NetNet Fund
Supplement Dated February 18, 1997
to Statement of Additional Information dated August 17, 1996
The following unaudited Financial Statements dated December
31, 1996 relating to the NetNet Fund (the "Fund") supplements the
Fund's Statement of Additional Information dated August 17, 1996.
NETNET FUND
PORTFOLIO OF INVESTMENTS, DECEMBER 31, 1996 (UNAUDITED)
==================================================================
==============
SHARES
VALUE
- ------------------------------------------------------------------
- --------------
COMMON STOCKS - 79.3%
ADVERTISING - 2.7%
1,300 CKS Group, Inc. + $
36,238
- ----------
COMMERCIAL SERVICES - 1.7%
950 CUC International, Inc. +
22,562
- ----------
COMPUTER EQUIPMENT - 4.3%
600 Dell Computer Corporation +
31,875
800 Security Dynamics Technologies, Inc. +
25,200
- ----------
57,075
- ----------
COMPUTER SERVICES - 15.6%
1,500 Checkfree Corporation +
25,687
2,000 Forrester Research, Inc. +
51,500
800 Gartner Group, Inc. +
31,150
600 Oracle Corporation +
25,050
2,500 XLConnect Solutions Inc. +
71,875
- ----------
205,262
- ----------
COMPUTER SOFTWARE - 16.0%
600 Adobe Systems, Inc.
22,425
1,600 AXENT Technologies, Inc. +
24,000
1,400 Check Point Software Technologies Ltd. +
30,450
600 McAfee Associates, Inc. +
26,400
600 Microsoft Corporation +
49,575
800 Transaction Systems Architects, Inc. +
26,600
3,000 Trusted Information Systems, Inc. +
32,250
- ----------
211,700
- ----------
FINANCIAL SERVICES - 1.9%
800 Charles Schwab Corporation
25,600
- ----------
INTERNET CONTENT - 4.0%
1,800 C/NET, Inc. +
52,200
- ----------
INTERNET SOFTWARE - 5.4%
200 Netscape Communications Corporation +
11,375
2,000 OneWave, Inc. +
15,625
1,500 Open Market, Inc. +
20,250
700 Shiva Corporation +
24,412
- ----------
71,662
- ----------
NETWORK SOFTWARE - 7.3%
1,200 Applix, Inc. +
26,250
2,000 CyberMedia, Inc. +
31,500
300 INSO Corporation +
11,925
1,100 Objective Systems Integrators, Inc. +
26,262
- ----------
95,937
- ----------
See Notes to Financial Statements.
1
NETNET FUND
PORTFOLIO OF INVESTMENTS, DECEMBER 31, 1996 (UNAUDITED)
(Continued)
==================================================================
==============
SHARES
VALUE
- ------------------------------------------------------------------
- --------------
COMMON STOCKS (Continued)
NETWORKING PRODUCTS - 9.7%
1,200 BBN Corporation + $
27,000
500 CISCO Systems, Inc. +
31,812
1,600 Information Resources Engineering, Inc. +
14,400
1,800 International Network Services +
54,338
- ----------
127,550
- ----------
TELECOMMUNICATIONS EQUIPMENT - 8.3%
500 Adtran, Inc. +
20,750
500 Ascend Communications, Inc. +
31,063
500 Cascade Communications Corporation +
27,563
1,000 PairGain Technologies, Inc. +
30,438
- ----------
109,814
- ----------
TELEPHONE - LONG DISTANCE - 2.4%
1,200 WorldCom, Inc. +
31,275
- ----------
TOTAL COMMON STOCKS
(Cost $973,558)
1,046,875
- ----------
PRINCIPAL
AMOUNT
- --------------
REPURCHASE AGREEMENT - 19.5%
(Cost $257,000)
$257,000 Agreement with Morgan (J.P.) & Company,
5.750% dated 12/31/1996 to be repurchased
at $257,082 on 01/02/1997, collateralized
by $208,000 U.S. Treasury Bond, 8.750%
due 08/15/2020 (value $269,837)
257,000
- ----------
TOTAL INVESTMENTS (Cost $1,230,558*) 98.8%
1,303,875
OTHER ASSETS AND LIABILITIES (Net) 1.2
16,420
-----
- ----------
NET ASSETS 100.0%
1,320,295
=====
==========
- ---------
*Aggregate cost for Federal tax purposes.
+Non-income producing security
See Notes to Financial Statements.
2
NETNET FUND
STATEMENT OF ASSETS AND LIABILITIES, PERIOD ENDED DECEMBER 31,
1996 (UNAUDITED)
==================================================================
==============
<TABLE>
<CAPTION>
<S>
<C>
ASSETS:
Investments, at value (Cost $1,230,558)
See accompanying schedule:
Securities.................................................
$ 1,046,875
Repurchase Agreement.......................................
257,000
- -------------
Total investments................................................
1,303,875
Cash.............................................................
860
Receivable for Fund shares sold..................................
215
Interest receivable..............................................
82
Prepaid expenses ................................................
18,668
- -------------
Total Assets.................................
1,323,700
- -------------
LIABILITIES:
Legal and audit fees payable.....................................
1,793
Custodian fees payable ..........................................
939
Distribution and shareholder servicing fees payable .............
268
Investment advisory fee payable .................................
207
Administration fee payable ......................................
121
Transfer agent fee payable ......................................
39
Accrued Directors' fees and expenses ............................
5
Accrued expenses and other payables..............................
33
- -------------
Total Liabilities ..........................
3,405
- -------------
NET ASSETS.......................................................
$ 1,320,295
=============
NET ASSETS consist of:
Net investment loss..............................................
$ (1,461)
Accumulated net realized gain on investments sold................
59,329
Net unrealized appreciation of investments.......................
73,317
Par value........................................................
1,044
Paid-in capital in excess of par value ..........................
1,188,066
- -------------
$ 1,320,295
=============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($1,320,295 o 104,428 shares of common stock outstanding)...
$ 12.64
=============
</TABLE>
See Notes to Financial Statements.
3
NETNET FUND
STATEMENT OF OPERATIONS, PERIOD ENDED DECEMBER 31, 1996(A)
(UNAUDITED)
==================================================================
==============
<TABLE>
<CAPTION>
<S>
<C>
INVESTMENT INCOME:
Interest.........................................................
$ 3,461
Dividends........................................................
65
- -------------
Total investment income.................
3,526
- -------------
EXPENSES:
Investment advisory fee .........................................
3,325
Custodian fees ..................................................
1,486
Distribution and shareholder servicing fees .....................
831
Administration fee ..............................................
377
Transfer agent fee ..............................................
62
Directors' fees and expenses ....................................
8
Other............................................................
1,343
- -------------
Total Expenses ...........................
7,432
Expenses reimbursed by investment advisor........................
(2,445)
- -------------
Net Expenses..............................
4,987
- -------------
NET INVESTMENT LOSS..............................................
(1,461)
- -------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain from security transactions.....................
89,712
Net change in unrealized appreciation of securities..............
73,317
- -------------
Net realized and unrealized gain on investments..................
163,029
- -------------
NET INCREASE IN NET
ASSETS RESULTING FROM OPERATIONS ............................
$ 161,568
=============
(a) NetNet Fund commenced operations on August 19, 1996.
</TABLE>
See Notes to Financial Statements.
4
NetNet Fund
Statement of Change in Net Assets
==================================================================
==============
<TABLE>
<CAPTION>
PERIOD
ENDED
12/31/96(A)
(UNAUDITED)
- ------------
<S>
<C>
Net investment loss..............................................
$ (1,461)
Net realized gain on investments sold............................
89,712
Net change in unrealized appreciation of investments.............
73,317
- -------------
Net increase in net assets resulting from operations.............
161,568
Distributions to shareholders from net realized gains............
(30,383)
Net increase in net assets from Fund share transactions..........
1,189,110
- -------------
Net increase in net assets.......................................
1,320,295
NET ASSETS:
Beginning of period..............................................
- -
- -------------
End of period (including net investment loss of $1,461)..........
$ 1,320,295
=============
- -----------------
(a) NetNet Fund commenced operations on August 19, 1996.
</TABLE>
See Notes to Financial Statements.
5
NETNET FUND
FINANCIAL HIGHLIGHTS, FOR A SHARE OUTSTANDING THROUGHOUT THE
PERIOD
==================================================================
==============
PERIOD
ENDED
12/31/96(A)
(UNAUDITED)
- -----------
Net asset value, beginning of period........................ $
10.00
-
- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss.........................................
(0.01)
Net realized and unrealized gain on investments.............
2.97
-
- ---------
Total from investment operations............................
2.96
-
- ---------
LESS DISTRIBUTIONS:
Distributions from net realized gains....................
(0.32)
-
- ---------
Total distributions.........................................
(0.32)
-
- ---------
Net asset value, end of period.............................. $
12.64
===========
TOTAL RETURN (B)............................................
29.61%
===========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)........................
$1,320
Ratio of operating expenses to average net assets...........
1.50%(c)
Ratio of net investment loss to average net assets..........
(0.44%)(c)
Portfolio turnover rate.....................................
71%
Ratio of operating expenses to average net assets
without expenses reimbursed .............................
2.24%(c)
Net investment loss per share without expenses reimbursed ...
($0.04)
Average commission rate (d).................................
$0.0600
- ---------------------------------------------------------------
(a) NetNet Fund commenced operations on August 19, 1996.
(b) Total return represents aggregate total return for the
period.
(c) Annualized.
(d) Average commission rate paid per share of securities
purchased and sold by
the Fund.
See Notes to Financial Statements.
6
THE NETNET FUND
NOTES TO FINANCIAL STATEMENTS, DECEMBER 31, 1996 (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Munder Funds, Inc. ("MFI") is registered under the
Investment Company
Act of 1940, as amended, (the "1940 Act"), as an open-end
investment company,
which was organized as a Maryland corporation on November 18,
1992. MFI consists
of 9 portfolios currently in operation. Information presented in
this financial
statement pertains to the NetNet Fund (the "Fund") which commenced
operations on
August 19, 1996. The financial statements for the other
remaining funds of MFI
are presented under separate covers.
The preparation of financial statements in accordance
with generally
accepted accounting principles requires management to make
estimates and
assumptions that affect the reported amounts of assets and
liabilities at the
date of the financial statements and the reported amounts of
increases and
decreases in net assets from operations during the reporting
period. Actual
results could differ from those estimates. The following
is a summary of
significant accounting policies followed by the Fund in the
preparation of its
financial statements:
Security Valuation: Portfolio securities (including
financial futures, if
any) traded on a recognized stock exchange or on the NASDAQ
National Market
System ("NASDAQ") are valued at the last sale price on the
securities exchange
on which such securities are primarily traded or at the last
sale price on the
national securities market as of the close of business on
the date of the
valuation. Securities traded on a national securities exchange or
on NASDAQ for
which there were no sales on the date of valuation and
securities traded on
over-the-counter markets, including listed securities for
which the primary
market is believed to be over-the-counter, are valued at the
mean between the
most recently quoted bid and asked prices. Restricted securities
and securities and
assets for which market quotations are not readily available are
valued
at fair value by the advisor, under the supervision of the Board
of Directors.
Debt securities with remaining maturities of 60 days or less at
the time of
purchase are valued on an amortized cost basis unless the Board
of Directors determines that such valuation does not constitute
fair value at
that time. Under this method, such securities are valued
initially at cost on
the date of purchase (or on the 61st day before maturity).
Repurchase Agreements: The Fund may engage in
repurchase agreement
transactions. Under the terms of a typical repurchase agreement,
the Fund takes
possession of an underlying debt obligation subject to an
obligation of the
seller to repurchase, and the Fund to resell, the obligation at
an agreed-upon
price and time, thereby determining the yield during the Fund's
holding period.
This arrangement results in a fixed rate of return that is not
subject to market
fluctuations during the Fund's holding period. The value of the
collateral is at
least equal, at all times, to the total amount of the repurchase
obligations,
including interest. In the event of counterparty default, the Fund
has the right
to use the collateral to satisfy the terms of the repurchase
agreement. However,
there could be potential loss to the Fund in the event the Fund
is delayed or
prevented from exercising its right to dispose of the
collateral securities,
including the risk of a possible decline in the value of
the collateral
securities during the period while the Fund seeks to assert its
rights. The
Fund's investment advisor, acting under the supervision of
the Board of
Directors, reviews the value of the collateral and the
creditworthiness of those
banks and dealers with which a Fund enters into repurchase
agreements to
evaluate potential risks.
Security Transactions and Investment Income: Security
transactions are
recorded on the trade date. The cost of investments sold is
determined by use of
the specific identification method for both financial reporting
and income tax
purposes. Interest income is recorded on the accrual basis.
Dividends are
recorded on the ex-dividend date.
Dividends and Distributions to Shareholders:
Dividends from net
investment income, if any, are declared and paid at least
annually. The Fund's
net realized capital gains (including net short-term capital
gains), if any, are
declared and distributed at least annually. Distributions to
shareholders are
recorded on the ex-dividend date.
-7-
THE NETNET FUND
NOTES TO FINANCIAL STATEMENTS, DECEMBER 31, 1996 (UNAUDITED)
(Continued)
Income dividends and capital gain distributions are
determined in
accordance with income tax regulations which may differ from
generally accepted
accounting principles. These differences are primarily due
to differing
treatments of income and gains on various investment securities
held by a Fund,
timing differences and differing characterization of
distributions made by a
Fund as a whole.
Federal Income Taxes: The Fund intends to continue to
qualify as a
regulated investment company by complying with the requirements
of the Internal
Revenue Code of 1986, as amended, applicable to regulated
investment companies
and to distribute substantially all of its earnings to its
shareholders.
Therefore, no Federal income or excise tax provision is required.
2. INVESTMENT ADVISOR, ADMINISTRATOR, CUSTODIAN, TRANSFER
AGENT AND OTHER
RELATED PARTY TRANSACTIONS
Munder Capital Management (the "Advisor"), an
independent investment
management firm, serves as the Fund's advisor. For its advisory
services, the
Advisor is entitled to receive a fee, computed daily and payable
monthly at an
annual rate of 1.00% of the value of its average daily net assets.
The Advisor has reimbursed certain expenses, payable by the
Fund, for the
period ended December 31, 1996, as reflected in the Statement of
Operations in
order to maintain the expense ratio as stated in the Fund's
prospectus.
First Data Investor Services Group, Inc. ("First
Data") (the
"Administrator"), serves as the Fund's administrator and assists
in all aspects
of its administration and operations. First Data also serves
as the Fund's
transfer agent and dividend disbursing agent ("Transfer Agent").
As compensation for its services, the Administrator and the
Transfer Agent
are entitled to receive fees, based on the aggregate average daily
net assets of
the Fund and certain other investment portfolios that are
advised by the
Advisor, and for which First Data provides services, computed
daily and payable
monthly, at the annual rates of: 0.12% of the first $2.8 billion
of net assets,
plus 0.105% of the next $2.2 billion of net assets, plus 0.10% of
all net assets
in excess of $5 billion with respect to the Administrator and
0.02% of the first
$2.8 billion of net assets, plus 0.015% of the next $2.2 billion
of net assets,
and 0.01% of all net assets in excess of $5 billion with respect
to the Transfer
Agent. Administration fees payable by the Fund and certain
other investment
portfolios advised by the Advisor are subject to a minimum
annual fee of $1.2
million to be allocated among each series and class thereof. The
Transfer Agent
and Administrator are also entitled to reimbursement for out-of-
pocket expenses.
The Administrator has entered into a Sub-Administration
Agreement with Funds
Distributor, Inc. ("FDI" or the "Distributor") under which FDI
provides certain
administrative services with respect to the Fund. The
Administrator pays FDI a
fee for these services out of its own resources at no
additional cost to the
Fund.
Comerica Bank ("Comerica") provides custodial services
to the Fund. As
compensation for its services, Comerica is entitled to receive
fees, based on
the aggregate average daily net assets of the Fund and certain
other investment
portfolios advised by the Advisor for which Comerica provides
services, computed
daily and payable monthly at an annual rate of 0.03% of the first
$100 million
of average daily net assets, plus 0.02% of the next $500 million
of net assets,
and 0.01% of net assets in excess of $600 million. Comerica
also receives
certain transaction based fees. Comerica earned $1,486 for its
services to the
Fund for the period ended December 31, 1996.
From MFI and other investment companies that are advised by
the Advisor of
which they are a director or trustee, each Director of MFI is
paid an aggregate
fee of $14,000 per year, consisting of a $2,500 quarterly
retainer for services
in such capacity plus $1,000 for each meeting attended
per year, plus
out-of-pocket expenses incurred as a Board member. The
Directors are also
reimbursed for any expenses incurred by them in connection with
their duties as
8
THE NETNET FUND
NOTES TO FINANCIAL STATEMENTS, DECEMBER 31, 1996 (UNAUDITED)
(Continued)
Directors. No officer, director or employee of the Advisor,
Comerica, FDI or
First Data currently receives any compensation from MFI.
3. DISTRIBUTION AND SERVICE PLAN
The Fund has adopted a Distribution and Service Plan (the
"Plan") pursuant
to Rule 12b-1, adopted under the 1940 Act. The Plan permits
payments to be made
by the Fund to the Distributor for expenditures incurred by the
Distributor in
connection with the distribution of Fund shares to investors
and provision of
certain shareholder services (which include but are not limited
to the payment
of compensation, including compensation to Service
Organizations to obtain
various distribution related services for the Fund). Under
the Plan the
Distributor is paid a distribution and service fee at an annual
ra unrealized depreciation for all securities for
which there was
an excess of tax cost over value was $66,854.
5. COMMON STOCK
At December 31, 1996, fifty million (50,000,000) shares of
$.01 par value
common stock were authorized for the Fund.
Changes in common stock for the Fund were as follows:
PERIOD ENDED
12/31/96
--- unrealized
depreciation for all securities for
which there was
an excess of tax cost over value was $66,854.
5. COMMON STOCK
At December 31, 1996, fifty million (50,000,000) shares of
$.01 par value
common stock were authorized for the Fund.
Changes in common stock for the Fund were as follows:
PERIOD ENDED
12/31/96
------------------
- ---
Shares
Amount
------
- ------
Sold................................ 102,015
$1,159,141
Issued as reinvestment.............. 2,413
29,969
- ------------------------------------ ------------------ -------
- ----------
Net increase........................ 104,428
$1,189,110
=======
==========
6. INDUSTRY CONCENTRATION
The Fund primarily invests in equity securities of
foreign and domestic
companies engaged in Internet and Intranet related businesses. The
value of Fund
shares will be especially susceptible to factors affecting
companies engaged in
Internet and Intranet related activities. These industries may
be subject to
greater governmental regulation than many other industries
and changes in
governmental policies, and the need for regulatory approvals may
have a material
effect on the products and services of these industries.
9
THE NETNET FUND
NOTES TO FINANCIAL STATEMENTS, DECEMBER 31, 1996 (UNAUDITED)
(Continued)
TNET FUND
NOTES TO FINANCIAL STATEMENTS, DECEMBER 31, 1996 (UNAUDITED)
(Continued)
7. ORGANIZATIONAL COSTS
Expenses incurred in connection with the organization
of the Fund,
including the fees and expenses of registering and qualifying
its shares for
distribution under Federal securities regulations, will be
amortized on a
straight-line basis over a period of 5 years from commencement of
operations and
are included under Prepaid expenses on the Statement of Assets and
Liabilities.
10
