As filed with the Securities and
Exchange Commission
on September 12, 1997
Registration Nos. 33-54748
811-7346
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. 30
[ X ]
----
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[ X ]
Amendment No. 32
[ 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
Julie A.
Tedesco
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, N.W.
Birmingham, Michigan 48009
Washington, DC 20005
[X] It is proposed that this filing will become effective
October 29, 1997
pursuant to paragraph (b) of Rule 485.
[X] This post-effective amendment designates a new
effective date for a
previously filed post-effective amendment (specifically,
Post-Effective
Amendment No. 29 as filed with the Commission on August 29, 1997.)
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, 1997 on August 28, 1997.
<PAGE>
THE MUNDER FUNDS,
INC.
CROSS-REFERENCE
SHEET
Pursuant to Rule
495(a)
Prospectus for The Munder
Funds, Inc.
(The Munder Lifestyle Funds Class A
and B Shares)
Part A
--------
<TABLE>
<CAPTION>
<S> <C>
<C>
Item
Heading
------
- ----------
1. Cover Page
Cover Page
2. Synopsis
Fund Highlights; Financial Information
3. Condensed Financial Information
Financial Information
4. General Description of Registrant
Cover Page; Fund Highlights; Fund
Choices; Structure and Management
of the Funds
5. Management of the Fund
Structure and Management of the
Funds; Fund Choices; Dividends,
Distributions and Taxes;
Performance
6. Capital Stock and Other Securities
Structure and Management of the
Funds; Purchases and Exchanges of
Shares; Redemptions of Shares;
Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered
Purchases and Exchanges of Shares
8. Redemption or Repurchase
Redemptions of Shares
9. Pending Legal Proceedings
Not Applicable
</TABLE>
THE MUNDER FUNDS,
INC.
CROSS-REFERENCE
SHEET
Pursuant to Rule
495(a)
Prospectus for The Munder
Funds, Inc.
(The Munder Lifestyle Funds
Class Y Shares)
Part A
--------
<TABLE>
<CAPTION>
<S> <C>
<C>
Item
Heading
------
- ----------
1. Cover Page
Cover Page
2. Synopsis
Fund Highlights; Financial Information
3. Condensed Financial Information
Financial Information
4. General Description of Registrant
Cover Page; Fund Highlights; Fund
Choices; Structure and Management
of the Funds
5. Management of the Fund
Structure and Management of the
Funds; Fund Choices; Dividends,
Distributions and Taxes;
Performance
6. Capital Stock and Other Securities
Structure and Management of the
Funds; Purchases and Exchanges of
Shares; Redemptions of Shares;
Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered
Purchases and Exchanges of Shares
8. Redemption or Repurchase
Redemptions of Shares
9. Pending Legal Proceedings
Not Applicable
</TABLE>
Part B
--------
(The Munder Lifestyle
Funds)
<TABLE>
<CAPTION>
<S> <C>
<C>
Item
Heading
------
- ----------
10. Cover Page
Cover Page
11. Table of Contents
Table of Contents
12. General Information and History
See Prospectus --"Structure and
Management of the Funds;" General;
Directors and Officers
13. Investment Objectives and Policies
Fund Investments; Investment Limitations;
Portfolio Transactions
14. Management of the Fund
See Prospectus --"Structure and
Management of the Funds;"
Directors and Officers;
Miscellaneous
15. Control Persons and Principal
See Prospectus --
Holders of Securities
"Structure and Management of the
Funds;" Miscellaneous
16. Investment Advisory and Other Services
Investment Advisory and Other
Service Arrangements; See
Prospectus -- " Structure and
Management of the Funds "
17. Brokerage Allocation and Other Practices
Portfolio Transactions
18. Capital Stock and Other Securities
See Prospectus --"Structure and
Management of the Funds;"
Additional Information Concerning
Shares
19. Purchase, Redemption and Pricing
Additional 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
</TABLE>
THE MUNDER FUNDS,
INC.
The purpose of this Post-Effective Amendment filing is to (i)
designate a
new effective date for a previously filed post-effective
amendment pursuant to
paragraph (b)(1)(v) of Rule 485, specifically Post-Effective
Amendment No. 29
which was filed with the Commission on August 29, 1997 pursuant to
paragraph (a)
of Rule 485 and (ii) comply with an undertaking pursuant to Item
32(b) of Form
N-1A to file a post-effective amendment containing reasonably
current financial
statements within four to six months from the effective date of
the Registration
Statement with respect to The Munder All-Season Maintenance
Fund, The Munder
All-Season Development Fund and The Munder All-Season Accumulation
Fund.
The prospectuses and statements of additional information
relating to
the Money Market Fund, Equity Selection Fund, Micro-Cap Equity
Fund, Mid-Cap
Growth Fund, Multi-Season Growth Fund, Real Estate Equity
Investment Fund,
Small-Cap Value Fund, Value Fund, International Bond Fund, Short
Term Treasury
Fund, NetNet Fund and Financial Services Fund are not
included in this
filing.
PROSPECTUS
Class A and Class B Shares
The Munder Funds, Inc. (the "Company") is an open-end
investment company.
This Prospectus describes three investment portfolios offered
by the Company
(collectively, the "Funds"):
Munder All-Season Conservative Fund
Munder All-Season Moderate Fund
Munder All-Season Aggressive Fund
This Prospectus relates only to the Class A and Class B
shares of the
Funds. The Funds are referred to as The Munder Lifestyle Funds.
Each Fund seeks
its investment objective by investing in a variety of
portfolios (the
"Underlying Funds") offered by the Company, The Munder
Framlington Funds Trust
("Framlington"), and The Munder Funds Trust (the "Trust").
Munder Capital Management (the "Advisor") serves as
investment advisor
to the Funds and to the Underlying Funds. Framlington
Overseas Investment
Management Limited (the "Sub-Advisor") serves as sub-advisor to
the Framlington
International Growth Fund, Framlington Emerging Markets Fund
and Framlington
Healthcare Fund (the "Framlington Funds"), three of the Underlying
Funds.
This Prospectus explains the objectives, policies,
risks and fees of
each Fund. You should read this Prospectus carefully before
investing and retain
it for future reference. A Statement of Additional
Information ("SAI")
describing each of the Funds has been filed with the Securities
and Exchange
Commission (the "SEC") and is incorporated by reference into
this Prospectus.
You can obtain the SAI free of charge by calling the Funds at
(800) 438-5789. In
addition, the SEC maintains a Web site (http://www.sec.gov)
that contains the
SAI and other information regarding the Funds.
Shares of the Funds and the Underlying Funds are not
deposits or
obligations of, or guaranteed or endorsed by, any bank, and are
not federally
insured or guaranteed. An investment in the Funds involves
investment risks,
including the possible loss of the principal amount invested.
There can be no assurance that a Fund's investment
objective will be
achieved. The net asset value per share of the Funds will
fluctuate in response
to changes in market conditions and other factors.
Securities offered by this Prospectus have not been approved
or disapproved
by the SEC or any state securities commission nor has the SEC
or any state
securities commission passed upon the accuracy or adequacy of
this Prospectus.
Any representation to the contrary is a criminal offense.
Call Toll-Free for Shareholder Services:
(800) 438-5789
The date of this Prospectus is _________________,
1997
<PAGE>
TABLE OF CONTENTS
Fund Highlights
What are the key facts regarding the
Funds?................................
Financial Information
Fund Choices
What Funds are
offered?....................................................
Who may want to invest in the
Funds?.......................................
What are the Funds' investments and investment
practices?..................
What are the Underlying Funds' investments and investment
practices?.......
What are the risks of investing in the
Funds?..............................
Performance
How is the Funds' performance
calculated?..................................
Where can I obtain performance
data?.......................................
Purchases and Exchanges of Shares
What share class should I choose for my
investment?........................
What price do I pay for
shares?............................................
When can I purchase
shares?................................................
What is the minimum required
investment?...................................
How can I purchase
shares?.................................................
How can I exchange
shares?.................................................
Redemptions of Shares
What price do I receive for redeemed
shares?...............................
When can I redeem
shares?..................................................
How can I redeem
shares?...................................................
When will I receive redemption
amounts?....................................
Structure and Management of the Funds
How are the Funds
structured?..............................................
Who manages and services the
Funds?........................................
What are my rights as a
shareholder?.......................................
Dividends, Distributions and Taxes
When will I receive distributions from the
Funds?..........................
How will distributions be
made?............................................
Are there tax implications of my investments in the
Funds?.................
Additional
Information.....................................................
<PAGE>
- ------------------------------------------------------------------
- ---------
FUND HIGHLIGHTS
- ------------------------------------------------------------------
- ----------
What Are the Key Facts
Regarding the Funds?
Q:.......What are the Funds' goals?
A: o The Conservative Fund (formerly, "Munder All-
Season
Maintenance Fund") seeks to provide current
income,
with capital appreciation as a secondary
objective.
o The Moderate Fund (formerly, "Munder All-
Season Development
Fund") seeks to provide high total return
through capital
appreciation and current income.
o The Aggressive Fund (formerly, "Munder All-
Season
Accumulation Fund") seeks long-term capital
appreciation.
Q: What are the Funds' strategies?
A: The Funds invest primarily in a variety of Underlying
Funds offered
by the Company, Framlington and the Trust.
Q: What are the Funds' risks?
A: A Fund's performance per share will change daily based on
many factors,
including interest rate levels, national and
international economic
conditions, general market conditions, and the
performance of the
Underlying Funds. The net asset value per share will
fluctuate in
response to these factors.
Q: What are the options for investment in the Funds?
A: This Prospectus offers two classes, Class A Shares and
Class B Shares,
of the Funds. Each Fund also offers one additional
class of shares,
Class Y Shares, which has different sales charges and
expense levels
and is offered in another Prospectus.
<TABLE>
<CAPTION>
<S> <C>
<C> <C>
Maximum Front Maximum
Class Rule 12b-1 Fees* End
Sales Load** CDSC***
Class A .30%
5.50% None****
Class B 1.00%
None 5%
<FN>
* An annual fee for distributing shares and
servicing shareholder
accounts based on the Fund's average daily net assets.
** A one-time fee charged at the time of purchase of
shares. The fee
declines based on the amount you invest.
*** A contingent deferred sales charge ("CDSC") is a one-
time fee charged
at the time of redemption. The fee declines based on the
length of time
you hold shares.
**** A CDSC of 1% is imposed on certain redemptions of
Class A Shares if
redeemed within one year of purchase.
</FN>
</TABLE>
Class B Shares convert automatically to Class A Shares
after six years.
Due to the level of Rule 12b-1 fees and the CDSC on Class B Shares
versus Class
A Shares, this conversion is to your economic benefit.
Q: How do I buy and sell shares of the Funds?
A: Funds Distributor Inc. (the "Distributor") sells shares of the
Funds. You may
purchase Class A Shares and Class B Shares from the
Distributor through
broker-dealers or other financial institutions or from the
Funds' transfer
agent, First Data Investor Services Group, Inc. ("Investor
Services Group" or
the "Transfer Agent"), by mailing the attached application
with a check to
Investor Services Group. You must invest at least $500 ($50
through the
Automatic Investment Plan) initially and at least $50 for
subsequent purchases.
Shares may be redeemed (sold back to the Fund) by mail.
You may also acquire the Funds' shares by exchanging
shares of the same
class of other funds of the Company, the Trust and Framlington
or exchanging
Class K shares of other funds of the Company, the Trust and
Framlington for
Class A Shares of the Funds. You may exchange Fund shares for
shares of the same
class of other funds of the Company, the Trust and Framlington.
Q: What shareholder privileges do the Funds offer?
A: Class A Shares Class B
Shares
-------------- ---------
- -----
Automatic Investment Plan Automatic
Investment Plan
Automatic Withdrawal Plan Automatic
Withdrawal Plan
Retirement Plans Retirement
Plans
Telephone Exchanges Telephone
Exchanges
Rights of Accumulation Reinvestment
Privileges
Letter of Intent
Quantity Discounts
Reinvestment Privilege
Q: When and how are distributions made?
A: The Funds declare dividends at least annually. The Funds
distribute capital
gains, if any, at least annually. Unless you elect to receive
distributions in
cash, all dividends and capital gain distributions of a
Fund will be
automatically used to purchase additional shares of that Fund.
Q: Who manages the Funds' assets?
A: Munder Capital Management is the investment advisor for the
Funds and the
Underlying Funds. Framlington Overseas Investment Management
Limited serves
as sub-advisor to the Framlington Funds.
- ------------------------------------------------------------------
- ---------
<PAGE>
FINANCIAL
INFORMATION
- ------------------------------------------------------------------
- -------------
- ------------------------------------------------------------------
- -------------
SHAREHOLDER TRANSACTION
EXPENSES1
- ------------------------------------------------------------------
- -------------
The purpose of this table is to assist you in
understanding the
expenses a shareholder in the Funds will bear directly.
<TABLE>
<CAPTION>
<S> <C>
<C>
Class A Class B
Shares Shares
Maximum Sales Charge
5.50% None
on Purchase2
(as a % of Offering Price)
Sales Charge Imposed
None None
on Reinvested Dividends
Maximum Deferred Sales Charge3
None4 5%
Redemption Fees
None5 None5
Exchange Fees
None None
Notes:
<FN>
1. Does not include fees which institutions may charge for
services they provide to you.
2. The sales charge declines as the amount invested
increases.
3. The CDSC payable on redemption of Class B Shares declines
over time.
4. A 1% CDSC applies to redemptions of Class A Shares
within one year of
investment that were purchased with no initial sales
charge as part of
an investment of $1,000,000 or more.
5. The Transfer Agent may charge a fee of $7.50 for wire
redemptions under $5,000.
</FN>
</TABLE>
- ------------------------------------------------------------------
- ------------
FUND OPERATING
EXPENSES
- ------------------------------------------------------------------
- ------------
The purpose of this table is to assist you in
understanding the
expenses charged directly to each Fund, which investors in the
Funds will bear
indirectly. Such expenses include payments to Trustees,
Directors, auditors,
legal counsel and service providers (such as the Advisor),
registration fees,
and distribution fees. The fees shown are estimated for the
current fiscal year.
Because of the 12b-1 fee, you may over the long term pay more than
the amount of
the maximum permitted front-end sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
<C> <C> <C>
ANNUAL FUND
OPERATING Conservative Fund
Moderate Fund Aggressive Fund
EXPENSES Class Class Class
Class Class Class
(as a % of A B A
B A B
average net assets) Shares Shares Shares
Shares Shares Shares
- ------------------- ------ ------ ------
- ------ ------ ------
Advisory Fees .35% .35% .35%
.35% .35% .35%
12b-1 Fees .30% 1.00% .30%
1.00% .30% 1.00%
Other Expenses .20% .20% .20%+
.20% .20% .20%
==== ==== =====
==== ==== ====
Total Fund
Operating Expenses .85% 1.55% .85%+
1.55% .85% 1.55%
- ---------------------
+After expense reimbursements. Without expense
reimbursements, the total
fund operating expenses an investor would pay for Class A
Shares for the
Moderate Fund would be 41.36%.
</TABLE>
In addition to the expenses shown above, shareholders of
the Funds will
indirectly bear their pro rata shares of fees and expenses
incurred by the
Underlying Funds, so that the investment returns of the Funds will
be net of the
expenses of the Underlying Funds. The table below shows total
fund operating
expenses expressed as a percentage of net assets, after any
applicable expense
reimbursements, for the Class Y Shares of each of the Underlying
Funds for their
past fiscal year. Expenses are estimated for the current
fiscal year for the
International Bond Fund, the NetNet Fund, the Micro-Cap
Equity Fund, the
Small-Cap Value Fund and the Framlington Funds. As of the
date of this
Prospectus, the Equity Selection Fund had not commenced
operations. The Funds
purchase only Class Y Shares of the Underlying Funds. Class Y
Shares are sold
without an initial sales charge.
<TABLE>
<CAPTION>
<S>
<C>
Class
Y
Shares
Accelerating Growth
Fund..............................................................
............... .95%
Equity Selection
Fund..............................................................
................ 1.00%
Growth & Income
Fund..............................................................
................. .95%
International Equity
Fund..............................................................
............ 1.01%
Micro-Cap Equity
Fund..............................................................
................ 1.25% +
Mid-Cap Growth
Fund..............................................................
.................. .99% +
Multi-Season Growth
Fund..............................................................
............. 1.00% *
NetNet
Fund..............................................................
.......................... 1.28% +
Small Company Growth
Fund..............................................................
............ .97%
Real Estate Equity Investment
Fund..............................................................
... 1.10% +
Small-Cap Value
Fund..............................................................
................. 1.13% +
Value
Fund..............................................................
........................... 1.02% +
Framlington International Growth
Fund..............................................................
1.30%
Framlington Emerging Markets
Fund..............................................................
.... 1.54%
Framlington Healthcare
Fund..............................................................
.......... 1.30%
Intermediate Bond
Fund..............................................................
............... .68%
Bond
Fund..............................................................
............................ .71%
International Bond
Fund..............................................................
.............. .89% +
U.S. Government Income
Fund..............................................................
.......... .71% +
Cash Investment
Fund..............................................................
................. .55%
Money Market
Fund..............................................................
.................... .64%
U.S. Treasury Money Market
Fund..............................................................
...... .54%
- ----------------------
<FN>
*Reflects advisory fees after waiver. Without waiver, the
Expense Ratio for
the Multi-Season Growth Fund would be 1.25%.
+The Advisor voluntarily reimbursed the Fund for
certain operating
expenses. In the absence of such expense reimbursement, the
Expense Ratio
would have been as follows: 1.21% for Mid-Cap Growth
Fund, 1.26% for
Small-Cap Value Fund, 1.06% for Value Fund, 1.27% for Real
Estate Equity
Investment Fund, 1.25% for the NetNet Fund, 5.18% for
the Framlington
Emerging Markets Fund, 7.08% for the Framlington
Healthcare Fund, 2.31%
for Framlington International Growth Fund, .93% for the
International Bond
Fund and .79% for the U.S. Government Income Fund.
</FN>
</TABLE>
- ------------------------------------------------------------------
- -------------
EXAMPLE
- ------------------------------------------------------------------
- -------------
This example shows the amount of expenses you would pay
(directly or
indirectly) on a $1,000 investment in the Fund assuming (1) a 5%
annual return
and (2) redemption at the end of the time period (including the
deduction of the
deferred. This example is not a representation of past or future
performance or
operating expenses; actual performance or operating expenses
may be larger or
smaller than those shown.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
<C> <C> <C>
Conservative
Moderate Aggressive
Fund
Fund Fund
------------------------------ -------
- ---------------- ------------------------
<PAGE>
Class Class
Class Class Class Class
A B A
B A B
Shares Shares
Shares Shares Shares Shares
1 Year
o Redemption $ 63 $ 66 $
63 $ 66 $ 63 $ 66
o No Redemption $ 63 $ 16 $
63 $ 16 $ 63 $ 16
3 Years
o Redemption $ 81 $ 79 $
81 $ 79 $ 81 $ 79
o No Redemption $ 81 $ 49 $
81 $ 49 $ 81 $ 49
5 Years
o Redemption $100 $104
$100 $104 $100 $104
o No Redemption $100 $ 84
$100 $ 84 $100 $ 84
10 Years
o Redemption $154 $195
$154 $195 $154 $195
o No Redemption $154 $185
$154 $185 $154 $185
Based on the expenses for the Funds and the Underlying
Funds shown
above, and assuming the neutral asset allocation for each Fund
set forth below,
the average weighted expense ratio for each Fund, expressed as a
percentage of
each Fund's average daily net assets, is estimated to be as
follows:
</TABLE>
<PAGE>
Expense Ratio
Class A Shares
Class B Shares
Conservative Fund..............................
Moderate Fund..................................
Aggressive Fund................................
.........The Advisor expects to reimburse expenses with respect
to the Moderate
Fund during the current fiscal year. The Advisor may discontinue
such expense
reimbursements at any time in its sole discretion.
Without expense
reimbursements, an investor in Class A Shares of the Moderate Fund
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:
$_____, $_____, $_____ and $_____. Without expense
reimbursements, the total
fund operating expenses an investor would pay for Class A
Shares for the
Moderate Fund would be 41.36%.
- ------------------------------------------------------------------
- ------------
FINANCIAL
HIGHLIGHTS
- ------------------------------------------------------------------
- ------------
The following financial highlights were audited by
Ernst & Young LLP,
independent auditors. The Conservative Fund Class A and Class
B Shares, the
Moderate Fund Class B Shares and the Aggressive Fund Class A and
Class B Shares
had not yet commenced operations on June 30, 1997. This
information should be
read in conjunction with the Funds' most recent Annual
Report, which is
incorporated by reference into the SAI. You may obtain the Annual
Report without
charge by calling (800) 438-5789.
<TABLE>
<CAPTION>
<S>
<C>
Moderate Fund Class A
(a,d)
- -------------------------
- -------------------------
Period
Ended
6/30/97
Net asset value, beginning of period
$ 10.00
- -------
Income from investment operations:
Net investment income
0.04
Net realized and unrealized gain on investments
0.98
- -------
Total from investment operations
1.02
Less distributions:
Dividends from net investment income
- --
Total distributions
.............................................. --
- -----
Net asset value, end of period
$ 11.02
=======
Total return (c)
.................................................
10.20%
========
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)
...................... $ 214
Ratio of operating expenses to average net assets
............. 0.85% (b)
Ratio of net investment income to
average net assets
.......................................... 2.22% (b)
Portfolio turnover
rate........................................... 5%
Ratio of operating expenses to
average net assets without expenses reimbursed
........... 41.36% (b)
- -----------------------------
<FN>
(a) The All-Season Moderate Fund Class A Shares commenced
operations on April 4, 1997.
(b) Annualized.
(c) Total return represents aggregate total return for the
period indicated and does not reflect any
applicable sales charges.
(d) The Fund is authorized to issue Class B Shares. As of
June 30, 1997,
the Fund had not commenced selling Class B Shares.
</FN>
</TABLE>
- ------------------------------------------------------------------
- ------------
FUND CHOICES
- ------------------------------------------------------------------
- ------------
What Funds are
Offered?
This Prospectus describes Class A Shares and Class B
Shares of the
Conservative Fund, the Moderate Fund and the Aggressive Fund.
This section
summarizes each Fund's goal and principal investments. The
section entitled
"What are the Risks of Investing in the Funds?" and the
SAI give more
information about the Funds' investment techniques and risks.
- ------------------------------------------------------------------
- -----------
CONSERVATIVE FUND
- ------------------------------------------------------------------
- -----------
The Fund's primary goal is to provide current income
with capital
appreciation as a secondary objective. The Fund invests in
Underlying Funds that
invest primarily in Fixed Income Securities. "Fixed Income
Securities" include
corporate bonds, debentures, notes and other similar corporate
debt instruments,
zero coupon bonds (discount debt obligations that do not make
interest payments)
and variable amount master demand notes that permit the amount of
indebtedness
to vary in addition to providing for periodic adjustments in the
interest rates.
The Fund may also invest in Underlying Funds that invest
primarily in Equity
Securities and may hold assets in cash or Cash Equivalents.
"Equity Securities"
include common stocks, preferred stocks, warrants and
other securities
convertible into common stock. "Cash Equivalents" are
instruments which are
highly liquid and virtually free of investment risk.
- ------------------------------------------------------------------
- ------------
MODERATE FUND
- ------------------------------------------------------------------
- ------------
The Fund's goal is to provide high total return through
both capital
appreciation and current income. The Fund invests in
Underlying Funds that
invest primarily in Equity Securities and Fixed Income Securities.
The Fund may
also hold assets in cash or Cash Equivalents. The Fund offers
greater potential
for capital appreciation than does the Conservative Fund by virtue
of its larger
investment in those Underlying Funds which invest
primarily in Equity
Securities, while also offering greater potential for investment
income.
<PAGE>
- ------------------------------------------------------------------
- ------------
AGGRESSIVE FUND
- ------------------------------------------------------------------
- ------------
The Fund's goal is to provide long-term capital
appreciation. The Fund
invests in Underlying Funds that invest primarily in Equity
Securities. The Fund
may also invest in Underlying Funds that invest in Fixed Income
Securities and
may hold some assets in cash or Cash Equivalents.
Who May Want To Invest in the Funds?
The Funds are designed for investors who desire a balance
of both capital
appreciation and income. Each Fund represents a varying
combination of these two
goals. Depending on the Fund or Funds you choose, risk of loss
will be greater
or lesser based on the Funds' goals and objectives.
What are the Funds' Investments and Investment
Practices?
The Funds will invest their assets in the following
Underlying Funds,
within the ranges (expressed as a percentage of each Fund's
assets) indicated
below:
<TABLE>
<CAPTION>
<S> <C> <C>
<C> <C> <C> <C>
Conservative Fund
Moderate Fund Aggressive Fund
Minimum Maximum
Minimum Maximum Minimum Maximum
Equity Funds
Accelerating Growth Fund............ 0% 5%
0% 10% 0% 15%
Equity Selection Fund............... 0% 10%
0% 20% 0% 30%
Framlington Emerging
Markets Fund................... 0% 5%
0% 10% 0% 15%
Framlington Healthcare Fund......... 0% 5%
0% 5% 0% 10%
Framlington International
Growth Fund.................... 0% 5%
0% 10% 0% 15%
Growth & Income Fund................ 0% 10%
0% 15% 0% 20%
International Equity Fund........... 0% 5%
0% 10% 0% 15%
Micro-Cap Equity Fund............... 0% 5%
0% 5% 0% 5%
Mid-Cap Growth Fund................. 0% 5%
0% 10% 0% 15%
Multi-Season Growth Fund............ 0% 20%
0% 30% 0% 40%
NetNet Fund......................... 0% 5%
0% 5% 0% 5%
Real Estate Equity
Investment Fund................ 0% 10%
0% 20% 0% 25%
Small-Cap Value Fund................ 0% 10%
0% 20% 0% 30%
Small Company Growth Fund........... 0% 10%
0% 20% 0% 30%
Value Fund.......................... 0% 20%
0% 30% 0% 40%
Fixed Income Funds
Bond Fund 0% 80%
0% 50% 0% 30%
Intermediate Bond Fund.............. 0% 80%
0% 50% 0% 30%
International Bond Fund............. 0% 30%
0% 20% 0% 10%
U.S. Government Income
Fund........................... 0% 60%
0% 40% 0% 20%
Money Market Funds
Cash Investment Fund................ 0% 10%
0% 10% 0% 10%
Money Market Fund................... 0% 10%
0% 10% 0% 10%
U.S. Treasury Money Market
Fund........................... 0% 10%
0% 10% 0% 10%
</TABLE>
While the Advisor intends to invest each Fund's
assets in the
Underlying Funds within the ranges set forth above, and to adjust
periodically
the allocations in response to economic and market conditions,
each Fund has a
"neutral mix" representing the intended typical allocations of the
Fund's assets
over time.
Each Fund's neutral asset allocation is expected to be as
follows:
<TABLE>
<CAPTION>
<S> <C>
<C> <C>
Conservative Fund
Moderate Fund Aggressive Fund
Equity Funds........................ 25%
60% 85%
Fixed Income Funds.................. 70%
35% 15%
Money Market Funds and
Cash........................... 5%
5% 0%
</TABLE>
Each Fund's investments are concentrated in the
Underlying Funds, and
the investment performance of each Fund is directly related to
the performance
of the Underlying Funds in which it invests. See "What are the
Underlying Funds'
Investments and Investment Practices?" for a description of
the Underlying
Funds.
In addition to shares of the Underlying Funds, each
Fund may invest
cash balances in repurchase agreements and other money market
investments to
maintain liquidity in an amount to meet expenses or for day-to-
day operating
purposes.
When the Advisor believes that market conditions
warrant, a Fund may
adopt a temporary defensive position and may invest without
limit in money
market securities denominated in U.S. dollars or in the currency
of any foreign
country.
What are the Underlying Funds' Investments and Investment
Practices?
- ------------------------------------------------------------------
- ------------
ACCELERATING GROWTH
FUND
- ------------------------------------------------------------------
- ------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to
provide long-term
capital appreciation; its secondary goal is to provide income.
Under normal
conditions, the Fund will invest at least 65% of its
assets in Equity
Securities.
In choosing Equity Securities the Advisor
considers, among other
factors:
o the potential for accelerated earnings growth
o the maintenance of a substantial competitive advantage
o a focused management team
o a stable balance sheet
PORTFOLIO MANAGEMENT. A committee of professional
portfolio managers
employed by the Advisor makes investment decisions for the Fund.
- ------------------------------------------------------------------
- --------
EQUITY SELECTION
FUND
- ------------------------------------------------------------------
- --------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to
provide shareholders
with long-term capital appreciation.
Under normal market conditions, the Fund will invest at
least 65% of its
assets in Equity Securities.
The Advisor's dedicated research team invests the Fund's
assets in Equity
Securities which it believes are of high quality and
undervalued compared
to stocks of other companies in the same industry.
The Fund generally invests in issuers with market
capitalizations of at
least $3 billion.
The Fund diversifies its assets by industry in
approximately the same
weightings as those of the Standard & Poor's 500 Composite
Stock Price
Index ("S&P 500").
PORTFOLIO MANAGEMENT. A committee of professional
portfolio managers
employed by the Advisor makes investment decisions for the Fund.
- ------------------------------------------------------------------
- -------------
FRAMLINGTON EMERGING
MARKETS FUND
- ------------------------------------------------------------------
- ------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
long-term capital
appreciation. The Fund invests at least 65% of its assets in
companies in
emerging market countries, as defined by the World Bank, the
International
Finance Corporation, the United Nations or the European Bank for
Reconstruction
and Development.
A company will be considered to be in an emerging market
country if:
the company is organized under the laws of, or has a
principal office in,
an emerging market country the company's stock is traded
primarily in an
emerging market country, most of the company's assets are
in an emerging
market country, or most of the company's revenues or
profits come from
goods produced or sold, investments made or services
performed in an emerging market country.
PORTFOLIO MANAGEMENT. William Calvert is the Fund's
primary portfolio
manager. Prior to joining the Sub-Advisor, Mr. Calvert was
an Economic
Strategist for LCF Edmond de Rothschild Securities (1993-1997),
Vice President
Emerging Markets for Citibank Global Asset Management (1993) and
Far East Fund
Manager for Municipal Mutual Insurance (1989-1992).
- ------------------------------------------------------------------
- ------------
FRAMLINGTON HEALTHCARE
FUND
- ------------------------------------------------------------------
- ------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
long-term capital
appreciation by investing in companies providing healthcare and
medical services
and products worldwide. Currently, most of such companies are
located in the
United States.
The Fund will invest in:
pharmaceutical producers
biotechnology firms
medical device and instrument manufacturers distributors
of healthcare
products healthcare providers and managers other
healthcare service
companies
Under normal conditions, the Fund will invest at
least 65% of its
assets in healthcare companies, which are companies for which
at least 50% of
sales, earnings or assets arise from or are dedicated to
health services or
medical technology activities.
PORTFOLIO MANAGEMENT. Antony Milford is the head of the
Specialist Desk for
the Sub-Advisor. He is the Fund's primary portfolio manager, a
position he has
held since the Fund's inception. Mr. Milford has managed
funds for the
Sub-Advisor since 1971.
- ------------------------------------------------------------------
- ------------
FRAMLINGTON INTERNATIONAL
GROWTH FUND
- ------------------------------------------------------------------
- ------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
long-term capital
appreciation. Under normal market conditions, at least 65% of the
Fund's assets
will be invested in Equity Securities in at least three foreign
countries.
The Sub-Advisor will choose companies that demonstrate:
above-average profitability
high quality management
the ability to grow significantly in their countries
PORTFOLIO MANAGEMENT. A committee of professional
portfolio managers
employed by the Sub-Advisor makes investment decisions for the
Fund. Simon Key,
Chief Investment Officer of the Sub-Advisor, heads the Committee.
- ------------------------------------------------------------------
- -------------
GROWTH & INCOME
FUND
- ------------------------------------------------------------------
- -------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to
provide capital
appreciation and current income. It primarily invests in a
broadly diversified
portfolio of dividend-paying Equity Securities and is designed
for investors
seeking current income and capital appreciation from the equity
markets.
Under normal circumstances, the Fund will invest at
least 65% of its
assets in income-producing common stocks and convertible
preferred stocks.
The Fund may also purchase Fixed Income Securities' which
are convertible
into or exchangeable for common stock.
The Fund may invest up to 35% of its assets in Fixed
Income Securities,
including 20% of its assets in Fixed Income Securities that
are rated below
investment grade.
The Advisor generally selects large, well-known
companies that it
believes have favorable prospects for dividend growth and capital
appreciation.
The Fund will seek to produce a current yield greater than the S&P
500.
The Fund focuses on dividend-paying Equity Securities
because, over
time, dividend income has accounted for a significant
portion of the total
return of the S&P 500. In addition, dividends are usually a
more stable and
predictable source of return than capital appreciation. The
Advisor believes
that stocks which distribute a high level of current income
generally have more
stable prices than those which pay below average dividends.
PORTFOLIO MANAGEMENT. Otto Hinzmann, Jr. is the Fund's
portfolio manager, a
position he has held since February 1995. Mr. Hinzmann has been a
Vice President
and Director of Equity Management of the Advisor or MCM since
January 1987.
- ------------------------------------------------------------------
- -------------
INTERNATIONAL EQUITY
FUND
- ------------------------------------------------------------------
- -------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
long-term capital
appreciation. The Fund invests primarily in foreign
securities, American
Depositary Receipts ("ADRs") and European Depositary Receipts
("EDRs"). At least
once a quarter, the Advisor creates a list of foreign securities,
ADRs and EDRs
(the "Securities List") which the Fund may purchase based on the
country where
the company is located, its competitive advantages, its past
financial record,
its future prospects for growth and the market for its
securities. The Advisor
updates the Securities List frequently (but at least
quarterly), adds new
securities to the Securities List if they are eligible and sells
securities not
on the updated Securities List as soon as practicable.
After the Advisor creates the Securities List, it divides
the list into
two sections. The first section is designed to provide broad
coverage of
international markets. The second section increases exposure to
securities that
the Advisor expects will perform better than other stocks in
their industry
sectors and their markets as a whole. When the Advisor believes
broader market
exposure will benefit the Fund, it will allocate up to 80% of the
Fund's assets
in first section securities. When the Advisor identifies strong
potential for
specific securities to perform well, the Fund may invest up to 50%
of its assets
in second section securities.
Under normal market conditions, at least 65% of the
Fund's assets are
invested in Equity Securities in at least three foreign
countries.
The Fund emphasizes companies with a market
capitalization of at least
$100 million.
PORTFOLIO MANAGEMENT. Todd B. Johnson and Theodore Miller
jointly manage
the Fund. Mr. Johnson, a Chief Investment Officer of the
Advisor, and Mr.
Miller, senior portfolio manager of the Fund, have managed the
Fund since July
1992 and October 1996, respectively. Mr. Miller previously worked
as the primary
analyst for the Fund (1996) and for Interacciones Global Inc.
(1993-1995) and
McDonald & Co. Securities Inc. (1991-1993).
- ------------------------------------------------------------------
- ---------
<PAGE>
MICRO-CAP EQUITY
FUND
- ------------------------------------------------------------------
- ----------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
long-term capital
appreciation. It invests primarily in Equity Securities
of smaller
capitalization companies. The Fund attempts to provide
investors with
potentially higher returns than a fund that invests primarily
in larger more
established companies. Since smaller capitalization companies are
generally not
as well known to investors and have less of an investor
following than larger
companies, they may provide higher returns due to
inefficiencies in the
marketplace.
Under normal market conditions, the Fund will invest at
least 65% of its
assets in Equity Securities of companies having a market
capitalization of
$200 million or less, which is considerably less
than the market
capitalization of S&P 500 companies.
......... The Advisor will choose companies that:
present the ability to grow significantly over the next
several years may
benefit from changes in technology, regulations and industry
sector trends
are still in the developmental stage and may have limited
product lines
PORTFOLIO MANAGEMENT. A committee of professional
portfolio managers
employed by the Advisor makes investment decisions for the Fund.
- ------------------------------------------------------------------
- -------------
MID-CAP GROWTH
FUND
- ------------------------------------------------------------------
- -------------
GOAL AND OBJECTIVES. The Fund's goal is to provide
long-term capital
appreciation. The Fund invests at least 65% of its assets
in the Equity
Securities of companies with market capitalizations between $100
million and $5
billion. Its style, which focuses on both growth prospects and
valuation, is
known as GARP (Growth at a Reasonable Price) and seeks to
produce attractive
returns during various market environments.
The Advisor chooses the Fund's investments as
follows: The Advisor
reviews the earnings growth of approximately 10,000 companies
over the past
three years. It invests in approximately 50 to 100 companies based
on:
superior earnings growth
financial stability
relative market value
price changes compared to the Standard & Poor's Mid-Cap 400
Index
PORTFOLIO MANAGEMENT. A committee of professional
portfolio managers
employed by the Advisor makes investment decisions for the Fund.
- ------------------------------------------------------------------
- ------------
<PAGE>
MULTI-SEASON GROWTH
FUND
- ------------------------------------------------------------------
- ------------
GOAL AND OBJECTIVES. The Fund's goal is to provide
long-term capital
appreciation. This goal is "fundamental" and cannot be
changed without
shareholder approval. Its style, which focuses on both growth
prospects and
valuation, is known as GARP (Growth at a Reasonable Price) and
seeks to produce
attractive returns during various market environments. The Fund
invests at least
65% of its assets in Equity Securities. The Fund generally
invests in Equity
Securities with market capitalizations over $1 billion.
The Advisor chooses the Fund's investments as
follows: The Advisor
reviews the earnings growth of approximately 5,500 companies over
the past five
years. It invests in approximately 50 to 100 companies based on:
superior earnings growth
financial stability
relative market value
price changes compared to the S&P 500
PORTFOLIO MANAGEMENT. The portfolio managers of the Fund,
Leonard J. Barr
II and Lee P. Munder, have managed the Fund since its
inception in February
1995. Mr. Barr is the Senior Vice President and Director of
Research of the
Advisor. From April 1988 to February 1995 he held similar
positions with MCM.
Mr. Munder is the President and Chief Executive Officer of
the Advisor,
positions he has held with the Advisor or MCM since 1985.
- ------------------------------------------------------------------
- ------------
NETNET FUND
- ------------------------------------------------------------------
- ------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to
provide long term
capital appreciation. Under normal conditions, the Fund will
invest at least 65%
of its assets in equity securities.
In choosing which companies' stock the Fund should
purchase, the
Advisor will invest in those companies listed on U.S. securities
exchanges or
NASDAQ which are engaged in the research, design, development or
manufacturing,
or engaged to a significant extent in the business of
distributing products,
processes or services for use with Internet or Intranet related
businesses. The
Internet is a world-wide network of computers designed to permit
users to share
information and transfer data quickly and easily. The World
Wide Web ("WWW"),
which is a means of graphically interfacing with the Internet,
is a hyper-text
based publishing medium containing text, graphics,
interactive feedback
mechanisms and links within WWW documents and to other WWW
documents. An
Intranet is the application of WWW tools and concepts to a
company's internal
documents and databases.
PORTFOLIO MANAGEMENT. A committee of professional
portfolio managers
employed by the Advisor makes investment decisions for the Fund.
- ------------------------------------------------------------------
- ------------
REAL ESTATE EQUITY
INVESTMENT FUND
- ------------------------------------------------------------------
- ------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
both capital
appreciation and current income. This goal is "fundamental"
and cannot be
changed without shareholder approval. The Fund invests
primarily in U.S.
companies which are principally engaged in the real estate
industry or which own
significant real estate. A company is "principally engaged" in
the real estate
industry if at least 50% of its assets, gross income or net
profits are
attributable to ownership, construction, management or sale of
residential,
commercial or industrial real estate. The Fund will not own
real estate
directly.
Under normal conditions, the Fund will invest at least
65% of its total
assets in Equity Securities of U.S. companies in the real
estate industry
including:
equity real estate investment trusts ("REITS")
brokers, home builders and real estate developers
companies with substantial real estate holdings (for
example, paper and
lumber producers, hotels and entertainment companies)
manufacturers and distributors of building supplies
mortgage REITS
financial institutions which issue or service mortgages
......... In addition, the Fund may invest:
up to 35% of its assets in companies other than real
estate industry
companies in investment grade Fixed Income Securities,
including up to 5%
of its
assets in debt securities rated below or unrated if secured
by real estate
assets if the Advisor believes that the underlying
collateral is
sufficient.
in REITS only if they are traded on a securities exchange or
NASDAQ
PORTFOLIO MANAGEMENT. Peter K. Hoglund is the portfolio
manager of the
Fund, a position he has held since October 1996. Mr. Hoglund
formerly was the
primary analyst of the Fund (October 1994 to October 1996).
- ------------------------------------------------------------------
- -----------
SMALL-CAP VALUE
FUND
- ------------------------------------------------------------------
- -----------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
long-term capital
appreciation, with income as a secondary objective. It invests
primarily in
Equity Securities of smaller capitalization companies. The
Fund attempts to
provide investors with potentially higher returns than a
fund that invests
primarily in larger more established companies. Since small
companies are
generally not as well known to investors and have less of an
investor following
than larger companies, they may provide higher returns due to
inefficiencies in
the marketplace.
Under normal market conditions, the Fund will invest at
least 65% of its
assets in Equity Securities of companies with market
capitalizations below
$750 million, which is less than the market
capitalization of S&P 500
companies.
......... The Advisor will concentrate on companies that
it believes are
undervalued. A company's Equity Securities may be undervalued
because it is
temporarily overlooked or out of favor due to general economic
conditions, a
market decline, industry conditions or developments affecting
the particular
company. The Fund will usually invest in Equity Securities of
companies with low
price/earnings ratios, low price/cash flow ratios and low
price/book values
compared to the general market.
In addition to valuation, the Advisor considers these
factors, among
others, in choosing companies:
a stable or improving earnings record sound finances above-
average growth
prospects participation in a fast growing industry
strategic niche
position in a specialized market adequate capitalization
PORTFOLIO MANAGEMENT. Gerald Seizert and Edward Eberle
jointly manage the
Fund. Mr. Seizert has managed the Fund since it commenced
operations. Prior to
joining the Advisor in 1995, Mr. Seizert was a Director and
Managing Partner of
Loomis, Sayles & Company, L.P. Mr. Eberle, who has managed the
Fund since March
1997, was formerly the primary analyst for the Fund. Prior
to joining the
Advisor in 1995, he was an Executive Vice President and
Portfolio Manager for
Westpointe Financial Corporation.
- ------------------------------------------------------------------
- -------------
SMALL COMPANY GROWTH
FUND
- ------------------------------------------------------------------
- -------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
long-term capital
appreciation. The Fund invests primarily in Equity
Securities of smaller
capitalization companies. The Fund attempts to provide
investors with
potentially higher returns than a fund that invests primarily
in larger more
established companies. Since smaller capitalization companies are
generally not
as well-known to investors and have less of an investor
following than larger
companies, they may provide higher returns due to
inefficiencies in the
marketplace.
Under normal market conditions, the Fund will invest at
least 65% of the
Fund's assets in Equity Securities of companies with market
capitalizations
below $750 million, which is less than the market
capitalization of S&P 500
companies.
The Advisor considers these factors, among others, in
choosing companies:
above-average growth prospects
participation in a fast-growing industry
strategic niche position in a specialized market
adequate capitalization
PORTFOLIO MANAGEMENT. Carl Wilk and Michael P. Gura
jointly manage the
Fund. Mr. Wilk, a Senior Portfolio Manager of the Advisor, has
managed the Fund
since October 1996 and was the Fund's primary analyst (1995 to
1996). Prior to
joining the Advisor in 1995, Mr. Wilk was a Senior Equity
Research Analyst at
Woodbridge. Mr. Gura has managed the Fund since March 1997. Prior
to joining the
Advisor in 1995, Mr. Gura was a Vice President, Senior Equity
Analyst for
Woodbridge (1994 - 1995) and an investment officer for
Manufacturers National
Bank Trust (1989 - 1994).
- ------------------------------------------------------------------
- -------------
<PAGE>
VALUE FUND
- ------------------------------------------------------------------
- -------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
long-term capital
appreciation, with income as a secondary objective. The Fund
invests primarily
in the Equity Securities of well-established companies with
intermediate to
large capitalizations, which typically exceed $750 million.
The Fund will invest at least 65% of its assets in Equity
Securities.
The Advisor will concentrate on companies that it
believes are
undervalued. A company's Equity Securities may be undervalued
because it is
temporarily overlooked or out of favor due to general economic
conditions, a
market decline, industry conditions or developments affecting
the particular
company. The Fund will usually invest in Equity Securities of
companies with low
price/earnings ratios, low price/cash flow ratios and low
price/book values
compared to the general market.
In addition to valuation, the Advisor considers these
factors, among
others, in choosing companies:
a stable or improving earnings record sound finances above-
average growth
prospects participation in a fast growing industry
strategic niche
position in a specialized market adequate capitalization
PORTFOLIO MANAGEMENT. Gerald Seizert and Edward Eberle
jointly manage the
Fund. Mr. Seizert, an Executive Vice President and Chief
Investment Officer of
the Advisor, has managed the Fund since it commenced
operations. Prior to
joining the Advisor in 1995, Mr. Seizert was a Director and
Managing Partner of
Loomis, Sayles & Company, L.P. Mr. Eberle, who has managed
the Fund since
October 1996, was formerly the primary analyst for the Fund.
Prior to joining
the Advisor in 1995, he was an Executive Vice President and
Portfolio Manager
for Westpointe Financial Corporation.
- ------------------------------------------------------------------
- ------------
BOND FUND
- ------------------------------------------------------------------
- ------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to
provide a high level
of current income and, secondarily, capital appreciation.
Under normal market conditions, at least 65% of the Fund's
assets will be
invested in Fixed Income Securities.
The Fund's dollar-weighted average maturity will generally
be between six
and 15 years.
PORTFOLIO MANAGEMENT. James C. Robinson and Gregory A. Prost
jointly manage
the Fund. Mr. Robinson and Mr. Prost have managed the Fund since
March 1995 and
May 1995, respectively. Mr. Robinson has been a Vice
President and Chief
Investment Officer of the Advisor or MCM since 1987. Mr. Prost has
been a Senior
Fixed Income Portfolio of the Advisor or MCM since 1985. Prior
to joining the
Advisor, he was a Vice President and Senior Fund Manager for
First of America
Investment Corp.
- ------------------------------------------------------------------
- ------------
INTERMEDIATE BOND
FUND
- ------------------------------------------------------------------
- ------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a
competitive rate
of return which, over time, exceeds the rate of inflation
and the return
provided by money market instruments.
Under normal conditions, at least 65% of the Fund's
assets will be
invested in Fixed Income Securities. The Fund's dollar-
weighted average
maturity will generally be between three and eight years.
PORTFOLIO MANAGEMENTS. Anne K. Kennedy and James C. Robinson
jointly manage
the Fund. Ms. Kennedy, Vice President and Director of Corporate
Bond Trading of
the Advisor or MCM since 1991, has managed the Fund since
March 1995. Mr.
Robinson, Vice President and Chief Investment Officer of the
Advisor or MCM
since 1987, has managed the Fund since March 1995.
- ------------------------------------------------------------------
- ------------
INTERNATIONAL BOND
FUND
- ------------------------------------------------------------------
- ------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to realize
a competitive
total return through a combination of current income and capital
appreciation.
Under normal market conditions, at least 65% of the Fund's
assets will be
invested in Fixed Income Securities of issuers in at least three
countries other
than the United States. The Fund's dollar-weighted average
maturity will
generally be between three and 15 years. The Fund will invest
mostly in
foreign debt obligations issued by foreign governments and
their agencies,
instrumentalities or political subdivisions debt securities issued
or guaranteed
by supra-national organizations, such as the World Bank debt
securities of banks
or bank holding companies corporate debt securities other
debt securities,
including those convertible into foreign stock.
PORTFOLIO MANAGEMENT. Gregory A. Prost and Sharon E. Fayolle
jointly manage
the Fund. Mr. Prost, Senior Fixed Income Portfolio Manager of
the Advisor or
MCM, has managed the Fund since October 1996. Prior to joining
MCM in 1995, he
was a Vice President and Senior Fund Manager for First of
America Investment
Corp. Ms. Fayolle, Vice President and Director of Money Market
Trading for the
Advisor, has managed the Fund since October 1996. Prior to
joining the Advisor
in 1996, she was a European Portfolio Manager for Ford Motor
Company.
- ------------------------------------------------------------------
- ------------
U.S. GOVERNMENT INCOME
FUND
- ------------------------------------------------------------------
- ------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
high current
income.
Under normal market conditions, at least 65% of the Fund's
assets will be
invested in U.S. government obligations. The Fund's dollar-
weighted average
maturity will generally be between six and 15 years.
PORTFOLIO MANAGEMENT. James C. Robinson and Peter G. Root
jointly manage
the Fund. Mr. Robinson, Vice President and Chief Investment
Officer of the
Advisor or MCM since 1987, and Mr. Root, Vice President and
Director of
Government Securities Trading of the Advisor since March 1995,
have managed the
Fund since March 1995. Mr. Root joined MCM in 1991.
- ------------------------------------------------------------------
- ------------
CASH INVESTMENT
FUND
- ------------------------------------------------------------------
- ------------
The Fund's primary goal is as high a level of current
interest income as is
consistent with maintaining liquidity and stability of
principal. The Fund
invests in a broad range of short-term, high quality, U.S.
dollar-denominated
instruments.
- ------------------------------------------------------------------
- ------------
U.S. TREASURY MONEY
MARKET FUND
- ------------------------------------------------------------------
- ------------
The Fund's goal is to provide as high a level of current
interest income
as is consistent with maintaining liquidity and stability of
principal.
The Fund invests its assets solely in short-term bonds,
bills and notes
issued by the U.S. Treasury (including "stripped"
securities), and in
repurchase agreements relating to such obligations.
- ------------------------------------------------------------------
- ------------
MONEY MARKET FUND
- ------------------------------------------------------------------
- ------------
The Fund's goal is to provide current income
consistent with the
preservation of capital and liquidity. The Fund invests
its assets in a
broad range of short-term, high quality, U.S. dollar
denominated
instruments, such as bank, commercial and other
obligations (including
Federal, state and local government obligations) that are
available in the
money markets.
General Information
Each Equity Fund invests primarily in Equity Securities,
which includes
common stocks, preferred stocks, warrants and other securities
convertible into
common stocks. Many of the common stocks the Funds (other than
Growth & Income
Fund) will buy will not pay dividends; instead, stocks will be
bought for the
potential that their prices will increase, providing capital
appreciation for
the Fund. The value of Equity Securities will fluctuate due to
many factors,
including the past and predicted earnings of the issuer, the
quality of the
issuer's management, general market conditions, the forecasts
for the issuer's
industry and the value of the issuer's assets. Holders of Equity
Securities only
have rights to value in the company after all debts have been
paid, and they
could lose their entire investment in a company that
encounters financial
difficulty. Warrants are rights to purchase securities at a
specified time at a
specified price.
Each Fund and each Underlying Fund may invest in Cash
Equivalents,
which are high-quality, short-term money market instruments
including, among
other things, commercial paper, bankers' acceptances and
negotiable certificates
of deposit of banks or savings and loan associations, short-
term corporate
obligations and short-term securities issued by, or guaranteed
by, the U.S.
Government and its agencies or instrumentalities. These
instruments will be used
primarily pending investment, to meet anticipated redemptions or
as a temporary
defensive measure.
All Funds and Underlying Funds may enter into
Repurchase Agreements.
Under a repurchase agreement, a fund agrees to purchase securities
from a seller
and the seller agrees to repurchase the securities at a later
time, typically
within seven days, at a set price. The seller agrees to set aside
collateral at
least equal to the repurchase price. This ensures that the fund
will receive the
purchase price at the time it is due, unless the seller
defaults or declares
bankruptcy, in which event the fund will bear the risk of
possible loss due to
adverse market action or delays in liquidating the underlying
obligation. With
respect to the Money Market Funds, the securities held subject
to a repurchase
agreement may have stated maturities exceeding 397 days provided
the repurchase
agreement itself matures in 397 days.
The Equity Funds may purchase ADRs, Global Depositary
Receipts ("GDRs")
and EDRs. ADRs are issued by U.S. financial institutions and
EDRs and GDRs are
issued by European financial institutions. They are
receipts evidencing
ownership of underlying Foreign Securities.
The Underlying Funds may buy shares of registered Money
Market Funds.
The Underlying Funds will bear a portion of the expenses of
any investment
company whose shares they purchase, including operating costs
and investment
advisory, distribution and administration fees. These
expenses would be in
addition to a Fund's own expenses. Each Underlying Fund may
invest up to 10% of
its assets in other investment companies and no more than 5% of
its assets in
any one investment company.
All Underlying Funds may purchase Fixed Income
Securities. Fixed Income
Securities are securities which either pay interest at set times
at either fixed
or variable rates, or which realize a discount upon maturity.
Fixed Income
Securities include corporate bonds, debentures, notes and
other similar
corporate debt instruments, zero coupon bonds (discount debt
obligations that do
not make interest payments) and variable amount master demand
notes that permit
the amount of indebtedness to vary in addition to providing
for periodic
adjustments in the interest rate. Each Underlying Fund may
purchase U.S.
Government Securities, which are securities issued by, or
guaranteed by, the
U.S. Government or its agencies or instrumentalities. Such
securities include
U.S. Treasury bills, which have initial maturities of less than
one year, U.S.
Treasury notes, which have initial maturities of one to ten years,
U.S. Treasury
bonds, which generally have initial maturities of greater than
ten years, and
obligations of the Federal Home Loan Mortgage Corporation,
Federal National
Mortgage Association and Government National Mortgage Association.
All Underlying Funds may Borrow Money in an amount
up to 5% of its
assets for temporary purposes and in an amount up to 33 1/3% of
its assets to
meet redemptions. This is a "fundamental" policy which only can
be changed by
shareholders.
All of the Funds, other than the International
Bond Fund, are
classified as "diversified funds." With respect to 75% of
each diversified
Fund's assets, each diversified fund cannot invest more than 5% of
its assets in
one issuer (other than the U.S. Government and its
agencies and
instrumentalities). In addition, each diversified fund cannot
invest more than
25% of its assets in a single issuer. These restrictions do
not apply to the
International Bond Fund.
Each Money Market Fund will invest primarily in Eligible
Securities (as
defined by the SEC) with remaining maturities of 397 days or less
as defined by
the SEC (although securities subject to repurchase agreements,
variable and
floating rate securities and certain other securities may
bear longer
maturities), and the dollar-weighted average portfolio maturity
of each Money
Market Fund will not exceed 90 days. Eligible Securities consist
of securities
that are determined by the Advisor, under guidelines established
by the Boards
of Trustees and Directors, to present minimal credit risk.
<PAGE>
Investment Charts
These charts summarize the Underlying Funds' investments
and investment
practices. The SAI contains more details. All percentages
are based on an
Underlying Fund's total assets except where otherwise noted. See
"What are the
Risks of Investing in the Funds?" for a description of the risks
involved with
the Underlying Funds' investment practices.
<TABLE>
<CAPTION>
<S> <C> <C>
<C> <C> <C>
- ------------------------------------------------------------------
- ---------------------------------------------------------------
EQUITY
FUNDS
- ------------------------------------------------------------------
- ---------------------------------------------------------------
------------------------------------------ ------------- --------
- ------ ------------- -------------- ----------------
Framling- Framlington
Acceler-
ton Framling- Inter-national
Investments and ating Equity
Emerging ton Growth
Investment Practices Growth
Selection Markets Healthcare
------------------------------------------ ------------- --------
- ------ ------------- -------------- ----------------
------------------------------------------ ------------- --------
- ------ ------------- -------------- ----------------
Foreign Securities. Includes
securities issued by non-U.S.
companies. Present more risks than 25% 25%
Y Y Y
U.S. securities.
------------------------------------------ ------------- --------
- ------ ------------- -------------- ----------------
------------------------------------------ ------------- --------
- ------ ------------- -------------- ----------------
Lower-Rated Debt Securities. Fixed
income securities which are rated
below investment grade by Standard & Y Y
Y Y Y
Poor's Ratings Service, Moody's
Investors Service Inc. or other
nationally recognized rating
agency. Considered riskier than
investment grade securities.
------------------------------------------ ------------- --------
- ------ ------------- -------------- ----------------
------------------------------------------ ------------- --------
- ------ ------------- -------------- ----------------
Investment-Grade Asset Backed
Securities. Includes debt N N
N N N
securities backed by mortgages,
installment sales contracts and
credit card receivables.
------------------------------------------ ------------- --------
- ------ ------------- -------------- ----------------
------------------------------------------ ------------- --------
- ------ ------------- -------------- ----------------
Stripped Securities. Includes
participations in trusts that hold
U.S. Treasury and agency securities N N
N N N
which represent either the interest
payments or principal payments on
the securities or combinations of
both.
------------------------------------------ ------------- --------
- ------ ------------- -------------- ----------------
------------------------------------------ ------------- --------
- ------ ------------- -------------- ----------------
Forward Foreign Currency Exchange
Contracts. Obligations of a Fund to
purchase or sell a specific currency
at a future date at a set price. Y Y
Y Y Y
May decrease a Fund's loss due to a
change in currency value, but also
limits gains from currency changes.
------------------------------------------ ------------- --------
- ------ ------------- -------------- ----------------
------------------------------------------ ------------- --------
- ------ ------------- -------------- ----------------
When-Issued and Delayed Delivery
Securities. Securities purchased at
a set price, with delivery and Y Y
Y Y Y
payment in the future. The value of
securities may change between the
time the price is set and payment.
Not to be used for speculation.
------------------------------------------ ------------- --------
- ------ ------------- -------------- ----------------
------------------------------------------ ------------- --------
- ------ ------------- -------------- ----------------
Futures and Options on Futures.1
Contracts in which a Fund agrees, at
maturity, to make delivery of or Y Y
Y Y Y
receive securities, the cash value
of an index or foreign currency.
Used for hedging purposes or to
maintain liquidity.
------------------------------------------ ------------- --------
- ------ ------------- -------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
<C> <C> <C> <C> <C>
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
Real Estate
Equity
Growth Inter- Micro- Mid- Multi-
Invest-ment Small- Small
& national Cap Cap Season
NetNet Cap Company
Income Equity Equity Growth Growth
Fund Value Growth Value
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
25% Y 25% 25% 25%
Y N 25% 25% 25%
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
20% Y Y Y Y
Y Y Y Y Y
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
N N N N N
N N N N N
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
N N N N N
N N N N N
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
Y Y Y Y Y
Y N Y Y 20%
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
Y Y Y Y Y
Y Y Y Y Y
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
Y Y Y Y Y
Y Y Y Y Y
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
<C> <C> <C>
- ------------------------------------------------------------------
- ---------------------------------------------------------
- ------------------------------------------------------------------
- ---------------------------------------------------------
EQUITY FUNDS
(continued)
------------------------------------------ ---------------- -----
- -------- ------------ -------------- ----------------
Framling- Framlington
ton Framling- Inter-national
Investments and Accelerating
Equity Emerging ton Growth
Investment Practices Growth
Selection Markets Healthcare
------------------------------------------ ---------------- -----
- -------- ------------ -------------- ----------------
------------------------------------------ ---------------- -----
- -------- ------------ -------------- ----------------
Options. A Fund may buy options
giving it the right to require a
buyer to buy a security held by the
Fund (put options), buy options
giving it the right to require a
seller to sell securities to the
Fund (call options), sell (write) Y
Y Y Y Y
options giving a buyer the right to
require the Fund to buy securities
from the buyer or write options
giving a buyer the right to require the Fund to sell securities
to the buyer
during a set time at a set price. Options may relate to
stock indices,
individual securities, foreign currencies or futures contracts.
See the SAI for
more details and additional limitations.
------------------------------------------ ---------------- -----
- -------- ------------ -------------- ----------------
------------------------------------------ ---------------- -----
- -------- ------------ -------------- ----------------
Reverse Repurchase Agreements. A
Fund sells securities and agrees to
buy them back later at an agreed Y
Y Y Y Y
upon time and price. A method to
borrow money for temporary purposes.
------------------------------------------ ---------------- -----
- -------- ------------ -------------- ----------------
------------------------------------------ ---------------- -----
- -------- ------------ -------------- ----------------
Illiquid Securities. Typically
there is no ready market for these 15%
15% 15% 15% 15%
securities, which inhibits the
ability to sell them and to obtain
their full market value, or there
are legal restrictions on their
resale by the Fund.
------------------------------------------ ---------------- -----
- -------- ------------ -------------- ----------------
------------------------------------------ ---------------- -----
- -------- ------------ -------------- ----------------
Lending Securities. May lend
securities to financial institutions 25%
25% 25% 25% 25%
which pay for the use of the
securities. May increase return.
Slight risk of borrower failing
financially.
------------------------------------------ ---------------- -----
- -------- ------------ -------------- ----------------
Key:
Y = investment allowed without restriction
N = investment not allowed
1 The limitation on margins and premiums for futures is 5% of a
Fund's assets
- ------------------------------------------------------------------
- ---------------------------------------------------------------
- ------------------------------------------------------------------
- ---------------------------------------------------------------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- --------
Real Estate
Equity
Growth Inter- Micro- Mid- Multi-
Invest-ment Small- Small
& national Cap Cap Season
NetNet Cap Company
Income Equity Equity Growth Growth
Fund Value Growth Value
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
Y Y Y Y Y
Y Y Y Y Y
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
Y Y Y Y N
Y Y Y Y Y
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
15% 15% 15% 15% 15%
15% 15% 15% 15% 15%
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ---------
25% 25% 25% 25% 25%
25% 25% 25% 25% 25%
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ ------------- ----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
<C> <C> <C>
- ------------------------------------------------------------------
- ---------------------------------------------------------------
- ------------------------------------------------------------------
- ---------------------------------------------------------------
FIXED
INCOME FUNDS
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
Investments and Bond
Intermediate International U.S. Government
Investment Practices Fund
Bond Fund Bond Fund Income Fund
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
Foreign Securities. Securities issued by
foreign governments and their agencies,
instrumentalities or political subdivisions,
supranational organizations, and foreign
corporations including those convertible into
foreign stock. 25%
25% Y 25%
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
Preferred Stock. May be convertible to common
stock. Preferred stock ranks senior to common
stock in capital structure and payment of
dividends. Y
Y Y Y
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
Asset-Backed Securities. Includes debt
securities backed by mortgages, installment
sales contracts and credit card receivables. Y
Y Y Y
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
Interest Rate and Currency Swaps. Agreement to
exchange payments calculated on the basis of
relative interest or currency rates. Derivative
instruments used solely for hedging. Y1
Y1 Y1 Y1
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
Interest Rate Caps and Floors. Entitle
purchaser to receive payments of interest to
the extent that a specified reference rate N
N Y N
exceeds or falls below a predetermined level.
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
Stripped Securities. Includes participations
in trusts that hold U.S. Treasury and agency
securities which represent either the interest
or principal payments on the securities or Y
Y Y Y
combinations of both.
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
Reverse Repurchase Agreements. A Fund sells
securities and agrees to buy them back later at
an agreed upon time and price. A method to
borrow money for temporary purposes. Y
Y Y Y
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
Forward Foreign Currency Exchange Contracts.
Obligations of a Fund to purchase or sell a
specific currency at a future date at a set
price. May decrease a Fund's loss due to a
change in currency value, but also limits gains Y
Y Y Y
from currency changes.
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
U.S. Bank Obligations. U.S. dollar denominated
bank obligations, including certificates of
deposit, bankers' acceptances, bank notes, time
deposits issued by U.S. or foreign banks or
savings institutions having total assets in
excess of $1 billion. Y
Y Y Y
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
FIXED INCOME
FUNDS (continued)
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
Investments and Bond
Intermediate International U.S. Government
Investment Practices Fund
Bond Fund Bond Fund Income Fund
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
Supranational Organization Obligation. Fixed
income securities issued or guaranteed by
supranational organizations such as the World N
N Y N
Bank.
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
Guaranteed Investment Contracts. Agreements of
a Fund to make payments to an insurance
company's general account in exchange for a
minimum level of interest based on a index.
Y
Y Y Y
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
When-Issued Purchases and Forward Commitments. Agreement by a
Fund to purchase
securities at a set price, with payment and delivery in the
future. The value
of the securities may change between the time the price is set
and payment.
Not to be used for speculation.
Y
Y Y Y
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
Illiquid Securities. Typically there is no
ready market for these securities, which limits
the ability to sell them for full market value, 15%2
15%2 15%2 15%2
or they are restricted as to resale.
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
Futures and Options on Futures.3 Contracts in which a Fund has
the right or the
obligation to make delivery of, or receive, securities, the
cash value of an
index or foreign currency. Used for hedging purposes or to
maintain
liquidity. Y
Y Y Y
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
Options. A Fund may buy options giving it the right to require a
buyer to buy a
security held by the Fund (put options), buy options giving
it the right to
require a seller to sell securities to the Fund (call options),
sell (write)
options giving a buyer the right to require the Fund to buy
securities from the
buyer or write options giving a buyer the right to require
the Fund to sell
securities to the buyer during a set time at a set price. Options
may relate to
stock indices, individual
securities or foreign currencies. See the SAI Y
Y Y Y
for more details and additional limitations.
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
Lending Securities. May lend securities to
financial institutions which pay for the use of 25%
25% 25% 25%
securities. May increase return. Slight risk
of borrower failing financially.
----------------------------------------------------- -----------
- -- ---------------- ---------------- --------------------
Key:
Y = Investment allowed without restriction N = Investment not
allowed 1 Interest
rate swaps only 2 Based on net assets 3 The limitation on
margins and premiums
for futures is 5% of a Fund's assets
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
<C> <C> <C>
MONEY MARKET FUNDS
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
Investments and Cash
Money Tax-Free U.S. Treasury
Investment Practices Investment
Market Money Money
- ----------------------------------------------
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
Corporate Obligations:
o Commercial paper (including paper Y
Y N N
of Canadian cos., Canadian branches
of U.S. cos., and Europaper)
o Corporate bonds
o Other short-term obligations Y
Y N N
o Variable Master Demand Notes Y
Y N N
o Bond Debentures Y
Y N N
o Notes Y
Y N N
Y
Y N N
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
Asset-Backed Securities. Includes debt Y
Y N N
securities backed by mortgages, installment
sales contracts and credit card receivables.
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
U.S. Government Obligations:
o Issued or guaranteed by U.S. Y
Y N Y
Government
o Issued or guaranteed by U.S. Y
Y N N
Government agencies and
instrumentalities
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
---------------- --
- -------------- ------------------ -------------------
Bank Obligations. U.S. dollar- denominated Y
Y N N
only; includes CDs, bankers' acceptances,
bank notes, deposit notes and
interest-bearing savings and time deposits,
issued by U.S. or foreign banks or savings
institutions with total assets greater than
$1 billion.
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
Foreign Banks and Foreign Branches of 25%
25% N N
Domestic Banks. Includes ECDs, ETDs, CTDs,
Schedule Bs, Yankee CDs and Yankee BAs.
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
Stripped Securities:
o Participation in trusts that hold Y
Y Y N
U.S. treasury and agency securities
o U.S. Treasury-issued receipts
o Non-U.S. Treasury receipts Y
Y Y 35%
Y
Y Y N
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
Municipal Revenue Obligations. Obligations
the interest on which is paid solely from N
N May be more than N
the revenues of similar projects.
25%
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
Municipal Obligations. Payable from the 5%
5% 25% in any one N
issuer's general revenue, the revenue of a
state
specific project, current revenues or a
reserve fund.
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
<PAGE>
MONEY MARKET FUNDS (continued)
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
Investments and Cash
Money Tax-Free U.S. Treasury
Investment Practices Investment
Market Money Money
- ----------------------------------------------
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
Reverse Repurchase Agreements. A Fund sells Y*
Y N Y*
securities and agrees to buy them back later
at an agreed upon time and price. A method
to borrow money for temporary purposes.
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
Guaranteed Investment Contracts. Agreements Y
Y N N
of a Fund to make payments to an insurance
company's general account in exchange for a
minimum level of interest based on an index.
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
When-Issued Purchases and Forward Not expected
Not expected Not expected to Not
Commitments. Agreement by a Fund to to exceed 25%
to exceed 25% exceed 25% expected to
purchase securities at a set price, with
exceed 25%
payment and delivery in the future. The
value of the securities may change between
the time the price is set and payment. Not
to be used for speculation.
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
Foreign Securities. Debt obligations issued 25%
25% N N
by foreign governments, and their agencies,
instrumentalities or political subdivisions,
supranational organizations, and foreign
corporations or convertible into foreign
stock.
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
Illiquid Securities. Typically there is no 10%
10% 10% 10%
ready market for these securities, which
limits the ability to sell them for full market value, or
there are legal
restrictions on their resale by a Fund.
- ---------------------------------------------- ---------------- --
- -------------- ------------------ -------------------
Key:
Y= investment allowed without restriction
N= investment not allowed
* = deemed borrowing; subject to the borrowing
limitations
</TABLE>
What are the Risks of Investing in the Funds?
A Fund's performance per share will change daily based on
many factors,
including interest rate levels, national and international
economic conditions,
general market conditions, and the performance of the Underlying
Funds. The net
asset value per share will fluctuate in response to these factors.
Consistent with a long-term investment approach,
investors in a Fund
should be prepared and able to maintain their investments
during periods of
adverse market conditions. By itself, no Fund constitutes a
balanced investment
program and there is no guarantee that any Fund will achieve
its investment
objective since there is uncertainty in every investment.
The risks of investing in the Funds are dependent on
which Underlying
Funds the Funds invest in, and to what extent. The risks of
investing in the
Underlying Funds are summarized below.
All Underlying Funds
A fund's risk is mostly dependent on the types of
securities it
purchases and its investment techniques. Certain Underlying Funds
are authorized
to use options, futures, and forward foreign currency exchange
contracts, which
are types of derivative instruments. Derivative instruments are
instruments that
derive their value from a different underlying security, index
or financial
indicator. The use of derivative instruments exposes an
Underlying Fund to
additional risks and transaction costs. Risks inherent in the use
of derivative
instruments include: (1) the risk that interest rates,
securities prices and
currency markets will not move in the direction that a
portfolio manager
anticipates; (2) imperfect correlation between the price
of derivative
instruments and movements in the prices of the securities,
interest rates or
currencies being hedged; (3) the fact that skills needed to use
these strategies
are different than those needed to select portfolio securities;
(4) the possible
absence of a liquid secondary market for any particular
instrument and possible
exchange-imposed price fluctuation limits, either of which may
make it difficult
or impossible to close out a position when desired; (5) leverage
risk, that is,
the risk that adverse price movements in an instrument can
result in a loss
substantially greater than the Underlying Fund's initial
investment in that
instrument (in some cases, the potential loss is
unlimited); and (6)
particularly in the case of privately-negotiated instruments, the
risk that the
counterparty will not perform its obligations, which could leave
the Underlying
Fund worse off than if it had not entered into the position.
The risks of the various investment techniques the
Funds use are
described in more detail in the SAI.
Equity Funds
Investing in the Funds may be less risky than investing
in individual
stocks due to the diversification of investing in a portfolio of
many different
stocks; however, such diversification does not eliminate all
risks. Because the
Funds invest mostly in Equity Securities, rises and falls in the
stock market in
general, as well as in the value of particular Equity
Securities held by the
Funds, can affect the Funds' performance. Your investment in
the Funds is not
guaranteed. The net asset value of the Funds will change daily and
you might not
recoup the amount you invest in the Funds.
<PAGE>
Fixed Income Funds
The value of each Fund's shares, like the value of
most securities,
will rise and fall in response to changes in economic conditions,
interest rates
and the market's perception of the underlying securities
held by the Fund.
Investing in the Funds may be less risky than investing in
individual Fixed
Income Securities due to the diversification of investing
in a portfolio
containing many different Fixed Income Securities; however,
such diversities
does not eliminate all risks. The Funds invest mostly in
Fixed Income
Securities, whose values typically rise when interest rates fall
and fall when
interest rates rise. Fixed Income Securities with shorter
maturities (time
period until repayment) tend to be less affected by interest rate
changes, but
generally offer lower yields than securities with longer
maturities. Current
yield levels should not be considered representative of yields
for any future
time. Securities with variable interest rates may exhibit
greater price
variations than ordinary securities. Zero coupon bonds are
subject to greater
market fluctuations from changing interest rates than debt
obligations of
comparable maturities which make current distributions of
interest.
Money Market Funds
Each Money Market Fund attempts to maintain a constant net
asset value of
$1.00 per share. However, your investment in the Funds is not
guaranteed.
Although the 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 Money Market Funds 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.
Micro-Cap Equity Fund, Mid-Cap Growth Fund, Small-Cap Value Fund
and Small
Company Growth Fund
The Advisor believes that smaller companies can provide
greater growth
potential and potentially higher returns than larger firms.
Investing in smaller
companies, however, is riskier than investing in larger
companies. The stock of
smaller companies may trade infrequently and in lower volume,
making it more
difficult for a Fund to sell the stocks of smaller companies
when it chooses.
Smaller companies may have limited product lines, markets,
financial resources
and distribution channels, which makes them more sensitive to
changing economic
conditions. Stocks of smaller companies historically
have had larger
fluctuations in price than stocks of larger companies included in
the S&P 500.
Framlington Emerging Markets Fund, Framlington International
Growth Fund,
International Equity Fund and International Bond Fund
Investing in any of the Funds, with its larger
investment in foreign
securities, may involve more risk than investing in a U.S.
fund for the
following reasons: (1) there may be less public information
available about
foreign companies than is available about U.S. companies; (2)
foreign companies
are not generally subject to the uniform accounting, auditing
and financial
reporting standards and practices applicable to U.S.
companies; (3) foreign
markets have less volume than U.S. markets, and the securities
of some foreign
companies are less liquid and more volatile than the securities
of comparable
U.S. companies; (4) there may be less government regulation of
stock exchanges,
brokers, listed companies and banks in foreign countries than in
the U.S.; (5)
the Fund may incur fees on currency exchanges when it changes
investments from
one country to another; (6) the Fund's foreign investments could
be affected by
expropriation, confiscatory taxation, nationalization of
bank deposits,
establishment of exchange controls, political or social
instability or
diplomatic developments; (7) fluctuations in foreign exchange
rates will affect
the value of the Fund's portfolio securities, the value of
dividends and
interest earned, gains and loses realized on the sale of
securities, net
investment income and unrealized appreciation or depreciation
of investments;
and (8) possible imposition of dividend or interest withholding
by a foreign
country.
Real Estate Equity Investment Fund
The Fund will invest primarily in the real estate
industry and may
invest more than 25% of its assets in any one sector of the
real estate
industry. As a result, the Fund will be particularly vulnerable
to declines in
real estate prices and new construction rates. The Fund may be
riskier than a
fund investing in a broader range of industries.
Framlington Healthcare Fund
The Fund will invest most of its assets in the
healthcare industry,
which is particularly affected by rapidly changing technology
and extensive
government regulation, including cost containment measures.
The Fund may be
riskier than a fund investing in a broader range of industries.
International Bond Fund
The Fund is non-diversified and holds securities of a
limited number of
issuers. The Fund may, therefore, pose a greater risk to
investors than an
investment in a diversified fund.
NetNet Fund
The Fund will invest primarily in companies engaged
in Internet and
Intranet related activities. The value of such companies is
particularly
vulnerable to rapidly changing technology, extensive government
regulation and
relatively high risks of obsolescence caused by scientific and
technological
advances. The value of the Fund's shares may fluctuate more
than shares of a
fund investing in a broader range of industries.
- ------------------------------------------------------------------
- -------------
PERFORMANCE
- ------------------------------------------------------------------
- -------------
How is the Funds' Performance Calculated?
There are various ways in which the Funds may
calculate and report
their performance. Performance is calculated separately for
each class of
shares.
One method is to show a Fund's total return. Cumulative
total return is
the percentage change in the value of an amount invested in a
class of shares of
a Fund over a stated period of time and takes into account
reinvested dividends
plus in the case of Class A Shares, the payment of the maximum
sales charge and,
in the case of Class B Shares, the maximum CDSC. Cumulative
total return most
closely reflects the actual performance of a Fund. However, a
shareholder who
opts to receive dividends in cash, a Class A shareholder who paid
a sales charge
lower than 5.5%, or a Class B shareholder who paid lower than
the maximum CDSC
will have a different return than the reported performance.
Average annual total return refers to the average
annual compounded
rates of return over a specified period on an investment in
shares of a Fund
determined by comparing the initial amount invested to the
ending redeemable
value of the amount, taking into account reinvested dividends,
the payment of
the maximum sales charge on Class A Shares, and the payment of
the maximum CDSC
on Class B Shares.
Each Fund may also publish its current yield.
Yield is the net
investment income generated by a share of a Fund during a 30-day
period divided
by the maximum offering price on the 30th day. "Maximum offering
price" includes
the sales charge for Class A Shares.
The Funds may sometimes publish total returns that do
not take into
account sales charges and such returns will be higher than returns
which include
sales charges. You should be aware that (i) past performance
does not indicate
how a Fund will perform in the future; and (ii) each Fund's return
and net asset
value will fluctuate, so you cannot necessarily use a Fund's
performance data to
compare it to investment in certificates of deposit, savings
accounts or other
investments that provide a fixed or guaranteed yield.
Each Fund may compare its performance to that of other
mutual funds,
such as the performance of similar funds reported by Lipper
Analytical Services,
Inc. or information reported in national financial publications
(such as Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New
York Times) or
in local or regional publications. Each Fund may also compare
its total return
to indices such as the S&P 500 and other broad-based indices.
These indices show
the value of selected portfolios of securities (assuming
reinvestment of
interest and dividends) which are not managed by a portfolio
manager. The Funds
may report how they are performing in comparison to the Consumer
Price Index, an
indication of inflation reported by the U.S. Government.
Where Can I Obtain Performance Data?
The Wall Street Journal and certain local newspapers
report information
on the performance of mutual funds. In addition, performance
information is
contained in the Funds' annual report dated June 30 of each year
and semi-annual
report dated December 31 of each year, which will automatically
be mailed to
shareholders. To obtain copies of financial reports or
performance information,
call (800) 438-5789.
- ------------------------------------------------------------------
- -------------
PURCHASES AND EXCHANGES OF
SHARES
- ------------------------------------------------------------------
- -------------
Which Share Class Should I Choose For My Investment?
Each of the Funds offers Class A and Class B Shares. Each
Class has its
own cost structure, allowing you to choose the one that
best meets your
requirements given the amount of your purchase and the intended
length of your
investment. You should consider both ongoing annual expenses
and initial or
contingent deferred sales charges in estimating the costs of
investing in a
particular class of shares.
<TABLE>
<CAPTION>
<S> <C>
Class A Class B
Front end sales charge. There are several No
front end sales charge. All your money
ways to reduce these sales charges. goes to
work for you right away.
Lower annual
expenses than
Class B
Shares. Higher
annual
expenses than
Class A
Shares.
A CDSC on shares you
sell within six years
of purchase.
Automatic conversion
to
Class A Shares
approximately six
years
after issuance,
thus
reducing future
annual
expenses.
CDSC is waived for
certain redemptions.
</TABLE>
Each Fund also issues Class Y Shares, which has a
different sales
charge, expense level and performance. Class Y Shares are
available to limited
types of investors. Call (800) 438-5789 to obtain more
information concerning
Class Y Shares.
What Price Do I Pay For Shares?
Class A Shares are sold at the net asset value next
determined by the
Funds plus any applicable sales charge and Class B Shares are
sold at the net
asset value next determined by the Funds. You should
be aware that
broker-dealers (other than the Funds' Distributor) may
charge investors
additional fees if shares are purchased through them.
NET ASSET VALUE. Except in certain limited circumstances, each
Fund determines
its net asset value ("NAV") at the close of the New York Stock
Exchange ("NYSE")
(normally 4:00 p.m. Eastern time) on each day on which the
NYSE is open for
trading (a "Business Day"). The Money Market Funds also determine
their NAVs at
2:45 p.m. (Eastern time). If we receive your purchase order and
payment for a
Money Market Fund by 2:45 p.m. (Eastern time) on a Business
Day, you will
receive dividends on that day. Each Fund calculates NAV
separately for each
class of shares. NAV is calculated by totaling the value of all of
the assets of
a Fund allocated to a particular class of shares,
subtracting the Fund's
liabilities and expenses charged to that class and dividing the
result by the
number of shares of that class outstanding.
APPLICABLE SALES CHARGE. Except in the circumstances described
below, you must
pay a sales charge at the time of purchase of Class A Shares.
The sales charge
as a percentage of your investment decreases as the amount you
invest increases.
The current sales charge rates and commissions paid to selected
dealers are as
follows:
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
<C> <C>
Discount to
Sales Charge Selected
as a
Percentage of Dealers as a
Your Percentage of
Net Asset Value
Investment Investment
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)**
<FN>
* No initial sales charge applies on investments of $1
million or more. However, a CDSC of 1% is imposed on certain
redemptions within one year of purchase.
** The Distributor will pay a 1% commission will be paid to
dealers who initiate and are responsible for purchases of $1
million or more.
</FN>
</TABLE>
The Distributor may pay the entire commission to
dealers. If that
occurs, the dealer may be considered an "underwriter" under
Federal securities
laws.
SALES CHARGE WAIVERS. We will waive the initial sales charge on
sales of Class
A Shares to the following types of purchasers:
(1) individuals with an investment account or relationship with
the Advisor;
(2) full-time employees and retired employees of the Advisor,
employees of
the Funds' administrator, distributor, custodian and
outside counsel
and immediate family members of such persons;
(3) registered broker-dealers that have entered into
selling agreements
with the Distributor, for their own accounts or for
retirement plans
for their employees or sold to registered representatives
for full-time
employees (and their families) that certify to the
Distributor at the
time of purchase that such purchase is for their own
account (or for
the benefit of their families);
(4) certain qualified employee benefit plans as described
below;
(5) individuals who reinvest a distribution from a
qualified retirement
plan for which the Advisor serves as investment advisor;
(6) individuals who reinvest the proceeds of redemptions
from Class Y
Shares of the Funds of the Trust, the Company or
Framlington, within 60 days of redemption;
(7) banks and other financial institutions that have
entered into
agreements with the Trust, the Company or
Framlington to provide
shareholder services for customers ("Customers")
(including Customers
of such banks and other financial institutions, and
the immediate
family members of such Customers);
(8) financial planners or employee benefit plan consultants
acting for the
accounts of their clients;
(9) persons acquiring Class A Shares by exchanging Class K
Shares of another
Fund of the Company, the Trust or Framlington; (10)
employer sponsored
retirement plans which are administered by Universal
Pensions, Inc. ("UPI
Plans"); and (11) employer sponsored 401(k) plans that are
administered by
Merrill Lynch Group Employee Services ("Merrill Lynch Plans")
which meet the
criteria described below under "Qualified Employer Sponsored
Retirement Plans."
Qualified Employer Sponsored Retirement Plans
We will waive the initial sales charge on purchases of
Class A Shares
by employer sponsored retirement plans that are qualified under
Section 401(a)
of the Code (each, a "Qualified Employee Benefit Plan")
that (1) invest
$1,000,000 or more in Class A Shares or (2) have at least 75
eligible plan
participants. In addition, we will waive the CDSC of 1%
charged on certain
redemptions of Class A Shares within one year of purchase for
Qualified Employee
Benefit Plan purchases that meet the above criteria. A 1%
commission will be
paid by the Distributor to dealers and other entities (as
permitted by
applicable Federal and state law) who initiate and are responsible
for Qualified
Employee Benefit Plan purchases that meet the above criteria.
For purposes of
this sales charge waiver, Simplified Employee Pension Plans
("SEPs"), Individual
Retirement Accounts ("IRAs") and UPI Plans are not considered
to be Qualified
Employee Benefit Plans.
We also will waive (i) the initial sales charge on
Class A Shares on
purchases by UPI and (ii) the CDSC of 1% imposed on certain
redemptions within
one year of purchase for UPI Plans. The Distributor will pay a 1%
commission to
dealers and others (as permitted by applicable Federal and
state law) who
initiate and are responsible for UPI Plan purchases.
We will waive the initial sales charge for all
investments by Merrill
Lynch Plans if (i) the Plan is recordkept on a daily valuation
basis by Merrill
Lynch Group Employee Services ("Merrill Lynch") and, on the
date the plan
sponsor (the "Plan Sponsor") signs the Merrill Lynch
Recordkeeping Service
Agreement, the Plan has $3 million or more in assets invested in
broker/dealer
funds not advised or managed by Merrill Lynch Asset Management,
L.P. ("MLAM")
that are made available pursuant to a Services Agreement between
Merrill Lynch
and the Funds' principal underwriter or distributor and in
funds advised or
managed by MLAM (collectively, the "Applicable Investments"); or
(ii) the Plan
is recordkept on a daily valuation basis by an independent
recordkeeper whose
services are provided through a contract or alliance arrangement
with Merrill
Lynch, and on the date the Plan Sponsor signs the Merrill Lynch
Recordkeeping
Service Agreement, the Plan has $3 million or more in assets,
excluding money
market funds, invested in Applicable Investments; or (iii) the
Plan has 500 or
more eligible employees, as determined by the Merrill Lynch
plan conversion
manager, on the date the Plan Sponsor signs the Merrill Lynch
Recordkeeping
Service Agreement.
SALES CHARGE REDUCTIONS. You may qualify for reduced sales
charges in the
following cases:
Letter of Intent. If you intend to purchase at least
$100,000 of Class A,
Class B and Class C Shares of the Funds and other non-money
market funds of
the Trust, the Company (other than Index 500 Fund) or
Framlington, you may
wish to complete the Letter of Intent Section of your
Account Application
Form. By doing so, you agree to invest a certain amount
over a 13-month
period. You would pay a sales charge on any Class A Shares
you purchase
during the 13 months based on the total amount to be
invested under the
Letter of Intent. You can apply any investments you made
in any of the
funds during the preceding 90-day period toward fulfillment
of the Letter
of Intent (although there will be no refund of sales
charges you paid
during the 90-day period). You should inform the Transfer
Agent that you
have a Letter of Intent each time you make an investment.
You are not obligated to purchase the amount specified in
the Letter of
Intent. If you purchase less than the amount specified,
however, you must
pay the difference between the sales charge paid and the
sales charge
applicable to the purchases actually made. The Custodian
will hold such
amount in escrow. The Custodian will pay the escrowed funds
to your account
at the end of the 13 months unless you do not complete
your intended
investment.
o Quantity Discounts. You may combine purchases of Class A
Shares that are
made by you, your spouse, your children under age 21 and
your IRA when
calculating the sales charge. You must notify your broker
or the Transfer
Agent to qualify.
o Right of Accumulation. You may add the value of any Class
A, Class B and
Class C Shares of non-money market funds of the Trust,
the Company or
Framlington you already own to the amount of your next Class
A investment
for purposes of calculating the sales charge at the
time of current
purchase. You must notify your broker or the Transfer Agent
to qualify.
Certain brokers may not offer these programs or may
impose conditions
on use of these programs. You should consult with your
broker prior to
purchasing the Funds' shares.
For further information on sales charge waivers and
reductions call the
Funds at (800) 438-5789.
When Can I Purchase Shares?
Shares of each Fund are sold on a continuous basis and
can be purchased
on any Business Day.
What is the Minimum Required Investment?
The minimum initial investment for Class A and Class B
Shares of a Fund
is $500 and subsequent investments must be at least $50.
Purchases in excess of
$250,000 must be for Class A Shares.
How Can I
Purchase Shares?
You can purchase Class A and Class B Shares in a number
of different
ways. You may place orders directly through the Transfer
Agent or the
Distributor or through arrangements with your authorized broker.
o By Broker. Any broker authorized by the Distributor can
sell you
shares of the Funds. Please note that brokers may
charge you fees for their services.
o By Mail. You may open an account by mailing a completed and
signed Account
Application Form and a check or other negotiable bank
draft (payable to
the Munder Funds) for $500 or more to: The Munder Funds,
c/o Investor
Services Group, P.O. Box 5130, Westborough, Massachusetts
01581-5130. You
can obtain an Account Application Form by calling (800) 438-
5789. Be sure
to specify on your Account Application Form the class of
shares being
purchased. If the class is not specified, your purchase will
automatically
be invested in Class A Shares. For additional investments
send a letter
stating the Fund and share class you wish to purchase, your
name and your
account number with a check for $50 or more to the address
listed above.
o By Wire. To open a new account, you should call the
Funds at (800)
438-5789 to obtain an account number and complete wire
instructions prior
to wiring any funds. Within seven days of purchase,
you must send a
completed Account Application Form containing your
certified taxpayer
identification number to Investor Services Group at the
address provided
above. Wire instructions must state the Fund name, share
class, your
registered name and your account number.
Your bank wire should be sent through the Federal Reserve
Bank Wire System
to:
Boston Safe Deposit and Trust
Company
Boston, MA
ABA# 011001234
DDA# 16-798-3
Account No.:
You may make additional investments at any time using the
wire procedures
described above. Note that banks may charge fees for
transmitting wires.
o Automatic Investment Plan ("AIP"). Under the AIP you may
arrange for
periodic investments in a Fund through automatic
deductions from a
checking or savings account. To enroll in the AIP you
should complete the
AIP Application Form or call the Funds at (800) 438-5789.
The minimum
pre-authorized investment amount is $50. You may
discontinue the AIP at
any time. We may discontinue the AIP on 30 days' written
notice to you.
o Reinvestment Privilege. Once a year you may reinvest
redemption proceeds
from Class A and Class B Shares of a Fund (or Class A, B
and C Shares of
another non-money market fund of the Trust, the Company or
Framlington) in
shares of the same class of the same Fund without any sales
charges, if
the reinvestment is made within 60 days of redemption. You
or your broker
must notify the Transfer Agent in writing at the time of
reinvestment in
order to eliminate the sales charge.
The Transfer Agent will send you confirmations of the
opening of an
account and of all subsequent purchases, exchanges or
redemptions in the
account. If your account has been set up by a broker or
other investment
professional, account activity will be detailed in their
statements to you. You
will not be issued a share certificate, unless you request one
in writing. We
reserve the right to (i) reject any purchase order if, in our
opinion, it is in
the Funds' best interest to do so and (ii) suspend the offering of
shares of any
Class for any period of time.
See the SAI for further information regarding purchases
of the Funds'
shares.
How Can I
Exchange Shares?
The following tables give information about permitted
and nonpermitted
exchanges of shares.
<TABLE>
<CAPTION>
<S>
<C> <C>
Class to
Class Held
be Acquired Permitted?
Class A Shares of the Funds Class A
Shares of the Other Funds1 Yes
Class B Shares of the Funds Class B
Shares of the Other Funds Yes
Class A Shares of the Other Funds Class A
Shares of the Funds Yes
Class B Shares of the Other Funds Class B
Shares of the Funds Yes
Class K Shares of the Other Funds Class A
Shares of the Funds Yes
Class A Shares of the Funds Acquired through an Class A
Shares of the Other Funds No
Exchange of Class K Shares of the Other Funds
Class A Shares of the Funds Acquired through an Class K
Shares of the Other Funds Yes
Exchange of Class K Shares of the Other Funds
- --------------------------
<FN>
1 "Other Funds" are funds of the Company, the Trust and
Framlington (other than the Funds).
</FN>
</TABLE>
Class A Shares of a money market fund of the Trust or
the Company that
were (1) acquired through the use of the exchange privilege
and (2) can be
traced back to a purchase of shares in one or more investment
portfolios of the
Trust, Framlington or the Company for which a sales charge was
paid, can be
exchanged for Class A Shares of a fund of the Trust, the Company
or Framlington.
Class B and Class C Shares will continue to age from the date of
the original
purchase and will retain the same CDSC rate as they had before the
exchange.
You may exchange shares based on their relative net
asset values. You
must meet the minimum purchase requirements for the fund of
the Trust, the
Company or Framlington that you purchase by exchange. If you are
exchanging into
shares of a fund with a higher sales charge, you must pay the
difference at the
time of the exchange. Please note that a share exchange is a
taxable event and
accordingly, you may realize a taxable gain or loss. Before
making an exchange
request, read the Prospectus of the fund you wish to purchase by
exchange. You
can obtain a Prospectus for any fund of the Trust, the Company or
Framlington by
contacting your broker or the Funds at (800) 438-5789. Brokers
may charge a fee
for handling exchanges.
o Exchanges by Telephone. You may give exchange instructions
by telephone to
the Funds at (800) 438-5789. You may not exchange shares
by telephone if
you hold share certificates. We reserve the right to reject
any telephone
exchange request and to place restrictions on telephone
exchanges.
o Exchanges by Mail. You may send exchange orders to your
broker or to us
at the Munder Funds c/o Investor Services Group,
P.O. Box 5130, Westborough, Massachusetts 01581-5130
We may modify or terminate the exchange privilege at any
time. You will
be given notice of any material modifications except where
notice is not
required.
<PAGE>
- ------------------------------------------------------------------
- -------------
REDEMPTIONS OF
SHARES
- ------------------------------------------------------------------
- -------------
What Price Do I Receive for Redeemed Shares?
The redemption price is the net asset value next
determined after we
receive the redemption request in proper order. We will reduce
the amount you
receive by the amount of any applicable CDSC. See "Purchases of
Shares - What
Price Do I Pay for Shares?" for an explanation of how the net
asset value next
determined is calculated.
- ------------------------------------------------------------------
- -------------
CONTINGENT DEFERRED
SALES CHARGES
- ------------------------------------------------------------------
- -------------
You pay a CDSC when you redeem:
Class A Shares that are part of an investment of at
least $1 million
within one year of buying them Class B Shares within six
years of buying
them
The CDSC schedule for Class B Shares is set forth
below. The CDSC is
based on the original net asset value at the time of your
investment or the net
asset value at the time of redemption, whichever is lower.
<TABLE>
<CAPTION>
<S>
<C>
Class B
Shares
Years Since Purchase
CDSC
- --------------------
- ----
First.............................................................
......... 5.00%
Second............................................................
......... 4.00%
Third.............................................................
......... 3.00%
Fourth............................................................
......... 3.00%
Fifth.............................................................
......... 2.00%
Sixth.............................................................
......... 1.00%
Seventh and
thereafter.....................................................
0.00%
</TABLE>
.........The Distributor pays sales commissions of 4.00%
of the purchase
price of Class B Shares of the Funds to brokers at the time
of sale that
initiate and are responsible for purchases of such Class B Shares
of the Funds.
.........You will not pay a CDSC to the extent that the
value of the
redeemed shares represents:
reinvestment of dividends or capital gains distributions
capital appreciation of shares redeemed
When you redeem shares, we will assume that you are
redeeming first
shares representing reinvestment of dividends and capital gains
distributions,
then any appreciation on shares redeemed, and then remaining
shares held by you
for the longest period of time. We will calculate the holding
period of shares
of a Fund acquired through an exchange of shares of the Munder
Money Market Fund
from the date that the shares of the Fund were initially
purchased.
- ------------------------------------------------------------------
- ------------
<PAGE>
CDSC WAIVERS
- ------------------------------------------------------------------
- -------------
We will waive the CDSC payable upon redemptions of shares
for:
redemptions made within one year after the death of a
shareholder or
registered joint owner minimum required distributions made
from an IRA or
other retirement plan account after you reach age 70
1/2 involuntary
redemptions made by the Fund
We will waive the CDSC for all redemptions of Class B
Shares by Merrill
Lynch Plans if: (i) the Plan is recordkept on a daily valuation
basis by Merrill
Lynch; or (ii) the Plan is recordkept on a daily valuation
basis by an
independent recordkeeper whose services are provided through
a contract or
alliance arrangement with Merrill Lynch; or (iii) the Plan has
less than 500
eligible employees, as determined by the Merrill Lynch plan
conversion manager,
on the date the Plan Sponsor signs the Merrill Lynch
Recordkeeping Service
Agreement.
When Can I Redeem Shares?
You can redeem shares on any Business Day, provided
all required
documents have been received by the Transfer Agent. A Fund may
temporarily stop
redeeming shares when the NYSE is closed or trading on the NYSE
is restricted,
when an emergency exists and the Funds cannot sell their assets
or accurately
determine the value of their assets or if the SEC orders the
Funds to suspend
redemptions.
How Can I
Redeem Shares?
You may redeem shares of the Funds in several ways:
o By Mail. You may mail your redemption request to: The
Munder Funds, c/o
Investor Services Group, P.O. Box 5130, Westborough,
Massachusetts
01581-5130. The redemption request should state the
name of the Fund,
share class, account number, amount of redemption, account
name and where
to send the proceeds. All account owners must sign. If a
stock certificate
has been issued to you, you must endorse the stock
certificate and return
it together with the written redemption request.
A signature guarantee is required for the
following redemption
requests: (a) redemptions proceeds greater than $50,000;
(b) redemption
proceeds not being made payable to the owner of the
account; (c)
redemption proceeds not being mailed to the address of
record on the
account or (d) if the redemption proceeds are being
transferred to another
Munder Funds account with a different registration.
You can obtain a
signature guarantee from a financial institution such as
a commercial
bank, trust company, savings association or from a
securities firm having
membership on a recognized securities exchange.
o By Telephone. You can redeem your shares by calling
your broker or
the Funds at (800) 438-5789. There is no minimum
requirement for telephone redemptions paid by check. The
Transfer Agent
may deduct a wire fee (currently $7.50) for wire
redemptions under $5,000.
If you are redeeming at least $1,000 of shares and you
have authorized
expedited redemption on your Account Application Form,
simply call the
Fund prior to 4:00 p.m. (Eastern time), and request the
funds be mailed to
the commercial bank or registered broker-dealer you
designated on your
Account Application Form. We will send your redemption
amount to you on
the next Business Day. We reserve the right at any
time to change or
impose fees for this expedited redemption procedure.
We record all telephone calls for your protection and
take measures to
identify the caller. If the Transfer Agent properly
acts on telephone
instructions and follows the reasonable procedures to
ensure against
unauthorized transactions, neither the Trust, the Company,
the Distributor
nor the Transfer Agent will be responsible for any
losses. If these
procedures are not followed, the Transfer Agent may be
liable to you for
losses resulting from unauthorized instructions.
During periods of unusual economic or market
activity, you may
experience difficulties or delays in effecting telephone
redemptions. In
such cases you should consider placing your redemption
request by mail.
Automatic Withdrawal Plan ("AWP"). If you have an account
value of $2,500
or more in a Fund, you may redeem shares on a
monthly, quarterly,
semi-annual or annual basis. The minimum withdrawal is
$50. We usually
process withdrawals on the 20th day of the month and
promptly send you
your redemption amount. You may enroll in the AWP by
completing the AWP
Application Form available through the Transfer Agent. To
participate in
the AWP you must have your dividends automatically
reinvested and may not
hold share certificates. You may change or cancel the AWP at
any time upon
notice to the Transfer Agent. You should not buy Class A
Shares (and pay a
sales charge) while you participate in the AWP and you
must pay any
applicable CDSCs when you redeem shares.
o Involuntary Redemption. We may redeem your account if
its value falls
below $500 as a result of redemptions (but not as a result
of a decline in
net asset value). You will be notified in writing and
allowed 60 days to
increase the value of your account to the minimum investment
level.
When Will I Receive Redemption Amounts?
We will typically send redemption amounts to you within
seven Business
Days after you redeem shares. We may hold redemption amounts
from the sale of
shares you purchased by check until the purchase check has
cleared, which may be
as long as 15 days.
- ------------------------------------------------------------------
- -------------
STRUCTURE AND MANAGEMENT OF
THE FUNDS
- ------------------------------------------------------------------
- -------------
How are the Funds Structured?
The Company is an open-end management investment
company, which is a
mutual fund that sells and redeems shares every day that
it is open for
business. It is managed under the direction of its governing Board
of Directors,
which is responsible for the overall management of the Company
and supervises
the Funds' service providers.
Who Manages and Services the Funds?
Investment Advisor. The Funds' investment advisor is Munder
Capital Management,
a Delaware general partnership with its principal offices at 480
Pierce Street,
Birmingham, Michigan 48009. The principal partners of the
Advisor are MCM,
Munder Group LLC, 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, 1997, the Advisor and its affiliates had
approximately
$41 billion in assets under management, of which $22 billion
were invested in
equity securities, $8 billion were invested in money market or
other short-term
instruments, and $11 billion were invested in other fixed income
securities.
The Advisor provides overall investment management
for each Fund,
provides research and credit analysis, and is responsible for all
purchases and
sales of portfolio securities.
The portfolio manager for the Funds is Gerald Seizert.
Mr. Seizert,
Executive Vice President and Chief Investment Officer of the
Advisor has managed
the Funds since they commenced operations. Prior to joining the
Advisor in 1995,
Mr.
Seizert was a Director and Managing Partner of Loomis, Sayles &
Company, L.P.
During the fiscal year ended June 30, 1997, the
Advisor was paid an
advisory fee at an annual rate based on the average daily net
assets of each
Fund (after waivers and/or expense reimbursements, if any) as
follows:
<TABLE>
<CAPTION>
<S> <C>
<C>
Conservative Moderate
Aggressive
Fund Fund
Fund
% %
%
</TABLE>
The Advisor may, from time to time, make
payments to banks,
broker-dealers or other financial institutions for certain
services to the Funds
and/or their shareholders, including sub-administration, sub-
transfer agency and
shareholder servicing. The Advisor makes such payments out of its
own resources
and there are no additional costs to the Funds or their
shareholders.
The Advisor selects broker-dealers to execute portfolio
transactions
for the Funds based on best price and execution terms. The
Advisor may consider
as a factor the number of shares sold by the broker-dealer.
Transfer Agent. First Data Investor Services Group, Inc. is
the Funds'
transfer agent. Investor Services Group is a wholly owned
subsidiary of First
Data Corporation and is located at 53 State Street, Boston,
Massachusetts 02109.
Administrator. State Street Bank and Trust Company ("State
Street" or the
"Administrator") is the Fund's administrator. State Street is
located at 225
Franklin Street, Boston, Massachusetts 02110. State Street
generally assists the
Company, the Trust and Framlington in all aspects of their
administration and
operations including the maintenance of financial records and
fund accounting.
As compensation for its services, State Street is entitled to
receive fees,
based on the aggregate daily net assets of the Fund and certain
other investment
portfolios that are advised by the Advisor for which it
provides services,
computed daily and payable monthly at the rate of: ____________.
State Street has entered into a Sub-Administration
Agreement with the
Distributor under which the Distributor provides certain
administrative services
with respect to the Fund. State Street pays the Distributor a
fee for these
services out of its own resources at no cost to the Fund.
Custodian. Comerica Bank (the "Custodian"), whose principal
business address is
One Detroit Center, 500 Woodward Avenue, Detroit, Michigan
48226, provides
custodial services to the Funds. No compensation is paid to the
Custodian for
its services. State Street also serves as sub-custodian to
the Fund. As
compensation for its services, the Sub-Custodian is entitled to
receive fees,
based on the aggregate average daily net assets of the Fund and
certain other
investment portfolios that are advised by the Advisor
for which the
Sub-Custodian provides services, computed daily and payable
monthly at an annual
rate of .01% of average daily net assets. The Sub-Custodian
also receives
certain transaction based fees.
Distributor. Funds Distributor Inc. is the distributor of the
Funds' shares
and is located at 60 State Street, Boston, Massachusetts 02109.
It markets and
sells the Funds' shares.
For an additional description of the services
performed by the
Administrator, the Transfer Agent, the Custodian, the Sub-
Custodian and the
Distributor, see the SAI.
Distribution Services Arrangement
Under Rule 12b-1 of the 1940 Act, the Funds have adopted
their Service
and Distribution Plans with respect to their Class A and Class B
Shares. Under
the Plans, each Fund uses its assets to finance activities
relating to the
distribution of its shares to investors and the provision of
certain shareholder
services. The Distributor is paid a service fee at an annual rate
of up to 0.25%
of the value of average daily net assets of the Funds' Class
A and Class B
Shares. The Distributor also is paid a distribution fee at an
annual rate of up
to 0.05% of the value of the average daily net assets of the
Funds' Class A
Shares and up to 0.75% of the value of the average daily net
assets of the
Funds' Class B Shares. The Distributor uses the service fees
primarily to pay
ongoing trail commissions to securities dealers (which may
include the
Distributor itself) and other financial organizations which
provide shareholder
services for the Funds. These services include, among other
things, processing
new shareholder account applications, reporting to the Fund's
Transfer Agent all
transactions by customers and serving as the primary
information source to
customers concerning the Funds.
What are My Rights as a Shareholder?
All shareholders have equal voting, liquidation and
other rights. You
are entitled to one vote for each share you hold and a fractional
vote for each
fraction of a share you hold. You will be asked to vote on matters
affecting the
Company as a whole and affecting your particular Fund. You
will not vote by
Class unless expressly required by law or when the Directors
determine the
matter to be voted on affects only the interests of the holders
of a particular
class of shares. The Company will not hold annual shareholder
meetings, but
special meetings may be held at the written request of
shareholders owning more
than 10% of outstanding shares for the purpose of removing a
Director. The SAI
contains more information regarding voting rights.
Comerica Bank currently has the right to vote a
majority of the
outstanding shares of the Funds as agent, custodian or trustee for
its customers
and therefore it is considered to be a controlling person of the
Company.
- ------------------------------------------------------------------
- -------------
DIVIDENDS, DISTRIBUTIONS
AND TAXES
- ------------------------------------------------------------------
- -------------
When Will I Receive Distributions From the Funds?
As a shareholder, you are entitled to your share of
net income and
capital gains, if any, on a Fund's investments. The Funds pass
their earnings
along to investors in the form of dividends. Dividend
distributions are the
dividends or interest earned on investments after expenses.
Dividends from net
income, if any, are paid at least annually by the Funds. Each
Fund distributes
its net realized capital gains (including net short-term capital
gains), if any,
at least annually.
It is possible that a Fund may make a distribution in
excess of the
Fund's current and accumulated earnings and profits. You
will treat such a
distribution as a return of capital which is applied against
and reduces your
basis in your shares. You will treat the excess of any such
distribution over
your basis in your shares, as gain from a sale or exchange of the
shares.
How Will Distributions Be Made?
The Funds will pay dividend and capital gains
distributions in
additional shares of the same class of a Fund. If you
wish to receive
distributions in cash, either indicate this request on your
Account Application
Form or notify the Funds at (800) 438-5789.
Are There Tax Implications of My Investments in the
Funds?
This section contains a brief summary of the tax
implications of
ownership in the Funds' shares. A more detailed discussion of
Federal income tax
considerations is contained in the SAI. You should consult
your tax advisor
regarding the impact of owning the Funds' shares on your own
personal tax
situation including the applicability of any state and local
taxes.
Each Fund intends to continue to qualify as a
regulated investment
company under the Internal Revenue Code, in which case it
generally pays no
Federal income tax on the earnings or capital gains it
distributes to
shareholders. Dividends of investment company income by each
Fund will be
taxable to you as ordinary income, unless you are exempt from
Federal income
taxes. Dividends from a Fund's long-term capital gains are
taxable on a capital
gain (regardless of how long you have held the shares). Please
note that the
above tax treatment applies regardless of whether you receive your
distributions
in cash or additional shares. Federal income taxes for
distributions to an IRA
or to a qualified retirement plan are deferred. Income
dividends will qualify
for the dividends received deduction for corporations to the
extent of the total
qualifying dividends received by the distributing Fund
from domestic
corporations for the year. Any distribution that is declared
in October,
November or December but not actually paid until January of the
following year
will be taxable in the year declared. When you redeem,
transfer or exchange
shares, you may have a taxable gain or loss depending on whether
the price you
pay for the shares has a value higher or longer than your
tax basis in the
shares. If you hold the shares for six months or less, and during
that time you
received a capital gain dividend, any loss you realize on the
sale of those
shares will be treated as a long-term loss to the extent
of the earlier
distribution.
You will receive from each Fund in which you are a
shareholder shortly
after the end of each year, a statement of the amount and
nature of the
distributions made to you during the year.
Dividends and certain interest income earned from foreign
securities by
the International Equity Fund will, and the other Funds may,
be subject to
foreign withholding or other taxes. Under certain
circumstances the
International Equity Fund may be in a position (in which
case it would)
"pass-through" to you the right to a credit or deduction for
income or other tax
credits earned from foreign investments.
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.
- ------------------------------------------------------------------
- -------------
ADDITIONAL
INFORMATION
- ------------------------------------------------------------------
- -------------
Shareholder Communications. You will receive unaudited Semi-
Annual Reports and
Audited Annual Reports on a regular basis from Funds. In addition,
you will also
receive updated Prospectuses or Supplements to this
Prospectus. In order to
eliminate duplicate mailings, the Funds will only send one
copy of the above
communications to (1) accounts with the same primary record
owner, (2) joint
tenant accounts, (3) tenant in common accounts and (4) accounts
which have the
same address.
PROSPECTUS
Class Y Shares
The Munder Funds, Inc. (the "Company") is an open-end
investment company.
This Prospectus describes three investment portfolios offered
by the Company
(collectively, the "Funds"):
Munder All-Season Conservative Fund
Munder All-Season Moderate Fund
Munder All-Season Aggressive Fund
This Prospectus relates only to the Class Y Shares of
the Funds. The
Funds are referred to as The Munder Lifestyle Funds. Each
Fund seeks its
investment objective by investing in a variety of portfolios
(the "Underlying
Funds") offered by the Company, The Munder Framlington
Funds Trust
("Framlington"), and The Munder Funds Trust (the "Trust").
Munder Capital Management (the "Advisor") serves as
investment advisor
to the Funds and to the Underlying Funds. Framlington
Overseas Investment
Management Limited (the "Sub-Advisor") serves as sub-advisor to
the Framlington
International Growth Fund, Framlington Emerging Markets Fund
and Framlington
Healthcare Fund (the "Framlington Funds"), three of the Underlying
Funds.
This Prospectus explains the objectives, policies,
risks and fees of
each Fund. You should read this Prospectus carefully before
investing and retain
it for future reference. A Statement of Additional
Information ("SAI")
describing each of the Funds has been filed with the Securities
and Exchange
Commission (the "SEC") and is incorporated by reference into
this Prospectus.
You can obtain the SAI free of charge by calling the Funds at
(800) 438-5789. In
addition, the SEC maintains a Web site (http://www.sec.gov)
that contains the
SAI and other information regarding the Funds.
Shares of the Funds and the Underlying Funds are not
deposits or
obligations of, or guaranteed or endorsed by, any bank, and are
not federally
insured or guaranteed. An investment in the Funds involves
investment risks,
including the possible loss of the principal amount invested.
There can be no assurance that a Fund's investment
objective will be
achieved. The net asset value per share of the Funds will
fluctuate in response
to changes in market conditions and other factors.
Securities offered by this Prospectus have not been approved
or disapproved
by the SEC or any state securities commission nor has the SEC
or any state
securities commission passed upon the accuracy or adequacy of
this Prospectus.
Any representation to the contrary is a criminal offense.
Call Toll-Free for Shareholder Services:
(800) 438-5789
The date of this Prospectus is _________________,
1997
<PAGE>
TABLE OF CONTENTS
Fund Highlights
What are the key facts regarding the
Funds?....................................
Finacial Information
Fund Choices
What Funds are
offered?.......................................................
Who may want to invest in the
Funds?..........................................
What are the Funds' investments and investments and investment
practices?.....
What are the Underlying Funds' investments and investment
practices?..........
What are the risks of investing in the
Funds?.................................
Performance
How is the Funds' performance
calculated?.....................................
Where can I obtain performance
data?..........................................
Purchases and Exchanges of Shares
What price do I pay for
shares?...............................................
When can I purchase
shares?...................................................
What is the minimum required
investment?......................................
How can I purchase
shares?....................................................
How can I exchange
shares?....................................................
Redemptions of Shares
What price do I receive for redeemed
shares?..................................
When can I redeem
shares?.....................................................
How can I redeem
shares?......................................................
When will I receive redemption
amounts?.......................................
Structure and Management of the Funds
How are the Funds
structured?.................................................
Who manages and services the
Funds?...........................................
What are my rights as a
shareholder?..........................................
Dividends, Distributions and Taxes
When will I receive distributions from the
Funds?.............................
How will distributions be
made?...............................................
Are there tax implications of my investments in the
Funds?....................
Additional
Information.......................................................
.
<PAGE>
- ------------------------------------------------------------------
- -------------
FUND HIGHLIGHTS
- ------------------------------------------------------------------
- -------------
What Are the Key Facts Regarding the Funds?
Q:.......What are the Funds' goals?
A: o The Conservative Fund (formerly "Munder All-
Season
Maintenance Fund") seeks to provide current
income, with
capital appreciation as a secondary objective.
o The Moderate Fund (formerly "Munder All-
Season Development
Fund") seeks to provide high total return
through capital
appreciation and current income.
o The Aggressive Fund (formerly "Munder All-Season
Accumulation
Fund") seeks long-term capital appreciation.
Q: What are the Funds' strategies?
A: The Funds invest primarily in a variety of Underlying
Funds offered by
the Company, Framlington and the Trust.
Q: What are the Funds' risks?
A: A Fund's performance per share will change daily based on
many factors,
including interest rate levels, national and international
economic conditions,
general market conditions, and the performance of the Underlying
Funds. The net
asset value per share will fluctuate in response to these factors.
Q: What are the options for investment in the Funds?
A: This Prospectus offers Class Y Shares of the Funds.
Each Fund offers
two additional classes of shares, Class A and
Class B Shares, which have different sales charges and
expense levels,
and are offered in another Prospectus.
Q: How do I buy and sell shares of the Funds?
A: Funds Distributor Inc. (the "Distributor") sells shares of the
Funds. You may
purchase shares from the Distributor through broker-dealers or
other financial
institutions or from the Funds' transfer agent, First Data
Investor Services
Group, Inc. ("Investor Services Group" or the "Transfer Agent"),
by mailing the
attached application with a check to Investor Services Group.
Fiduciary and
discretionary accounts of institutions and institutional
investors must invest
at least $500,000 in a Fund. Other types of investors are not
subject to any
required minimum investment.
Shares may be redeemed (sold back to the Fund) by mail.
You may also acquire the Funds' shares by exchanging
shares of the same
class of other funds of the Company, the Trust or Framlington.
You may exchange
Fund shares for Class Y Shares of other funds of the Company,
the Trust and
Framlington.
<PAGE>
Q: What shareholder privileges do the Funds offer?
A: The Funds offer an Automatic Investment Plan. You may
arrange for
period investments in the Funds through automatic
deductions from savings or checking accounts.
Q: When and how are distributions made?
A: The Funds declare dividends at least annually. The Funds
distribute capital
gains, if any, at least annually. Unless you elect to receive
distributions in
cash, all dividends and capital gain distributions of a
Fund will be
automatically used to purchase additional shares of that Fund.
Q: Who manages the Funds' assets?
A: Munder Capital Management is the investment advisor
for the Funds
and the Underlying Funds. Framlington Overseas
Investment Management Limited serves as sub-advisor to the
Framlington Funds.
- ------------------------------------------------------------------
- -------------
FINANCIAL INFORMATION
- ------------------------------------------------------------------
- -------------
- ------------------------------------------------------------------
- ------------
SHAREHOLDER TRANSACTION EXPENSES1
- ------------------------------------------------------------------
- ------------
The purpose of this table is to assist you in
understanding the
expenses a shareholder in the Funds will bear directly.
Maximum Sales Charge
None
on Purchase
(as a % of Offering Price)
Sales Charge Imposed
None
on Reinvested Dividends
Maximum Deferred Sales Charge
None
Redemption Fees
None2
Exchange Fees
None
Notes:
1. Does not include fees which institutions may charge for
services they
provide to you.
2. The Funds' transfer agent may charge a fee of $7.50 for
wire
redemptions under $5,000.
- ------------------------------------------------------------------
- -------------
FUND OPERATING EXPENSES
- ------------------------------------------------------------------
- -------------
The purpose of this table is to assist you in
understanding the
expenses charged directly to each Fund, which investors in the
Funds will bear
indirectly. Such expenses include payments to Directors, auditors,
legal counsel
and service providers (such as the Advisor), registration fees,
and distribution
fees. The fees shown are estimated for the current fiscal year.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
<C> <C>
ANNUAL FUND
OPERATING
EXPENSES
(as a % of
average net assets) Conservative Fund
Moderate Fund Aggressive Fund
Advisory Fees .35%
.35% .35%
Other Expenses+ .20%
.20% .20%
====
==== ====
Total Fund .55%
.55% .55%
Operating Expenses+
- -----------------
+ After expense reimbursements, if any. Without expense
reimbursements, the
total fund operating expenses an investor would pay for
Class Y Shares
would be 97.07% for the Conservative Fund, 41.06% for the
Moderate Fund and
14.30% for the Aggressive Fund.
</TABLE>
In addition to the expenses shown above, shareholders of
the Funds will
indirectly bear their pro rata shares of fees and expenses
incurred by the
Underlying Funds, so that the investment returns of the Funds will
be net of the
expenses of the Underlying Funds. The table below shows total
fund operating
expenses expressed as a percentage of net assets, after any
applicable expense
reimbursements, for the Class Y Shares of each of the Underlying
Funds for their
past fiscal year. Expenses are estimated for the current
fiscal year for the
International Bond Fund, the NetNet Fund, the Micro-Cap
Equity Fund, the
Small-Cap Value Fund and the Framlington Funds. As of the
date of this
Prospectus, the Equity Selection Fund had not commenced
operations. The Funds
purchase only Class Y Shares of the Underlying Funds. Class Y
Shares are sold
without an initial sales charge.
<TABLE>
<CAPTION>
<S>
<C>
Class
Y
Shares
Accelerating Growth
Fund..............................................................
............. .95%
Equity Selection
Fund..............................................................
................ 1.00%
Growth & Income
Fund..............................................................
................. .95%
International Equity
Fund..............................................................
............ 1.01%
Micro-Cap Equity
Fund..............................................................
................ 1.25%
Mid-Cap Growth
Fund..............................................................
.................. .99% +
Multi-Season Growth
Fund..............................................................
............. 1.00% *
NetNet
Fund..............................................................
.......................... 1.28% +
Small Company Growth
Fund..............................................................
............ .97%
Real Estate Equity Investment
Fund..............................................................
... 1.10% +
Small-Cap Value
Fund..............................................................
................. 1.13% +
Value
Fund..............................................................
........................... 1.02% +
Framlington International Growth
Fund..............................................................
1.30%
Framlington Emerging Markets
Fund..............................................................
.... 1.54%
Framlington Healthcare
Fund..............................................................
.......... 1.30%
Intermediate Bond
Fund..............................................................
............... .68%
Bond
Fund..............................................................
............................ .71%
International Bond
Fund..............................................................
.............. .89% +
U.S. Government Income
Fund..............................................................
.......... .71% +
Cash Investment
Fund..............................................................
................. .55%
Money Market
Fund..............................................................
.................... .64%
U.S. Treasury Money Market
Fund..............................................................
...... .54%
- ----------------------
*Reflects advisory fees after waiver. Without waiver, the
Expense Ratio for
the Multi-Season Growth Fund would be 1.25%.
+The Advisor voluntarily reimbursed the Fund for
certain operating
expenses. In the absence of such expense reimbursement, the
Expense Ratio
would have been as follows: 1.21% for Mid-Cap Growth
Fund, 1.26% for
Small-Cap Value Fund, 1.06% for Value Fund, 1.13% for Real
Estate Equity
Investment Fund, 4.37 for the NetNet Fund, 5.18% for
the Framlington
Emerging Markets Fund, 7.08% for the Framlington
Healthcare Fund, 2.31%
for Framlington International Growth Fund, .93% for the
International Bond
Fund and .71% for the U.S. Government Income Fund.
</TABLE>
- ------------------------------------------------------------------
- ------------
EXAMPLE
- ------------------------------------------------------------------
- ------------
This example shows the amount of expenses you would pay
(directly or
indirectly) on a $1,000 investment in the Fund assuming (1) a 5%
annual return
and (2) redemption at the end of the time period (including the
deduction of the
deferred. This example is not a representation of past or future
performance or
operating expenses; actual performance or operating expenses
may be larger or
smaller than those shown.
<TABLE>
<CAPTION>
<S> <C>
<C> <C>
Conservative
Moderate Aggressive
Fund
Fund Fund
1 Year
o Redemption 6
6 6
o No Redemption 6
6 6
3 Years
o Redemption 18
18 18
o No Redemption 18
18 18
5 Years
o Redemption 31
31 31
o No Redemption 31
31 31
10 Years
o Redemption 69
69 69
o No Redemption 69
69 69
Based on the expenses for the Funds and the Underlying
Funds shown
above, and assuming the neutral asset allocation for each Fund
set forth below,
the average weighted expense ratio for each Fund, expressed as a
percentage of
each Fund's average daily net assets, is estimated to be as
follows:
</TABLE>
Expense Ratio
Conservative Fund.........................................
Moderate Fund.............................................
Aggressive Fund............................................
The Advisor expects to reimburse expenses with
respect to the
Conservative Fund, Moderate Fund and Aggressive Fund during the
current fiscal
year. The Advisor may discontinue such expense reimbursements at
any time in its
sole discretion. Without expense reimbursements, an investor in
Class Y 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: $_____, $_____, $_____ and
$_____ for the
Conservative Fund, $_____, $_____, $_____ and $_____ for the
Moderate Fund and
$_____, $_____, $_____ and $_____ for the Aggressive Fund.
Without expense
reimbursements, the total fund operating expenses an investor
would pay for
Class Y Shares would be 97.07% for the Conservative Fund,
41.06% for the
Moderate Fund and 14.30% for the Aggressive Fund.
<PAGE>
- ------------------------------------------------------------------
- ----------
FINANCIAL
HIGHLIGHTS
- ------------------------------------------------------------------
- ----------
The following financial highlights were audited by
Ernst & Young LLP,
independent auditors. This information should be read in
conjunction with the
Funds' most recent Annual Report, which is incorporated by
reference into the
SAI. You may obtain the Annual Report without charge by calling
(800) 438-5789.
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
Conservative Moderate Aggressive
Fund(a) Fund(a) Fund(a)
- ----------------- ----------------- ----------------
Period Period Period
Ended Ended Ended
6/30/97 6/30/97 6/30/97
Net asset value, beginning of period
$ 10.00 $ 10.00 $10.00
- ----------- ----------- ------
Income from investment operations:
Net investment income
0.10 0.06 0.01
Net realized and unrealized gain on investments
0.45 0.96 1.34
- ---------- ---------- ------
Total from investment operations
0.55 1.02 1.35
- ---------- ---------- ------
Less distributions:
Dividends from net investment income
- -- -- --
Total distributions ........................................
- -- -- --
- ---------- ---------- -------
Net asset value, end of period
$ 10.55 $ 11.02 $ 11.35
========== ========== =======
Total return (c) ...........................................
5.50% 10.20% 13.50%
======= ======= =======
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) ................
$ 105 $ 113 $ 1,483
Ratio of operating expenses to average net assets .......
0.55% (b) 0.55% (b) 0.55% (b)
Ratio of net investment income to
average net assets ....................................
4.24% (b) 2.52% (b) 1.08% (b)
Portfolio turnover rate.....................................
18% 5% 3%
Ratio of operating expenses to
average net assets without expenses reimbursed .....
97.07% (b) 41.06% (b) 14.30% (b)
- -----------------------------
(a) Class Y Shares of the Funds commenced operations on April
3, 1997.
(b) Annualized.
(c) Total return represents aggregate total return for the
period indicated.
</TABLE>
<PAGE>
- ------------------------------------------------------------------
- -------------
FUND
CHOICES
- ------------------------------------------------------------------
- -------------
What Funds are Offered?
This Prospectus describes Class Y Shares of the Funds.
This section
summarizes each Fund's goal and principal investments. The
section entitled
"What are the Risks of Investing in the Funds?" and the
SAI give more
information about the Funds' investment techniques and risks.
- ------------------------------------------------------------------
- ------------
CONSERVATIVE FUND
- ------------------------------------------------------------------
- ------------
The Fund's primary goal is to provide current income
with capital
appreciation as a secondary objective. The Fund invests in
Underlying Funds that
invest primarily in Fixed Income Securities. "Fixed Income
Securities" include
corporate bonds, debentures, notes and other similar corporate
debt instruments,
zero coupon bonds (discount debt obligations that do not make
interest payments)
and variable amount master demand notes that permit the amount of
indebtedness
to vary in addition to providing for periodic adjustments in the
interest rates.
The Fund may also invest in Underlying Funds that invest
primarily in
Equity Securities and may hold assets in cash or Cash
Equivalents. "Equity
Securities" include common stocks, preferred stocks,
warrants and other
securities convertible into common stock. "Cash Equivalents"
are instruments
which are highly liquid and virtually free of investment risk.
- ------------------------------------------------------------------
- -----------
MODERATE FUND
- ------------------------------------------------------------------
- -----------
The Fund's goal is to provide high total return through
both capital
appreciation and current income.
The Fund invests in Underlying Funds that invest
primarily in Equity
Securities and Fixed Income Securities. The Fund may also
hold assets in
cash or Cash Equivalents.
The Fund offers greater potential for capital appreciation
than does the
Conservative Fund by virtue of its larger investment in
those Underlying
Funds which invest primarily in Equity Securities, while
also offering
greater potential for investment income.
- ------------------------------------------------------------------
- ----------
AGGRESSIVE FUND
- ------------------------------------------------------------------
- ----------
The Fund's goal is to provide long-term capital
appreciation. The Fund
invests in Underlying Funds that invest primarily in
Equity Securities.
The Fund may also invest in Underlying Funds that invest in
Fixed Income
Securities and may hold some assets in cash or Cash
Equivalents.
Who May Want To Invest in the Funds?
The Funds are designed for investors who desire a
balance of both
capital appreciation and income. Each Fund represents a varying
combination of
these two goals. Depending on the Fund or Funds you choose, risk
of loss will be
greater or lesser based on the Funds' goals and objectives.
What are the Funds' Investments and Investment
Practices?
The Funds will invest their assets in the following
Underlying Funds,
within the ranges (expressed as a percentage of each Fund's
assets) indicated
below:
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
<C> <C> <C> <C>
Conservative Fund
Moderate Fund Aggressive Fund
Minimum Maximum
Minimum Maximum Minimum Maximum
Equity Funds
Accelerating Growth Fund............ 0% 5%
0% 10% 0% 15%
Equity Selection Fund............... 0% 10%
0% 20% 0% 30%
Framlington Emerging
Markets Fund................... 0% 5%
0% 10% 0% 15%
Framlington Healthcare Fund......... 0% 5%
0% 5% 0% 10%
Framlington International
Growth Fund.................... 0% 5%
0% 10% 0% 15%
Growth & Income Fund................ 0% 10%
0% 15% 0% 20%
International Equity Fund........... 0% 5%
0% 10% 0% 15%
Micro-Cap Equity Fund............... 0% 5%
0% 5% 0% 5%
Mid-Cap Growth Fund................. 0% 5%
0% 10% 0% 15%
Multi-Season Growth Fund............ 0% 20%
0% 30% 0% 40%
NetNet Fund......................... 0% 5%
0% 5% 0% 5%
Real Estate Equity
Investment Fund................ 0% 10%
0% 20% 0% 25%
Small-Cap Value Fund................ 0% 10%
0% 20% 0% 30%
Small Company Growth Fund........... 0% 10%
0% 20% 0% 30%
Value Fund.......................... 0% 20%
0% 30% 0% 40%
Fixed Income Funds
Bond Fund........................... 0% 80%
0% 50% 0% 30%
Intermediate Bond Fund.............. 0% 80%
0% 50% 0% 30%
International Bond Fund............. 0% 30%
0% 20% 0% 10%
U.S. Government Income
Fund........................... 0% 60%
0% 40% 0% 20%
Money Market Funds
Cash Investment Fund................ 0% 10%
0% 10% 0% 10%
Money Market Fund................... 0% 10%
0% 10% 0% 10%
U.S. Treasury Money Market
Fund........................... 0% 10%
0% 10% 0% 10%
</TABLE>
While the Advisor intends to invest each Fund's
assets in the
Underlying Funds within the ranges set forth above, and to adjust
periodically
the allocations in response to economic and market conditions,
each Fund has a
"neutral mix" representing the intended typical allocations of the
Fund's assets
over time.
Each Fund's neutral asset allocation is expected to be as
follows:
<TABLE>
<CAPTION>
<S> <C>
<C> <C>
Conservative Fund
Moderate Fund Aggressive Fund
Equity Funds........................ 25%
60% 85%
Fixed Income Funds.................. 70%
35% 15%
Money Market Funds and
Cash.............................. 5%
5% 0%
</TABLE>
Each Fund's investments are concentrated in the
Underlying Funds, and
the investment performance of each Fund is directly related to
the performance
of the Underlying Funds in which it invests. See "What are the
Underlying Funds'
Investments and Investment Practices?" for a description of
the Underlying
Funds.
In addition to shares of the Underlying Funds, each
Fund may invest
cash balances in repurchase agreements and other money market
investments to
maintain liquidity in an amount to meet expenses or for day-to-
day operating
purposes.
When the Advisor believes that market conditions
warrant, a Fund may
adopt a temporary defensive position and may invest without
limit in money
market securities denominated in U.S. dollars or in the currency
of any foreign
country.
What are the Underlying Funds' Investments and Investment
Practices?
- ------------------------------------------------------------------
- ------------
ACCELERATING
GROWTH FUND
- ------------------------------------------------------------------
- -------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to
provide long-term
capital appreciation; its secondary goal is to provide income.
Under normal
conditions, the Fund will invest at least 65% of its
assets in Equity
Securities.
In choosing Equity Securities the Advisor
considers, among other
factors:
o the potential for accelerated earnings growth
o the maintenance of a substantial competitive advantage
o a focused management team
o a stable balance sheet
PORTFOLIO MANAGEMENT. A committee of professional
portfolio managers
employed by the Advisor makes investment decisions for the Fund.
- ------------------------------------------------------------------
- -----------
EQUITY SELECTION
FUND
- ------------------------------------------------------------------
- -----------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to
provide shareholders
with long-term capital appreciation.
Under normal market conditions, the Fund will invest at
least 65% of its
assets in Equity Securities.
The Advisor's dedicated research team invests the Fund's
assets in Equity
Securities which it believes are of high quality and
undervalued compared
to stocks of other companies in the same industry.
The Fund generally invests in issuers with market
capitalizations of at
least $3 billion.
The Fund diversifies its assets by industry in
approximately the same
weightings as those of the Standard & Poor's 500 Composite
Stock Price
Index ("S&P 500").
PORTFOLIO MANAGEMENT. A committee of professional
portfolio managers
employed by the Advisor makes investment decisions for the Fund.
- ------------------------------------------------------------------
- -------------
FRAMLINGTON EMERGING MARKETS FUND
- ------------------------------------------------------------------
- -------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
long-term capital
appreciation. The Fund invests at least 65% of its assets in
companies in
emerging market countries, as defined by the World Bank, the
International
Finance Corporation, the United Nations or the European Bank for
Reconstruction
and Moderate.
A company will be considered to be in an emerging market
country if:
the company is organized under the laws of, or has a
principal office in,
an emerging market country the company's stock is traded
primarily in an
emerging market country, most of the company's assets are
in an emerging
market country, or most of the company's revenues or
profits come from
goods produced or sold, investments made or services
performed in an
emerging market country.
PORTFOLIO MANAGEMENT. William Calvert of the Sub-
Advisor, is the
Fund's primary portfolio manager. Prior to joining the Sub-
Advisor, Mr. Calvert
was an Economic Strategist for LCF Edmond de Rothschild Securities
(1993-1997),
Vice President Emerging Markets for Citibank Global Asset
Management (1993) and
Far East Fund Manager for Municipal Mutual Insurance (1989-1992).
- ------------------------------------------------------------------
- -------------
FRAMLINGTON
HEALTHCARE FUND
- ------------------------------------------------------------------
- ------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
long-term capital
appreciation by investing in companies providing healthcare and
medical services
and products worldwide. Currently, most of such companies are
located in the
United States.
The Fund will invest in:
pharmaceutical producers
biotechnology firms
medical device and instrument manufacturers distributors
of healthcare
products healthcare providers and managers other
healthcare service
companies
Under normal conditions, the Fund will invest at
least 65% of its
assets in healthcare companies, which are companies for which
at least 50% of
sales, earnings or assets arise from or are dedicated to
health services or
medical technology activities.
PORTFOLIO MANAGEMENT. Antony Milford is the head of the
Specialist Desk for
the Sub-Advisor. He is the Fund's primary portfolio manager, a
position he has
held since the Fund's inception. Mr. Milford has managed
funds for the
Sub-Advisor since 1971.
- ------------------------------------------------------------------
- ------------
FRAMLINGTON INTERNATIONAL GROWTH FUND
- ------------------------------------------------------------------
- ------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
long-term capital
appreciation. Under normal market conditions, at least 65% of the
Fund's assets
will be invested in Equity Securities in at least three foreign
countries.
The Sub-Advisor will choose companies that demonstrate:
above-average profitability
high quality management
the ability to grow significantly in their countries
PORTFOLIO MANAGEMENT. A committee of professional
portfolio managers
employed by the Sub-Advisor makes investment decisions for the
Fund. Simon Key,
Chief Investment Officer of the Sub-Advisor, heads the Committee.
- ------------------------------------------------------------------
- ------------
GROWTH & INCOME FUND
- ------------------------------------------------------------------
- ------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to
provide capital
appreciation and current income. It primarily invests in a
broadly diversified
portfolio of dividend-paying Equity Securities and is designed
for investors
seeking current income and capital appreciation from the equity
markets.
Under normal circumstances, the Fund will invest at
least 65% of its
assets in income-producing common stocks and convertible
preferred stocks.
The Fund may also purchase Fixed Income Securities which
are convertible
into or exchangeable for common stock.
The Fund may invest up to 35% of its assets in Fixed
Income Securities,
including 20% of its assets in Fixed Income Securities that
are rated below
investment grade.
The Advisor generally selects large, well-known
companies that it
believes have favorable prospects for dividend growth and capital
appreciation.
The Fund will seek to produce a current yield greater than the S&P
500.
The Fund focuses on dividend-paying Equity Securities
because, over
time, dividend income has accounted for a significant
portion of the total
return of the S&P 500. In addition, dividends are usually a
more stable and
predictable source of return than capital appreciation. The
Advisor believes
that stocks which distribute a high level of current income
generally have more
stable prices than those which pay below average dividends.
PORTFOLIO MANAGEMENT. Otto Hinzmann, Jr. is the Fund's
portfolio manager, a
position he has held since February 1995. Mr. Hinzmann has been a
Vice President
and Director of Equity Management of the Advisor or MCM since
January 1987.
- ------------------------------------------------------------------
- ------------
INTERNATIONAL EQUITY FUND
- ------------------------------------------------------------------
- ------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
long-term capital
appreciation. The Fund invests primarily in foreign
securities, American
Depositary Receipts ("ADRs") and European Depositary Receipts
("EDRs"). At least
once a quarter, the Advisor creates a list of foreign securities,
ADRs and EDRs
(the "Securities List") which the Fund may purchase based on the
country where
the company is located, its competitive advantages, its past
financial record,
its future prospects for growth and the market for its
securities. The Advisor
updates the Securities List frequently (but at least
quarterly), adds new
securities to the Securities List if they are eligible and sells
securities not
on the updated Securities List as soon as practicable.
After the Advisor creates the Securities List, it divides
the list into
two sections. The first section is designed to provide broad
coverage of
international markets. The second section increases exposure to
securities that
the Advisor expects will perform better than other stocks in
their industry
sectors and their markets as a whole. When the Advisor believes
broader market
exposure will benefit the Fund, it will allocate up to 80% of the
Fund's assets
in first section securities. When the Advisor identifies strong
potential for
specific securities to perform well, the Fund may invest up to 50%
of its assets
in second section securities.
Under normal market conditions, at least 65% of the
Fund's assets are
invested in Equity Securities in at least three foreign countries.
The Fund emphasizes companies with a market capitalization of
at least $100
million.
PORTFOLIO MANAGEMENT. Todd B. Johnson and Theodore Miller
jointly manage
the Fund. Mr. Johnson, a Chief Investment Officer of the
Advisor, and Mr.
Miller, senior portfolio manager of the Fund, have managed the
Fund since July
1992 and October 1996, respectively. Mr. Miller previously worked
as the primary
analyst for the Fund (1996) and for Interacciones Global Inc.
(1993-1995) and
McDonald & Co. Securities Inc. (1991-1993).
- ------------------------------------------------------------------
- ------------
MICRO-CAP EQUITY FUND
- ------------------------------------------------------------------
- ------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
long-term capital
appreciation. It invests primarily in Equity Securities
of smaller
capitalization companies. The Fund attempts to provide
investors with
potentially higher returns than a fund that invests primarily
in larger more
established companies. Since smaller capitalization companies are
generally not
as well known to investors and have less of an investor
following than larger
companies, they may provide higher returns due to
inefficiencies in the
marketplace.
Under normal market conditions, the Fund will invest at
least 65% of its
assets in Equity Securities of companies having a market
capitalization of
$200 million or less, which is considerably less
than the market
capitalization of S&P 500 companies.
The Advisor will choose companies that:
present the ability to grow significantly over the next
several years may
benefit from changes in technology, regulations and industry
sector trends
are still in the developmental stage and may have limited
product lines
PORTFOLIO MANAGEMENT. A committee of professional
portfolio managers
employed by the Advisor makes investment decisions for the Fund.
- ------------------------------------------------------------------
- -------------
MID-CAP GROWTH FUND
- ------------------------------------------------------------------
- -------------
GOAL AND OBJECTIVES. The Fund's goal is to provide
long-term capital
appreciation. The Fund invests at least 65% of its assets
in the Equity
Securities of companies with market capitalizations between $100
million and $5
billion. Its style, which focuses on both growth prospects and
valuation, is
known as GARP (Growth at a Reasonable Price) and seeks to
produce attractive
returns during various market environments.
The Advisor chooses the Fund's investments as
follows: The Advisor
reviews the earnings growth of approximately 10,000 companies
over the past
three years. It invests in approximately 50 to 100 companies based
on:
superior earnings growth
financial stability
relative market value
price changes compared to the Standard & Poor's Mid-Cap 400
Index
PORTFOLIO MANAGEMENT. A committee of professional
portfolio managers
employed by the Advisor makes investment decisions for the Fund.
- ------------------------------------------------------------------
- ------------
MULTI-SEASON GROWTH FUND
- ------------------------------------------------------------------
- ------------
GOAL AND OBJECTIVES. The Fund's goal is to provide
long-term capital
appreciation. This goal is "fundamental" and cannot be
changed without
shareholder approval. Its style, which focuses on both growth
prospects and
valuation, is known as GARP (Growth at a Reasonable Price) and
seeks to produce
attractive returns during various market environments. The Fund
invests at least
65% of its assets in Equity Securities. The Fund generally
invests in Equity
Securities with market capitalizations over $1 billion.
The Advisor chooses the Fund's investments as
follows: The Advisor
reviews the earnings growth of approximately 5,500 companies over
the past five
years. It invests in approximately 50 to 100 companies based on:
superior earnings growth
financial stability
relative market value
price changes compared to the S&P 500
PORTFOLIO MANAGEMENT. The portfolio managers of the Fund,
Leonard J. Barr
II and Lee P. Munder, have managed the Fund since its
inception in February
1995. Mr. Barr is the Senior Vice President and Director of
Research of the
Advisor. From April 1988 to February 1995 he held similar
positions with MCM.
Mr. Munder is the President and Chief Executive Officer of
the Advisor,
positions he has held with the Advisor or MCM since 1985.
- ------------------------------------------------------------------
- -------------
NETNET FUND
- ------------------------------------------------------------------
- -------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to
provide long term
capital appreciation. Under normal conditions, the Fund will
invest at least 65%
of its assets in Equity Securities.
In choosing which companies' stock the Fund should
purchase, the
Advisor will invest in those companies listed on U.S. securities
exchanges or
NASDAQ which are engaged in the research, design, development of
manufacturing,
or engaged to a significant extent in the business of
distributing products,
processes or services for use with Internet or Intranet related
businesses. The
Internet is a world-wide network of computers designed to permit
users to share
information and transfer data quickly and easily. The World
Wide Web ("WWW"),
which is a means of graphically interfacing with the Internet,
is a hyper-text
based publishing medium containing text, graphics,
interactive feedback
mechanisms and links within WWW documents and to other WWW
documents. An
Intranet is the application of WWW tools and concepts to a
company's internal
documents and databases.
PORTFOLIO MANAGEMENT. A committee of professional
portfolio managers
employed by the Advisor makes investment decisions for the Fund.
- ------------------------------------------------------------------
- -------------
REAL ESTATE EQUITY INVESTMENT FUND
- ------------------------------------------------------------------
- -------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
both capital
appreciation and current income. This goal is "fundamental"
and cannot be
changed without shareholder approval. The Fund invests
primarily in U.S.
companies which are principally engaged in the real estate
industry or which own
significant real estate. A company is "principally engaged" in
the real estate
industry if at least 50% of its assets, gross income or net
profits are
attributable to ownership, construction, management or sale of
residential,
commercial or industrial real estate. The Fund will not own
real estate
directly.
Under normal conditions, the Fund will invest at least
65% of its total
assets in Equity Securities of U.S. companies in the real
estate industry
including:
equity real estate investment trusts ("REITS")
brokers, home builders and real estate developers
companies with substantial real estate holdings (for
example, paper and
lumber producers, hotels and entertainment companies)
manufacturers and distributors of building supplies
mortgage REITS
financial institutions which issue or service mortgages
In addition, the Fund may invest:
up to 35% of its assets in companies other than real
estate industry
companies in Fixed Income Securities, including up to 5% of its
assets in debt
securities rated below investment grade or unrated if secured
by real estate
assets if the Advisor believes that the underlying collateral is
sufficient in
REITS only if they are traded on a securities exchange or NASDAQ
PORTFOLIO MANAGEMENT. Peter K. Hoglund is the portfolio
manager of the
Fund, a position he has held since October 1996. Mr. Hoglund
formerly was the
primary analyst of the Fund (October 1994 to October 1996).
- ------------------------------------------------------------------
- -------------
SMALL-CAP VALUE FUND
- ------------------------------------------------------------------
- -------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
long-term capital
appreciation, with income as a secondary objective. It invests
primarily in
Equity Securities of smaller capitalization companies. The
Fund attempts to
provide investors with potentially higher returns than a
fund that invests
primarily in larger more established companies. Since small
companies are
generally not as well known to investors and have less of an
investor following
than larger companies, they may provide higher returns due to
inefficiencies in
the marketplace.
Under normal market conditions, the Fund will invest at
least 65% of its
assets in Equity Securities of companies with market
capitalizations below
$750 million, which is less than the market
capitalization of S&P 500
companies.
The Advisor will concentrate on companies
that it believes
are undervalued. A company's Equity Securities may be undervalued
because it is
temporarily overlooked or out of favor due to general economic
conditions, a
market decline, industry conditions or developments affecting
the particular
company. The Fund will usually invest in Equity Securities of
companies with low
price/earnings ratios, low price/cash flow ratios and low
price/book values
compared to the general market.
In addition to valuation, the Advisor considers these
factors, among
others, in choosing companies:
a stable or improving earnings record sound finances above-
average growth
prospects participation in a fast growing industry
strategic niche
position in a specialized market adequate capitalization
PORTFOLIO MANAGEMENT. Gerald Seizert and Edward Eberle
jointly manage the
Fund. Mr. Seizert has managed the Fund since it commenced
operations. Prior to
joining the Advisor in 1995, Mr. Seizert was a Director and
Managing Partner of
Loomis, Sayles & Company, L.P. Mr. Eberle, who has managed the
Fund since March
1997, was formerly the primary analyst for the Fund. Prior
to joining the
Advisor in 1995, he was an Executive Vice President and
Portfolio Manager for
Westpointe Financial Corporation.
- ------------------------------------------------------------------
- -------------
SMALL COMPANY GROWTH FUND
- ------------------------------------------------------------------
- -------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
long-term capital
appreciation. The Fund invests primarily in Equity
Securities of smaller
capitalization companies. The Fund attempts to provide
investors with
potentially higher returns than a fund that invests primarily
in larger more
established companies. Since smaller capitalization companies are
generally not
as well known to investors and have less of an investor
following than larger
companies, they may provide higher returns due to
inefficiencies in the
marketplace.
Under normal market conditions, the Fund will invest at
least 65% of the
Fund's assets in Equity Securities of companies with market
capitalizations
below $750 million, which is less than the market
capitalization of S&P 500
companies.
The Advisor considers these factors, among others, in
choosing companies:
above-average growth prospects
participation in a fast-growing industry
strategic niche position in a specialized market
adequate capitalization
PORTFOLIO MANAGEMENT. Carl Wilk and Michael P. Gura
jointly manage the
Fund. Mr. Wilk, a Senior Portfolio Manager of the Advisor, has
managed the Fund
since October 1996 and was the Fund's primary analyst (1995 to
1996). Prior to
joining the Advisor in 1995, Mr. Wilk was a Senior Equity
Research Analyst at
Woodbridge. Mr. Gura has managed the Fund since March 1997. Prior
to joining the
Advisor in 1995, Mr. Gura was a Vice President, Senior Equity
Analyst for
Woodbridge (1994 - 1995) and an investment officer for
Manufacturers National
Bank Trust (1989 - 1994).
- ------------------------------------------------------------------
- -------------
VALUE FUND
- ------------------------------------------------------------------
- -------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
long-term capital
appreciation, with income as a secondary objective. The Fund
invests primarily
in the Equity Securities of well-established companies with
intermediate to
large capitalizations which typically exceed $750 million.
The Fund will invest at least 65% of its assets in Equity
Securities.
The Advisor will concentrate on companies that it
believes are
undervalued. A company's Equity Securities may be undervalued
because it is
temporarily overlooked or out of favor due to general economic
conditions, a
market decline, industry conditions or developments affecting
the particular
company. The Fund will usually invest in Equity Securities of
companies with low
price/earnings ratios, low price/cash flow ratios and low
price/book values
compared to the general market.
In addition to valuation, the Advisor considers these
factors, among
others, in choosing companies:
a stable or improving earnings record sound finances above-
average growth
prospects participation in a fast growing industry
strategic niche
position in a specialized market adequate capitalization
PORTFOLIO MANAGEMENT. Gerald Seizert and Edward Eberle
jointly manage the
Fund. Mr. Seizert, an Executive Vice President and Chief
Investment Officer of
the Advisor, has managed the Fund since it commenced
operations. Prior to
joining the Advisor in 1995, Mr. Seizert was a Director and
Managing Partner of
Loomis, Sayles & Company, L.P. Mr. Eberle, who has managed
the Fund since
October 1996, was formerly the primary analyst for the Fund.
Prior to joining
the Advisor in 1995, he was an Executive Vice President and
Portfolio Manager
for Westpointe Financial Corporation.
- ------------------------------------------------------------------
- -------------
BOND FUND
- ------------------------------------------------------------------
- -------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to
provide a high level
of current income and, secondarily, capital appreciation.
Under normal market conditions, at least 65% of the Fund's
assets will be
invested in Fixed Income Securities.
The Fund's dollar-weighted average maturity will generally
be between six
and 15 years.
PORTFOLIO MANAGEMENT. James C. Robinson and Gregory A. Prost
jointly manage
the Fund. Mr. Robinson and Mr. Prost have managed the Fund since
March 1995 and
May 1995, respectively. Mr. Robinson has been a Vice
President and Chief
Investment Officer of the Advisor or MCM since 1987. Mr. Prost has
been a Senior
Fixed Income Portfolio of the Advisor or MCM since 1985. Prior
to joining the
Advisor, he was a Vice President and Senior Fund Manager for
First of America
Investment Corp.
- ------------------------------------------------------------------
- -------------
INTERMEDIATE BOND FUND
- ------------------------------------------------------------------
- -------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a
competitive rate
of return which, over time, exceeds the rate of inflation
and the return
provided by money market instruments.
Under normal conditions, at least 65% of the Fund's
assets will be
invested in Fixed Income Securities. The Fund's dollar-
weighted average
maturity will generally be between three and eight years.
PORTFOLIO MANAGEMENTS. Anne K. Kennedy and James C. Robinson
jointly manage
the Fund. Ms. Kennedy, Vice President and Director of Corporate
Bond Trading of
the Advisor or MCM since 1991, has managed the Fund since
March 1995. Mr.
Robinson, Vice President and Chief Investment Officer of the
Advisor or MCM
since 1987, has managed the Fund since March 1995.
- ------------------------------------------------------------------
- ------------
INTERNATIONAL BOND FUND
- ------------------------------------------------------------------
- ------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to realize
a competitive
total return through a combination of current income and capital
appreciation.
Under normal market conditions, at least 65% of the Fund's
assets will be
invested in Fixed Income Securities of issuers in at least three
countries other
than the United States. The Fund's dollar-weighted average
maturity will
generally be between three and 15 years. The Fund will invest
mostly in
foreign debt obligations issued by foreign governments and
their agencies,
instrumentalities or political subdivisions debt
securities issued or
guaranteed by supra-national organizations, such as the
World Bank debt
securities of banks or bank holding companies corporate
debt securities
other debt securities, including those convertible into
foreign stock.
PORTFOLIO MANAGEMENT. Gregory A. Prost and Sharon E. Fayolle
jointly manage
the Fund. Mr. Prost, Senior Fixed Income Portfolio Manager of
the Advisor or
MCM, has managed the Fund since October 1996. Prior to joining
MCM in 1995, he
was a Vice President and Senior Fund Manager for First of
America Investment
Corp. Ms. Fayolle, Vice President and Director of Money Market
Trading for the
Advisor, has managed the Fund since October 1996. Prior to
joining the Advisor
in 1996, she was a European Portfolio Manager for Ford Motor
Company.
- ------------------------------------------------------------------
- ------------
U.S. GOVERNMENT INCOME FUND
- ------------------------------------------------------------------
- ------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
high current
income.
Under normal market conditions, at least 65% of the Fund's
assets will be
invested in U.S. government obligations. The Fund's
dollar-weighted
average maturity will generally be between six and 15 years.
PORTFOLIO MANAGEMENT. James C. Robinson and Peter G. Root
jointly manage
the Fund. Mr. Robinson, Vice President and Chief Investment
Officer of the
Advisor or MCM since 1987, and Mr. Root, Vice President and
Director of
Government Securities Trading of the Advisor since March 1995,
have managed the
Fund since March 1995. Mr. Root joined MCM in 1991.
- ------------------------------------------------------------------
- ------------
CASH INVESTMENT FUND
- ------------------------------------------------------------------
- ------------
The Fund's primary goal is to provide as high a level of
current interest
income as is consistent with maintaining liquidity and stability
of principal.
The Fund invests in a broad range of short-term, high quality,
U.S.
dollar-denominated instruments.
- ------------------------------------------------------------------
- ------------
U.S. TREASURY MONEY MARKET FUND
- ------------------------------------------------------------------
- -----------
The Fund's goal is to provide as high a level of current
interest income
as is consistent with maintaining liquidity and stability of
principal.
The Fund invests its assets solely in short-term bonds,
bills and notes
issued by the U.S. Treasury (including "stripped"
securities), and in
repurchase agreements relating to such obligations.
- ------------------------------------------------------------------
- ------------
<PAGE>
MONEY MARKET FUND
- ------------------------------------------------------------------
- -------------
The Fund's goal is to provide current income
consistent with the
preservation of capital and liquidity. The Fund invests
its assets in a
broad range of short-term, high quality, U.S.
dollar denominated
instruments, such as
bank, commercial and other obligations (including Federal,
state and local
government obligations) that are available in the money
markets.
General Information
Each Equity Fund invests primarily in Equity Securities,
which includes
common stocks, preferred stocks, warrants and other securities
convertible into
common stocks. Many of the common stocks the Funds (other than
Growth & Income
Fund) will buy will not pay dividends; instead stocks will be
bought for the
potential that their prices will increase, providing capital
appreciation for
the Fund. The value of Equity Securities will fluctuate due to
many factors,
including the past and predicted earnings of the issuer, the
quality of the
issuer's management, general market conditions, the forecasts
for the issuer's
industry and the value of the issuer's assets. Holders of Equity
Securities only
have rights to value in the company after all debts have been
paid, and they
could lose their entire investment in a company that
encounters financial
difficulty. Warrants are rights to purchase securities at a
specified time at a
specified price.
Each Fund and each Underlying Fund may invest in Cash
Equivalents,
which are high-quality, short-term money market instruments
including, among
other things, commercial paper, bankers' acceptances and
negotiable certificates
of deposit of banks or savings and loan associations, short-
term corporate
obligations and short-term securities issued by, or guaranteed
by, the U.S.
Government and its agencies or instrumentalities. These
instruments will be used
primarily pending investment, to meet anticipated redemptions or
as a temporary
defensive measure. If a Fund is investing defensively, it may
not be pursuing
its investment objective.
All Funds and Underlying Funds may enter into
Repurchase Agreements.
Under a repurchase agreement, a fund agrees to purchase securities
from a seller
and the seller agrees to repurchase the securities at a later
time, typically
within seven days, at a set price. The seller agrees to set aside
collateral at
least equal to the repurchase price. This ensures that the fund
will receive the
purchase price at the time it is due, unless the seller
defaults or declares
bankruptcy, in which event the fund will bear the risk of
possible loss due to
adverse market action or delays in liquidating the underlying
obligation. With
respect to the Money Market Funds, the securities held subject
to a repurchase
agreement may have stated maturities exceeding 397 days provided
the repurchase
agreement itself matures in 397 days.
The Equity Funds may purchase ADRs, GDRs and
European Depositary
Receipts ("EDRs"). ADRs are issued by U.S. financial
institutions and GDRs and
EDRs are issued by European financial institutions. They are
receipts evidencing
ownership of underlying Foreign Securities.
The Underlying Funds may buy shares of registered Money
Market Funds.
The Underlying Funds will bear a portion of the expenses of
any investment
company whose shares they purchase, including operating costs
and investment
advisory, distribution and administration fees. These
expenses would be in
addition to a Fund's own expenses. Each Underlying Fund may
invest up to 10% of
its assets in other investment companies and no more than 5% of
its assets in
any one investment company.
All Underlying Funds may purchase Fixed Income
Securities. Fixed Income
Securities are securities which either pay interest at set times
at either fixed
or variable rates, or which realize a discount upon maturity.
Fixed Income
Securities include corporate bonds, debentures, notes and
other similar
corporate debt instruments, zero coupon bonds (discount debt
obligations that do
not make interest payments) and variable amount master demand
notes that permit
the amount of indebtedness to vary in addition to providing
for periodic
adjustments in the interest rate. Each Underlying Fund may
purchase U.S.
Government Securities, which are securities issued by, or
guaranteed by, the
U.S. Government or its agencies or instrumentalities. Such
securities include
U.S. Treasury bills, which have initial maturities of less than
one year, U.S.
Treasury notes, which have initial maturities of one to ten years,
U.S. Treasury
bonds, which generally have initial maturities of greater than
ten years, and
obligations of the Federal Home Loan Mortgage Corporation,
Federal National
Mortgage Association and Government National Mortgage Association.
Each Underlying Fund may Borrow Money in an amount
up to 5% of its
assets for temporary purposes and in an amount up to 33 1/3% of
its assets to
meet redemptions. This is a "fundamental" policy which only can
be changed by
shareholders.
All of the Funds, other than the International
Bond Fund, are
classified as "diversified funds." With respect to 75% of
each diversified
Fund's assets, each diversified fund cannot invest more than 5% of
its assets in
one issuer (other than the U.S. Government and its
agencies and
instrumentalities). In addition, each diversified fund cannot
invest more than
25% of its assets in a single issuer. These restrictions do
not apply to the
International Bond Fund.
Each Money Market Fund will invest primarily in Eligible
Securities (as
defined by the SEC) with remaining maturities of 397 days or less
as defined by
the SEC (although securities subject to repurchase agreements,
variable and
floating rate securities and certain other securities may
bear longer
maturities), and the dollar-weighted average portfolio maturity
of each Money
Market Fund will not exceed 90 days. Eligible Securities consist
of securities
that are determined by the Advisor, under guidelines established
by the Boards
of Trustees and Directors, to present minimal credit risk.
Investment Charts
These charts summarize the Underlying Funds' investments
and investment
practices. The SAI contains more details. All percentages
are based on an
Underlying Fund's total assets except where otherwise noted. See
"What are the
Risks of Investing in the Funds?" for a description of the risks
involved with
the Underlying Funds' investment practices.
<TABLE>
<CAPTION>
<S> <C> <C>
<C> <C> <C>
- ------------------------------------------------------------------
- ---------------------------------------------------------------
EQUITY
FUNDS
- ------------------------------------------------------------------
- ---------------------------------------------------------------
------------------------------------------ ------------- --------
- ------ -------------- ---------------- ----------------
Framling-
Acceler-
ton Emerging Framling- Framlington
Investments and ating Equity
Markets ton International
Investment Practices Growth
Selection Healthcare Growth
------------------------------------------ ------------- --------
- ------ -------------- ---------------- ----------------
------------------------------------------ ------------- --------
- ------ -------------- ---------------- ----------------
Foreign Securities. Includes
securities issued by non-U.S.
companies. Present more risks than 25% 25%
Y Y Y
U.S. securities.
------------------------------------------ ------------- --------
- ------ -------------- ---------------- ----------------
------------------------------------------ ------------- --------
- ------ -------------- ---------------- ----------------
Lower-Rated Debt Securities. Fixed
income securities which are rated
below investment grade by Standard & Y Y
Y Y Y
Poor's Ratings Service, Moody's
Investors Service Inc. or other
nationally recognized rating
agency. Considered riskier than
investment grade securities.
------------------------------------------ ------------- --------
- ------ -------------- ---------------- ----------------
------------------------------------------ ------------- --------
- ------ -------------- ---------------- ----------------
Investment-Grade Asset Backed
Securities. Includes debt N N
N N N
securities backed by mortgages,
installment sales contracts and
credit card receivables.
------------------------------------------ ------------- --------
- ------ -------------- ---------------- ----------------
------------------------------------------ ------------- --------
- ------ -------------- ---------------- ----------------
Stripped Securities. Includes
participations in trusts that hold
U.S. Treasury and agency securities N N
N N N
which represent either the interest
payments or principal payments on
the securities or combinations of
both.
------------------------------------------ ------------- --------
- ------ -------------- ---------------- ----------------
------------------------------------------ ------------- --------
- ------ -------------- ---------------- ----------------
Forward Foreign Currency Exchange
Contracts. Obligations of a Fund to
purchase or sell a specific currency
at a future date at a set price. Y Y
Y Y Y
May decrease a Fund's loss due to a
change in currency value, but also
limits gains from currency changes.
------------------------------------------ ------------- --------
- ------ -------------- ---------------- ----------------
------------------------------------------ ------------- --------
- ------ -------------- ---------------- ----------------
When-Issued and Delayed Delivery
Securities. Securities purchased at
a set price, with delivery and Y Y
Y Y Y
payment in the future. The value of
securities may change between the
time the price is set and payment.
Not to be used for speculation.
------------------------------------------ ------------- --------
- ------ -------------- ---------------- ----------------
------------------------------------------ ------------- --------
- ------ -------------- ---------------- ----------------
Futures and Options on Futures.1
Contracts in which a Fund agrees, at
maturity, to make delivery of or Y Y
Y Y Y
receive securities, the cash value
of an index or foreign currency.
Used for hedging purposes or to
maintain liquidity.
------------------------------------------ ------------- --------
- ------ -------------- ---------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
<C> <C> <C> <C> <C>
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
Real Estate
Equity
Growth Inter- Micro- Mid- Multi-
Invest-ment Small- Small
& national Cap Cap Season
NetNet Cap Company
Income Equity Equity Growth Growth
Fund Value Growth Value
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
25% Y 25% 25% 25%
Y N 25% 25% 25%
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
Y Y Y Y Y
Y Y Y Y 5%
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
N N N N N
N N N N N
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
N N N N N
N N N N N
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
Y Y Y Y Y
Y N Y Y 20%
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
Y Y Y Y Y
Y Y Y Y Y
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
Y Y Y Y Y
Y Y Y Y Y
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
<C> <C> <C>
EQUITY FUNDS
(continued)
------------------------------------------ ------------- --------
- ------ ---------------- ----------------- ------------------
Acceler-
Framling- Framling- Framlington
Investments and ating Equity
ton Emerging ton International
Investment Practices Growth
Selection Markets Healthcare Growth
------------------------------------------ ------------- --------
- ------ ---------------- ----------------- ------------------
------------------------------------------ ------------- --------
- ------ ---------------- ----------------- ------------------
Options. A Fund may buy options
giving it the right to require a
buyer to buy a security held by the
Fund (put options), buy options
giving it the right to require a
seller to sell securities to the
Fund (call options), sell (write) Y Y
Y Y Y
options giving a buyer the right to
require the Fund to buy securities
from the buyer or write options
giving a buyer the right to require the Fund to sell securities
to the buyer
during a set time at a set price. Options may relate to
stock indices,
individual securities, foreign currencies or futures contracts.
See the SAI for
more details and additional limitations.
------------------------------------------ ------------- --------
- ------ ---------------- ----------------- ------------------
------------------------------------------ ------------- --------
- ------ ---------------- ----------------- ------------------
Reverse Repurchase Agreements. A
Fund sells securities and agrees to
buy them back later at an agreed Y Y
Y Y Y
upon time and price. A method to
borrow money for temporary purposes.
------------------------------------------ ------------- --------
- ------ ---------------- ----------------- ------------------
------------------------------------------ ------------- --------
- ------ ---------------- ----------------- ------------------
Illiquid Securities. Typically
there is no ready market for these 15% 15%
15% 15% 15%
securities, which inhibits the
ability to sell them and to obtain
their full market value, or there
are legal restrictions on their
resale by the Fund.
------------------------------------------ ------------- --------
- ------ ---------------- ----------------- ------------------
------------------------------------------ ------------- --------
- ------ ---------------- ----------------- ------------------
Lending Securities. May lend
securities to financial institutions
which pay for the use of the
securities. May increase return. 25% 25%
25% 25% 25%
Slight risk of borrower failing
financially.
------------------------------------------ ------------- --------
- ------ ---------------- ----------------- ------------------
Key:
Y = investment allowed without restriction
N = investment not allowed
1 The limitation on margins and premiums for futures is 5% of a
Fund's assets
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
<C> <C> <C> <C> <C>
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
Real Estate
Equity
Growth Inter- Micro- Mid- Multi-
Invest-ment Small- Small
& national Cap Cap Season
NetNet Cap Company
Income Equity Equity Growth Growth
Fund Value Growth Value
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
Y Y Y Y Y
Y Y Y Y Y
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
Y Y Y Y N
Y Y Y Y Y
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
15% 15% 15% 15% 15%
15% 15% 15% 15% 15%
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
25% 25% 25% 25% 25%
25% 25% 25% 25% 25%
------------ ------------ ------------- ------------ ----------
- -- ------------ ------------ ------------ -------------- --------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
<C> <C> <C>
- ------------------------------------------------------------------
- ---------------------------------------------------------------
BOND
FUNDS
- ------------------------------------------------------------------
- ---------------------------------------------------------------
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
Investments and Bond
Intermediate International U.S. Government
Investment Practices Fund
Bond Fund Bond Fund Income Fund
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
Foreign Securities. Securities issued by
foreign governments and their agencies,
instrumentalities or political subdivisions,
supranational organizations, and foreign
corporations. 25%
25% Y 25%
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
Preferred Stock. May be convertible to common
stock. Preferred stock ranks senior to common
stock in capital structure and payment of
dividends. Y
Y Y Y
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
Asset-Backed Securities. Includes debt
securities backed by mortgages, installment
sales contracts and credit card receivables. Y
Y Y Y
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
Interest Rate and Currency Swaps. Agreement to
exchange payments on the basis of relative
interest or currency rates. Derivative
instruments used solely for hedging. Y1
Y1 Y1 Y1
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
Interest Rate Caps and Floors. Entitle
purchaser to receive payments of interest to
the extent that a specified reference rate N
N Y N
exceeds or falls below a predetermined level.
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
Stripped Securities. Includes participations
in trusts that hold U.S. Treasury and agency
securities which represent either the interest
or principal payments on the securities or Y
Y Y Y
combinations of both.
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
Reverse Repurchase Agreements. A Fund sells
securities and agrees to buy them back later
at an agreed upon time and price. A method to
borrow money for temporary purposes. Y
Y Y Y
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
Forward Foreign Currency Exchange Contracts.
Obligations of a Fund to purchase or sell a
specific currency at a future date at a set
price. May decrease a Fund's loss due to a
change in currency value, but also limits
gains from currency changes. Y
Y Y Y
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
U.S. Bank Obligations. U.S. dollar
denominated bank obligations, including
certificates of deposit, bankers' acceptances,
bank notes, time deposits issued by U.S. banks
or savings institutions having total assets in
excess of $1 billion. Y
Y Y Y
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
<C> <C> <C>
BOND FUNDS
(continued)
---------------------------------------------------- ------------
- --- ------------------ --------------------- --------------------
Investments and Bond
Intermediate International U.S. Government
Investment Practices Fund
Bond Fund Bond Fund Income Fund
---------------------------------------------------- ------------
- --- ------------------ --------------------- --------------------
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
Supranational Organization Obligation. Fixed
income securities issued or guaranteed by
supranational organizations such as the World N
N Y N
Bank.
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
Guaranteed Investment Contracts. Agreements of
a Fund to make payments to an insurance
company's general account in exchange for a
minimum level of interest based on a index.
Y
Y Y Y
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
When-Issued Purchases and Forward
Commitments. Agreement by a Fund to purchase
securities at a set price, with payment and
delivery in the future. The value of the
securities may change between the time the
price is set and payment. Not to be used for
speculation. Y
Y Y Y
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
Illiquid Securities. Typically there is no
ready market for these securities, which
limits the ability to sell them for full 15%2
15%2 15%2 15%2
market value, or they are restricted as to
resale.
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
Futures and Options on Futures.3 Contracts in which a Fund has
the right or the
obligation to make delivery of, or receive, securities, the
cash value of an
index or foreign currency. Used for hedging purposes
or to maintain liquidity. Y
Y Y Y
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
Options. A Fund may buy options giving it the right to require a
buyer to buy a
security held by the Fund (put options), buy options giving
it the right to
require a seller to sell securities to the Fund (call options),
sell (write)
options giving a buyer the right to require the Fund to buy
securities from the
buyer or write options giving a buyer the right to require
the Fund to sell
securities to the buyer during a set time at a set price. Options
may relate to
stock indices,
individual securities or foreign currencies. Y
Y Y Y
See the SAI for more details and additional
limitations.
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
Lending Securities. May lend securities to
financial institutions which pay for the use
of securities. May increase return. Slight
risk of borrower failing financially. 25%
25% 25% 25%
---------------------------------------------------- ------------
- -- ------------------- --------------------- --------------------
Key:
Y = investment allowed without restriction N = investment not
allowed 1 Interest
rate swaps only 2 Based on net assets 3 The limitation on
margins and premiums
for futures is 5% of a Fund's assets
</TABLE>
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
MONEY
MARKET FUNDS
-------------------------------------------- -----
- --------- ------------- -------------- ----------------------
Investments and Cash
Money Tax-Free U.S. Treasury
Investment Practices
Investment Market Money Money
--------------------------------------------
-------------------------------------------- -----
- --------- ------------- -------------- ----------------------
Corporate Obligations:
o Commercial paper (including paper
Y Y N N
of Canadian cos., Canadian
branches of U.S. cos., and
Europaper)
o Corporate bonds
Y Y N N
o Other short-term obligations
Y Y N N
o Variable Master Demand Notes
Y Y N N
o Bond Debentures
Y Y N N
o Notes
Y Y N N
Y Y N N
Y Y N N
-------------------------------------------- -----
- --------- ------------- -------------- ----------------------
-------------------------------------------- -----
- --------- ------------- -------------- ----------------------
Asset-Backed Securities. Includes debt
Y Y N N
securities backed by mortgages,
installment sales contracts and credit
card receivables.
-------------------------------------------- -----
- --------- ------------- -------------- ----------------------
-------------------------------------------- -----
- --------- ------------- -------------- ----------------------
U.S. Government Obligations:
o Issued or guaranteed by U.S.
Y Y N Y
Government
o Issued or guaranteed by U.S.
Y Y N N
Government agencies and
instrumentalities
-------------------------------------------- -----
- --------- ------------- -------------- ----------------------
-----
- --------- ------------- -------------- ----------------------
Bank Obligations. U.S. dollar- denominated
Y Y N N
only; includes CDs, bankers' acceptances,
bank notes, deposit notes and
interest-bearing savings and time
deposits, issued by U.S. or foreign banks
or savings institutions with total assets
greater than $1 billion.
-------------------------------------------- -----
- --------- ------------- -------------- ----------------------
-------------------------------------------- -----
- --------- ------------- -------------- ----------------------
Foreign Banks and Foreign Branches of
25% 25% N N
Domestic Banks. Includes ECDs, ETDs,
CTDs, Schedule Bs, Yankee CDs and Yankee BAs.
-------------------------------------------- -----
- --------- ------------- -------------- ----------------------
-------------------------------------------- -----
- --------- ------------- -------------- ----------------------
Stripped Securities:
o Participation in trusts that hold
Y Y Y N
U.S. treasury and agency
securities
o U.S. Treasury-issued receipts
Y Y Y 35%
o Non-U.S. Treasury receipts
Y Y Y N
-------------------------------------------- -----
- --------- ------------- -------------- ----------------------
-------------------------------------------- -----
- --------- ------------- -------------- ----------------------
Municipal Revenue Obligations.
Obligations the interest on which is paid
N N May be more N
solely from the revenues of similar
than 25%
projects.
-------------------------------------------- -----
- --------- ------------- -------------- ----------------------
-------------------------------------------- -----
- --------- ------------- -------------- ----------------------
Municipal Obligations. Payable from the
5% 5% 25% in any N
issuer's general revenue, the revenue of a
one state
specific project, current revenues or a
reserve fund.
-------------------------------------------- -----
- --------- ------------- -------------- ----------------------
<PAGE>
MONEY MARKET
FUNDS (continued)
--------------------------------------- ----------
- ---- --------------- -------------- -------------------------
Investments and Cash
Money Tax-Free U.S. Treasury
Investment Practices Investment
Market Money Money
---------------------------------------
--------------------------------------- ----------
- ---- --------------- -------------- -------------------------
Reverse Repurchase Agreements. A Y*
Y N Y*
Fund sells securities and agrees to
buy them back later at an agreed upon
time and price. A method to borrow
money for temporary purposes.
--------------------------------------- ----------
- ---- --------------- -------------- -------------------------
Guaranteed Investment Contracts. Y
Y N N
Agreements of a Fund to make payments
to an insurance company's general
account in exchange for a minimum
level of interest based on an index.
--------------------------------------- ----------
- ---- --------------- -------------- -------------------------
When-Issued Purchases and Forward Not
expected Not expected Not expected Not
Commitments. Agreement by a Fund to to exceed
25% to exceed 25% to exceed 25% expected to
purchase securities at a set price,
exceed 25%
with payment and delivery in the
future. The value of the securities
may change between the time the price
is set and payment. Not to be used
for speculation.
--------------------------------------- ----------
- ---- --------------- -------------- -------------------------
Foreign Securities. Debt obligations 25%
25% N N
issued by foreign governments, and
their agencies, instrumentalities or
political subdivisions, supranational
organizations, and foreign
corporations or convertible into
foreign stock.
--------------------------------------- ----------
- ---- --------------- -------------- -------------------------
Illiquid Securities. Typically there 10%
10% 10% 10%
is no ready market for these
securities, which limits the ability
to sell them for full market value, or
there are legal
restrictions on their resale by a Fund.
--------------------------------------- ----------
- ---- --------------- -------------- -------------------------
Key:
Y= investment allowed without restriction
N= investment not allowed
* = deemed borrowing; subject to the borrowing
limitations
</TABLE>
What are the Risks of Investing in the Funds?
The risks of investing in the Underlying Funds are
summarized below.
A Fund's performance per share will change daily based on
many factors,
including interests rate levels, national and international
economic conditions,
general market conditions, and the performance of the Underlying
Funds. The net
asset value per share will fluctuate in response to these
factors. Consistent
with a long-term investment approach, investors in a Fund should
be prepared and
able to maintain their investments during periods of adverse
market conditions.
By itself, no Fund constitutes a balanced investment program
and there is no
guarantee that any Fund will achieve its investment objective
since there is
uncertainty in every investment.
The risks of investing in the Funds are dependent on
which Underling
Funds the Funds invest in and to what extent.
All Underlying Funds
Certain Underlying Funds are authorized to use options,
futures, and
forward foreign currency exchange contracts, which are types
of derivative
instruments. Derivative instruments are instruments that derive
their value from
a different underlying security, index or financial
indicator. The use of
derivative instruments exposes an Underlying Fund to
additional risks and
transaction costs. Risks inherent in the use of derivative
instruments include:
(1) the risk that interest rates, securities prices and currency
markets will
not move in the direction that a portfolio manager anticipates;
(2) imperfect
correlation between the price of derivative instruments and
movements in the
prices of the securities, interest rates or currencies being
hedged; (3) the
fact that skills needed to use these strategies are different
than those needed
to select portfolio securities; (4) the possible absence of a
liquid secondary
market for any particular instrument and possible exchange-
imposed price
fluctuation limits, either of which may make it difficult or
impossible to close
out a position when desired; (5) leverage risk, that is, the
risk that adverse
price movements in an instrument can result in a loss
substantially greater than
the Underlying Fund's initial investment in that instrument (in
some cases, the
potential loss is unlimited); and (6) particularly in
the case of
privately-negotiated instruments, the risk that the
counterparty will not
perform its obligations, which could leave the Underlying Fund
worse off than if
it had not entered into the position.
The risks of the various investment techniques the
Underlying Funds use
are described in more detail in the SAI.
Equity Funds
Investing in these Funds may be less risky than investing
in individual
stocks due to the diversification of investing in a portfolio of
many different
stocks; however, such diversification does not eliminate all
risks. Because the
Funds invest mostly in Equity Securities, rises and falls in the
stock market in
general, as well as in the value of particular Equity
Securities held by the
Funds, can affect the Funds' performance. Your investment in
the Funds is not
guaranteed. The net asset value of the Funds will change daily and
you might not
recoup the amount you invest in the Funds.
Fixed Income Funds
The value of each Fund's shares, like the value of
most securities,
will rise and fall in response to changes in economic conditions,
interest rates
and the market's perception of the underlying securities
held by the Fund.
Investing in the Funds may be less risky than investing in
individual Fixed
Income Securities due to the diversification of investing
in a portfolio
containing many different Fixed Income Securities; however,
such diversities
does not eliminate all risks. The Funds invest mostly in
Fixed Income
Securities, whose values typically rise when interest rates fall
and fall when
interest rates rise. Fixed Income Securities with shorter
maturities (time
period until repayment) tend to be less affected by interest rate
changes, but
generally offer lower yields than securities with longer
maturities. Current
yield levels should not be considered representative of yields
for any future
time. Securities with variable interest rates may exhibit
greater price
variations than ordinary securities. Zero coupon bonds are
subject to greater
market fluctuations from changing interest rates than debt
obligations of
comparable maturities which make current distributions of
interest.
Money Market Funds
Each Money Market Fund attempts to maintain a constant net
asset value of
$1.00 per share. However, your investment in the Funds is not
guaranteed.
Although the Money Market Funds expect under normal
market conditions
to be as fully invested as possible, each Fund may hold
uninvested cash pending
investment of late payments for purchase orders (or other
payments) or during
temporary defensive periods. Uninvested cash will not earn
income. In general,
investments in the Money Market Funds 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.
Micro-Cap Equity Fund, Mid-Cap Growth Fund, Small-Cap Value Fund
and Small
Company Growth Fund
The Advisor believes that smaller companies can provide
greater growth
potential and potentially higher returns than larger firms.
Investing in smaller
companies, however, is riskier than investing in larger
companies. The stock of
smaller companies may trade infrequently and in lower volume,
making it more
difficult for a Fund to sell the stocks of smaller companies
when it chooses.
Smaller companies may have limited product lines, markets,
financial resources
and distribution channels, which makes them more sensitive to
changing economic
conditions. Stocks of smaller companies historically
have had larger
fluctuations in price than stocks of larger companies included in
the S&P 500.
Framlington Emerging Markets Fund, Framlington International
Growth Fund,
International Equity Fund and International Bond Fund
Investing in any of the Funds, with its larger
investment in foreign
securities, may involve more risk than investing in a U.S.
fund for the
following reasons: (1) there may be less public information
available about
foreign companies than is available about U.S. companies; (2)
foreign companies
are not generally subject to the uniform accounting, auditing
and financial
reporting standards and practices applicable to U.S.
companies; (3) foreign
markets have less volume than U.S. markets, and the securities
of some foreign
companies are less liquid and more volatile than the securities
of comparable
U.S. companies; (4) there may be less government regulation of
stock exchanges,
brokers, listed companies and banks in foreign countries than in
the U.S.; (5)
the Fund may incur fees on currency exchanges when it changes
investments from
one country to another; (6) the Fund's foreign investments could
be affected by
expropriation, confiscatory taxation, nationalization of
bank deposits,
establishment of exchange controls, political or social
instability or
diplomatic developments; (7) fluctuations in foreign exchange
rates will affect
the value of the Fund's portfolio securities, the value of
dividends and
interest earned, gains and loses realized on the sale of
securities, net
investment income and unrealized appreciation or depreciation
of investments;
and (8) possible imposition of dividend or interest withholding
by a foreign
country.
<PAGE>
Real Estate Equity Investment Fund
The Fund will invest primarily in the real estate
industry and may
invest more than 25% of its assets in any one sector of the
real estate
industry. As a result, the Fund will be particularly vulnerable
to declines in
real estate prices and new construction rates. The Fund may be
riskier than a
fund investing in a broader range of industries.
Framlington Healthcare Fund
The Fund will invest most of its assets in the
healthcare industry,
which is particularly affected by rapidly changing technology
and extensive
government regulation, including cost containment measures.
The Fund may be
riskier than a fund investing in a broader range of industries.
International Bond Fund
The Fund is non-diversified and holds securities of a
limited number of
issuers. The Fund may, therefore, pose a greater risk to
investors than an
investment in a diversified fund.
NetNet Fund
The Fund will invest primarily in companies engaged
in Internet and
Intranet related activities. The value of such companies is
particularly
vulnerable to rapidly changing technology, extensive government
regulation and
relatively high risks of obsolescence caused by scientific and
technological
advances. The value of the Fund's shares may fluctuate more
than shares of a
fund investing in a broader range of industries.
- ------------------------------------------------------------------
- -------------
PERFORMANCE
- ------------------------------------------------------------------
- -------------
How is the Funds' Performance Calculated?
There are various ways in which the Funds may
calculate and report
their performance. Performance is calculated separately for
each class of
shares.
One method is to show a Fund's total return. Cumulative
total return is
the percentage change in the value of an amount invested in a
class of shares of
a Fund over a stated period of time and takes into account
reinvested dividends.
Cumulative total return most closely reflects the actual
performance of a Fund.
Average annual total return refers to the average
annual compounded
rates of return over a specified period on an investment in
shares of a Fund
determined by comparing the initial amount invested to the
ending redeemable
value of the amount, taking into account reinvested dividends.
Each Fund may also publish its current yield.
Yield is the net
investment income generated by a share of a Fund during a 30-day
period divided
by the maximum offering price on the 30th day.
The Funds may sometimes publish total returns that do
not take into
account sales charges and such returns will be higher than returns
which include
sales charges. You should be aware that (i) past performance
does not indicate
how a Fund will perform in the future and (ii) each Fund's return
and net asset
value will fluctuate, so you cannot necessarily use a Fund's
performance data to
compare it to investment in certificates of deposit, savings
accounts or other
investments that provide a fixed or guaranteed yield.
Each Fund may compare its performance to that of other
mutual funds,
such as the performance of similar funds reported by Lipper
Analytical Services,
Inc. or information reported in national financial publications
(such as Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New
York Times) or
in local or regional publications. Each Fund may also compare
its total return
to indices such as the S&P 500 and other broad-based indices.
These indices show
the value of selected portfolios of securities (assuming
reinvestment of
interest and dividends) which are not managed by a portfolio
manager. The Funds
may report how they are performing in comparison to the Consumer
Price Index, an
indication of inflation reported by the U.S. Government.
Where Can I Obtain Performance Data?
The Wall Street Journal and certain local newspapers
report information
on the performance of mutual funds. In addition, performance
information is
contained in the Funds' annual report dated June 30 of each year
and semi-annual
report dated December 31 of each year, which will automatically
be mailed to
shareholders. To obtain copies of financial reports or
performance information,
call (800) 438-5789.
- ------------------------------------------------------------------
- ------------
PURCHASES AND EXCHANGES OF
SHARES
- ------------------------------------------------------------------
- ------------
The following persons may purchase Class Y Shares:
o Fiduciary and discretionary accounts of
institutions
o institutional investors (including
banks, savings
institutions, credit unions and
other financial
institutions, pension, profit sharing and
employee benefit
plans and trusts, insurance
companies, investment
companies, investment advisors and broker-
dealers acting
either for their own accounts or for the
accounts of
institutional investors)
o Directors, trustees, officers and employees
of the Trust,
the Company, Framlington, the Advisor and
the
Distributor
o the Advisor's investment advisory clients
o family members of employees of the Advisor
Each Fund also issues other classes of shares, which
have different
sales charges, expense levels and performance. Call (800) 438-
5789 to obtain
more information concerning the Funds' other classes of shares.
What Price Do I Pay For Shares?
Class Y Shares are sold at the "net asset value next
determined" by the
Funds. You should be aware that broker-dealers (other
than the Funds'
Distributor) may charge investors additional fees if shares
are purchased
through them.
Except in certain limited circumstances, each Fund
determines its net
asset value ("NAV") on each day the New York Stock Exchange
("NYSE") is open for
trading (a "Business Day") at the close of such trading
(normally 4:00 p.m.
Eastern time). The Money Market Funds also determine their
NAVs at 2:45 p.m.
(Eastern time). If we receive your purchase order and payment for
a Money Market
Fund by 2:45 p.m. (Eastern time) on a Business Day, you will
receive dividends
on that day. Each Fund calculates NAV separately for each class
of shares. NAV
is calculated by totaling the value of all of the assets of a Fund
allocated to
a particular class of shares, subtracting the Fund's
liabilities and expenses
charged to that class and dividing the result by the number of
shares of that
class outstanding.
When Can I Purchase Shares?
Shares of each Fund are sold on a continuous basis and
can be purchased
on any Business Day.
What is the Minimum Required Investment?
The minimum initial investment by fiduciary and
discretionary accounts
of institutions and institutional investors for Class Y
Shares is $500,000.
Other types of investors are not subject to any minimum required
investment.
How Can I
Purchase Shares?
You can purchase Class Y Shares in a number of different
ways. You may
place orders for Class Y Shares directly through the Transfer
Agent or the
Distributor or through arrangements with a financial institution.
o Through a Financial Institution. You may purchase
shares
through a financial institution through procedures
established with that institution. Confirmations of
share purchases
will be sent to the institution.
o By Mail. You may open an account by mailing a
completed and signed
Account Application Form and a check or other
negotiable bank draft
(payable to the Munder Funds) to: The Munder Funds,
c/o Investor
Services Group, P.O. Box 5130, Westborough,
Massachusetts 01581-5130.
You can obtain an Account Application Form by calling
(800) 438-5789.
For additional investments, send a letter stating the
Fund and share
class you wish to purchase, your name and your account
number with a
check for $50 or more to the address listed above.
o By Wire. To open a new account, you should call the
Funds at (800)
438-5789 to obtain an account number and complete wire
instructions
prior to wiring any funds. Within seven days of purchase,
you must send
a completed Account Application Form containing your
certified taxpayer
identification number to Investor Services Group at
the address
provided above. Wire instructions must state the Fund
name, share
class, your registered name and your account number.
Your bank wire
should be sent through the Federal Reserve Bank Wire
System to:
Boston Safe Deposit and Trust Company
Boston, MA ABA# 011001234 DDA#
16-798-3 Account No.:
You may make additional investments at any time
using the wire
procedures described above. Note that banks may charge fees for
transmitting
wires.
o Automatic Investment Plan ("AIP"). Under the AIP, you
may arrange for
periodic investments in a Fund through automatic
deductions from a
checking or savings account. To enroll in the AIP you
should complete
the AIP Application Form or call the Funds at (800)
438-5789. The
minimum pre-authorized investment amount is $50. You
may discontinue
the AIP at any time. We may discontinue the AIP on 30
days' written
notice to you.
The Transfer Agent will send you confirmations of the
opening of an
account and of all subsequent purchases, exchanges or
redemptions in the
account. You will not be issued a share certificate, unless you
request one in
writing. We reserve the right to (i) reject any purchase
order if, in its
opinion, it is in the Funds' best interest to do so and (ii)
suspend the
offering of shares of any Class for any period of time.
See the SAI for further information regarding purchases
of the Funds'
shares.
<PAGE>
How Can I Exchange Shares?
You may exchange Class Y Shares of the Funds for
Class Y Shares of
other funds of the Trust, the Company or Framlington based on
their relative net
asset values. You must meet the minimum purchase requirements
for the fund of
the Trust, the Company or Framlington that you purchase by
exchange. Please note
that a share exchange is a taxable event and accordingly, you
may realize a
taxable gain or loss. Before making an exchange request, read the
Prospectus of
the fund you wish to purchase by exchange. You can obtain a
Prospectus for any
fund of the Trust, the Company or Framlington by contacting your
broker or the
Funds at (800) 438-5789. Brokers may charge a fee for handling
exchanges.
We may modify or terminate the exchange privilege at any
time. You will
be given notice of any material modifications except where
notice is not
required.
- ------------------------------------------------------------------
- ------------
REDEMPTIONS OF
SHARES
- ------------------------------------------------------------------
- ------------
What Price Do I Receive for Redeemed Shares?
The redemption price is the net asset value next
determined after we
receive the redemption request in proper order.
When Can I Redeem Shares?
You can redeem shares on any Business Day, provided
all required
documents have been received by the Transfer Agent. A Fund may
temporarily stop
redeeming shares when the NYSE is closed or trading on the NYSE
is restricted,
when an emergency exists and the Funds cannot sell their assets
or accurately
determine the value of their assets or if the SEC orders the
Funds to suspend
redemptions.
How Can I
Redeem 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 that
institution.
o Involuntary Redemption. We may redeem your account if
its value falls
below $500 as a result of redemptions (but not as a
result of a decline
in net asset value). You will be notified in writing
and allowed 60
days to increase the value of your account to the
minimum investment
level.
When Will I Receive Redemption Amounts?
If we receive a redemption order for a Fund before 4:00
p.m. (Eastern
time) on a Business Day, we will normally wire payment to
the redeeming
institution on the next Business Day. With respect to a Money
Market Fund, if we
receive a redemption order before noon (Eastern time) on a
Business Day, we will
normally wire payment on the same Business Day. We may delay
wiring redemption
proceeds for up to seven days if we feel an earlier payment
would have a
negative impact on the Fund.
- ------------------------------------------------------------------
- -------------
STRUCTURE AND MANAGEMENT OF THE FUNDS
- ------------------------------------------------------------------
- -------------
How are the Funds Structured?
The Company is an open-end management investment
company, which is a
mutual fund that sells and redeems shares every day that
it is open for
business. It is managed under the direction of its governing Board
of Directors,
which is responsible for the overall management of the Company
and supervises
the Funds' service providers.
Who Manages and Services the Funds?
Investment Advisor. The Funds' investment advisor is Munder
Capital Management,
a Delaware general partnership with its principal offices at 480
Pierce Street,
Birmingham, Michigan 48009. The principal partners of the
Advisor are MCM,
Munder Group LLC, 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, 1997, the Advisor and its affiliates had
approximately
$41 billion in assets under management, of which $22 billion
were invested in
equity securities, $8 billion were invested in money market or
other short-term
instruments, and $11 billion were invested in other fixed income
securities.
The Advisor provides overall investment management
for each Fund,
provides research and credit analysis, and is responsible for all
purchases and
sales of portfolio securities.
The portfolio manager for the Funds is Gerald Seizert.
Mr. Seizert,
Executive Vice President and Chief Investment Officer of the
Advisor, has
managed the Funds since they commenced operations. Prior to
joining the Advisor
in 1995, Mr.
Seizert was a Director and Managing Partner of Loomis, Sayles &
Company, L.P.
During the fiscal year ended June 30, 1997, the
Advisor was paid an
advisory fee at an annual rate based on the average daily net
assets of each
Fund (after waivers and/or expense reimbursements, if any) as
follows:
Conservative Moderate
Aggressive
Fund Fund
Fund
% %
%
The Advisor may, from time to time, make
payments to banks,
broker-dealers or other financial institutions for certain
services to the Funds
and/or their shareholders, including sub-administration, sub-
transfer agency and
shareholder servicing. The Advisor makes such payments out of its
own resources
and there are no additional costs to the Funds or their
shareholders.
The Advisor selects broker-dealers to execute portfolio
transactions
for the Funds based on best price and execution terms. The
Advisor may consider
as a factor the number of shares sold by the broker-dealer.
Transfer Agent. First Data Investor Services Group, Inc.
is the Funds'
transfer agent. Investor Services Group is a wholly owned
subsidiary of First
Data Corporation and is located at 53 State Street, Boston,
Massachusetts 02109.
Administrator. State Street Bank and Trust Company ("State
Street" or the
"Administrator") is the Fund's administrator. State Street is
located at 225
Franklin Street, Boston, Massachusetts 02110. State Street
generally assists the
Company, the Trust and Framlington in all aspects of their
administration and
operations including the maintenance of financial records and
fund accounting.
As compensation for its services, State Street is entitled to
receive fees,
based on the aggregate daily net assets of the Fund and certain
other investment
portfolios that are advised by the Advisor for which it
provides services,
computed daily and payable monthly at the rate of: ____________.
State Street has entered into a Sub-Administration
Agreement with the
Distributor under which the Distributor provides certain
administrative services
with respect to the Fund. State Street pays the Distributor a
fee for these
services out of its own resources at no cost to the Fund.
Custodian. Comerica Bank (the "Custodian"), whose principal
business address is
One Detroit Center, 500 Woodward Avenue, Detroit, Michigan
48226, provides
custodial services to the Funds. No compensation is paid to the
Custodian for
its services. State Street also serves as sub-custodian to
the Fund. As
compensation for its services, the Sub-Custodian is entitled to
receive fees,
based on the aggregate average daily net assets of the Fund and
certain other
investment portfolios that are advised by the Advisor
for which the
Sub-Custodian provides services, computed daily and payable
monthly at an annual
rate of .01% of average daily net assets. The Sub-Custodian
also receives
certain transaction based fees.
Distributor. Funds Distributor Inc. is the distributor of the
Funds' shares
and is located at 60 State Street, Boston, Massachusetts 02109.
It markets and
sells the Funds' shares.
For an additional description of the services
performed by the
Administrator, the Transfer Agent, the Custodian, the Sub-
Custodian and the
Distributor, see the SAI.
What are My Rights as a Shareholder?
All shareholders have equal voting, liquidation and
other rights. You
are entitled to one vote for each share you hold and a fractional
vote for each
fraction of a share you hold. You will be asked to vote on matters
affecting the
Company as a whole and affecting your particular Fund. You
will not vote by
Class unless expressly required by law or when the Directors
determine the
matter to be voted on affects only the interests of the holders
of a particular
class of shares. The Company will not hold annual shareholder
meetings, but
special meetings may be held at the written request of
shareholders owning more
than 10% of outstanding shares for the purpose of removing a
Director. The SAI
contains more information regarding voting rights.
Comerica Bank currently has the right to vote a
majority of the
outstanding shares of the Funds as agent, custodian or trustee for
its customers
and therefore it is considered to be a controlling person of the
Company.
- ------------------------------------------------------------------
- ------------
DIVIDENDS, DISTRIBUTIONS
AND TAXES
- ------------------------------------------------------------------
- ------------
When Will I Receive Distributions From the Funds?
As a shareholder, you are entitled to your share of
net income and
capital gains, if any, on a Fund's investments. The Funds pass
their earnings
along to investors in the form of dividends. Dividend
distributions are the
dividends or interest earned on investments after expenses.
Dividends from net
income, if any, are paid at least annually by the Funds. Each
Fund distributes
its net realized capital gains (including net short-term capital
gains), if any,
at least annually.
<PAGE>
How Will Distributions Be Made?
The Funds will pay dividend and capital gains
distributions in
additional shares of the same class of a Fund. If you
wish to receive
distributions in cash, either indicate this request on your
Account Application
Form or notify the Funds at (800) 438-5789.
Are There Tax Implications of My Investments in the
Funds?
This section contains a brief summary of the tax
implications of
ownership in the Funds' shares. A more detailed discussion of
Federal income tax
considerations is contained in the SAI. You should consult
your tax advisor
regarding the impact of owning the Funds' shares on your own
personal tax
situation including the applicability of any state and local
taxes.
Each Fund intends to continue to qualify as a
regulated investment
company under the Internal Revenue Code, in which case it
generally pays no
Federal income tax on the earnings or capital gains it
distributes to
shareholders. Dividends of investment company income by each
Fund will be
taxable to you as ordinary income, unless you are exempt from
Federal income
taxes. Dividends from a Fund's long-term capital gains are
taxable on a capital
gain (regardless of how long you have held the shares). Please
note that the
above tax treatment applies regardless of whether you receive your
distributions
in cash or additional shares. Federal income taxes for
distributions to an IRA
or to a qualified retirement plan are deferred. Income
dividends will qualify
for the dividends received deduction for corporations to the
extent of the total
qualifying dividends received by the distributing Fund
from domestic
corporations for the year. Any distribution that is declared
in October,
November or December but not actually paid until January of the
following year
will be taxable in the year declared. When you redeem,
transfer or exchange
shares, you may have a taxable gain or loss depending on whether
the price you
pay for the shares has a value higher or longer than your
tax basis in the
shares. If you hold the shares for six months or less, and during
that time you
received a capital gain dividend, any loss you realize on the
sale of those
shares will be treated as a long-term loss to the extent
of the earlier
distribution.
You will receive from each Fund in which you are a
shareholder shortly
after the end of each year, a statement of the amount and
nature of the
distributions made to you during the year.
Dividends and certain interest income earned from foreign
securities by
the International Equity Fund will, and the other Funds may,
be subject to
foreign withholding or other taxes. Under certain
circumstances the
International Equity Fund may be in a position (in which
case it would)
"pass-through" to you the right to a credit or deduction for
income or other tax
credits earned from foreign investments.
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.
- ------------------------------------------------------------------
- ----------
ADDITIONAL
INFORMATION
- ------------------------------------------------------------------
- ----------
Shareholder Communications. You will receive unaudited Semi-
Annual Reports and
Audited Annual Reports on a regular basis from the Funds. In
addition, you will
also receive updated Prospectuses or Supplements to this
Prospectus. In order to
eliminate duplicate mailings, the Funds will only send one
copy of the above
communications to (1) accounts with the same primary record
owner, (2) joint
tenant accounts, (3) tenant in common accounts and (4) accounts
which have the
same address.
THE MUNDER LIFESTYLE FUNDS
480 Pierce Street
Birmingham, Michigan 48009
Telephone (800) 438-5789
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 the Class A, Class B, and Class Y
shares representing
interests in the Munder All-Season Conservative Fund (the
"Conservative Fund"),
the Munder All-Season Moderate Fund (the "Moderate Fund"),
and the Munder
All-Season Aggressive Fund (the "Aggressive Fund") (each a
"Fund," collectively
the "Funds"). The Funds are three diversified series of shares
issued by The
Munder Funds, Inc. (the "Company"), an open-end management
investment company.
This Statement of Additional Information relates only to the
Funds, which are
referred to as The Munder Lifestyle Funds. Each Fund seeks
its investment
objective by investing in a portfolio of mutual funds (the
"Underlying Funds")
offered by the Company, The Munder Framlington Funds Trust
("Framlington"), and
The Munder Funds Trust (the "Trust"). This Statement of
Additional Information
is not a prospectus, and should be read only in conjunction
with the Funds'
Prospectus dated ____________, 1997. The contents of this
Statement of
Additional Information are incorporated by reference in the
Prospectus in their
entirety. A copy of the Prospectus may be obtained through Funds
Distributor,
Inc. (the "Distributor"), or by calling (800) 438-5789. This
Statement of
Additional Information is dated ____________, 1997.
Shares of the Funds and the Underlying Funds are not deposits or
obligations of,
or guaranteed or endorsed by any bank, and are not insured or
guaranteed by the
Federal Deposit Insurance Corporation, the Federal Reserve
Board, or any other
agency. An investment in the Funds involves investment risks,
including the
possible loss of principal.
<PAGE>
TABLE OF CONTENTS
GENERAL
INVESTMENT OBJECTIVES AND
POLICIES.............................................
FUND
INVESTMENTS.......................................................
........
INVESTMENT
LIMITATIONS.......................................................
..
DIRECTORS AND
OFFICERS.........................................................
INVESTMENT ADVISORY AND OTHER SERVICE
ARRANGEMENTS.............................
PORTFOLIO
TRANSACTIONS......................................................
...
ADDITIONAL PURCHASE AND REDEMPTION
INFORMATION.................................
NET ASSET
VALUE.............................................................
...
PERFORMANCE
INFORMATION.......................................................
.
TAXES.............................................................
.............
ADDITIONAL INFORMATION CONCERNING
SHARES.......................................
MISCELLANEOUS.....................................................
.............
REGISTRATION
STATEMENT.........................................................
FINANCIAL
STATEMENTS........................................................
...
APPENDIX
A.................................................................
....
APPENDIX
B.................................................................
....
No person has been authorized to give any information or
to make any
representations not contained in this Statement of Additional
Information or in
the Prospectus in connection with the offering made by the
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
Prospectus does not
constitute an offering by the Funds or by the Distributor in any
jurisdiction in
which such offering may not lawfully be made.
<PAGE>
GENERAL
The Company was organized as a Maryland corporation
on November 18,
1992 and is registered under the Investment Company Act of 1940
as an open-end
management investment company. The Munder All-Season
Conservative Fund, Munder
All-Season Moderate Fund and Munder All-Season Aggressive Fund
were formerly
known as Munder All-Season Maintenance Fund, Munder All-Season
Development Fund
and Munder All-Season Accumulation Fund, respectively. The
Funds operate as
three diversified series of shares issued by the Company.
The Company's
principal office is located at 480 Pierce Street, Birmingham,
Michigan 48009 and
its telephone number is (800) 438-5789.
As stated in the Prospectus, the investment advisor of
each Fund, and
each of the Underlying Funds, 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.
Framlington Overseas
Investment Management Limited serves as sub-advisor ("Sub-
Advisor") to the
Framlington International Growth Fund, the Framlington Emerging
Markets Fund,
and the Framlington Healthcare Fund (collectively, the
"Framlington Funds"),
which are three series of Framlington. Capitalized terms used
herein and not
otherwise defined have the same meanings as are given to
them in the
Prospectuses.
Assets of the Funds will be allocated among the
Underlying Funds within
the ranges set forth in the Prospectuses. In addition, each Fund
may hold cash,
and may invest cash balances in repurchase agreements and
other money market
instruments in an amount to meet redemptions or for day-to-
day operating
expenses.
INVESTMENT OBJECTIVES AND POLICIES
The Conservative Fund seeks to provide current income,
with capital
appreciation as a secondary objective. The Fund seeks to achieve
its objectives
by concentrating its investments in Underlying Funds that
invest primarily in
fixed income securities.
The Moderate Fund seeks to provide high total return
through capital
appreciation and current income. The Fund seeks to achieve its
objective by
concentrating its investments in Underlying Funds that invest
primarily in
equity securities and fixed income securities.
The Aggressive Fund seeks to provide long-term capital
appreciation.
The Fund seeks its objective by concentrating its investments
in Underlying
Funds that invest primarily in equity securities.
The following is a description of the investment
objectives and
policies of the Underlying Funds.
<PAGE>
FUND INVESTMENTS
The following supplements the information contained in
each Prospectus
concerning the investment objectives and policies of the
Underlying Funds. With
the exception of Multi-Season Growth Fund, Real Estate Equity
Investment Fund
and Money Market Fund, each Underlying Fund's investment
objective is a
non-fundamental policy and may be changed without authorization
of the holders
of a majority of such Underlying 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 Accelerating Growth Fund, Equity
Selection Fund,
Growth & Income Fund, International Equity Fund, Micro-Cap Equity
Fund, Mid-Cap
Growth Fund (the "Mid-Cap Fund"), Multi-Season Growth Fund (the
"Multi-Season
Fund"), Real Estate Equity Investment Fund (the "Real Estate
Fund"), Small-Cap
Value Fund, Small Company Growth Fund, Value Fund, the Framlington
Funds and the
NetNet Fund are referred to as the "Equity Funds." The Bond Fund,
Intermediate
Bond Fund, International Bond Fund and U.S. Government Income
Fund are referred
to as the "Fixed Income Funds." The Cash Investment Fund, Money
Market Fund, and
U.S. Treasury Money Market Fund are referred to as the "Money
Market Funds." If
you require more detailed information about an Underlying Fund,
please call the
Distributor at (800) 438-5789 to obtain the complete prospectus
and statement of
additional information for that fund.
Borrowing. The Underlying 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 Underlying 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 Underlying
Funds may be
required to sell some of their portfolio holdings within three
days to reduce
the debt and restore the 300% asset coverage, even
though it may be
disadvantageous from an investment standpoint to sell securities
at that time.
Borrowed funds are subject to interest costs which may or may
not be offset by
amounts earned on borrowed funds. The Underlying 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 Underlying Funds may, in connection with permissible
borrowings, transfer as
collateral, securities owned by the funds.
Additionally, each Underlying Fund (except the Money
Market Fund) may
borrow funds for temporary or emergency purposes by selling
portfolio securities
to financial institutions such as banks and broker/dealers
and agreeing to
repurchase them at a mutually specified date and price
("reverse repurchase
agreements"). Reverse repurchase agreements involve the risk
that the market
value of the securities sold by an Underlying Fund may
decline below the
repurchase price. An Underlying Fund will pay interest on
amounts obtained
pursuant to a reverse repurchase agreement. While reverse
repurchase agreements
are outstanding, an Underlying Fund will maintain in a segregated
account, cash,
U.S. Government securities or other liquid portfolio securities
of an amount at
least equal to the market value of the securities, plus
accrued interest,
subject to the agreement.
Foreign Securities. Each Equity Fund (except NetNet
Fund, Real Estate
Fund, International Equity Fund, Framlington International
Growth Fund,
Framlington Emerging Markets Fund and Framlington Healthcare
Fund), each Fixed
Income Fund (except International Bond Fund) and the Cash
Investment Fund may
invest up to 25% of its assets in foreign securities. Under
normal market
conditions, the International Equity Fund, Framlington
International Growth Fund
and International Bond Fund each will invest at least 65% of
its assets in
securities of issuers located in at least three other countries
other than the
United States. The Framlington Emerging Markets Fund will invest
at least 65% of
its assets in companies in emerging markets countries. There is
no limit on the
Framlington Healthcare Fund's investments in foreign
securities. The Mid-Cap
Fund and the Multi-Season Fund typically will only purchase
foreign securities
which are represented by 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.
The International Bond Fund will primarily invest in
foreign debt
obligations denominated in foreign currencies, including the
European Currency
Unit, 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."
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.
There may be less publicly available information
about foreign
companies comparable to the reports and ratings published about
companies in the
United States. Foreign companies are not generally
subject to uniform
accounting, auditing and financial reporting standards, and
auditing practices
and requirements may not be comparable to those applicable to
United States
companies. Foreign markets have substantially less volume
than the New York
Stock Exchange and securities of some foreign companies are less
liquid and more
volatile than securities of comparable United States companies.
Commission rates
in foreign countries, which are generally fixed rather
than subject to
negotiation as in the United States, are likely to be higher.
In many foreign
countries there is less government supervision and
regulation of stock
exchanges, brokers, and listed companies than in the United
States. Such
concerns are particularly heightened for emerging markets and
eastern European
countries.
Investments in companies domiciled in developing
countries may be
subject to potentially higher risks than investments in
developed countries.
These risks include (i) less social, political and economic
stability; (ii) the
small current size of the markets for such securities and the
currently low or
nonexistent volume of trading, which result in a lack of
liquidity and in
greater price volatility; (iii) certain national policies which
may restrict an
Underlying Fund's investment opportunities, including restrictions
on investment
in issuers or industries deemed sensitive to national interest;
(iv) foreign
taxation; (v) the absence of developed legal structures
governing private or
foreign investment or allowing for judicial redress for
injury to private
property; (vi) the absence, until recently in certain
Eastern European
countries, of a capital market structure or market-oriented
economy; and (vii)
the possibility that recent favorable economic developments in
Eastern Europe
may be slowed or reversed by unanticipated political or social
events in such
countries.
Investments in Eastern European countries may
involve risks of
nationalization, expropriation and confiscatory taxation.
The Communist
governments of a number of Eastern European countries expropriated
large amounts
of private property in the past, in many cases without adequate
compensation,
and there can be no assurance that such expropriation will
not occur in the
future. In the event of such expropriation, an Underlying
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 (Sub-Advisor with respect to the
Framlington Funds)
endeavors to buy and sell foreign currencies on as favorable
a basis as
practicable. Some price spread on currency exchange (to cover
service charges)
may be incurred, particularly when an Underlying 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 an
Underlying Fund from
transferring cash out of the country or withhold portions of
interest and
dividends at the source. There is the possibility of
expropriation,
nationalization or confiscatory taxation, withholding and other
foreign taxes on
income or other amounts, foreign exchange controls (which may
include suspension
of the ability to transfer currency from a given country),
default in foreign
government securities, political or social instability
or diplomatic
developments that could affect investments in securities of
issuers in foreign
nations.
Foreign securities markets have different clearance
and settlement
procedures, and in certain markets there have been times when
settlements have
been unable to keep pace with the volume of securities
transactions, making it
difficult to conduct such transactions. Delays in settlement
could result in
temporary periods when assets of an Underlying Fund are uninvested
and no return
is earned thereon. The inability of an Underlying Fund to make
intended security
purchases due to settlement problems could cause the fund to
miss attractive
investment opportunities. Inability to dispose of portfolio
securities due to
settlement problems could result either in losses to an
Underlying Fund due to
subsequent declines in value of the portfolio security or,
if the fund has
entered into a contract to sell the security, could result in
possible liability
to the purchaser.
An Underlying 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 an Underlying 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), and the
Fixed Income Funds are authorized to enter into forward
foreign currency
exchange contracts ("forward currency contracts"). These
contracts involve an
obligation to purchase or sell a specified currency at a future
date at a price
set at the time of the contract. Forward currency contracts do
not eliminate
fluctuations in the values of portfolio securities but
rather allow an
Underlying 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,
an Underlying Fund may enter into a forward foreign currency
exchange contract
for the amount of the purchase or sale price to protect
against variations,
between the date the security is purchased or sold and the date on
which payment
is made or received, in the value of the foreign currency relative
to the U.S.
dollar or other foreign currency.
When the Advisor (Sub-Advisor with respect to the
Framlington Funds)
anticipates that a particular foreign currency may decline
substantially
relative to the U.S. dollar or other leading currencies, in
order to reduce
risk, an Underlying 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 Underlying Fund's securities denominated in such
foreign currency.
Similarly, when the obligations held by an Underlying 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. An
Underlying 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 an Underlying Fund's assets that could be required
to consummate
forward contracts will be established with the Underlying
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 Underlying Fund. A forward contract to
sell a foreign
currency is "covered" if an Underlying 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 an Underlying 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 and
Fixed Income
Funds 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 Fixed
Income Funds may
enter into interest rate swap agreements for purposes of
attempting to obtain a
particular desired return at a lower cost to those Underlying
Funds than if the
Underlying Funds had invested directly in an instrument that
yielded that
desired return. Interest rate swap transactions involve the
exchange by a
Underlying 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 Underlying Funds 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 Underlying Funds' ability to engage in certain
interest rate
transactions. Gains from transaction in interest rate swaps
distributed to
shareholders of the Underlying Funds will be taxable as ordinary
income or, in
certain circumstances, as long-term capital gains to the
shareholders.
Each of the Underlying Funds' obligations (or rights)
under a swap
agreement will generally be equal only to the net amount to be
paid or received
under the agreement based on the relative values of the
positions held by each
party to the agreement (the "net amount"). Each of the Fixed
Income Funds'
obligations under a swap agreement will be accrued daily
(offset against any
amounts owed to the Underlying 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
Underlying Funds'
portfolio.
The Underlying Funds 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
Underlying Funds 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 Underlying Funds 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 Fixed Income Funds'
ability to terminate
existing swap agreements or to realize amounts to be
received under such
agreements.
Lending of Portfolio Securities. To enhance the
return on its
portfolio, each of the Underlying Funds may lend securities in
its portfolio
(subject to a limit of 25% of total assets for each Fund
(except the Money
Market Fund), and 33 1/3% of total assets of the Money
Market Fund) 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
Underlying Funds will
receive any interest or dividends paid on the loaned securities.
In addition, it
is anticipated that an Underlying 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 Underlying Funds will
lend securities,
the Advisor (Sub-Advisor with respect to the Framlington Funds)
will consider
all relevant facts and circumstances. The Underlying Funds will
only enter into
loan arrangements with broker-dealers, banks or other
institutions which the
Advisor (Sub-Advisor) has determined are creditworthy
under guidelines
established by the Boards of Directors or Trustees, as applicable.
Lower-Rated Debt Securities. It is expected that each
Fund (other than
the Growth & Income Fund) will invest not more than 5% of its
total assets in
securities that are rated below investment grade by Standard
& Poor's or
Moody's. The Growth & Income Fund may invest up to 20% of the
value of its total
assets in such securities. Such securities are also known as
junk bonds. The
yields on lower-rated debt and comparable unrated securities
generally are
higher than the yields available on higher-rated
securities. However,
investments in lower-rated debt and comparable unrated
securities generally
involve greater volatility of price and risk of loss of income
and principal,
including the possibility of default by or bankruptcy of the
issuers of such
securities. Lower-rated debt and comparable unrated securities
(a) will likely
have some quality and protective characteristics that, in the
judgment of the
rating organization, are outweighed by large uncertainties
or major risk
exposures to adverse conditions and (b) are predominantly
speculative with
respect to the issuer's capacity to pay interest and repay
principal in
accordance with the terms of the obligation. Accordingly, it is
possible that
these types of factors could, in certain instances, reduce
the value of
securities held in each Underlying Fund's portfolio, with a
commensurate effect
on the value of each of the fund's shares. Therefore, an
investment in the Funds
should not be considered as a complete investment program
and may not be
appropriate for all investors.
While the market values of lower-rated debt and
comparable unrated
securities tend to react more to fluctuations in interest rate
levels than the
market values of higher-rated securities, the market values of
certain lower
rated debt and comparable unrated securities also tend to be
more sensitive to
individual corporate developments and changes in economic
conditions than
higher-rated securities. In addition, lower-rated debt securities
and comparable
unrated securities generally present a higher degree of credit
risk. Issuers of
lower-rated debt and comparable unrated securities often are
highly leveraged
and may not have more traditional methods of financing available
to them so that
their ability to service their debt obligations during an
economic downturn or
during sustained periods of rising interest rates may be
impaired. The risk of
loss due to default by such issuers is significantly greater
because lower-rated
debt and comparable unrated securities generally are unsecured
and frequently
are subordinated to the prior payment of senior indebtedness.
The Underlying
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 Underlying
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 Underlying 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 the
Prospectuses, the Funds
and the Underlying 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.
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 and the Underlying Funds
will invest in
obligations of foreign banks or foreign branches of U.S. banks
only where the
Advisor (Sub-Advisor with respect to the Framlington Funds) deems
the instrument
to present minimal credit risks, such investments may nevertheless
entail risks
that are different from those of investments in domestic
obligations of U.S.
banks due to differences in political, regulatory and
economic systems and
conditions. All investments in bank obligations are limited to
the obligations
of financial institutions having more than $1 billion in total
assets at the
time of purchase.
Investments by a Fund or an Underlying Fund in
commercial paper will
consist of issues rated at the time A-1 and/or P-1 by S&P or
Moody's Investor
Services, Inc. ("Moody's"). In addition, the Funds and the
Underlying Funds may
acquire unrated commercial paper and corporate bonds that are
determined by the
Advisor (Sub-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 and the Underlying 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, an investor 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, an
investor 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 and the Underlying Funds invest in variable
amount master
notes only when the Advisor (Sub-Advisor) deems the
investment to involve
minimal credit risk.
Mortgage-Related Securities. Subject to applicable
credit criteria,
each Fixed Income 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). There are a number
of important
differences among the agencies and instrumentalities of the U.S.
Government that
issue mortgage-related securities and among the securities
that they issue.
Mortgage-related securities guaranteed by the Government
National Mortgage
Association ("GNMA") include GNMA Mortgage Pass-Through
Certificates (also known
as "Ginnie Maes") which are guaranteed as to the timely payment of
principal and
interest by GNMA and such guarantee is backed by the full faith
and credit of
the United States. GNMA is a wholly-owned U.S. Government
corporation within the
Department of Housing and Urban Development. GNMA
certificates also are
supported by the authority of GNMA to borrow funds from the
U.S. Treasury to
make payments under its guarantee. Mortgage-related securities
issued by the
Federal National Mortgage Association ("FNMA") include FNMA
Guaranteed Mortgage
Pass-Through Certificates (also known as "Fannie Maes") which
are solely the
obligations of the FNMA and are not backed by or entitled to the
full faith and
credit of the United States, but are supported by the right of
the issuer to
borrow from the Treasury. FNMA is a government-sponsored
organization owned
entirely by private stockholders. Fannie Maes are guaranteed
as to timely
payment of the principal and interest by FNMA. Mortgage-
related securities
issued by the Federal Home Loan Mortgage Corporation ("FHLMC")
include FHLMC
Mortgage Participation Certificates (also known as "Freddie
Macs" or "PCs").
FHLMC is a corporate instrumentality of the United States,
created pursuant to
an Act of Congress, which is owned entirely by Federal Home Loan
Banks. Freddie
Macs are not guaranteed by the United States or by any Federal
Home Loan Banks
and do not constitute a debt or obligation of the United
States or of any
Federal Home Loan Bank. Freddie Macs entitle the holder to
timely payment of
interest, which is guaranteed by the FHLMC. FHLMC guarantees
either ultimate
collection or timely payment of all principal payments on
the underlying
mortgage loans. When FHLMC does not guarantee timely payment of
principal, FHLMC
may remit the amount due on account of its guarantee of
ultimate payment of
principal at any time after default on an underlying mortgage,
but in no event
later than one year after it becomes payable.
Municipal Obligations. The Cash Investment Fund and
the Money Market
Fund may, when deemed appropriate by the Advisor in light of
the Underlying
Fund's investment objective, invest in high quality municipal
obligations issued
by state and local governmental issuers, the interest on which may
be taxable or
tax-exempt for Federal income tax purposes, provided that such
obligations carry
yields that are competitive with those of other types of
money market
instruments of comparable quality. The Cash Investment Fund and
the Money Market
Fund each do not expect to invest more than 5% of its net
assets in such
municipal obligations during its current fiscal year.
Non-Domestic Bank Obligations. Non-domestic bank
obligations include
Eurodollar Certificates of Deposit, 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,
which are U.S.
dollar-denominated deposits in a foreign branch of a U.S.
bank or a foreign
bank; Canadian Time Deposits, 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, 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, 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 Underlying Funds may write covered call
options, buy put
options, buy call options and write secured put options. Such
options may relate
to particular securities and may or may not be listed on a
national securities
exchange and issued by the Options Clearing Corporation.
Options trading is a
highly specialized activity which entails greater than ordinary
investment risk.
Options on particular securities may be more volatile than
the underlying
securities, and therefore, on a percentage basis, an investment
in options may
be subject to greater fluctuation than an investment in
the underlying
securities themselves. For risks associated with options on
foreign currencies,
see Appendix B to this Statement of Additional Information.
A call option for a particular security gives the
purchaser of the
option the right to buy, and a writer the obligation to sell,
the underlying
security at the stated exercise price at any time prior to the
expiration of the
option, regardless of the market price of the security. The
premium paid to the
writer is in consideration for undertaking the obligations
under the option
contract. A put option for a particular security gives the
purchaser the right
to sell the underlying security at the stated exercise price at
any time prior
to the expiration date of the option, regardless of the market
price of the
security.
The writer of an option that wished to terminate its
obligation may
effect a "closing purchase transaction." This is accomplished
by buying an
option of the same series as the option previously written. The
effect of the
purchase is that the writer's position will be canceled by
the clearing
corporation. However, a writer may not effect a closing
purchase transaction
after being notified of the exercise of an option. Likewise, an
investor who is
the holder of an option may liquidate its position by effecting a
"closing sale
transaction." The cost of such a closing purchase plus
transaction costs may be
greater than the premium received upon the original option, in
which event the
relevant Underlying 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 Underlying 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 Underlying Fund investments. If an
Underlying 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 Underlying Funds may write options in connection with
buy-and-write
transactions; that is, the Underlying Funds may purchase a
security and then
write a call option against that security. The exercise price
of the call the
Underlying 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 Underlying
Fund will be the premium received by it for writing the option,
adjusted upwards
or downwards by the difference between the fund's purchase price
of the security
and the exercise price. If the options are not exercised and
the price of the
underlying security declines, the amount of such decline will be
offset in part,
or entirely, by the premium received.
In the case of a call option on a security, the option
is "covered" if
an Underlying 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 an Underlying Fund maintains with
its Custodian
cash or cash equivalents equal to the contract value. A call
option is also
covered if an Underlying 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. Each of
the Underlying Funds will limit its investment in uncovered
call options
purchased or written by the Fund to 33 1/3% of the Fund's total
assets. The
Underlying 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 Underlying
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 Underlying
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 Underlying Funds may purchase put options to
hedge against
a decline in the value of its portfolio. By using put options
in this way, an
Underlying Fund will reduce any profit it might otherwise have
realized in the
underlying security by the amount of the premium paid for the put
option and by
transaction costs. Each of the Underlying 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 relevant
Underlying Fund upon exercise of the option, and, unless
the price of the
underlying security rises sufficiently, the option may expire
worthless to the
fund.
When an Underlying Fund purchases an option, the premium
paid by it is
recorded as an asset of the fund. When the Underlying 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 Underlying Fund
expires unexercised
the fund realizes a loss equal to the premium paid. If the
Underlying Fund
enters into a closing sale transaction on an option
purchased by it, the
Underlying 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 Underlying 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 Underlying Fund is exercised, the proceeds of the sale
will be increased
by the net premium originally received and the fund will realize a
gain or loss.
There are several risks associated with transactions
in options on
securities and indices. For example, there are significant
differences between
the securities and options markets that could result in an
imperfect correlation
between these markets, causing a given transaction not to
achieve its
objectives. An option writer, unable to effect a closing
purchase transaction,
will not be able to sell the underlying security (in the case of
a covered call
option) or liquidate the segregated account (in the case of
a secured put
option) until the option expires or the optioned security is
delivered upon
exercise with the result that the writer in such circumstances
will be subject
to the risk of market decline or appreciation in the security
during such
period.
There is no assurance that an Underlying 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 Underlying
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.
Real Estate Securities. The Real Estate Fund may invest
without limit
in shares of real estate investment trusts ("REITs"). REITs
pool investors'
funds for investment primarily in income producing real estate
or real estate
loans or interests. A REIT is not taxed on income distributed to
shareholders if
it complies with several requirements relating to its
organization, ownership,
assets, and income and a requirement that it distribute to its
shareholders at
least 95% of it taxable income (other than net capital gains)
for each taxable
year. REITs can generally be classified as Equity REITs,
Mortgage REITs and
Hybrid REITs. Equity REITs, which invest the majority of their
assets directly
in real property, derive their income primarily from rents.
Equity REITs can
also realize capital gains by selling properties that have
appreciated in value.
Mortgage REITs, which invest the majority of their assets
in real estate
mortgages, derive their income primarily from interest payments.
Hybrid REITs
combine the characteristics of both Equity REITs and Mortgage
REITs. The Real
Estate Fund will not invest in real estate directly, but only
in securities
issued by real estate companies. However, the Real Estate Fund may
be subject to
risks similar to those associated with the direct ownership of
real estate (in
addition to securities markets risks) because of its policy of
concentration in
the securities of companies in the real estate industry. These
include declines
in the value of real estate, risks related to general and
local economic
conditions, dependency on management skill, heavy cash flow
dependency, possible
lack of availability of mortgage funds, overbuilding, extended
vacancies of
properties, increased competition, increases in property taxes
and operating
expenses, changes in zoning laws, losses due to costs
resulting from the
clean-up of environmental problems, liability to third
parties for damages
resulting from environmental problems, casualty or
condemnation losses,
limitations on rents, changes in neighborhood values 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 and the Underlying
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 (Sub-Advisor with
respect to the
Framlington Funds) will review and continuously monitor the
creditworthiness of
the seller under a repurchase agreement, and will require the
seller to maintain
liquid assets 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 397 days.
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, as
applicable, by the Trust's, Framlington's or the Company's
Custodian (or
sub-Custodian) in the Federal Reserve/Treasury book-entry system
or by another
authorized securities depositary. Repurchase agreements are
considered to be
loans by a Fund or Underlying Fund under the 1940 Act.
Rights and Warrants. As stated in the Prospectus, the
Equity Funds 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 an Underlying 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.
Stand-by Commitments. The Cash Investment Fund may 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 Underlying
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 an
Underlying Fund at any time before the maturity of the
underlying municipal
obligations and may be sold, transferred or assigned only with
the instruments
involved.
The Trust expects that stand-by commitments will
generally be available
without the payment of any direct or indirect consideration.
However, if
necessary or advisable, the Cash Investment 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 the
Underlying Fund will not exceed 1/2 of 1% of the value of the
Underlying Fund's
total assets calculated immediately after each stand-by commitment
is acquired.
Stock Index Futures, Options on Stock and Bond Indices
and Options on
Stock and Bond Index Futures Contracts. The Equity and Fixed
Income Funds
(except the International 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 (Sub-Advisor with respect to the
Framlington Funds)
expects general stock or bond market prices to rise, it might
purchase a stock
index futures contract, or a call option on that index, as a
hedge against an
increase in prices of particular securities it ultimately wants
to buy. If in
fact the index does rise, the price of the particular securities
intended to be
purchased may also increase, but that increase would be offset
in part by the
increase in the value of the Underlying Funds' futures contract
or index option
resulting from the increase in the index. If, on the other
hand, the Advisor
(Sub-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
Underlying Funds' portfolio may also be expected to decline, but
that decrease
would be offset in part by the increase in the value of the
Underlying Funds'
position in such futures contract or put option.
The Underlying Funds (except the International Bond
Fund) may purchase
and write call and put options on stock index futures contracts
and each such
Underlying Fund and the International Bond Fund may purchase and
write call and
put options on bond index futures contracts. Each such
Underlying 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
Underlying 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
Underlying 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
Underlying Funds will be required to deposit as "initial
margin" an amount of
cash and short-term U.S. Government securities equal to between 5%
and 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 Underlying Fund may at any
time commit more
than 5% of its total assets to initial margin deposits on
futures contracts,
index options and options on futures contracts.
Stripped Securities. The Fixed Income and 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 Company
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, an Underlying 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 Fixed Income Funds may invest
in stripped
mortgage-backed securities ("SMBS"), which represent
beneficial ownership
interests in the principal distributions and/or the interest
distributions on
mortgage assets. SMBS are usually structured with two classes
that receive
different proportions of the interest and principal
distributions on a pool of
mortgage assets. One type of SMBS will have one class
receiving some of the
interest and most of the principal from the mortgage assets,
while the other
class will receive most of the interest and the remainder of the
principal. In
the most common case, one class of SMBS will receive all of the
interest (the
interest-only or "IO" class), while the other class will
receive all of the
principal (the principal-only or "PO" class). SMBS may be
issued by FNMA or
FHLMC.
The original principal amount, if any, of each SMBS
class represents
the amount payable to the holder thereof over the life of such
SMBS class from
principal distributions of the underlying mortgage assets, which
will be zero in
the case of an IO class. Interest distributions allocable to a
class of SMBS, if
any, consist of interest at a specified rate on its principal
amount, if any, or
its notional principal amount in the case of an IO class. The
notional principal
amount is used solely for purposes of the determination
of interest
distributions and certain other rights of holders of such IO
class and does not
represent an interest in principal distributions of the mortgage
assets.
Yields on SMBS will be extremely sensitive to the
prepayment experience
on the underlying mortgage loans, and there are other associated
risks. For IO
classes of SMBS and SMBS that were purchased at prices exceeding
their principal
amounts there is a risk that an Underlying 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 Directors/Trustees. Such
securities may be
deemed liquid if they can be disposed of promptly in the
ordinary course of
business at a value reasonably close to that used in the
calculation of an
Underlying 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 and the
Underlying 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 an Underlying Fund may have stated
maturities in
excess of an Underlying Fund's maturity limitation if the
Underlying 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 (Sub-Advisor with respect to
the Framlington
Funds) 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
an Underlying
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 Underlying
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 Underlying Fund involved can recover payment of
principal as specified
in the instrument. Variable rate U.S. Government obligations
held by the
Underlying 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
an Underlying Fund could suffer a loss if the issuer defaulted or
during periods
that an Underlying Fund is not entitled to exercise its demand
rights.
Variable and floating rate instruments held by an
Underlying 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 Fixed Income
Funds, the Cash
Investment Fund and the Money Market Fund may make limited
investments in
guaranteed investment contracts ("GICs") issued by U.S.
insurance companies.
Pursuant to such contracts, an Underlying Fund makes cash
contributions to a
deposit fund of the insurance company's general account. The
insurance company
then credits to the Underlying 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. An Underlying 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 Directors/Trustees.
Generally, GICs are
not assignable or transferable without the permission of the
issuing insurance
companies, and an active secondary market in GICs does not
currently exist.
Therefore, GICs will normally be considered illiquid
investments, and will be
acquired subject to the limitation on illiquid investments.
When-Issued Purchases and Forward Commitments
(Delayed-Delivery
Transactions). When-issued purchases and forward commitments
(delayed-delivery
transactions) are commitments by an Underlying 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
Underlying Fund
to lock-in a price or yield on a security, regardless of
future changes in
interest rates.
When an Underlying 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 Underlying 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
Underlying Fund's commitments. It may be expected that the
market value of the
Underlying 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 an Underlying 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 an Underlying Fund's total assets absent unusual
market conditions.
An Underlying 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, an Underlying 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
Underlying Fund on the
settlement date. In these cases the Underlying Fund may
realize a taxable
capital gain or loss.
When an Underlying 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 Underlying 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
an Underlying Fund starting on the day the fund agrees to
purchase the
securities. The Underlying 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 and Underlying 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 Underlying Fund's total assets at the time
of purchase,
provided that the Underlying 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 an Underlying
Fund, a rated
security may cease to be rated or its rating may be reduced
below the minimum
rating required for purchase by the Underlying Fund. The Boards
of Trustees and
Directors, as applicable, or the Advisor (Sub-Advisor with
respect to the
Framlington Funds), pursuant to guidelines established by the
Boards, will
consider such an event in determining whether the Underlying
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
an Underlying
Fund in reliance upon Rule 144A under the Securities Act of
1933, as amended,
could have the effect of increasing the level of the
Underlying Fund's
illiquidity to the extent that qualified institutional buyers
become, for a
period, uninterested in purchasing these securities.
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 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); this
limitation does not
apply to investment by the Funds in investment
companies;
2. With respect to 75% of the Fund's assets
invest more than 5%
of the Fund's assets (taken at market value
at the time of
purchase) in the outstanding securities of any
single issuer
or own more than 10% of the outstanding voting
securities of
any one issuer, in each case other than
securities issued by
other investment companies or securities issued
or guaranteed
by the United States Government, its
agencies or
instrumentalities;
3. Borrow money or enter into reverse
repurchase agreements
except that the Funds may (i) borrow money
or enter into
reverse repurchase agreements for temporary
purposes in
amounts not exceeding 5% of its total assets
and (ii) borrow
money to meet redemption requests, in amounts
(when aggregated
with amounts borrowed under clause (i) not
exceeding 33 1/3%
of its total assets;
4. Issue any senior security (as defined in
Section 18(f) of
the 1940 Act) except as permitted under the
1940 Act.
5. Make loans of securities to other persons in
excess of 25% of
a 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; or
7. Purchase or sell real estate or any
interest therein,
including interests in real estate limited
partnerships,
except securities issued by companies
(including real estate
investment trusts) that invest in real estate
or interests
therein.
Additional investment restrictions adopted by each
Fund, which may be
changed by the Board of Directors of the Company without
shareholder vote,
provide that a Fund may not invest more than 15% of its net
assets (taken at
market value at the time of purchase) in securities which
cannot be readily
resold because of legal or contractual restrictions and which are
not otherwise
marketable.
If a percentage limitation is satisfied at the time of
investment, a
later increase or decrease in such percentage resulting from a
change in the
value of a Fund's investments will not constitute a
violation of such
limitation, except that any borrowing by a Fund that exceeds
the fundamental
investment limitations stated above must be reduced to meet
such limitations
within the period required by the 1940 Act (currently three days).
Otherwise, a
Fund may continue to hold a security even though it causes the
Fund to exceed a
percentage limitation because of fluctuation in the value of the
Fund's assets.
DIRECTORS AND OFFICERS
The directors and executive officers of the Company, and
their business
addresses and principal occupations during the past five years,
are:
<TABLE>
<CAPTION>
<S> <C>
<C>
Principal Occupation
Name, Address and Age Position with Company
During Last Five Years
Charles W. Elliott 1 Chairman of the Board of
Directors Senior Advisor to the President - Western
3338 Bronson Boulevard
Michigan University since July 1995; Executive
Kalmazoo, MI 49008
Vice President - Administration & Chief
Age: 64
Financial Officer, Kellogg Company from January
1987 through June 1995; before that Price
Waterhouse. Board of Directors, Steelcase
Financial Corporation.
John Rakolta, Jr. Director and Vice Chairman of the
Chairman, Walbridge Aldinger Company
1876 Rathmor Board of Directors
(construction company).
Bloomfield Hills, MI 48304
Age: 49
Thomas B. Bender Director
Investment Advisor, Financial & Investment
7 Wood Ridge Road
Management Group (since April, 1991); Vice
Glen Arbor, MI 49636
President Institutional Sales, Kidder, Peabody &
Age: 63
Co. (Retired April, 1991).
David J. Brophy Director
Professor, University of Michigan; Director,
1025 Martin Place
River Place Financial Corp.; Trustee,
Ann Arbor, MI 48104
Renaissance Assets Trust.
Age: 60
Dr. Joseph E. Champagne Director
Corporate and Executive Consultant since
319 Snell Road
September 1995; prior to that Chancellor, Lamar
Rochester, MI 48306
University from September 1994 until September
Age: 58
1995; before that Consultant to Management,
Lamar
University;
President
and
Chief
Executive
Officer,
Crittenton
Corporation
(holding
company
that
owns
healthcare
facilities)
and
Crittenton
Development
Corporation
until
August
1993;
before
that
President,
Oakland
University
of
Rochester,
MI,
until
August
1991;
Member,
Board of
Directors,
Ross
Operating
Valve of
Troy, MI
Thomas D. Eckert Director President and COO, Mid-Atlantic Group
of Pulte 10726
Falls Pointe Drive Home Corporation (developer of residential
land Great Falls,
VA 22066 and construction of housing units).
Age: 49
Lee P. Munder President
President and CEO of the Advisor; Chief
480 Pierce Street
Executive Officer and President of Old MCM;
Birmingham, MI 48009
Chief Executive Officer of World Asset
Age: 51
Management; and Director, LPM Investment
Services, Inc. ("LPM").
Terry H. Gardner Vice President, Chief Financial
Vice President and Chief Financial Officer of
480 Pierce Street Officer and Treasurer
the Advisor and World Asset Management; Vice
Suite 300
President and Chief Financial Officer of Old
Birmingham, MI 48009
MCM; Audit Manager of Arthur Andersen & Co.
Age: 36
(1991 to February 1993); Secretary of LPM.
Paul Tobias Vice President Executive Vice President and Chief
Operatin 480
Pierce Street Officer of the Advisor (since April 1995) and Suite
300 Executive
Vice President of Comerica, Inc.
Birmingham, MI 48009
Age: 45
Gerald Seizert Vice President
Executive Vice President and Chief Investment
480 Pierce Street
Officer/Equities of the Advisor (since April
Suite 300
1995); Managing Director (1992-1995) and Vice
Birmingham, MI 48009
President (1984-1991) of Loomis, Sayles and
Age: 45
Company, L.P.
Elyse G. Essick Vice President
Vice President and Director of Marketing for the
480 Pierce Street
Advisor; Vice President and Director of Client
Suite 300
Services of Old MCM (August 1988 to December
Birmingham, MI 48009
1994).
Age: 38
James C. Robinson Vice President
Vice President and Chief Investment
480 Pierce Street
Officer/Fixed Income for the Advisor; Vice
Suite 300
President and Director of Fixed Income of Old
Birmingham, MI 48009
MCM (1987-1994).
Age: 35
Leonard J. Barr, II Vice President
Vice President and Director of Core Equity
480 Pierce Street
Research of the Advisor; Director and Senior
Suite 300
Vice President of Old MCM (since 1988); Director
Birmingham, MI 48009
of LPM.
Age: 52
Ann F. Putallaz Vice President
Vice President and Director of Fiduciary
480 Pierce Street
Services of the Advisor (since January 1995);
Suite 300
Director of Client and Marketing Services of
Birmingham, MI 48009
Woodbridge.
Age: 51
Richard H. Rose Assistant Treasurer
Senior Vice President, First Data Investor
First Data Investor Services
Services Group, Inc. (since May 1994).
Group, Inc.
Formerly, Senior Vice President, The Boston
One Exchange Place
Company Advisors, Inc. (since November 1989.)
8th Floor
Boston, MA 02109
Age: 41
Lisa A. Rosen Secretary, Assistant Treasurer
General Counsel of the Advisor since May, 1996.
480 Pierce Street
Formerly, Counsel, First Data Investor Services
Suite 300
Group, Inc.; Assistant Vice President and
Birmingham, MI 48009
Counsel with The Boston Company Advisors, Inc.;
Age: 30
Associate with Hutchins, Wheeler & Dittmar.
Teresa M.R. Hamlin Assistant Secretary
Counsel, First Data Investor Services Group,
First Data Investor Services
Inc. (since 1995). Formerly, Paralegal Manager,
Group, Inc.
The Boston Company Advisors, Inc.
One Exchange Place
8th Floor
Boston, MA 02109
Age: 33
Julie A. Tedesco Assistant Secretary
Counsel, First Data Investor Services Group,
First Data Investor Services
Inc. (since May, 1994). Formerly Assistant Vice
Group, Inc.
President and Counsel of The Boston Company
One Exchange Place
Advisors, Inc. (since July, 1992).
8th Floor
Boston, MA 02109
Age: 40
</TABLE>
Directors of the Company receive an aggregate fee from the
Company, the
Trust, Framlington and St. Clair Funds, Inc. ("St. Clair") for
service on those
organizations' respective Boards comprised of an annual retainer
fee of $20,000
and a fee of $1,500 for each Board meeting attended; and are
reimbursed for all
out-of-pocket expenses relating to attendance at meetings.
The following table summarizes the compensation paid by the
Company, the Trust,
Framlington and St. Clair to their respective Directors/Trustees
for the year
ended June 30, 1997.
<TABLE>
<CAPTION>
<S> <C> <C>
<C> <C>
Aggregate Pension
Compensation from Retirement
the Company, the Benefits
Estimated
Trust, Framlington Accrued as
Annual Benefits
and St. Clair Part of Fund
Upon Retirement Total from the
Name of Person Expenses
Fund Complex
Position
Charles W. Elliott $20,000.00 None
None $20,000.00
Chairman
John Rakolta, Jr. $18,500.00 None
None $18,500.00
Vice Chairman
Thomas B. Bender $20,000.00 None
None $20,000.00
Trustee and Director
David J. Brophy $20,000.00 None
None $20,000.00
Trustee and Director
Dr. Joseph E. Champagne $20,000.00 None
None $20,000.00
Trustee and Director
Thomas D. Eckert $20,000.00 None
None $20,000.00
Trustee and Director
</TABLE>
No officer, director or employee of the Advisor, Comerica
Incorporated
("Comerica"), the Sub-Custodian, the Distributor, the
Administrator or the
Transfer Agent currently receives any compensation from the
Company. [As of
October 1, 1997, the Directors and officers of the Company, as a
group, owned
[less than 1%] of all classes of outstanding shares of the
Funds of the
Company.]
[As of October 1, 1997, the Directors and officers of the
Company, as a
group, owned ___ Class Y Shares of the Conservative Fund, ___
Class Y Shares of
the Moderate Fund, and ___ Class Y Shares of the Aggressive
Fund, which
represented less than 1% of the outstanding Class Y Shares of the
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, 1997
owned ___ Class A Shares and ___ Class Y Shares, respectively,
the Conservative
Fund, ___ Class A Shares and ___ Class Y Shares, respectively, the
Moderate Fund
and ___ Class A Shares and ___ Class Y Shares of the Aggressive
Fund, which
represented [less than 1%] of the outstanding Shares of each
Fund.]
[Munder Capital Management and affiliates of Munder
Capital Management
through common ownership, owned beneficially ___ Class Y
Shares of the
Conservative Fund, ___ Class Y Shares of the Moderate Fund
and ___ Class Y
Shares of the Aggressive Fund.]
INVESTMENT ADVISORY AND OTHER SERVICE ARRANGEMENTS
Investment Advisor. The Advisor of each Fund is
Munder Capital
Management, a Delaware general partnership. The Advisor 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.
The Investment Advisory Agreement ("Advisory
Agreement") between the
Advisor and the Company on behalf of each Fund was approved
by the Board of
Directors of the Company on February 4, 1997 and by Shareholders
on ________,
1997 and will continue in effect until February 4, 1999, and
from year to year
thereafter only if its continuance is specifically approved
annually by (a) the
vote of a majority of the Board of Directors who are not parties
to the Advisory
Agreement or interested persons (as defined in the 1940 Act),
cast in person at
a meeting called for the purpose of voting on approval, and (b)
either (i) the
vote of a majority of the outstanding voting securities of each
Fund, or (ii)
the vote of a majority of the Board of Directors. The Advisory
Agreement is
terminable with respect to a Fund by vote of the Board of
Directors, or by the
holders of a majority of the outstanding voting securities of
the Fund, at any
time without penalty, 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 Company. The Advisory
Agreement terminates
automatically in the event of its assignment (as defined in the
1940 Act).
Under the terms of the Advisory Agreement, 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 Company's Boards of Directors. For the advisory
services provided
to the Funds 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 .35% of each Funds' average daily net
assets. For the
period ended June 30, 1997, the Advisor received fees, after
waivers, of $87 for
the Conservative Fund, $202 for the Moderate Fund and $597 for
the Aggressive
Fund. In addition, for the period ended June 30, 1997, the
Advisor reimbursed
expenses of $23,853, $23,375 and $23,467, to the Conservative
Fund, Moderate
Fund and Aggressive Fund, respectively.
The Advisor serves as investment advisor to each of
the Underlying
Funds, and for the advisory services provided and expenses
assumed by it, the
Advisor has agreed to a fee from each Underlying Fund. The
Advisor expects to
voluntarily reimburse expenses during the Trust's, the
Company's and
Framlington's current fiscal year with respect to ___________
Funds. The Advisor
may discontinue such fee waivers and/or expense reimbursements
at any time, in
its sole discretion. See "STRUCTURE AND MANAGEMENT OF THE FUNDS--
Who Manages and
Services the Funds?" in the Prospectus for a description of the
advisory fees
received by the Advisor from the Underlying Funds.
Pursuant to a sub-advisory agreement with the
Advisor, Framlington
Overseas Investment Management Limited provides sub-advisory
services to the
Framlington Funds, and receives a fee from the Advisor for such
sub-advisory
services. See "STRUCTURE AND MANAGEMENT OF THE FUNDS--Who
Manages and Services
the Funds?" in the Prospectus for a description of the sub-
advisory services and
fees received by the Sub-Advisor.
For the fiscal year ended June 30, 1997 (and for the
Micro-Cap Equity
Fund, Small-Cap Value Fund, Framlington International Growth
Fund, Framlington
Emerging Markets Fund, Framlington Healthcare Fund, NetNet and
International
Bond Fund for the period from commencement of operations to June
30, 1997) the
Advisor received fees, after waivers, if any, at an effective
rate of .75% of
average daily net assets for each of the Accelerating Growth
Fund, Growth &
Income Fund, International Equity Fund, Multi-Season Fund, Small-
Cap Value Fund
and Small Company Growth Fund; .50% of average daily nets each of
the Bond Fund,
Intermediate Bond Fund, International Bond Fund and U.S.
Government Income Fund;
1.00% of average daily net assets for each of the Micro-Cap Fund,
NetNet Fund,
Framlington International Growth Fund and Framlington Healthcare
Fund; .74% of
average daily net assets for each of the Mid-Cap Fund, Real
Estate Fund, and
Value 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 and
U.S. Treasury
Money Market Fund; 1.25% of average daily net assets of the
Framlington Emerging
Markets Fund.
As of the date of this Statement of Additional
Information, the Equity
Selection Fund had not yet commenced operations.
Distribution Agreement. The Company has entered into a
distribution
agreement 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. 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 distribution of
Class A shares
to investors and the provision of certain services to holders of
Class A shares.
Under such Plans, the Distributor is paid an annual service fee
at the rate of
0.25% of the value of average daily net assets of the Class A
shares of the Fund
and an annual distribution fee at the rate of 0.05% of the
value of average
daily net assets of the Class A shares of the Fund. Each Fund
has adopted a
Service and Distribution Plan with respect to its Class B
shares, pursuant to
which it uses its assets to finance activities relating to the
distribution of
Class B shares to investors and the provision of certain services
to the holders
of Class B shares. Under such Plans, the Distributor is paid an
annual service
fee of 0.25% of the value of average daily net assets of the
Class B shares of
each Fund and an annual distribution fee at the rate of 0.75%
of the value of
average daily net assets of the Class B 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 Directors, including
a majority of
the Board of Directors who are not interested persons of the
Company, as
applicable, and who have no direct or indirect financial
interest in the
operation of that Plan (the "Non-Interested Plan Directors"). The
Plans may not
be amended to increase the amount to be spent for the services
provided by the
Distributor without shareholder approval, and all amendments of
the Plans also
must be approved by the Directors in the manner described above.
Each Plan may
be terminated at any time, without penalty, by vote of a
majority of the
Non-Interested Plan Directors or, with respect to a Fund,
by a vote of a
majority of the outstanding voting securities of the relevant
class of that Fund
(as defined in the 1940 Act) upon not more than 30 days' written
notice to any
other party to the Plan. Pursuant to each Plan, the Distributor
will provide the
Board of Directors periodic reports of amounts expended under
the Plan and the
purposes for which such expenditures were made.
The Directors have determined that the Plans will
benefit the Company,
each Fund, and their shareholders by (i) providing an incentive
for broker or
bank personnel to provide continuous shareholder servicing
after the time of
sale; (ii) facilitating portfolio management flexibility through
cash flow into
the Funds; and (iii) maintaining a competitive sales structure
in the mutual
fund industry.
With respect to Class A and Class B shares of
each Fund, the
Distributor expects to pay sales commissions to dealers
authorized to sell the
Fund's Class A and Class B shares at the time of sale. The
Distributor will use
its own funds (which may be borrowed) to pay such
commissions pending
reimbursement pursuant to the Service and Distribution Plan. In
addition, the
Advisor may use its own resources to make payments to the
Distributor or dealers
authorized to sell the Fund's shares to support their sales
efforts.
For the period ended June 30, 1997, the following fees
were paid to the
Distributor pursuant to the Class A and Class B Service and
Distribution Plans.
<TABLE>
<CAPTION>
<S> <C>
<C>
Class A Service and
Distribution Plan Class B Service and Distribution Plan
Conservative Fund $_______
$_______
Moderate Fund $_______
$_______
Aggressive Fund $_______
$_______
</TABLE>
The following amounts were paid by each Fund under
its Class A and
Class B Service and Distribution Plans during the period from
commencement of
operations to June 30, 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
<C> <C> <C> <C> <C> <C> <C>
Printing and
Mailing of
Interest
Prospectuses
Carrying or
to other than
Compen- Compen- Compen- Other Financing
Current
sation to sation sation to Charges
Advertising Shareholders
Underwriters to Dealers Sales Personnel
Class A Class B Class A Class B Class
Class B Class A Class B Class Class B Class A Class B
A
A
Conservative Fund $ $ $ $ $
$ $ $ $ $ $ $
Moderate Fund $ $ $ $ $
$ $ $ $ $ $ $
Aggressive Fund $ $ $ $ $
$ $ $ $ $ $ $
</TABLE>
Administration Agreement. State Street Bank and Trust
Company ("State
Street") whose principal business address is 225 Franklin
Street, Boston,
Massachusetts 02110, serves as administrator for the Company
pursuant to an
administration agreement (the "Administration Agreement").
State Street has
agreed to maintain office facilities for the Company; provide
accounting and
bookkeeping services for the Funds, oversee the computation of
each Fund's net
asset value, net income and realized capital gains, if any;
furnish statistical
and research data, clerical services, and stationery and
office supplies;
prepare and file various reports with the appropriate regulatory
agencies; and
prepare various materials required by the SEC or any state
securities commission
having jurisdiction over the Company. State Street may enter
into an agreement
with one or more third parties pursuant to which such third
parties will provide
administrative services on behalf of the Funds.
The Administration Agreement provides that the
Administrator performing
services thereunder shall not be liable under the Agreement
except for its bad
faith, negligence or willful misconduct in the performance of
its duties and
obligations thereunder.
Prior to November 1, 1997, First Data Investor Services
Group, Inc.
("Investor Services Group") located at 53 State Street, Boston,
Massachusetts
02109 served as administrator to the Funds.
For the period from ended June 30, 1997, administration
fees of Investor
Services Group accrued were $7,479 - Conservative Fund, $7,480 -
Moderate Fund
and $7,479 - Aggressive Fund.
Custodian, Sub-Custodian and Transfer Agency Agreements.
Comerica Bank (the
"Custodian"), whose principal business address is One Detroit
Center, 500
Woodward Avenue, Detroit, MI 48226, maintains custody of the
Funds' assets
pursuant to a custodian agreement (the "Custody Agreement") with
the Company.
Under the Custody Agreement, the Custodian (i)
<PAGE>
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 Directors
concerning each Fund's operations. For the period ended June
30, 1997, the
Custodian earned $_______ for its services to the Funds.
Effective _________,
1997, no compensation will be paid to the Custodian for its
services. The
Custodian has entered into a Sub-Custody Agreement with State
Street pursuant to
which State Street will serve as Sub-Custodian to the Funds.
Investor Services Group serves as the transfer and
dividend disbursing
agent for the Funds pursuant to a transfer agency agreement
(the "Transfer
Agency Agreement") with the Company, under which Investor
Services Group (i)
issues and redeems shares of each Fund, (ii) addresses
and mails all
communications by each Fund to its record owners,
including reports to
shareholders, dividend and distribution notices and proxy
materials for its
meetings of shareholders, (iii) maintains shareholder accounts,
(iv) responds to
correspondence by shareholders of the Funds and (v) makes
periodic reports to
the Boards of Directors concerning the operations of each Fund.
PORTFOLIO
TRANSACTIONS
Subject to the general supervision of the Directors, the Advisor
makes decisions
with respect to and places orders for all purchases and sales
of portfolio
securities for each Fund. The Funds purchase only Class Y
shares of the
Underlying Funds, which are sold without an initial or contingent
deferred sales
charge to the Funds.
For the period ended June 30, 1997, the Funds did not pay
any brokerage
commissions.
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 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 portfolio turnover rate of a Fund and an
Underlying Fund is
calculated by dividing the lesser of such Fund's annual sales
or purchases of
portfolio securities (exclusive of purchases or sales of
securities whose
maturities at the time of acquisition were one year or less)
by the monthly
average value of the securities held by the fund during the
year. Each Fund's
and each Underlying Fund's portfolio turnover rate is included in
its respective
Prospectuses under "Financial Highlights." Purchases and sales are
made for each
Fund and Underlying Fund whenever necessary, in management's
opinion, to meet
such fund's investment objective. The Underlying 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.
<PAGE>
In the Advisory Agreement, the Advisor agrees to select
broker-dealers
in accordance with guidelines established by the 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 Agreement
authorizes the
Advisor, subject to the prior approval of the Company's Board of
Directors, to
cause the Funds to pay a broker-dealer which furnishes
brokerage and research
services a higher commission than that which might be
charged by another
broker-dealer for effecting the same transaction, provided
that the Advisor
determines in good faith that such commission is reasonable in
relation to the
value of the brokerage and research services provided by such
broker-dealer,
viewed in terms of either the particular transaction or
the overall
responsibilities of the Advisor to the Funds. Such brokerage
and research
services might consist of reports and statistics on specific
companies or
industries, general summaries of groups of bonds and their
comparative earnings
and yields, or broad overviews of the securities markets and the
economy.
Supplementary research information so received is in
addition to, and
not in lieu of, services required to be performed by the
Advisor and does not
reduce the advisory fees payable to the Advisor by the Funds.
It is possible
that certain of the supplementary research or other services
received will
primarily benefit one or more other investment companies or
other accounts for
which investment discretion is exercised. Conversely, a Fund may
be the primary
beneficiary of the research or services received as a result
of portfolio
transactions effected for such other account or investment
company.
Portfolio securities will not be purchased from or sold
to the Advisor,
the Distributor or any affiliated person (as defined in the
1940 Act) of the
foregoing entities except to the extent permitted by SEC
exemptive order or by
applicable law.
Investment decisions for each Fund, the Underlying Funds,
and for other
investment accounts managed by the Advisor (Sub-Advisor with
respect to the
Framlington Funds) 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 or Underlying Fund is concerned, in
other cases it is
believed to be beneficial to a Fund or Underlying Fund. To the
extent permitted
by law, the Advisor may aggregate the securities to be sold or
purchased for a
Fund or Underlying 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 Company's Board of Directors
in accordance
with Rule 10f-3 under the 1940 Act.
The Funds 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. For the
period ended June 30, 1997: ____________________________.
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, Sub-Custodian and
Transfer Agent; fees
and expenses of officers and Board of Directors; taxes;
interest; legal and
auditing fees; certain fees and expenses in registering and
qualifying each Fund
and its shares for distribution under Federal and state
securities laws;
expenses of preparing prospectuses and statements of additional
information and
of printing and distributing prospectuses and statements
of additional
information to existing shareholders; the expense of reports to
shareholders,
shareholders' meetings and proxy solicitations; fidelity bond and
directors' and
officers' liability insurance premiums; the expense of using
independent pricing
services; and other expenses which are not assumed by the
Administrator. Any
general expenses of the Company that are not readily
identifiable as belonging
to a particular investment portfolio of the Company are
allocated among all
investment portfolios of the Company by or under the direction
of the Board of
Directors in a manner that the Board of Directors determines
to be fair and
equitable. The Advisor, Administrator, Custodian, Sub-
Custodian and Transfer
Agent may voluntarily waive all or a portion of their respective
fees from time
to time.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Purchases and redemptions are discussed in the Funds'
Prospectus and
such information is incorporated herein by reference.
Purchases. As described in the Prospectuses, shares of
the Funds may be
purchased in a number of different ways. Such alternative sales
arrangements
permit an investor to choose the method of purchasing shares
that is more
beneficial depending on the amount of the purchase, the
length of time the
investor expects to hold the shares and other relevant
circumstances. An
investor may place orders directly through the Transfer Agent or
the Distributor
or through arrangements with his/her authorized broker.
Retirement Plans. Shares of any of the Funds may be
purchased in
connection with various types of tax deferred retirement
plans, including
individual retirement accounts ("IRAs"), qualified plans,
deferred compensation
for public schools and charitable organizations (403(b) plans)
and simplified
employee pension IRAs. An individual or organization
considering the
establishment of a retirement plan should consult with an
attorney and/or an
accountant with respect to the terms and tax aspects of the
plan. A $10.00
annual custodial fee is also charged on IRAs. This custodial
fee is due by
December 15 of each year and may be paid by check or shares
liquidated from a
shareholder's account.
Redemptions. As described in the Prospectuses, shares of
the Funds may be
redeemed in a number of different ways:
<PAGE>
o By Mail
o By Telephone
o Automatic Withdrawal
Plan
Other Information. Redemption proceeds are normally
paid in cash;
however, each Fund may pay the redemption price in whole
or part by a
distribution in kind of securities from the portfolio of the
particular Fund, in
lieu of cash, in conformity with applicable rules of the SEC.
If shares are
redeemed in kind, the redeeming shareholder might incur
transaction costs in
converting the assets into cash. The Funds are obligated to redeem
shares solely
in cash up to the lesser of $250,000 or 1% of its net assets
during any 90-day
period for any one shareholder.
The Funds reserve the right to suspend or postpone
redemptions during
any period when: (i) trading on the New York Stock Exchange 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' Prospectus, a shareholder exchanging at least $1,000
of shares (for
which certificates have not been issued) and who has
authorized expedited
exchanges on the application form filed with the Transfer
Agent may exchange
shares by telephoning the Funds at (800) 438-5789.
Telephone exchange
instructions must be received by the Transfer Agent by 4:00 p.m.,
New York City
time. The Funds, Distributor and Transfer Agent reserve the right
at any time to
suspend or terminate the expedited exchange procedure or to
impose a fee for
this service. During periods of unusual economic or market
changes, shareholders
may experience difficulties or delays in effecting telephone
exchanges. Neither
the Funds nor the Transfer Agent will be responsible for any
loss, damages,
expense or cost arising out of any telephone exchanges
effected upon
instructions believed by them to be genuine. The Transfer Agent
has instituted
procedures that it believes are reasonably designed to insure
that exchange
instructions communicated by telephone are genuine, and could
be liable for
losses caused by unauthorized or fraudulent instructions in the
absence of such
procedures. The procedures currently include a recorded
verification of the
shareholder's name, social security number and account number,
followed by the
mailing of a statement confirming the transaction, which is sent
to the address
of record.
<PAGE>
NET ASSET VALUE
In determining the approximate market value of portfolio
investments,
the Company may employ outside organizations, which may use
matrix or formula
methods that take into consideration market indices, matrices,
yield curves and
other specific adjustments. This may result in the securities
being valued at a
price different from the price that would have been determined had
the matrix or
formula methods not been used. All cash, receivables and current
payables are
carried on the Company's books at their face value. Other
assets, if any, are
valued at fair value as determined in good faith under the
supervision of the
Board Members.
PERFORMANCE
INFORMATION
Yield and Performance of the Funds
The Funds' 30-day (or one month) standard yield
described in the
Prospectus is calculated for each Fund in accordance with the
method prescribed
by the SEC for mutual funds:
YIELD = 2[( a - b +1)6 -1]
cd
Where: a = dividends and interest earned by a Fund during
the period;
b = expenses accrued for the period (net
of
reimbursements and waivers);
c = average daily number of shares
outstanding during
the period entitled to receive
dividends;
d = maximum offering price per share on
the last day of
the period.
For the purpose of determining interest earned on
debt obligations
purchased by a Fund at a discount or premium (variable "a" in the
formula), each
Fund computes the yield to maturity of such instrument based on
the market value
of the obligation (including actual accrued interest) at the
close of business
on the last business day of each month, or, with respect
to obligations
purchased during the month, the purchase price (plus actual
accrued interest).
Such yield is then divided by 360 and the quotient is multiplied
by the market
value of the obligation (including actual accrued interest)
in order to
determine the interest income on the obligation for each day of
the subsequent
month that the obligation is in the portfolio. It is assumed
in the above
calculation that each month contains 30 days. The maturity of a
debt obligation
with a call provision is deemed to be the next call date on which
the obligation
reasonably may be expected to be called or, if none, the maturity
date. For the
purpose of computing yield on equity securities held by a Fund,
dividend income
is recognized by accruing 1/360 of the stated dividend rate of
the security for
each day that the security is held by the Fund.
Interest earned on tax-exempt obligations that are
issued without
original issue discount and have a current market discount is
calculated by
using the coupon rate of interest instead of the yield to
maturity. In the case
of tax-exempt obligations that are issued with original issue
discount but which
have discounts based on current market value that exceed the
then-remaining
portion of the original issue discount (market discount), the
yield to maturity
is the imputed rate based on the original issue discount
calculation. On the
other hand, in the case of tax-exempt obligations that are issued
with original
issue discount but which have the discounts based on current
market value that
are less than the then-remaining portion of the original issue
discount (market
premium), the yield to maturity is based on the market value.
With respect to mortgage or other receivables-backed
debt obligations
purchased at a discount or premium, the formula generally calls
for amortization
of the discount or premium. The amortization schedule will be
adjusted monthly
to reflect changes in the market value of such debt
obligations. Expenses
accrued for the period (variable "b" in the formula) include all
recurring fees
charged by a Fund to all shareholder accounts in proportion to the
length of the
base period and the Fund's mean (or median) account size.
Undeclared earned
income will be subtracted from the offering price per share
(variable "d" in the
formula).
Total Return of the Funds
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.
Based on the foregoing calculation, set forth below are
the aggregate
total return figures for the Class A, Class B and Class Y Shares
of each of the
Funds for the period from commencement of operations through June
30, 1997:
<TABLE>
<CAPTION>
<S>
<C>
Period
ended
Fund-Inception Date
6/30/97
Conservative Fund
Class Y - 4/3/97
5.50%
Moderate Fund
Class A - 4/4/97
10.20%
Class Y - 4/3/97
10.20%
Aggressive Fund
Class Y - 4/3/97
13.50%
</TABLE>
As of June 30, 1997, Class A Shares of the Conservative
Fund and the
Aggressive Fund and Class B Shares of the Conservative Fund,
Moderate Fund and
Aggressive Fund had not commenced operations.
The performance of any investment is generally a
function of portfolio
quality and maturity, type of investment and operating expenses.
From time to time, in advertisements or in reports to
shareholders, a
Fund's yields or total returns may be quoted and compared to
those of other
mutual funds with similar investment objectives and to stock or
other relevant
indices. For example, a Fund's yield may be compared to the
IBC/Donoghue's Money
Fund Average, which is an average compiled by Donoghue's MONEY
FUND REPORT of
Holliston, MA 01746, a widely recognized independent publication
that monitors
the performance of money market funds, or to the data
prepared by Lipper
Analytical Services, Inc., a widely recognized independent service
that monitors
the performance of mutual funds. Hypothetical examples showing
the difference
between a taxable and a tax-free investment may also be
provided to
shareholders.
TAXES
The following summarizes certain additional tax
considerations
generally affecting the Funds and their shareholders that are
not described in
the Funds' Prospectus. 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.
Distributions of net investment income received by
a Fund from
investments in debt securities 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 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."
If an Underlying Fund derives dividends from domestic
corporations, a
portion of the income distributions of a Fund which invests in
that Underlying
Fund may be eligible for the 70% deduction for dividends
received by
corporations. Shareholders will be informed of the portion of
dividends which so
qualify. The dividends-received deduction is reduced to the
extent the shares
held by the Underlying Fund with respect to which the dividends
are received are
treated as debt-financed under federal income tax law and is
eliminated if
either those shares or the shares of the Underlying Fund or the
Fund are deemed
to have been held by the Underlying Fund, the Fund or the
shareholders, as the
case may be, for less than 46 days.
Income received by an Underlying Fund from sources
within a foreign
country may be subject to withholding and other taxes imposed by
that country.
If more than 50% of the value of an Underlying Fund's total
assets at the close
of its taxable year consists of stock or securities of foreign
corporations, the
Underlying Fund will be eligible and may elect to "pass-
through" to its
shareholders, including a Fund, the amount of foreign income and
similar taxes
paid by the Underlying Fund. Pursuant to this election, the
Fund would be
required to include in gross income (in addition to taxable
dividends actually
received), its pro rata share of foreign income and similar
taxes in computing
its taxable income or to use it as a foreign tax credit against
its U.S. federal
income taxes, subject to limitations. A Fund, would not, however,
be eligible to
elect to "pass-through" to its shareholders the ability to claim
a deduction or
credit with respect to foreign income and similar taxes paid by
the Underlying
Fund.
Disposition of Shares. Upon a redemption, sale or
exchange of his or
her shares, a shareholder will realize a taxable gain or loss
depending upon his
or her basis in the shares. Such gain or loss will be treated as
capital gain or
loss if the shares are capital assets in the shareholder's
hands and will be
long-term or short-term, generally, depending upon the
shareholder's holding
period for the shares. Any loss realized on a redemption, sale or
exchange will
be disallowed to the extent the shares disposed of are
replaced (including
through reinvestment of dividends) within a period of 61 days
beginning 30 days
before and ending 30 days after the shares are disposed of. In
such a case, the
basis of the shares acquired will be adjusted to reflect the
disallowed loss.
Any loss realized by a shareholder on the sale of Fund
shares held by the
shareholder for six months or less will be treated as a long-term
capital loss
to the extent of any distributions of net capital gains received
or treated as
having been received by the shareholder with respect to
such shares.
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.
Taxation of the Underlying Funds. Each Underlying Fund
intends to elect
and qualify to be taxed as a regulated investment company under
the Code. In any
year in which an Underlying Fund qualifies as a regulated
investment company and
timely distributes all of its taxable income, the Underlying Fund
generally will
not pay any federal income or excise tax.
Distributions of an Underlying Fund's investment company
taxable income
are taxable as ordinary income to a Fund which invests in the
Underlying Fund.
Distributions of the excess of an Underlying Fund's net long-term
capital gain
over its net short-term capital loss, which are properly
designated as "capital
gain dividends," are taxable as long-term capital gain to a Fund
which invests
in the Underlying Fund, regardless of how long the Fund held
the Underlying
Fund's shares, and are not eligible for the corporate
dividends-received
deduction. Upon the sale or other disposition by a Fund of
shares of an
Underlying Fund, the Fund generally will realize a capital gain
or loss which
will be long-term or short-term, generally depending upon the
holding period for
the shares.
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.
Other Taxation
The foregoing discussion relates only to U.S. 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 Company is a Maryland corporation. The Company's
Articles of
Incorporation authorize the Board of Directors to classify or
reclassify any
unissued shares of the Company into one or more classes by
setting or changing,
in any one or more respects, their respective designations,
preferences,
conversion or other rights, voting powers, restrictions,
limitations,
qualifications and terms and conditions of redemption. Pursuant to
the authority
of the Company's Articles of Incorporation, the Directors have
authorized the
issuance of shares of common stock representing interests
in the Equity
Selection Fund, Micro-Cap Equity Fund, Mid-Cap Fund, Multi-
Season Fund, Real
Estate Fund, Small-Cap Value Fund, Value Fund, International
Bond Fund, Short
Term Treasury Fund, Money Market Fund, NetNet Fund, Financial
Services Fund,
Conservative Fund, Moderate Fund and Aggressive Fund,
respectively. The Munder
Lifestyle Funds are offered in three separate classes: Class
A, Class B and
Class Y shares.
At a board meeting on February 4, 1997, the Directors
adopted a plan
pursuant to Rule 18f-3 under the 1940 Act ("Multi-Class Plan") on
behalf of each
Fund. The 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 Company or
an individual portfolio of the Company, shareholders of a
particular portfolio
would be entitled to receive the assets available for distribution
belonging to
such portfolio, and a proportionate distribution, based upon
the relative net
asset values of the Company's respective portfolios, of any
general assets not
belonging to any particular portfolio which are available for
distribution.
Shareholders of a portfolio are entitled to participate in the net
distributable
assets of the particular portfolio involved on liquidation, based
on the number
of shares of the portfolio 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, and 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. Further, shareholders of
all of the funds
of the Company, as well as those of any other fund now or
hereafter offered by
the Company, will vote together in the aggregate and not
separately on a
portfolio-by-portfolio basis, except as required by law or when
permitted by the
Board of Directors. Rule 18f-2 under the 1940 Act provides
that any matter
required to be submitted to the holders of the outstanding voting
securities of
an investment company such as the Company shall not be
deemed to have been
effectively acted upon unless approved by the holders of a
majority of the
outstanding shares of each portfolio affected by the matter. A
portfolio is
affected by a matter unless it is clear that the interests of each
portfolio in
the matter are substantially identical or that the matter does
not affect any
interest of the portfolio. 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 portfolio. However, the Rule also
provides that
the ratification of the appointment of independent auditors,
the approval of
principal underwriting contracts and the election of
directors may be
effectively acted upon by shareholders of the Company voting
together in the
aggregate without regard to a particular portfolio.
Shares of the Company have noncumulative voting
rights and,
accordingly, the holders of more than 50% of each of the
Company's outstanding
shares (irrespective of class) may elect all of the directors.
Shares have no
preemptive rights and only such conversion and exchange rights as
the Board may
grant in its discretion. When issued for payment as described in
the Prospectus,
shares will be fully paid and non-assessable by the Company.
Shareholder meetings to elect Directors will not be
held unless and
until such time as required by law. At that time, the Directors
then in office
will call a shareholders' meeting to elect Directors. Except as
set forth above,
the Directors will continue to hold office and may appoint
successor Directors.
Meetings of the shareholders of the Company shall be called by
the Directors
upon the written request of shareholders owning at least 10% of
the outstanding
shares entitled to vote.
MISCELLANEOUS
Counsel. The law firm of Dechert Price & Rhoads, 1500 K
Street, N.W.,
Washington, DC 20005, has passed upon certain legal matters in
connection with
the shares offered by the Funds and serves as counsel to the
Company.
Independent Auditors. Ernst & Young LLP, 200 Clarendon
Street, Boston, MA
02116, serves as the Company's independent auditors.
Control Persons and Principal Holders of Securities. [As
of October 1,
1997, Comerica Bank, One Detroit Center, 500 Woodward Avenue,
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 the 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.
Name of Fund Name and Address Percent of Total
Shares Outstanding
[As of October 1, 1997, Munder Capital Management, Inc. on
behalf of their
clients owned _______% of the __________ Funds.]
[As of October 1, 1997, Funds Distributor Inc. on behalf of
their clients
owned ________% of the outstanding shares of the _________ Funds.]
[As of October 1, 1997, Merrill Lynch Pierce Fenner and
Smith on behalf
of their clients owned approximately ________% of the outstanding
shares of the
_________ Funds.]
Banking Laws. Banking laws and regulations currently
prohibit a bank
holding company registered under the Federal Bank Holding Company
Act of 1956 or
any bank or non-bank affiliate thereof from sponsoring,
organizing, controlling
or distributing the shares of a registered, open-end
investment company
continuously engaged in the issuance of its shares, and prohibit
banks generally
from underwriting securities, but such banking laws and
regulations do not
prohibit such a holding company or affiliate or banks generally
from acting as
investment advisor, administrator, transfer agent or
custodian to such an
investment company, or from purchasing shares of such a company as
agent for and
upon the order of customers. The Advisor and the Custodian are
subject to such
banking laws and regulations.
The Advisor and the Custodian believe they may perform
the services for
the Company contemplated by their respective agreements with the
Company without
violation of applicable banking laws or regulations. It
should be noted,
however, that there have been no cases deciding whether bank
and non-bank
subsidiaries of a registered bank holding company may
perform services
comparable to those that are to be performed by these
companies, and future
changes in either Federal or state statutes and regulations
relating to
permissible activities of banks and their subsidiaries or
affiliates, as well as
future judicial or administrative decisions or interpretations
of current and
future statutes and regulations, could prevent these companies
from continuing
to perform such service for the Company.
Should future legislative, judicial or administrative
action prohibit
or restrict the activities of such companies in connection with
the provision of
services on behalf of the Company, the Company might be
required to alter
materially or discontinue its arrangements with such companies
and change its
method of operations. It is not anticipated, however, that any
change in the
Company's method of operations would affect the net asset value
per share of any
Fund or result in a financial loss to any shareholder of a Fund.
Shareholder Approvals. As used in this Statement
of Additional
Information in the 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 the Funds'
Prospectuses do
not contain all the information included in the Funds'
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.
<PAGE>
Statements contained herein and in the Funds'
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 Funds'
registration statement,
each such statement being qualified in all respects by such
reference.
FINANCIAL
STATEMENTS
The financial statements for the The Munder Lifestyle Funds,
including the
notes thereto, dated June 30, 1997 have been audited by Ernst &
Young LLP and
are incorporated by reference into this Statement of Additional
Information from
the Annual Report of the The Munder Lifestyle Funds dated as of
June 30, 1997, in reliance on their report given on their authority
as experts in accounting and auditing.
<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.
<PAGE>
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.
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.
<PAGE>
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."
<PAGE>
APPENDIX B
As stated in the Prospectus, the Underlying Funds
may enter into
certain futures transactions and options for hedging purposes.
Such transactions
are described in this Appendix.
I. Interest Rate Futures Contracts
Use of Interest Rate Futures Contracts. Bond prices are
established in
both the cash market and the futures market. In the cash
market, bonds are
purchased and sold with payment for the full purchase price of
the bond being
made in cash, generally within five business days after the
trade. In the
futures market, only a contract is made to purchase or sell a bond
in the future
for a set price on a certain date. Historically, the
prices for bonds
established in the futures markets have tended to move
generally in the
aggregate in concert with the cash market prices and have
maintained fairly
predictable relationships. Accordingly, the Funds may use
interest rate futures
contracts as a defense, or hedge, against anticipated interest
rate changes and
not for speculation. As described below, this would include the
use of futures
contract sales to protect against expected increases in
interest rates and
futures contract purchases to offset the impact of interest rate
declines.
The Funds presently could accomplish a similar result to
that which it
hopes to achieve through the use of futures contracts by selling
bonds with long
maturities and investing in bonds with short maturities when
interest rates are
expected to increase, or conversely, selling short-term bonds
and investing in
long-term bonds when interest rates are expected to decline.
However, because of
the liquidity that is often available in the futures market, the
protection is
more likely to be achieved, perhaps at a lower cost and without
changing the
rate of interest being earned by the Funds, through using futures
contracts.
Description of Interest Rate Futures Contracts. An
interest rate futures
contract sale would create an obligation by a Fund, as seller,
to deliver the
specific type of financial instrument called for in the contract
at a specific
future time for a specified price. A futures contract purchase
would create an
obligation by the Fund, as purchaser, to take delivery of the
specific type of
financial instrument at a specific future time at a specific
price. The specific
securities delivered or taken, respectively, at settlement
date, would not be
determined until or at near that date. The determination would be
in accordance
with the rules of the exchange on which the futures contract
sale or purchase
was made.
Although interest rate futures contracts by their terms
call for actual
delivery or acceptance of securities, in most cases the contracts
are closed out
before the settlement date without making or taking of delivery
of securities.
Closing out a futures contract sale is effected by the Fund's
entering into a
futures contract purchase for the same aggregate amount of the
specific type of
financial instrument and the same delivery date. If the
price of the sale
exceeds the price of the offsetting purchase, the Fund is
immediately paid the
difference and thus realizes a gain. If the offsetting purchase
price exceeds
the sale price, the Fund pays the difference and realizes a loss.
Similarly, the
closing out of a futures contract purchase is effected by the Fund
entering into
a futures contract sale. If the offsetting sale price
exceeds the purchase
price, the Fund realizes a gain, and if the purchase price
exceeds the
offsetting sale price, the Fund realizes a loss.
Interest rate futures contracts are traded in an auction
environment on
the floors of several exchanges -- principally, the Chicago Board
of Trade, the
Chicago Mercantile Exchange and the New York Futures Exchange.
The Funds would
deal only in standardized contracts on recognized exchanges.
Each exchange
guarantees performance under contract provisions through a
clearing corporation,
a nonprofit organization managed by the exchange membership.
A public market now exists in futures contracts
covering various
financial instruments including long-term United States
Treasury Bonds and
Notes; Government National Mortgage Association (GNMA) modified
pass-through
mortgage backed securities; three-month United States
Treasury Bills; and
ninety-day commercial paper. 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 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 and the index fluctuates with changes in the market
values of the
bonds included. The Chicago Board of Trade has designed a futures
contract based
on the Bond Buyer Municipal Bond Index. This Index is
composed of 40 term
revenue and general obligation bonds and its composition is
updated regularly as
new bonds meeting the criteria of the Index are issued and
existing bonds
mature. The Index is intended to provide an accurate indicator
of trends and
changes in the municipal bond market. Each bond in the Index is
independently
priced by six dealer-to-dealer municipal bond brokers daily. The
40 prices then
are averaged and multiplied by a coefficient. The
coefficient is used to
maintain the continuity of the Index when its composition changes.
<PAGE>
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.
Examples of Stock Index Futures Transactions. The following
are examples of
transactions in stock index futures (net of commissions and
premiums, if any).
ANTICIPATORY PURCHASE HEDGE: Buy the Future
Hedge Objective: Protect Against Increasing Price
<TABLE>
<CAPTION>
<S>
<C>
Portfolio Futures
-
Day Hedge is Placed-
Anticipate buying $62,500 in Equity Securities
Buying 1 Index Futures at 125
Value of Futures = $62,500/Contract
-
Day Hedge is Lifted-
Buy Equity Securities with Actual Cost = $65,000
Sell 1 Index Futures at 130
Increase in Purchase Price = $2,500
Value of Futures = $65,000/Contract
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 Value of Futures Contract
- - 125 X $500 =
$62,500 Portfolio Beta Relative to the Index = 1.0
Portfolio Futures
-
Day Hedge is Placed-
Anticipate Selling $1,000,000 in Equity Securities
Sell 16 Index Futures at 125
Value of Futures = $1,000,000
-
Day Hedge is Lifted-
Equity Securities - Own Stock Buy 16 Index Futures at 120 with
Value = $960,000
Value of Futures = $960,000
Loss in Portfolio Value = $40,000
Gain on Futures = $40,000
</TABLE>
III. Margin Payments
Unlike purchase or sales of portfolio securities, no
price is paid or
received by a Fund upon the purchase or sale of a futures
contract. Initially,
the Fund will be required to deposit with the broker or in a
segregated account
with the Custodian an amount of cash or cash equivalents,
known as initial
margin, based on the value of the contract. The nature of
initial margin in
futures transactions is different from that of margin in security
transactions
in that futures contract margin does not involve the borrowing
of funds by the
customer to finance the transactions. Rather, the initial
margin is in the
nature of a performance bond or good faith deposit on the
contract which is
returned to the Fund upon termination of the futures contract
assuming all
contractual obligations have been satisfied. Subsequent
payments, called
variation margin, to and from the broker, will be made on a
daily basis as the
price of the underlying instruments fluctuates making the
long and short
positions in the futures contract more or less valuable, a
process known as
marking-to-the-market. For example, when a particular Fund
has purchased a
futures contract and the price of the contract has risen in
response to a rise
in the underlying instruments, that position will have
increased in value and
the Fund will be entitled to receive from the broker a variation
margin payment
equal to that increase in value. Conversely, where the Fund
has purchased a
futures contract and the price of the futures contract has
declined in response
to a decrease in the underlying instruments, the position would be
less valuable
and the Fund would be required to make a variation margin payment
to the broker.
At any time prior to expiration of the futures contract, the
adviser may elect
to close the position by taking an opposite position,
subject to the
availability of a secondary market, which will operate to
terminate the Fund's
position in the futures contract. A final determination of
variation margin is
then made, additional cash is required to be paid by or
released to the Fund,
and the Fund realizes a loss or gain.
IV. Risks of Transactions in Futures Contracts
There are several risks in connection with the use of
futures by the
Underlying 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 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 Underlying Funds may purchase and write options
on the futures
contracts described above. A futures option gives the holder, in
return for the
premium paid, the right to buy (call) from or sell (put) to the
writer of the
option a futures contract at a specified price at any time during
the period of
the option. Upon exercise, the writer of, the option is
obligated to pay the
difference between the cash value of the futures contract and
the exercise
price. Like the buyer or seller of a futures contract, the holder,
or writer, of
an option has the right to terminate its position prior to
the scheduled
expiration of the option by selling, or purchasing an option of
the same series,
at which time the person entering into the closing transaction
will realize a
gain or loss. A Fund will be required to deposit initial margin
and variation
margin with respect to put and call options on futures contracts
written by it
pursuant to brokers' requirements similar to those described
above. Net option
premiums received will be included as initial margin deposits.
Investments in futures options involve some of the same
considerations
that are involved in connection with investments in future
contracts (for
example, the existence of a liquid secondary market). In addition,
the purchase
or sale of an option also entails the risk that changes in
the value of the
underlying futures contract will not correspond to changes in
the value of the
option purchased. Depending on the pricing of the option compared
to either the
futures contract upon which it is based, or upon the price of
the securities
being hedged, an option may or may not be less risky than
ownership of the
futures contract or such securities. In general, the market
prices of options
can be expected to be more volatile than the market prices on
underlying futures
contract. Compared to the purchase or sale of futures contracts,
however, the
purchase of call or put options on futures contracts may
frequently involve less
potential risk to the Fund because the maximum amount at risk
is the premium
paid for the options (plus transaction costs). The writing of
an option on a
futures contract involves risks similar to those risks relating
to the sale of
futures contracts.
VI. Currency Transactions
The Fund may engage in currency transactions in order to
hedge the value
of portfolio holdings denominated in particular currencies
against fluctuations
in relative value. Currency transactions include forward
currency contracts,
currency futures, options on currencies, and currency swaps. A
forward currency
contract involves a privately negotiated obligation to purchase
or sell (with
delivery generally required) a specific currency at a future
date, which may be
any fixed number of days from the date of the contract
agreed upon by the
parties, at a price set at the time of the contract. A
currency swap is an
agreement to exchange cash flows based on the notional difference
among two or
more currencies and operates similarly to an interest rate swap
as described in
the Statement of Additional Information. The Fund may enter
into currency
transactions with counterparties which have received (or the
guarantors of the
obligations which have received) a credit rating of A-1 or
P-1 by S&P or
Moody's, respectively, or that have an equivalent rating from
a NRSRO or are
determined to be of equivalent credit quality by the Advisor.
<PAGE>
The Fund's dealings in forward currency contracts and
other currency
transactions such as futures, options, options on futures and
swaps will be
limited to hedging involving either specific transactions
or portfolio
positions. Transaction hedging is entering into a currency
transaction with
respect to specific assets or liabilities of the Fund, which
will generally
arise in connection with the purchase or sale of its portfolio
securities or the
receipt of income therefrom. Position hedging is entering
into a currency
transaction with respect to portfolio security positions
denominated or
generally quoted in that currency.
The Fund will not enter into a transaction to hedge
currency exposure to
an extent greater after netting all transactions intended wholly
or partially to
offset other transactions, than the aggregate market value
(at the time of
entering into the transaction) of the securities held in its
portfolio that are
denominated or generally quoted in or currently convertible into
such currency,
other than with respect to proxy hedging as described below.
The Fund may also cross-hedge currencies by entering into
transactions
to purchase or sell one or more currencies that are expected to
decline in value
relative to other currencies to which the Fund has or in which
the Fund expects
to have portfolio exposure.
To reduce the effect of currency fluctuations on the
value of existing
or anticipated holdings of portfolio securities, the Fund may
also engage proxy
hedging. Proxy hedging is often used when the currency to
which the Fund's
portfolio is exposed is difficult to hedge or to hedge against the
dollar. Proxy
hedging entails entering into a commitment or option to sell a
currency whose
changes in value are generally considered to be correlated to
a currency or
currencies in which some or all of the Fund's portfolio
securities are or are
expected to be denominated, in exchange for U.S. dollars. The
amount of the
commitment or option would not exceed the value of the
Fund's securities
denominated in correlated currencies. For example, if the Advisor
considers that
the Austrian schilling is correlated to the German mark (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.
6279697.DOC
<PAGE>
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 Report relating
to The Munder
All-Season Maintenance Fund, The
Munder All-Season
Development Fund and The All-Season
Accumulation Fund
for the fiscal year ended June 30,
1997 and the
Report of Independent Auditors dated
August 15, 1997,
are incorporated by reference to the
Definitive 30b-2
filed (EDGAR Form N-30D) on
September 10, 1997 as
Accession #0000927405-97-000361
Included in Part C:
Consent of Independent Accountants is
filed herein
<TABLE>
<CAPTION>
<S> <C> <C>
(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 Fund11
(e) Articles Supplementary for The Munder
Short Term Treasury Fund12
(f) Articles Supplementary for The Munder
All-Season Conservative Fund, The Munder All-Season
Moderate Fund and The Munder All-Season
Aggressive Fund13
(g) Articles Supplementary with respect
to the name
changes of The Munder All-Season
Conservative Fund,
The Munder All-Season Moderate Fund
and The Munder
All-Season Aggressive Fund to The
Munder All-Season
Maintenance Fund, The Munder All-
Season Development
Fund and The Munder All-Season
Accumulation Fund14
(h) Articles Supplementary for The Munder
Financial Services Fund15
(i) Form of Articles Supplementary with
respect to the
name changes of The Munder All-
Season Maintenance
Fund, The Munder All-Season
Development Fund and The
Munder All-Season Accumulation Fund
to The Munder
All-Season Conservative Fund, The
Munder All-Season
Moderate Fund and The Munder All-
Season Aggressive
Fund*.
(2) By-Laws1
(3) Not Applicable
(4) Not Applicable
(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 Fund12
(l) Form of Investment Advisory Agreement
for The Munder All-Season Conservative Fund, The Munder
All-Season Moderate Fund and The Munder
All-Season Aggressive Fund13
(m) Form of Investment Advisory Agreement
for The Munder Financial Services Fund15
(6) (a) Underwriting Agreement8
(b) Notice to Underwriting Agreement with
respect to The Munder Value Fund and The Munder Mid-Cap
Growth Fund8
(c) Notice to Underwriting Agreement with
respect to The Munder International Bond Fund8
(d) Notice to Underwriting Agreement with
respect to The Munder Small-Cap Value Fund, The Munder
Equity Selection Fund, The Munder
Micro-Cap Equity Fund, and the NetNet Fund10
(e) Form of Notice to Underwriting
Agreement with respect to the Munder Short Term Treasury Fund12
(f) Form of Distribution Agreement with
respect to The Munder All-Season Conservative Fund, The
Munder All-Season Moderate Fund and The
Munder All-Season Aggressive Fund13
(g) Form of Distribution Agreement with
respect to The Munder Financial Services Fund15
(7) Not Applicable
(8) (a) Form of Custodian Contract8
(b) Notice to Custodian Contract with
respect to The Munder Value Fund and The Munder Mid-Cap
Growth Fund8
(c) Notice to Custodian Contract with
respect to the Munder International Bond Fund8
(d) Notice to Custodian Contract with
respect to The Munder Small-Cap Value Fund, The Munder
Equity Selection Fund, The Munder
Micro-Cap Equity Fund and the NetNet Fund10
(e) Form of Notice to the Custodian
Contract with respect to The Munder Short Term Treasury Fund12
(f) Form of Sub-Custodian Agreement13
(g) Form of Notice to the Custody Agreement
with respect to The Munder All-Season Conservative Fund,
The Munder All-Season Moderate Fund and
The Munder All-Season Aggressive Fund13
(h) Form of Notice to the Custodian
Agreement with respect to The Munder Financial Services Fund15
(9) (a) Transfer Agency and Service Agreement8
(b) Notice to Transfer Agency and Service
Agreement with respect to the Munder Value Fund and
the Munder Mid-Cap Growth Fund8
(c) Notice to Transfer Agency and Service
Agreement with respect to the Munder International Bond
Fund8
(d) Notice to Transfer Agency and Service
Agreement with respect to The Munder Small-Cap Value
Fund, The Munder Equity Selection Fund,
The Munder Micro-Cap Equity Fund and the NetNet Fund10
(e) Form of Notice to Transfer Agency and
Service Agreement with respect to The Munder Short Term
Treasury Fund12
(f) Form of Amendment to the Transfer
Agency and Registrar Agreement with respect to The Munder
All-Season Conservative Fund, The
Munder All-Season Moderate Fund and The Munder All-Season
Aggressive Fund13
(g) Form of Notice to the Transfer Agency
and Registrar Agreement with respect to The Munder
Financial Services Fund15
(h) Form of Amendment to the Transfer
Agency and Registrar Agreement with respect to The Munder
Financial Services Fund15
(i) Administration Agreement8
(j) Notice to Administration Agreement
with respect to The Munder Value and The Munder Mid-Cap Growth
Fund8
(k) Notice to Administration Agreement with
respect to The Munder International Bond Fund8
(l) 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
(m) Form of Notice to Administration
Agreement with respect to The Munder Short Term Treasury Fund12
(n) Form of Amendment to the
Administration Agreement with respect to The Munder All-
Season
Conservative Fund, The Munder All-
Season Moderate Fund and The Munder All-Season Aggressive
Fund13
(o) Form of Notice to Administration
Agreement with respect to The Munder Financial Services
Fund15
(p) Form of Amendment to the
Administration Agreement with respect to The Munder
Financial
Services Fund15
(q) Form of Notice to Sub-Administration
Agreement with respect to The Munder Financial Services
Fund15
(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 Fund11
(h) Opinion and Consent of Counsel with
respect to Munder Short Term Treasury Fund12
(i) Opinion and Consent of Counsel with
respect to The Munder All-Season Conservative Fund, The
Munder All-Season Moderate Fund and The
Munder All-Season Aggressive Fund14
(j) Opinion and Consent of Counsel with
respect to The Munder Financial Services Fund15
(11) (a) Consent of Ernst & Young LLP with
respect to The Munder All-Season Maintenance Fund, The
Munder All-Season Development Fund
and The Munder All-Season Accumulation Fund is filed
herein
(b) Consent of Arthur Andersen LLP7
(c) Letter of Arthur Andersen LLP regarding
change in independent auditor required by Item 304 of
Regulation S-K7
(d) Powers of Attorney13
(e) Certified Resolution of Board
authorizing signature on behalf of Registrant pursuant to power
of attorney14
(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
(p) Amended and Restated Service Plan for
Class K Shares16
(16) Schedule for Computation of Performance
Quotations*
(17) Financial Data Schedules with respect
to The Munder All-Season Maintenance Fund, The Munder
All-Season Development Fund and The
Munder All-Season Accumulation Fund are filed herein
(18) Form of Amended and Restated Multi-
Class Plan13
- ---------------------
*To be filed by amendment.
- --------------------------------
<FN>
1. Filed in Registrant's initial Registration
Statement on November 18, 1992 and incorporated by
reference herein.
2. Filed in Pre-Effective Amendment No. 2 to the
Registrant's Registration Statement on February 26, 1993
and incorporated by reference herein.
3. Filed in Post-Effective Amendment No. 7 to the
Registrant's Registration Statement on August 26, 1994
and incorporated by reference herein.
4. Filed in Post-Effective Amendment No. 2 to the
Registrant's Registration Statement on July 9, 1993 and
incorporated by reference herein.
5. Filed in Post-Effective Amendment No. 8 to
the Registrant's Registration Statement on February 28,
1995 and incorporated by reference herein.
6. Filed in Post-Effective Amendment No. 9 to the
Registrant's Registration Statement on April 13, 1995
and incorporated by reference herein.
7. Filed in Post-Effective Amendment No. 12 to the
Registrant's Registration Statement on August 29, 1995
and incorporated by reference herein.
8. Filed in Post-Effective Amendment No. 16 to
the Registrant's Registration Statement on June 25, 1996
and incorporated by reference herein.
9. Filed in Post-Effective Amendment No. 17 to the
Registrant's Registration Statement on August 9, 1996
and incorporated by reference herein.
10. Filed in Post-Effective Amendment No. 18 to the
Registrant's Registration Statement on August 14, 1996
and incorporated by reference herein.
11. Filed in Post-Effective Amendment No. 20 to
the Registrant's Registration Statement on October 28,
1996 and incorporated by reference herein.
12. Filed in Post-Effective Amendment No. 21 to
the Registrant's Registration Statement on December 13,
1996 and incorporated by reference herein.
13. Filed in Post-Effective Amendment No. 23 to
the Registrant's Registration Statement on February 18,
1997 and incorporated by reference herein.
14. Filed in Post-Effective Amendment No. 25 to
the Registrant's Registration Statement on May 14, 1997
and incorporated by reference herein.
15. Filed in Post-Effective Amendment No. 28 to
the Registrant's Registration Statement on July 28, 1997
and incorporated by reference herein.
16. Filed in Post-Effective Amendment No. 29 to the
Registrant's Registration Statement on August 29, 1997
and incorporated by reference herein.
</FN>
</TABLE>
Item 25. Persons Controlled by or Under Common Control with
Registrant.
------------------------------------------------
- --
Not Applicable
Item 26. Number of Holders of Securities.
-------------------------------
As of August 22, 1997, 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:
<TABLE>
<CAPTION>
<S> <C>
<C> <C> <C> <C>
Class A
Class B Class C Class K Class Y
- ------------------------------------------------------------------
- ------------------
Munder Multi-Season Growth Fund 500
1705 50 135 157
Munder Money Market Fund 19
21 10 0 76
Munder Real Estate Equity 70
62 32 2 56
Investment Fund
Munder Mid-Cap Growth Fund 18
17 5 1 16
Munder Value Fund 54
33 14 2 66
Munder International Bond Fund 4
3 1 2 9
Munder Small-Cap Value Fund 44
42 24 2 68
Munder Micro-Cap Equity Fund 36
98 9 2 53
Munder Equity Selection Fund 1
1 1 1 1
Munder Short Term Treasury Fund 1
3 1 1 8
Munder All-Season Maintenance Fund 1
1 0 0 2
Munder All-Season Development Fund 2
1 0 0 6
Munder All-Season Accumulation Fund 1
1 0 0 24
NetNet Fund - as of August 22, 1997, the NetNet Fund had 112
accounts open.
Munder Financial Services Fund - As of the date of this filing,
the Fund had not
commenced operations. </TABLE>
Item 27. Indemnification.
Article VII, Section 7.6 of the Registrant's
Articles of
Incorporation ("Section 7.6") provides that the Registrant,
including its
successors and assigns, shall indemnify its directors and
officers and make
advance payment of related expenses to the fullest extent
permitted, and in
accordance with the procedures required, by the General Laws
of the State of
Maryland and the Investment Company Act of 1940. Such
indemnification shall be
in addition to any other right or claim to which any director,
officer, employee
or agent may otherwise be entitled. In addition, Article VI of
the Registrant's
By-laws provides that the Registrant shall indemnify its employees
and/or agents
in any manner as shall be authorized by the Board of Directors
and within such
limits as permitted by applicable law. The Board of Directors
may take such
action as is necessary to carry out these indemnification
provisions and is
expressly empowered to adopt, approve and amend from time
to time such
resolutions or contracts implementing such provisions or
such further
indemnification arrangements as may be permitted by law. The
Registrant may
purchase and maintain insurance on behalf of any person
who is or was a
director, officer, employee or agent of the Registrant or is
serving at the
request of the Registrant as a director, officer, partner,
trustee, employee or
agent of another foreign or domestic corporation, partnership,
joint venture,
trust or other enterprise or employee benefit plan, against
any liability
asserted against and incurred by such person in any such capacity
or arising out
of such person's position, whether or not the Registrant
would have had the
power to indemnify against such liability. The rights provided
by Section 7.6
shall be enforceable against the Registrant by such person who
shall be presumed
to have relied upon such rights in serving or continuing
to serve in the
capacities indicated therein.
Insofar as indemnification for liabilities
arising under the
Securities Act of 1933, as amended, may be permitted to directors,
officers and
controlling persons of the Registrant by the Registrant pursuant
to the Fund's
Articles of Incorporation, its By-Laws or otherwise, the
Registrant is aware
that in the opinion of the Securities and Exchange
Commission, such
indemnification is against public policy as expressed in the Act
and, therefore,
is unenforceable. In the event that a claim for indemnification
against such
liabilities (other than the payment by the Registrant of
expenses incurred or
paid by directors, officers or controlling persons of the
Registrant in
connection with the successful defense of any act, suit or
proceeding) is
asserted by such directors, officers or controlling persons in
connection with
shares being registered, the Registrant will, unless in the
opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court
of appropriate jurisdiction the question whether such
indemnification by it is
against public policy as expressed in the Act and will be
governed by the final
adjudication of such issues.
Item 28. Business and Other Connections of Investment Advisor.
<TABLE>
<CAPTION>
<S>
<C>
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
Clark Durant
Vice President and Co-Director of The Private
Management Group
Terry H. Gardner
Vice President and Chief Financial Officer
Elyse G. Essick
Vice President and Director of Client Services
Sharon E. Fayolle
Vice President and Director of Money Market Trading
Otto G. Hinzmann
Vice President and Director of Equity Portfolio Management
Anne K. Kennedy
Vice President and Director of Corporate Bond Trading
Richard R. Mullaney
Vice President and Director of The Private
Management Group
Ann F. Putallaz
Vice President and Director of Fiduciary Services
Peter G. Root
Vice President and Director of Government
Securities Trading
Lisa A. Rosen
General Counsel and Director of Mutual Fund
Operations
James C. Robinson
Executive 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
</TABLE>
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:
<TABLE>
<CAPTION>
<S>
<C>
Harris Insight Funds Trust
Fremont Mutual Funds, Inc.
The Munder Funds Trust
RCM Capital Funds, Inc.
St. Clair Funds, Inc.
Monetta Fund, Inc.
The Munder Framlington Funds Trust
Monetta Trust
BJB Investment Funds
Burridge Funds
The PanAgora Institutional Funds
The JPM Series Trust
RCM Equity Funds, Inc.
The JPM Series Trust II
Waterhouse Investors Cash Management Fund, Inc.
HT Insight Funds, Inc.
LKCM Fund
d/b/a Harris Insight Funds
The JPM Pierpont Funds
The Brinson Funds
The JPM Institutional Funds
WEBS Index Fund, Inc.
The Skyline Funds
The Montgomery Funds
Orbitex Group of Funds
The Montgomery Funds II
(b) The following is a list of the executive
officers, directors and partners of Funds Distributor, Inc.
Director, President and Chief Executive Officer
- - Marie E. Connolly
Executive Vice President
- - Richard W. Ingram
Executive Vice President
- - Donald R. Roberson
Senior Vice President, General Counsel,
- - John E. Pelletier
Secretary and Clerk
Senior Vice President
- - Michael S. Petrucelli
Director, Senior Vice President, Treasurer and
- - Joseph F. Tower, III
Chief Financial Officer
Senior Vice President
- - Paula R. David
Senior Vice President
- - Bernard A. Whalen
Director
- - William J. Nutt
</TABLE>
(c) Not Applicable
Item 30. Location of Accounts and Records.
The account books and other documents
required to be
maintained by Registrant pursuant to Section 31(a) of the
Investment Company Act
of 1940 and the Rules thereunder will be maintained at the offices
of:
(1) Munder Capital Management, 480 Pierce
Street or 255
East Brown Street, Birmingham,
Michigan 48009
(records relating to its function
as investment
advisor)
(2) First Data Investor Services Group,
Inc., 53 State
Street, Exchange Place, Boston,
Massachusetts 02109
or 4400 Computer Drive, Westborough,
Massachusetts
01581 (records relating to its
functions as
administrator and transfer agent)
(3) Funds Distributor, Inc., 60 State
Street, Boston,
Massachusetts 02109 (records relating
to
its function as distributor)
(4) Comerica Bank, 1 Detroit Center, 500
Woodward
Avenue, Detroit, Michigan 48226
(records
relating to its function as custodian)
Item 31. Management Services.
Not Applicable
Item 32. Undertakings.
(a) Not Applicable
(b) Not Applicable
(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 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.
<PAGE>
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. 30 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. 30 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 12th day of September, 1997.
The Munder Funds, Inc.
By: *
Lee P. Munder
President
*By: _/s/ Julie A. Tedesco
Julie A. Tedesco
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.
<TABLE>
<CAPTION>
<S> <C>
<C>
Signatures Title
Date
* President and
Chief September 12, 1997
- -------------------------
Lee P. Munder Executive
Officer
* Director
September 12, 1997
- --------------------------
Charles W. Elliott
* Director
September 12, 1997
- -------------------------
Joseph E. Champagne
* Director
September 12, 1997
- ---------------------
Thomas B. Bender
* Director
September 12, 1997
- -------------------------
Thomas D. Eckert
* Director
September 12, 1997
- -------------------------
John Rakolta, Jr.
<PAGE>
* Director
September 12, 1997
- -------------------------
David J. Brophy
* Vice
President, September 12, 1997
- -------------------------
Terry H. Gardner Treasurer and
Chief
Financial
Officer
</TABLE>
* By: /s/ Julie A. Tedesco
Julie A. Tedesco
as Attorney-in-Fact
* The Powers of Attorney are incorporated by reference to
Post-
Effective Amendment No. 23 filed with the Securities
and Exchange Commission on February 18, 1997.
EXHIBIT
INDEX
Exhibit Number Exhibit
11 (a) Consent of Ernst & Young LLP
17 Financial Data Schedules
<PAGE>
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the
captions "Financial
Highlights" in the Munder Lifestyle Funds Class A and Class B
Shares and Class Y
Shares Prospectuses and "Independent Auditors" and "Financial
Statements" in the
Munder Lifestyle Funds Statement of Additional Information
included in
Post-Effective Amendment No. 30 to the Registration Statement
(Form N-1A, No.
33-54748) of The Munder Funds, Inc.
We also consent to the incorporation by reference into the
Statement of
Additional Information of our report dated August 15, 1997 on
the financial
statements and financial highlights included in the Annual Report
of The Munder
Lifestyle Funds (three of the portfolios constituting The Munder
Funds, Inc.)
for the period ended June 30, 1997.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
September 12, 1997
Boston, Massachusetts
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>141
<NAME>MUNDER ALL-SEASON ACCUMULATION CL-Y
<CAPTION>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 1,376,005
<INVESTMENTS-AT-VALUE> 1,468,005
<RECEIVABLES> 10,960
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 13,517
<TOTAL-ASSETS> 1,492,482
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,703
<TOTAL-LIABILITIES> 9,703
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,388,588
<SHARES-COMMON-STOCK> 130,687
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,878
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 313
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 92,000
<NET-ASSETS> 1,482,779
<DIVIDEND-INCOME> 2,775
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 936
<NET-INVESTMENT-INCOME> 1,839
<REALIZED-GAINS-CURRENT> 313
<APPREC-INCREASE-CURRENT> 92,000
<NET-CHANGE-FROM-OPS> 94,152
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 130,687
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,482,779
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 597
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 24,402
<AVERAGE-NET-ASSETS> 707,887
<PER-SHARE-NAV-BEGIN> 10.56
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 0.78
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.35
<EXPENSE-RATIO> 0.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>131
<NAME>MUNDER ALL-SEASON DEVELOPMENT CL-A
<CAPTION>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 290,709
<INVESTMENTS-AT-VALUE> 312,309
<RECEIVABLES> 10,625
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 13,077
<TOTAL-ASSETS> 336,011
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,409
<TOTAL-LIABILITIES> 9,409
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 200,279
<SHARES-COMMON-STOCK> 19,392
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,356
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 803
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21,600
<NET-ASSETS> 213,675
<DIVIDEND-INCOME> 1,771
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 415
<NET-INVESTMENT-INCOME> 1,356
<REALIZED-GAINS-CURRENT> 803
<APPREC-INCREASE-CURRENT> 21,600
<NET-CHANGE-FROM-OPS> 23,759
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 19,392
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 326,602
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 202
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 23,790
<AVERAGE-NET-ASSETS> 135,370
<PER-SHARE-NAV-BEGIN> 10.47
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0.51
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.02
<EXPENSE-RATIO> 0.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>132
<NAME>MUNDER ALL-SEASON DEVELOPMENT CL-Y
<CAPTION>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 290,709
<INVESTMENTS-AT-VALUE> 312,309
<RECEIVABLES> 10,625
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 13,077
<TOTAL-ASSETS> 336,011
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,409
<TOTAL-LIABILITIES> 9,409
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 102,564
<SHARES-COMMON-STOCK> 10,248
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,356
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 803
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21,600
<NET-ASSETS> 112,927
<DIVIDEND-INCOME> 1,771
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 415
<NET-INVESTMENT-INCOME> 1,356
<REALIZED-GAINS-CURRENT> 803
<APPREC-INCREASE-CURRENT> 21,600
<NET-CHANGE-FROM-OPS> 23,759
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,248
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 326,602
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 202
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 23,790
<AVERAGE-NET-ASSETS> 103,952
<PER-SHARE-NAV-BEGIN> 10.47
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 0.49
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.02
<EXPENSE-RATIO> 0.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>121
<NAME>MUNDER ALL-SEASON MAINTENANCE CL-Y
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 87,024
<INVESTMENTS-AT-VALUE> 90,749
<RECEIVABLES> 11,100
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 12,906
<TOTAL-ASSETS> 114,755
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,258
<TOTAL-LIABILITIES> 9,258
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100,030
<SHARES-COMMON-STOCK> 10,003
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,048
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 694
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,725
<NET-ASSETS> 105,497
<DIVIDEND-INCOME> 1,184
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 136
<NET-INVESTMENT-INCOME> 1,048
<REALIZED-GAINS-CURRENT> 694
<APPREC-INCREASE-CURRENT> 3,725
<NET-CHANGE-FROM-OPS> 5,467
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,003
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 105,497
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 87
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 23,989
<AVERAGE-NET-ASSETS> 102,504
<PER-SHARE-NAV-BEGIN> 10.28
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> 0.17
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.55
<EXPENSE-RATIO> 0.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
