ------ ------
Net Asset Value, End of
Period................ $ 9.31 $9.30 $9.31 $ 9.52 $9.51 $ 9.27 $9.27 $ 9.91 $10.47
====== ===== ===== ====== ===== ====== ===== ====== ======
Total Return(b)........ 3.92% 3.22% 0.39% 5.15% 4.78% 0.54% 3.33% 3.77% 4.15%
====== ===== ===== ====== ===== ====== ===== ====== ======
Ratios to Average Net
Assets/
Supplemental Data:
Net assets, end of
period (in thousands). $5,356 $ 103 $ 52 $5,470 $ 9 $5,472 $ 7 $6,401 $ 542
Ratio of operating
expenses to average
net assets............ 0.94% 1.69% 1.69%(c) 0.95%(c) 1.70%(c) 0.93% 1.67%(c) 0.86% 0.78%(c)
Ratio of net investment
income to average net
assets................ 6.08% 5.33% 5.33%(c) 7.12%(c) 6.37%(c) 6.71% 5.97%(c) 5.75% 5.52%(c)
Portfolio turnover
rate.................. 494% 494% 494% 84% 84% 80% 80% 155% 104%
Ratio of operating
expenses
to average net assets
without waivers....... 1.02% 1.77% 1.77%(c) 1.19%(c) 1.94%(c) 1.18% 1.92%(c) 1.00% 0.92%(c)
Net investment income
per share without
waivers............... $ 0.57 $0.48 $0.09 $ 0.22 $0.19 $ 0.57 $0.18 $ 0.58 $ 0.16
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) The Munder Intermediate Bond Fund Class A Shares, Class B Shares and Class
C Shares commenced operations on November 24, 1992, October 25, 1994 and
April 19, 1996, respectively.
12
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME FUND(A)
--------------------------------------------------
PERIOD
YEAR ENDED PERIOD ENDED ENDED PERIOD ENDED
6/30/96(G) 6/30/96(E,G) 6/30/95(B) 2/28/95(E,F)
CLASS A CLASS B CLASS A CLASS A
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period................. $10.30 $10.31 $ 9.88 $10.03
------ ------ ------ ------
Income from Investment
Operations:
Net investment income..... 0.71 0.49 0.24 0.42
Net realized and
unrealized gain/(loss) on
investments.............. (0.27) (0.24) 0.41 (0.10)
------ ------ ------ ------
Total from investment
operations............... 0.44 0.25 0.65 0.32
------ ------ ------ ------
Less Distributions:
Dividends from net
investment income........ (0.68) (0.50) (0.23) (0.47)
Distributions from net
realized gains........... (0.08) (0.08) -- --
------ ------ ------ ------
Total distributions....... (0.76) (0.58) (0.23) (0.47)
------ ------ ------ ------
Net Asset Value, End of
Period.................... $ 9.98 $ 9.98 $10.30 $ 9.88
====== ====== ====== ======
Total Return(c)........... 4.34% 2.42% 6.66% 3.30%
====== ====== ====== ======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period
(in thousands)........... $ 259 $ 498 $ 97 $ 69
Ratio of operating
expenses to average net
assets................... 0.97% 1.72%(d) 0.97%(d) 0.95%(d)
Ratio of net investment
income to average net
assets................... 6.92% 6.17%(d) 6.96%(d) 7.02%(d)
Portfolio turnover rate... 133% 133% 42% 143%
Ratio of operating
expenses to average net
assets without waivers... 1.04% 1.79%(d) 1.21%(d) 1.19%(d)
Net investment income per
share without waivers.... $ 0.70 $ 0.48 $ 0.23 $ 0.41
</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) Fiscal year end 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
and does not reflect any applicable sales charges.
(d) Annualized.
(e) The Munder U.S. Government Income Fund Class A Shares and Class B Shares
commenced operations on July 28, 1994 and September 6, 1995, respectively.
(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) 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.
13
<PAGE>
<TABLE>
<CAPTION>
MICHIGAN TRIPLE TAX-FREE BOND FUND(A)
----------------------------------------------------------------------------------------
YEAR YEAR PERIOD PERIOD YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/96(C) 6/30/96(C) 6/30/95(B,C) 6/30/95(B,C) 2/28/95(C,F) 2/28/95(C,F,G) 2/28/94(G)
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.... $9.34 $9.34 $9.24 $9.24 $9.73 $9.17 $9.93
----- ----- ----- ----- ----- ----- -----
Income from Investment
Operations:
Net investment income.. 0.48 0.41 0.16 0.14 0.44 0.24 0.01
Net realized and
unrealized gain/(loss)
on investments........ 0.01 0.00 0.10 0.10 (0.50) 0.10 (0.21)
----- ----- ----- ----- ----- ----- -----
Total from investment
operations............ 0.49 0.41 0.26 0.24 (0.06) 0.34 (0.20)
----- ----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net
investment income..... (0.48) (0.40) (0.16) (0.14) (0.43) (0.27) --
----- ----- ----- ----- ----- ----- -----
Total distributions.... (0.48) (0.40) (0.16) (0.14) (0.43) (0.27) --
----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of
Period................. $9.35 $9.35 $9.34 $9.34 $9.24 $9.24 $9.73
===== ===== ===== ===== ===== ===== =====
Total Return(d)........ 5.25% 4.46% 2.84% 2.58% (0.16)% 3.81% (2.01)%
===== ===== ===== ===== ===== ===== =====
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands). $ 446 $ 251 $ 417 $ 254 $ 444 $ 227 $ 43
Ratio of operating
expenses to average
net assets............ 0.51% 1.26% 0.52%(e) 1.27%(e) 0.56% 1.29%(e) 0.46%(e)
Ratio of net investment
income to average net
assets................ 5.01% 4.26% 5.06%(e) 4.31%(e) 4.81% 4.08%(e) 3.76%(e)
Portfolio turnover
rate.................. 31% 31% 8% 8% 53% 53% 0%
Ratio of operating
expenses to average
net assets without
waivers............... 1.09% 1.84% 1.26%(e) 2.01%(e) 1.30% 2.03%(e) 1.20%(e)
Net investment income
per share without
waivers............... $0.42 $0.35 $0.14 $0.12 $0.37 $0.20 $0.01
</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) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of 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 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 Michigan Triple Tax-Free Bond Fund Class A Shares and Class B
Shares commenced operations on February 15, 1994 and July 5, 1994,
respectively.
14
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE BOND FUND(A)
---------------------------------------------------
PERIOD YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED
6/30/96(C,F) 6/30/96(C) 6/30/95(B,C) 2/28/95(F,G)
CLASS A CLASS B CLASS B CLASS B
------------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period................ $10.49 $10.29 $10.14 $ 9.72
------ ------ ------ ------
Income from Investment
Operations:
Net investment income.... 0.34 0.40 0.13 0.10
Net realized and
unrealized gain/(loss)
on investments.......... (0.14) 0.05 0.15 0.42
------ ------ ------ ------
Total from investment
operations.............. 0.20 0.45 0.28 0.52
------ ------ ------ ------
Less Distributions:
Dividends from net
investment income....... (0.35) (0.39) (0.13) (0.10)
Distributions from net
realized gains.......... (0.01) (0.01) -- --
------ ------ ------ ------
Total distributions...... (0.36) (0.40) (0.13) (0.10)
------ ------ ------ ------
Net Asset Value, End of
Period................... $10.33 $10.34 $10.29 $10.14
====== ====== ====== ======
Total Return(d).......... 1.87% 4.36% 2.80% 5.39%
====== ====== ====== ======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period
(in thousands).......... $1,141 $ 5 $ 1 $ 0(h)
Ratio of operating
expenses to average net
assets.................. 0.98%(e) 1.73% 1.77%(e) 1.67%(e)
Ratio of net investment
income to average net
assets.................. 4.42%(e) 3.67% 3.63%(e) 3.95%(e)
Portfolio turnover rate.. 15% 15% 12% 50%
Ratio of operating
expenses to average net
assets without waivers.. 1.06%(e) 1.81% 2.01%(e) 1.91%(e)
Net investment income per
share without waivers... $ 0.33 $ 0.39 $ 0.10 $ 0.09
</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) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of 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 results of operations.
(d) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(e) Annualized.
(f) The Munder Tax-Free Bond Fund Class A and Class B Shares commenced
operations on October 9, 1995 and December 6, 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) Total net assets for Class B Shares were $164 at the period ended February
28, 1995.
15
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE BOND FUND(A)
--------------------------------------------------------------------
PERIOD YEAR PERIOD
YEAR ENDED PERIOD ENDED ENDED YEAR ENDED ENDED ENDED
6/30/96(G) 6/30/96(F,G) 6/30/95(B) 2/28/95(E) 2/28/94 2/28/93(F)
CLASS A CLASS B CLASS A CLASS A CLASS A CLASS A
---------- ------------ ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $10.36 $10.36 $10.17 $10.44 $10.69 $10.39
------ ------ ------ ------ ------ ------
Income from Investment
Operations:
Net investment income
...................... 0.41 0.04 0.14 0.40 0.42 0.09
Net realized and
unrealized gain/(loss)
on investments........ (0.02) 0.00 0.19 (0.23) (0.14) 0.31
------ ------ ------ ------ ------ ------
Total from investment
operations............ 0.39 0.04 0.33 0.17 0.28 0.40
------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from net
investment income..... (0.41) (0.06) (0.14) (0.42) (0.42) (0.08)
Distributions from net
realized gains........ -- -- -- (0.02) (0.11) (0.02)
------ ------ ------ ------ ------ ------
Total distributions.... (0.41) (0.06) (0.14) (0.44) (0.53) (0.10)
------ ------ ------ ------ ------ ------
Net Asset Value, End of
Period................. $10.34 $10.34 $10.36 $10.17 $10.44 $10.69
====== ====== ====== ====== ====== ======
Total Return(c)........ 3.79% 0.39% 3.25% 2.05% 2.62% 3.90%
====== ====== ====== ====== ====== ======
Ratios to Average Net
Assets/ Supplemental
Data:
Net assets, end of
period (in thousands). $5,012 $ 50 $4,138 $4,551 $6,011 $1,262
Ratio of operating
expenses to average
net assets............ 0.96% 1.71%(d) 0.98%(d) 0.95% 0.86% 0.79%(d)
Ratio of net investment
income to average net
assets................ 3.91% 3.16%(d) 4.02%(d) 4.19% 3.88% 4.09%(d)
Portfolio turnover
rate.................. 20% 20% 5% 52% 38% 57%
Ratio of operating
expenses to average
net assets without
waivers............... 1.04% 1.79%(d) 1.22%(d) 1.19% 1.00% 0.93%(d)
Net investment income
per share without
waivers............... $ 0.40 $ 0.03 $ 0.13 $ 0.38 $ 0.40 $ 0.08
</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) Fiscal year end 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
and does not reflect any applicable sales charges.
(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 A Shares and Class B
Shares commenced operations on November 30, 1992 and May 16, 1996,
respectively.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
16
<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 International Bond Fund, offered by Munder; and the Michigan Triple Tax-
Free Bond Fund, Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund (the
"Tax-Free Bond Funds") offered by the Company (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 Bond 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."
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
17
<PAGE>
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."
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. "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. 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."
18
<PAGE>
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. 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."
PORTFOLIO INSTRUMENTS AND PRACTICES AND ASSOCIATED RISK FACTORS
Corporate Obligations. Each Bond Fund and the International 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.
Each Bond Fund and the International 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, Inc. ("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
19
<PAGE>
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. 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. 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. Investments by a Bond Fund and
the International 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 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
20
<PAGE>
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.
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
21
<PAGE>
redemption requests. Borrowing by a Fund creates an opportunity for greater
total return but, at the same time, increases exposure to capital risk.
Leveraging by means of borrowing may exaggerate the effect of any increase or
decrease in the value of portfolio securities on the Fund's net asset value.
In addition, borrowed funds are subject to interest costs that may offset or
exceed the return earned on the borrowed funds. However, 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 and the International Bond Fund 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, except with respect to
repurchase agreement secured by U.S. government securities.
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. Each Fund (except the International Bond Fund) may
invest up to 10% of its net assets in foreign securities. 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 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.
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<PAGE>
Forward Foreign Currency Transactions. Each of the Bond Funds and the
International Bond Fund may enter into forward foreign 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 foreign currency exchange contract is an
obligation to purchase or sell a specific currency at a future date, which may
be a 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. Each of the Bond Funds
and the International Bond Fund normally conduct their 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 into forward
currency contracts. 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 and the International
Bond Fund 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 on foreign currencies (traded on
U.S. and foreign exchanges or over the counter) to manage the Fund's 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.
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<PAGE>
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. For a further discussion see "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. In managing the Michigan Triple Tax-Free Bond
Fund, the Advisor intends to concentrate in Michigan Municipal Obligations.
Additionally, 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. 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
24
<PAGE>
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 1996-1997 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 AA 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 Michigan Triple
Tax-Free Bond Fund and Tax-Free Intermediate 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 rated 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 and the International Bond Fund 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.
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<PAGE>
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
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/Directors. 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
26
<PAGE>
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 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.
Diversification. The Bond Funds and Tax-Free Bond Fund are each classified
as a diversified investment company under the 1940 Act; the International Bond
Fund, Michigan Triple Tax-Free Bond Fund and Tax-Free Intermediate 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 Transactions and Turnover. All orders for the purchase or sale of
securities on behalf of a Fund are placed with broker/dealers 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 respective objectives and policies. 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 advance
notice is not required. No assurance can be given that a Fund will achieve its
investment objective.
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<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). These
fundamental investment policies are set forth in full in the Statement of
Additional Information.
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.
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<PAGE>
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.
DIFFERENCES AMONG THE CLASSES
The primary distinctions among the classes of the Fund's Shares are in their
sales charge structures and ongoing expenses, as summarized in the table
below. Each class has distinct advantages and disadvantages for different
investors, and investors may choose the class that best suits their
circumstances and objectives.
<TABLE>
<CAPTION>
ANNUAL 12B-1 FEES
(AS A % OF AVERAGE
SALES CHARGE DAILY NET ASSETS) OTHER INFORMATION
------------ ------------------ -----------------
<S> <C> <C> <C>
Class 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 an-
redemption proceeds for distribution fee of 0.75% other 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 CDSC, except
for a CDSC of 1% applicable to redemptions made within the first year after
investing. Thus, the entire amount of a Class B or C shareholder's purchase
price is immediately invested in the Fund.
WAIVER AND REDUCTIONS OF CLASS A SALES CHARGES
Class A share purchases of $100,000 or more may be made at a reduced sales
charge. In considering the combined cost of sales charges and ongoing annual
expenses, investors should take into account any applicable reduced sales
charges on Class A Shares. In addition, the entire initial sales charge on
Class A Shares is waived for certain eligible purchasers. See "Initial Sales
Charge--Class A Shares" and "Sales Charge Waivers--Class A Shares." Because
Class A Shares bear lower ongoing, annual expenses than Class B Shares or
Class C Shares, investors eligible for complete initial sales charge waivers
should purchase Class A Shares.
29
<PAGE>
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 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.
30
<PAGE>
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 Funds 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 Funds 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:
INITIAL SALES CHARGE SCHEDULE--CLASS A SHARES
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE DISCOUNT TO
OF SELECTED
---------------------------- DEALERS AS A
OFFERING NET AMOUNT INVESTED PERCENTAGE OF
AMOUNT OF PURCHASE PRICE (NET ASSET VALUE) OFFERING PRICE
- ------------------ -------- ------------------- --------------
<S> <C> <C> <C>
Less than $100,000.................. 4.00% 4.17% 3.75%
$100,000 but less than $250,000..... 3.00% 3.09% 2.75%
$250,000 but less than $500,000..... 2.00% 2.04% 1.75%
$500,000 but less than $1,000,000... 1.25% 1.27% 1.00%
$1,000,000 or more.................. None* None* (see below)**
</TABLE>
- --------
*No initial sales charge applies on investments of $1 million or more, but a
CDSC of 1% is imposed on certain redemptions within one year of the
purchase. 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.
31
<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 the Securities Act of 1933, as
amended. In addition to the Dealers' Reallowance, the Distributor will, from
time to time, at its expense or as an expense for which it may be reimbursed
under the Class B Plan or Class C Plan described below, pay a bonus or other
consideration or incentive (which may be in the form of merchandise or trips)
to brokers or institutions which sell a minimum dollar amount of shares of 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.
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.
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 redemptions. See "Other Information--Description of
Shares."
If an investor intends to purchase over the next 13 months at least $100,000
of Class A Shares, the sales charge may be reduced by completing the Letter of
Intent portion of the Account Application Form or the applicable form from the
investor's broker. The Letter of Intent includes a provision for a sales
charge adjustment depending on the amount actually purchased within the 13-
month period. In addition, pursuant to a Letter of Intent, the Custodian will
hold in escrow the difference between the sales charge applicable to the
amount initially purchased and the sales charge paid at the time of the
investment which is based on the amount covered by the Letter of Intent. The
amount held in escrow will be applied to the investor's account at the end of
the 13-month period unless the amount specified in the Letter of Intent is not
purchased.
32
<PAGE>
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.
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
33
<PAGE>
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 Funds ordinarily will make payment for all shares redeemed within seven
business days after the receipt of the redemption request by the Transfer Agent
in proper form, however the right of redemption and payment of redemption
proceeds are subject to suspension for any period during which the New York
Stock Exchange is closed, or when trading 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.
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,
other than the International Bond 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 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.
34
<PAGE>
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 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
YEAR AS A PERCENTAGE OF THE LESSER OF
SINCE NET ASSET VALUE AT REDEMPTION OR
PURCHASE THE ORIGINAL PURCHASE PRICE
-------- --------------------------------
<S> <C>
First................................... 5.00%
Second.................................. 4.00%
Third................................... 3.00%
Fourth.................................. 3.00%
Fifth................................... 2.00%
Sixth................................... 1.00%
Seventh................................. 0.00%
</TABLE>
35
<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% 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 OR
REDEMPTION DURING 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 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.
36
<PAGE>
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 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.
37
<PAGE>
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 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
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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.
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
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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 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.
MANAGEMENT
BOARDS OF TRUSTEES AND 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
Munder Capital Management, a Delaware general partnership with its principal
offices at 480 Pierce Street, Birmingham, Michigan 48009, serves as the Funds'
investment advisor. The Advisor was formed in December, 1994. 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
Michigan Triple Tax-Free Bond Fund, Tax-Free Bond Fund and Tax-Free
Intermediate 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. From February 1980 to June 1992, she was a Senior Fixed Income
Manager for Comerica Capital Management, Inc.
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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. From June 1987
to September 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, Intermediate
Bond Fund and U.S. Government Income 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, Vice President, and 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. From August 1988 to
February 1991, he was Investment Manager for Society National Bank.
Gregory A. Prost, CFA, Senior Fixed Income Portfolio Manager of the Advisor
or MCM, has co-managed the Balanced Fund and Bond Fund since May, 1995 and the
International Bond Fund since October, 1996. Prior to joining MCM in 1995, he
was a Vice President and Senior Fund Manager for First of America Investment
Corp. (May 1987 to May 1995).
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 International Bond Fund since October, 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. (August 1981 to April 1996).
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. The voluntary advisory fee waiver previously in effect for
the Michigan Triple Tax-Free Bond Fund was discontinued as of the date of this
Prospectus.
For the period from July 1, 1995 to October 27, 1995, the Advisor received
fees, after waivers, if any, at an effective rate of .50% of the average daily
net assets of the Bond Fund, Intermediate Bond Fund, U.S. Government Income
Fund, Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund and 0.00% of the
average daily net assets of the Michigan Triple Tax-Free Bond Fund.
For the period from October 28, 1995 to June 30, 1996, the Advisor received
fees, after waivers, if any, at an effective rate of .50% of the average daily
net assets of the Bond Fund, Intermediate Bond Fund, U.S. Government Income
Fund, Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund and 0.00% for the
Michigan Triple Tax-Free Bond Fund. The International Bond Fund did not
commence operations until October 2, 1996.
The Advisor may, from time to time, make payments to banks, broker-dealers
or other financial institutions for certain services to the Funds and/or their
shareholders, including sub-administration, sub-transfer agency and
shareholder servicing. Such payments are made out of the Advisor's own
resources and do not involve additional costs to the Funds or their
shareholders.
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.
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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 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 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 and certain other investment portfolios that are advised by
the Advisor for which the Custodian provides services computed daily and
payable monthly at an annual rate of .03% of the first $100 million of average
daily net assets, .02% of the next $500 million of net assets and .01% of net
assets in excess of $600 million. The Custodian also receives certain
transaction based fees. For an additional description of the services performed
by the Administrator, Transfer Agent and Custodian, see the Statement of
Additional Information.
DISTRIBUTION SERVICES ARRANGEMENT
The Company 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
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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.
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 taxable 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. 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.
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.
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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 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
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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.
MICHIGAN TAXES--MICHIGAN TRIPLE TAX-FREE BOND FUND AND TAX-FREE INTERMEDIATE
BOND FUND
Ordinary tax-exempt interest dividends paid by the Michigan Triple Tax-Free
Bond Fund and Tax-Free Intermediate 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, Balanced, Growth & Income,
Index 500, International Equity, Small Company Growth, Bond, Intermediate
Bond, U.S. Government Income, Michigan Triple Tax-Free Bond, Tax-Free Bond,
Tax-Free Intermediate Bond, Cash Investment, Tax-Free Money Market and U.S.
Treasury Money Market 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. 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 Equity Selection,
Micro-Cap Equity, Mid-Cap Growth, Multi-Season Growth, Real Estate Equity
Investment, Small-Cap Value, Value, International Bond, Money Market and
NetNet Funds, 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 Cash Investment, Tax-Free Money Market, U.S. Treasury Money Market,
the Money Market and the NetNet Funds) 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 Cash Investment, Tax-Free Money Market and U.S. Treasury Money
Market Funds offer only Class A Shares, Class K Shares and Class Y Shares. The
Money Market Fund offers only Class A, Class B, Class C shares (which may be
acquired only through an exchange from the corresponding classes of other
funds of the Company and Munder) and Class Y shares. The NetNet 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, Intermediate Bond, International Bond, U.S.
Government Income, Michigan Triple Tax-Free Bond, Tax-Free Bond and Tax-Free
Intermediate Bond Funds.
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 October 1, 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 October 1, 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: Bond Fund 98%;
Intermediate Bond Fund 98%; U.S. Government Income Fund 99%; Michigan Triple
Tax-Free Bond Fund 97%; Tax-Free Bond Fund 98%; and Tax-Free Intermediate Bond
Fund 98%. The International Bond Fund did not commence operations until
October 2, 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.
46
<PAGE>
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 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.
47
<PAGE>
INVESTMENT BY MAIL
Send the completed Account Application Form (if initial purchase) or letter
stating Fund name, Share Class, shareholder's registered name and account
number (if subsequent purchase) with a check to:
First Data Investor Services Group, Inc.
The Munder Funds
P.O. Box 5130
Westborough, Massachusetts 01581-5130
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 Investor Services Group, Inc.
The Munder Funds
P.O. Box 5130
Westborough, Massachusetts 01581-5130
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures may call the Funds at (800) 438-5789.
48
/R>
James C. Robinson, Vice President and Chief Investment Officer--Fixed Income
of the Advisor or MCM since 1987, has co-managed the Bond Fund, Intermediate
Bond Fund and U.S. Government Income 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 Bankhe "MFI Funds") described below
(collectively, the "Funds"):
Munder Accelerating Growth Fund Munder Value Fund
Munder Balanced Fund Munder Bond Fund
Munder Equity Selection Fund Munder Intermediate Bond Fund
Munder Growth & Income Fund Munder International Bond Fund
Munder Index 500 Fund Munder U.S. Government Income Fund
Munder International Equity Fund
Munder Michigan Triple Tax-Free Bond
Munder Micro-Cap Equity Fund Fund*
Munder Mid-Cap Growth Fund
Munder Tax-Free Bond Fund
Munder Multi-Season Growth Fund
Munder Tax-Free Intermediate Bond
Fund
Munder Real Estate Equity Investment Fund
Munder Small-Cap Value Fund
Munder Cash Investment Fund
Munder Small Company Growth Fund
Munder Money Market Fund
Munder Tax-Free Money Market Fund
Munder U.S. Treasury Money Market
- -------- 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 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 October 28, 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. In addition, the SEC maintains a Web site (http://www.sec.gov) that
contains the Statement of Additional Information and other information
regarding the Funds.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.
ALTHOUGH EACH OF THE CASH INVESTMENT FUND, MONEY MARKET FUND, TAX-FREE MONEY
MARKET FUND AND U.S. TREASURY MONEY MARKET FUND SEEKS TO MAINTAIN A CONSTANT
NET ASSET VALUE OF $1.00 PER SHARE, THERE CAN BE NO ASSURANCE THAT EACH FUND
CAN DO SO ON A CONTINUING BASIS.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE DATE OF THIS PROSPECTUS IS OCTOBER 28, 1996.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Funds
Expense Table............................................................ 3
Financial Highlights..................................................... 6
Investment Objectives and Policies....................................... 25
Portfolio Instruments and Practices and Associated Risk Factors.......... 38
Investment Limitations................................................... 50
Purchase and Redemption of Shares........................................ 50
Dividends and Distributions.............................................. 52
Other Information
Net Asset Value.......................................................... 53
Management............................................................... 54
Taxes.................................................................... 59
Description of Shares.................................................... 62
Performance.............................................................. 63
</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 BY 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 tables below set forth certain information concerning shareholder
transaction expenses and 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 October 2, 1996 and the Equity Selection Fund,
Micro-Cap Equity Fund and Small-Cap Value Fund had not commenced operations as
of the date of this Prospectus; 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 Index 500 Fund,
Multi-Season Growth Fund, Mid-Cap Growth Fund, Real Estate Equity Investment
Fund and Value Fund to reflect anticipated fees, waivers and/or expense
reimbursements; and with respect to the Michigan Triple Tax-Free Bond Fund to
reflect the discontinuation of the voluntary advisory fee waiver effective as
of the date of this Prospectus. 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, the
Distributor, the Advisor's investment advisory clients and family members of
employees of the Advisor.
<TABLE>
<CAPTION>
EQUITY GROWTH &
ACCELERATING BALANCED SELECTION INCOME INDEX 500
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% .65% .75% .75% .07%*
Other Expenses (after
expense
reimbursements)....... .20% .25% .25% .21% .19%+
---- ---- ---- ---- ----
Total Fund Operating
Expenses (after
expense
reimbursements)....... .95% .90% 1.00% .96% .26%*+
==== ==== ==== ==== ====
<CAPTION>
MULTI- REAL ESTATE
INTERNATIONAL MICRO-CAP MID-CAP SEASON EQUITY
EQUITY EQUITY GROWTH GROWTH INVESTMENT
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% 1.00% .74% .75%* .74%
Other Expenses (after
expense
reimbursements)....... .26% .25% .21%+ .26% .26%+
---- ---- ---- ---- ----
Total Fund Operating
Expenses (after
expense
reimbursements)....... 1.01% 1.25% .95%+ 1.01%* 1.00%+
==== ==== ==== ==== ====
<CAPTION>
SMALL
COMPANY INTERMEDIATE
SMALL-CAP GROWTH VALUE BOND
VALUE FUND FUND FUND BOND FUND FUND
------------- ---------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Annual Fund Operating
Expenses:
(as a percentage of
average net assets)
Advisory Fees.......... .75% .75% .74% .50% .50%
Other Expenses (after
expense
reimbursements)....... .25% .21% .21%+ .20% .19%
---- ---- ---- ---- ----
Total Fund Operating
Expenses (after
expense
reimbursements)....... 1.00% .96% .95%+ .70% .69%
==== ==== ==== ==== ====
<CAPTION>
U.S. MICHIGAN
GOVERNMENT TRIPLE TAX-FREE
INTERNATIONAL INCOME TAX-FREE TAX-FREE INTERMEDIATE
BOND 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 (after
expense
reimbursements)....... .35% .22% .26% .23% .21%
---- ---- ---- ---- ----
Total Fund Operating
Expenses (after
expense
reimbursements)....... .85% .72% .76% .73% .71%
==== ==== ==== ==== ====
</TABLE>
- --------
*Reflects advisory fees after waivers. Waivers are described on page 5.
+The Advisor voluntarily reimbursed the Fund for certain operating expenses.
In the absence of such expense reimbursement, total fund operating expenses
would have been as follows: .44% for Index 500 Fund, 1.13% for Mid-Cap
Growth Fund, 1.27% for Real Estate Equity Investment Fund and 1.05% for
Value Fund.
3
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE U.S.
CASH MONEY MONEY TREASURY
INVESTMENT MARKET MARKET MONEY
FUND FUND FUND MARKET FUND
---------- ------ -------- -----------
<S> <C> <C> <C> <C>
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Advisory Fees.......................... .35% .40% .35% .35%
Other Expenses (after expense
reimbursements)....................... .18% .22% .18% .19%
--- --- --- ---
Total Fund Operating Expenses (after
expense reimbursements)............... .53% .62% .53% .54%
=== === === ===
</TABLE>
"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 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 (other than
the Equity Selection, Micro-Cap Equity, Small-Cap Value and International Bond
Funds), the amount of "Other expenses" in the tables above is based on amounts
incurred during the most recent fiscal year. With respect to the Equity
Selection, Micro-Cap Equity, Small-Cap Value and International Bond Funds, the
amount of "Other expenses" 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.
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>
Accelerating Growth Fund........................ $10 $30 $53 $117
Balanced Fund................................... $ 9 $29 $50 $111
Equity Selection Fund........................... $10 $32 N/A N/A
Growth & Income Fund............................ $10 $31 $53 $118
Index 500 Fund.................................. $ 3 $ 8 $15 $ 33
International Equity Fund....................... $10 $32 $56 $124
Micro-Cap Equity Fund........................... $13 $40 N/A N/A
Mid-Cap Growth Fund............................. $10 $30 $53 $117
Multi-Season Growth Fund........................ $10 $32 $56 $124
Real Estate Equity Investment Fund.............. $10 $32 $55 $122
Small-Cap Value Fund............................ $10 $32 N/A N/A
Small Company Growth Fund....................... $10 $31 $53 $118
Value Fund...................................... $10 $30 $53 $117
Bond Fund....................................... $ 7 $22 $39 $ 87
Intermediate Bond Fund.......................... $ 7 $22 $38 $ 86
International Bond Fund......................... $ 9 $27 N/A N/A
U.S. Government Income Fund..................... $ 7 $23 $40 $ 89
Michigan Triple Tax-Free Bond Fund.............. $ 8 $24 $42 $ 94
Tax-Free Bond Fund.............................. $ 7 $23 $41 $ 91
Tax-Free Intermediate Bond Fund................. $ 7 $23 $40 $ 88
Cash Investment Fund............................ $ 5 $17 $30 $ 66
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
</TABLE>
4
<PAGE>
The foregoing Expense Tables and Examples are intended to assist investors
in understanding the various shareholder transaction expenses and operating
expenses of the Funds that investors bear either directly or indirectly. The
voluntary advisory fee waiver previously in effect for the Michigan Triple
Tax-Free Bond Fund was discontinued as of the date of this Prospectus. The
Advisor expects to waive a portion of its fees with respect to the Index 500
Fund and Multi-Season Growth Fund and reimburse expenses with respect to the
Index 500 Fund, Mid-Cap Growth Fund, Real Estate Equity Investment Fund and
Value Fund during the current fiscal year. The Advisor may discontinue such
waivers and/or expense reimbursements at any time in its sole discretion.
Without waivers and/or expense reimbursements, 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: $5, $14, $25 and $55 for the Index
500 Fund; $13, $40, $69 and $152 for the Multi-Season Growth Fund; $12, $36,
$62 and $137 for the Mid-Cap Growth Fund, $13, $40, $70 and $153 for the Real
Estate Equity Investment Fund and $11, $33, $58 and $128 for the Value Fund.
Without waivers and/or expense reimbursements, the total fund operating
expenses an investor would pay for Class Y Shares would be .44% for the Index
500 Fund, 1.26% for the Multi-Season Growth Fund, 1.13% for the Mid-Cap Growth
Fund, 1.27% for the Real Estate Equity Investment Fund and 1.05% for the Value
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.
5
<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
Equity Selection Fund, the Micro-Cap Equity Fund, the Small-Cap Value Fund and
the International Bond 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>
ACCELERATING GROWTH FUND
---------------------------------------------------------------------
YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED YEAR ENDED ENDED ENDED ENDED
6/30/96 6/30/95(A) 2/28/95(E) 2/28/94 2/28/93 2/29/92(F)
-------- ---------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $ 14.88 $ 12.77 $ 13.99 $ 12.08 $ 11.10 $ 10.00
-------- -------- -------- -------- -------- --------
Income from Investment
Operations:
Net investment
income/(loss).......... (0.02) 0.00(b) 0.00(b) 0.02 0.06 0.03
Net realized and
unrealized gain/(loss)
on investments......... 2.94 2.11 (0.88) 2.16 1.26 1.08
-------- -------- -------- -------- -------- --------
Total from investment
operations............. 2.92 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......... (2.33) -- (0.34) (0.25) (0.28) --
-------- -------- -------- -------- -------- --------
Total distributions..... (2.33) -- (0.34) (0.27) (0.34) (0.01)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of
Period.................. $ 15.47 $ 14.88 $ 12.77 $ 13.99 $ 12.08 $ 11.10
======== ======== ======== ======== ======== ========
Total Return(c)......... 22.31% 16.52% (6.22)% 18.08% 12.07% 11.13%
======== ======== ======== ======== ======== ========
Ratios to Average Net
Assets/Supplemental
Data:
Net Assets, End of
Period (in thousands).. $188,390 $193,701 $177,584 $240,680 $172,217 $151,336
Ratio of operating
expenses to average net
assets................. 0.95% 0.95%(d) 0.93% 0.95% 0.96% 0.20%(d)
Ratio of net investment
income/(loss) to
average net assets..... (0.17)% 0.04%(d) 0.00%(h) 0.13% 0.40% 1.28%(d)
Portfolio turnover rate. 112% 31% 90% 34% 56% 73%
Ratio of operating
expenses to average net
assets without waivers. 1.02% 1.19%(d) 1.16% 1.20% 1.21% 1.20%(d)
Net investment
income/(loss) per share
without waivers........ $ (0.03) $ (0.01) $ (0.04) $ (0.02) $ 0.02 $ 0.01
Average commission
rate(g)................ $ 0.0548 N/A N/A N/A N/A N/A
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Amount represents less than $0.01 per share.
(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 Accelerating Growth Fund Class Y Shares commenced operations on
December 1, 1991.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Amount rounds to less than 0.01%.
6
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
-----------------------------------------------
PERIOD PERIOD
YEAR ENDED ENDED YEAR ENDED ENDED
6/30/96(G) 6/30/95(A) 2/28/95(D) 2/28/94(E)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period........................ $ 10.77 $ 9.95 $ 10.36 $ 10.00
-------- ------- ------- -------
Income from Investment
Operations:
Net investment income......... 0.30 0.10 0.21 0.16
Net realized and unrealized
gain/(loss) on investments... 1.55 0.85 (0.42) 0.32
-------- ------- ------- -------
Total from investment
operations................... 1.85 0.95 (0.21) 0.48
-------- ------- ------- -------
Less Distributions:
Dividends from net investment
income....................... (0.27) (0.13) (0.20) (0.12)
-------- ------- ------- -------
Total distributions........... (0.27) (0.13) (0.20) (0.12)
-------- ------- ------- -------
Net Asset Value, End of Period. $ 12.35 $ 10.77 $ 9.95 $ 10.36
======== ======= ======= =======
Total Return(b)............... 17.35% 9.57% (1.91)% 4.81%
======== ======= ======= =======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands)................... $ 57,637 $48,844 $45,610 $43,997
Ratio of operating expenses to
average net assets........... 0.90% 0.91%(c) 0.97% 0.95%(c)
Ratio of net investment income
to average net assets........ 2.54% 2.76%(c) 2.14% 1.78%(c)
Portfolio turnover rate....... 197 52% 116% 50%
Ratio of operating expenses to
average net assets without
waivers...................... 1.01% 1.26%(c) 1.32% 1.20%(c)
Net investment income per
share without waivers........ $ 0.29 $ 0.08 $ 0.18 $ 0.14
Average commission rate(f).... $ 0.0586 N/A N/A N/A
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) The Munder Balanced Fund Class Y Shares commenced operations on April 13,
1993.
(f) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
7
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND
------------------------------------
PERIOD
YEAR ENDED ENDED PERIOD ENDED
6/30/96(H) 6/30/95(A) 2/28/95(D,E)
---------- ---------- ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 11.14 $10.43 $10.00
------- ------ ------
Income from Investment Operations:
Net investment income................... 0.35 0.11 0.25
Net realized and unrealized gain on
investments............................ 1.98 0.79 0.34
------- ------ ------
Total from investment operations........ 2.33 0.90 0.59
------- ------ ------
Less Distributions:
Dividends from net investment income.... (0.33) (0.19) (0.16)
Distributions from net realized gains... (0.09) -- (0.00)(f)
------- ------ ------
Total distributions..................... (0.42) (0.19) (0.16)
------- ------ ------
Net Asset Value, End of Period........... $ 13.05 $11.14 $10.43
======= ====== ======
Total Return(b)......................... 21.26% 8.69% 6.02%
======= ====== ======
Ratios to Average Net Assets/Supplemental
Data:
Net assets, end of period (in
thousands)............................. $20,464 $7,860 $4,142
Ratio of operating expenses to average
net assets............................. 0.96% 0.84%(c) 0.28%(c)
Ratio of net investment income to
average net assets..................... 2.81% 3.58%(c) 4.97%(c)
Portfolio turnover rate................. 37% 13% 12%
Ratio of operating expenses to average
net assets without waivers............. 1.03% 1.26%(c) 1.28%(c)
Net investment income per share without
waivers................................ $ 0.34 $ 0.09 $ 0.20
Average commission rate(g).............. $0.0591 N/A N/A
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) The Munder Growth & Income Fund Class Y Shares commenced operations on
July 5, 1994.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
8
<PAGE>
<TABLE>
<CAPTION>
INDEX 500 FUND
------------------------------------------------------------------
PERIOD YEAR YEAR YEAR PERIOD
YEAR ENDED ENDED ENDED ENDED ENDED ENDED
6/30/96(D) 6/30/95(A) 2/28/95(D,E) 2/28/94 2/28/93 2/29/92(F)
---------- ---------- ------------ ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 13.81 $ 12.40 $ 12.07 $ 11.47 $ 11.02 $ 10.00
-------- -------- -------- ------- ------- -------
Income from Investment
Operations:
Net investment income.. 0.36 0.11 0.32 0.31 0.31 0.07
Net realized and
unrealized gain on
investments........... 3.07 1.46 0.50 0.59 0.78 0.97
-------- -------- -------- ------- ------- -------
Total from investment
operations............ 3.43 1.57 0.82 0.90 1.09 1.04
-------- -------- -------- ------- ------- -------
Less Distributions:
Dividends from net
investment income..... (0.35) (0.16) (0.32) (0.30) (0.31) (0.02)
Distributions from net
realized gains........ (0.72) -- (0.17) -- (0.33) --
-------- -------- -------- ------- ------- -------
Total distributions.... (1.07) (0.16) (0.49) (0.30) (0.64) (0.02)
-------- -------- -------- ------- ------- -------
Net Asset Value, End of
Period................. $ 16.17 $ 13.81 $ 12.40 $ 12.07 $ 11.47 $ 11.02
======== ======== ======== ======= ======= =======
Total Return(b)........ 25.61% 12.69% 7.06% 7.97% 10.25% 10.44%
======== ======== ======== ======= ======= =======
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands). $174,693 $124,902 $100,024 $85,269 $58,164 $59,019
Ratio of operating
expenses to average
net assets............ 0.26% 0.25%(c) 0.25% 0.25% 0.25% 0.13%(c)
Ratio of net investment
income to average net
assets................ 2.38% 2.66%(c) 2.74% 2.61% 2.73% 2.59%(c)
Portfolio turnover
rate.................. 8% 6% 7% 1% 22% 0%
Ratio of operating
expenses to average
net assets
without waivers and/or
expenses reimbursed... 0.44% 0.38%(c) 0.39% 0.42% 0.47% 1.21%(c)
Net investment income
per share without
waivers and/or
expenses reimbursed... $ 0.33 $ 0.11 $ 0.31 $ 0.29 $ 0.29 $ 0.04
Average commission
rate(g)............... $ 0.0240 N/A N/A N/A N/A N/A
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(e) 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 Index 500 Fund Class Y Shares commenced operations on December
1, 1991.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
9
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
----------------------------------------------------------------
YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/96(D) 6/30/95(A) 2/28/95(D,E) 2/28/94 2/28/93 2/29/92(F)
---------- --------- ------------ ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 13.45 $ 12.30 $ 13.68 $ 10.64 $ 10.76 $ 10.00
------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Net investment income.. 0.19 0.12 0.20 0.19 0.11 0.11
Net realized and
unrealized gain/(loss)
on investments........ 1.64 1.03 (1.47) 2.85 (0.10) 0.67
------- ------- ------- ------- ------- -------
Total from investment
operations............ 1.83 1.15 (1.27) 3.04 0.01 0.78
------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from net
investment income..... (0.13) -- (0.05) -- (0.11) (0.02)
Distribution from net
realized gains........ -- -- -- -- (0.02) --
Distribution from
capital............... -- -- (0.06) -- -- --
------- ------- ------- ------- ------- -------
Total distributions.... (0.13) -- (0.11) -- (0.13) (0.02)
------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period................. $ 15.15 $ 13.45 $ 12.30 $ 13.68 $ 10.64 $ 10.76
======= ======= ======= ======= ======= =======
Total Return(b)........ 13.63% 9.35% (9.33)% 28.57% 0.09% 7.76%
======= ======= ======= ======= ======= =======
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands). $89,435 $75,000 $68,263 $68,954 $42,740 $33,357
Ratio of operating
expenses to average
net assets............ 1.01% 0.96%(c) 0.93% 1.03% 1.02% 0.25%(c)
Ratio of net investment
income to average net
assets................ 1.32% 2.82%(c) 1.56% 1.65% 1.25% 4.16%(c)
Portfolio turnover
rate.................. 75% 14% 20% 15% 1% 0%
Ratio of operating
expenses to average
net assets without
waivers............... 1.08% 1.21%(c) 1.18% 1.28% 1.34% 1.33%(c)
Net investment income
per share without
waivers............... $ 0.18 $ 0.11 $ 0.17 $ 0.16 $ 0.08 $ 0.08
Average commission
rate(g)............... $0.0288 N/A N/A N/A N/A N/A
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(e) 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 International Equity Fund Class Y Shares commenced operations
on December 1, 1991.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
10
<PAGE>
<TABLE>
<CAPTION>
MID-CAP
GROWTH FUND
------------
PERIOD ENDED
6/30/96(A,E)
------------
<S> <C>
Net Asset Value, Beginning of Period............................ $ 10.00
-------
Income from Investment Operations:
Net investment loss............................................ (0.03)
Net realized and unrealized gain on investments................ 1.61
-------
Total from investment operations............................... 1.58
-------
Less Distributions:
Dividends from net investment income........................... --
-------
Total distributions............................................ --
-------
Net Asset Value, End of Period.................................. $ 11.58
=======
Total Return(c)................................................ 15.80%
=======
Ratios to Average Net Assets/Supplemental Data:
Net assets, end of period (in 000's)........................... $21,449
Ratio of operating expenses to average net assets.............. 0.95%(b)
Ratio of net investment loss to average net assets............. (0.28)%(b)
Portfolio turnover rate........................................ 247%
Ratio of operating expenses to average net assets without
waivers and expenses reimbursed............................... 1.13%(b)
Net investment loss per share without waivers and expenses
reimbursed.................................................... $ (0.04)
Average commission rate(d)..................................... $0.0600
</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.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
11
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND
------------------------------------------------
YEAR PERIOD
YEAR ENDED PERIOD ENDED ENDED ENDED
6/30/96(J) 6/30/95(A,B,C) 12/31/94 12/31/93(H)
---------- -------------- -------- -----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period....................... $ 12.10 $ 10.43 $10.70 $10.20
-------- ------- ------ ------
Income from Investment
Operations:
Net investment income........ 0.09 0.00(d) 0.04 0.00(d)
Net realized and unrealized
gain/(loss) on investments.. 3.22 1.67 (0.27) 0.50
-------- ------- ------ ------
Total from investment
operations.................. 3.31 1.67 (0.23) 0.50
-------- ------- ------ ------
Less Distributions:
Dividends from net investment
income...................... (0.07) -- -- --
Distributions from net
realized gains.............. (0.40) -- (0.04) --
-------- ------- ------ ------
Total distributions.......... (0.47) -- (0.04) --
-------- ------- ------ ------
Net Asset Value, End of
Period....................... $ 14.94 $ 12.10 $10.43 $10.70
======== ======= ====== ======
Total Return(e).............. 27.85% 16.01% (2.17)% 4.90%
======== ======= ====== ======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands).................. $130,129 $87,604 $3,244 $2,322
Ratio of operating expenses
to average net assets....... 1.01% 1.40%(f) 1.50% 1.50%(f)
Ratio of net investment
income to average net
assets...................... 0.69% 0.53%(f) 0.29% 0.08%(f)
Portfolio turnover rate...... 54% 27% 48% 238%
Ratio of operating expenses
to average net assets
without waivers............. 1.26% 1.72%(f) 2.53% 2.70%(f)
Net investment income/(loss)
per share without
waivers(g).................. $ 0.06 $ 0.00(d) $(0.10) $ 0.00(d)
Average commission rate(i)... 0.0592 N/A N/A N/A
</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 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.
(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 16, 1993.
(i) Average commission rate paid per share of securities purchased and sold by
the Fund.
(j) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
12
<PAGE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY
INVESTMENT FUND
-----------------------
YEAR ENDED PERIOD ENDED
6/30/96(F) 6/30/95(A,B)
---------- ------------
<S> <C> <C>
Net Asset Value, Beginning of Period.................. $ 10.09 $10.00
------- ------
Income from Investment Operations:
Net investment income................................ 0.47 0.37
Net realized and unrealized gain on investments...... 1.13 0.08
------- ------
Total from investment operations..................... 1.60 0.45
------- ------
Less Distributions:
Dividends from net investment income................. (0.47) (0.36)
------- ------
Total distributions.................................. (0.47) (0.36)
------- ------
Net Asset Value, End of Period........................ $ 11.22 $10.09
======= ======
Total Return(c)...................................... 16.20% 4.64%
======= ======
Ratios to Average Net Assets/Supplemental Data:
Net assets, end of period (in thousands)............. $19,125 $4,989
Ratio of operating expenses to average net assets.... 1.00% 1.25%(d)
Ratio of net investment income to average net assets. 4.50% 5.28%(d)
Portfolio turnover rate.............................. 17% 3%
Ratio of operating expenses to average net assets
without waivers and/or expenses reimbursed.......... 1.27% 6.98%(d)
Net investment income/(loss) per share without
waivers and/or expenses reimbursed.................. $ 0.44 $(0.03)
Average commission rate(e)........................... $0.0600 N/A
</TABLE>
- --------
(a) The Munder Real Estate Equity Investment Fund Class Y Shares commenced
operations on October 3, 1994.
(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) Average commission rate paid per share of securities purchased and sold by
the Fund.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
13
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND
--------------------------------------------------------------------
PERIOD YEAR YEAR PERIOD
YEAR ENDED ENDED YEAR ENDED ENDED ENDED ENDED
6/30/96(G) 6/30/95(A) 2/28/95(D) 2/28/94 2/28/93 2/29/92(E)
---------- ---------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 15.33 $ 13.93 $ 14.38 $ 12.72 $ 11.49 $ 10.00
-------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Net investment
income/(loss)......... (0.07) (0.01) (0.02) (0.04) 0.04 0.03
Net realized and
unrealized gain/(loss)
on investments........ 7.19 1.41 (0.41) 1.97 1.23 1.47
-------- ------- ------- ------- ------- -------
Total from investment
operations............ 7.12 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........ (1.24) -- (0.02) (0.27) -- --
-------- ------- ------- ------- ------- -------
Total distributions.... (1.24) -- (0.02) (0.27) (0.04) (0.01)
-------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period................. $ 21.21 $ 15.33 $ 13.93 $ 14.38 $ 12.72 $ 11.49
======== ======= ======= ======= ======= =======
Total Return(b)........ 48.65% 10.05% (3.00)% 15.19% 11.13% 15.01%
======== ======= ======= ======= ======= =======
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands). $107,492 $79,968 $72,207 $64,466 $48,569 $36,386
Ratio of operating
expenses to average
net assets............ 0.96% 0.96%(c) 0.98% 0.95% 0.96% 0.22%(c)
Ratio of net investment
income/(loss) to
average net assets.... (0.41)% (0.16)%(c) (0.15)% (0.28)% 0.10% 1.16%(c)
Portfolio turnover
rate.................. 98% 39% 45% 47% 46% 43%
Ratio of operating
expenses to average
net assets without
waivers............... 1.03% 1.21%(c) 1.23% 1.20% 1.16% 0.97%(c)
Net investment
income/(loss) per
share without
waivers............... $ (0.08) $ (0.02) $ (0.04) $ (0.08) $ (0.08) $ 0.01
Average commission
rate(f)............... $ 0.0551 N/A N/A N/A N/A N/A
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) The Munder Small Company Growth Fund Class Y Shares commenced operations
on December 1, 1991.
(f) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
14
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND
------------
PERIOD ENDED
6/30/96(A,E)
------------
<S> <C>
Net Asset Value, Beginning of Period............................. $ 10.00
-------
Income from Investment Operations:
Net investment income........................................... 0.09
Net realized and unrealized gain on investments................. 1.56
-------
Total from investment operations................................ 1.65
-------
Less Distributions:
Dividends from net investment income............................ (0.06)
-------
Total distributions............................................. (0.06)
-------
Net Asset Value, End of Period................................... $ 11.59
=======
Total Return(b)................................................. 16.52%
=======
Ratios to Average Net Assets/Supplemental Data:
Net assets, end of period (in 000's)............................ $35,432
Ratio of operating expenses to average net assets............... 0.95%(c)
Ratio of net investment income to average net assets............ 0.89%(c)
Portfolio turnover rate......................................... 223%
Ratio of operating expenses to average net assets without
waivers and expenses reimbursed................................ 1.05%(c)
Net investment income per share without waivers and/or expenses
reimbursed..................................................... $ 0.08
Average commission rate(d)...................................... $0.0602
</TABLE>
- --------
(a) The Munder Value Fund Class Y Shares commenced operations on August 18,
1995.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
15
<PAGE>
<TABLE>
<CAPTION>
BOND FUND
-------------------------------------------------------------------
YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/96 6/30/95(A) 2/28/95(D,E) 2/28/94 2/28/93 2/29/92(F)
-------- ---------- ------------ -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 9.70 $ 9.31 $ 9.91 $ 9.92 $ 10.13 $ 10.00
-------- -------- -------- -------- -------- --------
Income from Investment
Operations:
Net investment income.. 0.64 0.21 0.64 0.58 0.77 0.20
Net realized and
unrealized gain/(loss)
on investments........ (0.21) 0.39 (0.64) (0.03) (0.12) 0.07
-------- -------- -------- -------- -------- --------
Total from investment
operations............ 0.43 0.60 0.00 0.55 0.65 0.27
-------- -------- -------- -------- -------- --------
Less Distributions:
Dividends from net
investment income..... (0.60) (0.21) (0.60) (0.56) (0.77) (0.14)
Distributions from net
realized gains........ -- -- -- -- (0.09) --
-------- -------- -------- -------- -------- --------
Total distributions.... (0.60) (0.21) (0.60) (0.56) (0.86) (0.14)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of
Period................. $ 9.53 $ 9.70 $ 9.31 $ 9.91 $ 9.92 $ 10.13
======== ======== ======== ======== ======== ========
Total Return(b)........ 4.50% 6.48% 0.70% 5.63% 6.75% 2.70%
======== ======== ======== ======== ======== ========
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands). $113,020 $146,741 $141,704 $147,770 $154,078 $145,120
Ratio of operating
expenses to average
net assets............ 0.70% 0.70%(c) 0.67% 0.80% 0.76% 0.19%(c)
Ratio of net investment
income to average net
assets................ 6.51% 6.72%(c) 6.82% 5.70% 7.50% 8.32%(c)
Portfolio turnover
rate.................. 507% 99% 165% 128% 77% 34%
Ratio of operating
expenses to average
net assets without
waivers............... 0.79% 0.94%(c) 0.91% 0.94% 0.94% 0.93%(c)
Net investment income
per share without
waivers............... $ 0.64 $ 0.21 $ 0.61 $ 0.57 $ 0.75 $ 0.18
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(e) 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 Bond Fund Class Y Shares commenced operations on December 1,
1991.
16
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
-----------------------------------------------------------------
YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/96 6/30/95(A) 2/28/95(D) 2/28/94 2/28/93 2/29/92(E)
-------- ---------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 9.51 $ 9.27 $ 9.91 $ 10.47 $ 10.07 $ 10.00
-------- -------- -------- -------- -------- --------
Income from Investment
Operations:
Net investment income.. 0.60 0.23 0.60 0.59 0.54 0.15
Net realized and
unrealized gain/(loss)
on investments........ (0.20) 0.24 (0.59) (0.20) 0.49 0.02
-------- -------- -------- -------- -------- --------
Total from investment
operations............ 0.40 0.47 0.01 0.39 1.03 0.17
-------- -------- -------- -------- -------- --------
Less Distributions:
Dividends from net
investment income..... (0.60) (0.23) (0.64) (0.58) (0.54) (0.10)
Distributions from net
realized gains........ -- -- (0.01) (0.37) (0.09) --
-------- -------- -------- -------- -------- --------
Total distributions.... (0.60) (0.23) (0.65) (0.95) (0.63) (0.10)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of
Period................. $ 9.31 $ 9.51 $ 9.27 $ 9.91 $ 10.47 $ 10.07
======== ======== ======== ======== ======== ========
Total Return(b)........ 4.29% 5.12% 0.78% 3.79% 10.56% 1.72%
======== ======== ======== ======== ======== ========
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands). $182,937 $157,484 $162,185 $162,738 $152,470 $114,014
Ratio of operating
expenses to average
net assets............ 0.69% 0.70%(c) 0.68% 0.80% 0.77% 0.19%(c)
Ratio of net investment
income to average net
assets................ 6.33% 7.37%(c) 6.96% 5.63% 5.53% 6.17%(c)
Portfolio turnover
rate.................. 494% 84% 80% 155% 104% 23%
Ratio of operating
expenses to average
net assets without
waivers............... 0.77% 0.94%(c) 0.93% 0.94% 0.95% 0.93%(c)
Net investment income
per share without
waivers............... $ 0.59 $ 0.23 $ 0.58 $ 0.58 $ 0.52 $ 0.13
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) The Munder Intermediate Bond Fund Class Y Shares commenced operations on
December 1, 1991.
17
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME FUND
------------------------------------
PERIOD
YEAR ENDED ENDED PERIOD ENDED
6/30/96(F) 6/30/95(A) 2/28/95(D,E)
---------- --------- ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 10.30 $ 9.89 $ 10.00
------- ------- -------
Income from Investment Operations:
Net investment income................... 0.74 0.24 0.44
Net realized and unrealized gain/(loss)
on investments......................... (0.27) 0.41 (0.07)
------- ------- -------
Total from investment operations........ 0.47 0.65 0.37
------- ------- -------
Less Distributions:
Dividends from net investment income.... (0.71) (0.24) (0.48)
Distributions from net realized gain.... (0.08) -- --
------- ------- -------
Total distributions..................... (0.79) (0.24) (0.48)
------- ------- -------
Net Asset Value, End of Period........... $ 9.98 $ 10.30 $ 9.89
======= ======= =======
Total Return(b)......................... 4.58% 6.64% 3.85%
======= ======= =======
Ratios to Average Net Assets/Supplemental
Data:
Net assets, end of period (in
thousands)............................. $46,695 $12,862 $11,647
Ratio of operating expenses to average
net assets............................. 0.72% 0.72%(c) 0.70%(c)
Ratio of net investment income to
average net assets..................... 7.17% 7.21%(c) 7.27%(c)
Portfolio turnover rate................. 133% 42% 143%
Ratio of operating expenses to average
net assets without waivers............. 0.79% 0.96%(c) 0.94%(c)
Net investment income per share without
waivers................................ $ 0.73 $ 0.24 $ 0.43
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) The Munder U.S. Government Income Fund Class Y Shares commenced operations
on July 5, 1994.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
18
<PAGE>
<TABLE>
<CAPTION>
MICHIGAN TRIPLE TAX-FREE BOND FUND
------------------------------------------------
YEAR PERIOD
YEAR ENDED PERIOD ENDED ENDED ENDED
6/30/96(D) 6/30/95(A,D) 2/28/95(D,E) 2/28/94(F)
---------- ------------ ------------ ----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period...................... $9.34 $9.24 $9.73 $10.00
----- ----- ----- ------
Income from Investment
Operations:
Net investment income....... 0.44 0.17 0.50 0.05
Net realized and unrealized
gain/(loss) on investments. 0.07 0.10 (0.54) (0.30)
----- ----- ----- ------
Total from investment
operations................. 0.51 0.27 (0.04) (0.25)
----- ----- ----- ------
Less Distributions:
Dividends from net
investment income.......... (0.50) (0.17) (0.45) (0.02)
----- ----- ----- ------
Total distributions......... (0.50) (0.17) (0.45) (0.02)
----- ----- ----- ------
Net Asset Value, End of
Period...................... $9.35 $9.34 $9.24 $ 9.73
===== ===== ===== ======
Total Return(b)............. 5.51% 2.92% 0.10% (2.47)%
===== ===== ===== ======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period
(in thousands)............. $ 204 $ 771 $ 604 $2,252
Ratio of operating expenses
to average net assets...... 0.26% 0.27%(c) 0.31% 0.21%(c)
Ratio of net investment
income to average net
assets..................... 5.26% 5.31%(c) 5.06% 3.67%(c)
Portfolio turnover rate..... 31% 8% 53% 0%
Ratio of operating expenses
to average net assets
without waivers............ 0.84% 1.01%(c) 1.05% 0.95%(c)
Net investment income per
share without waivers...... $0.38 $0.12 $0.42 $ 0.04
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(e) 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 Michigan Triple Tax-Free Bond Fund Class Y Shares commenced
operations on January 3, 1994.
19
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE BOND FUND
-------------------------------------
YEAR ENDED PERIOD ENDED PERIOD ENDED
6/30/96(B) 6/30/95(A,B) 2/28/95(E,F)
---------- ------------ ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.... $10.29 $10.13 $10.06
------ ------ ------
Income from Investment Operations:
Net investment income.................. 0.49 0.16 0.30
Net realized and unrealized gain on
investments........................... 0.06 0.16 0.10
------ ------ ------
Total from investment operations....... 0.55 0.32 0.40
------ ------ ------
Less Distributions:
Dividends from net investment income... (0.49) (0.16) (0.33)
Distributions from net realized gains.. (0.01) -- --
------ ------ ------
Total distributions.................... (0.50) (0.16) (0.33)
------ ------ ------
Net Asset Value, End of Period.......... $10.34 $10.29 $10.13
====== ====== ======
Total Return(c)........................ 5.38% 3.17% 4.08%
====== ====== ======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands)............................ $1,929 $1,498 $ 953
Ratio of operating expenses to average
net assets............................ 0.73% 0.77%(d) 0.68%(d)
Ratio of net investment income to
average net assets.................... 4.67% 4.63%(d) 4.94%(d)
Portfolio turnover rate................ 15% 12% 50%
Ratio of operating expenses to average
net assets without waivers............ 0.81% 1.01%(d) 0.92%(d)
Net investment income per share without
waivers............................... $ 0.48 $ 0.15 $ 0.29
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Per share numbers have been calculated using the monthly average shares
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.
(c) Total return represents aggregate total return for the period indicated.
(d) Annualized.
(e) The Munder Tax-Free Bond Fund Class Y Shares commenced operations on July
21, 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.
20
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE BOND FUND
-------------------------------------------------------
PERIOD YEAR PERIOD
YEAR ENDED ENDED YEAR ENDED ENDED ENDED
6/30/96(F) 6/30/95(A) 2/28/95(D) 2/28/94 2/28/93(E)
---------- ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $10.37 $ 10.17 $ 10.44 $10.69 $10.40
------ ------- ------- ------ ------
Income from Investment
Operations:
Net investment income.. 0.45 0.15 0.42 0.42 0.07
Net realized and
unrealized gain/(loss)
on investments........ (0.04) 0.20 (0.23) (0.14) 0.31
------ ------- ------- ------ ------
Total from investment
operations............ 0.41 0.35 0.19 0.28 0.38
------ ------- ------- ------ ------
Less Distributions:
Dividends from net
investment income..... (0.44) (0.15) (0.44) (0.42) (0.07)
Distributions from net
realized gains........ -- -- (0.02) (0.11) (0.02)
------ ------- ------- ------ ------
Total distributions.... (0.44) (0.15) (0.46) (0.53) (0.09)
------ ------- ------- ------ ------
Net Asset Value, End of
Period................. $10.34 $ 10.37 $ 10.17 $10.44 $10.69
====== ======= ======= ====== ======
Total Return(b)........ 3.95% 3.43% 2.34% 2.64% 3.68%
====== ======= ======= ====== ======
Ratios to Average Net
Assets/Supplemental
Data:
Net assets, end of
period (in thousands). $5,285 $11,100 $10,709 $3,074 $ 489
Ratio of operating
expenses to average
net assets............ 0.71% 0.73%(c) 0.70% 0.80% 0.79%(c)
Ratio of net investment
income to average net
assets................ 4.16% 4.27%(c) 4.44% 3.99% 4.08%(c)
Portfolio turnover
rate.................. 20% 5% 52% 38% 57%
Ratio of operating
expenses to average
net assets without
waivers............... 0.79% 0.97%(c) 0.94% 0.94% 0.93%(c)
Net investment income
per share without
waivers............... $ 0.44 $ 0.14 $ 0.39 $ 0.41 $ 0.07
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) The Munder Tax-Free Intermediate Bond Fund Class Y Shares commenced
operations on December 17, 1992.
(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.
21
<PAGE>
<TABLE>
<CAPTION>
CASH INVESTMENT FUND
---------------------------------------------------------------------------
YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED YEAR ENDED ENDED ENDED ENDED ENDED
6/30/96 6/30/95(A) 2/28/95(D) 2/28/94 2/28/93 2/29/92 2/28/91(E)
-------- ---------- ---------- -------- -------- -------- ----------
<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 $ 1.00
-------- -------- -------- -------- -------- -------- --------
Income from Investment
Operations:
Net investment income.. 0.051 0.019 0.042 0.027 0.031 0.052 0.073
-------- -------- -------- -------- -------- -------- --------
Total from investment
operations............ 0.051 0.019 0.042 0.027 0.031 0.052 0.073
-------- -------- -------- -------- -------- -------- --------
Less Distributions:
Dividends from net
investment income..... (0.051) (0.019) (0.042) (0.027) (0.031) (0.052) (0.073)
-------- -------- -------- -------- -------- -------- --------
Total distributions.... (0.051) (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 $ 1.00
======== ======== ======== ======== ======== ======== ========
Total Return(b)........ 5.27% 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). $317,825 $340,394 $324,793 $282,363 $320,296 $317,943 $317,545
Ratio of operating
expenses to average
net assets............ 0.53% 0.52%(c) 0.55% 0.53% 0.48% 0.44% 0.45%(c)
Ratio of net investment
income to average net
assets................ 5.13% 5.64%(c) 4.27% 2.66% 3.12% 5.12% 7.43%(c)
Ratio of operating
expenses to average
net assets without
waivers............... 0.53% 0.54%(c) 0.58% 0.58% 0.59% 0.63% 0.65%(c)
Net investment income
per share without
waivers............... $ 0.051 $ 0.019 $ 0.041 $ 0.026 $ 0.030 $ 0.050 $ 0.071
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) The Munder Cash Investment Fund Class Y Shares commenced operations on
March 14, 1990.
22
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND
---------------------------------------------
YEAR YEAR PERIOD
ENDED PERIOD ENDED ENDED 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 $ 1.00
-------- -------- -------- -------
Income from Investment
Operations:
Net investment income......... 0.051 0.024 0.040 0.010
-------- -------- -------- -------
Total from investment
operations................... 0.051 0.024 0.040 0.010
-------- -------- -------- -------
Less Distributions:
Dividends from net investment
income....................... (0.051) (0.024) (0.040) (0.010)
-------- -------- -------- -------
Total distributions........... (0.051) (0.024) (0.040) (0.010)
-------- -------- -------- -------
Net Asset Value, End of Period. $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== =======
Total Return(c)............... 5.17% 2.44% 3.88% 0.96%
======== ======== ======== =======
Ratios to Average Net
Assets/Supplemental Data:
Net assets, end of period (in
thousands)................... $223,396 $263,513 $145,685 $90,086
Ratio of operating expenses to
average net assets........... 0.62% 0.60%(d) 0.60% 0.60%(d)
Ratio of net investment income
to average net assets........ 5.09% 5.46%(d) 3.81% 2.57%(d)
Ratio of operating expenses to
average net assets without
waivers...................... 0.62% 0.66%(d) 0.74% 0.73%(d)
Net investment income per
share without waivers(e)..... $ 0.051 $ 0.024 $ 0.040 $ 0.010
</TABLE>
- --------
(a) Fiscal year end 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.
23
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
----------------------------------------------------------------------
YEAR PERIOD YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/96 6/30/95(A) 2/28/95(D) 2/28/94 2/28/93 2/29/92 2/28/91(E)
------- --------- --------- ------- ------- -------- ---------
<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 $ 1.00
------- ------- ------- ------- ------- -------- -------
Income from Investment
Operations:
Net investment income.. 0.031 0.012 0.026 0.020 0.025 0.039 0.051
------- ------- ------- ------- ------- -------- -------
Total from investment
operations............ 0.031 0.012 0.026 0.020 0.025 0.039 0.051
------- ------- ------- ------- ------- -------- -------
Less Distributions:
Dividends from net
investment income..... (0.031) (0.012) (0.026) (0.020) (0.025) (0.039) (0.051)
------- ------- ------- ------- ------- -------- -------
Total distributions.... (0.031) (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 $ 1.00
======= ======= ======= ======= ======= ======== =======
Total Return(b)........ 3.16% 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). $25,594 $23,430 $30,884 $53,798 $94,749 $102,453 $94,546
Ratio of operating
expenses to average
net assets............ 0.53% 0.54%(c) 0.55% 0.54% 0.50% 0.44% 0.45%(c)
Ratio of net investment
income to average net
assets................ 3.14% 3.51%(c) 2.54% 2.00% 2.45% 3.89% 5.30%(c)
Ratio of operating
expenses to average
net assets without
waivers............... 0.55% 0.59%(c) 0.60% 0.59% 0.58% 0.62% 0.66%(c)
Net investment income
per share without
waivers............... $ 0.031 $ 0.012 $ 0.025 $ 0.020 $ 0.024 $ 0.037 $ 0.050
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) The Munder Tax-Free Money Market Fund Class Y Shares commenced operations
on March 14, 1990.
24
<PAGE>
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND
--------------------------------------------------------------------------
YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED YEAR ENDED ENDED ENDED ENDED ENDED
6/30/96 6/30/95(A) 2/28/95(D) 2/28/94 2/28/93 2/29/92 2/28/91(E)
-------- ---------- ---------- -------- -------- ------- ----------
<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 $ 1.00
-------- -------- -------- -------- -------- ------- -------
Income from Investment
Operations:
Net investment income.. 0.049 0.018 0.039 0.026 0.030 0.050 0.068
-------- -------- -------- -------- -------- ------- -------
Total from investment
operations............ 0.049 0.018 0.039 0.026 0.030 0.050 0.068
-------- -------- -------- -------- -------- ------- -------
Less Distributions:
Dividends from net
investment income..... (0.049) (0.018) (0.039) (0.026) (0.030) (0.050) (0.068)
-------- -------- -------- -------- -------- ------- -------
Total distributions.... (0.049) (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 $ 1.00
======== ======== ======== ======== ======== ======= =======
Total Return(b)........ 5.02% 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). $309,873 $231,055 $240,590 $245,800 $102,429 $83,619 $88,498
Ratio of operating
expenses to average
net assets............ 0.54% 0.55%(c) 0.55% 0.53% 0.51% 0.44% 0.45%(c)
Ratio of net investment
income to average net
assets................ 4.89% 5.38%(c) 3.88% 2.56% 2.98% 4.95% 6.94%(c)
Ratio of operating
expenses to average
net assets without
waivers............... 0.56% 0.60%(c) 0.60% 0.58% 0.60% 0.63% 0.66%(c)
Net investment income
per share without
waivers............... $ 0.049 $ 0.018 $ 0.038 $ 0.025 $ 0.029 $ 0.048 $ 0.066
</TABLE>
- --------
(a) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) The Munder U.S. Treasury Money Market Fund Class Y Shares commenced
operations on March 14, 1990.
INVESTMENT OBJECTIVES AND POLICIES
This Prospectus describes the following funds offered by the Company and
Munder: the Accelerating Growth, Equity Selection, Growth & Income, Index 500,
International Equity, Mid-Cap Growth, Micro-Cap Equity, Multi-Season Growth,
Real Estate Equity Investment, Small-Cap Value, Small Company Growth 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 Cash Investment Fund, Money
Market Fund, Tax-Free Money Market Fund and U.S. Treasury Money Market 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. Unless otherwise specified in this Prospectus or the
Statement of Additional Information, up to 35% of each Equity Fund's net
assets may be invested in the instruments described under "Portfolio
Instruments and Practices and Associated Risk Factors."
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.
25
<PAGE>
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 temporary 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.
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.
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 $3 billion at
the time of purchase. The Fund will be diversified by industry with
proportionate weightings approximately the same as those of the Standard &
Poor's Composite Stock Price 500 Index (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
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in equity securities, the Fund is also authorized to invest in high quality
short-term fixed income securities as cash reserves or for temporary 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.
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.
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 Standard & Poor's Ratings Service ("S&P"),
a division of McGraw-Hill Companies, Inc., or Moody's Investor Services, Inc.
("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 temporary 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.
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, 1995, the S&P 500 represented approximately 69% 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
27
<PAGE>
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 temporary 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.
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.
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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 the second section 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 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. It is expected that these
securities will be traded in the principal trading market in such countries.
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 temporary defensive purposes. See "Portfolio Instruments
and Practices and Associated Risk Factors--Foreign Securities."
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 micro-cap companies that generally have a market capitalization
of $200 million or less at the time of purchase. Such issuers have market
capitalizations that are less than the capitalization of companies which
predominate the major market indices, such as the S&P 500.
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.
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<PAGE>
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 temporary 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.
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.
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.
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<PAGE>
This style which incorporates both growth investing and value constraints has
been nationally recognized as GARP (Growth at a Reasonable Price) and seeks to
produce attractive returns during various market environments.
The Advisor believes that superior investment returns are derived from
securities of financially stable companies that reward shareholders with
superior earnings growth, are attractively priced and enjoy relative price
momentum. Specifically, the Advisor will examine the earnings growth
characteristics of approximately 5,500 companies for each of the last five
years to determine earnings strength, consistency and momentum. Companies
which have demonstrated superior earnings growth will be further reviewed for
financial stability. Corporate balance sheets will be scrutinized to select
those companies which reinvest a significant portion of profits, demonstrate a
high return on equity and carry a relatively low debt load. Companies that
meet these earnings growth and financial stability criteria are further judged
for their value relative to these criteria and the market. Historically, the
median valuation of the portfolios managed by the Advisor has been no more
than a moderate premium to that of the S&P 500. Once determined to be
attractive values, those securities exhibiting the strongest relative price
momentum to the S&P 500 normally will be chosen by the Advisor for the Fund.
Within these parameters, the Advisor typically will establish equity positions
in approximately 50 to 100 companies. Equity securities generally will be sold
from the Fund's portfolio when they consistently fail to achieve any two or
more of the four criteria stated above.
The Fund invests substantially all, and at least 65%, of its assets in
equity securities. Equity securities include common and preferred stocks and
securities convertible into or exchangeable for common stocks, such as
convertible preferred stocks, convertible debentures or warrants. No more than
25% of the assets of the Fund will be invested in one industry group. In
addition, the Fund will not own more than 10% of the outstanding voting
securities of a single issuer. The Fund may also invest up to 20% of the value
of its total assets in equity securities of foreign issuers, including
companies domiciled in developing countries.
The Fund may invest in short-term money market instruments. Under normal
market conditions, short-term money market instruments could comprise up to
35% of the Fund's total assets. The Fund could invest a higher percentage of
its assets in money market instruments for temporary defensive purposes.
The Fund's investment objective is a fundamental policy and may not be
changed without the authorization of the holders of a majority (as defined in
the Investment Company Act of 1940, as amended (the "1940 Act")) of the Fund's
outstanding shares.
REAL ESTATE EQUITY INVESTMENT FUND
The Real Estate Equity Investment Fund's investment objectives are to
provide shareholders with capital appreciation and current income. It seeks to
achieve these objectives by investing primarily in securities of United States
companies which are principally engaged in the real estate industry or which
own significant real estate assets. It will not invest directly in real
estate.
Under normal conditions, the Fund will invest at least 65% of its total
assets in equity securities of companies listed on U.S. securities exchanges
or NASDAQ which are principally engaged in the real estate industry. Equity
securities include common stock, preferred stock and securities convertible
into common stock. A company is "principally engaged" in the real estate
industry if at least 50% of its assets, gross income or net profits are
attributable to ownership, construction, management or sale of residential,
commercial or industrial real estate. Real estate industry companies may
include among others: equity real estate investment trusts, which pool
investors' funds for investment primarily in commercial real estate
properties; mortgage real estate investment trusts, which invest pooled funds
in real estate related loans; brokers, home builders or real estate
developers; and companies with substantial real estate holdings, such as paper
and lumber producers and hotel and entertainment companies. The Fund will
invest in real estate investment trusts only if they are traded on major U.S.
exchanges or NASDAQ. The Fund will not invest more than 15% of its total
assets in equity real
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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 or BBB by
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.
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 at least 65% of its total assets in equity
securities of small-cap companies that generally have a market capitalization
below $750 million at the time of purchase. Such issuers have market
capitalizations that are less than the capitalization of companies which
predominate the major market indices, such as the S&P 500.
The Advisor will generally favor companies that it believes 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
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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 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 temporary 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
below $750 million 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.
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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 temporary 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.
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 it
believes 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.
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 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 "Fund Investments--Lower Rated Debt
Securities" in the Statement of Additional Information.
BOND FUND, INTERMEDIATE BOND FUND AND U.S. GOVERNMENT INCOME FUND
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.
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Each Bond 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."
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."
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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. "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. 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 and Tax-Free Money Market Fund."
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. In
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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 and Tax-Free Money Market Fund."
CASH INVESTMENT FUND, MONEY MARKET FUND AND U.S. TREASURY MONEY MARKET FUND
The investment objective of both the Cash Investment Fund and U.S. Treasury
Money Market Fund is to provide as high a level of current interest income as
is consistent with maintaining liquidity and stability of principal. The
investment objective of the Money Market Fund is to provide current income
consistent with the preservation of capital and liquidity. 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 Cash Investment Fund and Money
Market 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 Cash Investment
Fund and 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.
Securities acquired by the Cash Investment Fund, Money Market Fund and U.S.
Treasury 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 Boards of Trustees/Directors, to
present minimal credit risks. The Appendix to the Statement of Additional
Information includes a description of applicable ratings.
Assets of the Cash Investment Fund, Money Market Fund and U.S. Treasury
Money Market 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.
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Although the Cash Investment Fund, Money Market Fund and U.S. Treasury Money
Market Fund expect under normal market conditions to be as fully invested as
possible, each Fund may hold uninvested cash pending investment of late
payments for purchase orders (or other payments) or during temporary defensive
periods. Uninvested cash will not earn income. In general, investments in the
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. 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. Each Equity Fund and the Balanced 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 Micro-Cap Equity Fund,
Small-Cap Value Fund and the Small Company Growth 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
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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
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 Securities. Each Equity Fund (except the Real Estate Equity
Investment Fund), the Balanced Fund, each Bond Fund, the International Bond
Fund and the Cash 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. 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. 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. 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 Equity Selection Fund, Micro-Cap Equity Fund, Mid-Cap Growth Fund,
Multi-Season Growth Fund, Small-Cap Value Fund, and Value Fund each may invest
up to 20% and each other Equity Fund (except the International Equity Fund)
may invest up to 10% of its total assets in equity securities of foreign
issuers, including companies domiciled in developing countries. Each Bond
Fund, the Balanced Fund, the Cash Investment Fund and each Tax-Free Bond Fund
may invest up to 10% of its assets in foreign securities. Under normal market
conditions, the International Equity Fund and the International Bond Fund will
each invest at least 65% of its
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assets in equity securities and bonds, respectively, of issuers located in at
least three countries other than the United States. 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 Equity, Balanced and International Bond 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 Mid-Cap Growth Fund and Multi-Season 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. Each Equity Fund (except the
Real Estate Equity Investment Fund), the Balanced Fund, the Bond Funds and the
International Bond Fund may enter into forward foreign 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. 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 the Fund's total
return will be adversely affected as a result. Open positions in forward
contracts are covered by the segregation with a Fund's custodian of cash, U.S.
Government securities or other high grade debt obligations which are marked to
market daily. Each of 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 Bond Funds and the
International Bond Fund normally conduct their 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 Bond Funds and the International Bond Fund will enter
into forward currency contracts. Such Funds generally will not enter into a
forward contract with a term of greater than one year.
Futures Contracts and Options. Each Equity Fund, the Balanced Fund, each
Bond Fund and the International Bond 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
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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.
The Equity Funds, Balanced Fund, Bond Funds and 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 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, each Equity Fund, the Balanced Fund, each Bond Fund and the
International Bond 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.
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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 "Fund Investments"
and Appendix B in the Statement of Additional Information.
Corporate Obligations. The Balanced Fund, each Bond Fund, the International
Bond Fund and the Cash Investment 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, each Bond Fund and the International 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 Cash Investment Fund and Money
Market 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 Equity Funds, the Balanced Fund, each Bond Fund, the
Cash Investment Fund and the Money Market 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.
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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 and Money Market Fund
will invest in the obligations of domestic banks and savings institutions only
if their deposits are federally insured. Investments by the above-referenced
Funds in the obligations of foreign banks and foreign branches of domestic
banks will not exceed 25% of each 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, each Bond Fund, the International Bond Fund and 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 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 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 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
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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.
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 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 a Fund's dividends may be subject to
Federal alternative minimum tax. See "Taxes--Tax-Free Bond Funds and Tax-Free
Money Market Fund."
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.
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Michigan Municipal Obligations. In managing the Michigan Triple Tax-Free
Bond Fund, the Advisor intends to concentrate in Michigan Municipal
Obligations. Additionally, 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. 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.
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 1996-1997 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 AA 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 Michigan Triple
Tax-Free Bond Fund and Tax-Free Intermediate 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. Each Equity Fund, the Balanced Fund, each Bond
Fund, the International Bond Fund, the Cash Investment Fund, the Money Market
Fund and the U.S. Treasury Money Market 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
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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, each of the Bond Funds, the
International Bond Fund, the Cash Investment Fund, the Money Market Fund and
the Tax-Free Money Market 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. 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
Cash Investment Fund, Money Market Fund and U.S. Treasury Money Market Fund,
the securities held subject to a repurchase agreement may have stated
maturities exceeding 397 days, provided the repurchase agreement itself
matures in 397 days. 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, except with respect to
repurchase agreements secured by U.S. Government securities.
Reverse Repurchase Agreements. Each of the Equity Funds (except the Multi-
Season Growth Fund), the Balanced Fund, each of the Bond Funds, the
International Bond Fund, Cash Investment Fund and U.S. Treasury Money Market
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.
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 when the Fund may not demand payment of the principal amount
within seven days absent a reliable trading market.
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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, Micro-Cap Equity Fund, Small-Cap Value Fund,
each of the Bond Funds, the International Bond Fund, Cash Investment Fund,
Money Market Fund and U.S. Treasury Money Market 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 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 Equity Funds, the Balanced Fund, each of the Bond Funds and the
International Bond Fund 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 Bond Funds, International Bond Fund and
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/Directors. 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
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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 International Bond Fund, Michigan
Triple Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund, are each
classified as a diversified investment company under the 1940 Act; the
International Bond Fund, Michigan Triple Tax-Free Bond Fund and Tax-Free
Intermediate 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. Each of the Equity Funds, the Balanced Fund, each of
the Bond Funds, International Bond Fund and each of the 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
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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 its 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. Leveraging by means of borrowing may exaggerate the effect of any
increase or decrease in the value of portfolio securities on the Fund's net
asset value. In addition, borrowed funds are subject to interest costs that
may offset or exceed the return earned on the borrowed funds. However, 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. 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 the Funds' respective objectives and policies. It is
anticipated that the portfolio turnover rate of each of the Equity Selection
Fund, Micro-Cap Equity Fund and Small-Cap Value Fund will not exceed 100% and
that the annual portfolio turnover rate of the International Bond Fund will
range from 200% to 300%. See "Financial Highlights" for the portfolio turnover
rate of each Fund other than the Equity Selection Fund, Micro-Cap Equity Fund,
Small-Cap Value 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 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 regain its tax
status
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as a regulated investment company. See "Taxes" 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, 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 of the Tax-Free Bond
Fund's and 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 advance
notice is not required. No assurance can be given that a Fund will achieve its
investment objective.
Each Fund has also adopted certain fundamental investment limitations that
may be changed only with the approval of a "majority of the outstanding shares
of a Fund" (as defined in the Statement of Additional Information). These
restrictions are set forth in the Statement of Additional Information.
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, the Advisor's investment advisory
clients and family members of employees of the Advisor. "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.
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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) or 4:00 p.m.
(Eastern time) on any Business Day (as defined below). 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 each of the Equity, the
Balanced, each of the Bond, the International Bond, and each of the 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 its 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 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 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.
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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 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 each of the Equity
Funds (except the Equity Selection Fund, International Equity Fund, Micro-Cap
Equity Fund, Mid-Cap Growth Fund, Multi-Season Growth Fund, Real Estate Equity
Investment Fund, Small-Cap Value Fund and Value Fund), the Balanced Fund and
the International Bond Fund. Dividends from net income are declared and paid
at least annually by the Equity Selection Fund, International Equity Fund,
Micro-Cap Equity Fund, Mid-Cap Growth Fund, Multi-Season Growth Fund, Small-
Cap Value Fund and Value Fund. Dividends from net investment income are
declared and paid monthly by the Real Estate Equity Investment Fund. The net
income of each of the Cash Investment Fund, Tax-Free Money Market Fund and
U.S. Treasury Money Market 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, is paid within six business days of month-end. The net income of
the Money Market Fund is declared daily and paid monthly.
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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 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) 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 each of the Equity Funds, the Balanced
Fund, each of the Bond Funds, the International Bond Fund and each of the 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
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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 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
Munder Capital Management, a Delaware general partnership with its principal
offices at 480 Pierce Street, Birmingham, Michigan 48009, serves as the Funds'
investment advisor. The Advisor was formed in December, 1994. 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.
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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. From
April, 1988 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. From December,
1965 to June, 1992, she was Director of Equity Strategy for Comerica Capital
Management, Inc.
Arnold Kent Douville, Senior Portfolio Manager of the Advisor, 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 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
Michigan Triple Tax-Free Bond Fund, Tax-Free Bond Fund and Tax-Free
Intermediate 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. From February, 1980 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. From June,
1987 to September, 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. Mr. Munder has co-managed the Multi-Season
Growth Fund since its inception in April, 1993 and managed the Real Estate
Equity Investment Fund since its inception to October, 1996. 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, Chief Investment Officer of the Advisor, is currently the
co-manager of the International Equity Fund (previously, from January, 1996 to
October, 1996, was the portfolio manager) and the Index 500 Fund (and
previously, from July, 1992 to October, 1996, was the portfolio manager). Mr.
Johnson previously served as a portfolio manager at Woodbridge Capital
Management (June, 1991 to December, 1994) and Manufacturers Bank (June, 1986
to June, 1992). 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, Intermediate
Bond Fund and U.S. Government Income Fund since
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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, Vice President and 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 has been
responsible for fixed income portfolios. From August, 1988 to February, 1991
he was an Investment Manager for Society National Bank.
Gerald Seizert, CFA, CIC, is Executive Vice President and Chief Investment
Officer of all equity management of the Advisor and has managed 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. Prior
to June, 1992, he was a Portfolio Manager for the Trust Investment Department
of Manufacturers Bank, N.A. (January, 1981 to June, 1992).
Jeffrey A. Wrona, CFA, Senior Portfolio Manager of the Advisor, 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
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 (September, 1987 to August,
1988). 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 Bond Fund and the Balanced Fund since May, 1995 and
the International Bond Fund since October, 1996. Prior to joining MCM in 1995,
he was a Vice President and Senior Fund Manager for First of America
Investment Corp. (May, 1987 to May, 1995).
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 International Bond Fund since October, 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 (August, 1981 to April, 1996).
Edward Eberle, Value Portfolio Manager of the Advisor, has been co-manager
of the Value Fund since October, 1996. Prior to being appointed co-manager,
Mr. Eberle acted as the primary analyst for the Fund, assisting the manager
with portfolio decisions. He is also a member of the Advisor's asset
allocation team. Prior to joining the Advisor in 1995, Mr. Eberle served as
Executive Vice President and Portfolio Manager for Westpointe Financial
Corporation and as a member of the Board of Directors for Westpointe Capital
Management and Dart Investors Bermuda Limited. Mr. Eberle received a B.A. in
Finance from Michigan State University.
Carl Wilk, Senior Portfolio Manager of the Advisor, has been co-manager of
the Small Company Growth Fund since October, 1996. Prior to being appointed
co-manager, Mr. Wilk acted as the primary analyst for the Fund assisting the
manager with portfolio decisions. Prior to joining the Advisor in 1995, Mr.
Wilk was a Senior Equity Research Analyst at Woodbridge. Prior
responsibilities include experience as an Investment Analyst at
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Manufacturers Bank, N.A. from 1986 to 1992 for their core growth equity
investment process. In addition, Mr. Wilk performed various financial
positions in the banking and brokerage industry from 1984 to 1986. Mr. Wilk
received a B.S. in Finance, M.B.A. from Wayne State University and is a
Certified Financial Planner.
Peter K. Hoglund, CFA, Portfolio Manager/Strategic Projects of the Advisor,
has been manager of the Real Estate Equity Investment Fund since October,
1996. Prior to being appointed as manager, Mr. Hoglund acted as the primary
analyst for this Fund, assisting the former manager with portfolio decisions.
Prior to joining MCM in May, 1993, Mr. Hoglund was in the Investment Banking
Division of Morgan Stanley & Co., Inc. (July, 1988 to July, 1990) where he was
a financial analyst. Mr. Hoglund received both his B.A. and M.B.A. from the
University of Michigan and is a Chartered Financial Analyst.
Theodore Miller, Senior Portfolio Manager of the Advisor, has been co-
manager of the Internationsl Equity Fund since October, 1996. Prior to being
appointed co-manager, Mr. Miller acted as the primary analyst for the Fund,
assisting the manager with portfolio decisions. Prior to joining the Advisor,
Mr. Miller worked in Derivatives Marketing for Interacciones Global Inc (1993-
1995), in Equity Sales/Trader for McDonald & Co. Securities Inc. (1991-1993)
and started his career in 1986 and was a derivative and equity transaction
execution specialist with various New York investment banks. Mr. Miller
received his B.S. from the University of Pittsburgh and his M.B.A. from
Indiana University.
Robert J. Samrah, Senior Portfolio Manager of the Advisor, has been co-
manager of the Index 500 Fund since October, 1996. Prior to being appointed
co-manager, Mr. Samrah assisted the manager with portfolio decisions. Prior to
joining the Advisor, Mr. Samrah was an Asset/Liability Manager for First of
America Bank Corporation (1993-1994), a Senior Consultant for Deloitte &
Touche Management Consulting (1992-1993) and started his career in 1985 at
GMAC as an Analyst. Mr. Samrah received his B.B.A. and M.B.A. from Wayne State
University.
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 average daily 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, Equity Selection Fund, Growth & Income
Fund, International Equity Fund, Small-Cap Value Fund and Small Company Growth
Fund; .74% of average daily net assets of each of the Mid-Cap Growth Fund,
Real Estate Equity Investment 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, International Bond Fund, U.S. Government
Income Fund, Michigan Triple Tax-Free Bond Fund, Tax-Free Bond Fund and Tax-
Free Intermediate Bond Fund; .40% of average daily net assets of the Money
Market Fund; .35% of average daily net assets of each of the Cash Investment
Fund, Tax-Free Money Market Fund and U.S. Treasury Money Market Fund and .20%
of the first $250 million of average daily net assets, .12% of the next $250
million of average daily net assets and .07% of average daily net assets in
excess of $500 million of the Index 500 Fund. The voluntary advisory fee
waiver previously in effect for the Michigan Triple Tax-Free Bond Fund is
discontinued as of the date of this Prospectus.
For the period July 1, 1995 to October 27, 1995, the Advisor received fees,
after waivers, if any, at an effective rate of .75% of the average daily net
assets of each of the Accelerating Growth Fund, Growth & Income Fund,
International Equity Fund, and Small Company Growth Fund; .65% of average
daily net assets of the Balanced Fund; .50% of the average daily net assets of
each of the Bond Fund, Intermediate Bond Fund, U.S. Government Income Fund,
Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund; .35% of the average
daily net assets of the Cash Management Fund, the Tax-Free Money Market Fund
and the U.S. Treasury Money Market 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.
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For the period October 28, 1996 to June 30, 1996, the Advisor received fees,
after waivers, if any, at an effective rate of .75% of the average daily net
assets of each of the Accelerating Growth Fund, Growth & Income Fund,
International Equity Fund, and Small Company Growth Fund; .65% of the average
daily net assets of the Balanced Fund; .50% of the average daily net assets of
each of the Bond Fund, Intermediate Bond Fund, U.S. Government Income Fund,
Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund; .35% of the average
daily net assets of each of the Cash Investment Fund, Tax-Free Money Market
Fund and U.S. Treasury Fund; .06% 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.
For the fiscal year ended June 30, 1996 (and for the Mid-Cap Growth Fund and
Value Fund for the period of commencement of operations to June 30, 1996) the
Advisor received fees, after waivers, if any, at an effective rate of .75% of
average daily net assets of the Multi-Season Growth Fund; .68% of average
daily net assets of the Real Estate Equity Investment Fund; .73% of average
daily net assets of the Value Fund; .71% of average daily net assets of the
Mid-Cap Growth Fund and .40% of average daily net assets of the Money Market
Fund.
The International Bond Fund did not commence operations until October 2,
1996 and the Equity Selection, Micro-Cap Equity and Small-Cap Value Funds had
not commenced operations as of the date of this Prospectus.
The Advisor expects to voluntarily waive a portion of the fees payable to it
with respect to the Index 500 Fund and the Multi-Season Growth 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 .07% and .75% of the average
daily net assets of the Index 500 Fund and the Multi-Season Growth Fund,
respectively, during the Company's and Munder's current fiscal year.
The Advisor may, from time to time, make payments to banks, broker-dealers
or other financial institutions for certain services to the Funds and/or their
shareholders, including sub-administration, sub-transfer agency and
shareholder servicing. Such payments are made out of the Advisor's own
resources and do not involve additional costs to the Funds or their
shareholders.
ADMINISTRATOR, CUSTODIAN AND TRANSFER AGENT
First Data Investor Services Group, Inc. ("First Data"), whose principal
business address is 53 State Street, Boston, Massachusetts 02109, 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.
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 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 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
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<PAGE>
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 and certain other
investment portfolios that are advised by the Advisor for which the Custodian
provides services computed daily and payable monthly at an annual rate of .03%
of the first $100 million of average daily net assets, .02% of the next $500
million of net assets and .01% of net assets in excess of $600 million. The
Custodian also receives certain transaction based fees. 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
0.33% 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 taxable 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 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
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<PAGE>
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 and the International Bond 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 each of the
International Equity Fund's and International Bond 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.
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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--MICHIGAN TRIPLE TAX-FREE BOND FUND AND TAX-FREE INTERMEDIATE
BOND FUND
Ordinary tax-exempt interest dividends paid by the Michigan Triple Tax-Free
Bond Fund and Tax-Free Intermediate 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.
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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, Balanced, Growth & Income,
Index 500, International Equity, Small Company Growth, Bond, Intermediate
Bond, U.S. Government Income, Michigan Triple Tax-Free Bond, Tax-Free Bond,
Tax-Free Intermediate Bond, Cash Investment, Tax-Free Money Market and U.S.
Treasury Money Market, respectively, each of which, except the Michigan Triple
Tax-Free Bond Fund and Tax-Free Intermediate 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.
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 Equity Selection, Micro-
Cap Equity, Mid-Cap Growth, Multi-Season Growth, Real Estate Equity
Investment, Small-Cap Value, Value, International Bond, Money Market and
NetNet Funds, 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 NetNet
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 Cash Investment, Tax-Free Money
Market and U.S. Treasury Money Market Funds offer only Class A Shares, Class K
Shares and Class Y Shares. The NetNet 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 Accelerating Growth,
Balanced, Equity Selection, Growth & Income, Index 500, International Equity,
Micro-Cap Equity, Mid-Cap Growth, Multi-Season Growth, Real Estate Equity
Investment, Small-Cap Value, Small Company Growth, Value, Bond, Intermediate
Bond, International Bond, U.S. Government Income, Michigan Triple Tax-Free
Bond, Tax-Free Bond, Tax-Free Intermediate Bond, Cash Investment, Money
Market, Tax-Free Money Market and U.S. Treasury Money Market Funds.
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
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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 October 1, 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 October 1, 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: Accelerating
Growth Fund--87%; Balanced Fund--88%; Growth & Income Fund--98%; Index 500
Fund--68%; International Equity Fund--90%; Mid-Cap Growth Fund--91%; Multi-
Season Growth Fund--63%; Real Estate Equity Investment Fund--83%; Small
Company Growth Fund--86%; Value Fund--91%; Bond Fund--98%; Intermediate Bond
Fund--98%; U.S. Government Income Fund--99%; Michigan Triple Tax-Free Bond
Fund--97%; Tax-Free Bond Fund--98%; Tax-Free Intermediate Bond Fund--98%; Cash
Investment Fund--97%; Money Market Fund--0%; Tax-Free Money Market Fund--91%;
and U.S. Treasury Money Market Fund--56%. The International Bond Fund did not
commence operations until October 2, 1996 and as of the date of this
Prospectus, the Equity Selection Fund, Micro-Cap Equity Fund and Small-Cap
Value Fund had not commenced operations.
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
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 Bond Funds, International Bond Fund
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 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
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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.
64
<TABLE>
<CAPTION>
<S> <C>
MUNDER ACCELERATING GROWTH FUND MUNDER VALUE FUND
MUNDER BALANCED FUND MUNDER BOND FUND
MUNDER EQUITY SELECTION FUND MUNDER INTERMEDIATE BOND FUND
MUNDER GROWTH & INCOME FUND MUNDER INTERNATIONAL BOND FUND
MUNDER INDEX 500 FUND MUNDER U.S. GOVERNMENT INCOME FUND
MUNDER INTERNATIONAL EQUITY FUND MUNDER MICHIGAN TRIPLE TAX-FREE BOND FUND
MUNDER MICRO-CAP EQUITY FUND MUNDER TAX-FREE BOND FUND
MUNDER MID-CAP GROWTH FUND MUNDER TAX-FREE INTERMEDIATE BOND FUND
MUNDER MULTI-SEASON GROWTH FUND MUNDER CASH INVESTMENT FUND
MUNDER REAL ESTATE EQUITY INVESTMENT FUND MUNDER MONEY MARKET FUND
MUNDER SMALL-CAP VALUE FUND MUNDER TAX-FREE MONEY MARKET FUND
MUNDER SMALL COMPANY GROWTH FUND MUNDER U.S. TREASURY MONEY MARKET 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
Equity Selection Fund (the "Equity Selection Fund"), Munder Micro-Cap Equity
Fund (the "Micro-Cap Equity Fund"), Munder Mid-Cap Growth Fund (the "Mid-Cap
Fund"), Munder Multi-Season Growth Fund (the "Multi-Season Fund"), Munder Real
Estate Equity Investment Fund (the "Real Estate Fund"), Munder Small-Cap Value
Fund (the "Small-Cap Value Fund"), Munder Value Fund (the "Value Fund"), Munder
International Bond Fund (the "International Bond Fund") and Munder Money Market
Fund (the "Money Market Fund"). The NetNet 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. 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 October 28, 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 October 28,
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.
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TABLE OF CONTENTS
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Page
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General............................................................ 3
Fund Investments................................................... 3
Risk Factors and Special Considerations -- Index 500 Fund.......... 20
Risk Factors and Special Considerations -- Michigan Bond Fund and
Tax-Free Intermediate Bond Fund.............................. 22
Investment Limitations............................................. 24
Trustees, Directors and Officers................................... 28
Investment Advisory and Other Service Arrangements................. 33
Portfolio Transactions............................................. 47
Purchase and Redemption Information................................ 50
Net Asset Value.................................................... 52
Performance Information............................................ 53
Taxes.............................................................. 62
Additional Information Concerning Shares........................... 69
Miscellaneous...................................................... 71
Registration Statement............................................. 81
Financial Statements............................................... 81
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.
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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
Munder Accelerating Growth Fund, Equity Selection Fund, Munder Growth & Income
Fund, Munder Index 500 Fund, Munder International Equity Fund, Micro-Cap Equity
Fund, Mid-Cap Fund, Multi-Season Fund, Real Estate Fund, Small-Cap Value Fund,
Munder Small Company Growth Fund and Value Fund, and are referred to as the
"Equity Funds." Munder Bond Fund, Munder Intermediate Bond Fund and Munder U.S.
Government Income Fund are referred to as the "Bond Funds"; and Munder Cash
Investment Fund, Money Market Fund, Munder Tax-Free Money Market Fund and Munder
U.S. Treasury Money Market Fund are referred to as the "Money Market
Funds."
BORROWING. The Funds are authorized to borrow money in amounts up to
5% of the value of their total assets at the time of such borrowings for
temporary purposes, and are authorized to borrow money in excess of the 5% limit
as permitted by the Investment Company Act of 1940, as amended (the "1940 Act"),
to meet redemption requests. This borrowing may be unsecured. The 1940 Act
requires the Funds to maintain continuous asset coverage of 300% of the amount
borrowed. If the 300% asset coverage should decline as a result of market
fluctuations or other reasons, the Funds may be required to sell some of their
portfolio holdings within three days to reduce the debt and restore the 300%
asset coverage, even though it may be disadvantageous from an investment
standpoint to sell securities at that time. 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.
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FOREIGN SECURITIES. Each Equity Fund (except the Real Estate Fund),
the Balanced Fund, each Bond Fund and the Cash Investment Fund may invest in the
securities of foreign issuers. The Mid-Cap Fund and the Multi-Season 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 International Bond 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 a
Fund's investment opportunities, including restrictions on investment in issuers
or industries deemed sensitive to national interest; (iv) foreign taxation; (v)
the absence of developed legal structures governing private or foreign
investment or allowing for judicial redress for injury to private property; (vi)
the absence, until recently in certain Eastern European countries, of a capital
market structure or market-oriented economy; and (vii) the possibility that
recent favorable economic developments in Eastern Europe may be slowed or
reversed by unanticipated political or social events in such countries.
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Investments in Eastern European countries may involve risks of
nationalization, expropriation and confiscatory taxation. The Communist
governments of a number of Eastern European countries expropriated large amounts
of private property in the past, in many cases without adequate compensation,
and there can be no assurance that such expropriation will not occur in the
future. In the event of such expropriation, a 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 a 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 a 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 Equity Funds (excluding the Real Estate Fund), the
Balanced Fund, the Bond Funds and the International Bond Fund are authorized to
enter into forward foreign currency exchange contracts ("forward currency
contracts"). These contracts involve an obligation to purchase or sell a
specified currency at a future date at a price set at the time of the contract.
Forward currency contracts do not eliminate fluctuations in the values of
portfolio securities but rather allow a Fund to establish a rate of exchange for
a future point in time.
When entering into a contract for the purchase or sale of a security,
a Fund may enter into a forward foreign currency exchange contract for the
amount of the purchase or sale price to protect against variations,
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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 Equity Funds, the Balanced
Fund, the Bond Funds and the International 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 Funds than if the Funds had invested directly in an instrument that yielded
that desired return. Interest rate swap transactions involve the exchange by a
Bond Fund or the International Bond Fund with another party of its commitments
to pay or receive interest, such as an exchange of fixed rate payments for
floating rate payments. Typically, the parties with which the Bond Funds and the
International Bond Fund will enter into interest rate swap transactions will be
brokers, dealers or other financial institutions known as "counterparties."
Certain Federal income tax requirements may, however, limit the Bond Funds' and
the International Bond Fund's ability to engage in certain interest rate
transactions. Gains from transaction in interest rate swaps distributed to
shareholders of the Bond Funds and the International Bond Fund will be taxable
as ordinary income or, in certain circumstances, as long-term capital gains to
the shareholders.
Each of the Bond Funds' and the International Bond Fund's obligations
(or rights) under a swap agreement will generally be equal only to the net
amount to be paid or received under the agreement based on
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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 portfolio.
The Bond Funds and the International Bond Fund will not enter into any
interest rate swap transaction unless the credit quality of the unsecured senior
debt or the claims-paying ability of the other party to the transaction is rated
in one of the highest four rating categories by at least one nationally-
recognized statistical rating organization ("NRSRO") or is believed by the
Advisor to be equivalent to that rating. If the other party to a transaction
defaults, the Bond Funds and the International Bond Fund will have contractual
remedies pursuant to the agreements related to the transactions.
The use of interest rate swaps is a highly specialized activity that
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If the Advisor is incorrect in its
forecasts of market values, interest rates and other applicable factors, the
investment performance of each of the Bond Funds and the International Bond Fund
would be lower than it would have been if interest rate swaps were not used. The
swaps market has grown substantially in recent years with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. As a result, the swaps market has
become relatively liquid in comparison with other similar instruments traded in
the interbank market. The swaps market is a relatively new market and is largely
unregulated. It is possible that developments in the swaps market, including
potential government regulation, could adversely affect the Bond Funds' and the
International Bond Fund's ability to terminate existing swap agreements or to
realize amounts to be received under such agreements.
INVESTMENT COMPANY SECURITIES. The Funds 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 Funds'
administrator (the "Administrator"), the Funds' custodian (the "Custodian"), the
Funds' 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, 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
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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
20% 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 Fund's ability to (a) obtain
accurate market quotations for purposes of valuing such securities and
calculating its net asset value and (b) sell the securities at fair value either
to meet redemption requests or to respond to changes in the economy or in
financial markets.
Lower-rated debt securities and comparable unrated securities may have
call or buy-back features that permit their issuers to call or repurchase the
securities from their holders. If an issuer exercises these rights during
periods of declining interest rates, the Funds may have to replace the security
with a lower yielding security, thus resulting in a decreased return to the
Funds.
MONEY MARKET INSTRUMENTS. As described in their Prospectuses, the
Equity Funds; the Balanced Fund; the Bond Funds; the International Bond Fund;
the Munder Michigan Triple Tax-Free Bond Fund (the "Michigan Bond Fund"), Munder
Tax-Free Bond Fund ("Tax-Free Bond Fund"), Munder Tax-Free Intermediate Bond
Fund ("Tax-Free Intermediate Bond Fund"); and the Money Market Funds may invest
from time to time in "money market instruments," a term that includes, among
other things, bank obligations, commercial paper, variable amount master demand
notes and corporate bonds with remaining maturities of 397 days or less.
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Bank obligations include bankers' acceptances, negotiable certificates
of deposit and non-negotiable time deposits, including U.S. dollar-denominated
instruments issued or supported by the credit of U.S. or foreign banks or
savings institutions. Although the Funds will invest in obligations of foreign
banks or foreign branches of U.S. banks only where the Advisor 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 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
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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 Michigan Bond Fund, Tax-Free Bond
Fund, Tax-Free Intermediate Bond Fund and Tax-Free Money Market Fund
(collectively, the "Tax-Free Funds") 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 Time Deposits ("CTDs"), which are essentially the same as ETDs
except they are issued by Canadian offices of major Canadian banks; Schedule Bs
which are obligations issued by Canadian branches of foreign or domestic banks;
Yankee Certificates of Deposit ("Yankee CDs"), which are U.S. dollar-denominated
certificates of deposit issued by a U.S. branch of a foreign bank and held in
the United States; and Yankee Bankers' Acceptances ("Yankee BAs"), which are
U.S. dollar-denominated bankers' acceptances issued by a U.S. branch of a
foreign bank and held in the United States.
OPTIONS. The Equity Funds, Balanced Fund, Bond Funds, International
Bond Fund, Michigan Bond Fund and Tax-Free Intermediate Bond Fund may write
covered call options, buy put options, buy call options
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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 each
Fund will have incurred a loss in the transaction. There is no guarantee that
either a closing purchase or a closing sale transaction can be effected.
Effecting a closing transaction in the case of a written call option
will permit the Funds to write another call option on the underlying security
with either a different exercise price or expiration date or both, or in the
case of a written put option, will permit the Funds to write another put option
to the extent that the exercise price thereof is secured by deposited cash or
short-term securities. Also, effecting a closing transaction will permit the
cash or proceeds from the concurrent sale of any securities subject to the
option to be used for other Fund investments. If a Fund desires to sell a
particular security from its portfolio on which it has written a call option, it
will effect a closing transaction prior to or concurrent with the sale of the
security.
The Multi-Season, Real Estate and International Bond Funds may write
options in connection with buy-and-write transactions; that is, the Funds may
purchase a security and then write a call option against that security. The
exercise price of the call the Funds determine to write will depend upon the
expected price movement of the underlying security. The exercise price of a call
option may be below ("in-the-money"), equal to ("at-the-money") or above ("out-
of-the-money") the current value of the underlying security at the time the
option is written. Buy-and-write transactions using in-the-money call options
may be used when it is expected that the price of the underlying security will
remain flat or decline moderately during the option period. Buy-and-write
transactions using out-of-the-money call options may be used when it is expected
that the premiums received from writing the call option plus the appreciation in
the market price of the underlying security up to the exercise price will be
greater than the appreciation in the price of the underlying security alone. If
the call options are exercised in such transactions, the maximum gain to the
relevant Fund will be the premium received by it for writing the option,
adjusted upwards or downwards by the difference between the Fund's purchase
price of the security and the exercise price. If the options are not exercised
and the price of the underlying security declines, the amount of such decline
will be offset in part, or entirely, by the premium received.
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The Funds (excluding the Mid-Cap, Multi-Season, Real Estate, Value,
and International Bond 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 Fund owns the security underlying the call or has an absolute and immediate
right to acquire that security without additional cash consideration (or, if
additional cash consideration is required, cash or cash equivalents in such
amount as are held in a segregated account by its custodian) upon conversion or
exchange of other securities held by it. For a call option on an index, the
option is covered if a Fund maintains with its Custodian cash or cash
equivalents equal to the contract value. A call option is also covered if a Fund
holds a call on the same security or index as the call written where the
exercise price of the call held is (i) equal to or less than the exercise price
of the call written, or (ii) greater than the exercise price of the call written
provided the difference is maintained by the portfolio in cash or cash
equivalents in a segregated account with its custodian. The Mid-Cap, Multi-
Season, Real Estate and Value Funds may write call options that are not covered
for cross-hedging purposes. Each of the Mid-Cap, Multi-Season, Real Estate 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 relevant Fund's gain will be limited to the
premium received. If the market price of the underlying security declines or
otherwise is below the exercise price, the Fund may elect to close the position
or take delivery of the security at the exercise price and the Fund's return
will be the premium received from the put option minus the amount by which the
market price of the security is below the exercise price.
Each of the Funds may purchase put options to hedge against a decline
in the value of its portfolio. By using put options in this way, the Funds will
reduce any profit it might otherwise have realized in the underlying security by
the amount of the premium paid for the put option and by transaction costs. Each
of the Funds may purchase call options to hedge against an increase in the price
of securities that it anticipates purchasing in the future. The premium paid for
the call option plus any transaction costs will reduce the benefit, if any,
realized by the Funds upon exercise of the option, and, unless the price of the
underlying security rises sufficiently, the option may expire worthless to the
Fund.
When a Fund purchases an option, the premium paid by it is recorded as
an asset of the Fund. When the Fund writes an option, an amount equal to the net
premium (the premium less the commission) received by the Fund is included in
the liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of this asset or deferred credit will be
subsequently marked-to-market to reflect the current value of the option
purchased or written. The current value of the traded option is the last sale
price or, in the absence of a sale, the average of the closing bid and asked
prices. If an option purchased by the Fund expires unexercised the Fund realizes
a loss equal to the premium paid. If the Fund enters into a closing sale
transaction on an option purchased by it, the Fund will realize a gain if the
premium received by the Fund on the closing transaction is more than the premium
paid to purchase the option, or a loss if it is less. If an option written by
the Fund expires on the stipulated expiration date or if the Fund enters into a
closing purchase transaction, it will realize a gain (or loss if the cost of a
closing purchase transaction exceeds the net premium received when the option is
sold) and the deferred credit related to such option will be eliminated. If an
option written by the Fund is exercised, the proceeds of the sale will be
increased by the net premium originally received and the Fund will realize a
gain or loss.
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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 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 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. 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 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 its portfolio.
REAL ESTATE SECURITIES. The Real Estate Fund may invest without limit
in shares of real estate investment trusts ("REITs"). REITs pool investors'
funds for investment primarily in income producing real estate or real estate
loans or interests. A REIT is not taxed on income distributed to shareholders if
it complies with several requirements relating to its organization, ownership,
assets, and income and a requirement that it
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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 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.
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REVERSE REPURCHASE AGREEMENTS. Each Fund (except the Multi-Season
Fund, Money Market Fund and Tax-Free Funds) may borrow funds for temporary or
emergency purposes by selling portfolio securities to financial institutions
such as banks and broker/dealers and agreeing to repurchase them at a mutually
specified date and price ("reverse repurchase agreements"). Reverse repurchase
agreements involve the risk that the market value of the securities sold by 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. Each Equity Fund and the Balanced 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 Funds 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-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 Tax-Free Funds intend to enter into stand-by commitments only with
dealers, banks and broker/dealers which, in the Advisor's opinion, present
minimal credit risks. The Tax-Free 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 Equity Funds, the Balanced Fund,
the Bond Funds, Michigan Triple Tax-Free Bond
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Fund and Tax-Free Intermediate Bond Fund may purchase and sell stock index
futures, options on stock and bond indices and options on stock index futures
contracts as a hedge against movements in the equity and bond markets. The
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.
The Equity Funds, the Balanced Fund, the Bond Funds and the Tax-Free
Bond Funds may purchase and write call and put options on stock index futures
contracts and each such Fund and the International Bond Fund may purchase and
write call and put options on bond index futures contracts. Each such Fund may
use such options on futures contracts in connection with its hedging strategies
in lieu of purchasing and selling the underlying futures or purchasing and
writing options directly on the underlying securities or indices. For example,
such Funds may purchase put options or write call options on stock and bond
index futures (only bond index futures in the case of the International Bond
Fund), rather than selling futures contracts, in anticipation of a decline in
general stock or bond market prices or purchase call options or write put
options on stock or bond index futures, rather than purchasing such futures, to
hedge against possible increases in the price of securities which such Funds
intend to purchase.
In connection with transactions in stock or bond index futures, stock
or bond index options and options on stock index or bond futures, such Funds
will be required to deposit as "initial margin" an amount of cash and short-term
U.S. Government securities equal to from 5% to 8% of the contract amount.
Thereafter, subsequent payments (referred to as "variation margin") are made to
and from the broker to reflect changes in the value of the option or futures
contract. No such Fund may at any time commit more than 5% of its total assets
to initial margin deposits on futures contracts, index options and options on
futures contracts.
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STRIPPED SECURITIES. The Balanced Fund, the Bond Funds, International
Bond Fund and the Money Market Funds may acquire U.S. Government obligations and
their unmatured interest coupons that have been separated ("stripped") by their
holder, typically a custodian bank or investment brokerage firm. Having
separated the interest coupons from the underlying principal of the U.S.
Government obligations, the holder will resell the stripped securities in
custodial receipt programs with a number of different names, including "Treasury
Income Growth Receipts" ("TIGRs") and "Certificate of Accrual on Treasury
Securities" ("CATS"). The stripped coupons are sold separately from the
underlying principal, which is usually sold at a deep discount because the buyer
receives only the right to receive a future fixed payment on the security and
does not receive any rights to periodic interest (cash) payments. The underlying
U.S. Treasury bonds and notes themselves are held in book-entry form at the
Federal Reserve Bank or, in the case of bearer securities (i.e., unregistered
securities which are ostensibly owned by the bearer or holder), in trust on
behalf of the owners. Counsel to the underwriters of these certificates or other
evidences of ownership of U.S. Treasury securities have stated that, in their
opinion, purchasers of the stripped securities most likely will be deemed the
beneficial holders of the underlying U.S. Government obligations for federal tax
and securities purposes. The Trust is not aware of any binding legislative,
judicial or administrative authority on this issue.
Only instruments which are stripped by the issuing agency will be
considered U.S. Government obligations. Securities such as CATS and TIGRs which
are stripped by their holder do not qualify as U.S. Government obligations.
Within the past several years the Treasury Department has facilitated
transfers of ownership of zero coupon securities by accounting separately for
the beneficial ownership of particular interest coupon and principal payments or
Treasury securities through the Federal Reserve book-entry record-keeping
system. The Federal Reserve program as established by the Treasury Department is
known as "STRIPS" or "Separate Trading of Registered Interest and Principal of
Securities." Under the STRIPS program, a Fund is able to have its beneficial
ownership of zero coupon securities recorded directly in the book-entry record-
keeping system in lieu of having to hold certificates or other evidences of
ownership of the underlying U.S. Treasury securities.
In addition, the Bond Fund, Intermediate Bond Fund, International Bond
Fund and U.S. Government Income Fund may invest in stripped mortgage-backed
securities ("SMBS"), which represent beneficial ownership interests in the
principal distributions and/or the interest distributions on mortgage assets.
SMBS are usually structured with two classes that receive different proportions
of the interest and principal distributions on a pool of mortgage assets. One
type of SMBS will have one class receiving some of the interest and most of the
principal from the mortgage assets, while the other class will receive most of
the interest and the remainder of the principal. In the most common case, one
class of SMBS will receive all of the interest (the interest-only or "IO"
class), while the other class will receive all of the principal (the principal-
only or "PO" class). SMBS may be issued by FNMA or FHLMC.
The original principal amount, if any, of each SMBS class represents
the amount payable to the holder thereof over the life of such SMBS class from
principal distributions of the underlying mortgage assets, which will be zero in
the case of an IO class. Interest distributions allocable to a class of SMBS, if
any, consist of interest at a specified rate on its principal amount, if any, or
its notional principal amount in the case of an IO class. The notional principal
amount is used solely for purposes of the determination of interest
distributions and certain other rights of holders of such IO class and does not
represent an interest in principal distributions of the mortgage assets.
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Yields on SMBS will be extremely sensitive to the prepayment
experience on the underlying mortgage loans, and there are other associated
risks. For IO classes of SMBS and SMBS that were purchased at prices exceeding
their principal amounts there is a risk that a Fund may not fully recover its
initial investment.
The determination of whether a particular government-issued IO or PO
backed by fixed-rate mortgages is liquid may be made under guidelines and
standards established by the 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 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.
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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.
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS (DELAYED-DELIVERY
TRANSACTIONS). When-issued purchases and forward commitments (delayed-delivery
transactions) are commitments by a Fund to purchase or sell particular
securities with payment and delivery to occur at a future date (perhaps one or
two months later). These transactions permit the Fund to lock-in a price or
yield on a security, regardless of future changes in interest rates.
When a Fund agrees to purchase securities on a when-issued or forward
commitment basis, the 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.
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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, each of 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 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
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duplicate the performance of the common stocks included in the S&P 500 Index
("S&P 500"), taking into account redemptions, sales of additional Fund shares,
and other adjustments as described below.
The Fund does not expect to hold at any particular time all of the
stocks included in the S&P 500. The Advisor believes, however, that through the
application of capitalization weighing and sector balancing techniques it will
be able to construct and maintain the Fund's investment portfolio so that it
reasonably tracks the performance of the S&P 500. The Advisor will compare the
industry sector diversification of the stocks the Fund would acquire solely on
the basis of their weighted capitalizations with the industry sector
diversification of all issuers included in the S&P 500. This comparison is made
because the Advisor believes that, unless the Fund holds all stocks included in
the S&P 500, the selection of stocks for purchase by the Fund solely on the
basis of their weighted market capitalizations would tend to place heavier
concentration in certain industry sectors that are dominated by the larger
corporations, such as communications, automobile, oil and energy. As a result,
events disproportionately affecting such industries could affect the performance
of the Fund differently than the performance of the S&P 500. Conversely, if
smaller companies were not purchased by the Fund, the representation of
industries included in the S&P 500 that are not dominated by the most heavily
market-capitalized companies would be reduced or eliminated.
For these reasons, the Advisor will identify the sectors which are
(or, except for sector balancing, would be) most underrepresented in the Fund's
portfolio and will purchase balancing securities in these sectors until the
portfolio's sector weightings closely match those of the S&P 500. This process
continues until the portfolio is fully invested (except for cash holdings).
Redemptions of a substantial number of shares of the Fund could reduce
the number of issuers represented in the Fund's investment portfolio, which
could, in turn, adversely affect the accuracy with which the Fund tracks the
performance of the S&P 500.
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
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intended to provide investment results that generally correspond to the price
and yield performance of the S&P 500. SPDR holders are paid a "Dividend
Equivalent Amount" that corresponds to the amount of cash dividends accruing to
the securities in the SPDR Trust, net of certain fees and expenses charged to
the Trust. Because of these fees and expenses, the dividend yield for SPDRs may
be less than that of the S&P 500. SPDRs are traded on the American Stock
Exchange.
The Fund may also purchase put and call options on the S&P 500 and S&P
100 stock indices, which are traded on national securities exchanges. In
addition, the Fund may enter into transactions involving futures contracts (and
futures options) on these two stock indices and may purchase securities of other
investment companies that are structured to seek a similar correlation to the
S&P 500. These transactions are effected in an effort to have fuller exposure to
price movements in the S&P 500 pending investment of purchase orders or while
maintaining liquidity to meet potential shareholder redemptions. Transactions in
option and stock index futures contracts may be desirable to hedge against a
price movement in the S&P 500 at times when the Fund is not fully invested in
stocks that are included in the S&P 500. For example, by purchasing a futures
contract, the Fund may be able to reduce the potential that cash inflows will
disrupt its ability to track the S&P 500, since the futures contracts may serve
as a temporary substitute for stocks which may then be purchased in an orderly
fashion. Similarly, because futures contracts only require a small initial
margin deposit, the Fund may be able, as an effective matter, to be fully
invested in the S&P 500 while keeping a cash reserve to meet potential
redemptions. See Appendix B to this Statement of Additional Information.
RISK FACTORS AND SPECIAL CONSIDERATIONS -- MICHIGAN BOND FUND AND TAX-FREE
INTERMEDIATE BOND FUND
The information set forth below is derived in substantial part from
the official statements prepared in connection with the issuance of Michigan
municipal bonds and similar obligations and other sources that are generally
available to investors. The information is provided as general information
intended to give a recent historical description and is not intended to indicate
future or continuing trends in the financial or other positions of the State of
Michigan (the "State"). The Company has not independently verified this
information.
The State's Constitution limits the amount of total State revenues
raised from taxes and other sources. State revenues (excluding federal aid and
revenues for payment of principal and interest on general obligation 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.
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Expenditures are not permitted by the State Constitution to exceed
available revenues. The State Constitution requires that the Governor, with the
approval of the appropriating committees of the State House and Senate, reduce
expenditures whenever it appears that the actual revenues will be less than the
originally projected revenues upon which the budget was based.
In 1994, a ballot proposal ("Proposal A") to implement extensive
property tax and school finance reform measures was subject to voter approval
and in fact approved on March 15, 1994. Under Proposal A as approved, effective
May 1, 1994, the State sales and use tax increased from 4% to 6%, the State
income tax decreased from 4.6% to 4.4%, the cigarette tax increased from $.25 to
$.75 per pack, and an additional tax of 16% of the wholesale price is imposed on
certain other tobacco products. As of January 1, 1995, a 0.75% real estate
transfer tax also became effective. In 1994, a State education property tax of 6
mills was imposed on all real property and personal property currently subject
to the general property tax. In addition, all school boards can now, with voter
approval, levy up to the lesser of 18 mills or the number of mills levied in
1993 for school operating purposes, on non-homestead property. Proposal A
contained additional provisions regarding the ability of local school districts
to levy taxes as well as a limit on assessment increases for each parcel of
property, beginning in 1995 to the lesser of 5% or the rate of inflation. When
property is subsequently sold, its assessed value is adjusted equal to 50% of
true cash value. Under Proposal A, much of the additional revenue generated by
these taxes is dedicated to the State School Aid Fund.
Proposal A shifts significant portions of the cost of local school
operations from local school districts to the State and raises additional State
revenues to fund these additional State expenses. These additional revenues will
be included within the State's constitutional revenue limitations and may impact
the State's ability to raise additional revenues in the future.
The State is a party to various legal proceedings seeking damages or
injunctive or other relief. In addition to routine litigation, certain of these
proceedings could, if unfavorably resolved from the point of view of the State,
substantially affect State programs or finances. These lawsuits involve programs
generally in the areas of corrections, highway maintenance, social services, tax
collection, commerce and budgetary reductions to school districts and
governmental units and court funding.
The principal sectors of Michigan's diversified economy are
manufacturing of durable goods (including automobiles and components and office
equipment), tourism and agriculture. The health of the State's economy, and in
particular its durable goods manufacturing industry, is susceptible to a long-
term increase in the cost of energy and energy related products. As reflected in
historical employment figures, the State's economy has lessened its dependence
upon durable 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 1996-1997 are expected to operate at somewhat less
than full capacity, but at higher levels than in the immediate prior years. This
factor can usually adversely affect the revenue streams of the State and its
political subdivisions because it adversely impacts tax sources, particularly
sales, income taxes and single business taxes.
As of the date of this Statement of Additional Information, the
State's general obligation bonds are rated "AA" by Moody's and "AA" by Fitch. To
the extent that either the Michigan Bond Fund or the Tax-Free Intermediate Bond
Fund is comprised of revenue or general obligations of local governments or
authorities, rather than general obligations of the State of Michigan itself,
ratings on such Michigan obligations will be different from those given to the
State of Michigan and their value may be independently affected by economic
matters not directly impacting the State.
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INVESTMENT LIMITATIONS
Each Fund is subject to the investment limitations enumerated in this
section which may be changed with respect to a particular Fund only by a vote of
the holders of a majority of such Fund's outstanding shares (as defined under
"Miscellaneous - Shareholder Approvals").
No Fund of the Trust may:
1. Purchase securities of any one issuer (other than securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities
or certificates of deposit for any such securities) if more than 5% of
the value of the Fund's total assets (taken at current value) would be
invested in the securities of such issuer, or more than 10% of the
issuer's outstanding voting securities would be owned by the Fund or
the Trust, except that (a) with respect to each Fund, other than the
Michigan Bond Fund and the Tax-Free Intermediate Bond Fund, up to 25%
of the value of the Fund's total assets (taken at current value) may
be invested without regard to these limitations and (b) with respect
to the Michigan Bond Fund and the Tax-Free Intermediate Bond Fund, up
to 50% of the value of the Fund's total assets may be invested without
regard to these limitations so long as no more than 25% of the value
of the Fund's total assets are invested in the securities of any one
issuer. For purposes of this limitation, a security is considered to
be issued by the entity (or entities) whose assets and revenues back
the security. A guarantee of a security is not deemed to be a security
issued by the guarantor when the value of all securities issued and
guaranteed by the guarantor, and owned by the Fund, does not exceed
10% of the value of the Fund's total assets.
2. Borrow money or issue senior securities except that each Fund may
borrow from banks and enter into reverse repurchase agreements for
temporary purposes in amounts up to one-third of the value of its
total assets at the time of such borrowing; or mortgage, pledge or
hypothecate any assets, except in connection with any such borrowing
and then in amounts not in excess of one-third of the value of the
Fund's total assets at the time of such borrowing. No Fund will
purchase securities while its aggregate borrowings (including reverse
repurchase agreements and borrowing from banks) in excess of 5% of its
total assets are outstanding. Securities held in escrow or 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.
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4. Purchase or sell real estate, except that each Fund may purchase
securities of issuers which deal in real estate and may purchase
securities which are secured by interests in real estate.
5. Acquire any other investment company or investment company security
except in connection with a merger, consolidation, reorganization or
acquisition of assets or where otherwise permitted by the 1940 Act.
6. Act as an underwriter of securities within the meaning of the
Securities Act of 1933, as amended, except to the extent that the
purchase of obligations directly from the issuer thereof, or the
disposition of securities, in accordance with the Fund's investment
objective, policies and limitations may be deemed to be underwriting.
7. Write or sell put options, call options, straddles, spreads, or any
combination thereof except for transactions in options on securities,
securities indices, futures contracts, options on futures contracts
and transactions in securities on a when-issued or forward commitment
basis, and except that each Equity and Bond Fund may enter into
forward currency contracts in accordance with its investment
objectives and policies. Notwithstanding the above, the Tax-Free
Intermediate Bond Fund may not write or purchase options, including
puts, calls, straddles, spreads, or any combination thereof.
8. Purchase securities of companies for the purpose of exercising
control.
9. Purchase securities on margin, make short sales of securities or
maintain a short position, except that (a) this investment limitation
shall not apply to a Fund's transactions in futures contracts and
related options, a Fund's sale of securities short against the box or
a Fund's transactions in securities on a when-issued or forward
commitment basis, and (b) a Fund may obtain short-term credit as may
be necessary for the clearance of purchases and sales of portfolio
securities.
10. Purchase or sell commodity contracts, or invest in oil, gas or mineral
exploration or development programs, except that each Fund may, to the
extent appropriate to its investment policies, purchase publicly
traded securities of companies engaging in whole or in part in such
activities, may enter into futures contracts and related options, and
may engage in transactions in securities on a when-issued or forward
commitment basis, and except that each Equity and Bond Fund may enter
into forward currency contracts in accordance with its investment
objectives and policies.
11. Make loans, except that each Fund may purchase and hold debt
instruments (whether such instruments are part of a public offering or
privately negotiated), may enter into repurchase agreements and may
lend portfolio securities in accordance with its investment objective
and policies.
In addition, the Tax-Free Intermediate Bond Fund may not:
1. Purchase or retain securities of any issuer if the officers or
trustees of the Trust or its Advisor own beneficially more than one-
half of 1% of the securities of such issuer together own beneficially
more than 5% of such securities.
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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.
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;
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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 Mid-
Cap, Multi-Season, Real Estate, Value and International Bond Funds of
forward foreign currency exchange contracts, financial futures
contracts and options on financial futures contracts, and options on
securities and on securities, foreign currencies and on securities
indices, as permitted by each Fund's prospectus.
Additional investment restrictions adopted by each Fund of the Company,
which may be changed by the Board of Directors, provide that a Fund may not:
1. Invest more than 15% of its net assets (10% of net assets for the
Money Market Fund) (taken at market value at the time of purchase) in
securities which cannot be readily resold because of legal or
contractual restrictions and (in the case of International Bond Fund
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 a 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
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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.
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 Executive Vice President -
Age: 64 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
1876 Rathmor Chairman of the Boards of Company
Bloomfield Hills, MI 48304 Trustees and Directors
Age: 49
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: 63 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: 60 Trust.
</TABLE>
- ----------------------------
/1/Trustee/Director is an "interested person" of the Trust or the Company as
defined in the 1940 Act.
28
<PAGE>
<TABLE>
<CAPTION>
Positions Principal Occupation
Name, Address and Age With Trust and Company During Past Five Years
- --------------------- ---------------------- ----------------------
<S> <C> <C>
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: 49
Jack L. Otto Trustee and Director Retired; Director of Standard Federal Bank;
6532 W. Beech Tree Road Executive Director, McGregor Fund (a private
Glen Arbor, MI 49636 philanthropic foundation) 1981-1985;
Age: 70 Managing Partner, Detroit office of Ernst
& Young, until 1981.
Arthur DeRoy Rodecker Trustee and Director President, Rodecker & Company,
4000 Town Center Investment Brokers, Inc. since November
Suite 101 1976; President, RAC Advisors, Inc.,
Southfield, MI 48075 Registered Investment Advisors since
Age: 68 February 1979, President and Trustee,
Helen L. DeRoy Foundation, a charitable
foundation; Vice President and Trustee,
DeRoy Testamentary Foundation, a
charitable foundation, Trustee, Providence
Hospital Foundation.
Lee P. Munder President President and CEO of the 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").
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
Positions Principal Occupation
Name, Address and Age With Trust and Company During Past Five Years
- --------------------- ---------------------- ----------------------
<S> <C> <C>
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 of 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
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.
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.
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Positions Principal Occupation
Name, Address and Age With Trust and Company During Past Five Years
- --------------------- ---------------------- ----------------------
<S> <C> <C>
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: 29 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 and St.
Clair 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>
Charles W. Elliott $14,000.00 None None $14,000.00
Chairman
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
</TABLE>
31
<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>
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 Incorporated
("Comerica"), the Distributor, the Administrator or the Transfer Agent currently
receives any compensation from the Trust or the Company. As of October 1, 1996,
the Trustees and officers of the Trust as a group, owned less than 1% of the
outstanding shares of any Fund of the Trust and as a group, the Directors and
Officers of the Company owned less than 1% of the outstanding shares of any Fund
of the Company.
As of October 1, 1996, the Directors and officers of the Company, as a
group, owned 29,675.31 Class Y Shares of Multi-Season Growth Fund, 16,234.01
Class Y Shares of Value Fund, 44,641.36 Class Y Shares of Tax-Free Money Market
Fund, 3,620.69 Class Y Shares of Money Market Fund, 1,400.56 Class Y Shares of
International Equity Fund, 10,964.20 Class Y Shares of Real Estate Equity
Investment Fund, 9,483.16 Class Y Shares of Small Company Growth Fund, 3,641.40
Class Y Shares of Accelerating Growth Fund and 585.38 Class Y Shares of Mid-Cap
Growth Fund, which represented less than 1% of the outstanding Class Y Shares of
those Funds.
Lee P. Munder and Terry H. Gardner are administrators of a pension
plan for employees of Munder Capital Management, which as of October 1, 1996
owned 77,82 Class Y Shares of Multi-Season Growth Fund and 151,859.51 Class Y
Shares of Money Market Fund, which represented less than 1% of the outstanding
Class Y Shares of each of those Funds. As of the same date, such pension plan
owned 22,989 Class A Shares of Value Fund, 11,380 Class A Shares of
International Equity Fund, 20,000 Class Y Shares of Real Estate Equity
Investment Fund, 7,550 Class A Shares of Bond Fund, 10,135 Class A Shares of
Small Company Growth Fund, 12,682 Class A Shares of Accelerating Growth Fund,
16,122 Class A Shares of Mid-Cap Growth Fund and 31,399.02 Class Y Shares of
Bond Fund, which represented 36.638%, 3.650%, 1.153%, 8.683%, 4.343%, 3.380%,
90.507% and 36.113%, respectively, of the outstanding Class Y and Class A
Shares, as applicable, of those Funds.
Munder Capital Management and affiliates of Munder Capital Management,
through common ownership, owned beneficially 10,406.77 Class Y Shares of the
Multi-Season Growth Fund, 2,628,139.35 Class Y Shares of the Money Market Fund
and 1,201.27 Class Y Shares of Small Company Growth Fund,
32
<PAGE>
which represented 0.119%, 1.351% and 0.023% of the outstanding Class Y Shares of
those Funds, respectively.
The Trust and the Company will not employ Rodecker & Company,
Investment Brokers, Inc. to effect brokerage transactions for the Funds.
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. ("Woodbridge") 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, 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
33
<PAGE>
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 Directors on July 31, 1995 and by shareholders on
August 14, 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
October 1, 1996. The Advisory Agreements for the Equity Selection Fund, Micro-
Cap Equity Fund and Small-Cap Value Fund were approved by the Board of Directors
on August 6, 1996 and by the shareholders of each Fund on October 28, 1996.
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.
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 and an
amendment to the Trust's Advisory Agreement was approved whereby the Advisor
reduced the annual investment advisory fees payable by certain portfolios of the
Trust effective October 28, 1995. 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).
For its services, the Advisor earns a monthly fee as set forth below.
Advisory fees for each Fund are reflected in the following paragraphs.
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 each of the
Accelerating Growth Fund, Equity Selection Fund, Growth & Income Fund,
International Equity Fund, Small-Cap Value Fund and Small Company Growth Fund;
.74% of average daily net assets of each of the Mid-Cap Fund, Real Estate Fund
and the 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,
International Bond Fund, U.S. Government Income Fund, Michigan Bond Fund, Tax-
Free Bond Fund and Tax-Free Intermediate Bond Fund; .40% of average daily net
assets of the Money Market Fund; .35% of average daily net assets of each of the
Cash Investment Fund, Tax-Free Money Market Fund and U.S. Treasury 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 average daily 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 .07% and .75% of the
average daily net assets of the Index 500 Fund and the Multi-Season Fund,
respectively, during the Trust's and the Company's current fiscal year. The
Advisor expects to voluntarily reimburse expenses during the
34
<PAGE>
Trust's and the Company's current fiscal year with respect to the Index 500,
Mid-Cap, Real Estate and Value Funds. The Advisor may discontinue such
fee waivers and/or expense reimbursements at anytime, in its sole discretion.
For the period February 1, 1995 through February 28, 1995, the Advisor
received fees, after waivers, of: $144,906 - Accelerating Growth Fund, $22,937-
Balanced Fund, $0 - Growth & Income Fund, $5,407 - Index 500 Fund, $75,502 -
International Equity Fund, $68,046 - Small Company Growth Fund, $67,126 - Bond
Fund, $172,014 - Intermediate Bond Fund, $67,252 - U.S. Government Income Fund,
$0 - Michigan Bond Fund, $96,599 - Tax-Free Bond Fund, $137,594 - Tax-Free
Intermediate Bond Fund, $246,455 - Cash Investment Fund, $62,910 - Tax-Free
Money Market Fund and $83,125 - U.S. Treasury Money Market Fund.
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 $620,204 for the Money Market Fund. For such
periods, the Advisor voluntarily reimbursed expenses for the Multi-Season, Real
Estate and Money Market Funds in the following amounts of $285,571, $68,336 and
$218,109, respectively.
For the period March 1, 1995 through June 30, 1995, the Advisor
received fees after waivers of: $659,256 - Accelerating Growth Fund, $103,145 -
Balanced Fund, $243,681 - Growth & Income Fund, $27,024 - Index 500 Fund,
$357,460 - International Equity Fund, $316,025 - Small Company Growth Fund,
$300,222 - Bond Fund, $767,122 - Intermediate Bond Fund, $304,666 - U.S.
Government Income Fund, $0 - Michigan Bond Fund, $410,093 - Tax-Free Bond Fund,
$593,601 - Tax-Free Intermediate Bond Fund, $1,144,037 - Cash Investment Fund,
$273,285 - Tax-Free Money Market Fund and $373,285 - U.S. Treasury Money Market
Fund.
For the period from January 1, 1995 through June 30, 1995, the Advisor
received fees after waivers of $272,521 for the Multi-Season Fund, $0 for the
Real Estate Fund and $431,213 for the Money Market Fund. For such period, the
Advisor voluntarily reimbursed expenses for the Multi-Season and Real Estate
Funds, in the following amounts of $34,525 and $141,161, respectively.
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,
$107,536 for the Balanced Fund, $364,938 for the Growth & Income Fund, $31,087
for the Index 500 Fund, $379,355 for the International Equity Fund, $17,380 for
the Mid-Cap Fund, $358,622 for the Small Company Growth Fund, $31,762 for the
Value Fund, $300,502 for the Bond Fund, $771,815 for the Intermediate Bond Fund,
$290,956 for the U.S. Government Fund, $0 for the Michigan Bond Fund, $367,467
for the Tax-Free Bond Fund, $572,916 for the Tax-Free Intermediate Fund,
$1,159,247 for the Cash Investment Fund, $266,552 for the Tax-Free Money Market
Fund and $341,421 for the U.S. Treasury Money Market 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, $246,967 for the Balanced Fund, $970,328 for the Growth & Income Fund,
$72,265 for the Index 500 Fund, $946,880 for the International Equity Fund,
$920,847 for the Small Company Growth Fund, $537,663 for the Bond Fund,
$1,809,598 for the Intermediate Bond Fund, $661,896 for the U.S. Government
Fund, $0.00 for the Michigan Bond Fund, $709,274 for the Tax-Free Bond Fund,
$1,185,441 for the Tax-Free Intermediate Fund, $2,478,073 for the Cash
Investment Fund, $660,687 for the Money Market Fund, $610,215 for the Tax-Free
Money Market Fund and $823,717 for the U.S. Treasury Money Market Fund.
35
<PAGE>
For the fiscal year ended June 30, 1996 (and for the period from
commencement of operations to June 30, 1996 for the Mid-Cap and Value Funds) the
Advisor received fees after waivers, if any, of $2,275,469 for the Multi-Season
Fund, $114,330 for the Real Estate Fund, $1,025,924 for the Money Market Fund,
$113,145 for the Mid-Cap Fund and $189,909 for the Value Fund.
For the fiscal year ended June 30, 1996 the Advisor voluntarily
reimbursed expenses for the Real Estate Fund, Mid-Cap Fund, Value Fund and Index
500 Fund, in the amounts of $34,671, $24,500, $70,016 and $21,376, respectively.
The Equity Selection, Micro-Cap Equity and Small-Cap Value Funds had
not commenced operations as of the date of this Statement of Additional
Information. The International Bond Fund did not commence operations until
October 2, 1996.
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.
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 60 State Street, 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 up to 0.25% of the value of average daily net assets of the
Class A Shares of each Fund. Each Fund has also adopted a Service and
Distribution Plan with respect to its Class B and Class C Shares, pursuant to
which it uses its assets to finance activities relating to the distribution of
its shares to investors and provision of certain shareholder services. Under the
Service and Distribution Plans for Class B and Class C Shares, the Distributor
is paid an annual service fee of up to 0.25% of the value of average daily net
assets of the Class B and Class C Shares of each Fund and an annual distribution
fee at the rate of up to 0.75% of the value of average daily net assets of the
Class B and Class C Shares of each Fund.
Under the terms of the Service and Distribution Plans (collectively,
the "Plans"), each Plan continues from year to year, provided such continuance
is approved annually by vote of the 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. 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
36
<PAGE>
provide the Boards of Trustees and Directors periodic reports of amounts
expended under the Plan and the purpose for which such expenditures were made.
The Trustees/Directors have determined that the Plans will benefit the Trust,
the Company and their respective shareholders by (i) providing an incentive for
broker or bank personnel to provide continuous shareholder servicing after the
time of sale; (ii) retention of existing accounts; (iii) facilitating portfolio
management flexibility through continued cash flow into the Funds; and (iv)
maintaining a competitive sales structure in the mutual fund industry.
With respect to Class B and Class C Shares of each Fund, the
Distributor expects to pay sales commissions to dealers authorized to sell a
Fund's Class B and Class C Shares at the time of sale. The Distributor will use
its own funds (which may be borrowed) to pay such commissions pending
reimbursement by the relevant Service and Distribution Plan. In addition, the
Advisor may use its own resources to make payments to the Distributor or dealers
authorized to sell the Funds' shares to support their sales efforts.
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.
ADMINISTRATION AGREEMENT. First Data Investor Services Group, Inc.
("First Data"), 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
37
<PAGE>
facilities for the Trust and the Company; provide 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 -Investment
Advisor."
CUSTODIAN AND TRANSFER AGENCY AGREEMENTS. Comerica Bank, 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 certain 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. As of December 1996, Morgan Stanley
Trust Company ("Morgan Stanley") will replace Boston Safe as sub-custodian
relating to the custody of foreign securities held by the funds of the Trust and
the Company (except International Bond Fund). With respect to the International
Bond Fund, Morgan Stanley has provided sub-custody services to the Fund since
its commencement of operations on October 2, 1996.
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 other
institutions that have entered into agreements with the Trust providing for
shareholder services for their customers.
38
<PAGE>
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, its affiliates and subsidiaries 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, its affiliates and subsidiaries 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, its affiliates and subsidiaries
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.
39
<PAGE>
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS A SERVICE AND
DISTRIBUTION PLANS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FISCAL FISCAL
YEAR PERIOD YEAR
ENDED ENDED ENDED
2/28/95 6/30/95 6/30/96
- --------------------------------------------------------------------------------
<S> <C> <C> C>
Accelerating Growth Fund $1,339.97 $ 51.86 $ 1916.29
Balanced Fund $ 116.01 $ 0.17 $ 136.95
Growth & Income Fund $ 0.00 $ 76.92 $ 268.00
Index 500 Fund $ 176.46 $ 203.84 $23,640.46
International Equity Fund $ 617.32 $ 1.38 $ 1,946.82
Small Company Growth Fund $ 794.65 $ 10.80 $ 1,158.43
Bond Fund $ 17.48 $ 15.24 $ 29.40
Intermediate Bond Fund $ 230.93 $ 0.51 $ 345.66
Michigan Triple Tax-Free Bond Fund $ 663.53 $ 0.00 $ 23.32
Tax-Free Bond Fund $ 0.00 $ 0.00 $ 0.03
Tax-Free Intermediate Bond Fund $ 6.17 $ 10.80 $ 85.26
- --------------------------------------------------------------------------------
-----------------------
FISCAL
PERIOD YEAR
ENDED ENDED
6/30/95 6/30/96
- --------------------------------------------------------------
Multi-Season Growth Fund $ 427.88 $1,945.49
Real Estate Fund $ 422.10 $ 179.10
Mid-Cap Growth Fund N/A $ 51.87
Value Fund N/A $ 41.77
- --------------------------------------------------------------
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS B SERVICE AND DISTRIBUTION PLANS
FOR THE FISCAL YEAR ENDED JUNE 30, 1996
-------------------------------------------------
DISTRIBUTION SERVICER CDSC's
FEES FEES
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Accelerating Growth Fund $ 1,268.42 $ 422.83 $ 238.16
Balanced Fund $ 400.45 $ 133.48 $ 199.11
Growth & Income Fund $ 1,147.15 $ 382.37 $ 300.00
Index 500 Fund $ 15,750.66 $ 4,500.20 $ 1,207.75
International Equity Fund $ 3,131.06 $ 1,043.68 $ 1.008.01
Mid-Cap Growth Fund $ 88.71 $ 29.54 $ 0.00
Multi-Season Growth Fund $454,197.35 $151,399.12 $155,014.33
Real Estate Fund $ 12,014.27 $ 4,004.75 $ 4,278.33
Small Company Growth Fund $ 2,247.94 $ 749.31 $ 100.00
Value Fund $ 424.07 $ 141.36 $ 181.56
Bond Fund $ 590.01 $ 196.67 $ 861.49
Intermediate Bond Fund $ 206.34 $ 68.79 $ 0.00
U.S. Government Income Fund $ 3,656.37 $ 1,218.79 $ 199.27
Michigan Triple Tax Free Fund $ 1,923.70 $ 641.24 $ 405.63
Tax-Free Bond Fund $ 131.90 $ 43.96 $ 979.34
Tax-Free Intermediate Bond Fund $ 298.44 $ 99.48 $ 0.53
Money Market Fund $ 1,496.13 $ 498.72 $ 0.00
- --------------------------------------------------------------------------------
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS B SERVICE AND DISTRIBUTION PLANS
FOR THE PERIOD ENDED JUNE 30, 1995*
-------------------------------------------------
DISTRIBUTION SERVICER CDSC's
FEES FEES
- --------------------------------------------------------------------------------
Accelerating Growth Fund $ 137.64 $ 45.26 $ 350.16
Balanced Fund $ 44.96 $ 15.16 $ 200.96
Growth & Income Fund $ 135.37 $ 44.52 $ 0.00
International Equity Fund $ 311.35 $ 103.16 $ 0.00
Multi-Season Growth Fund** $187,381.57 $ 62,460.53 $101,519.47
Real Estate Fund** $ 4,532.31 $ 1,510.77 $ 430.62
Small Company Growth Fund $ 107.62 $ 35.70 $ 0.00
Intermediate Bond Fund $ 19.61 $ 6.50 $ 0.00
Michigan Triple Tax Free Fund $ 631.87 $ 208.93 $ 361.42
Tax-Free Bond Fund $ 2.85 $ 0.95 $ 0.00
Money Market Fund** $ 1,774.98 $ 591.66 $ 0.00
- --------------------------------------------------------------------------------
</TABLE>
- -----------------------------
* As of June 30, 1995, the following funds had not commenced selling Class B
Shares: Index 500 Fund, Bond Fund, U.S. Government Income Fund, Tax Free
Intermediate Bond Fund.
** Figures reflect the period 01/01/95 - 06/30/95. All other funds reflect
the period 03/01/95 - 06/30/95.
41
<PAGE>
<TABLE>
<CAPTION>
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS B SERVICE AND DISTRIBUTION PLANS
FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1995
-------------------------------------------------
DISTRIBUTION SERVICER CDSC's
FEES FEES
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Accelerating Growth Fund $ 113.37 $15.95 $ 0.00
Balanced Fund $ 66.05 $ 7.42 $ 0.00
Growth & Income Fund $ 117.51 $20.45 $ 0.00
International Equity Fund $ 315.98 $49.15 $ 0.00
Multi-Season Growth Fund* $481,834.00 $ 0.00 $159,185.00
Real Estate Fund** $ 1,064.00 $ 0.00 $ 0.00
Small Company Growth Fund $ 72.07 $14.30 $ 0.00
Intermediate Bond Fund $ 16.61 $ 2.96 $ 0.00
Michigan Triple Tax Free Fund $ 515.28 $91.47 $ 0.00
Tax-Free Bond Fund $ 0.12 $ 0.04 $ 0.00
Money Market Fund** $ 1,799 $ 0.00 $ 0.00
- -------------------------------------------------------------------------------
- ----------------------------
* Figures reflect period from 01/01/94 - 12/31/94. Such amounts were paid to
previous distributor.
** Figures reflect period from commencement of operations to 12/31/94. Such
amounts were paid to previous distributor.
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS C SERVICE AND DISTRIBUTION PLANS
FOR THE FISCAL YEAR ENDED JUNE 30, 1996*
-------------------------------------------------
DISTRIBUTION SERVICER CDSC's
FEES FEES
- --------------------------------------------------------------------------------
Accelerating Growth Fund $ 263.46 $ 87.82 $188.66
Balanced Fund $ 3.69 $ 1.21 $100.01
Growth & Income Fund $ 89.74 $ 29.90 $ 0.00
International Equity Fund $ 3,585.39 $ 1,195.13 $293.87
Mid-Cap Growth Fund $ 129.03 $ 43.00 $ 2.18
Multi-Season Growth Fund $ 32,127.47 $10,709.17 $798.25
Real Estate Fund $ 13.33 $ 4.43 $ 7.50
Small Company Growth Fund $ 171.21 $ 57.06 $149.87
Value Fund $ 855.88 $ 285.29 $ 0.00
Bond Fund $ 92.46 $ 30.80 $ 0.00
Intermediate Bond Fund $ 73.80 $ 24.58 $ 0.00
- --------------------------------------------------------------------------------
</TABLE>
- ----------------------------
* As of June 30, 1996, the following funds had not commenced selling Class C
Shares: Index 500 Fund, U.S. Government Income Fund, Michigan Triple Tax-
Free Bond Fund, Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund and
Money Market Fund.
42
<PAGE>
<TABLE>
<CAPTION>
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS C SERVICE AND DISTRIBUTION PLANS
FOR THE FISCAL PERIOD ENDED JUNE 30, 1995*
DISTRIBUTION SERVICER CDSC's
FEES FEES
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Multi-Season Growth Fund** $9,464.61 $3,154.86 $256.15
Real Estate Fund** $ 1.28 $ 0.43 $ 0.00
- --------------------------------------------------------------------------------
</TABLE>
- ----------------------------
* As of June 30, 1995, the Funds of the Trust had not commenced selling Class
C Shares.
** Figures reflect period 01/01/95-06/30/95.
The following amounts were paid by the Accelerating Growth Fund under its
Class B Plan during the fiscal year ended June 30, 1996 and Class C Distribution
Plan, for the period ended June 30, 1996, respectively; advertising: $0 and $0,
respectively; printing and mailing of prospectuses to other than current
shareholders: $0 and $0, respectively; compensation to underwriters: $0 and $0,
respectively; compensation to dealers: $123 and $11, respectively; compensation
to sales personnel: $0 and $0, respectively; and interest, carrying or other
financing charges: $392 and $39, 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: $0 and $0,
respectively; printing and mailing of prospectuses to other than current
shareholders: $0 and $0, respectively; compensation to underwriters: $0 and $0,
respectively; compensation to dealers: $42 and $0, respectively; compensation to
sales personnel: $0 and $0, respectively; and interest, carrying or other
financing charges: $115 and $1, respectively.
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: $0
and $0, respectively; printing and mailing of prospectuses to other than current
shareholders: $0 and $0, respectively; compensation to underwriters: $0 and $0,
respectively; compensation to dealers: $102 and $0, respectively; compensation
to sales personnel: $0 and $0, respectively; and interest, carrying or other
financing charges: $477 and $11, respectively.
The following amounts were paid by the Index 500 Fund under its Class B
Distribution Plan during the period ended June 30, 1996; advertising: $0;
printing and mailing of prospectuses to other than current shareholders: $0;
compensation to underwriters: $0; compensation to dealers: $0; compensation to
sales personnel: $0; and interest, carrying or other financing charges: $12,384.
The following amounts were paid by the International Equity Fund under its
Class B Plan during the fiscal year ended June 30, 1996 and Class C Distribution
Plan, for the period ended June 30, 1996, respectively; advertising: $0 and $0,
respectively; printing and mailing of prospectuses to other than current
shareholders: $0 and $0, respectively; compensation to underwriters: $0 and $0,
respectively; compensation to dealers: $241 and $55, respectively; compensation
to sales personnel: $0 and $0, respectively; and interest, carrying or other
financing charges: $1,584 and $495, 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: $0 and $0, respectively; printing and mailing of prospectuses to
other than current shareholders: $0 and $0, respectively; compensation to
43
<PAGE>
underwriters: $0 and $0, respectively; compensation to dealers: $17 and $0,
respectively; compensation to sales personnel: $0 and $0, respectively; and
interest, carrying or other financing charges: $29 and $16, respectively.
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: $0 and $0, respectively; printing and mailing of
prospectuses to other than current shareholders: $0 and $0, respectively;
compensation to underwriters: $0 and $0, respectively; compensation to dealers:
$130,116 and $11,976, respectively; compensation to sales personnel: $0 and $0,
respectively; and interest, carrying or other financing charges: $82,959 and $0,
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:
$0 and $0, respectively; printing and mailing of prospectuses to other than
current shareholders: $0 and $0, respectively; compensation to underwriters: $0
and $0, respectively; compensation to dealers: $1,789 and $0, respectively;
compensation to sales personnel: $0 and $0, respectively; and interest, carrying
or other financing charges: $4,381 and $4, 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: $0 and $0, respectively; printing and mailing of prospectuses to
other than current shareholders: $0 and $0, respectively; compensation to
underwriters: $0 and $0, respectively; compensation to dealers: $77 and $10,
respectively; compensation to sales personnel: $0 and $0, respectively; and
interest, carrying or other financing charges: $739 and $13, 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: $0 and $0, respectively; printing and mailing of prospectuses to
other than current shareholders: $0 and $0, respectively; compensation to
underwriters: $0 and $0, respectively; compensation to dealers: $20 and $0,
respectively; compensation to sales personnel: $0 and $0, respectively; and
interest, carrying or other financing charges: $229 and $125, 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: $0 and $0, respectively; printing and mailing of prospectuses to
other than current shareholders: $0 and $0, respectively; compensation to
underwriters: $0 and $0, respectively; compensation to dealers: $0 and $0,
respectively; compensation to sales personnel: $0 and $0, respectively; and
interest, carrying or other financing charges: $8 and $0, 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: $0 and $0, respectively; printing and mailing of prospectuses to
other than current shareholders: $0 and $0, respectively; compensation to
underwriters: $0 and $0, respectively; compensation to dealers: $50 and $0,
respectively; compensation to sales personnel: $0 and $0, respectively; and
interest, carrying or other financing charges: $70 and $14, respectively.
The following amounts were paid by the U.S. Government Income Fund under
its Class B Distribution Plan, during the period ended June 30, 1996;
advertising: $0; printing and mailing of prospectuses to other than current
shareholders: $0; compensation to underwriters: $0; compensation to dealers: $9;
compensation to sales personnel: $0; and interest, carrying or other financing
charges: $54.
44
<PAGE>
The following amounts were paid by the Michigan Bond Fund under its Class B
Distribution Plan, during the fiscal year ended June 30, 1996: advertising: $0;
printing and mailing of prospectuses to other than current shareholders: $0;
compensation to underwriters: $0; compensation to dealers: $407 compensation to
sales personnel: $0; and interest, carrying or other financing charges: $360.
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: $0;
printing and mailing of prospectuses to other than current shareholders: $0;
compensation to underwriters: $0; compensation to dealers: $6; compensation to
sales personnel: $0; and interest, carrying or other financing charges: $7.
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: $0; printing and mailing of prospectuses to other than current
shareholders: $0; compensation to underwriters: $0; compensation to dealers:
$14; compensation to sales personnel: $0; and interest, carrying or other
financing charges: $38.
The following amounts were paid by the Money Market Fund under its Class B
Distribution Plan during the year ended June 30, 1996: advertising: $0; printing
and mailing of prospectuses to other than current shareholders: $0; compensation
to underwriters: $0; compensation to dealers: $557; compensation to sales
personnel: $0; and interest, carrying or other financing charges: $0.
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, Index 500, International
Equity, Small Company Growth, Bond and Intermediate Bond Funds, the
administrators, custodian and transfer agent accrued fees of $336,669; $111,867;
$120,447; $124,551; $241,597; and $416,803, respectively (exclusive of out-of-
pocket expenses).
For the fiscal year ended February 28, 1994 for the Balanced, Michigan Bond
and Tax-Free Intermediate Bond Funds, the administrators accrued fees of $45,845
(exclusive of out-of-pocket expenses). For the fiscal year ended February 28,
1994, the administrators, custodian and transfer agent voluntarily waived fees
of $26,318 for the Index 500.
On July 1, 1994, First Data became the Administrator and Transfer Agent for
the Growth & Income Fund, the U.S. Government Income 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.
45
<PAGE>
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; Balanced
Fund - $16,978; Growth & Income Fund - $0; Index 500 Fund - $23,865;
International Equity Fund - $41,742; Small Company Growth Fund - $38,003; Bond
Fund - $71,113; Intermediate Bond Fund - $123,934; U.S. Government Income Fund -
$0; Michigan Bond Fund - $6,417; Tax-Free Bond Fund - $0; Tax-Free Intermediate
Bond Fund - $50; Cash Investment Fund - $267,499; Tax Free Money Market Fund-
$104,713; and U.S. Treasury Money Market Fund - $134,386.
For the period ended February 28, 1995, the fees of the Administrator
accrued as follows: Accelerating Growth Fund - $198,140; Balanced Fund -$34,625;
Growth & Income Fund - $41,047; Index 500 Fund - $69,871; International Equity
Fund - $94,485; Small Company Growth Fund - $83,027; Bond Fund -$133,388;
Intermediate Bond Fund - $335,642; U.S. Government Income Fund -$142,297;
Michigan Bond Fund - $17,168; Tax-Free Bond Fund - $217,868; Tax-Free
Intermediate Bond Fund - $272,285; Cash Investment Fund - $669,287; Tax-Free
Money Market Fund $179,189; and U.S. Treasury Money Market Fund - $212,383.
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; Balanced Fund - $18,258 and $62,095; Growth & Income
Fund - $48,503 and $202,655; Index 500 Fund - $44,411 and $188,416;
International Equity Fund - $54,832 and $201,299; Small Company Growth Fund -
$48,480 and $194,176; 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 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; Cash
Investment Fund - $376,101 and $1,183,419; Tax-Free Money Market Fund - $89,841
and $285,214; and U.S. Treasury Money Market Fund - $122,730 and $378,955,
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: $18,006 - Mid-Cap Fund and $29,705 - Value Fund.
46
<PAGE>
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.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board Members, the Advisor makes
decisions with respect to and places orders for all purchases and sales of
portfolio securities for 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,
Balanced Fund, Index 500 Fund, International Equity Fund and Small Company
Growth Fund paid brokerage commissions in the following amounts: $281,465,
$89,315, $18,585, $169,977 and $94,291, respectively. The Accelerating Growth
Fund, Balanced Fund, Growth & Income Fund, Index 500 Fund, International Equity
Fund and Small Company Growth Fund paid in brokerage commissions $332,408,
$49,232, $185,181, $5,085, $116,312 and $70,561, 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 March 1, 1995 to June 30, 1995, the Accelerating Growth
Fund, Balanced Fund, Growth & Income Fund, Index 500 Fund, International Equity
Fund and Small Company Growth Fund paid in brokerage commissions $123,045,
$13,238, $62,706, $5,047, $127,871 and $65,661, respectively. The other Funds of
the Trust did not pay brokerage commissions for the period from March 1, 1995 to
June 30, 1995.
For the period from January 1, 1995 to June 30, 1995, the Multi-Season Fund
and the Real Estate Fund paid $62,889 and $14,627, 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: $474,252 - Accelerating Growth Fund, $52,376-Balanced
Fund, $202,292 - Growth & Income Fund, $41,009 - Index 500 Fund, $428,699 -
International Equity Fund, $424,580 - Multi-Season Fund, $40,182 - Real Estate
Fund and $203,936 - Small Company Growth 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 Mid-Cap Fund and the Value Fund
paid brokerage commissions of $83,397 and $169,335, respectively.
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For the fiscal year ended June 30, 1996, the portfolio turnover rate
for the Bond Fund and the Intermediate Bond Fund was: 507% and 494%,
respectively. The portfolio turnover of the Bond Fund and the Intermediate Bond
Fund was affected by fluctuating interest rate conditions which at times
required increased dispositions and acquisitions of securities to maintain each
Fund's maturity structure. For the period ended June 30, 1996, the portfolio
turnover rate for the Mid-Cap Growth Fund and Value Fund was 247% and 223%,
respectively. The portfolio turnover for the Mid-Cap Growth and Value Funds was
higher than anticipated during the period as it was each Fund's initial year of
operations.
Over-the-counter issues, including corporate debt and government
securities, are normally traded on a "net" basis (i.e., without commission)
through dealers, or otherwise involve transactions directly with the issuer of
an instrument. With respect to over-the-counter transactions, the Advisor will
normally deal directly with dealers who make a market in the instruments
involved except in those circumstances where more favorable prices and execution
are available elsewhere. The cost of foreign and domestic securities purchased
from underwriters includes an underwriting commission or concession, and the
prices at which securities are purchased from and sold to dealers include a
dealer's mark-up or mark-down.
The 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
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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
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 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; 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.; and
the Money Market Fund held 10,000,000 shares of Bear Stearns.
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.
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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.
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.
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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 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.
Redemption proceeds are normally paid in cash; however, each Fund may
pay the redemption price in whole or part by a distribution in kind of
securities from the portfolio of the particular Fund, in lieu of cash, in
conformity with applicable rules of the SEC. If shares are redeemed in kind, the
redeeming shareholder might incur transaction costs in converting the assets
into cash. The Funds are obligated to redeem shares solely in cash up to the
lesser of $250,000 or 1% of its net assets during any 90-day period for any one
shareholder.
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,
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expense or cost arising out of any telephone exchanges effected upon
instructions believed by them to be genuine. The Transfer Agent has instituted
procedures that it believes are reasonably designed to insure that exchange
instructions communicated by telephone are genuine, and could be liable for
losses caused by unauthorized or fraudulent instructions in the absence of such
procedures. The procedures currently include a recorded verification of the
shareholder's name, social security number and account number, followed by the
mailing of a statement confirming the transaction, which is sent to the address
of record.
NET ASSET VALUE
MONEY MARKET FUNDS. The value of the portfolio securities of the
Money Market Funds is calculated using the amortized cost method of valuation.
Under this method the market value of an instrument is approximated by
amortizing the difference between the acquisition cost and value at maturity of
the instrument on a straight-line basis over the remaining life of the
instrument. The effect of changes in the market value of a security as a result
of fluctuating interest rates is not taken into account. The market value of
debt securities usually reflects yields generally available on securities of
similar quality. When such yields decline, market values can be expected to
increase, and when yields increase, market values can be expected to decline.
As indicated, the amortized cost method of valuation may result in the
value of a security being higher or lower than its market price, the price a
Fund would receive if the security were sold prior to maturity. The Boards of
Trustees and Directors have established procedures reasonably designed, taking
into account current market conditions and the Funds' investment objectives, for
the purpose of maintaining a stable net asset value of $1.00 per share for each
Fund for purposes of sales and redemptions. These procedures include a review by
the 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.
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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 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 Cash Investment, Money
Market, Tax-Free Money Market and U.S. Treasury Money Market Funds for the
seven-day period ended June 30, 1996 were: 4.84% (Class Y) and 4.69% (Class K)
and 4.59% (Class A) for the Cash Investment Fund; 4.56% (Class A), 3.82% (Class
B), and 4.81% (Class Y) for the Money Market 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.
The effective 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: 4.66% (Class A), 3.88% (Class B) and
4.92% (Class Y) for the Money Market Fund; 4.94% (Class Y), 4.79% (Class K) and
4.68% (Class A) for the Cash Investment Fund; 2.86% (Class Y), 2.71% (Class K)
and 2.61% (Class A) for the Tax-Free Money Market Fund; and 4.80% (Class Y),
4.65% (Class K) and 4.54% (Class A) for the U.S. Treasury Money Market Fund.
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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) calculated
for all share classes based on a stated tax rate of 31%. The fees which may be
imposed by institutions on their Customers are not reflected in the calculations
of yields for the Funds.
Yield may fluctuate daily and does not provide a basis for determining
future yields. Because the yields of each Fund will fluctuate, they cannot be
compared with yields on savings accounts or other investment alternatives that
provide an agreed to or guaranteed fixed yield for a stated period of time.
However, yield information may be useful to an investor considering temporary
investments in money market instruments. In comparing the yield of one money
market fund to another, consideration should be given to each Fund's investment
policies including the types of investments made, lengths of maturities of the
portfolio securities, and whether there are any special account charges which
may reduce the effective yield.
YIELD AND PERFORMANCE OF THE NON-MONEY MARKET FUNDS
The Bond Funds' 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.
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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 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 Bond Fund, a Michigan state tax rate of
4%.
CLASS A SHARES
- --------------
The standard yields and/or tax-equivalent yields of the Class A Shares of
the following Funds for the 30-day period ended June 30, 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% N/A
Michigan Bond Fund* 4.50% 6.92%
Tax-Free Bond Fund 4.45% 6.45%
Tax-Free Intermediate Bond Fund 3.76% 5.45%
</TABLE>
- ------------------------
* With waiver of fees by the Advisor, the standardized yields and tax equivalent
yields for the Michigan Bond Fund, Class A Shares, were 5.00% and 7.69%,
respectively.
55
<PAGE>
CLASS B SHARES
- --------------
The standard yields and/or tax-equivalent yields of the Class B Shares of
the following Funds for the 30-day period ended June 30, 1996 were:
<TABLE>
<CAPTION>
30-Day Tax-Equivalent
Yield 30-Day Yield
------- ---------------
<S> <C> <C>
Bond Fund 4.98% N/A
Intermediate Bond Fund 5.05% N/A
U.S. Government Income Fund 5.40% N/A
Michigan Bond Fund** 3.97% 6.11%
Tax-Free Bond Fund 3.86% 5.59%
Tax-Free Intermediate Bond Fund 3.17% 4.59%
</TABLE>
CLASS C SHARES
- --------------
The standard yields and/or tax-equivalent yields of the Class C Shares of
the following Funds for the 30-day period ended June 30, 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 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
- --------------
The standard yields and/or tax-equivalent yields of the Class K Shares of
the following Funds for the 30-day period ended June 30, 1996 were:
<TABLE>
<CAPTION>
30-Day Tax-Equivalent
Yield 30-Day Yield
------- ---------------
<S> <C> <C>
Bond Fund 5.73% N/A
Intermediate Bond Fund 5.79% N/A
U.S. Government Income Fund 6.15% N/A
Michigan Bond Fund** 4.72% 7.26%
Tax-Free Bond Fund 4.62% 6.70%
Tax-Free Intermediate Bond Fund 3.92% 5.68%
</TABLE>
- ----------------------
** With waiver of fees by the Advisor, the standardized yields and tax-
equivalent yields for the Michigan Bond Fund, Class B Shares were 4.47% and
6.88%, respectively and for Class K Shares, were 5.22% and 8.03%,
respectively.
56
<PAGE>
CLASS Y SHARES
- --------------
The standard yields and/or tax-equivalent yields of the Class Y Shares of
the following Funds for the 30-day period ended June 30, 1996 were:
<TABLE>
<CAPTION>
30-Day Tax-Equivalent
Yield 30-Day Yield
------- ---------------
<S> <C> <C>
Bond Fund 5.98% N/A
Intermediate Bond Fund 6.04% N/A
U.S. Government Income Fund 6.40% N/A
Michigan Bond Fund*** 4.96% 7.63%
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.
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
- -----------------------
*** With waiver of fees by the Advisor, the standardized yields and tax-
equivalent yields for the Michigan Bond Fund, Class Y Shares, were 5.46% and
8.40%, respectively.
57
<PAGE>
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
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
Period Ended through Period Ended through
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
12 Month Inception 12 Month Inception
GROWTH & Period Ended through Period Ended through
INCOME FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- ----------- -------- -------- --------- ---------
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 21.25% 18.34% N/A N/A
</TABLE>
58
<PAGE>
<TABLE>
<CAPTION>
12 Month Inception 12 Month Inception
Period Ended through Period Ended through
INDEX 500 FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- -------------- -------- -------- --------- ---------
<S> <C> <C> <C> <C>
Class A+-12/9/92 25.51% 15.43% 22.38% 14.61%
Class B-11/1/95 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
12 Month Inception 12 Month Inception
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
MID-CAP 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
Period Ended through Period Ended through
MULTI-SEASON FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- ----------------- -------- -------- --------- ---------
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% 25.13% N/A N/A
Class Y-8/16/93 27.85% 15.74% N/A N/A
12 Month Inception 12 Month Inception
Period Ended through Period Ended through
REAL ESTATE 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>
59
<PAGE>
<TABLE>
<CAPTION>
12 Month Inception 12 Month Inception
SMALL COMPANY 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 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
Period Ended through Period Ended through
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
BOND FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- --------- -------- -------- --------- ---------
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
Period Ended through Period Ended through
INTERMEDIATE 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/A .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
12 Month Inception 12 Month Inception
U.S. 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 (2.42)%++
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
</TABLE>
60
<PAGE>
<TABLE>
<CAPTION>
12 Month Inception 12 Month Inception
Period Ended through Period Ended through
MICHIGAN BOND FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- ------------------ -------- -------- --------- ---------
<S> <C> <C> <C> <C>
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
Period Ended through Period Ended through
TAX-FREE 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
TAX-FREE 12 Month Inception 12 Month Inception
INTERMEDIATE Period Ended through Period Ended through
BOND FUND 6/30/96* 6/30/96* 6/30/96** 6/30/96**
- ------------ -------- -------- --------- ---------
Class A-11/30/92 3.79% 4.38% (.36)% 3.20%
Class B-5/16/96 N/A .39%++ N/A (4.60)%++
Class K-2/9/87 3.69% 5.64% N/A N/A
Class Y-12/17/92 3.95% 4.56% 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%.
++ Aggregate total return.
As of June 30, 1996, the following Classes had not commenced operations:
Class C Shares of each of U.S. Government Income, Michigan Bond, Tax-Free Bond
and Tax-Free Intermediate Bond Funds and the Class K Shares of the Real Estate
Fund.
The Equity Selection Fund, Micro-Cap Equity Fund and Small-Cap Value Fund
had not commenced operations as of the date of this Statement of Additional
Information. The International Bond Fund did not commence operations until
October 2, 1996.
ALL FUNDS. The performance of any investment is generally a function of
portfolio quality and maturity, type of investment and operating expenses.
61
<PAGE>
From time to time, in advertisements or in reports to shareholders, a
Fund's yields or total returns may be quoted and compared to those of other
mutual funds with similar investment objectives and to stock or other relevant
indices. For example, a Fund's yield may be compared to the IBC/Donoghue's Money
Fund Average, which is an average compiled by Donoghue's MONEY FUND REPORT of
Holliston, MA 01746, a widely recognized independent publication that monitors
the performance of money market funds, or to the data prepared by Lipper
Analytical Services, Inc., a widely recognized independent service that monitors
the performance of mutual funds. In addition, as stated in the Funds'
Prospectuses, the tax-equivalent yield (and hypothetical examples illustrating
the effect of tax-equivalent yields) of a Fund may be quoted in advertisements
or reports to shareholders. Hypothetical examples showing the difference between
a taxable and a tax-free investment may also be provided to shareholders.
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 intends to elect and qualify to be taxed separately as
a regulated investment company under 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
Test").
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.
62
<PAGE>
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 Michigan Bond Fund, Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund
and Tax-Free Money Market Fund) and any net realized short-term capital gains
distributed by a Fund will be taxable to shareholders as ordinary income and
will not be eligible for the dividends received deduction for corporations.
Each Fund intends to distribute to shareholders any excess of net long-term
capital gain over net short-term capital loss ("net capital gain") for each
taxable year. Such gain is distributed as a capital gain dividend and is taxable
to shareholders as long-term capital gain, regardless of the length of time the
shareholder has held the 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.
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 distributions, including
gross proceeds realized upon sale or other dispositions paid to any shareholder
(i) who has provided either an uncertified or 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."
DISPOSITION OF SHARES. Upon a redemption, sale or exchange of his or her
shares, a shareholder will realize a taxable gain or loss depending upon his or
her basis in the shares. Such gain or loss will be treated as capital gain or
loss if the shares are capital assets in the shareholder's hands and will be
long-term or short-term, generally, depending upon the shareholder's holding
period for the shares. Any loss realized on a redemption, sale or exchange will
be disallowed to the extent the shares disposed of are replaced (including
through reinvestment of dividends) within a period of 61 days beginning 30 days
before and ending 30 days after the shares are disposed of. In such a case, the
basis of the shares acquired will be adjusted to reflect the
63
<PAGE>
disallowed loss. Any loss realized by a shareholder on the sale of Fund shares
held by the shareholder for six months or less will be treated as a long-term
capital loss to the extent of any distributions of net capital gains received or
treated as having been received by the shareholder with respect to such shares.
Furthermore, a loss realized by a shareholder on the redemption, sale or
exchange of shares of a Fund with respect to which exempt-interest dividends
have been paid will, to the extent of such exempt-interest dividends have been
paid will, to the extent of such exempt-interest dividends, be disallowed if
such shares have been held by the shareholder for less than six months.
In some cases, shareholders will not be permitted to take sales charges
into account for purposes of determining the amount of gain or loss realized on
the disposition of their stock. This prohibition generally applies where (1) the
shareholder incurs a sales charge in acquiring the stock of a Fund, (2) the
stock is disposed of before the 91st day after the date on which it was
acquired, and (3) the shareholder subsequently acquires the stock of the same or
another fund and the otherwise applicable sales charge is reduced under a
"reinvestment right" received upon the initial purchase of regulated investment
company shares. The term "reinvestment right" means any right to acquire stock
of one or more funds without the payment of a sales charge or with the payment
of a reduced sales charge. Sales charges affected by this rule are treated as if
they were incurred with respect to the stock acquired under the reinvestment
right. This provision may be applied to successive acquisitions of Fund shares.
Although each Fund expects to qualify as a "regulated investment company"
and to be relieved of all or substantially all Federal income taxes, depending
upon the extent of its activities in states and localities in which its offices
are maintained, in which its agents or independent contractors are located or in
which it is otherwise deemed to be conducting business, each Fund may be subject
to the tax laws of such states or localities.
MICHIGAN BOND FUND, TAX-FREE BOND FUND, TAX-FREE INTERMEDIATE BOND FUND,
AND TAX-FREE MONEY MARKET FUND. The Michigan Bond Fund, Tax-Free Bond Fund, Tax-
Free Intermediate Bond Fund, and Tax-Free Money Market Fund are designed to
provide investors with current tax-exempt interest income. Shares of the Funds
would not be suitable for tax-exempt institutions and may not be suitable for
retirement plans qualified under Section 401 of the Code, H.R. 10 plans and
individual retirement accounts since such plans and accounts are generally tax-
exempt and, therefore, not only would not gain any additional benefit from the
Funds' dividends being tax-exempt but also such dividends would be taxable when
distributed to the beneficiary. In addition, the Funds may not be an appropriate
investment for entities which are "substantial users" of facilities financed by
private activity bonds or "related persons" thereof. "Substantial user" is
defined under U.S. Treasury Regulations to include a non-exempt person who
regularly uses a part of such facilities in his trade or business and (a) whose
gross revenues derived with respect to the facilities financed by the issuance
of bonds are more than 5% of the total revenues derived by all users of such
facilities, (b) who occupies more than 5% of the entire usable area of such
facilities, or (c) for whom such facilities or a part thereof were specifically
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 tax-exempt municipal
obligations. Exempt-interest dividends distributed to shareholders are not
included in the shareholder's gross income for regular Federal income tax
purposes. However, all shareholders required to file a Federal income tax return
are required to report the receipt of exempt-interest dividends and other tax-
exempt interest on their returns. Moreover, while such dividends and interest
are exempt from regular Federal income tax, they may be subject to alternative
minimum tax in two circumstances. First, exempt-interest
64
<PAGE>
dividends derived from certain "private activity" bonds issued after August 7,
1986 will generally constitute an item of tax preference for both corporate and
non-corporate taxpayers. Second, exempt-interest dividends derived from all
bonds, regardless of the date of issue, must be taken into account by corporate
taxpayers in determining the amount of certain adjustments for alternative
minimum tax purposes. Receipt of exempt-interest dividends may result in
collateral Federal income tax consequences to certain other taxpayers, including
financial institutions, property and casualty insurance companies, individual
recipients of Social Security or Railroad Retirement benefits, and foreign
corporations engaged in a trade or business in the United States. Prospective
investors should consult their own tax advisors as to such consequences.
The percentage of total dividends paid by the Fund with respect to any
taxable year which qualifies as Federal exempt-interest dividends will be the
same for all shareholders receiving dividends during such year. If a shareholder
receives an exempt-interest dividend with respect to any share and such share is
held for six months or less, any loss on the sale or exchange of such share will
be disallowed to the extent of the amount of such dividends.
Interest on indebtedness incurred by a shareholder to purchase or carry
shares of the Funds generally is not deductible for Federal income tax purposes
if the Funds distribute exempt-interest dividends during the shareholder's
taxable year.
Investors may be subject to state and local taxes on income derived from an
investment in a Fund. In certain states, income derived from a Fund which is
attributable to interest on obligations of that state or any municipality or
political subdivision thereof may be exempt from taxation.
Shareholders are advised to consult their own tax advisers with respect to
the particular tax consequences to them of an investment in a Fund. Persons who
may be "substantial users" (or "related persons" of substantial users) of
facilities financed by industrial development bonds should consult their tax
advisers before investing in a Fund. The term "substantial user" generally
includes any "non-exempt person" who regularly uses in his or her trade or
business a part of a facility financed by industrial development bonds.
Generally, an individual will not be a "related person" of a substantial user
under the Code unless the person or his or her immediate family owns directly or
indirectly in the aggregate more than a 50% equity interest in the substantial
user.
MICHIGAN TAX CONSIDERATIONS - MICHIGAN BOND FUND AND TAX-FREE INTERMEDIATE
BOND FUND. As stated in the Michigan Bond Fund Prospectus and the Tax-Free
Intermediate Bond Fund Prospectus, dividends paid by the Fund that are derived
from interest attributable to tax-exempt Michigan Municipal Obligations will be
exempt from Michigan Income Tax, Michigan Intangibles Tax and Michigan Single
Business Tax. Conversely, to the extent that the Fund's dividends are derived
from interest on obligations other than Michigan Municipal Obligations, such
dividends will be subject to Michigan Income, Intangibles and Michigan Single
Business Taxes, even though the dividends may be exempt for Federal Income Tax
purposes.
In particular, gross interest income and dividends derived from obligations
or securities of the State of Michigan and its political subdivisions, exempt
from Federal Income Tax, are exempt from Michigan Income Tax under Act No. 281,
Public Acts of Michigan, 1967, as amended, and are exempt from Michigan Single
Business Tax under Act No. 228, Public Acts of Michigan, 1975, as amended. The
Michigan Income Tax act levies a flat-rate income tax on individuals, estates,
and trusts. The Single Business Tax Act levies a tax upon the "adjusted tax
base" of most individuals, corporations, financial organizations, partnerships,
joint ventures, estates, and trusts with "business activity" in Michigan.
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<PAGE>
Bonds or other similar obligations of the State of Michigan or of a
political subdivision of the State of Michigan are exempt from Michigan
Intangibles Tax under Act No. 301, Public Acts of Michigan, 1939, as amended. In
1986, the Michigan Department of Treasury issued a Bulletin stating that holders
of interests in investment companies who are subject to the Michigan intangibles
tax will be exempt from the tax to the extent that the investment portfolio
consists of items such as Michigan Municipal Obligations.
The transfer of obligations or securities of the State of Michigan and its
political subdivisions by the Fund, as well as the transfer of Fund shares by a
shareholder, is subject to Michigan taxes measured by gain on the sale, payment,
or other disposition thereof.
INTERNATIONAL EQUITY FUND 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 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-Short Test,
all described above.
HEDGING TRANSACTIONS. The taxation of equity options and over-the-counter
options on debt securities is governed by Code section 1234. Pursuant to Code
section 1234, the premium received by a Fund for selling
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<PAGE>
a put or call option is not included in income at the time of receipt. If the
option expires, the premium is short-term capital gain to the Fund. If the Fund
enters into a closing transaction, the difference between the amount paid to
close out its position and the premium received is short-term capital gain or
loss. If a call option written by a Fund is exercised, thereby requiring the
Fund to sell the underlying security, the premium will increase the amount
realized upon the sale of such security and any resulting gain or loss will be a
capital gain or loss, and will be long-term or short-term depending upon the
holding period of the security. With respect to a put or call option that is
purchased by a Fund, if the option is sold, any resulting gain or loss will be a
capital gain or loss, and will be long-term or short-term, depending upon the
holding period of the option. If the option expires, the resulting loss is a
capital loss and is long-term or short-term, depending upon the holding period
of the option. If the option is exercised, the cost of the option, in the case
of a call option, is added to the basis of the purchased security and, in the
case of a put option, reduces the amount realized on the underlying security in
determining gain or loss.
Certain options, futures and forward contracts in which a Fund may invest
may be "section 1256 contracts." Gains or losses on section 1256 contracts are
generally considered 60% long-term and 40% short-term capital gains or losses;
however, foreign currency gains or losses arising from certain section 1256
contracts may be treated as ordinary income or loss. Also, section, 1256
contracts held by a Fund at the end of each taxable year (and generally for
purposes of the 4% excise tax, on October 31 of each year) are "marked-to-
market" with the result that unrealized gains or losses are treated as though
they were realized.
Generally, hedging transactions, if any, undertaken by a Fund may result in
"straddles" for federal income tax purposes. The straddle rules may affect the
character of gains (or losses) realized by the Funds. In addition, losses
realized by a Fund on positions that are part of a straddle may be deferred
under the straddle rules, rather than being taken into account in calculating
the taxable income for the taxable year in which such losses are realized.
Because only a few regulations implementing the straddle rules have been
promulgated, the tax consequences of hedging transactions to the Funds are not
entirely clear. The hedging transactions may increase the amount of short-term
capital gain realized by the Funds which is taxed as ordinary income when
distributed to shareholders.
The Funds may make one or more of the elections available under the Code
which are applicable to straddles. If a Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections may
operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Because application of the straddle rules may affect the character of gains
or losses, defer losses and/or accelerate the recognition of gains or losses
from the affected straddle positions, the amount which must be distributed to
shareholders, and which will be taxed to shareholders as ordinary income or
long-term capital gain, may be increased or decreased substantially as compared
to a fund that did not engage in such hedging transactions.
The Short-Short Test and the diversification requirements applicable to the
Funds' assets may limit the extent to which the Funds will be able to engage in
transactions in options, futures or forward contracts.
CURRENCY FLUCTUATIONS-"SECTION 988" GAINS OR LOSSES. Under the Code, gains
or losses attributable to fluctuations in exchange rates which occur between the
time a Fund accrues receivables or liabilities denominated in a foreign currency
and the time the Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income and loss. Similarly, on
disposition of debt securities denominated in a foreign currency and on
disposition of certain futures, forward contracts and options, gains
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<PAGE>
or losses attributable to fluctuations in the value of the foreign currency
between the date of acquisition of the security or contract and the date of
disposition also are treated as ordinary gain or loss. These gains or losses,
referred to under the Code as "Section 988" gains or losses, may increase or
decrease the amount of a Fund's investment company taxable income to be
distributed to its shareholders as ordinary income.
DISCOUNT. Certain of the bonds purchased by a Fund may be treated as bonds
that were originally issued at a discount., Original issue discount represents
interest for federal income tax purposes and can generally be defined as the
difference between the price at which a security was issued and its stated
redemption price at maturity. Original issue discount is treated for federal
income tax purposes as income earned by a Fund even though the Fund doesn't
actually receive any cash, and therefore is subject to the distribution
requirements of the Code. The amount of income earned by the Fund generally is
determined on the basis of a constant yield to maturity which takes into account
the semi-annual compounding of accrued interest.
If a Fund invests in certain high yield original issue discount obligations
issued by corporations, a portion of the original issue discount accruing on the
obligation may be eligible for the deduction for dividends received by
corporations. In such event, dividends of investment company taxable income
received from the Fund by its corporate shareholders, to the extent attributable
to such portion of accrued original issue discount, may be eligible for this
deduction for dividends received by corporations if so designated by the Fund in
a written notice to shareholders.
In addition, some of the bonds may be purchased by a Fund at a discount
which exceeds the original issue discount on such bonds, if any. This additional
discount represents market discount for federal income tax purposes. The gain
realized on the disposition of any bond having market discount will be treated
as ordinary income to the extent it does not exceed the accrued market discount
on such bond (unless the Fund elects for all its debt securities acquired after
the first day of the first taxable year to which the election applies having a
fixed maturity date of more than one year from the date of issue to include
market discount in income in tax years to which it is attributable). Generally,
market discount accrues on a daily basis for each day the bond is held by a Fund
at a constant rate over the time remaining to the bond's maturity.
INVESTMENT IN PASSIVE FOREIGN INVESTMENT COMPANIES
Certain Funds may invest in shares of foreign corporations which may be
classified under the Code as passive foreign investment companies ("PFIC's"). In
general, a foreign corporation is classified as a PFIC if at least one-half of
its assets constitute investment-type assets, or 75% or more of its gross
income is investment-type income. If a Fund receives a so-called "excess
distribution" with respect to PFIC stock, the Fund itself may be subject to a
tax on a portion of the excess distribution, whether or not the corresponding
income is distributed by the Fund to shareholders. In general, under the PFIC
rules, an excess distribution is treated as having been realized ratably over
the period during which the Fund held the PFIC shares. The Fund itself will be
subject to tax on the portion, if any, of an excess distribution that is so
allocated to prior Fund taxable years and an interest factor will be added to
the tax, as if the tax had been payable in such prior taxable years. Certain
distributions from a PFIC as well as gain from the sale of PFIC shares are
treated as excess distributions. Excess distributions are characterized as
ordinary income even though, absent application of the PFIC rules, certain
excess distributions might have been classified as capital gain.
The Funds may be eligible to elect alternative tax treatment with respect
to PFIC shares. Under an election that currently is available in some
circumstances, a Fund generally would be required to include in its gross income
its share of the earnings of a PFIC on a current basis, regardless of whether
distributions are received from the PFIC in a given year. If this election were
made, the special rules, discussed above, relating
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<PAGE>
to the taxation of excess distributions, would not apply. In addition, other
elections may become available that would affect the tax treatment of PFIC
shares held by the Funds.
OTHER TAXATION
The foregoing discussion relates only to US. Federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens and residents and domestic
corporations, partnerships, trusts and estates). Distributions by the Fund also
may be subject to state and local taxes, and their treatment under state and
local income tax laws may differ from the U.S. Federal income tax treatment.
Shareholders should consult their tax advisers with respect to particular
questions of U.S. Federal, state and local taxation. Shareholders who are not
U.S. persons should consult their tax advisers regarding U.S. and foreign tax
consequences of ownership of shares of the Fund, including the likelihood that
distributions to them would be subject to withholding of U.S. Federal income tax
at a rate of 30% (or at a lower rate under a tax treaty).
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, Balanced,
Growth & Income, Index 500, International Equity, Small Company Growth, Bond,
Intermediate Bond, U.S. Government Income, Michigan Bond, Tax-Free Bond, Tax-
Free Intermediate Bond, Cash Investment, Tax-Free Money Market and U.S. Treasury
Money Market Funds. The shares of each Fund (other than the Cash Investment
Fund, Tax-Free Money Market Fund and U.S. Treasury Money Market Fund) are
offered in five separate classes: Class A, Class B, Class C, Class K and Class Y
Shares. Class C Shares of the Index 500 Fund are not currently available for
purchase. The Cash Investment Fund, Tax-Free Money Market Fund and U.S. Treasury
Money Market Fund offer only Class Y Shares, Class K Shares and Class A Shares.
Pursuant to the authority of the Company's Articles of Incorporation, the
Directors have authorized the issuance of shares of common stock representing
interests in the Equity Selection Fund, Micro-Cap Equity Fund, Mid-Cap Fund,
Multi-Season Fund, Real Estate Fund, Small-Cap Value Fund, Value Fund,
International Bond Fund, Money Market Fund and NetNet Fund, respectively. The
Shares of each Fund (other than the Money Market Fund and the NetNet Fund) are
offered in five separate classes: Class A, Class B, Class C, Class K and Class Y
Shares. The Money Market Fund offers only Class A, Class B and Class C Shares
(which may be acquired only through an exchange of shares from the corresponding
classes of other funds of the Trust and the Company) and Class Y Shares. The
NetNet Fund offers only one class of shares.
At a board meeting on April 25 and 26, 1995, the Trustees/Directors adopted
plans pursuant to Rule 18f-3 under the 1940 Act ("Multi-Class Plans") on behalf
of each Fund. Each Multi-Class Plan provides that shares of each class of a Fund
are identical, except for one or more expense variables, certain related rights,
exchange privileges, class designation and sales loads assessed due to differing
distribution methods.
In the event of a liquidation or dissolution of each of the Trust 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
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<PAGE>
Funds, of any general assets not belonging to any particular Fund which are
available for distribution. Shareholders of a Fund are entitled to participate
in the net distributable assets of the particular Fund involved on liquidation,
based on the number of shares of the Fund that are held by each shareholder.
Holders of all outstanding shares of a particular Fund will vote
together in the aggregate and not by class on all matters, except that only
Class A Shares of a Fund will be entitled to vote on matters submitted to a vote
of shareholders pertaining to the Fund's Class A Plan, only Class B Shares will
be entitled to vote on matters submitted to a vote of shareholders pertaining to
the Fund's Class B Plan, only Class C Shares of a Fund will be entitled to vote
on matters submitted to a vote of shareholders pertaining to the Fund's Class C
Plan, and only Class K Shares of a Fund will be entitled to vote on matters
submitted to a vote of shareholders pertaining to the Class K Plan. Further,
shareholders of all of the Funds, as well as those of any other investment
portfolio now or hereafter offered by the Trust 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 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,
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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
Accelerating Growth Fund, Balanced Fund, Growth & Income Fund, Index 500 Fund,
International Equity Fund, Small Company Growth Fund, Bond Fund, Intermediate
Bond Fund, U.S. Government Income Fund, Michigan Bond Fund, Tax-Free Bond Fund,
Tax-Free
Intermediate Bond Fund, Cash Investment Fund, Tax-Free Money Market Fund and
U.S. Treasury Money Market 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, and Mid-Cap Growth Fund and Value Fund for the period ended
June 30, 1996, incorporated by reference in this Statement of Additional
Information, have been audited by Ernst & Young LLP, independent auditors. The
information under the caption "Financial Highlights" of the Funds for the period
from commencement of operations through June 30, 1996, appearing in the related
Prospectuses dated October 28, 1996 has been derived from the financial
statements audited by Ernst & Young LLP except for periods ended prior to June
30, 1995 for the Multi-Season Fund and Money Market Fund, which have been
derived from the financial statements audited by other 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 October 1, 1996,
Comerica Bank, One Detroit Center, 500 Woodward Ave., Detroit, Michigan 48226,
held of record substantially all of the outstanding shares of the Funds as
agent, custodian or trustee for its customers. As of such date, the following
persons were beneficial owners of 5% or more of the outstanding shares of a Fund
because they possessed voting or investment power with respect to such shares:
<TABLE>
<CAPTION>
Percent of
Name of Name and Total Shares
Fund Address Outstanding
------- -------- ------------
<S> <C> <C>
Tax-Free Money Market Fund--Class Y Lasalle National Trust, N.A.
Omnibus Account
P.O. Box 1443
Chicago, IL 60690-1443 14.0558%
Cash Investment Fund--Class A National Financial Services Corp.
P.O. Box 3908
Church Street Station
New York, NY 10008-3908 99.5951%
Tax-Free Money Market Fund--Class A National Financial Services Corp.
P.O. Box 3908
Church Street Station
New York, NY 10008-3908 85.4317%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Tax-Free Money Market Fund--Class A Paxton Mendelssohn II
100 Renaissance Ctr. Ste. 2750
Detroit, MI 48243-1102 9.5550%
U.S. Treasury Money Market Fund--Class A National Financial Services Corp.
P.O. Box 3908
Church Street Station
New York, NY 10038-3908 99.8543%
Accelerating Growth Fund--Class A Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 5.8487%
Small Company Growth Fund--Class A Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 8.2102%
Index 500 Fund--Class A Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 65.8530%
Index 500 Fund--Class A Rose Acre Farms Inc. IRA
c/o Merrill Lynch
11555 N. Meridian Street
Carmel, IN 46032 5.5191%
International Equity Fund--Class A Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 57.4016%
Bond Fund--Class A Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 8.6834%
Bond Fund--Class A Tulio Carlesimo
20941 Lujon
Northville, MI 48167 7.8433%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Bond Fund - Class A Leon A. Dickson
18200 Wyoming Avenue
Detroit, MI 48221 6.5428%
Tax-Free Intermediate Bond Fund - Class A Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 7.2237%
Balanced Fund - Class A Carl Ottman
10627 S. Grayling Road
Roscommon, MI 48653 14.5957%
Balanced Fund - Class A Duayne C. & Helen L. Showerman
P.O. Box 366
Michigan Center, MI 49254 8.7520%
Balanced Fund - Class A Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 7.6028%
Balanced Fund - Class A Julie A. Prince
124 Cuarton Drive
Orange Park, FL 32073 7.3597%
Balanced Fund - Class A Paul Ochmanek
732 Dover
Dearborn Heights, MI 48127 5.8120%
Balanced Fund - Class A Kaye J. Clark
31821 Hickory Lane
Warren, MI 48093 5.3125%
Balanced Fund - Class A John B & Joan F Baum
3340-F Devonwood Hills N.E.
Grand Rapids, MI 49505 5.1890%
Michigan Triple Tax-Free Gayle M Miller
Bond Fund - Class A 1285 Brockley Avenue
Lakewood, OH 44107 10.4753%
Michigan Triple Tax-Free Reino Kellman
Bond Fund - Class A 27095 Bennett
Redford, MI 48240 9.9455%
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
Michigan Triple Tax-Free Donald A. & Catherine L. Dick
Bond Fund - Class A Deborah L. Evans
15810 Stout Street
Detroit, MI 48223 9.3431%
Michigan Triple Tax-Free Merrill Lynch Pierce Fenner & Smith
Bond Fund - Class A Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 5.9595%
Michigan Triple Tax-Free MLPF&S
Bond Fund - Class A 4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246 5.8100%
Tax-Free Bond Fund - Class A Miaz & Co.
1000 N. Water Street, 14th Floor
Milwaukee, WI 53202 35.2900%
Tax-Free Bond Fund - Class A Barnett Banks Trust Co.
P.O. Box 40200
Jacksonville, FL32203-0200 17.1805%
Tax-Free Bond Fund - Class A MLPF&S
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32248 9.6415%
Tax-Free Bond Fund - Class A Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Drive E 3rd Floor
Jacksonville, FL 32246-6484 9.1706%
Tax-Free Bond Fund - Class A Charles W. Macleod
15901 W 9 Mile Rd., Suite 306
Southfield, MI 48075-4866 6.8762%
Tax-Free Bond Fund - Class A William C. Torrey
4250 East Camelback, Suite 115-K
Phoenix, AZ 85018 5.0416%
Tax-Free Bond Fund - Class A Lyle B. Torrey, Jr.
Hotchkiss School
Lakeville, CT 06039 5.0416%
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
Growth & Income Fund - Class A Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 14.7192%
Growth & Income Fund - Class A Robert R. Van Dongen &
Colleen J. Blayden
630 McKay Tower
Grand Rapids, MI 49503 12.6969%
Growth & Income Fund - Class A Bowen & David Co.
P.O. Box 1647
Boston, MA 02109-1647 6.2058%
Growth & Income Fund - Class A Doris A. Bradshaw
1701 NE Ocean Blvd., Apt. 202
Stuart, FL 34996-2928 5.8286%
U.S. Government Income Fund - Class A Doris A. Bradshaw
1701 NE Ocean Blvd., Apt. 202
Stuart, FL 34996-2928 14.1526%
U.S. Government Income Fund - Class A Dolores L. Evans Living Trust
109 Hanover
Gary, NC 27511 7.9069%
U.S. Government Income Fund - Class A George D. Ruttinger
4619 Elliott Street NW
Washington, DC 20016 6.4225%
U.S. Government Income Fund - Class A Grant C. & Stephanie Ruttinger
1745 Stanhope Avenue
Grosse Pointe Woods, MI 48236 6.3549%
U.S. Government Income Fund - Class A Ernistine K. Mitchell
1760 N. Woodward, Apt. 6
Bloomfield Hills, MI 48304 5.8297%
Multi-Season Growth Fund - Class A Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 18.6875%
</TABLE>
75
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Real Estate Equity Investment Fund--Class A Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 55.7606%
Real Estate Equity Investment Fund--Class A Raymond James & Assoc. Inc.
570 E. Benson Blvd. Ste 17
Anchorage, AK 99503-4100 11.9657%
Real Estate Equity Investment Fund--Class A Harry Harden
15063 Marl Drive
Linden, MI 48423 5.6719%
Money Market Fund--Class A Lyle J & Deedra R. Wolas
43299 Stonington Ct.
Canton, MI 48188-0000 49.0838%
Money Market Fund--Class A Rhondan Inc.
8032 Spring Arbor Rd.
P.O. Box 397
Spring Arbor, MI 49283 15.2347%
Mid-Cap Growth Fund--Class A Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 94.0887%
Value Fund--Class A Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 58.7072%
Value Fund--Class A Piedmont Trust Bank
1 Ellsworth Street
Martinsville, VA 24112-2811 40.0763%
Accelerating Growth Fund--Class B Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 42.9279%
Accelerating Growth Fund--Class B Eugene Ramsey
6203 Wabash
Detroit, MI 48208 9.1847%
</TABLE>
76
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Small Company Growth Fund--Class B Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 86.7606%
Index 500 Fund--Class B Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 83.9917%
International Equity Fund--Class B Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 83.0486%
Intermediate Bond Fund--Class B Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 69.3711%
Intermediate Bond Fund--Class B Bear Sterns Securities Corp.
1 Metrotech Center North
Brooklyn, NY 11201-3872 21.5048%
Bond Fund--Class B Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 95.9988%
Balanced Fund--Class B Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484
Balanced Fund--Class B Eugene Ramsey
6203 Wabash
Detroit, MI 48208 30.2083%
Michigan Bond Fund--Class B Martin G. and Rena A. Janower
6216 Cromwell
West Bloomfield, MI 48322 29.3611%
</TABLE>
77
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Michigan Bond Fund--Class B Henry and Adeline Oelkers
3004 Geneva
Dearborn, MI 48124 20.8942%
Michigan Bond Fund--Class B Sophie P. Czerwinski
36 N 26th Street
Battle Creek, MI 49015 15.2684%
Michigan Bond Fund--Class B Sam and Ethel Weiner
22160 Cloverlawn
Oak Park, MI 48237 14.9427%
Tax-Free Bond Fund--Class B Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 92.3915%
Tax-Free Bond Fund--Class B Robert Heard
PO Box 19543
Detroit, MI 48219 7.6085%
Growth & Income Fund--Class B Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 36.5746%
Growth & Income Fund--Class B William F. Dueweke
24315 Cottage Lane
Warren, MI 48089 10.9258%
Growth & Income Fund--Class B Roxie W. Kinney
5757 Martin Road
Muskegon, MI 49441 6.2474%
Growth & Income Fund--Class B Elisha and Mary L. Swift
18811 Gainborough
Detroit, MI 48223 5.8611%
Growth & Income Fund--Class B Angeline and Francis J. Mikula Jr.
29201 Telegraph Road
Southfield, MI 48034 5.7018%
Growth & Income Fund--Class B William F. Dueweke
24315 Cottage Lane
Warren, MI 48089 10.9258%
</TABLE>
78
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Growth & Income Fund--Class B Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 62.0752%
Growth & Income Fund--Class B Merrill Lynch Pierce Fenner & Smith
Mutual Fund Operations
on behalf of their clients
4800 Deer Lake Dr. E 3rd Floor
Jacksonville, FL 32246-6484 94.2101%
Money Market Fund--Class B Prudential Securities on behalf
of their clients
5131 W. Cullom
Chicago, IL 60641-1446 56.0707%
Money Market Fund--Class B Smith Barney Inc. on behalf
of their clients
388 Greenwich Street
New York, NY 10013 22.6127%
Money Market Fund--Class B Gruntal & Co. on behalf
of their clients
14 Wall Street
New York, NY 10005 22.3079%
Mid-Cap Growth Fund--Class B Merrill Lynch Pierce on behalf
of their clients
4800 Deer Lake Dr. E. 3rd Fl.
Jacksonville, FL 32246-6484 21.5231%
Mid-Cap Growth Fund--Class B Smith Barney Inc. on behalf
of their clients
388 Greenwich Street
New York, NY 10013 53.1863%
Mid-Cap Growth Fund--Class B Richard M. Cremins
3 Twinbrook Road
Saddle River, NJ 07458 5.1415%
Value Fund--Class B Merrill Lynch Pierce on behalf
of their clients
4800 Deer Lake Dr. E. 3rd Fl.
Jacksonville, FL 32246-6484 72.6927%
Small Company Growth Fund--Class C Appel Equity Group
150 Great Neck Road
Great Neck, NY 11021 82.0272%
</TABLE>
79
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Real Estate Equity Investment Fund--Class C Marion L. Brown
4233 Vance Drive
Anchorage, AK 99508 50.2045%
Real Estate Equity Investment Fund--Class C Raymond James & Assoc Inc.
CSDN Brock Steller
3430 Corona Circle
Anchorage, AK 99517 41.8765%
Real Estate Equity Investment Fund--Class C Raymond James & Assoc Inc.
CSDN Rene C. Kennicott
1001 Boniface Parkway Lot 14E1
Anchorage, AK 99504 7.6349%
Mid-Cap Growth Fund--Class C Raymond James & Assoc Inc.
CSDN Thomas D. Harkreader
7400 Clairborne Circle
Anchorage, AK 99502 5.7022%
</TABLE>
As of October 1, 1996, Munder Capital Management, Inc., on behalf of their
clients owned 45% of the Accelerating Growth Fund Class Y Shares; 9% of the Bond
Fund Class A Shares; 81% of the Bond Fund Class Y Shares; 37% of the Growth &
Income Fund Class Y Shares; 24% of the Index 500 Fund Class Y Shares,; 69% of
the International Equity Fund Class Y Shares; 49% of the Intermediate Bond Fund
Class Y Shares; 27% of the Michigan Bond Fund Class Y Shares; 43% of the Multi-
Season Fund Class Y Shares; 28% of the Real Estate Fund Class A Shares; 97% of
the Real Estate Fund Class Y Shares; 6% of the Small Company Value Fund Class A
Shares; 41% of the Small Company Value Fund Class Y Shares; 93% of the U.S.
Government Income Fund Class Y Shares; 28% of the Value Fund Class K Shares; 94%
of the Value Fund Class Y Shares; 100% of the Money Market Fund Class Y Shares.
As of October 1, 1996, Funds Distributor Inc. on behalf of their clients
owned 100% of the outstanding Class A Shares, Class B Shares, Class Y Shares and
Class K Shares of International Bond Fund as well as Class K Shares of Real
Estate Equity Investment Fund.
As of October 1, 1996, Merrill Lynch Pierce on behalf of their clients
owned approximately 100% of the outstanding Class C Shares of Accelerating
Growth Fund, International Equity Fund, Intermediate Bond Fund, Bond Fund, Tax-
Free Intermediate Bond Fund, Balanced Fund, Michigan Triple Tax-Free Bond Fund,
Tax-Free Bond Fund, Growth & Income Fund, U.S. Government Income Fund, Multi-
Season Growth Fund, Value Fund and International Bond Fund as well as Class B
Shares of Tax-Free Intermediate Bond Fund and Growth & Income Fund,
respectively.
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,
80
<PAGE>
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
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.
81
<PAGE>
APPENDIX A
----------
- RATED INVESTMENTS -
CORPORATE BONDS
- ---------------
Excerpts from MOODY'S INVESTORS SERVICES, INC. ("MOODY'S") description of its
bond ratings:
"Aaa": Bonds that are rated "Aaa" are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
"Aa": Bonds that are rated "Aa" are judged to be of high-quality by all
standards. Together with the "Aaa" group they comprise what are generally known
as "high-grade" bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in "Aaa"
securities.
"A": Bonds that are rated "A" possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
"Baa": Bonds that are rated "Baa" are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appears adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as well.
"Ba": Bonds that are rated "Ba" are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
"B": Bonds that are rated "B" generally lack characteristics of desirable
investments. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
"Caa": Bonds that are rated "Caa" are of poor standing. These issues
may be in default or present elements of danger may exist with respect to
principal or interest.
Moody's applies numerical modifiers (1, 2 and 3) with respect to bonds
rated "Aa" through "B". The modifier 1 indicates that the bond being rated
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the bond ranks in the
lower end of its generic rating category.
A-1
<PAGE>
Excerpts from STANDARD & POOR'S CORPORATION ("S&P") description of its bond
ratings:
"AAA": Debt rated "AAA" has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
"AA": Debt rated "AA" has a very strong capacity to pay interest and
repay principal and differs from "AAA" issues by a small degree.
"A": Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
"BBB": Bonds rated "BBB" are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for bonds in this category than for bonds in higher rated categories.
"BB", "B" AND "CCC": Bonds rated "BB" and "B" are regarded, on balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligations. "BB" represents a
lower degree of speculation than "B" and "CCC" the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
To provide more detailed indications of credit quality, the "AA" or "A"
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
COMMERCIAL PAPER
- ----------------
The rating "PRIME-1" is the highest commercial paper rating assigned by
MOODY'S. These issues (or related supporting institutions) are considered to
have a superior capacity for repayment of short-term promissory obligations.
Issues rated "PRIME-2" (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics of "Prime-1" rated issues, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
Commercial paper ratings of S&P are current assessments of the likelihood
of timely payment of debt having original maturities of no more than 365 days.
Commercial paper rated "A-1" by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted "A-1+."
Commercial paper rated "A-2" by S&P indicates that capacity for timely payment
is strong. However, the relative degree of safety is not as high as for issues
designated "A-1."
A-2
<PAGE>
APPENDIX A
----------
- RATED INVESTMENTS -
COMMERCIAL PAPER
- ----------------
Rated commercial paper purchased by a Fund must have (at the time of
purchase) the highest quality rating assigned to short-term debt securities or,
if not rated, or rated by only one agency, are determined to be of comparative
quality pursuant to guidelines approved by a Fund's Boards of Trustees and
Directors. Highest quality ratings for commercial paper for Moody's and S&P are
as follows:
MOODY'S: The rating "PRIME-1" is the highest commercial paper rating
category assigned by Moody's. These issues (or related supporting institutions)
are considered to have a superior capacity for repayment of short-term
promissory obligations.
S&P: Commercial paper ratings of S&P are current assessments of the
likelihood of timely payment of debts having original maturities of no more than
365 days. Commercial paper rated in the "A-1" category by S&P indicates that the
degree of safety regarding timely payment is either overwhelming or very strong.
Those issues determined to possess overwhelming safety characteristics are
denoted "A-1+".
A-3
<PAGE>
APPENDIX B
As stated in the applicable Prospectuses, the Equity Funds, the Balanced
Fund and the Bond Funds may enter into certain futures transactions and options
for hedging purposes. Such transactions are described in this Appendix.
I. Interest Rate Futures Contracts
-------------------------------
Use of Interest Rate Futures Contracts. Bond prices are established in both
the cash market and the futures market. In the cash market, bonds are purchased
and sold with payment for the full purchase price of the bond being made in
cash, generally within five business days after the trade. In the futures
market, only a contract is made to purchase or sell a bond in the future for a
set price on a certain date. Historically, the prices for bonds established in
the futures markets have tended to move generally in the aggregate in concert
with the cash market prices and have maintained fairly predictable
relationships. Accordingly, the Funds may use interest rate futures contracts as
a defense, or hedge, against anticipated interest rate changes and not for
speculation. As described below, this would include the use of futures contract
sales to protect against expected increases in interest rates and futures
contract purchases to offset the impact of interest rate declines.
The Funds presently could accomplish a similar result to that which it
hopes to achieve through the use of futures contracts by selling bonds with long
maturities and investing in bonds with short maturities when interest rates are
expected to increase, or conversely, selling short-term bonds and investing in
long-term bonds when interest rates are expected to decline. However, because of
the liquidity that is often available in the futures market, the protection is
more likely to be achieved, perhaps at a lower cost and without changing the
rate of interest being earned by the Funds, through using futures contracts.
Description of Interest Rate Futures Contracts. An interest rate futures
contract sale would create an obligation by a Fund, as seller, to deliver the
specific type of financial instrument called for in the contract at a specific
future time for a specified price. A futures contract purchase would create an
obligation by the Fund, as purchaser, to take delivery of the specific type of
financial instrument at a specific future time at a specific price. The specific
securities delivered or taken, respectively, at settlement date, would not be
determined until or at near that date. The determination would be in accordance
with the rules of the exchange on which the futures contract sale or purchase
was made.
Although interest rate futures contracts by their terms call for actual
delivery or acceptance of securities, in most cases the contracts are closed out
before the settlement date without making or taking of delivery of securities.
Closing out a futures contract sale is effected by the Fund's entering into a
futures contract purchase for the same aggregate amount of the specific type of
financial instrument and the same delivery date. If the price of the sale
exceeds the price of the offsetting purchase, the Fund is immediately paid the
difference and thus realizes a gain. If the offsetting purchase price exceeds
the sale price, the Fund pays the difference and realizes a loss. Similarly, the
closing out of a futures contract purchase is effected by the Fund entering into
a futures contract sale. If the offsetting sale price exceeds the purchase
price, the Fund realizes a gain, and if the purchase price exceeds the
offsetting sale price, the Fund realizes a loss.
Interest rate futures contracts are traded in an auction environment on the
floors of several exchanges -- principally, the Chicago Board of Trade, the
Chicago Mercantile Exchange and the New York Futures Exchange. The Funds would
deal only in standardized contracts on recognized exchanges. Each exchange
guarantees performance under contract provisions through a clearing corporation,
a nonprofit organization managed by the exchange membership.
B-1
<PAGE>
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, 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
B-2
<PAGE>
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.
A stock index assigns relative values to the stocks included in the index
and the index fluctuates with changes in the market values of the stocks
included. Some stock index futures contracts are based on broad market indexed,
such as the Standard & Poor's 500 or the New York Stock Exchange Composite
Index. In contrast, certain exchanges offer futures contracts on narrower market
indexes, such as the Standard & Poor's 100 or indexes based on an industry or
market segment, such as oil and gas stocks.
Futures contracts are traded on organized exchanges regulated by the
Commodity Futures Trading Commission. Transactions on such exchanges are cleared
through a clearing corporation, which guarantees the performance of the parties
to each contract.
A Fund will sell index futures contracts in order to offset a decrease in
market value of its portfolio securities that might otherwise result from a
market decline. A Fund will purchase index futures contracts in anticipation of
purchases of securities. In a substantial majority of these transactions, a Fund
will purchase such securities upon termination of the long futures position, but
a long futures position may be terminated without a corresponding purchase of
securities.
In addition, a Fund may utilize index futures contracts in anticipation of
changes in the composition of its portfolio holdings. For example, in the event
that a Fund expects to narrow the range of industry groups represented in its
holdings it may, prior to making purchases of the actual securities, establish a
long futures position based on a more restricted index, such as an index
comprised of securities of a particular industry group. A Fund may also sell
futures contracts in connection with this strategy, in order to protect against
the possibility that the value of the securities to be sold as part of the
restructuring of the portfolio will decline prior to the time of sale.
B-3
<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
Portfolio Futures
--------- -------
-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 Sell 16 Index Futures at 130
Cost = $65,000 Value of Futures = $65,000/Contract
Increase in Purchase Price = $2,500 Gain on Futures = $2,500
HEDGING A STOCK PORTFOLIO: Sell the Future
Hedge Objective: Protect Against Declining
Value of the Portfolio
Factors:
Value of Stock Portfolio = $1,000,000
Portfolio Beta Relative to the Index = 1.0
Portfolio Futures
--------- -------
-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
III. Margin Payments
---------------
Unlike purchase or sales of portfolio securities, no price is paid or
received by a Fund upon the purchase or sale of a futures contract. Initially,
the Fund will be required to deposit with the broker or in a segregated account
with the Custodian an amount of cash or cash equivalents, known as initial
margin, based on the value of the contract. The nature of initial margin in
futures transactions is different from that of margin in security transactions
in that futures contract margin does not involve the borrowing of funds by the
customer to finance the transactions. Rather, the initial margin is in the
nature of a performance bond or good faith deposit on the contract which is
returned to the Fund upon termination of the futures contract assuming all
contractual obligations have been satisfied. Subsequent payments, called
variation margin, to and from the broker, will be made on a daily basis as the
price of the underlying instruments fluctuates making the long and short
positions in the futures contract more or less valuable, a process known as
marking-to-the-market. For
B-4
<PAGE>
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 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
B-5
<PAGE>
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. 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
B-6
<PAGE>
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.
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
B-7
<PAGE>
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-8
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
---------------------------------
(a) Financial Statements
Included in Part A:
Financial Highlights
Included in Part B:
The Registrant's Annual Reports for the fiscal year
ended June 30, 1996 and the Reports of Independent Auditors dated
August 8, 1996, are incorporated by reference to the Definitive
30b-2 filed (Edgar Form N-3OD) on August 28, 1996 as Accession
#0000927405-96-000342 and 0000927405-96-000344.
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 and the NetNet Fund.
(b) Exhibits (the number of each exhibit relates to the
exhibit designation in Form N-1A):
(1) (a) Articles of Incorporation10
(b) Articles of Amendment10
(c) Articles Supplementary10
(d) Articles Supplementary for the Munder Small-Cap
Value Fund, the Munder Equity Selection Fund, the Munder Micro-Cap
Equity Fund, and the NetNet Fund are filed herein.
(e) Articles Supplementary for the Munder Short Term
Treasury Fund.*
(2) By-Laws1
(3) Not Applicable
(4) (a) Specimen security for The Munder Multi-
Season Growth Fund2
(b) By-Laws1
(5) (a) Form of Investment Advisory Agreement for
The Munder Multi-Season Growth Fund5
(b) Form of Investment Advisory Agreement for
The Munder Money Market Fund5
(c) Form of Investment Advisory Agreement for
The Munder Real Estate Equity Investment Fund5
(d) Investment Advisory Agreement for The
Munder Value Fund8
(e) Investment Advisory Agreement for The
Munder Mid-Cap Growth Fund8
(f) Form of Investment Advisory Agreement for
The Munder International Bond Fund10
(g) Form of Investment Advisory Agreement for
the NetNet Fund9
(h) Form of Investment Advisory Agreement for
The Munder Small-Cap Value Fund10
(i) Form of Investment Advisory Agreement for
The Munder Micro-Cap Equity Fund10
(j) Form of Investment Advisory Agreement for
The Munder Equity Selection Fund10
(k) Form of Investment Advisory Agreement for
The Munder Short Term Treasury Fund.*
(6) (a) Underwriting Agreement8
(b) Notice to Underwriting Agreement with
respect to The Munder Value Fund and The Munder Mid-Cap Growth
Fund8
(c) Notice to Underwriting Agreement with
respect to The Munder International Bond Fund8
(d) Notice to Underwriting Agreement with
respect to the Munder Small-Cap Value Fund, the Munder Equity
Selection Fund, the Munder Micro-Cap Equity Fund, and the NetNet
Fund10
(e) Notice to Underwriting Agreement with
respect to the Munder Short Term Treasury Fund.*
(7) Not Applicable
(8) (a) Form of Custodian Contract8
(b) Notice to Custodian Contract with respect
to The Munder Value Fund and The Munder Mid-Cap Growth Fund8
(c) Notice to Custodian Contract with respect
to the Munder International Bond Fund8
(d) Notice to Custodian Contract with respect
to the Munder Small-Cap Value Fund, the Munder Equity Selection
Fund, the Munder Micro-Cap Equity Fund and the NetNet Fund10
(e) Notice to the Custodian Contract with
respect to the Munder Short Term Treasury Fund.*
(f) Form of Subcustodian Agreement is filed
herein.
(9) (a) Transfer Agency and Service Agreement8
(b) Notice to Transfer Agency and Service
Agreement with respect to the Munder Value Fund and the Munder
Mid-Cap Growth Fund8
(c) Notice to Transfer Agency and Service
Agreement with respect to the Munder International Bond Fund8
(d) Notice to Transfer Agency and Service
Agreement with respect to the Munder Small-Cap Value Fund, the
Munder Equity Selection Fund, the Munder Micro-Cap Equity Fund and
the NetNet Fund10
(e) Notice to Transfer Agency and Service
Agreement with respect to the Munder Short Term Treasury Fund.*
(f) Administration Agreement8
(g) Notice to Administration Agreement with
respect to The Munder Value and The Munder Mid-Cap Growth Fund8
(h) Notice to Administration Agreement with
respect to The Munder International Bond Fund8
(i) Notice to Administration Agreement with
respect to the Munder Small-Cap Value Fund, the Munder Equity
Selection Fund, the Munder Micro-Cap Equity Fund and the NetNet
Fund10
(j) Notice to Administration Agreement with
respect to the Munder Short Term Treasury Fund.*
(10) (a) Opinion and Consent of Counsel with
respect to The Munder Multi-Season Growth Fund2
(b) Opinion and Consent of Counsel with
respect to The Munder Money Market Fund4
(c) Opinion and Consent of Counsel with
respect to The Munder Real Estate Equity Investment Fund3
(d) Opinion and Consent of Counsel with
respect to the Munder Value Fund and The Munder Mid-Cap Growth
Fund8
(e) Opinion and Consent of Counsel with
respect to the Munder International Bond Fund8
(f) Opinion and Consent of Counsel with
respect to The NetNet Fund9
(g) Opinion and Consent of Counsel with
respect to the Munder Small-Cap Value Fund, the Munder Equity
Selection Fund, and the Munder Micro-Cap Equity Fund is filed
herein.
(h) Opinion and Consent of Counsel with
respect to Munder Short Term Treasury Fund.*
(11) (a) Consent of Dechert Price & Rhoads
(included with Exhibit 10 a-h).
(b) Consent of Ernst & Young LLP is filed
herein.
(c) Consent of Arthur Andersen LLP7
(d) Letter of Arthur Andersen LLP regarding
change in independent auditor required by Item 304 of Regulation
S-K.7
(e) Powers of Attorney9
(12) Not Applicable
(13) Initial Capital Agreement2
(14) Not Applicable
(15) (a) Service Plan for The Munder Multi-Season
Growth Fund Class A Shares5
(b) Service and Distribution Plan for The
Munder Multi-Season Growth Fund Class B Shares5
(c) Service and Distribution Plan for The
Munder Multi-Season Growth Fund Class D Shares5
(d) Service Plan for The Munder Money Market
Fund Class A Shares5
(e) Service and Distribution Plan for The
Munder Money Market Fund Class B Shares5
(f) Service and Distribution Plan for The
Munder Money Market Fund Class D Shares5
(g) Service Plan for The Munder Real Estate
Equity Investment Fund Class A Shares5
(h) Service and Distribution Plan for The
Munder Real Estate Equity Investment Fund Class B Shares5
(i) Service and Distribution Plan for The
Munder Real Estate Equity Investment Fund Class D Shares5
(j) Form of Service Plan for The Munder Multi-
Season Growth Fund Investor Shares6
(k) Form of Service Plan for Class K Shares of
The Munder Funds, Inc.10
(l) Form of Service Plan for Class A Shares of
The Munder Funds, Inc.10
(m) Form of Distribution and Service Plan for
Class B Shares for The Munder Funds, Inc.10
(n) Form of Distribution and Service Plan for
Class C Shares for The Munder Funds, Inc.10
(o) Form of Distribution and Service Plan for
the NetNet Fund9
(16) Schedule for Computation of Performance
Quotations is filed herein.
(17) Financial Data Schedules are filed
herein.
(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. 7 to the
Registrant's Registration Statement on August 26, 1994 and
incorporated by reference herein.
4. Filed in Post-Effective Amendment No. 2 to the
Registrant's Registration Statement on July 9, 1993 and
incorporated by reference herein.
5. Filed in Post-Effective Amendment No. 8 to the
Registrant's Registration Statement on February 28, 1995 and
incorporated by reference herein.
6. Filed in Post-Effective Amendment No. 9 to the
Registrant's Registration Statement on April 13, 1995 and
incorporated by reference herein.
7. Filed in Post-Effective Amendment No. 12 to the
Registrant's Registration Statement on August 29, 1995 and
incorporated by reference herein.
8. Filed in Post-Effective Amendment No. 16 to the
Registrant's Registration Statement on June 25, 1996 and
incorporated by reference herein.
9. Filed in Post-Effective Amendment No. 17 to the
Registrant's Registration Statement on August 9, 1996 and
incorporated by reference herein.
10. Filed in Post-Effective Amendment No. 18 to the
Registrant's Registration Statement on August 14, 1996 and
incorporated by reference herein.
Item 25. Persons Controlled by or Under Common Control with
Registrant.
--------------------------------------------------
Not Applicable.
Item 26. Number of Holders of Securities.
-------------------------------
As of October 1, 1996, the number of shareholders of
record of each Class of shares of each Series of the Registrant
that was offered as of that date was as follows:
Class A Class B Class C Class K
Class Y
--------------------------------------------------------------
- ------------
The Munder Multi-Season Growth Fund 384 1,620 18 141 101
The Munder Money Market Fund 6 8 1 0 67
The Munder Real Estate Equity 14 9 4 1 28
Investment Fund
The Munder Mid-Cap Growth Fund 8 17 3 1 23
The Munder Value Fund 5 16 1 2 27
The Munder International Bond Fund 1 1 1
1 1
The NetNet Fund - as of October 1, 1996, the NetNet Fund had 28 accounts open.
Item 27. Indemnification.
---------------
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. Fremont Mutual Funds, Inc.
BJB Investment Funds RCM Capital Funds, Inc.
PanAgora Funds
RCM Equity Funds, Inc.
Waterhouse Investors Cash Management Fund, Inc.
LKCM Fund
Pierpont Funds
JPM Advisor Funds
JPM Institutional Funds
(b) The information required by this Item 29(b) with
respect to each director, officer or partner of FDI is
incorporated by reference to Schedule A of Form BD filed by FDI
with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 (SEC File No. 8-20518).
(c) Not Applicable
Item 30. Location of Accounts and Records.
--------------------------------
The account books and other documents required to be
maintained by Registrant pursuant to Section 31(a) of the
Investment Company Act of 1940 and the Rules thereunder will be
maintained at the offices of 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, the Munder International Bond Fund, the Munder NetNet Fund
and the Munder Short Term Treasury Fund, using reasonably current
financial statements which need not be certified, within four to
six months from the effective date of the Registration Statement
describing the respective Fund.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
the Registrant certifies that this Post-Effective Amendment No. 20
to the Registration Statement meets the requirements for
effectiveness pursuant to Rule 485(b) of the Securities Act of
1933, as amended, and the Registrant has duly caused this Post-
Effective Amendment No. 20 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
28th day of October, 1996.
The Munder Funds, Inc.
By: *
Lee P. Munder
*By: /s/ Teresa M.R. Hamlin
Teresa M.R. Hamlin
as Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement has been signed by the
following persons in the capacities and on the date indicated.
Signatures Title Date
* President and
Chief October 28, 1996
Lee P. Munder Executive Officer
* Director
October 28, 1996
Charles W. Elliott
* Director
October 28, 1996
Joseph E. Champagne
* Director
October 28, 1996
Arthur DeRoy Rodecker
* Director
October 28, 1996
Jack L. Otto
* Director
October 28, 1996
Thomas B. Bender
* Director
October 28, 1996
Thomas D. Eckert
* Director
October 28, 1996
John Rakolta, Jr.
* Director
October 28, 1996
David J. Brophy
* Vice President,
October 28, 1996
Terry H. Gardner Treasurer and
Chief Financial
Officer
* By: /s/ Teresa M.R. Hamlin
Teresa M.R. Hamlin
as Attorney-in-Fact
* The Powers of Attorney are incorporated by reference to
Post-Effective Amendment No. 17 filed with the Securities and
Exchange Commission on August 9, 1996.
EXHIBIT INDEX
Exhibit Description
(1) (d) Articles Supplementary for the Munder
Small-Cap Value Fund, the Munder Equity Selection Fund, the Munder
Micro-Cap Equity Fund, and the NetNet Fund
(8) (f) Form of Subcustodian Agreement
(10) (g) Opinion and Consent of Counsel with
respect to the Munder Small-Cap Value Fund, the Munder Equity
Selection Fund, and the Munder Micro-Cap Equity Fund
(11) (b) Consent of Ernst & Young
(16) Schedule for Computation of Performance
Quotations
(17) Financial Data Schedules
shared/bankgrp/munder/parta/pea20.doc
G:\SHARED\BANKGRP\MUNDER\PARTA\PEA12.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, as amended, (the "1940 Act") and having its principal office
in the State of Maryland in Baltimore City, Maryland (hereinafter
called the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: In accordance with procedures established in the
Corporation's Charter, the Board of Directors of the Corporation,
by resolution dated August 6, 1996:
a. changed the names of the following, previously
designated series of the Corporation, including each class
thereof, pursuant to Section 2-605(a)(4) of Maryland General
Corporate Law:
Previously Designated Series New Name
1. The Munder World Growth Fund The Munder Equity
Selection Fund
Class A Class A
Class B Class B
Class C Class C
Class K Class K
Class Y Class Y
2. The Munder Michigan High Yield Bond Fund The Munder
Micro-Cap Equity Fund.
Class A Class A
Class B Class B
Class C Class C
Class K ClassK
ClassY Class Y
b. pursuant to Section 2-208 of Maryland General
Corporate Law, duly classified 105,000,000 shares of the unissued,
authorized capital stock of the Corporation into the following
additional series, designated as follows:
Name of Series Name of Class of Series Number
of Shares Allocated
NetNet Fund N/A 50,000,000
shares
The Munder Small-Cap
Value Fund Class A
10,000,000 shares
Class B
15,000,000 shares
Class Y
10,000,000 shares
Class C
10,000,000 shares
Class K
10,000,000 shares
SECOND: The shares of the Corporation classified pursuant
to Article First of these Articles Supplementary have been so
classified by the Board of Directors under the authority contained
in the Charter of the Corporation. The number of Shares of
capital stock of the various classes that the Corporation has
authority to issue has been established by the Board of Directors
in accordance with Section 2-105(c) of the Maryland General
Corporation Law.
THIRD: Immediately prior to the effectiveness of the
Articles Supplementary of the Corporation as hereinabove set
forth, the Corporation had the authority to issue two billion,
three-hundred million (2,300,000,000) shares of Common Stock of
the par value of $0.01 per share and of the aggregate par value of
twenty-three million dollars ($23,000,000), of which the Board of
Directors had designated one billion, 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 Y C K
The Munder Multi-Season Growth Fund 10 60 50 10 50
The Munder Money Market Fund 55 20 500 20 200
The Munder Real Estate Equity Investment Fund 10 50 10
10 10
The Munder World Growth Fund 20 40 20 10 10
The Munder International Bond Fund 20 40 20 10 10
The Munder Mid-Cap Growth Fund 5 10 10 5 10
The Munder Value Fund 5 10 10 5 10
The Munder Michigan High Yield Bond Fund 10 15 10 10
10
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, five hundred and five million
(1,505,000,000) (including the 1,400,000,000 shares previously
designated) shares into Series and classified the shares of each
Series as follows:
Current Classification of Shares
Name of Shares
Authorized Shares
(in millions)
NetNet Fund 50
Authorized
Shares by Class (in millions)
A B Y C K
The Munder Multi-Season Growth Fund 10 60 50 10 50
The Munder Money Market Fund 55 20 500 20 200
The Munder Real Estate Equity Investment Fund 10 50 10
10 10
The Munder Equity Selection Fund 20 40 20 10 10
The Munder International Bond Fund 20 40 20 10 10
The Munder Mid-Cap Growth Fund 5 10 10 5 10
The Munder Value Fund 5 10 10 5 10
The Munder Micro-Cap Equity Fund 10 15 10 10 10
The Munder Small-Cap Value Fund 10 15 10 10 10
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: August 6, 1996
THE MUNDER FUNDS, INC.
[CORPORATE SEAL]
By: : /s/ Terry H. Gardner
Terry H. Gardner
Vice President
Attest:
/s/ Lisa Anne Rosen
Lisa Anne Rosen
Secretary
6
shared/bankgrp/munder/charter/mfiasup5.doc
FORM OF
SUB-CUSTODIAN AGREEMENT
AGREEMENT dated as of November ___, 1995 among BOSTON SAFE
DEPOSIT & TRUST COMPANY (the "Bank"), THE MUNDER FUNDS, INC. (the
"Fund"), on behalf of its investment portfolios MUNDER MULTI-
SEASON GROWTH FUND, MUNDER MID-CAP GROWTH FUND AND MUNDER VALUE
FUND (each, an "Investment Portfolio") and COMERICA BANK (the
"Company").
WITNESSETH:
WHEREAS, the Company has entered into a Custodian Agreement
with the Fund, an open-end investment company, to provide certain
custody services; and
WHEREAS, the Company and the Fund wish to retain the Bank to
provide certain sub-custodian services to the Company and the Fund
for the benefit of the Fund and the Bank is willing to furnish
such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties
hereto as follows:
1. Custody Account. The Bank agrees to establish and
maintain (a) a separate custody account in the name of each
Investment Portfolio of the Fund ("Custody Account") for any and
all stocks, shares, bonds, debentures, notes, mortgages or other
obligations for the payment of money and any certificates,
receipts, warrants or other instruments representing rights to
receive, purchase or subscribe for the same or evidencing or
representing any other rights or interests therein and other
similar property (hereinafter called "Securities") from time to
time received by the Bank or any sub-custodian (as defined in the
second paragraph of Section 3 hereof) for the account of the
particular Investment Portfolio of the Fund; and (b) a separate
deposit account or accounts in the name of each Investment
Portfolio of the Fund ("Deposit Account") for any and all cash and
cash equivalents in any currency received by the Bank or any sub-
custodian for the account of the particular Investment Portfolio
of the Fund, which cash shall not be subject to withdrawal by
draft or check. The term "Property" as used herein shall mean all
Securities, cash, cash equivalents and other assets of the Fund.
2. Maintenance of Property Abroad. Securities in a
Custody Account shall be held in such country or other
jurisdiction as shall be specified from time to time in
Instructions (as defined in Section 9 hereof), provided that such
country or other jurisdiction shall be one in which the principal
trading market for such Securities is located or the country or
other jurisdiction in which such Securities are to be presented
for payment or are acquired for the Custody Account, and cash in a
Deposit Account shall be credited to an account in such amounts
and in the country or other jurisdiction as shall be specified
from time to time in Instructions, provided that such country or
other jurisdiction shall be one in which such cash is the legal
currency for the payment of public or private debts.
3. Eligible Foreign Custodians and Securities
Depositories. The Board of Directors of the Fund authorizes the
Bank to hold the Securities in the Custody Account(s) and the cash
in the Deposit Account(s) in custody and deposit accounts,
respectively, which have been established by the Bank with one of
its branches, a branch of a qualified U.S. bank, an eligible
foreign custodian or an eligible foreign securities depository;
provided, however, that the Board of Directors of the Fund has
approved the use of, and the Bank's contract with, such eligible
foreign custodian or eligible foreign securities depository by
resolution, and Instructions to such effect have been provided to
the Bank. Furthermore, if a branch of the Bank, a branch of a
qualified U.S. bank or an eligible foreign custodian is selected
to act as the Bank's sub-custodian to hold any property, such
entity is authorized to hold such in its account with any eligible
foreign securities depository in which it participates so long as
such foreign securities depository has been approved by the Board
of Directors of the Fund. For purposes of this Agreement (a)
"qualified U.S. bank" shall mean a qualified U.S. bank as defined
in Rule 17f-5 under the Investment Company Act of 1940, as amended
("Rule 17f-5"); (b) "eligible foreign custodian" shall mean (i) a
banking institution or trust company incorporated or organized
under the laws of a country other than the United States that is
regulated as such by that country's government or an agency
thereof and that has shareholders' equity in excess of $200
million in U.S. currency (or a foreign currency equivalent
thereto) or (ii) a majority-owned direct or indirect subsidiary of
a qualified U.S. bank or bank holding company that is incorporated
or organized under the laws of a country other than the United
States and that has shareholders' equity in excess of $100 million
in U.S. currency (or a foreign currency equivalent thereto); (c)
"eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the
laws of a country other than the United States, which operates (i)
the central system for handling of securities or equivalent book-
entries in that country or (ii) a transnational system for the
central handling of securities or equivalent book-entries.
Hereinafter the term "sub-custodian" will refer to any Bank
branch, any branch of a qualified U.S. bank, any eligible foreign
custodian or any eligible foreign securities depository with which
the Bank has entered into an agreement of the type contemplated
hereunder regarding Securities and/or cash held in or to be
acquired for a Custody Account or a Deposit Account.
If, after the initial approval of the sub-custodians by the
Board of Directors of the Fund in connection with this Agreement,
the Bank wishes to appoint other sub-custodians to hold the Fund's
Property, it will so notify the Company and the Fund and will
provide them with information reasonably necessary to determine
any such new sub-custodian's eligibility under Rule 17f-5,
including a copy of the proposed agreement with such sub-
custodian. The Fund shall within 30 days after receipt of such
notice give a written approval or disapproval of the proposed
action.
If the Bank intends to remove any sub-custodian previously
approved, it shall so notify the Fund and the Company and shall
move the Property deposited with such sub-custodian to another
sub-custodian previously approved or to a new sub-custodian,
provided that the appointment of any new sub-custodian will be
subject to the requirements set forth in the preceding paragraph.
The Bank shall take steps as may be required to remove any sub-
custodian which has ceased to meet the requirements of Rule 17f-5.
4. Use of Sub-Custodians. With respect to Property which
is maintained by the Bank in the physical custody of a sub-
custodian pursuant to Section 3:
(a) The Bank will identify on its books as belonging to
the particular Investment Portfolio of the Fund any Property held
by such sub-custodian.
(b) In the event that a sub-custodian permits any of the
Securities placed in its care to be held in an eligible foreign
securities depository, such sub-custodian will be required by its
agreement with the Bank to identify on its books such Securities
as being held for the account of the Bank as a custodian for its
customers.
(c) Any Securities in a Custody Account held by a sub-
custodian of the Bank will be subject only to the instructions of
the Bank or its agents; and any Securities held in an eligible
foreign securities depository for the Account of a sub-custodian
will be subject only to the instructions of such sub-custodian.
(d) The Bank will only deposit Property in an account with
a sub-custodian which includes exclusively the assets held by the
Bank for its customers, and the Bank will cause such account to be
designated by such sub-custodian as a special custody account for
the exclusive benefit of customers of the Bank.
(e) Any agreement the Bank shall enter into with a sub-
custodian with respect to the holding of Property shall require
that (i) the Property is not subject to any right, charge,
security interest, lien or claim of any kind in favor of such sub-
custodian or its creditors except for a claim of payment for its
safe custody or administration and (ii) beneficial ownership of
such Property is freely transferable without the payment of money
or value other than for safe custody or administration; provided,
however, that the foregoing shall not apply to the extent that any
of the above-mentioned rights, charges, etc. result from any
compensation or other expenses arising with respect to the
safekeeping of Property pursuant to such agreement.
(f) The Bank shall allow independent public accountants of
the Fund such reasonable access to the records of the Bank
relating to Property held in a Custody Account and a Deposit
Account as required by such accountants in connection with their
examination of the books and records pertaining to the affairs of
the Fund. The Bank shall, subject to restrictions under
applicable law, also obtain from any sub-custodian with which the
Bank maintains the physical possession of any Property an
undertaking to permit independent public accountants of the Fund
such reasonable access to the records of such sub-custodian as may
be required in connection with their examination of the books and
records pertaining to the affairs of the Fund or to supply a
verifiable confirmation of the contents of such records. The Bank
shall furnish the Fund and the Company such reports (or portions
thereof) of the Bank's external auditors as relate directly to the
Bank's system of internal accounting controls applicable to the
Bank's duties under this Agreement.
(g) The Bank will supply to the Fund in care of its
investment adviser, and the Company at least monthly a statement
in respect to any Property in a Custody Account and a Deposit
Account held by each sub-custodian, including an identification of
the entity having possession of such Property, and the Bank will
send to the Fund and the Company an advice or notification of any
transfers of Property to or from the Custody Account and Deposit
Account, indicating, as to Property acquired for an Investment
Portfolio of the Fund, the identity of the entity having physical
possession of such Property. In the absence of the filing in
writing with the Bank by the Fund of exceptions or objections to
any such statement within sixty (60) days of the Fund's receipt of
such statement, or within sixty (60) days after the date that a
material defect is reasonably discoverable, the Fund shall be
deemed to have approved such statement; and in such case or upon
written approval of the Fund of any such statement the Bank shall,
to the extent permitted by law and provided the Bank has met the
standard of care in Section 12 hereof, be released, relieved and
discharged with respect to all matters and things set forth in
such statement as though such statement has been settled by the
decree of a court of competent jurisdiction in an action in which
the Fund and all persons having any equity interest in the Fund
were parties.
(h) The Bank hereby warrants to the Fund and the Company
that in its opinion, after due inquiry, the established procedures
to be followed by each of its branches, each branch of a qualified
U.S. bank, each eligible foreign custodian and each eligible
foreign securities depository holding Property of the Fund
pursuant to this Agreement afford protection for such Property at
least equal to that afforded by the Bank's established procedures
with respect to similar Property held by the Bank (and its
securities depositories) in Boston, MA.
(i) The Bank hereby warrants to the Fund and the Company
that as of the date of this Agreement it is maintaining a Bankers
Blanket Bond and hereby agrees to notify the Fund and the Company
in the event its Bankers Blanket Bond is cancelled or otherwise
lapses.
5. Deposit Account Payments. Subject to the provisions
of Section 7, the Bank shall make, or cause its sub-custodian to
make, payments of cash credited to a Deposit Account only:
(a) in connection with the purchase of Securities for the
particular Investment Portfolio of the Fund involved and the
delivery of such Securities to, or the crediting of such
Securities to the particular Custody Account of, the Bank or its
sub-custodian, each such payment to be made at prices as confirmed
by Instructions from Authorized Persons (as defined in Section l0
hereof);
(b) for the purchase or redemption of shares of the
capital stock of the particular Investment Portfolio of the Fund
involved and the delivery to, or crediting to the account of, the
Bank or its sub-custodian of such shares to be so purchased or
redeemed;
(c) for the payment for the account of the particular
Investment Portfolio of the Fund involved of dividends, interest,
taxes, management or supervisory fees, capital distributions or
operating expenses;
(d) for the payments to be made in connection with the
conversion, exchange or surrender of Securities held in a Custody
Account;
(e) for other proper corporate purposes of the particular
Investment Portfolio of the Fund involved; or
(f) upon the termination of this Custody
Agreement as hereinafter set forth.
All payments of cash for a purpose permitted by subsection
(a), (b), (c) or (d) of this Section 5 will be made only upon
receipt by the Bank of Instructions from Authorized Persons which
shall specify the purpose for which the payment is to be made and
the applicable subsection of this Section 5. In the case of any
payment to be made for the purpose permitted by subsection (e) of
this Section 5, the Bank must first receive a certified copy of a
resolution of the Board of Directors of the Fund adequately
describing such payment, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom such
payment shall be made. Any payment pursuant to subsection (f) of
this Section 5 will be made in accordance with Section 17 hereof.
In the event that any payment for an Investment Portfolio of
the Fund made under this Section 5 exceeds the funds available in
that Investment Portfolio's Deposit Account, the Bank's foreign
sub-custodian may, in its discretion, advance the Fund on behalf
of that Investment Portfolio an amount equal to such excess and
such advance shall be deemed an overdraft from the Bank's foreign
sub-custodian to that Investment Portfolio payable on demand,
bearing interest at the rate of interest customarily charged by
the Bank's foreign sub-custodian on similar overdrafts. If the
Bank causes a Deposit Account to be credited on the payable date
for interest, dividends or redemptions, the particular Investment
Portfolio of the Fund involved will promptly return to the Bank
any such amount or property so credited upon oral or written
notification that neither the Bank nor its sub-custodian can
collect such amount or property in the ordinary course of
business. The Bank or its sub-custodian, as the case may be,
shall have no duty or obligation to institute legal proceedings,
file a claim or proof of claim in any insolvency proceeding or
take any other action with respect to the collection of such
amount or property beyond its ordinary collection procedures.
6. Custody Account Transactions. Subject to the
provisions of Section 7, Securities in a Custody Account will be
transferred, exchanged or delivered by the Bank or its sub-
custodians only:
(a) upon sale of such Securities for the particular
Investment Portfolio of the Fund involved and receipt by the Bank
or its sub-custodian of payment therefor, each such payment to be
in the amount confirmed by Instructions from Authorized Persons;
(b) when such Securities are called, redeemed or retired,
or otherwise become payable;
(c) in exchange for or upon conversion into other
Securities alone or other Securities and cash pursuant to any plan
of merger, consolidation, reorganization, recapitalization or
readjustment;
(d) upon conversion of such Securities pursuant to their
terms into other Securities;
(e) upon exercise of subscription, purchase or other
similar rights represented by such Securities;
(f) for the purpose of exchanging interim receipts or
temporary Securities for definitive Securities;
(g) for the purpose of redeeming in kind shares of the
capital stock of the particular Investment Portfolio of the Fund
involved against delivery to the Bank or its sub-custodian of such
shares to be redeemed;
(h) for other proper corporate purposes of the particular
Investment Portfolio of the Fund involved; or
(i) upon the termination of this Custody Agreement as
hereinafter set forth.
All transfers, exchanges or deliveries of Securities in a
Custody Account for a purpose permitted by either subsection (a),
(b), (c), (d), (e) or (f) of this Section 6 will be made, except
as provided in Section 8 hereof, only upon receipt by the Bank of
Instructions from Authorized Persons which shall specify the
purpose of the transfer, exchange or delivery to be made and the
applicable subsection of this Section 6. In the case of any
transfer or delivery to be made for the purpose permitted by
subsection (g) of this Section 6, the Bank must first receive
Instructions from Authorized Persons specifying the shares held by
the Bank or its sub-custodian to be so transferred or delivered
and naming the person or persons to whom transfers or delivery of
such shares shall be made. In the case of any transfer, exchange
or delivery to be made for the purpose permitted by subsection (h)
of this Section 6, the Bank must first receive a certified copy of
a resolution of the Board of Directors of the Fund adequately
describing such transfer, exchange or delivery, declaring such
purpose to be proper corporate purpose, and naming the person or
persons to whom delivery of such Securities shall be made. Any
transfer or delivery pursuant to subsection (i) of this Section 6
will be made in accordance with Section 17 hereof.
7. Custody Account Procedures. With respect to any
transaction involving Securities held in or to be acquired for a
Custody Account, the Bank in its discretion may cause the Deposit
Account for the particular Investment Portfolio of the Fund
involved to be credited on the actual settlement date with the
proceeds of any sale or exchange of Securities from the particular
Custody Account and to be debited on the actual settlement date
for the cost of Securities purchased or acquired for the
particular Custody Account.
Settlement and payment for Securities received for, and
delivery of Securities out of, a Custody Account may be effected
in accordance with the customary or established securities trading
or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including,
without limitation, delivering Securities to the purchaser thereof
or to a dealer therefor (or an agent for such purchaser or dealer)
against a receipt with the expectation of receiving later payment
for such Securities from such purchaser or dealer.
8. Actions of the Bank. Until the Bank receives
Instructions from Authorized Persons to the contrary, the Bank
will, or will instruct it sub-custodian, to:
(a) present for payment any Securities in a Custody
Account which are called, redeemed or retired or otherwise become
payable and all coupons and other income items which call for
payment upon presentation to the extent that the Bank or sub-
custodian is aware of such opportunities for payment, and hold
cash received upon presentation of such Securities in accordance
with the provisions of Sections 2, 3 and 4 hereof;
(b) in respect of Securities in a Custody Account, execute
in the name of the Fund on behalf of the particular Investment
Portfolio involved such ownership and other certificates as may be
required to obtain payments in respect thereof;
(c) exchange interim receipts or temporary Securities in a
Custody Account for definitive Securities;
(d) (if applicable) convert monies received with respect
to Securities of foreign issue into United States dollars or any
other currency necessary to effect any transaction involving the
Securities whenever it is practicable to do so through customary
banking channels, using any method or agency available, including,
but not limited to, the facilities of the Bank, its subsidiaries,
affiliates or sub-custodians;
(e) (if applicable) appoint brokers and agents for any
transaction involving the Securities in a Custody Account,
including, without limitation, affiliates of the Bank or any sub-
custodian; and
(f) reclaim taxes withheld by foreign issuers where
reclaim is possible provided that Bank has been provided with all
documentation it may require.
9. Instructions. As used in this Agreement, the term
"Instructions" means instructions of the Fund or the Company
received by the Bank, via telephone, telex, TWX, facsimile
transmission, bank wire or other teleprocess or electronic
instruction system acceptable to the Bank which the Bank believes
in good faith to have been given by Authorized Persons or which
are transmitted with proper testing or authentication pursuant to
terms and conditions which the Bank may specify.
Any Instructions delivered to the Bank by telephone shall
promptly thereafter be confirmed in writing by an Authorized
Person (which confirmation may bear the facsimile signature of
such Person), but the particular Investment Portfolio of the Fund
involved and the Company will hold the Bank harmless for the
Company's or Fund's (i) failure to send such confirmation in
writing, or (ii) the failure of such confirmation to conform to
the telephone instructions received. Unless otherwise expressly
provided, all Instructions shall continue in full force and effect
until cancelled or superseded. If the Bank requires test
arrangements, authentication methods or other security devices to
be used with respect to Instructions, any Instructions given by
the Fund or the Company thereafter shall be given and processed in
accordance with such terms and conditions for the use of such
arrangements, methods or devices as the Bank may put into effect
and modify from time to time. The Fund and the Company shall
safeguard any testkeys, identification codes or other security
devices which the Bank shall make available to them. The Bank may
electronically record any Instructions given by telephone, and any
other telephone discussions, with respect to a Custody Account.
10. Authorized Persons. As used in this Agreement, the
term "Authorized Persons" means such officers or such agents of
the Fund or the Company as have been designated by a resolution of
the Board of Directors of the Fund, a certified copy of which has
been provided to the Bank, to act on behalf of the Fund in the
performance of any acts which Authorized Persons may do under this
Agreement. Such persons shall continue to be Authorized Persons
until such time as the Bank receives Instructions from Authorized
Persons that any such officer or agent is no longer an Authorized
Person.
11. Nominees. Securities in a Custody Account which are
ordinarily held in registered form may be registered in the name
of the Bank's nominee or, as to any Securities in the possession
of an entity other than the Bank, in the name of such entity's
nominee. The particular Investment Portfolio of the Fund involved
agrees to hold any such nominee harmless from any liability as a
holder of record of such Securities, but not if such liability is
a result of such nominee's negligence. The Bank may without
notice to the Company or the Fund cause any such Securities to
cease to be registered in the name of any such nominee and to be
registered in the name of the Fund. In the event that any
Securities registered in the name of the Bank's nominee or held by
one of its sub-custodians and registered in the name of such sub-
custodian's nominee are called for partial redemption by the
issuer of such Security, the Bank may allot, or cause to be
allotted, the called portion to the respective beneficial holders
of such class of security in any manner the Bank deems to be fair
and equitable.
12. Standard of Care.
(a) The Bank shall be obligated to perform only such
duties as are set forth in this Agreement or expressly contained
in Instructions given to Bank which are consistent with the
provisions of this Agreement.
(i) The Bank will use reasonable care with respect to its
obligations under this Agreement and the safekeeping of Property.
The Bank shall be liable to the Fund and the Company for any loss
which shall occur as the result of the failure of a sub-custodian
or an eligible foreign securities depository to exercise
reasonable care and without negligence with respect to the
safekeeping of such Property to the same extent that the Bank
would be liable to the Fund and the Company if the Bank were
holding such Property in Boston, MA. In the event of any loss to
the Fund or the Company by reason of the failure or negligent
conduct of the Bank or its sub-custodian or an eligible foreign
securities depository to exercise reasonable care, the Bank shall
be liable to the Fund or the Company only to the extent of the
Fund's or the Company's direct damages and expenses, which
damages, for purposes of Property only shall, be determined based
on the market value of the Property which is the subject of the
loss at the date of discovery of such loss and without reference
to any special conditions or circumstances.
(ii) The Bank will not be responsible for any act,
omission, default or for the solvency of any broker or agent
(other than as provided herein) which it or a sub-custodian
appoints and uses unless such appointment and use were made or
done negligently or in bad faith.
(iii) The Bank shall be indemnified by, and without
liability to the particular Investment Portfolio of the Fund
involved and the Company for any action taken or omitted by the
Bank whether pursuant to Instructions or otherwise within the
scope of this Agreement if such act or omission was in good faith
and without negligence. In performing its obligations under this
Agreement, the Bank may rely on the genuineness of any document
which it believes in good faith and without negligence to have
been validly executed.
(iv) The Fund on behalf of the particular Investment
Portfolio of the Fund involved agrees to cause such investment
portfolio to pay for and hold the Bank harmless from any liability
or loss resulting from the imposition or assessment of any taxes
or other governmental charges, and any related expenses with
respect to income from or Property in such Investment Portfolio's
Custody Account and Deposit Account.
(v) The Bank shall be entitled to rely, and may act upon
the advice of counsel (who may be counsel for the Fund or the
Company) on all matters and shall be without liability for any
action reasonably taken or omitted in good faith and without
negligence pursuant to such advice.
(vi) The Bank need not maintain any insurance for the
exclusive benefit of the Fund or Company.
(vii) Without limiting the foregoing, the Bank shall not be
liable for any loss which results from:
1) the general risk of investing, or
2) subject to Section 12(a)(i) hereof investing or holding
Property in a particular country including, but not limited to,
losses resulting from nationalization, expropriation or other
governmental actions; regulation of the banking or securities
industry; currency restrictions, devaluations or fluctuations; and
market conditions which prevent the orderly execution of
securities transactions or affect the value of Property.
(viii) No party shall be liable to the other for any
loss due to forces beyond their control including but not limited
to strikes or work stoppages, acts of war or terrorism,
insurrection, revolution, nuclear fusion, fission or radiation, or
acts of God.
(b) Consistent with and without limiting the first
paragraph of this Section 12, it is specifically acknowledged that
the Bank shall have no duty or responsibility to:
(i) Question Instructions or make any suggestions to the
Fund, the Company or an Authorized Person regarding such
Instructions;
(ii) Supervise or make recommendations with respect to
investments or the retention of Securities;
(iii) Subject to Section 12(a)(ii) hereof, evaluate or
report to the Fund, the Company or an Authorized Person regarding
the financial condition of any broker, agent or other party to
which Securities are delivered or payments are made pursuant to
this Agreement; or
(iv) Review or reconcile trade confirmations received from
brokers.
(c) The Bank shall provide to the Fund, on an annual
basis, a report confirming that the arrangements hereunder remain
in compliance with the rules of the Securities and Exchange
Commission governing such arrangements.
13. Compliance with Securities and Exchange Commission
Rules and Orders. Except to the extent the Bank has specifically
agreed pursuant to this Agreement or in an exemptive order to
comply with a condition of Rule 17f-5 or any interpretation or
exemptive order promulgated thereunder by or under the authority
of the Securities and Exchange Commission, the Fund shall be
solely responsible to assure that the maintenance of Securities
and cash under this Agreement complies with such Rule 17f-5.
14. Corporate Action. Whenever the Bank or its sub-
custodian receives information concerning the Securities which
requires discretionary action by the beneficial owner of the
Securities (other than a proxy), such as subscription rights,
bonus issues, stock repurchase plans and rights offerings, or
legal notices or other material intended to be transmitted to
securities holders ("Corporate Actions"), the Bank will give the
Company notice of such Corporate Actions to the extent that the
Bank's central corporate actions department has actual knowledge
of a Corporate Action in time to notify its customers.
When a rights entitlement or a fractional interest resulting
from a rights issue, stock dividend, stock split or similar
Corporate Action is received which bears an expiration date, the
Bank or its sub-custodians will endeavor to obtain Instructions
from the Fund, the Company or its Authorized Person, but if
Instructions are not received in time for the Bank to take timely
action, or actual notice of such Corporate Action was received too
late to seek Instructions, the Bank is authorized to sell such
rights entitlement or fractional interest and to credit the
applicable Deposit Account with the proceeds and to take any other
action it deems, in good faith, to be appropriate in which case,
provided it has met the standard of care in Section 12 hereof, it
shall be held harmless by the particular Investment Portfolio of
the Fund involved for any such action.
The Bank will deliver proxies to the Company or its
designated agent pursuant to special arrangements which may have
been agreed to in writing between the parties hereto. Such
proxies shall be executed in the appropriate nominee name relating
to Securities in the Custody Account registered in the name of
such nominee but without indicating the manner in which such
proxies are to be voted; and where bearer Securities are involved,
proxies will be delivered in accordance with Instructions from
Authorized Persons.
15. Fees and Expenses. The Fund agrees to pay to the Bank
from time to time such compensation for its services pursuant to
this Agreement as may be mutually agreed upon in writing from time
to time and the Bank's out-of-pocket or incidental expenses,
including (but without limitation) reasonable legal fees. The
Fund hereby agrees on behalf of its respective Investment
Portfolios to cause the particular Investment Portfolio of the
Fund involved to hold the Bank harmless from any liability or loss
resulting from any taxes or other governmental charges, and any
expenses related thereto, which may be imposed, or assessed with
respect to such Investment Portfolio's Custody Account and also
agrees on behalf of its respective Investment Portfolios to cause
the particular Investment Portfolio of the Fund involved to hold
the Bank, its sub-custodians, and their respective nominees
harmless from any liability as a record holder of Securities in
such Investment Portfolio's Custody Account. The Bank is
authorized to charge any account of the particular Investment
Portfolio of the Fund involved for such items and the Bank shall
have a lien on Securities in such Investment Portfolio's Custody
Account and on cash in such Investment Portfolio's Deposit Account
for any amount owing to the Bank in connection with such
Investment Portfolio from time to time under this Agreement.
16. Effectiveness. This Agreement shall be effective on
the date first noted above.
17. Termination. This Agreement may be terminated by the
Fund, the Company or the Bank by 60 days' written notice to the
other, sent by registered mail, provided that any termination by
the Company shall be authorized by a resolution of the Board of
Directors of the Fund, a certified copy of which shall accompany
such notice of termination, and provided further, that such
resolution shall specify the names of persons to whom the Bank
shall deliver the Securities in each Custody Account and to whom
the cash in each Deposit Account shall be paid. If notice of
termination is given by the Bank, the Fund or the Company shall,
within 60 days following the giving of such notice, deliver to the
Bank a certified copy of a resolution of the Board of Directors of
the Fund specifying the names of the persons to whom the Bank
shall deliver such Securities and cash, after deducting therefrom
any amounts which the Bank determines to be owed to it under
Section l5 hereof. If within 60 days following the giving of a
notice of termination by the Bank, the Bank does not receive from
the Fund or the Company a certified copy of a resolution of the
Board of Directors of the Fund specifying the names of the persons
to whom the cash in each Deposit Account shall be paid and to whom
the Securities in each Custody Account shall be delivered, the
Bank, at its election, may deliver such Securities and pay such
cash to a bank or trust company doing business in the Continental
United States and qualified as a custodian under the Investment
Company Act of 1940 to be held and disposed of pursuant to the
provisions of this Agreement, or to Authorized Persons, or may
continue to hold such Securities and cash until a certified copy
of one or more resolutions as aforesaid is delivered to the Bank.
The obligations of the parties hereto regarding the use of
reasonable care, indemnities and payment of fees and expenses
shall survive the termination of this Agreement, and the
obligations of each Investment Portfolio of the Fund to indemnify
and/or hold harmless other persons or entities under this
Agreement shall be the several (and not the joint or joint and
several) obligation of each Investment Portfolio of the Fund.
18. Notices. Any notice or other communication from the
Fund or the Company to the Bank is to be sent to the office of the
Bank at Boston Safe Deposit and Trust Company, One Cabot Road,
Medford, MA 02155 Attention: Merton E. Thompson, or such other
address as may hereafter be given to the Fund or the Company in
accordance with the notice provisions hereunder, and any notice
from the Bank to the Fund or the Company is to be mailed postage
prepaid, addressed to the Fund and to the Company at the addresses
appearing below, or as the same may hereafter be changed on the
Bank's records in accordance with notice hereunder from the Fund
or the Company.
19. Authorized Signatures. Persons initially authorized
to give instructions pursuant to this Agreement are listed,
including specimen signatures, on Exhibit A attached.
20. Governing Law and Successors and Assigns. This
Agreement shall be governed by the law of the State of Delaware
and shall not be assignable by any party, but shall bind the
successors and assigns of the Fund, the Company and the Bank.
21. Headings. The headings of the paragraphs hereof are
included for convenience of reference only and do not form a part
of this Agreement.
22. Counterpart Execution. This Agreement may be executed
in any number of counterparts with the same effect as if all
parties hereto had signed the same document. All counterparts
shall be construed together and shall constitute one agreement.
23. Confidentiality. Bank agrees on behalf of itself and
its employees to treat confidentially all records and other
information relative to the Fund and its prior, present, or
potential shareholders, and relative to the Company and its prior
present, or potential customers, except, after prior notification
to and approval in writing by the Fund or the Company, which
approval shall not be unreasonably withheld and may not be
withheld where Bank may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested
by the Fund or the Company.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below on the
day and year first above written.
COMERICA BANK
By:
Address for record:
411 West Lafayette
2nd Floor Master Trust
Mail Code 3438
Detroit, Michigan 48226
Attention: Julie Elya
BOSTON SAFE DEPOSIT & TRUST COMPANY
By:
Address for record:
One Cabot Road
Medford, MA 02155
Attention: Merton E. Thompson
THE MUNDER FUNDS, INC., on behalf of its Investment Portfolios,
Munder Multi-Season Growth Fund, Munder Mid-Cap Growth Fund,
Munder Munder Value Fund
By:
Address for record:
480 Pierce Street
Birmingham, MI 48009
Attention: Lee Munder,
President, The Munder Funds, Inc.
2
shared/bankgrp/munder/agree/subcstdy.doc
DECHERT PRICE & RHOADS
1500 K Street, N.W., Suite 500
Washington, D.C. 20005
October 24, 1996
The Munder Funds, Inc.
480 Pierce Street
Birmingham, MI 48009
Dear Sirs:
In connection with the registration under the
Securities Act of 1933 of an indefinite number of shares of common
stock of The Munder Small-Cap Value Fund, The Munder Micro-Cap
Equity Fund and The Munder Equity Selection Fund (collectively,
the "Funds"), each of which is a series of The Munder Funds, Inc.
(the "Company"), we have examined such matters as we have deemed
necessary, and we are of the opinion that, assuming that the
Company or its agent receives consideration for such shares in
accordance with the provisions of its Articles of Incorporation,
the shares will be legally and validly issued, will be fully paid,
and will be non-assessable by the Company.
We hereby consent to the use of this opinion as an
exhibit to the Company's Registration Statement on Form N-1A to be
filed with the Securities and Exchange Commission (File No. 33-
54748) for the registration under the Securities Act of 1933 of an
indefinite number of the Funds' shares, and to the use of our name
in the prospectuses and statement of additional information
contained therein, and any amendments thereto.
Very truly yours,
/s/ Dechert Price &
Rhoads
Dechert Price & Rhoads
g:\shared\bankgrp\munder\dpropn2.doc
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the
captions "Financial Highlights" in the Class A, B and C
Shares Prospectuses (Equity Funds, Income Funds and Money
Market Funds), the Class K Shares Prospectus and the Class
Y Shares Prospectus and "Independent Auditors" and
"Financial Statements" in the combined Munder Funds Trust
(the "Trust") and Munder Funds, Inc. (the "Company")
Statement of Additional Information in Post-Effective
Amendment No. 23 and No. 20 of the Trust and the Company,
respectively, to Registration Statement (Form N-1A, No.
33-30913 and 33-54748 for the Trust and the Company,
respectively ) dated October 28, 1996.
We also consent to the incorporation by reference therein
of our report dated August 8, 1996, with respect to the
financial statements and financial highlights of the
Munder Funds in this Form N-1A.
ERNST & YOUNG LLP
Ernst & Yound LLP
Boston, Massachusetts
October 24, 1996
THE MUNDER FUNDS TRUST
THE MUNDER FUNDS, INC.
Schedule of Computation
(Exhibit 16)
1. Yield for the seven-day period ended June 30, 1996:
Formula: (Base period return/1) x 365/7 = Yield
Munder Cash Investment Fund
Class Y Shares: (.000927432/1) x 365/7 = 4.84%
Class K Shares: (.000898744/1) x 365/7 = 4.69%
Class A Shares: (.000879619/1) x 365/7 = 4.59%
Munder Tax-Free Money Market Fund
Class Y Shares: (.000540403/1) x 366/7 = 2.83%
Class K Shares: (.000511732/1) x 366/7 = 2.68%
Class A Shares: (.000492619/1) x 366/7 = 2.58%
Munder U.S. Treasury Money Market Fund
Class Y Shares: (.000901167/1) x 365/7 = 4.70%
Class K Shares: (.000872837/1) x 365/7 = 4.55%
Class A Shares: (.000853714/1) x 365/7 = 4.45%
Munder Money Market Fund
Class Y Shares: (.000923272/1) x 365/7 = 4.81%
Class A Shares: (.000875363/1) x 365/7 = 4.56%
Class B Shares: (.000731913/1) x 365/7 = 3.82%
2. Effective yield for the seven-day period ended June 30,
1996:
Formula: (1 + base period return)365/7 - 1 =
Effective Yield
Munder Cash Investment Fund
Class Y Shares: (1 + .000927432)365/7 - 1 = 4.94%
Class K Shares: (1 + .000898744)365/7 - 1 = 4.79%
Class A Shares: (1 + .000879619)365/7 - 1 = 4.68%
Munder Tax-Free Money Market Fund
Class Y Shares: (1 + .000540403)365/7 - 1 = 2.86%
Class K Shares: (1 + .000511732)365/7 - 1 = 2.71%
Class A Shares: (1 + .000492619)365/7 - 1 = 2.61%
Munder U.S. Treasury Money Market Fund
Class Y Shares: (1 + .000901167)365/7 - 1 = 4.80%
Class K Shares: (1 + .000872837)365/7 - 1 = 4.65%
Class A Shares: (1 + .000853714)365/7 - 1 = 4.54%
Munder Money Market Fund
Class Y Shares: (1 + .000923272)365/7 - 1 = 4.92%
Class A Shares: (1 + .000875363)365/7 - 1 = 4.66%
Class B Shares: (1 + .000731913)365/7 - 1 = 3.88%
3. Tax-Equivalent Yield for the seven-day period ended June 30,
1996:
Formula: (7-day yield) / (1 - stated tax rate) = Tax-
Equivalent Yield
(31% Stated Tax Rate)
Munder Tax-Free Money Market Fund
Class Y Shares: (2.83%) / (1 - 31%) = 4.10%
Class K Shares: (2.68%) / (1 - 31%) = 3.88%
Class A Shares: (2.58%) / (1 - 31%) = 3.74%
4. 30-Day SEC Yield for the period ended June 30, 1996 (with
waivers):
Formula: 2*(((A - B + 1)/(C*D)) + 1)^6 - 1)
A = interest earned during the period
B = expenses accrued during the period
C = average fund shares outstanding during
the period
D = maximum offering price per share on the
last day of the period
Michigan Triple Tax-Free Bond Fund
Class A Shares: 2*(((2,117.73 - 192.56 +
1)/(47,941.57*9.74)) + 1)^6 - 1 = 5.00%
Class B Shares: 2*(((1,182.08 - 259.57 +
1)/(26,760.00*9.35)) + 1)^6 - 1 = 4.47%
Class K Shares: 2*(((139,592.48 - 12,688.21 +
1)/(3,160,114.83*9.34)) + 1)^6 - 1 = 5.22%
Class Y Shares: 2*(((962.57 - 46.27 +
1)/(21,790.85*9.35)) + 1)^6 - 1 = 5.46%
5. 30-Day SEC Yield for the period ended June 30, 1996 (without
waivers):
Formula: 2*(((A - B + 1)/(C*D)) + 1)^6 - 1)
A = interest earned during the period
B = expenses accrued during the period
C = average fund shares outstanding during
the period
D = maximum offering price per share on the
last day of the period
Bond Fund
Class A Shares: 2*(((4,924.53 - 700.24 +
1)/(94,007.86*9.93)) + 1)^6 - 1) = 5.49%
Class B Shares: 2*(((1,577.98 - 399.62 +
1)/(30,123.20*9.53)) + 1)^6 - 1) = 4.98%
Class C Shares: 2*(((280.79 - 71.01 +
1)/(5,360.14*9.52)) + 1)^6 - 1) = 4.98%
Class K Shares: 2*(((176,484.25 - 25,092.31 +
1)/(3,369,034.65*9.53)) + 1)^6 - 1) = 5.73%
Class Y Shares: 2*(((613,707.63 - 64,534.18 +
1)/(11,715,505.73*9.53)) + 1)^6 - 1) = 5.98%
Intermediate Bond Fund
Class A Shares: 2*(((29,505.74 - 4,050.28 +
1)/(573,410.06*9.70)) + 1)^6 - 1) = 5.56%
Class B Shares: 2*(((455.39 - 112.87 +
1)/(8,849.94*9.30)) + 1)^6 - 1) = 5.05%
Class C Shares: 2*(((285.13 - 70.55 +
1)/(5,541.08*9.31)) + 1)^6 - 1) = 5.04%
Class K Shares: 2*(((2,050,138.06 - 281,347.26 +
1)/(39,842,076.91*9.31)) + 1)^6 - 1) = 5.79%
Class Y Shares: 2*(((996,499.17 - 99,991.51 +
1)/(19,365,816.12*9.31)) + 1)^6 - 1) = 6.04%
U.S. Government Income Fund
Class A Shares: 2*(((1,335.04 - 178.60 +
1)/(22,907.15*10.40)) + 1)^6 - 1) = 5.90%
Class B Shares: 2*(((3,171.87 - 755.86 +
1)/(54,424.49*9.98)) + 1)^6 - 1) = 5.40%
Class K Shares: 2*(((925,659.35 - 123,877.00 +
1)/(15,882,891.20*9.98)) + 1)^6 - 1) = 6.15%
Class Y Shares: 2*(((271,721.83 - 26,892.93 +
1)/(4,662,328.85*9.98)) + 1)^6 - 1) = 6.40%
Michigan Triple Tax-Free Bond Fund
Formula: SEC Yield (with waivers) - Amount Waived of
Advisory Fees = SEC Yield (without waivers)
Class A Shares: 5.00 - 0.50 = 4.50%
Class B Shares: 4.47 - 0.50 = 3.97%
Class K Shares: 5.22 - 0.50 = 4.72%
Class Y Shares: 5.46 - 0.50 = 4.96%
Tax-Free Bond Fund
Class A Shares: 2*(((6,552.62 - 1,100.47 +
1)/(138,030.91*10.76)) + 1)^6 - 1) = 4.45%
Class B Shares: 2*(((22.75 - 6.95 + 1)/(479.20*10.34))
+ 1)^6 - 1) = 3.86%
Class K Shares: 2*(((905,350.03 - 152,256.87 +
1)/(19,071,190.75*10.35)) + 1)^6 - 1) = 4.62%
Class Y Shares: 2*(((7,914.87 - 979.47 +
1)/(166,726.74*10.34)) + 1)^6 - 1) = 4.88%
Tax-Free Intermediate Bond Fund
Class A Shares: 2*(((20,481.86 - 3,893.55 +
1)/(495,333.72*10.77)) + 1)^6 - 1) = 3.76%
Class B Shares: 2*(((199.67 - 68.47 +
1)/(4,828.77*10.34)) + 1)^6 - 1) = 3.17%
Class K Shares: 2*(((1,336,743.19 - 254,132.28 +
1)/(32,327,822.40*10.34)) + 1)^6 - 1)= 3.92%
Class Y Shares: 2*(((19,828.26 - 2,754.51 +
1)/(479,526.95*10.34)) + 1)^6 - 1) = 4.17%
6. Tax-Equivalent Yield for the period ended June 30, 1996
(with waivers):
Formula: (SEC Yield with waivers) / (1 - Tax Rate +
Michigan Tax Rate) = Tax-Equivalent Yield
(31% Tax Rate; 4% Michigan Tax Rate)
Michigan Triple Tax-Free Bond Fund
Class A Shares: (5.00) / (1 - .31 + .04) = 7.69%
Class B Shares: (4.47) / (1 - .31 + .04) = 6.88%
Class K Shares: (5.22) / (1 - .31 + .04) = 8.03%
Class Y Shares: (5.46) / (1 - .31 + .04) = 8.40%
7. Tax-Equivalent Yield for the period ended June 30, 1996
(without waivers):
Formula: (SEC Yield) / (1- Tax Rate) = Tax-Equivalent
Yield
(31% Tax Rate)
Michigan Triple Tax-Free Bond Fund (Michigan Tax Rate = 4%)
Formula: (SEC Yield) / (1 - Tax Rate + Michigan Tax Rate)
Class A Shares: (4.50%) / (1 - .31 + .04) = 6.92%
Class B Shares: (3.97%) / (1 - .31 + .04) = 6.11%
Class K Shares: (4.72%) / (1 - .31 + .04) = 7.26%
Class Y Shares: (4.96%) / (1 - .31 + .04) = 7.63%
Tax-Free Bond Fund
Class A Shares: (4.45%) / (1 - .31) = 6.45%
Class B Shares: (3.86%) / (1 - .31) = 5.59%
Class K Shares: (4.62%) / (1 - .31) = 6.70%
Class Y Shares: (4.88%) / (1 - .31) = 7.07%
Tax-Free Intermediate Bond Fund
Class A Shares: (3.76%) / (1 - .31) = 5.45%
Class B Shares: (3.17%) / (1 - .31) = 4.59%
Class K Shares: (3.92%) / (1 - .31) = 5.68%
Class Y Shares: (4.17%) / (1 - .31) = 6.04%
8. Average Annual Total Return for the 12 month period ended
June 30, 1996 (without sales charge):
Formula: (ERV/P)^1 - 1 also: (ERV)^1/n - 1
P
ERV = Ending redeemable value assuming
redemption of the last day
of the period.
P = The initial hypothetical investment of
$1000
N = Period covered by the computation,
expressed in years
Multi-Season Growth Fund
Class A Shares: ( 1,275.60 ) ^ 1.00
- 1 = 27.56%
1,000.00
Class B Shares: ( 1,266.60 ) ^ 1.00
- 1 = 26.66%
1,000.00
Class C Shares: ( 1,266.40 ) ^ 1.00
- 1 = 26.64%
1,000.00
Class K Shares: ( 1,275.60 ) ^ 1.00
- 1 = 27.56%
1,000.00
Class Y Shares: ( 1,278.50 ) ^ 1.00
- 1 = 27.85%
1,000.00
Real Estate Equity Investment Fund
Class A Shares: ( 1,159.20 ) ^ 1.00
- 1 = 15.92%
1,000.00
Class B Shares: ( 1,150.50 ) ^ 1.00
- 1 = 15.05%
1,000.00
Class Y Shares: ( 1,162.00 ) ^ 1.00
- 1 = 16.20%
1,000.00
Accelerating Growth Fund
Class A Shares: ( 1,220.30 ) ^ 1.00
- 1 = 22.03%
1,000.00
Class B Shares: ( 1,210.50 ) ^ 1.00
- 1 = 21.05%
1,000.00
Class K Shares: ( 1,220.30 ) ^ 1.00
- 1 = 22.03%
1,000.00
Class Y Shares: ( 1,223.10 ) ^ 1.00
- 1 = 22.31%
1,000.00
Small Company Growth Fund
Class A Shares: ( 1,482.80 ) ^ 1.00
- 1 = 48.28%
1,000.00
Class B Shares: ( 1,472.60 ) ^ 1.00
- 1 = 47.26%
1,000.00
Class K Shares: ( 1,482.80 ) ^ 1.00
- 1 = 48.28%
1,000.00
Class Y Shares: ( 1,486.50 ) ^ 1.00
- 1 = 48.65%
1,000.00
International Equity Fund
Class A Shares: ( 1,133.70 ) ^ 1.00
- 1 = 13.37%
1,000.00
Class B Shares: ( 1,125.30 ) ^ 1.00
- 1 = 12.53%
1,000.00
Class K Shares: ( 1,132.90 ) ^ 1.00
- 1 = 13.29%
1,000.00
Class Y Shares: ( 1,136.30 ) ^ 1.00
- 1 = 13.63%
1,000.00
Index 500 Fund
Class A Shares: ( 1,255.10 ) ^ 1.00
- 1 = 25.51%
1,000.00
Class K Shares: ( 1,253.70 ) ^ 1.00
- 1 = 25.37%
1,000.00
Class Y Shares: ( 1,256.10 ) ^ 1.00
- 1 = 25.61%
1,000.00
Growth & Income Fund
Class A Shares: ( 1,209.00 ) ^ 1.00
- 1 = 20.90%
1,000.00
Class B Shares: ( 1,200.90 ) ^ 1.00
- 1 = 20.09%
1,000.00
Class K Shares: ( 1,209.70 ) ^ 1.00
- 1 = 20.97%
1,000.00
Class Y Shares: ( 1,212.60 ) ^ 1.00
- 1 = 21.26%
1,000.00
Balanced Fund
Class A Shares: ( 1,170.60 ) ^ 1.00
- 1 = 17.06%
1,000.00
Class B Shares: ( 1,162.40 ) ^ 1.00
- 1 = 16.24%
1,000.00
Class K Shares: ( 1,171.70 ) ^ 1.00
- 1 = 17.17%
1,000.00
Class Y Shares: ( 1,173.50 ) ^ 1.00
- 1 = 17.35%
1,000.00
Bond Fund
Class A Shares: ( 1,042.40 ) ^ 1.00
- 1 = 4.24%
1,000.00
Class K Shares: ( 1,043.50 ) ^ 1.00
- 1 = 4.35%
1,000.00
Class Y Shares: ( 1,045.00 ) ^ 1.00
- 1 = 4.50%
1,000.00
Intermediate Bond Fund
Class A Shares: ( 1,039.20 ) ^ 1.00
- 1 = 3.92%
1,000.00
Class B Shares: ( 1,032.20 ) ^ 1.00
- 1 = 3.22%
1,000.00
Class K Shares: ( 1,040.40 ) ^ 1.00
- 1 = 4.04%
1,000.00
Class Y Shares: ( 1,042.90 ) ^ 1.00
- 1 = 4.29%
1,000.00
U.S. Government Income Fund
Class A Shares: ( 1,043.40 ) ^ 1.00
- 1 = 4.34%
1,000.00
Class K Shares: ( 1,043.20 ) ^ 1.00
- 1 = 4.32%
1,000.00
Class Y Shares: ( 1,045.80 ) ^ 1.00
- 1 = 4.58%
1,000.00
Michigan Triple Tax- Free Bond Fund
Class A Shares: ( 1,052.50 ) ^ 1.00
- 1 = 5.25%
1,000.00
Class B Shares: ( 1,044.60 ) ^ 1.00
- 1 = 4.46%
1,000.00
Class K Shares: ( 1,051.40 ) ^ 1.00
- 1 = 5.14%
1,000.00
Class Y Shares: ( 1,055.10 ) ^ 1.00
- 1 = 5.51%
1,000.00
Tax-Free Bond Fund
Class B Shares: ( 1,043.60 ) ^ 1.00
- 1 = 4.36%
1,000.00
Class K Shares: ( 1,051.20 ) ^ 1.00
- 1 = 5.12%
1,000.00
Class Y Shares: ( 1,053.80 ) ^ 1.00
- 1 = 5.38%
1,000.00
Tax-Free Intermediate Bond Fund
Class A Shares: ( 1,037.90 ) ^ 1.00
- 1 = 3.79%
1,000.00
Class K Shares: ( 1,036.90 ) ^ 1.00
- 1 = 3.69%
1,000.00
Class Y Shares: ( 1,039.50 ) ^ 1.00
- 1 = 3.95%
1,000.00
9. Average Annual Total Return since inception through June 30,
1996 (without sales charge):
Formula: ((ERV/P)^(1/N)) - 1
N = Number of year and portion of a year
ERV = Ending redeemable value assuming
redemption of the last day of the period.
P = The initial hypothetical investment of $1000
Multi-Season Growth Fund
Class A Shares (8/4/93): ( 1,514.90 ) ^
0.34 - 1 = 15.36%
1,000.00
Class B Shares (4/29/93): ( 1,507.01 ) ^
0.32 - 1 = 13.80%
1,000.00
Class C Shares (9/20/93): ( 1,479.42 ) ^
0.36 - 1 = 15.14%
1,000.00
Class K Shares (6/23/95): ( 1,257.46 ) ^
0.98 - 1 = 25.13%
1,000.00
Class Y Shares (8/16/93): ( 1,522.12 ) ^
0.35 - 1 = 15.74%
1,000.00
Real Estate Equity Investment Fund
Class A Shares (9/30/94): ( 1,210.70 ) ^
0.57 - 1 = 11.54%
1,000.00
Class B Shares (10/3/94): ( 1,194.91 ) ^
0.57 - 1 = 10.76%
1,000.00
Class C Shares (1/5/96): ( 1,029.04 ) ^
2.06 - 1 = 6.08%*
1,000.00
Class Y Shares (10/3/94): ( 1,216.04 ) ^
0.57 - 1 = 11.88%
1,000.00
Accelerating Growth Fund
Class A Shares (11/23/92): ( 1,653.51 ) ^
0.28 - 1 = 14.98%
1,000.00
Class B Shares (4/25/94): ( 1,420.26 ) ^
0.46 - 1 = 17.43%
1,000.00
Class C Shares (9/26/95): ( 1,076.93 ) ^
1.31 - 1 = 10.22%*
1,000.00
Class K Shares (11/23/92): ( 1,653.51 ) ^
0.28 - 1 = 14.98%
1,000.00
Class Y Shares (12/1/91): ( 1,966.66 ) ^
0.22 - 1 = 15.90%
1,000.00
Small Company Growth Fund
Class A Shares (11/23/92): ( 1,876.54 ) ^
0.28 - 1 = 19.09%
1,000.00
Class B Shares (4/28/94): ( 1,650.97 ) ^
1.00 - 1 = 25.92%
1,000.00
Class C Shares (9/26/95): ( 1,235.26 ) ^
1.00 - 1 = 31.97%*
1,000.00
Class K Shares (11/23/92): ( 1,876.54 ) ^
1.00 - 1 = 19.09%
1,000.00
Class Y Shares (12/1/91): ( 2,337.38 ) ^
1.00 - 1 = 20.35%
1,000.00
Mid-Cap Growth Fund
Class A Shares (12/22/95): ( 1,048.99 )
^ 1.00 - 1 = 9.57%*
1,000.00
Class B Shares (1/26/96): ( 1,037.84 ) ^
2.34 - 1 = 9.08%*
1,000.00
Class C Shares (11/9/95): ( 1,067.15 ) ^
1.56 - 1 = 10.67%*
1,000.00
Class K Shares (10/2/95): ( 1,072.01 ) ^
1.34 - 1 = 9.78%*
1,000.00
Class Y Shares (8/14/95): ( 1,137.70 ) ^
1.14 - 1 = 15.80%*
1,000.00
International Equity Fund
Class A Shares (11/30/92): ( 1,461.97 ) ^
0.28 - 1 = 11.18%
1,000.00
Class B Shares (3/9/94): ( 1,122.88 ) ^
0.43 - 1 = 5.14%
1,000.00
Class C Shares (9/29/95): ( 1,052.74 ) ^
1.33 - 1 = 7.06%*
1,000.00
Class K Shares (11/23/92): ( 1,481.63 ) ^
0.28 - 1 = 11.53%
1,000.00
Class Y Shares (12/1/91): ( 1,562.73 ) ^
0.22 - 1 = 10.23%
1,000.00
Index 500 Fund
Class A Shares (12/9/92): ( 1,666.43 ) ^
0.28 - 1 = 15.43%
1,000.00
Class B Shares (11/1/95):( 1,106.62 ) ^
1.51 - 1 = 16.51%*
1,000.00
Class K Shares (12/7/92): ( 1,666.19 ) ^
0.28 - 1 = 15.40%
1,000.00
Class Y Shares (12/1/91): ( 1,993.25 ) ^
0.22 - 1 = 16.24%
1,000.00
Growth & Income Fund
Class A Shares (8/8/94): ( 1,376.98 ) ^
0.53 - 1 = 18.38%
1,000.00
Class B Shares (8/9/94): ( 1,358.79 ) ^
0.53 - 1 = 17.58%
1,000.00
Class C Shares (12/5/95): ( 1,031.37 ) ^
1.75 - 1 = 5.57%*
1,000.00
Class K Shares (7/5/94): ( 1,391.99 ) ^
0.50 - 1 = 18.09%
1,000.00
Class Y Shares (7/5/94): ( 1,397.85 ) ^
0.50 - 1 = 18.34%
1,000.00
Value Fund
Class A Shares (9/14/95): ( 1,093.83 ) ^
1.26 - 1 = 11.95%*
1,000.00
Class B Shares (9/19/95): ( 1,085.59 ) ^
1.28 - 1 = 11.09%*
1,000.00
Class C Shares (2/9/96): ( 1,007.35 ) ^
2.57 - 1 = 1.90%*
1,000.00
Class K Shares (11/30/95): ( 1,042.14 ) ^
1.71 - 1 = 7.33%*
1,000.00
Class Y Shares (8/18/95): ( 1,142.01 ) ^
1.15 - 1 = 16.52%*
1,000.00
Balanced Fund
Class A Shares (4/30/93): ( 1,332.56 ) ^
0.32 - 1 = 9.48%
1,000.00
Class B Shares (6/21/94): ( 1,327.81 ) ^
0.49 - 1 = 15.01%
1,000.00
Class C Shares (1/24/96): ( 1,026.38 ) ^
2.31 - 1 = 6.20%*
1,000.00
Class K Shares (4/16/93): ( 1,319.64 ) ^
0.31 - 1 = 9.03%
1,000.00
Class Y Shares (4/13/93): ( 1,322.14 ) ^
0.31 - 1 = 9.07%
1,000.00
Bond Fund
Class A Shares (12/9/92): ( 1,237.48 ) ^
0.28 - 1 = 6.17%
1,000.00
Class B Shares (3/13/96): ( 1,000.66 ) ^
3.35 - 1 = 0.22%*
1,000.00
Class C Shares (3/25/96): ( 998.70 ) ^
3.76 - 1 = (0.49)%*
1,000.00
Class K Shares (11/23/92): ( 1,238.21 ) ^
0.28 - 1 = 6.11%
1,000.00
Class Y Shares (12/1/91): ( 1,297.69 ) ^
0.22 - 1 = 5.85%
1,000.00
Intermediate Bond Fund
Class A Shares (11/24/92): ( 1,187.12 ) ^
0.28 - 1 = 4.88%
1,000.00
Class B Shares (10/25/94): ( 1,117.55 ) ^
0.59 - 1 = 6.83%
1,000.00
Class C Shares (4/19/96): ( 1,000.77 ) ^
5.07 - 1 = 0.39%*
1,000.00
Class K Shares (11/20/92): ( 1,187.33 ) ^
0.28 - 1 = 4.87%
1,000.00
Class Y Shares (12/1/91): ( 1,289.29 ) ^
0.22 - 1 = 5.70%
1,000.00
U.S. Government Income Fund
Class A Shares (7/28/94): ( 1,149.67 ) ^
0.52 - 1 = 7.51%
1,000.00
Class B Shares (9/6/95): ( 1,019.71 ) ^
1.22 - 1 = 2.42%*
1,000.00
Class K Shares (7/5/94): ( 1,152.79 ) ^
0.50 - 1 = 7.41%
1,000.00
Class Y Shares (7/5/94): ( 1,158.34 ) ^
0.50 - 1 = 7.67%
1,000.00
Michigan Triple Tax- Free Bond Fund
Class A Shares (2/15/94): ( 1,058.86 ) ^
0.42 - 1 = 2.44%
1,000.00
Class B Shares (7/5/94): ( 1,112.58 ) ^
0.50 - 1 = 5.51%
1,000.00
Class K Shares (1/3/94): ( 1,052.61 ) ^
0.40 - 1 = 2.08%
1,000.00
Class Y Shares (1/3/94): ( 1,060.07 ) ^
0.40 - 1 = 2.37%
1,000.00
Tax-Free Bond Fund
Class A Shares (10/9/95): ( 1,013.54 ) ^
1.38 - 1 = 1.87%*
1,000.00
Class B Shares (12/6/94): ( 1,130.64 ) ^
0.64 - 1 = 8.15%
1,000.00
Class K Shares (7/5/94): ( 1,134.08 ) ^
0.50 - 1 = 6.53%
1,000.00
Class Y Shares (7/21/94): ( 1,131.76 ) ^
0.51 - 1 = 6.57%
1,000.00
Tax-Free Intermediate Bond Fund
Class A Shares (11/30/92): ( 1,166.05 ) ^
0.28 - 1 = 4.38%
1,000.00
Class B Shares (5/16/96): ( 1,000.48 ) ^
8.11 - 1 = 0.39%*
1,000.00
Class K Shares (2/9/87): ( 1,674.39 ) ^
0.11 - 1 = 5.64%
1,000.00
Class Y Shares (12/17/92): ( 1,170.84 ) ^
0.28 - 1 = 4.56%
1,000.00
10. Average Annual Total Return for the 12 month period ended
June 30, 1996 (with sales charge):
Formula: (Load Adjusted ERV/P)^1 - 1
ERV = Ending redeemable value assuming redemption of the last day
of the period and deduction of any applicable sales charge.
P = The initial hypothetical investment of $1000.
Multi-Season Growth Fund
Class A Shares: ( 1,205.40 ) ^ 1.00
- 1 = 20.54%
1,000,00
Class B Shares: ( 1,216.60 ) ^ 1.00
- 1 = 21.66%
1,000.00
Class C Shares: ( 1,256.40 ) ^ 1.00
- 1 = 25.64%
1,000.00
Real Estate Equity Investment Fund
Class A Shares: ( 1,095.40 ) ^ 1.00
- 1 = 9.54%
1,000.00
Class B Shares: ( 1,100.50 ) ^ 1.00
- 1 = 10.05%
1,000.00
Accelerating Growth Fund
Class A Shares: ( 1,153.20 ) ^ 1.00
- 1 = 15.32%
1,000.00
Class B Shares: ( 1,160.50 ) ^ 1.00
- 1 = 16.05%
1,000.00
Small Company Growth Fund
Class A Shares: ( 1,401.20 ) ^ 1.00
- 1 = 40.12%
1,000.00
Class B Shares: ( 1,422.60 ) ^ 1.00
- 1 = 42.26%
1,000.00
International Equity Fund
Class A Shares: ( 1,071.30 ) ^ 1.00
- 1 = 7.13%
1,000.00
Class B Shares: ( 1,075.30 ) ^ 1.00
- 1 = 7.53%
1,000.00
Index 500 Fund
Class A Shares: ( 1,223.80 ) ^ 1.00
- 1 = 22.38%
1,000.00
Growth & Income Fund
Class A Shares: ( 1,142.50 ) ^ 1.00
- 1 = 14.25%
1,000.00
Class B Shares: ( 1,150.90 ) ^ 1.00
- 1 = 15.09%
1,000.00
Balanced Fund
Class A Shares: ( 1,106.20 ) ^ 1.00
- 1 = 10.62%
1,000.00
Class B Shares: ( 1,112.40 ) ^ 1.00
- 1 = 11.24%
1,000.00
Bond Fund
Class A Shares: ( 1,000.70 ) ^ 1.00
- 1 = 0.07%
1,000.00
Intermediate Bond Fund
Class A Shares: ( 997.70 ) ^ 1.00
- 1 = (0.23)%
1,000.00
Class B Shares: ( 983.30 ) ^
1.00 - 1 = (1.67)%
1,000.00
U.S. Government Income Fund
Class A Shares: ( 1,001.60 ) ^ 1.00
- 1 = 0.16%
1,000.00
Michigan Triple Tax- Free Bond Fund
Class A Shares: ( 1,010.40 ) ^ 1.00
- 1 = 1.04%
1,000.00
Class B Shares: ( 994.60 ) ^ 1.00
- 1 = (0.54)%
1,000.00
Tax-Free Bond Fund
Class B Shares: ( 993.60 ) ^ 1.00
- 1 = (0.64)%
1,000.00
Tax-Free Intermediate Bond Fund
Class A Shares: ( 996.40 ) ^ 1.00
- 1 = (0.36)%
1,000.00
11. Average Annual Total Return since inception through June 30,
1996 (with sales charge):
Formula: ((Load Adjusted ERV/P)^(1/N)) - 1
N = Number of years and portion of a year.
ERV = Ending redeemable value assuming redemption of the last day
of the period and deduction of any applicable sales charge.
P = The initial hypothetical investment of $1000
Multi-Season Growth Fund
Class A Shares (8/4/93): ( 1,431.34 ) ^
0.34 - 1 = 13.13%
1,000.00
Class B Shares (4/29/93): ( 1,476.97 ) ^
0.32 - 1 = 13.08%
1,000.00
Class C Shares (9/20/93): ( 1,479.42 ) ^
0.36 - 1 = 15.14%
1,000.00
Real Estate Equity Investment Fund
Class A Shares (9/30/94): ( 1,144.23 ) ^
0.57 - 1 = 8.00%
1,000.00
Class B Shares (10/3/94): ( 1,154.97 ) ^
0.57 - 1 = 8.62%
1,000.00
Class C Shares (1/5/96): ( 1,024.32 ) ^
2.06 - 1 = 5.08%*
1,000.00
Accelerating Growth Fund
Class A Shares (11/23/92): ( 1,562.63 )
^ 0.28 - 1 = 13.19%
1,000.00
Class B Shares (4/25/94): ( 1,390.32 ) ^
0.46 - 1 = 16.29%
1,000.00
Class C Shares (9/26/95): ( 1,069.93 ) ^
1.31 - 1 = 9.28%*
1,000.00
Small Company Growth Fund
Class A Shares (11/23/92): ( 1,773.08 ) ^
0.28 - 1 = 17.23%
1,000.00
Class B Shares (4/28/94): ( 1,620.89 ) ^
1.00 - 1 = 24.86%
1,000.00
Class C Shares (9/26/95): ( 1,228.13 ) ^
1.00 - 1 = 30.97%*
1,000.00
Mid-Cap Growth Fund
Class A Shares (12/22/95): ( 1,018.42 )
^ 1.00 - 1 = 3.55%*
1,000.00
Class B Shares (1/26/96): ( 1,017.24 ) ^
2.34 - 1 = 4.08%*
1,000.00
Class C Shares (11/9/95): ( 1,060.96 ) ^
1.56 - 1 = 9.67%*
1,000.00
International Equity Fund
Class A Shares (11/30/92): ( 1,381.62 )
^ 0.28 - 1 = 9.44%
1,000.00
Class B Shares (3/9/94): ( 1,092.74 ) ^
0.43 - 1 = 3.91%
1,000.00
Class C Shares (9/29/95): ( 1,045.32 ) ^
1.33 - 1 = 6.06%*
1,000.00
Index 500 Fund
Class A Shares (12/9/92): ( 1,624.68 ) ^
0.28 - 1 = 14.61%
1,000.00
Class B Shares (11/1/95): ( 1,087.65 ) ^
1.51 - 1 = 13.51%*
1,000.00
Growth & Income Fund
Class A Shares (8/8/94): ( 1,301.25 ) ^
0.53 - 1 = 14.90%
1,000.00
Class B Shares (8/9/94): ( 1,318.81 ) ^
0.53 - 1 = 15.74%
1,000.00
Class C Shares (12/5/95): ( 1,025.79 )
^ 1.75 - 1 = 4.57%*
1,000.00
Value Fund
Class A Shares (9/14/95): ( 1,045.74 ) ^
1.26 - 1 = 5.79%*
1,000.00
Class B Shares (9/19/95): ( 1,047.24 ) ^
1.28 - 1 = 6.09%*
1,000.00
Class C Shares (2/9/96): ( 1,003.49 ) ^
2.57 - 1 = 0.90%*
1,000.00
Balanced Fund
Class A Shares (4/30/93): ( 1,259.51 ) ^
0.32 - 1 = 7.55%
1,000.00
Class B Shares (6/21/94): ( 1,297.79 ) ^
0.49 - 1 = 13.72%
1,000.00
Class C Shares (1/24/96): ( 1,022.19 ) ^
2.31 - 1 = 5.20%*
1,000.00
Bond Fund
Class A Shares (12/9/92): ( 1,188.01 ) ^
0.28 - 1 = 4.96%
1,000.00
Class B Shares (3/13/96): ( 985.73 ) ^
3.35 - 1 = (4.70)%*
1,000.00
Class C Shares (3/25/96): ( 996.02 ) ^
3.76 - 1 = (1.49)%*
1,000.00
Intermediate Bond Fund
Class A Shares (11/24/92): ( 1,139.73 ) ^
0.28 - 1 = 3.70%
1,000.00
Class B Shares (10/25/94): ( 1,077.55 )
^ 0.59 - 1 = 4.54%
1,000.00
Class C Shares (4/19/96): ( 998.79 ) ^
5.07 - 1 = (0.61)%*
1,000.00
U.S. Government Income Fund
Class A Shares (7/28/94): ( 1,103.77 ) ^
0.52 - 1 = 5.26%
1,000.00
Class B Shares (9/6/95): ( 980.20 ) ^
1.22 - 1 = (2.42)%*
1,000.00
Michigan Triple Tax- Free Bond Fund
Class A Shares (2/15/94): ( 1,016.69 ) ^
0.42 - 1 = 0.70%
1,000.00
Class B Shares (7/5/94): ( 1,072.47 ) ^
0.50 - 1 = 3.58%
1,000.00
Tax-Free Bond Fund
Class A Shares (10/9/95): ( 983.98 ) ^
1.38 - 1 = (2.20)%*
1,000.00
Class B Shares (12/6/94): ( 1,090.60 ) ^
0.64 - 1 = 5.69%
1,000.00
Tax-Free Intermediate Bond Fund
Class A Shares (11/30/92): ( 1,119.49 )
^ 0.28 - 1 = 3.20%
1,000.00
Class B Shares (5/16/96): ( 994.21 ) ^
8.11 - 1 = (4.60)%*
1,000.00
12. Average Annual Total Return for the five-years ended June
30, 1996 (without sales charge):
Formula: ((ERV/P)^(1/N)) - 1
N = Number of years and portion of a year.
ERV = Ending redeemable value assuming redemption of the last day
of the period.
P = The initial hypothetical investment of $1000
Tax-Free Intermediate Bond Fund
Class K Shares: ( 1,312.54 ) ^ 0.20
- 1 = 5.59%
1,000.00
_______________________________
*Aggregate Total Return
g:\shared\bankgrp\munder\ex16.doc
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<NUMBER>021
<NAME>Munder Money Market CL-A
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<NAME>Munder Money Market CL-B
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<SERIES>
<NUMBER>023
<NAME>Munder Money Market CL-Y
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<SERIES>
<NUMBER>011
<NAME>Munder Multi Season Growth CL-A
<S> <C>
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<NAME>Munder Multi Season Growth CL-C
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<NAME>Munder Multi Season Growth CL-K
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<NAME>Munder Multi Season Growth CL-Y
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<NAME> MUNDER VALUE FUND CL-A
<S> <C>
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<TABLE> <S> <C>
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<NAME> MUNDER VALUE FUND CL-B
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<TABLE> <S> <C>
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<SERIES>
<NUMBER> 053
<NAME> MUNDER VALUE FUND CL-C
<S> <C>
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<TABLE> <S> <C>
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<SERIES>
<NUMBER> 054
<NAME> MUNDER VALUE FUND CL-K
<S> <C>
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<SERIES>
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<NAME> MUNDER VALUE FUND CL-Y
<S> <C>
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</TABLE>
