<PAGE>
THE MUNDER FUNDS
SUPPLEMENT DATED JUNE 8, 1998
TO PROSPECTUS DATED OCTOBER 29, 1997
CLASS A AND B SHARES OF:
MUNDER ALL-SEASON CONSERVATIVE FUND, MUNDER ALL-SEASON MODERATE FUND AND
MUNDER ALL-SEASON AGGRESSIVE FUND
The "FUND OPERATING EXPENSES" section in the Prospectus is deleted in its
entirety and supplemented as follows:
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 for the current fiscal year. Such expenses include payments to
Directors, auditors, legal counsel and service providers (such as the
Advisor) and registration fees. The fees shown are estimated for the current
fiscal year. In addition, the Advisor expects to voluntarily reimburse
certain expenses with respect to the Conservative Fund and the Moderate Fund
for the current fiscal year. The Advisor may discontinue such expense
reimbursements at any time in its sole discretion. 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>
ANNUAL FUND
OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS) CONSERVATIVE FUND MODERATE FUND AGGRESSIVE FUND
- ------------------------------ ----------------- ------------- ---------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
SHARES SHARES SHARES SHARES SHARES SHARES
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees.............................. .35% .35% .35% .35% .35% .35%
12b-1 Fees................................. .30% 1.00% .30% 1.00% .30% 1.00%
Other Expenses............................. .25%+ .25%+ .20%+ .20%+ .20% .20%
--- ---- --- ---- --- ----
Total Fund Operating Expenses.............. .90%+ 1.60%+ .85%+ 1.55%+ .85% 1.55%
--- ---- --- ---- --- ----
--- ---- --- ---- --- ----
- --------------------
</TABLE>
+ The Advisor expects to voluntarily reimburse the Funds for certain operating
expenses. In the absence of expense reimbursements, the total fund operating
expenses would be Conservative Fund: 2.00%-Class A and 2.70%-Class B and
Moderate Fund: 2.13%-Class A and 2.83%-Class B.
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. Since the Funds invest in other Munder Funds,
as a shareholder you will pay a higher expense ratio than if you had purchased
shares of an Underlying Fund directly. 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, the Growth Opportunities 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>
CLASS Y SHARES
--------------
<S> <C>
Accelerating Growth Fund.................................. .95%
Equity Selection Fund..................................... 1.00%
Growth & Income Fund...................................... .95%
Growth Opportunities Fund................................. 1.15%+
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%+
<PAGE>
CLASS Y SHARES
--------------
Framlington International Growth Fund..................... 1.30%+
Framlington Emerging Markets Fund......................... 1.54%+
Framlington Global Financial Services Fund**.............. 1.15%+
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%
</TABLE>
- -----------------------
*Reflects advisory fees after waiver. Without waiver, the Expense Ratio for the
Multi-Season Growth Fund would be 1.25%.
**Effective June 15, 1998
+ 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, 4.57% for the
NetNet Fund, 7.65% for the Micro-Cap Equity 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,
1.28% for the Growth Opportunities Fund and 1.32% for the Framlington Global
Financial Services Fund.
The "EXAMPLE" section in the Prospectus is deleted in its entirety and
supplemented as follows:
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 periods (including the deduction of
the deferred sales charge, if any). 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>
CONSERVATIVE FUND MODERATE FUND AGGRESSIVE FUND
----------------- ------------- ---------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
SHARES SHARES SHARES SHARES SHARES SHARES
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
1 YEAR
Redemption................. $64 $66 $63 $66 $63 $66
No Redemption.............. $64 $16 $63 $16 $63 $16
3 YEARS
Redemption................. $82 $80 $81 $79 $81 $79
No Redemption.............. $82 $50 $81 $49 $81 $49
5 YEARS
Redemption................. $102 $107 $100 $104 $100 $104
No Redemption.............. $102 $87 $100 $84 $100 $84
10 YEARS
Redemption................. $160 $190 $154 $185 $154 $185
No Redemption.............. $160 $190 $154 $185 $154 $185
</TABLE>
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>
<CAPTION>
EXPENSE RATIO
-------------
CLASS A SHARES CLASS B SHARES
-------------- --------------
<S> <C> <C>
Conservative Fund............................... 1.68% 2.38%
Moderate Fund................................... 1.85% 2.55%
Aggressive Fund................................. 1.95% 2.65%
</TABLE>
<PAGE>
The "FUND CHOICES--What are the Funds' Investments and Investment Practices?"
section in the Prospectus is hereby supplemented as follows:
<TABLE>
<CAPTION>
CONSERVATIVE FUND MODERATE FUND AGGRESSIVE FUND
----------------- ------------- ---------------
MINIMUM MAXIMUM MINIMUM MAXIMUM MINIMUM MAXIMUM
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Equity Funds
Growth Opportunities Fund . 0% 10% 0% 15% 0% 20%
Framlington Global Financial Services Fund 0% 5% 0% 10% 0% 15%
</TABLE>
Each Fund's neutral asset allocation is expected to be as follows:
CONSERVATIVE MODERATE AGGRESSIVE
FUND FUND FUND
---- ---- ----
Equity Funds...................... 25% 65% 85%
Fixed Income Funds................ 70% 30% 15%
Money Market Funds................ 5% 5% 0%
The "FUND CHOICES--What are the Underlying Funds' Investments and Investment
Practices?" section in the Prospectus is hereby supplemented as follows:
GROWTH OPPORTUNITIES 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 the Equity
Securities of companies with market capitalizations between $500 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 MidCap 400 Index
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
FRAMLINGTON GLOBAL FINANCIAL SERVICES FUND*
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. Under normal market conditions, the Fund invests at least
65% of its assets in equity securities of U.S. and foreign companies which are
principally engaged in the financial services industry and companies providing
services primarily within the financial services industry. The Fund focuses
specifically on companies which are likely to benefit from growth or
consolidation in the financial services industry.
Examples of companies in the financial services industry are:
- commercial, industrial and investment banks
- savings and loan associations
- brokerage companies
- consumer and industrial finance companies
- real estate and leasing companies
- insurance companies
- holding companies for each of the above
- -----------------------------------
* Effective June 15, 1998
<PAGE>
A company is "principally engaged" in the financial services industry if at
least 50% of its gross income, net sales or net profits comes from activities in
the financial services industry or if the company dedicates more than 50% of its
assets to the production of revenues from the financial services industry.
Under normal market conditions, the Fund invests at least 65% of its assets
in at least three different countries, including the United States.
The Sub-Advisor allocates assets among countries based on its analysis of
the trends in the financial services industry in particular regions, the
relative valuation of financial services companies in different regions and its
assessment of the prospects for a particular equity market and its currency.
PORTFOLIO MANAGEMENT. A committee of professional managers employed by
the Sub-Advisor makes decisions for the Fund.
INVESTMENT CHARTS
<TABLE>
<CAPTION>
EQUITY FUNDS
- ------------------------------------------------------------------------------------------------------------------------------------
FRAMLINGTON GROWTH OPPORTUNITIES
INVESTMENTS AND GLOBAL FINANCIAL SERVICES FUND
INVESTMENT PRACTICES FUND (*)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN SECURITIES. Includes securities issued by non-U.S. companies.
Present more risks than U.S. securities. Y 25%
- ------------------------------------------------------------------------------------------------------------------------------------
LOWER-RATED DEBT SECURITIES. Fixed income securities which are rated below
investment grade by Standard & Poors Ratings Service, Moody's Investors
Service Inc. or other nationally recognized rating agency. Considered Y Y
riskier than investment grade securities.
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT-GRADE ASSET BACKED SECURITIES. Includes debt securities backed by
mortgages, installment sales contracts and credit card receivables. Y N
- ------------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Includes participations in trusts that hold U.S.
Treasury and agency securities which represent either the interest payments
or principal payments on the securities or combinations of both. Y N
- ------------------------------------------------------------------------------------------------------------------------------------
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 a currency value, but also limits Y Y
gains from currency changes.
- ------------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Agreement by a Fund to
purchase securities at a set price, with delivery and payment in the future.
The value of securities may change between the time the price is set and Y Y
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 receive securities, the cash value of an
index or foreign currency. Used for hedging purposes or to maintain Y Y
liquidity.
- ------------------------------------------------------------------------------------------------------------------------------------
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, foreign Y Y
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 upon time and price. A method to borrow money
for temporary purposes. Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready market for these
securities, which inhibits the ability to sell them and to obtain there full
market value, or there are legal restrictions on their resale by the Fund. 15%(2) 15%(2)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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
(2) Based on net assets
- -----------------------------------
* Effective June 15, 1998
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FRAMLINGTON GROWTH OPPORTUNITIES
INVESTMENTS AND GLOBAL FINANCIAL SERVICES FUND
INVESTMENT PRACTICES FUND (*)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LENDING SECURITIES. A Fund may lend securities to financial institutions
which pay for the use of the securities. May increase return. Slight risk
of borrower failing financially. 25% 25%
- ------------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS. Companies, usually traded publicly, that
manage a portfolio of real estate. Risks involved in such investments
include vulnerability to decline in real estate prices and new construction Y N
rates.
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT SALES. A transaction in which the Fund sells a security it does not
own in anticipation that the market price of that security will decline. It
must borrow the security sold short and deliver it to the broker-dealer
through which it made the short sale as collateral for its obligation to
deliver the security upon conclusion of the sale. May also sell securities
that it owns or has the right to acquire at no additional cost but does not Y N
intend to deliver to the buyer, a practice known as selling short "against
the box."
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Key:
Y = investment allowed without restriction
N = investment not allowed
The "FUND CHOICES--What are the Risks of Investing in the Funds?" section in the
Prospectus is hereby supplemented as follows:
MICRO-CAP EQUITY FUND, MID-CAP GROWTH FUND, SMALL-CAP VALUE FUND, SMALL COMPANY
GROWTH FUND AND GROWTH OPPORTUNITIES 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 the 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,
FRAMLINGTON GLOBAL FINANCIAL SERVICES FUND*, INTERNATIONAL EQUITY FUND AND
INTERNATIONAL BOND FUND
Investing in the Fund, 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 United States; (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.
- -----------------------------------
* Effective June 15, 1998
<PAGE>
FRAMLINGTON GLOBAL FINANCIAL SERVICES FUND (*)
Financial services companies are subject to extensive governmental
regulation which may limit both the amount and types of loans and other
financial commitments they can make, and the interest rates and fees they can
charge. Profitability is largely dependent on the availability and cost of
capital funds, and can fluctuate significantly when interest rates change.
Credit losses resulting from financial difficulties of borrowers can negatively
impact the industry. Insurance companies may be subject to severe price
competition. Legislation is currently being considered which would reduce the
separation between commercial and investment banking businesses. If enacted
this could significantly impact the industry and the Fund. The Fund may be
riskier than a fund investing in a broader range of industries.
Although securities of large and well-established companies in the
financial services industry will be held in the Fund's portfolio, the Fund also
will invest in medium, small and/or newly-public companies which may be subject
to greater share price fluctuations and declining growth, particularly in the
event of rapid changes in the industry and/or increased competition. Securities
of those smaller and/or less seasoned companies may, therefore, expose
shareholders of the Fund to above-average risk.
- -----------------------------------
* Effective June 15, 1998
<PAGE>
THE MUNDER FUNDS
SUPPLEMENT DATED JUNE 8, 1998
TO PROSPECTUS DATED OCTOBER 29, 1997
CLASS Y SHARES OF:
MUNDER ALL-SEASON CONSERVATIVE FUND, MUNDER ALL-SEASON MODERATE FUND AND
MUNDER ALL-SEASON AGGRESSIVE FUND
The "FUND OPERATING EXPENSES" section in the Prospectus is deleted in its
entirety and supplemented as follows:
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
for the current fiscal year. Such expenses include payments to Directors,
auditors, legal counsel and service providers (such as the Advisor) and
registration fees. The fees shown are estimated for the current fiscal year. In
addition, the Advisor expects to voluntarily reimburse certain expenses with
respect to the Conservative Fund and the Moderate Fund for the current fiscal
year. The Advisor may discontinue such expense reimbursements at any time in its
sole discretion.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES CONSERVATIVE MODERATE AGGRESSIVE
(AS A % OF AVERAGE NET ASSETS) FUND FUND FUND
- ------------------------------ ---- ---- ----
<S> <C> <C> <C>
Advisory Fees...................................................... .35% .35% .35%
Other Expenses..................................................... .25%+ .20%+ .20%
----- ----- -----
Total Fund Operating Expenses...................................... .60%+ .55%+ .55%
----- ----- -----
----- ----- -----
- --------------------
</TABLE>
+ The Advisor expects to voluntarily reimburse the Funds for certain operating
expenses. In the absence of expense reimbursements, the total fund operating
expenses would be 1.70% for the Conservative Fund and 1.83% for the Moderate
Fund.
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. Since the Funds invest in other Munder Funds,
as a shareholder you will pay a higher expense ratio than if you had purchased
shares of an Underlying Fund directly. 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, the Growth Opportunities 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>
CLASS Y SHARES
--------------
<S> <C>
Accelerating Growth Fund.................................... .95%
Equity Selection Fund....................................... 1.00%
Growth & Income Fund........................................ .95%
Growth Opportunities Fund................................... 1.15%+
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 Global Financial Services Fund**................ 1.15%+
Framlington Healthcare Fund................................. 1.30%+
Intermediate Bond Fund...................................... .68%
Bond Fund................................................... .71%
International Bond Fund..................................... .89%+
U.S. Government Income Fund................................. .71%
<PAGE>
CLASS Y SHARES
--------------
Cash Investment Fund....................................... .55%
Money Market Fund.......................................... .64%
U.S. Treasury Money Market Fund............................ .54%
- -----------------------
</TABLE>
*Reflects advisory fees after waiver. Without waiver, the Expense Ratio for the
Multi-Season Growth Fund would be 1.25%.
**Effective June 15, 1998
+ 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, 4.57% for the
NetNet Fund, 7.65% for the Micro-Cap Equity 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,
1.28% for the Growth Opportunities Fund and 1.32% for the Framlington Global
Financial Services Fund.
The "EXAMPLE" section in the Prospectus is deleted in its entirety and
supplemented as follows:
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 periods (including the deduction of
the deferred sales charge, if any). 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>
CONSERVATIVE MODERATE AGGRESSIVE
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
1 YEAR
- - Redemption................. $6 $6 $6
- - No Redemption.............. $6 $6 $6
3 YEARS
- - Redemption................. $19 $18 $18
- - No Redemption.............. $19 $18 $18
5 YEARS
- - Redemption................. $33 $31 $31
- - No Redemption.............. $33 $31 $31
10 YEARS
- - Redemption................. $75 $69 $69
- - No Redemption.............. $75 $69 $69
</TABLE>
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>
<CAPTION>
EXPENSE RATIO
-------------
<S> <C>
Conservative Fund............................................ 1.38%
Moderate Fund................................................ 1.55%
Aggressive Fund.............................................. 1.65%
</TABLE>
The "FUND CHOICES--What are the Funds' Investments and Investment Practices?"
section in the Prospectus is hereby supplemented as follows:
<TABLE>
<CAPTION>
CONSERVATIVE FUND MODERATE FUND AGGRESSIVE FUND
----------------- ------------- ---------------
MINIMUM MAXIMUM MINIMUM MAXIMUM MINIMUM MAXIMUM
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Equity Funds
Growth Opportunities Fund...... 0% 10% 0% 15% 0% 20%
Framlington Global 0% 5% 0% 10% 0% 15%
Financial Services Fund (*)
</TABLE>
- ----------------------------------
* Effective June 15, 1998
<PAGE>
Each Fund's neutral asset allocation is expected to be as follows:
<TABLE>
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
Equity Funds...................... 25% 65% 85%
Fixed Income Funds................ 70% 30% 15%
Money Market Funds................ 5% 5% 0%
</TABLE>
The "FUND CHOICES--What are the Underlying Funds' Investments and Investment
Practices?" section in the Prospectus is hereby supplemented as follows:
GROWTH OPPORTUNITIES 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 the Equity
Securities of companies with market capitalizations between $500 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 MidCap 400 Index
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
FRAMLINGTON GLOBAL FINANCIAL SERVICES FUND (*)
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. Under normal market conditions, the Fund invests at least
65% of its assets in equity securities of U.S. and foreign companies which are
principally engaged in the financial services industry and companies providing
services primarily within the financial services industry. The Fund focuses
specifically on companies which are likely to benefit from growth or
consolidation in the financial services industry.
Examples of companies in the financial services industry are:
- commercial, industrial and investment banks
- savings and loan associations
- brokerage companies
- consumer and industrial finance companies
- real estate and leasing companies
- insurance companies
- holding companies for each of the above
A company is "principally engaged" in the financial services industry if at
least 50% of its gross income, net sales or net profits comes from activities in
the financial services industry or if the company dedicates more than 50% of its
assets to the production of revenues from the financial services industry.
Under normal market conditions, the Fund invests at least 65% of its assets
in at least three different countries, including the United States.
The Sub-Advisor allocates assets among countries based on its analysis of
the trends in the financial services industry in particular regions, the
relative valuation of financial services companies in different regions and its
assessment of the prospects for a particular equity market and its currency.
- ----------------------------------
* Effective June 15, 1998
<PAGE>
PORTFOLIO MANAGEMENT. A committee of professional managers employed by
the Sub-Advisor makes decisions for the Fund.
INVESTMENT CHARTS
<TABLE>
<CAPTION>
EQUITY FUNDS
- ----------------------------------------------------------------------------------------------------------------------------------
FRAMLINGTON GROWTH
INVESTMENTS AND GLOBAL FINANCIAL SERVICES OPPORTUNITIES
INVESTMENT PRACTICES FUND (*) FUND
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN SECURITIES. Includes securities issued by non-U.S. companies.
Present more risks than U.S. securities. Y 25%
- ----------------------------------------------------------------------------------------------------------------------------------
LOWER-RATED DEBT SECURITIES. Fixed income securities which are rated below
investment grade by Standard & Poors Ratings Service, Moody's Investors
Service Inc. or other nationally recognized rating agency. Considered Y Y
riskier than investment grade securities.
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INVESTMENT-GRADE ASSET BACKED SECURITIES. Includes debt securities backed by
mortgages, installment sales contracts and credit card receivables. Y N
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STRIPPED SECURITIES. Includes participations in trusts that hold U.S.
Treasury and agency securities which represent either the interest payments
or principal payments on the securities or combinations of both. Y N
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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 a currency value, but also limits Y Y
gains from currency changes.
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WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Agreement by a Fund to
purchase securities at a set price, with delivery and payment in the future.
The value of securities may change between the time the price is set and Y Y
payment. Not to be used for speculation.
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FUTURES AND OPTIONS ON FUTURES. (1) Contracts in which a Fund agrees, at
maturity, to make delivery of or receive securities, the cash value of an
index or foreign currency. Used for hedging purposes or to maintain Y Y
liquidity.
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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, foreign Y Y
currencies or futures contracts. See the SAI for more details and
additional limitations.
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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
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ILLIQUID SECURITIES. Typically there is no ready market for these
securities, which inhibits the ability to sell them and to obtain there full
market value, or there are legal restrictions on their resale by the Fund. 15%(2) 15%(2)
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LENDING SECURITIES. A Fund may lend securities to financial institutions
which pay for the use of the securities. May increase return. Slight risk
of borrower failing financially. 25% 25%
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REAL ESTATE INVESTMENT TRUSTS. Companies, usually traded publicly, that
manage a portfolio of real estate. Risks involved in such investments
include vulnerability to decline in real estate prices and new construction Y N
rates.
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SHORT SALES. A transaction in which the Fund sells a security it does not
own in anticipation that the market price of that security will decline. It
must borrow the security sold short and deliver it to the broker-dealer
through which it made the short sale as collateral for its obligation to
deliver the security upon conclusion of the sale. May also sell securities
that it owns or has the right to acquire at no additional cost but does not Y N
intend to deliver to the buyer, a practice known as selling short "against
the box."
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</TABLE>
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
(2) Based on net assets
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* Effective June 15, 1998
<PAGE>
The "FUND CHOICES--What are the Risks of Investing in the Funds?" section in the
Prospectus is hereby supplemented as follows:
MICRO-CAP EQUITY FUND, MID-CAP GROWTH FUND, SMALL-CAP VALUE FUND, SMALL COMPANY
GROWTH FUND AND GROWTH OPPORTUNITIES 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 the 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,
FRAMLINGTON GLOBAL FINANCIAL SERVICES FUND (*), INTERNATIONAL EQUITY FUND AND
INTERNATIONAL BOND FUND
Investing in the Fund, 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 United States; (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.
FRAMLINGTON GLOBAL FINANCIAL SERVICES FUND*
Financial services companies are subject to extensive governmental
regulation which may limit both the amount and types of loans and other
financial commitments they can make, and the interest rates and fees they can
charge. Profitability is largely dependent on the availability and cost of
capital funds, and can fluctuate significantly when interest rates change.
Credit losses resulting from financial difficulties of borrowers can negatively
impact the industry. Insurance companies may be subject to severe price
competition. Legislation is currently being considered which would reduce the
separation between commercial and investment banking businesses. If enacted
this could significantly impact the industry and the Fund. The Fund may be
riskier than a fund investing in a broader range of industries.
Although securities of large and well-established companies in the
financial services industry will be held in the Fund's portfolio, the Fund also
will invest in medium, small and/or newly-public companies which may be subject
to greater share price fluctuations and declining growth, particularly in the
event of rapid changes in the industry and/or increased competition. Securities
of those smaller and/or less seasoned companies may, therefore, expose
shareholders of the Fund to above-average risk.
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* Effective June 15, 1998
