<PAGE>
As filed with the Securities and Exchange Commission
on August 28, 1998
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. 35 [X]
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 37 [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: (248) 647-9200
Cynthia Surprise
Vice President and Associate Counsel
State Street Bank and Trust Company
1776 Heritage Drive, AFB
North Quincy, MA 02171
(Name and Address of Agent for Service)
Copies to:
Lisa Anne Rosen, Esq. Paul R. Roye, Esq.
Munder Capital Management Dechert Price & Rhoads
480 Pierce Street 1775 Eye Street, NW
Birmingham, Michigan 48009 Washington, DC 20006
[X] It is proposed that this filing will become effective 60 days after filing
pursuant to paragraph (a)(1) of Rule 485
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Equity Funds Class A, B and C Shares)
Part A
- ------
Item Heading
---- -------
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial
Information
3. Condensed Financial Information Not applicable
4. General Description of Registrant Cover Page; Fund Highlights;
Structure and Management of Fund
5. Management of the Fund Structure and Management of Fund;
Dividends, Distributions and Taxes;
Performance
6. Capital Stock and Other Securities Structure and Management of Fund;
Purchases and Exchanges of Shares;
Redemption 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
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Class K Shares)
Part A
- ------
Item Heading
---- -------
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial
Information
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page; Fund Highlights;
Structure and Management of Fund
5. Management of the Fund Structure and Management of Fund;
Dividends, Distributions and Taxes;
Performance
6. Capital Stock and Other Securities Structure and Management of Fund;
Purchases and Exchanges of Shares;
Redemption 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
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Class Y Shares)
Part A
- ------
Item Heading
---- -------
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial
Information
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page; Fund Highlights;
Structure and Management of Fund
5. Management of the Fund Structure and Management of Fund;
Dividends, Distributions and Taxes;
Performance
6. Capital Stock and Other Securities Structure and Management of Fund;
Purchases and Exchanges of Shares;
Redemption 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
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Income Funds Class A, B and C Shares)
Part A
- ------
Item Heading
---- -------
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial
Information
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page; Fund Highlights;
Structure and Management of Fund
5. Management of the Fund Structure and Management of Fund;
Dividends, Distributions and Taxes;
Performance
6. Capital Stock and Other Securities Structure and Management of Fund;
Purchases and Exchanges of Shares;
Redemption 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
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Money Market Funds Class A, B and C Shares)
Part A
- ------
Item Heading
---- -------
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial
Information
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page; Fund Highlights;
Structure and Management of Fund
5. Management of the Fund Structure and Management of Fund;
Dividends, Distributions and Taxes;
Performance
6. Capital Stock and Other Securities Structure and Management of Fund;
Purchases and Exchanges of Shares;
Redemption 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
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Lifestyle Funds Class A and B Shares)
Part A
- ------
Item Heading
---- -------
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial
Information
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page; Fund Highlights;
Structure and Management of Fund
5. Management of the Fund Structure and Management of Fund;
Dividends, Distributions and Taxes;
Performance
6. Capital Stock and Other Securities Structure and Management of Fund;
Purchases and Exchanges of Shares;
Redemption 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
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Lifestyle Funds Class Y Shares)
Part A
- ------
Item Heading
---- -------
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial
Information
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page; Fund Highlights;
Structure and Management of Fund
5. Management of the Fund Structure and Management of Fund;
Dividends, Distributions and Taxes;
Performance
6. Capital Stock and Other Securities Structure and Management of Fund;
Purchases and Exchanges of Shares;
Redemption 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
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Munder Short Term Treasury Fund- Michigan Municipal League Shares)
Part A
- ------
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;
Structure and Management of Fund
5. Management of the Fund Structure and Management of Fund;
Dividends, Distributions and Taxes;
Performance
6. Capital Stock and Other Securities Structure and Management of Fund;
Purchases and Exchanges of Shares;
Redemption 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
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Statement of Additional Information
(Munder Funds)
Part B
- ------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History See Prospectus --"Structure and
Management of the Fund;" 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 Fund;"
Directors and Officers;
Miscellaneous
15. Control Persons and Principal See Prospectus --Holders of
Securities "Structure and
Management of the Fund;"
Miscellaneous
16. Investment Advisory Services and Other Investment Advisory Services and
Other Service Arrangements; See
Prospectus--"Structure and
Management of the Fund"
17. Brokerage Allocation and Other Portfolio Transactions
18. Capital Stock and Other Securities See Prospectus --"Structure and
Management of the Fund;"
Additional Information Concerning
Shares
19. Purchase, Redemption and Pricing of Additional Purchase and
Securities Being Offered Redemption Information; Net Asset
Value; Additional Information
Concerning Shares
20. Tax Status Taxes
21. Underwriters Investment Advisory and Other
Service Arrangements
22. Calculation of Performance Data Performance Information
23. Financial Statements Not applicable
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Statement of Additional Information
(Munder Lifestyle Funds)
Part B
- ------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History See Prospectus --"Structure and
Management of the Fund;" 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 Fund;"
Directors and Officers;
Miscellaneous
15. Control Persons and Principal See Prospectus --Holders of
Securities "Structure and
Management of the Fund;"
Miscellaneous
16. Investment Advisory Services and Other Investment Advisory Services and
Other Service Arrangements; See
Prospectus--"Structure and
Management of the Fund"
17. Brokerage Allocation and Other Portfolio Transactions
18. Capital Stock and Other Securities See Prospectus --"Structure and
Management of the Fund;"
Additional Information Concerning
Shares
19. Purchase, Redemption and Pricing of Additional Purchase and
Securities Being Offered Redemption Information; Net Asset
Value; Additional Information
Concerning Shares
20. Tax Status Taxes
21. Underwriters Investment Advisory and Other
Service Arrangements
22. Calculation of Performance Data Performance Information
23. Financial Statements Not applicable
<PAGE>
THE MUNDER FUNDS, INC.
The purposes of this Post-Effective Amendment filing are (i) to combine
prospectuses with respect to certain series of the Registrant, (ii) to reflect a
name change for a series of the Registrant to the Munder NetNet Fund, (iii) to
add a new class of shares to the Munder NetNet Fund, specifically Class C
Shares, (iv) to separate into a single prospectus the Michigan Municipal Shares
(formerly "Class K Shares") of the Munder Short Term Treasury Fund and (v) to
incorporate supplements to the Prospectuses and Statement of Additional
Information.
<PAGE>
CLASS A, B & C SHARES
[LOGO OF MUNDER APPEARS HERE]
Prospectus
October 27, 1998
THE MUNDER EQUITY FUNDS
Accelerating Growth
Balanced
Growth & Income
Growth Opportunities
International Equity
Micro-Cap Equity
Multi-Season Growth
NetNet
Real Estate Equity Investment
Small-Cap Value
Small Company Growth
Value
THE MUNDER FRAMLINGTON FUNDS
Framlington Emerging Markets
Framlington Global Financial Services
Framlington Healthcare
Framlington International Growth
Prospectus begins on next page
<PAGE>
PROSPECTUS
Class A, Class B and Class C Shares
The Munder Funds Trust (the "Trust"), The Munder Funds, Inc. (the
"Company") and The Munder Framlington Funds Trust ("Framlington") are open-end
investment companies. This Prospectus describes investment portfolios offered by
the Trust (the "Trust Funds"), the Company (the "Company Funds") and Framlington
("Framlington Funds") described below (referred to as the "Funds"):
Munder Accelerating Growth Fund*
Munder Balanced Fund
Munder Growth & Income Fund
Munder Growth Opportunities Fund
Munder International Equity Fund
Munder Micro-Cap Equity Fund
Munder Multi-Season Growth Fund
Munder NetNet Fund
Munder Real Estate Equity Investment Fund
Munder Small-Cap Value Fund
Munder Small Company Growth Fund
Munder Value Fund
Munder Framlington Emerging Markets Fund
Munder Framlington Global Financial Services Fund
Munder Framlington Healthcare Fund
Munder Framlington International Growth Fund
* The Accelerating Growth Fund is closed to new investors.
Munder Capital Management (the "Advisor") serves as the investment adviser
of the 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 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 PRINCIPLE AMOUNT INVESTED.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES:
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS OCTOBER 27, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
Fund Highlights
What are the key facts regarding the Funds?................. 3
Financial Information............................................ 5
Fund Choices
What Funds are offered?..................................... 34
Who may want to invest in the Funds?........................ 41
What are the Funds' investments and investment practices?... 41
What are the risks of investing in the Funds?............... 48
Performance
How is the Funds' performance calculated?................... 49
Where can I obtain performance data?........................ 50
Purchases and Exchanges of Shares
What share class should I choose for my investment?......... 50
What price do I pay for shares?............................. 51
When can I purchase shares?................................. 53
What is the minimum required investment?.................... 53
How can I purchase shares?.................................. 54
How can I exchange shares?.................................. 55
Redemptions of Shares
What price do I receive for redeemed shares?................ 55
When can I redeem shares?................................... 56
How can I redeem shares?.................................... 57
When will I receive redemption amounts?..................... 58
Structure and Management of the Funds
How are the Funds structured?............................... 58
Who manages and services the Funds?......................... 58
What are my rights as a shareholder?........................ 61
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?........... 61
How will distributions be made?............................. 62
Are there tax implications of my investments in the Funds?.. 62
Additional Information........................................... 63
2
<PAGE>
FUND HIGHLIGHTS
What Are the Key Facts Regarding the Funds?
Q: What are the Funds' goals?
A:
. The Accelerating Growth Fund, Framlington Emerging Markets Fund,
Framlington Global Financial Services Fund, Framlington Healthcare Fund,
Framlington International Growth Fund, Growth Opportunities Fund,
International Equity Fund, Micro-Cap Equity Fund, Multi-Season Growth Fund,
NetNet Fund, Small-Cap Value Fund, Small Company Growth Fund and Value Fund
primarily seek to provide long-term capital appreciation.
. The Balanced Fund, Growth & Income Fund and Real Estate Equity Investment
Fund seek to provide capital appreciation and current income.
Q: What are the Funds' strategies?
A: The Funds, other than the Balanced Fund, invest primarily in Equity
Securities. The Balanced Fund allocates its assets primarily among three types
of assets--Equity Securities, Fixed Income Securities and Cash Equivalents.
"Equity Securities" include common stocks, preferred stocks, warrants and other
securities convertible into common stock. "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 rates. "Cash Equivalents" are instruments which are highly
liquid and virtually free of investment risk.
Q: What are the Funds' risks?
A: The following table summarizes the primary risks of investing in the Funds:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Fund Risk
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
All Funds Potential loss of investment due to changes in the stock market
in general, changes in the stock prices of particular companies
and perceptions about particular industries.
- ------------------------------------------------------------------------------------------------------------------
International Equity Fund, Because of large investments in foreign securities, the Funds are
Framlington International Growth Fund, riskier than domestic funds due to factors such as freezes on
Framlington Emerging Markets Fund and convertibility of currency, changes in exchange rates, political
Framlington Global Financial Services Fund instability and differences in accounting and reporting standards.
- ------------------------------------------------------------------------------------------------------------------
Micro-Cap Equity Fund, Because of large investments in mid-capitalization,
Small-Cap Value Fund, small-capitalization and/or emerging growth companies, the Funds
Small Company Growth Fund, are riskier than large-capitalization funds since such companies
Growth Opportunities Fund and typically have greater earnings fluctuations and greater reliance
NetNet Fund on a few key customers than larger companies.
- ------------------------------------------------------------------------------------------------------------------
Real Estate Equity Investment Fund, These Funds concentrate their investments in single industries
Framlington Healthcare Fund, and could experience larger price fluctuations than funds
Framlington Global Financial Fund and invested in a broader range of industries.
NetNet Fund
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
Q: What are the options for investment in the Funds?
A: Each Fund, other than the NetNet Fund, offers five different investment
options, or classes: Class A, B, C, K and Y. The NetNet Fund offers four
different investment options, or classes: Class A, B, C and Y. Class K and Y
shares, which are only offered to institutional and other qualified investors,
are offered in other prospectuses.
<TABLE>
<CAPTION>
Maximum Front Maximum
Class Rule 12b-1 Fees* End Sales Load** CDSC***
----- ----------------- ----------------- -------
<S> <C> <C> <C>
Class A 0.25% 5.5% None+
Class B 1% None 5%
Class C 1% None 1%, if redeemed within 1
year of purchase
</TABLE>
_____________________________________
* 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 the
shares.
+ A CDSC of 1% is imposed on certain redemptions of Class A Shares if redeemed
within one year of purchase.
(i) If you invest over $250,000, you must buy Class A or Class C Shares.
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. (the "Transfer Agent"), by mailing the attached Account
Application Form with a check to the Transfer Agent. You must invest at least
$250 ($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 or by telephone.
You may also acquire the Funds' shares by exchanging shares of the same class
of other funds of the Trust, the Company and Framlington, and exchange Fund
shares for shares of the same class of other funds of the Trust, the Company and
Framlington.
Q: What shareholder privileges do the Funds offer?
<TABLE>
<CAPTION>
A: Class A Shares Class B Shares Class C Shares
-------------- -------------- --------------
<S> <C> <C>
Automatic Investment Plan Automatic Investment Plan Automatic Investment Plan
Automatic Withdrawal Plan Automatic Withdrawal Plan Automatic Withdrawal Plan
Retirement Plans Retirement Plans Retirement Plans
Telephone Exchanges Telephone Exchanges Telephone Exchanges
Rights of Accumulation Reinvestment Privilege Reinvestment Privilege
Letter of Intent
Quantity Discounts
Reinvestment Privilege
</TABLE>
4
<PAGE>
Q: When and how are distributions made?
A: Dividend distributions are made from the dividends and interest earned on
investments. Dividends paid at least annually: Framlington Emerging Markets
Fund, Framlington Global Financial Services Fund, Framlington Healthcare Fund,
Framlington International Growth Fund, Growth Opportunities Fund, International
Equity Fund, Micro-Cap Equity Fund, Multi-Season Growth Fund, NetNet Fund,
Small-Cap Value Fund and Value Fund.
Dividends paid at least quarterly (if income is available): Accelerating
Growth Fund, Balanced Fund, Growth & Income Fund and Small Company Growth Fund.
Dividends paid monthly: Real Estate Equity Investment Fund.
The Funds distribute capital gains 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 Funds' investment advisor. The Advisor is
responsible for all purchases and sales of the securities held by the Funds
other than the Framlington Funds. The Advisor provides overall investment
management services for the Framlington Funds. Framlington Overseas Investment
Management Limited (the "Sub-Advisor") is responsible for all purchases and
sales of securities held by the Framlington Emerging Markets, Healthcare and
International Growth Funds. The Advisor is responsible for purchases and sales
of domestic securities and the Sub-Advisor is responsible for sales of foreign
securities for the Framlington Global Financial Services Fund.
FINANCIAL INFORMATION
SHAREHOLDER TRANSACTION EXPENSES (1)
The purpose of this table is to assist you in understanding the expenses a
shareholder in the Funds will bear directly.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
----------- ----------- ----------
<S> <C> <C> <C>
Maximum Sales Charge on Purchase (as a % of Offering Price).......... 5.5%(2) None None
Sales Charge Imposed on Reinvested Dividends......................... None None None
Maximum Deferred Sales Charge........................................ None(3) 5%(4) None(5)
Redemption Fees(6)................................................... None None None
Exchange Fees........................................................ None None None
</TABLE>
____________________________________
Notes:
(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) 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.
(4) The CDSC payable upon redemption of Class B Shares declines over time.
(5) A 1% CDSC applies to redemptions of Class C Shares within one year of
purchase.
(6) The Transfer Agent may charge a fee of $7.50 for wire redemptions under
$5,000.
5
<PAGE>
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 Trustees,
Directors, auditors, legal counsel and service providers (such as the Advisor),
registration fees and distribution fees. The expenses shown below are based on
expenses for the Funds' past fiscal year, except (i) the expenses for the Real
Estate Equity Investment Fund and Value Fund have been restated to reflect the
discontinuation of voluntary expense reimbursements effective as of the date of
this Prospectus, (ii) the expenses for the Multi-Season Growth Fund reflect an
anticipated voluntary advisory fee waiver for the current fiscal year, (iii) the
expenses for the NetNet Fund have been restated to reflect the discontinuation
of the voluntary 12b-1 fee waiver for Class A Shares and (iv) the expenses for
the Micro-Cap Equity Fund, Small-Cap Value Fund, Growth Opportunities Fund and
the Framlington Funds are based on estimated operating expenses for the current
fiscal year and reflect anticipated voluntary expense reimbursements for the
Micro-Cap Equity Fund, Framlington Healthcare Fund, Framlington Global Financial
Services Fund and Growth Opportunities Fund. The Advisor may discontinue such
voluntary waivers or 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. [Update]
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS) ACCELERATING GROWTH FUND BALANCED FUND
- ------------------------------------------------ --------------------------- ----------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees.................................... .75% .75% .75% .65% .65% .65%
12b-1 Fees....................................... .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses................................... .20% .20% .20% .32% .32% .32%
---- ---- ---- ---- ---- ----
Total Fund Operating Expenses.................... 1.20% 1.95% 1.95% 1.22% 1.97% 1.97%
===== ===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND GROWTH & INCOME FUND GROWTH OPPORTUNITIES FUND INTERNATIONAL EQUITY FUND
OPERATING ---------------------------- ---------------------------- ----------------------------
EXPENSES(AS A % OF CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
AVERAGE NET ASSETS) SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
- ---------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees............... .75% .75% .75% .75% .75% .75% .75% .75% .75%
12b-1 Fees.................. .25% 1.00% 1.00% .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses+............. .20% .20% .20% .40%++ .40%++ .40%++ .26% .26% .26%
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses+.................. 1.20% 1.95% 1.95% 1.40%++ 2.15%++ 2.15%++ 1.26% 2.01% 2.01%
===== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND MICRO-CAP EQUITY FUND MULTI-SEASON GROWTH FUND NETNET FUND
OPERATING ---------------------------- --------------------------- ---------------------------
EXPENSES (AS A % OF CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
AVERAGE NET ASSETS) SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
- ------------------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees.............. 1.00% 1.00% 1.00% .75%* .75%* .75%* 1.00% 1.00% 1.00%
12b-1 Fees................. .25% 1.00% 1.00% .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses+............ .25%++ .25%++ .25%++ .25% .25% .25% .28%++ .28%++ .28%++
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Fund Operating
Expenses+.................. 1.50%++ 2.25%++ 2.25%++ 1.25%* 2.00%* 2.00%* 1.53%++ 2.28%++ 2.28%++
====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY
ANNUAL FUND INVESTMENT FUND SMALL-CAP VALUE FUND SMALL COMPANY GROWTH FUND
OPERATING ---------------------------- ---------------------------- ----------------------------
EXPENSES (AS A % OF CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
AVERAGE NET ASSETS) SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
- ------------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees............ .74% .74% .74% .75% .75% .75% .75% .75% .75%
12b-1 Fees............... .25% 1.00% 1.00% .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses+.......... .36% .36% .36% .38% .38% .38% .22% .22% .22%
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses+............... 1.35% 2.10% 2.10% 1.38% 2.13% 2.13% 1.22% 1.97% 1.97%
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON EMERGING FRAMLINGTON GLOBAL FINANCIAL
ANNUAL FUND VALUE FUND MARKETS FUND SERVICES FUND
OPERATING --------------------------- -------------------------------- ------------------------------
EXPENSES (AS A % OF CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
AVERAGE NET ASSETS) SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
- ---------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees......... .74% .74% .74% 1.25% 1.25% 1.25% .75% .75% .75%
12b-1 Fees............ .25% 1.00% 1.00% .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses+....... .28% .28% .28% .29% .29% .29% .50%++ .50%++ .50%++
---- ---- ---- ---- ---- ---- ---- ----- -----
Total Fund Operating
Expenses+............... 1.27% 2.02% 2.02% 1.79% 2.54% 2.54% 1.50%++ 2.25%++ 2.25%++
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
FRAMLINGTON INTERNATIONAL
ANNUAL FUND FRAMLINGTON HEALTHCARE FUND GROWTH FUND
OPERATING EXPENSES ------------------------------- ----------------------------
(AS A PERCENTAGE OF AVERAGE CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
NET ASSETS) SHARES SHARES SHARES SHARES SHARES SHARES
- ---------------------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees................. 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
12b-1 Fees.................... .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses+............... .30%++ .30%++ .30%++ .30% .30% .30%
---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses+..................... 1.55%++ 2.30%++ 2.30%++ 1.55% 2.30% 2.30%
===== ===== ===== ===== ===== =====
</TABLE>
- ----------------------------
*The Advisor expects to voluntarily waive a portion of its advisory fees for the
current fiscal year. Without waivers, the ratio of advisory fees to average net
assets would be 1.00% and total fund operating expenses would be 1.50%--Class A
Shares; 2.25%--Class B Shares; and 2.25%--Class C Shares.
+After expense reimbursements, if any.
++The Advisor expects to voluntarily reimburse the Funds for certain operating
expenses. In the absence of such expense reimbursements, it is estimated that
total fund operating expenses would be: Micro-Cap Equity Fund: 1.60%--Class A,
2.35%--Class B, 2.35%--Class C, Growth Opportunities Fund: 1.53%--Class A,
2.28%--Class B, 2.28%--Class C, NetNet Fund: 2.34%--Class A, 3.09%--Class B,
[_____ -- Class C,] Framlington Global Financial Services Fund: 1.67%--Class A,
2.42%--Class B, 2.42%--Class C and Framlington Healthcare Fund: 1.76%--Class A,
2.51%--Class B and 2.51%--Class C.
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, (2)
redemption at the end of the time periods (including the deduction of the
deferred sales charge, if any) and (3) no redemption at the end of the time
periods. 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>
ACCELERATING GROWTH FUND BALANCED FUND
---------------------------- -----------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
1 Year
. Redemption.................. $67 $70 $30 $67 $70 $30
. No Redemption............... $67 $20 $20 $67 $20 $20
3 Years
. Redemption.................. $91 $91 $61 $92 $92 $62
. No Redemption................ $91 $61 $61 $92 $62 $62
5 Years
. Redemption.................. $117 $125 $105 $118 $126 $106
. No Redemption.................. $117 $105 $105 $118 $126 $106
10 Years
. Redemption.................. $193 $227 $227 $195 $230 $230
. No Redemption.................. $193 $227 $227 $195 $230 $230
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND GROWTH OPPORTUNITIES FUND INTERNATIONAL EQUITY FUND
------------------------------- ----------------------------- -------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------ ------ ------ ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year
. Redemption............ $ 67 $ 70 $ 30 $69 $ 73 $32 $ 67 $ 70 $ 30
. No Redemption......... $ 67 $ 20 $ 20 $69 $ 73 $22 $ 67 $ 20 $ 20
3 Years
. Redemption............ $ 91 $ 91 $ 61 $98 $122 $68 $ 93 $ 93 $ 63
. No Redemption......... $ 91 $ 61 $ 61 $98 $122 $68 $ 93 $ 63 $ 63
5 Years
. Redemption............ $117 $125 $105 $120 $128 $108
. No Redemption......... $117 $105 $105 $120 $108 $108
10 Years
. Redemption............ $193 $227 $227 $199 $234 $234
. No Redemption......... $193 $227 $227 $199 $234 $234
</TABLE>
<TABLE>
<CAPTION>
MICRO-CAP EQUITY FUND MULTI-SEASON GROWTH FUND NETNET FUND
------------------------------ ------------------------------ -----------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------ ------- ------ ------ ------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year
. Redemption............ $ 69 $ 73 $ 33 $ 67 $ 70 $ 30 $ 70 $ 75
. No Redemption......... $ 69 $ 23 $ 23 $ 67 $ 20 $ 20 $ 70 $ 23
3 Years
. Redemption............ $100 $100 $ 70 $ 93 $ 93 $ 63 $101 $104
. No Redemption......... $100 $ 70 $ 70 $ 93 $ 63 $ 63 $101 $ 72
5 Years
. Redemption............ $132 $140 $120 $120 $128 $108
. No Redemption......... $132 $120 $120 $120 $108 $108
10 Years
. Redemption............ $225 $250 $258 $198 $233 $233
. No Redemption......... $225 $258 $258 $198 $233 $233
</TABLE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY
INVESTMENT FUND SMALL-CAP VALUE FUND SMALL COMPANY GROWTH FUND
---------------------------- ------------------------------- ----------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------ ------ ------ ------- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year
. Redemption............ $ 68 $ 71 $ 31 $ 68 $ 72 $ 32 $ 67 $ 70 $ 30
. No Redemption......... $ 68 $ 21 $ 21 $ 68 $ 22 $ 22 $ 67 $ 20 $ 20
3 Years
. Redemption............ $ 95 $ 96 $ 66 $ 96 $ 97 $ 67 $ 92 $ 92 $ 62
. No Redemption......... $ 95 $ 66 $ 66 $ 96 $ 67 $ 67 $ 92 $ 62 $ 62
5 Years
. Redemption............ $125 $133 $113 $127 $134 $114 $118 $126 $106
. No Redemption......... $125 $113 $113 $127 $114 $114 $118 $106 $106
10 Years
. Redemption............ $209 $243 $243 $212 $246 $246 $195 $230 $230
. No Redemption......... $209 $243 $243 $212 $246 $246 $195 $230 $230
</TABLE>
<TABLE>
<CAPTION>
VALUE FUND FRAMLINGTON EMERGING FRAMLINGTON GLOBAL FINANCIAL
---------- MARKETS FUND SERVICES FUND
----------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------ ------ ------ ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year
. Redemption............ $ 67 $ 71 $ 31 $ 72 $ 76 $ 36 $ 70 $ 74 $33
. No Redemption......... $ 67 $ 21 $ 21 $ 72 $ 26 $ 26 $ 70 $ 23 $23
3 Years
. Redemption............ $ 93 $ 93 $ 63 $108 $109 $ 79 $101 $104 $71
. No Redemption......... $ 93 $ 63 $ 63 $108 $ 79 $ 79 $101 $ 71 $71
5 Years
. Redemption............ $121 $129 $109 $147 $155 $135
. No Redemption......... $121 $109 $109 $147 $135 $135
10 Years
. Redemption............ $200 $235 $235 $254 $288 $288
. No Redemption......... $200 $235 $235 $254 $288 $288
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON HEALTHCARE FUND FRAMLINGTON INTERNATIONAL GROWTH FUND
------------------------------- --------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
1 Year
. Redemption..................... $ 70 $ 73 $ 33 $ 70 $ 73 $ 33
. No Redemption.................. $ 70 $ 23 $ 23 $ 70 $ 23 $ 23
3 Years
. Redemption..................... $101 $102 $ 72 $101 $102 $ 72
. No Redemption.................. $101 $ 72 $ 72 $101 $ 72 $ 72
5 Years
. Redemption..................... $135 $143 $123 $135 $143 $123
. No Redemption.................. $135 $123 $123 $135 $123 $123
10 Years
. Redemption..................... $230 $264 $264 $230 $264 $264
. No Redemption.................. $230 $264 $264 $230 $264 $264
</TABLE>
9
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights were audited by Ernst & Young LLP,
independent auditors, except that Multi-Season Growth Fund's financial
statements for periods ended prior to June 30, 1995 were audited by another
independent auditor. Class B Shares of the Company's Funds were not offered
prior to March 1, 1994. The Growth Opportunities Fund Class A, Class B and
Class C Shares, the Framlington Global Financial Services Fund Class A, Class B
and Class C Shares and the NetNet Fund Class C Shares had not yet commenced
operations on June 30, 1998. This information should be read in conjunction
with the Funds' most recent Annual Reports, which are incorporated by reference
into the SAI. You may obtain the Annual Reports without charge by calling (800)
438-5789.
<TABLE>
<CAPTION>
ACCELERATING GROWTH (A)
---------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(I) 6/30/96 6/30/95(D) 2/28/95(E)
CLASS A CLASS A CLASS A CLASS A CLASS A
------- ------- ------- ------- -------
Net asset value, beginning of
period.....................................
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income/(loss).........................
Net realized and unrealized
gain/(loss) on
investments...........................
Total from investment
operations............................
Less distributions:.
Dividends from net investment
income................................
Distributions from net realized
gains.................................
Total distributions...................
Net asset value, end of
period.....................................
Total return (b)......................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in 000's)..
Ratio of operating expenses to
average net assets....................
Ratio of net investment income/(loss)
to average net assets.................
Portfolio turnover rate...............
Ratio of operating expenses to
average net assets w/o waivers........
Average commission rate (g)...........
</TABLE>
______________________________
(a) The Munder Accelerating Growth Fund Class A Shares, Class B Shares and Class
C Shares commenced operations on November 23, 1992, April 25, 1994 and September
26, 1995, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Amount rounds to less than 0.01%.
(i) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
10
<PAGE>
<TABLE>
<CAPTION>
ACCELERATING GROWTH FUND(A)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
YEAR PERIOD YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/94 2/28/93 6/30/98 6/30/97(I) 6/30/96 6/30/95(D) 6/30/97(I) 6/30/96 6/30/95(D)
CLASS A CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B CLASS B CLASS B
- ------------ ------- ------- ------- ------- ------- ------- ------- -------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND(A)
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(G) 6/30/96(G) 6/30/95(D) 2/28/95(E)
CLASS A CLASS A CLASS A CLASS A CLASS A
------- ------- ------- ------- -------
Net asset value, beginning of
period..........................................
Income from investment operations:
Net investment
income.....................................
Net realized and unrealized
gain/(loss) on
investments................................
Total from investment
operations.................................
Less distributions:
Dividends from net investment
income.....................................
Distributions from net realized
gains......................................
Total
distributions..............................
Net asset value, end of
period..........................................
Total return
(b)........................................
Ratios to average net
assets/supplemental data:
Net assets, end of period
(in 000's).................................
Ratio of operating expenses to average net
assets.....................................
Ratio of net investment income to average
net assets.................................
Portfolio turnover
rate.......................................
Ratio of operating expenses to
average net assets w/o waivers.............
Average commission rate
(f)........................................
</TABLE>
__________________________
(a) The Munder Balanced Fund Class A Shares, Class B Shares and Class C Shares
commenced operations on April 30, 1993, June 21, 1994 and January 24, 1996,
respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
12
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND(A)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
YEAR YEAR YEAR YEAR PERIOD PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/94 6/30/98 6/30/97(G) 6/30/96(G) 6/30/95(D) 2/28/95(E) 6/30/98 6/30/97(G) 6/30/96(G)
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B CLASS C CLASS C CLASS C
- ------------ ------- ------- ------- ------- ------- ------- ------- -------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND(A)
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(H) 6/30/96(H) 6/30/95(D) 2/28/95(E)
CLASS A CLASS A CLASS A CLASS A CLASS A
------- ------- ------- ------- -------
Net asset value, beginning of
period.....................................
Income from investment operations:
Net investment
income................................
Net realized and unrealized gain on
investments...........................
Total from investment
operations............................
Less distributions:
Dividends from net investment
income................................
Distributions from net realized
gains.................................
Total
distributions.........................
Net asset value, end of
period.....................................
Total return
(b)...................................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's)................................
Ratio of operating expenses to
average net
assets................................
Ratio of net investment income to
average net
assets................................
Portfolio turnover
rate..................................
Ratio of operating expenses to
average net assets w/o
waivers...............................
Average commission rate
(g)...................................
</TABLE>
________________
(a) The Munder Growth & Income Fund Class A Shares, Class B Shares and Class C
Shares commenced operations on August 8, 1994, August 9, 1994 and December 5,
1995, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
14
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND(A)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR YEAR YEAR PERIOD PERIOD YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(H) 6/30/96(H) 6/30/95(D) 2/28/95(E) 6/30/98 6/30/97(H) 6/30/96(H)
CLASS B CLASS B CLASS B CLASS B CLASS B CLASS C CLASS C CLASS C
- ------------- ------- ------- ------- ------- ------- ------- -------
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND(A)
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
YEAR YEAR YEAR PERIOD YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/97 6/30/97(F) 6/30/96(F) 6/30/95(D) 2/28/95(E,F) 2/28/94
CLASS A CLASS A CLASS A CLASS A CLASS A CLASS A
------- ------- ------- ------- ----------- -------
Net asset value, beginning of
period..............................
Income from investment
operations:
Net investment
income.........................
Net realized and unrealized
gain on
investments....................
Total from investment
operations.....................
Less distributions:
Dividends from net investment
income.........................
Distributions from net
realized gains.................
Distributions from
capital........................
Total
distributions..................
Net asset value, end of
period..............................
Total return
(b)............................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's).........................
Ratio of operating expenses to
average net
assets.........................
Ratio of net investment income
to average net
assets.........................
Portfolio turnover
rate...........................
Ratio of operating expenses to
average net assets w/o
waivers........................
Average commission rate
(h)............................
</TABLE>
_______________________
(a) The Munder International Equity Fund Class A Shares, Class B Shares and
Class C Shares commenced operations on November 30, 1992, March 9, 1994 and
September 29, 1995, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(g) Amount represents less than $0.01 per share.
(h) Average commission rate paid per share of securities purchased and sold by
the Fund.
16
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND(A)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PERIOD YEAR YEAR YEAR PERIOD PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/93 6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(D) 2/28/95(E,F) 6/30/98 6/30/97(F) 6/30/96(F)
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B CLASS C CLASS C CLASS C
- -------------- ------- ------- ------- ------- ----------- ------- ------- -------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
MICRO-CAP EQUITY FUND(A)
------------------------------------------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/98 6/30/97(E) 6/30/98 6/30/97(E)
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income........................
Net realized and unrealized gain on
investments..................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment income to average
net assets...................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers...........................
Average commission rate (d)..................
</TABLE>
- --------------------
(a) The Munder Micro-Cap Equity Fund Class A Shares, Class B Shares and Class C
Shares commenced operations on December 26, 1996, February 24, 1997 and March
31, 1997, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
18
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND(A)
---------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(H) 6/30/96(H) 6/30/95(D,E,F) 12/31/94 12/31/93
CLASS A CLASS A CLASS A CLASS A CLASS A CLASS A
------- ------- ------- ------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income........................
Net realized and unrealized gain on
investments..................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment income to average
net assets...................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers...........................
Average commission rate (g)..................
</TABLE>
- --------------------
(a) The Munder Multi-Season Growth Fund Class A Shares, Class B Shares and Class
C Shares commenced operations on August 4, 1993, April 29, 1993 and September
20, 1993, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
December 31.
(e) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
(f) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
19
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND(A)
---------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(H) 6/30/96(H) 6/30/95(D,E,F) 12/31/94 12/31/93
CLASS B CLASS B CLASS B CLASS B CLASS B CLASS B
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income........................
Net realized and unrealized gain on
investments..................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment income to average
net assets...................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers...........................
Average commission rate (g)..................
</TABLE>
- --------------------
(a) The Munder Multi-Season Growth Fund Class A Shares, Class B Shares and Class
C Shares commenced operations on August 4, 1993, April 29, 1993 and September
20, 1993, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
December 31.
(e) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
(f) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
20
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH (A)
-------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(H) 6/30/96(H) 6/30/95(D,E,F) 12/31/94 12/31/93
CLASS C CLASS C CLASS C CLASS C CLASS C CLASS C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
NETNET FUND
------------------------------
YEAR PERIOD PERIOD
ENDED ENDED ENDED
6/30/98 6/30/97(A) 6/30/98
CLASS A CLASS A CLASS B
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period..............
Income from investment operations:
Net investment loss.............................
Net realized and unrealized gain on investments.
Total from investment operations................
Less distributions:
Distributions from net realized gains...........
Total distributions.............................
Net asset value, end of period....................
Total return (b)................................
Ratio to average net assets/supplemental data:
Net assets, end of period (in 000's)............
Ratio of operating expenses to average net
assets.........................................
Ratio of net investment loss to average net
assets.........................................
Portfolio turnover rate.........................
Ratio of operating expenses to average net
assets without waivers and expenses
reimbursed......................................
Average commission rate(d)........................
</TABLE>
- --------------------
(a) The Munder NetNet Fund commenced operations on August 16, 1996.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
22
<PAGE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY INVESTMENT FUND(A)
------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96(F) 6/30/95(D) 6/30/98 6/30/97
CLASS A CLASS A CLASS A CLASS A CLASS B CLASS B
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income........................
Net realized and unrealized gain on
investments..................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment income to average
net assets...................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers and/or expenses
reimbursed...................................
Average commission rate (e)..................
</TABLE>
- --------------------
(a) The Munder Real Estate Equity Investment Fund Class A Shares, Class B Shares
and Class C Shares commenced operations on September 30, 1994, October 3, 1994
and January 5, 1996, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Average commission rate paid per share of securities purchased and sold by
the Fund.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
23
<PAGE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY INVESTMENT FUND (A)
---------------------------------------------------
YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/96(F) 6/30/95(D) 6/30/98 6/30/97 6/30/96(F)
CLASS B CLASS B CLASS C CLASS C CLASS C
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income........................
Net realized and unrealized gain on
investments..................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment income to average
net assets...................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers and/or expenses
reimbursed...................................
Average commission rate (e)..................
</TABLE>
- --------------------
(a) The Munder Real Estate Equity Investment Fund Class A Shares, Class B Shares
and Class C Shares commenced operations on September 30, 1994, October 3, 1994
and January 5, 1996, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Average commission rate paid per share of securities purchased and sold by
the Fund.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
24
<PAGE>
<TABLE>
<CAPTION>
SMALL-CAP VALUE FUND (A)
------------------------------------------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/98 6/30/97(F) 6/30/98 6/30/96(F)
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income........................
Net realized and unrealized gain on
investments..................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment income to average
net assets...................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers and/or expenses
reimbursed...................................
Average commission rate (e)..................
</TABLE>
- --------------------
(a) The Munder Small-Cap Value Fund Class A Shares, Class B Shares and Class C
Shares commenced operations on January 10, 1997, February 11, 1997 and January
13, 1997, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Average commission rate paid per share of securities purchased and sold by
the Fund.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
25
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND (A)
---------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(E) 2/28/95(D) 2/28/94
CLASS A CLASS A CLASS A CLASS A CLASS A CLASS A
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...............
Income from investment operations:
Net investment income.........................
Net realized and unrealized
gain on investments...........................
Total from investment operations..............
Less distributions:
Dividends from net investment income..........
Distributions from net realized gains.........
Total distributions...........................
Net asset value, end of period.....................
Total return (b)..............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)..........
Ratio of operating expenses to
average net assets............................
Ratio of net investment income
to average net assets.........................
Portfolio turnover rate.......................
Ratio of operating expenses to
average net assets w/o waivers................
Average commission rate (g)...................
</TABLE>
- --------------------
(a) The Munder Small Company Growth Fund Class A Shares, Class B Shares and
Class C Shares commenced operations on November 23, 1992, April 28, 1994 and
September 26, 1995, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
26
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND(A)
- -----------------------------------------------------------------------------------------------------------------
PERIOD YEAR YEAR YEAR PERIOD PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/93(E) 6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(E) 2/28/95(D) 6/30/98 6/30/97(F) 6/30/96(F)
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B CLASS C CLASS C CLASS C
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND (A)
-------------------------------------------------------------------
YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/96(E) 6/30/98 6/30/97(E) 6/30/96(E)
CLASS A CLASS A CLASS A CLASS B CLASS B CLASS B
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.........
Income from investment operations:
Net investment income...................
Net realized and unrealized gain on
investments.............................
Total from investment operations........
Less distributions:
Dividends from net investment income....
Distributions from net realized gains...
Total distributions.....................
Net asset value, end of period...............
Total return (b)........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)....
Ratio of operating expenses to average
net assets..............................
Ratio of net investment income
to average net assets...................
Portfolio turnover rate.................
Ratio of operating expenses to average
net assets w/o waivers and expenses
reimbursed..............................
Average commission rate(d)..............
</TABLE>
- ----------------
(a) The Munder Value Fund Class A Shares, Class B Shares and Class C Shares
commenced operations on September 14, 1995, September 19, 1995 and February
9, 1996, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
28
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND (A)
- ----------------------------------------------------
YEAR YEAR YEAR
ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/96(E)
CLASS C CLASS C CLASS C
------- ------- -------
<S> <C> <C>
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON EMERGING MARKETS FUND (A)
----------------------------------------------------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/98 6/30/97(E) 6/30/98 6/30/97(E)
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...............
Income from investment operations:
Net investment income.........................
Net realized and unrealized gain on
investments...................................
Total from investment operations..............
Less distributions:
Dividends from net investment income..........
Distributions from net realized gains.........
Total distributions...........................
Net asset value, end of period.....................
Total return (b)..............................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to
average net assets...........................
Ratio of net investment income to average
net assets...................................
Portfolio turnover rate......................
Ratio of operating expenses to average
net assets w/o expenses reimbursed...........
Average commission rate (d)..................
</TABLE>
- ---------------------
(a) The Munder Framlington Emerging Markets Fund Class A Shares, Class B Shares
and Class C Shares commenced operations on January 14, 1997, February 25, 1997
and March 3, 1997, respectively. The Munder Framlington Healthcare Fund Class A
Shares, Class B Shares and Class C Shares commenced operations on February 14,
1997, January 31, 1997 and January 13, 1997, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(f) Amount represents less than $0.01 per share.
30
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON HEALTHCARE FUND (A)
- ---------------------------------------------------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/98 6/30/97 6/30/98 6/30/97
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON INTERNATIONAL GROWTH FUND (A)
---------------------------------------------------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/98 6/30/97(E) 6/30/98 6/30/97(E)
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period..........
Income from investment operations:
Net investment income....................
Net realized and unrealized
gain on investments......................
Total from investment operations.........
Less distributions:
Dividends from net investment income.....
Distributions from net realized gains....
Total distributions......................
Net asset value, end of period................
Total return (b).........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's).....
Ratio of operating expenses to average
net assets...............................
Ratio of net investment income
to average net assets....................
Portfolio turnover rate..................
Ratio of operating expenses to average
net assets w/o expenses reimbursed.......
Average commission rate (d)..............
</TABLE>
- ------------------
(a) The Munder Framlington International Growth Fund Class A Shares, Class B
Shares and Class C Shares commenced operations on February 20, 1997, March 19,
1997 and February 13, 1997, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(f) Amount represents less than $0.01 per share.
32
<PAGE>
FUND CHOICES
WHAT FUNDS ARE OFFERED?
This Prospectus offers Class A, Class B and Class C Shares of the Funds
described below. This section summarizes each Fund's principal investments.
The sections entitled "What are the Funds' Investments and Investment
Practices?" and "What are the Risks of Investing in the Funds?" and the SAI give
more information about the Funds' investment techniques and risks. Capitalized
terms are explained in the section "What are the Funds' Investments and
Investment Practices?"
ACCELERATING GROWTH FUND
GOALS 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:
. the potential for accelerated earnings growth
. the maintenance of a substantial competitive advantage
. a focused management team
. a stable balance team.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
The Fund is closed to new investments.
BALANCED FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide an
attractive investment return through a combination of growth of capital and
current income. The Fund will allocate its assets among three asset groups:
Equity Securities, Fixed Income Securities and Cash Equivalents.
. The Fund normally will invest at least 25% of its assets in Fixed
Income Securities and no more than 75% of its assets in Equity
Securities. The Fund will notify shareholders at least 30 days before
changing this policy.
The Advisor will allocate the Fund's assets to the three asset groups based
on its view of the following factors, among others:
. general market and economic conditions and trends
. interest rates and inflation rates
. fiscal and monetary developments
. long-term corporate earnings growth.
The Advisor will try to take advantage of changing economic conditions by
adjusting the ratio of Equity Securities to Fixed Income Securities or Cash
Equivalents. For example, if the Advisor believes that rapid economic growth
will lead to better corporate earnings in the future, then it might increase the
Fund's Equity Securities holdings and reduce its Fixed Income Securities and
Cash Equivalents holdings.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
33
<PAGE>
GROWTH & INCOME FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide capital
appreciation and current income. It primarily invests in 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 Standard & Poor's 500
Composite Stock Price Index ("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 Old MCM, Inc.
("MCM"), the predecessor to the Advisor, since January 1987.
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.
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
34
<PAGE>
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 (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.
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
35
<PAGE>
. 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 April 1993.
Mr. Barr is the Senior Vice President and Director of Research of the Advisor.
From April 1988 to April 1993 he held similar positions with MCM. Mr. Munder is
the Chairman of the Advisor.
NETNET FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's 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
invests in those companies listed on a U.S. securities exchange 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 invests 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.
36
<PAGE>
PORTFOLIO MANAGEMENT. Peter K. Hoglund and Robert E. Crosby jointly manage
the Fund. Mr. Hoglund has managed the Fund since October 1996. Mr. Hoglund
formerly was the primary analyst of the Fund (October 1994 to October 1996).
Mr. Crosby has managed the Fund since March 1998. Mr. Crosby was formerly the
primary analyst of the Fund (October 1996 to March 1998). Mr. Crosby has been
with the Advisor since 1993, and also serves as portfolio manager for separately
managed institutional accounts.
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 the company 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, Edward Eberle and Brian Wall jointly
manage the Fund. Mr. Seizert, a Chief Executive 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 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. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge Capital Management, Inc. ("Woodbridge") (1994-1995) and an Assistant
Vice President in Equity Research for Merrill Lynch, Pierce Fenner & Smith in
New York (1992-1994).
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.
37
<PAGE>
. 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 from 1995 to 1996. Prior
to joining the Advisor in 1995, Mr. Wilk was a Senior Equity Research Analyst
for the Fund at Woodbridge. Mr. Gura has managed the Fund since March 1997.
Prior to joining the Advisor in 1995, Mr. Gura was a Vice President and Senior
Equity Analyst for the Fund at Woodbridge (1994-1995) and an investment officer
for Manufacturers National Bank Trust Department (1989-1994).
VALUE FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide
long-term capital appreciation, its secondary goal is to provide income. 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 the company 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, Edward Eberle and Brian Wall jointly
manage the Fund. Mr. Seizert, a Chief Executive 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 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. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge (1994-1995) and an Assistant Vice President in Equity Research for
Merrill Lynch, Pierce Fenner & Smith in New York (1992-1994).
38
<PAGE>
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. A committee of professional portfolio managers
employed by the Sub-Advisor makes investment decisions for the Fund. William
Calvert heads the committee.
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.
PORTFOLIO MANAGEMENT. A committee of professional managers employed by the
Advisor or the Sub-Advisor makes decisions for the Fund.
39
<PAGE>
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 these 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.
WHO MAY WANT TO INVEST IN THE FUNDS?
The Funds are designed for investors who desire potentially high capital
appreciation and who can accept short-term variations in return for potentially
greater returns over the long term. In general, the greater the risk, the
greater the potential reward. Investors who have a short time horizon, who
desire a high level of income or who are conservative in their investment
approach may wish to invest in other portfolios offered by the Trust and the
Company.
WHAT ARE THE FUNDS' INVESTMENTS AND INVESTMENT PRACTICES?
Each Fund will invest in EQUITY SECURITIES, which include 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
40
<PAGE>
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 may invest in MONEY MARKET INSTRUMENTS, 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.
The 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.
The Funds may purchase ADRs, EDRs and GLOBAL DEPOSITORY RECEIPTS ("GDRs").
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 Funds may buy shares of registered MONEY MARKET FUNDS. The 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 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.
The 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 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. Under normal
market conditions, the Funds will not invest to a significant extent, or on a
routine basis, in U.S. Government Securities.
Each 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 can be changed only by
shareholders.
All of the Equity Funds, 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 a single issuer (other than 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 non-diversified Funds.
41
<PAGE>
INVESTMENT CHART
The following chart summarizes the Funds' investments and investment
practices. The SAI contains more details. All percentages are based on a
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 Funds'
investment practices.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND ACCELERATING GROWTH & GROWTH INTERNATIONAL MICRO-CAP
INVESTMENT PRACTICES GROWTH BALANCED INCOME OPPORTUNITIES EQUITY EQUITY
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOREIGN SECURITIES. Includes
securities issued by non-U.S.
companies. Present more risks
than U.S. securities. 25% 25% 25% 25% Y 25%
- ------------------------------------------------------------------------------------------------------------------------
LOWER-RATED DEBT SECURITIES.
Fixed Income Securities which
are rated below investment grade
by Standard & Poor's Ratings
Service, Moody's Investors
Service, Inc. or other
nationally recognized rating
agency. Considered riskier than
investment grade securities. Y Y 20% Y Y Y
- ------------------------------------------------------------------------------------------------------------------------
INVESTMENT-GRADE ASSET BACKED
SECURITIES. Includes debt
securities backed by mortgages,
installment sales contracts and
credit card receivables. N Y N N N 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 combination of
both. N Y N N N 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 gains from currency
changes. Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------
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 payment. Not to be used
for speculation. Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------
FUTURES AND OPTIONS ON FUTURES.
(1) Contracts in which a Fund
has the right or the obligation,
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
liquidity. Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1) THE LIMITATION ON MARGINS AND PREMIUMS FOR FUTURES AND OPTIONS ON FUTURES IS
5% OF A FUND'S ASSETS.
(2) BASED ON NET ASSETS.
42
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
MULTI- REAL ESTATE SMALL- SMALL FRAMLINGTON FRAMLINGTON FRAMLINGTON
SEASON EQUITY CAP COMPANY EMERGING GLOBAL FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH NETNET INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
25% Y N 25% 25% 25% Y Y Y Y
- ----------------------------------------------------------------------------------------------------------------------------
Y N 5% Y Y Y Y Y Y Y
- ----------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ----------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ----------------------------------------------------------------------------------------------------------------------------
Y Y N Y Y Y Y Y Y Y
- ----------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ----------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
INVESTMENTS AND ACCELERATING GROWTH & GROWTH INTERNATIONAL MICRO-CAP
INVESTMENT PRACTICES GROWTH BALANCED INCOME OPPORTUNITIES EQUITY EQUITY
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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 Y Y Y Y Y Y
a set price. Options may
relate to securities 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 upon time and
price. A method to borrow Y Y Y Y Y Y
money for temporary purposes.
- ----------------------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS.
Companies, usually traded
publicly, that manage a
portfolio of real estate.
Risks involved in such
investments include N N N N N N
vulnerability to decline in
real estate prices and new
construction 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 N N N N N N
also sell securities that it
owns or has the right to
acquire at no additional cost
but does not intend to deliver
to the buyer, a practice known
as selling short "against the
box."
- ----------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically
there is no ready market for
these securities, which
inhibits the ability to sell
them for full market value, or
there are legal restrictions 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
on their resale by the Fund.
- ----------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may
lend securities to financial
institutions which pay for the
use of the securities. May
increase return. Slight risk 25% 25% 25% 25% 25% 25%
of borrower failing
financially.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1) THE LIMITATION ON MARGINS AND PREMIUMS FOR FUTURES AND OPTIONS ON FUTURES
IS 5% OF A FUND'S ASSETS.
(2) BASED ON NET ASSETS.
44
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
MULTI- REAL ESTATE SMALL- SMALL FRAMLINGTON FRAMLINGTON FRAMLINGTON
SEASON EQUITY CAP COMPANY EMERGING GLOBAL FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH NETNET INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Y Y Y Y Y Y Y Y Y Y
- ----------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ----------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ----------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ----------------------------------------------------------------------------------------------------------------------------
15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
- ----------------------------------------------------------------------------------------------------------------------------
25% 25% 25% 25% 25% 25% 25% 25% 25% 25%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
WHAT ARE THE RISKS OF INVESTING IN THE 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.
The Funds are not meant to provide a vehicle for playing short-term swings
in the stock market. 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 is a balanced
investment program and there is no guarantee that any Fund will achieve its
investment objective since there is uncertainty in every investment.
A Fund's risk is mostly dependent on the types of securities it purchases
and its investment techniques. Each Fund is 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 a Fund to additional risks and transaction costs.
Risks inherent in the use of derivative instruments include: (1) the risk that
interest rates, securities prices and currency markets will not move in the
direction that a portfolio manager anticipates; (2) imperfect correlation
between the price of derivative instruments and movements in the prices of the
securities, interest rates or currencies being hedged; (3) the fact that skills
needed to use these strategies are different than those needed to select equity
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 Fund's initial
investment in that instrument (in some cases, the potential loss is unlimited);
(6) particularly in the case of privately-negotiated instruments, the risk that
the counterparty will not perform its obligations, which could leave the Fund
worse off than if it had not entered into the position and (7) inability to
close out certain hedged positions to avoid adverse tax consequences.
To the extent that a Fund invests in illiquid securities, the Fund risks
not being able to sell securities at the time and the price that it would like.
A Fund may therefore have to lower the price, sell substitute securities or
forego an investment opportunity, each of which might adversely affect the Fund.
The risks of the various investment techniques the Funds use are described
in more detail in the SAI.
Growth Opportunities Fund, Micro-Cap Equity 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 Global Financial Services Fund,
Framlington International Growth Fund and International Equity Fund
Investing in any of these Funds, with their 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
46
<PAGE>
uniform accounting, auditing and financial reporting standards and practices
applicable to U.S. companies; (3) foreign stock markets have less volume than
the U.S. market, 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.
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.
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.
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.
PERFORMANCE
HOW IS THE FUND'S 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.
47
<PAGE>
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 and Class C 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 or C 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 and Class C 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 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, Class B and Class C 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.
48
<PAGE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- --------------------------------- --------------------------------------- -------------------------------------
<S> <C> <C>
. Front end sales charge. . No front end sales charge. All . No front end sales charge or
There are several ways to your money goes to work for you right CDSC, except for a CDSC for
reduce these sale charges. away. redemptions made within the first
. Lower annual expenses than . Higher annual expenses than Class A year after investing. All your
Class B and Class C Shares. Shares. money goes to work for you right
. A CDSC on shares you sell within away.
six years of purchase. . Shares do not convert to another
. Automatic conversion to Class A class.
Shares approximately six years after . Higher annual expenses than Class
issuance, thus reducing future annual A Shares.
expenses.
. CDSC is waived for certain
redemptions.
</TABLE>
Each Fund other than the NetNet Fund issues Class K and Class Y Shares,
which have different sales charges, expense levels and performance. The NetNet
Fund offer only Class Y Shares. Class K and Class Y Shares are available to
limited types of investors. Call (800) 438-5789 to obtain more information
concerning Class K and Class Y Shares.
WHAT PRICE DO I PAY FOR SHARES?
The purchase price for Class A Shares is the net asset value ("NAV") next
determined after we receive your order in proper form plus any applicable sales
charge. The purchase price for Class B and Class C Shares is the NAV next
determined. 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 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). 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:
<TABLE>
<CAPTION>
SALES CHARGE DEALER REALLOWANCE
AS A PERCENTAGE OF AS A PERCENTAGE
----------------------------------
YOUR INVESTMENT NET ASSET VALUE OF THE OFFERING PRICE
---------------- ---------------- ----------------------
<S> <C> <C> <C>
Less than $25,000..................... 5.50% 5.82% 5.00%
$25,000 but less than $50,000......... 5.25% 5.54% 4.75%
$50,000 but less than $100,000........ 4.50% 4.71% 4.00%
$100,000 but less than $250,000....... 3.50% 3.63% 3.25%
$250,000 but less than $500,000...... 2.50% 2.56% 2.25%
$500,000 but less than $1,000,000..... 1.50% 1.52% 1.25%
$1,000,000 or more.................... None* None* (see below)**
</TABLE>
__________________________
*No initial sales charge applies on investments of $1 million or more. However,
a CDSC of 1% is imposed on certain redemptions within one year of purchase.
Class A Shares of the Trust Funds purchased on or before June 27, 1995 are
subject to a different CDSC, which is described in the SAI.
**The Distributor will pay a 1% commission to dealers who initiate and are
responsible for purchases of $1 million or more.
49
<PAGE>
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' service providers 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 (including customers of such banks
and other financial institutions, and the immediate family members of
such customers);
(8) fee-based financial planners or employee benefit plan consultants
acting for the accounts of their clients;
(9) employer sponsored retirement plans which are administered by Universal
Pensions, Inc. ("UPI Plans");
(10) 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";
(11) individuals who reinvest proceeds of redemptions from Class A, Class B
or Class C Shares of the Short Term Treasury Fund, provided such
individuals were shareholders of the Short Term Treasury Fund on June
2, 1998; and
(12) individuals who were shareholders of the NetNet Fund prior to June 1,
1998.
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) or
Section 403(b) of the Code (each, a "Qualified Employee Benefit Plan") and that
(1) invest $1,000,000 or more in Class A Shares of investment portfolios offered
by the Trust, the Company or Framlington or (2) have at least 75 eligible plan
participants. In addition, we will waive the CDSC of 1% charged on certain
redemptions 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 Plans for employees participating in an employer-sponsored or
administered retirement program operating under Section 408A of the Code and
(ii) the CDSC of 1% imposed on certain redemptions within one year of purchase
for these accounts. 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
50
<PAGE>
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 $25,000 of Class A,
Class B and Class C Shares of the Funds 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.
. 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.
. Right of Accumulation. You may add the value of any shares of non-money
market funds of the Trust, the Company or Framlington you already own to the
amount of your next Class A Share 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, Class B and Class C Shares of a
Fund is $250 and subsequent investments must be at least $50. Purchases in
excess of $250,000 must be for Class A or Class C Shares.
51
<PAGE>
HOW CAN I PURCHASE SHARES?
You can purchase Class A, Class B and Class C 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.
. 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.
. BY MAIL. You may open an account by completing, signing and mailing the
attached Account Application Form and a check or other negotiable bank draft
(payable to The Munder Funds) for $250 or more to: The Munder Funds, c/o First
Data Investor Services Group, P.O. Box 5130, Westborough, Massachusetts 01581-
5130. 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.
. 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 the
Transfer Agent 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.
. 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.
. REINVESTMENT PRIVILEGE. Once a year you may reinvest redemption proceeds
from Class A, B and C 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. We do not issue
share certificates. 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.
52
<PAGE>
HOW CAN I EXCHANGE SHARES?
You may exchange shares of the Funds for shares of the same class of other
funds of the Trust, the Company or Framlington based on their relative net asset
values. Class A Shares acquired through an exchange 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
funds of the Trust 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 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.
. 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.
. EXCHANGES BY MAIL. You may send exchange orders to your broker or to the
Transfer Agent at The Munder Funds c/o First Data Investor Services Group, PO
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.
REDEMPTIONS OF SHARES
WHAT PRICE DO I RECEIVE FOR REDEEMED SHARES?
The redemption price is the NAV 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
. Class C Shares within one year of buying them.
These time periods include the time you held Class B or Class C Shares
which you may have exchanged for Class B or Class C Shares of the Fund.
The CDSC schedule for Class B shares purchased after June 27, 1995 is set
forth below. See the SAI for the CDSC schedule for Class B Shares purchased
before that time. 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.
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<PAGE>
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%
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.
CDSC Waivers. We will waive the CDSC payable upon redemptions of shares
which you purchased after June 27, 1995 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
. redemptions limited to 10% per year of an account's NAV. For example, if you
maintain an annual balance of $10,000 you can redeem up to $1,000 annually free
of charge.
Consult the SAI for Class B Share CDSC waivers which apply when you redeem
shares acquired in an exchange of shares of another Fund of the Company or the
Tvrust that were purchased on or before June 27, 1995.
We will waive the CDSC for Class B Shares for all redemptions 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 Fund cannot sell its assets or accurately determine the
value of its assets or if the SEC orders the Fund to suspend redemptions.
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<PAGE>
HOW CAN I REDEEM SHARES?
You may redeem shares of the Funds in several ways:
. BY MAIL. You may mail your redemption request to: The Munder Funds C/O
First Data 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.
. 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 CDSC's when you redeem shares.
. INVOLUNTARY REDEMPTION. We may redeem your account if its value falls
below $250 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.
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<PAGE>
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 Trust, the Company and Framlington are each an open-end management
investment company, which is a mutual fund that sells and redeems shares every
day that it is open for business. They are managed under the direction of their
governing Boards of Trustees and Directors, which are responsible for the
overall management of the Trust, the Company and Framlington and supervise the
Funds' service providers. The Trust and Framlington are organized as
Massachusetts business trusts and the Company is a Maryland corporation.
WHO MANAGES AND SERVICES THE FUNDS?
INVESTMENT ADVISOR AND SUB-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 and WAM Holdings, Inc. ("WAM") MCM was founded
in April, 1985 as a Delaware corporation and was a registered investment
advisor. WAM is an indirect, wholly-owned subsidiary of Comerica Incorporated
which owns or controls approximately 88% of the partnership interests in the
Advisor. As of June 30, 1998, the Advisor and its affiliates had approximately
$48.2 billion in assets under management, of which $25.4 billion were invested
in equity securities, $8.1 billion were invested in money market or other short-
term instruments, $9.2 billion were invested in other fixed income securities
and $5.5 billion in non-discretionary assets.
The Advisor provides overall investment management and research and
credit analysis for each Fund and is responsible for all purchases and sales of
portfolio securities for each Fund other than the Framlington Funds.
Framlington Overseas Investment Management Limited is the sub-advisor
of the Framlington Funds. The Sub-Advisor is an indirect subsidiary of
Framlington Holdings Limited which is, in turn, owned 49% by the Advisor and 51%
by Credit Commercial de France S.A., a French banking corporation listed on the
Societe des Bourses Francaises.
The Sub-Advisor provides research and credit analysis for each of the
Framlington Funds and is responsible for all purchase and sales of portfolio
securities for each of the Framlington Funds other than the Framlington Global
Financial Services Fund. Each of the Advisor and Sub-Advisor manages a portion
of the assets of the Framlington Global Financial Services Fund. The Advisor is
responsible for all purchases and sales of domestic securities held by the Fund.
The Sub-Advisor is responsible for the allocation of the Fund's assets among
countries and for all purchases and sales of foreign securities held by the
Fund.
During the fiscal year ended June 30, 1998, the Advisor was paid an
advisory fee at an annual rate based on the average daily net assets of each
Fund (after waivers, if any) as follows:
<TABLE>
<S> <C> <S> <C>
Accelerating Growth Fund ..........................0.75% Growth & Income Fund ..........................0.75%
Balanced Fund .....................................0.65% Growth Opportunities Fund .....................0.75%
Framlington Emerging Markets Fund .................1.25% International Equity Fund .....................0.75%
Framlington Global Financial Services Fund ........0.75% Micro-Cap Equity Fund .........................1.00%
Framlington International Growth Fund .............1.00% Multi-Season Growth Fund ......................0.75%
Framlington Healthcare Fund .......................1.00% NetNet Fund ...................................1.00%
</TABLE>
56
<PAGE>
<TABLE>
<S> <C> <S> <C>
Real Estate Equity Investment Fund ................0.74% Small Company Growth Fund .....................0.75%
Small-Cap Value Fund ..............................0.75% Value Fund ....................................0.74%
</TABLE>
The Advisor waived advisory fees during the past fiscal year for the Multi-
Season Growth Fund. The Advisor is entitled to receive an annual fee equal to
1.00% of the first $500 million of the Multi-Season Growth Fund's average daily
net assets and .75% of the Fund's average daily net assets over $500 million.
The Sub-Advisor is entitled to receive an advisory fee equal to one half of
the fee paid to the Advisor by each of the Framlington Funds as compensation for
its services as Sub-Advisor. The Advisor pays fees to the Sub-Advisor and the
Framlington Funds pay no fees directly to the Sub-Advisor.
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.
PERFORMANCE OF FRAMLINGTON FUNDS MANAGED BY THE SUB-ADVISOR
The tables below contain certain performance information provided by the
Sub-Advisor relating to accounts managed by the Sub-Advisor and which have
investment objectives and policies similar to those of the corresponding
Framlington Funds. See "Fund Choices" and "What are the Funds' Investments and
Investment Practices?" In the case of the Healthcare portfolio performance, the
data relates to a unit trust organized under the laws of the United Kingdom
managed by the same personnel of the Sub-Advisor with similar investment
objectives and policies to the Framlington Healthcare Fund. In the case of
Emerging Markets portfolio performance, the data relates to a Canadian-based
institutional emerging markets portfolio managed by the same personnel of the
Sub-Advisor with similar investment objectives and policies to the Framlington
Emerging Markets Fund.
The trust account performance is provided by Micropal, an independent
research organization that is a recognized source of performance data in the UK
unit trust industry. The data is U.S. dollar adjusted on the basis of exchange
rates provided by Datastream using WM/Reuters closing rates. The performance
figures are net of brokerage commissions, actual investment advisory fees and
initial sales charges. The data assume the reinvestment of net income and
capital gain distributions. The trust account returns are calculated using
beginning offer and ending bid prices for periods ended December 31, 1996.
You should not rely on the following performance data of the Sub-Advisor's
client accounts as an indication of future performance of the Framlington Funds.
It should be noted that the management of the Funds will be affected by
regulatory requirements under the Investment Company Act of 1940, as amended
(the "1940 Act") and requirements of the Internal Revenue Code of 1986, as
amended, to qualify as a regulated investment company.
<TABLE>
<CAPTION>
PERIOD ENDED UK S&P HEALTHCARE
DECEMBER 31, 1996 HEALTH COMPOSITE INDEX
----------------- PORTFOLIO CAPITAL CHANGE
--------- --------------
<S> <C> <C>
1 Year.............................................................. 10.75% 18.48%
3 Years............................................................. 96.93% 100.49%
5 Years............................................................. 99.43% 45.60%
Inception on April 30, 1987......................................... 411.08% 239.64%
</TABLE>
Performance for the Health trust account is calculated on an offer-bid
basis; US Dollar adjusted total return net of all management fees but not
reflective of U.K. tax. Source: Micropal.
57
<PAGE>
S&P Healthcare Composite Index performance shows capital change in U.S.
Dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Datastream.
<TABLE>
<CAPTION>
PERIOD ENDED CANADIAN EMERGING MSCI EMERGING MARKETS
DECEMBER 31, 1996 MARKETS ACCOUNT FREE TOTAL RETURN
- ----------------- --------------- -----------------
<S> <C> <C>
1 Year..................................................... 5.16% 6.03%
Inception on November 1, 1994.............................. (3.68)% (12.37)%
</TABLE>
MSCI Emerging Markets Free Index performance shows total return in U.S.
dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Datastream.
The performance of the Canadian institutional account is measured by the
World Markets Company on a total return basis and has been re-calculated net of
the management fee charged the Canadian institutional account. The inception
date of the Canadian institutional account is November 1, 1994.
Indices
The S&P Healthcare Composite Index is the composite Healthcare section of
the S&P 500 Index as defined and tracked by S&P. This index covers securities
listed in the United States only.
The MSCI Emerging Markets Free Index is maintained by Morgan Stanley
Capital International and covers 26 countries and represents the investment
opportunities in emerging markets available to foreign investors. Total return
is calculated using the prices of the companies tracked and assumes the
reinvestment of dividends.
TRANSFER AGENT. First Data Investor Services Group, Inc. is the Funds'
transfer agent. The Transfer Agent 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
"Administrator") is the Funds' 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 its administration and
operations including overseeing the maintenance of financial records and fund
accounting. As compensation for its services for the Company, the Trust and
Framlington, State Street is entitled to receive fees, based on the aggregate
daily net assets of the Funds and certain other investment portfolios that are
advised by the Advisor for which it provides services, computed daily and
payable monthly at the annual rate of 0.113% on the first $2.8 billion of net
assets, plus 0.103% on the next $2.2 billion of net assets, plus 0.101% on the
next $2.5 billion of net assets, plus 0.095% on the next $2.5 billion of net
assets, plus 0.080% on the next $2.5 billion of net assets, plus 0.070% on all
net assets in excess of $12.5 billion (with a $75,000 minimum fee per annum in
the aggregate for all portfolios with respect to the Administrator). If the
assets of the Framlington Funds do not exceed $120 million, the ultimate rate
charged the Framlington Funds will be reduced by their pro-rata portion of the
total fees if calculated at the rates of 0.062% of the first $2.8 billion of net
assets, plus 0.052% of the next $2.2 billion of net assets, plus 0.050% of all
net assets in excess of $5 billion.
State Street has entered into a Sub-Administration Agreement with the
Distributor under which the Distributor provides certain administrative services
with respect to the Funds. State Street pays the Distributor a fee for these
services out of its own resources at no cost to the Funds.
CUSTODIAN AND SUB-CUSTODIAN. Comerica Bank ("Comerica" or the
"Custodian"), whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, Michigan 48226, is the Funds' custodian. No
compensation is paid to the Custodian for its custodial services. Comerica
receives a fee of 0.01% of the aggregate average daily net assets of the Funds
beneficially owned by Comerica and its customers for certain shareholder
services provided by Comerica to the Funds. State Street serves as the Funds'
sub-custodian.
58
<PAGE>
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 Service Plans with
respect to their Class A Shares and Service and Distribution Plans with respect
to their Class B and Class C 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 Shares. The Distributor also is paid a service fee
at an annual rate of 0.25% and a distribution fee at an annual rate of up to
0.75% of the value of the average daily net assets of the Funds' Class B and
Class C 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 Trust, the Company or Framlington as a whole and affecting your particular
Fund. You will not vote by Class unless expressly required by law or when the
Trustees or Directors determine the matter to be voted on affects only the
interests of the holders of a particular class of shares. The Trust, the
Company and Framlington 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 Trustee or Director. Under
Massachusetts law, it is possible that a shareholder may be personally liable
for the Trust's or Framlington's obligations. If a shareholder were required to
pay a debt of a Fund, however, the Trust and Framlington have committed to
reimburse the shareholder in full from their assets. The SAI contains more
information regarding voting rights.
Comerica 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 Trust, the Company
and Framlington.
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. The Accelerating Growth Fund,
Balanced Fund, Growth & Income Fund, Index 500 Fund and Small Company Growth
Fund pay dividends quarterly. The Framlington Emerging Markets Fund,
Framlington Healthcare Fund, Framlington International Growth Fund, Framlington
Global Financial Services Fund, International Equity Fund, Growth Opportunities
Fund, Micro-Cap Equity Fund, Multi-Season Growth Fund, NetNet Fund, Small-Cap
Value Fund and Value Fund pay dividends annually. The Real Estate Equity
Investment Fund pays dividends monthly. 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
59
<PAGE>
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.
In general, as long as each Fund meets the requirements to qualify as a
regulated investment company ("RIC") under Federal tax laws, it will not be
subject to Federal income tax on its income and capital gains that it
distributes in a timely manner to its shareholders. Each Fund intends to
qualify annually as a RIC. Even if it qualifies as a RIC, a Fund may still be
liable for an excise tax on income that is not distributed in accordance with a
calendar year requirement; the Funds intend to avoid the excise tax by making
timely distributions.
Generally, you will owe tax on the amounts distributed to you, regardless
of whether you receive these amounts in cash or reinvest them in additional Fund
shares. Shareholders not subject to tax on their income generally will not be
required to pay any tax on amounts distributed to them. Federal income tax on
distributions to an IRA or to a qualified retirement plan will generally be
deferred.
Capital gains derived from sales of portfolio securities held by a Fund
will generally be designated as long-term or short-term. Distributions from a
Fund's long-term capital gains are generally taxed at the long-term capital
gains rate regardless of how long you have owned shares in the Fund. Dividends
from other sources are generally taxed as ordinary income.
Dividends and capital gain distributions are generally taxable when you
receive them; however, if a distribution is declared in October, November or
December, but not paid until January of the following year, it will be
considered to be paid on December 31 in the year in which it was declared.
Shortly after the end of each year, you will receive from each Fund in which you
are a shareholder a statement of the amount and nature of the distributions made
to you during the year.
If you redeem, transfer or exchange Fund shares, you may have taxable gain
or a loss. If you hold Fund shares for six months or less, and during that time
you receive a capital gain dividend, any loss you realize on the sale of these
Fund shares will be treated as a long-term loss to the extent of the earlier
distribution.
Dividends and certain interest income earned from foreign securities by a
Fund may be subject to foreign withholding or other taxes. A Fund may be
permitted to pass on to its shareholders the right to a credit or deduction for
income or other tax credits earned from foreign investments and it intends to do
so if possible. These deductions or credits may be subject to tax law
limitations.
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 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 of the
QEF, regardless of whether received, and such amounts will be subject to the
various
60
<PAGE>
distribution requirements described above. The Funds may also elect to
mitigate the tax effects of owning PFIC stock by making an annual mark-to-
market election with respect to PFIC shares.
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.
YEAR 2000. The Funds' operations depend on the seamless functioning of
computer systems in the financial service industry, including those of its
service providers. Many computer software systems in use today cannot properly
process date-related information after December 31, 1999 because of the method
by which dates are encoded and calculated. This failure, commonly referred to
as the "Year 2000 Issue," could adversely affect the handling of securities
trades, pricing and account servicing for the Funds. The Funds have been
informed that their major service providers have made compliance with the Year
2000 Issue a high priority and are taking steps that they believe are reasonably
designed to address the Year 2000 Issue with respect to their computer systems.
There can be, however, no assurance that these steps will be successful, or that
interaction with other non-complying computer systems will not impair their
services at that time.
61
<PAGE>
CLASS K SHARES
Prospectus
OCTOBER 27, 1998
THE MUNDER EQUITY FUNDS
Accelerating Growth
Balanced
Growth & Income
Growth Opportunities
Index 500
International Equity
Micro-Cap Equity
Multi-Season Growth
Real Estate Equity Investment
Small-Cap Value
Small Company Growth
Value
THE MUNDER FRAMLINGTON FUNDS
Framlington Emerging Markets
Framlington Global Financial Services
Framlington Healthcare
Framlington International Growth
THE MUNDER INCOME FUNDS
Bond
Intermediate Bond
International Bond
U.S. Government Income
Michigan Triple Tax-Free Bond
Tax-Free Bond
Tax-Free Intermediate Bond
THE MUNDER MONEY MARKET FUNDS
Cash Investment
Tax-Free Money Market
U.S. Treasury Money Market
Prospectus begins on next page
<PAGE>
PROSPECTUS
Class K Shares
The Munder Funds Trust (the "Trust"), The Munder Funds, Inc. (the
"Company") and The Munder Framlington Funds Trust ("Framlington") are open-end
investment companies. This Prospectus describes the investment portfolios
offered by the Trust (the "Trust Funds"), the Company (the "Company Funds") and
Framlington ("Framlington Funds") described below (referred to as the "Funds"):
<TABLE>
<CAPTION>
<S> <C>
Munder Accelerating Growth Fund* Munder Framlington Global Financial Services Fund
Munder Balanced Fund Munder Framlington Healthcare Fund
Munder Growth & Income Fund Munder Framlington International Growth Fund
Munder Growth Opportunities Fund Munder Bond Fund
Munder Index 500 Fund Munder Intermediate Bond Fund
Munder International Equity Fund Munder International Bond Fund
Munder Micro-Cap Equity Fund Munder U.S. Government Income Fund
Munder Multi-Season Growth Fund Munder Michigan Triple Tax-Free Bond Fund**
Munder Real Estate Equity Investment Fund Munder Tax-Free Bond Fund
Munder Small-Cap Value Fund Munder Tax-Free Intermediate Bond Fund
Munder Small Company Growth Fund Munder Cash Investment Fund
Munder Value Fund Munder Tax-Free Money Market Fund
Munder Framlington Emerging Markets Fund Munder U.S. Treasury Money Market Fund
</TABLE>
* The Accelerating Growth Fund is closed to new investors.
** The Michigan Triple Tax-Free Bond Fund is offered only in the State
of Michigan.
Munder Capital Management (the "Advisor") serves as the investment advisor
of the Funds.
This Prospectus 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 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.
ALTHOUGH EACH OF THE CASH INVESTMENT FUND, TAX-FREE MONEY MARKET FUND AND
U.S. TREASURY MONEY MARKET FUND SEEKS TO MAINTAIN A CONSTANT NET ASSET VALUE OF
$1.00 PER SHARE, THERE CAN BE NO ASSURANCE THAT EACH FUND CAN DO SO ON A
CONTINUING BASIS.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES:
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS OCTOBER 27, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Fund Highlights
What are the key facts regarding the Funds?................. 3
Financial Information............................................ 6
Fund Choices
What Funds are offered?..................................... 31
Who may want to invest in the Funds?........................ 41
What are the Funds' investments and investment practices?... 41
What are the risks of investing in the Funds?............... 51
Performance
How is the Funds' performance calculated?................... 53
Where can I obtain performance data?........................ 54
Purchases of Shares
What price do I pay for shares?............................. 54
When can I purchase shares?................................. 54
How can I purchase shares?.................................. 54
Redemptions of Shares
What price do I receive for redeemed shares?................ 55
When can I redeem shares?................................... 55
How can I redeem shares?.................................... 55
When will I receive redemption amounts?..................... 55
Structure and Management of the Funds
How are the Funds structured?............................... 55
Who manages and services the Funds?......................... 55
What are my rights as a shareholder?........................ 61
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?........... 62
How will distributions be made?............................. 62
Are there tax implications of my investments in the Funds?.. 62
Additional Information........................................... 63
Appendix A....................................................... A-1
</TABLE>
2
<PAGE>
FUND HIGHLIGHTS
WHAT ARE THE KEY FACTS REGARDING THE FUNDS?
Q: What are the Funds' goals?
A:
. The Accelerating Growth Fund, Framlington Emerging Markets Fund,
Framlington Global Financial Services Fund, Framlington Healthcare Fund,
Framlington International Growth Fund, Growth Opportunities Fund,
International Equity Fund, Micro-Cap Equity Fund, Multi-Season Growth
Fund, Small-Cap Value Fund, Small Company Growth Fund and Value Fund
primarily seek to provide long-term capital appreciation.
. The Index 500 Fund seeks to provide price performance and income that is
comparable to the Standard & Poor's 500 Composite Stock Price Index ("S&P
500").
. The Balanced Fund, Growth & Income Fund and Real Estate Equity Investment
Fund seek to provide capital appreciation and current income.
. The Bond Fund seeks to provide a high level of current income with
capital appreciation as a secondary consideration.
. The Intermediate Bond Fund seeks to provide a competitive rate of return
which exceeds the inflation rate and the return provided by money market
instruments.
. The International Bond Fund seeks to provide a competitive total return
through a combination of current income and capital appreciation.
. The U.S. Government Income Fund seeks to provide high current income.
. The Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund seek to
provide current interest income exempt from Federal income taxes.
. The Michigan Triple Tax-Free Bond Fund seeks to provide as high a level
of current interest income exempt from regular Federal income taxes,
Michigan state income tax and Michigan intangibles tax as is consistent
with prudent investment management and preservation of capital.
. The Cash Investment Fund and U.S. Treasury Money Market Fund seek as high
a level of current interest income as is consistent with maintaining
liquidity and stability of principal.
. The Tax-Free Money Market Fund seeks to provide as high a level of
current interest income exempt from Federal income taxes as is consistent
with maintaining liquidity and stability of principal.
Q: What are the Funds' strategies?
A: BALANCED FUND
. This Fund allocates its assets primarily among three types of assets--
Equity Securities, Fixed Income Securities and Cash Equivalents. "Equity
Securities" include common stocks, preferred stocks, warrants and other
securities convertible into common stock. "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 rates. "Cash
Equivalents" are instruments which are highly liquid and virtually free
of investment risk.
3
<PAGE>
ACCELERATING GROWTH FUND, FRAMLINGTON EMERGING MARKETS FUND, FRAMLINGTON GLOBAL
FINANCIAL SERVICES FUND, FRAMLINGTON HEALTHCARE FUND, FRAMLINGTON INTERNATIONAL
GROWTH FUND, GROWTH & INCOME FUND, GROWTH OPPORTUNITIES FUND, INDEX 500 FUND,
INTERNATIONAL EQUITY FUND, MICRO-CAP EQUITY FUND, MULTI-SEASON GROWTH FUND,
REAL ESTATE EQUITY INVESTMENT FUND, SMALL-CAP VALUE FUND, SMALL COMPANY GROWTH
FUND AND VALUE FUND (THE "EQUITY FUNDS")
. These Funds invest primarily in Equity Securities.
INDEX 500 FUND
. This Fund invests primarily in Equity Securities and it normally will
hold the securities of at least 80% of the issuers in the S&P 500. The
Fund is managed through a "quantitative" or "indexing" investment
approach, which attempts to duplicate the investment composition and
performance of the S&P 500 through statistical procedures.
BOND FUND, INTERMEDIATE BOND FUND, INTERNATIONAL BOND FUND AND U.S. GOVERNMENT
INCOME FUND (THE "BOND FUNDS")
. These Funds, other than the U.S. Government Income Fund, invest primarily
in Fixed Income Securities.
. The U.S. Government Income Fund invests primarily in obligations of the
U.S. government and its agencies and instrumentalities.
MICHIGAN TRIPLE TAX-FREE BOND FUND, TAX-FREE BOND FUND AND TAX-FREE
INTERMEDIATE BOND FUND (THE "TAX-FREE FUNDS")
. The Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund invest
primarily in Municipal Obligations. "Municipal Obligations" are
obligations of states, territories and possessions of the United States
and the District of Columbia, and their political subdivisions, agencies,
instrumentalities and authorities, the interest on which is exempt from
regular Federal income tax.
. The Michigan Triple Tax-Free Bond Fund invests primarily in Michigan
Municipal Obligations. "Michigan Municipal Obligations" are municipal
obligations issued by the State of Michigan and its political
subdivisions, the interest on which is exempt from Federal income taxes,
Michigan state income tax and Michigan intangibles tax.
CASH INVESTMENT FUND, TAX-FREE MONEY MARKET FUND AND U.S. TREASURY MONEY MARKET
FUND (THE "MONEY MARKET FUNDS")
. These Funds invest solely in dollar-denominated debt securities with
remaining maturities of 13 months or less and maintain an average dollar-
weighted portfolio maturity of 90 days or less.
Each Fund implements a different investment strategy which is described in
this Prospectus.
4
<PAGE>
Q: What are the Funds' risks?
A: The following table summarizes the primary risks of investing in the
Funds:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FUND RISK
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Equity Funds and Balanced Fund Potential loss of investment due to changes in the stock
market in general, changes in the stock prices of particular
companies and perceptions about particular industries.
- -------------------------------------------------------------------------------------------------------------------
Bond Funds and Tax-Free Funds Potential loss of investment due to changes in the bond market
in general, in the prices of debt securities of particular
companies and in interest rates.
- -------------------------------------------------------------------------------------------------------------------
Money Market Funds Potential failure to maintain a $1.00 net asset value.
- -------------------------------------------------------------------------------------------------------------------
Framlington Emerging Markets Fund, Framlington Because of large investments in foreign securities, the Funds
Global Financial Services Fund, Framlington are riskier than domestic funds due to factors such as freezes
International Growth Fund, International Bond on convertibility of currency, changes in exchange rates,
Fund and International Equity Fund political instability and differences in accounting and
reporting standards.
- -------------------------------------------------------------------------------------------------------------------
Growth Opportunities Fund, Micro-Cap Equity Fund, Because of large investments in mid-capitalization,
Small Company Growth Fund and Small-Cap Value small-capitalization and/or emerging growth companies, the
Fund Funds are riskier than large-capitalization funds since such
companies typically have greater earnings fluctuations and
greater reliance on a few key customers than larger companies.
- -------------------------------------------------------------------------------------------------------------------
Real Estate Equity Investment Fund, Framlington These Funds concentrate their investments in single industries
Global Financial Services Fund and Framlington and could experience larger price fluctuations than funds
Healthcare Fund invested in a broader range of industries.
- -------------------------------------------------------------------------------------------------------------------
International Bond Fund, Michigan Triple Tax-Free These "non-diversified" Funds concentrate their investments in
Bond Fund and Tax-Free Intermediate Bond Fund fewer issuers than diversified funds, and could experience
larger price fluctuations than diversified funds.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Q: What are the options for investment in the Funds?
A: Each Equity, Bond and Tax-Free Fund offer five different investment options,
or classes: Class A, B, C, K and Y. The Money Market Funds offer Class A, K
and Y Shares. Class A, B, C and Y Shares are offered in other prospectuses.
Q: How do I buy and sell shares of the Funds?
A: Class K Shares of each Fund are available to customers ("Customers") of
banks and other institutions, and the immediate family members of such
Customers, that have entered into agreements with us to provide shareholder
services for Customers. You may purchase shares through such a bank or
financial institution.
Shares may be redeemed (sold back to the Fund) through your bank or financial
institution or, in some cases, through the free checkwriting privilege.
You may also acquire the Funds' shares by exchanging shares of the same class
of other funds of the Trust, the Company and Framlington, and exchange Fund
shares for shares of the same class of other funds of the Trust, the Company and
Framlington.
Q: What shareholder privileges do the Funds offer?
A:
. Free Checkwriting (certain Funds only--See "Redemption of Shares").
5
<PAGE>
Q: When and how are distributions made?
A: Dividend distributions are made from the dividends and interest earned on
investments after expenses. Dividends paid at least annually: Framlington
Emerging Markets Fund, Framlington Global Financial Services Fund, Framlington
Healthcare Fund, Framlington International Growth Fund, Growth Opportunities
Fund, International Equity Fund, Micro-Cap Equity Fund, Multi-Season Growth
Fund, Small-Cap Value Fund and Value Fund.
Dividends paid at least quarterly (if income is available): Accelerating
Growth Fund, Balanced Fund, Growth & Income Fund, Index 500 Fund, Small Company
Growth Fund and International Bond Fund.
Dividends paid monthly: Real Estate Equity Investment Fund, Bond Fund,
Intermediate Bond Fund, U.S. Government Income Fund, Michigan Triple Tax-Free
Bond Fund, Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund.
Dividends declared daily and paid monthly: Cash Investment Fund, Tax-Free
Money Market Fund, and U.S. Treasury Money Market Fund.
The Funds distribute capital gains at least annually. Unless you elect to
receive distributions in cash, we will use all dividends and capital gain
distributions of a Fund to purchase additional shares of that Fund.
Q: Who manages the Funds' assets?
A: Munder Capital Management is the Funds' investment advisor. The Advisor is
responsible for all purchases and sales of the securities held by the Funds
other than the Framlington Funds. The Advisor provides overall investment
management services for the Framlington Funds. Framlington Overseas Investment
Management Limited (the "Sub-Advisor") is responsible for all purchases and
sales of securities held by the Framlington Emerging markets, Healthcare and
International Growth Funds. The Advisor is responsible for purchases and sales
of domestic securities and the Sub-Advisor is responsible for sales of foreign
securities for the Framlington Global Financial Services Fund.
FINANCIAL INFORMATION
SHAREHOLDER TRANSACTION EXPENSES(1)
The purpose of this table is to assist you in understanding the expenses a
shareholder in the Funds will bear directly.
<TABLE>
<S> <C>
Maximum Sales Charge on Purchase (as a % of Offering Price).................................. None
Sales Charges Imposed on Reinvested Dividends................................................ None
Maximum Deferred Sales Charge................................................................ None
Redemption Fees(2)........................................................................... None
Exchange Fees................................................................................ None
</TABLE>
- --------------------------
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.
6
<PAGE>
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 Trustees,
Directors, auditors, legal counsel and service providers (such as the Advisor)
and registration fees. The fees shown below are based on fees for the Funds'
past fiscal year, except (i) the fees for the Index 500 Fund, Mid- Cap Growth
Fund, Real Estate Equity Investment Fund and Value Fund have been restated to
reflect the discontinuation of voluntary expense reimbursements effective as of
the date of this Prospectus, (ii) the fees for the Index 500 Fund and the Multi-
Season Growth Fund reflect an anticipated voluntary advisory fee waiver for the
current fiscal year and (iii) the fees for the Micro-Cap Equity Fund, Small-Cap
Value Fund, Growth Opportunities Fund, International Bond Fund and the
Framlington Funds are based on estimated operating expenses for the current
fiscal year and reflect anticipated voluntary expense reimbursements for the
Micro-Cap Equity Fund , Framlington Healthcare Fund, Growth Opportunities Fund
and Framlington Global Financial Services Fund. [update]
<TABLE>
<CAPTION>
ACCELERATING GROWTH & GROWTH INDEX
ANNUAL FUND OPERATING EXPENSES GROWTH BALANCED INCOME OPPORTUNITIES 500
(AS A % OF AVERAGE NET ASSETS) FUND FUND FUND FUND FUND
- ----------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Advisory Fees..................................... .75% .65% .75% .75% .07%*
Shareholder Servicing Fees........................ .25% .25% .25% .25% .25%
Other Expenses+................................... .20% .32% .20% .40%++ .22%
---- ---- ---- ---- ----
Total Fund Operating Expenses+.................... 1.20% 1.22% 1.30% 1.40%++ .54%*
----- ----- ----- ------- -----
</TABLE>
<TABLE>
<CAPTION>
MICRO- MULTI- REAL ESTATE SMALL-
INTERNATIONAL CAP SEASON EQUITY CAP
ANNUAL FUND OPERATING EXPENSES EQUITY EQUITY GROWTH INVESTMENT VALUE
(AS A % OF AVERAGE NET ASSETS) FUND FUND FUND FUND FUND
- ----------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Advisory Fees..................................... .75% 1.00% .75%* .74% .75%
Shareholder Servicing Fees........................ .25% .25% .25% .25% .25%
Other Expenses+................................... .26% .25%++ .25% .11% .38%
---- ---- ---- ---- ----
Total Fund Operating Expenses+.................... 1.26% 1.50%++ 1.25%* 1.10% 1.38%
===== ===== ====== ===== =====
</TABLE>
<TABLE>
<CAPTION>
FRAMLINGTON
SMALL FRAMLINGTON GLOBAL
COMPANY EMERGING FINANCIAL FRAMLINGTON
ANNUAL FUND OPERATING EXPENSES GROWTH VALUE MARKETS SERVICES HEALTHCARE
(AS A % OF AVERAGE NET ASSETS) FUND FUND FUND FUND FUND
- ----------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Advisory Fees..................................... .75% .74% 1.25% .75% 1.00%
Shareholder Servicing Fees........................ .25% .25% .25% .25% .25%
Other Expenses+................................... .22% .28% .29% .50%++ .30%++
---- ---- ---- ---- ----
Total Fund Operating Expenses+.................... 1.22% 1.27% 1.79% 1.50%++ 1.55%++
===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
FRAMLINGTON U.S.
INTERNATIONAL INTERMEDIATE INTERNATIONAL GOVERNMENT
ANNUAL FUND OPERATING EXPENSES GROWTH BOND BOND BOND INCOME
(AS A % OF AVERAGE NET ASSETS) FUND FUND FUND FUND FUND
- ------------------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Advisory Fees..................................... 1.00% .50% .50% .50% .50%
Shareholder Servicing Fees........................ .25% .25% .25% .25% .25%
Other Expenses+................................... .30% .21% .18% .35% .21%
---- ---- ---- ---- ----
Total Fund Operating Expenses+.................... 1.55% .96% .93% 1.10% .96%
===== ==== ==== ===== ====
</TABLE>
<TABLE>
<CAPTION>
MICHIGAN TAX-FREE TAX-FREE
TRIPLE TAX- TAX-FREE INTERMEDIATE CASH MONEY
ANNUAL FUND OPERATING EXPENSES FREE BOND BOND BOND INVESTMENT MARKET
(AS A % OF AVERAGE NET ASSETS) FUND FUND FUND FUND FUND
- ----------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Advisory Fees..................................... .50% .50% .50% .35% .35%
Shareholder Servicing Fees........................ .25% .25% .25% .15% .15%
Other Expenses+................................... .13% .20% .18% .20% .18%
---- ---- ---- ---- ----
Total Fund Operating Expenses+.................... .88% .95% .93% .70% .68%
==== ==== ==== ==== ====
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES U.S. TREASURY MONEY
(AS A % OF AVERAGE NET ASSETS) MARKET FUND
- ----------------------------- -----------
<S> <C>
Advisory Fees.......................... .35%
Shareholder Servicing Fees............. .15%
Other Expenses......................... .19%
----
Total Fund Operating Expenses.......... .69%
====
</TABLE>
- -----------------------------
* The Advisor expects to voluntarily waive a portion of its advisory fees for
the current fiscal year. Without waiver, the ratio of advisory fees to
average net assets would be 1.00% for the Multi-Season Growth Fund and .15%
for the Index 500 Fund and total fund operating expenses would be at 1.50%
for the Multi-Season Growth Fund and .62% for the Index 500 Fund.
+ After expense reimbursements, if any.
++ The Advisor expects to voluntarily reimburse the Funds for certain
operating expenses. In the absence of such expense reimbursements, it is
estimated that total fund operating expenses would be as follows: 1.76% for
the Framlington Healthcare Fund, 1.67% for the Framlington Global Financial
Services Fund, 1.53% for the Growth Opportunities Fund and 1.60% for the
Micro-Cap Equity Fund.
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. 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>
1 YEAR 3 YEAR 5 YEAR 10 YEARS
------ ------ ------ --------
<S> <C> <C> <C> <C>
Accelerating Growth Fund $12 $38 $66 $145
Balanced Fund $12 $39 $67 $148
Growth & Income Fund $12 $38 $66 $145
Growth Opportunities Fund $14 $45
Index 500 Fund $ 6 $17 $30 $ 68
International Equity Fund $13 $40 $69 $152
Micro-Cap Equity Fund $15 $47 $82 $179
Multi-Season Growth Fund $13 $40 $69 $151
Real Estate Equity Investment Fund $14 $43 $74 $162
Small-Cap Value Fund $14 $44 $76 $166
Small Company Growth Fund $12 $39 $67 $148
Value Fund $13 $40 $70 $153
Framlington Emerging Markets Fund $18 $56 $97 $211
Framlington Global Financial Services Fund $15 $48
Framlington Healthcare Fund $16 $49 $84 $185
Framlington International Growth Fund $16 $49 $84 $185
Bond Fund $10 $31 $53 $118
Intermediate Bond Fund $ 9 $30 $51 $114
International Bond Fund $11 $35 $61 $134
U.S. Government Income Fund $10 $31 $53 $118
Michigan Triple Tax-Free Bond Fund $ 9 $28 $49 $108
Tax-Free Bond Fund $10 $30 $53 $117
Tax-Free Intermediate Bond Fund. $ 9 $30 $51 $114
Cash Investment Fund $ 7 $22 $39 $ 87
Tax-Free Money Market Fund $ 7 $22 $38 $ 85
U.S. Treasury Money Market Fund $ 7 $22 $38 $ 86
</TABLE>
8
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights were audited by Ernst & Young LLP,
independent auditors, except that, for periods ended prior to June 30, 1995 for
the Multi-Season Growth Fund, such financial highlights were audited by another
independent auditor. This information should be read in conjunction with the
Funds' most recent Annual Reports, which are incorporated by reference into the
SAI. You may obtain the Annual Reports without charge by calling (800) 438-5789.
<TABLE>
<CAPTION>
ACCELERATING GROWTH FUND(A)
------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(H) 6/30/96 6/30/95(D) 2/28/95(D) 2/28/94 2/28/93
--------- ---------- ------- ---------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period......................
Income from investment operations:
Net investment income/(loss)............................
Net realized and unrealized gain/(loss) on investments..
Total from investment operations........................
Less distributions:
Dividends from net investment income....................
Distributions from net realized gains...................
Total distributions.....................................
Net asset value, end of period............................
Total return(b).........................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)....................
Ratio of operating expenses to average net assets ......
Ratio of net investment income/(loss) to average net
assets..................................................
Portfolio turnover rate.................................
Ratio of operating expenses to average net assets w/o
waivers.................................................
Average commission rate paid(f).........................
</TABLE>
- -----------------------------------------
(a) The Munder Accelerating Growth Fund Class K Shares commenced operations on
November 23, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Amount represents less than $0.01 per share.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately represents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
9
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND(A)
-----------------------------------------------------------------
YEAR YEAR PERIOD PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(G) 6/30/96(G) 6/30/95(D) 2/28/95(E) 2/28/94(E)
-------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period......................
Income from investment operations:
Net investment income/(loss)............................
Net realized and unrealized gain/(loss) on investments..
Total from investment operations........................
Less distributions:
Dividends from net investment income....................
Distributions from net realized gains...................
Total distributions.....................................
Net asset value, end of period............................
Total return(b).........................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)....................
Ratio of operating expenses to average net assets ......
Ratio of net investment income/(loss) to average net
assets...................................................
Portfolio turnover rate..................................
Ratio of operating expenses to average net assets w/o
waivers..................................................
Average commission rate paid(f)..........................
</TABLE>
- ----------------------------------------------
(a) The Munder Balanced Fund Class K Shares commenced operations on April 16,
1993.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
10
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND (A)
----------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(D) 2/28/95(E)
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......................
Income from investment operations:
Net investment income/(loss)............................
Net realized and unrealized gain/(loss) on investments..
Total from investment operations........................
Less distributions:
Dividends from net investment income....................
Distributions from net realized gains...................
Total distributions.....................................
Net asset value, end of period............................
Total return(b).........................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)....................
Ratio of operating expenses to average net assets ......
Ratio of net investment income/(loss) to average net
assets..................................................
Portfolio turnover rate.................................
Ratio of operating expenses to average net assets w/o
waivers.................................................
Average commission rate paid(g).........................
</TABLE>
- -----------------------------------
(a) The Munder Growth & Income Fund Class K Shares commenced operations on July
5, 1994.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Amount represents less than $0.01 per share.
11
<PAGE>
<TABLE>
<CAPTION>
GROWTH
OPPORTUNITES FUND(A)
-------------------------
PERIOD
ENDED
6/30/98
-------------------------
<S> <C>
Net asset value, beginning of period......................
Income from investment operations:
Net investment income/(loss)............................
Net realized and unrealized gain/(loss) on investments..
Total from investment operations........................
Less distributions:
Dividends from net investment income....................
Distributions from net realized gains...................
Total distributions.....................................
Net asset value, end of period............................
Total return(b).........................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)....................
Ratio of operating expenses to average net assets ......
Ratio of net investment income/(loss) to average net
assets.................................................
Portfolio turnover rate.................................
Ratio of operating expenses to average net assets w/o
waivers...............................................
Average commission rate paid(g).........................
</TABLE>
- -------------------------------
12
<PAGE>
<TABLE>
<CAPTION>
INDEX 500 FUND(A)
------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96(D) 6/30/95(E) 2/28/95(D,F) 2/28/94(E) 2/28/93
-------- ------- ---------- ---------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period......................
Income from investment operations:
Net investment income/(loss)............................
Net realized and unrealized gain/(loss) on investments..
Total from investment operations........................
Less distributions:
Dividends from net investment income....................
Distributions from net realized gains...................
Total distributions.....................................
Net asset value, end of period............................
Total return(b).........................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)....................
Ratio of operating expenses to average net assets ......
Ratio of net investment income/(loss) to average net
assets................................................
Portfolio turnover rate.................................
Ratio of operating expenses to average net assets w/o
waivers...............................................
Average commission rate paid(g).........................
</TABLE>
- ---------------------------------------
(a) The Munder Index 500 Fund Class K Shares commenced operations on December 7,
1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(e) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Average commission rate paid per share of securities purchased and sold by
the fund.
13
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND(A)
-----------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(D) 6/30/96(D) 6/30/95(E) 2/28/95(D,F) 2/28/94 2/28/93
------- ---------- ---------- ---------- ------------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period......................
Income from investment operations:
Net investment income/(loss)............................
Net realized and unrealized gain/(loss) on investments..
Total from investment operations........................
Less distributions:
Dividends from net investment income....................
Distributions from net realized gains...................
Total distributions.....................................
Net asset value, end of period............................
Total return(b).........................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)....................
Ratio of operating expenses to average net assets ......
Ratio of net investment income/(loss) to average net
assets..................................................
Portfolio turnover rate.................................
Ratio of operating expenses to average net assets w/o
waivers.................................................
Average commission rate paid(g).........................
</TABLE>
- -----------------------------------
(a) The Munder International Equity Fund Class K Shares commenced operations on
November 23, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(e) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
14
<PAGE>
<TABLE>
<CAPTION>
MICRO-CAP
EQUITY FUND
-----------------
YEAR PERIOD
ENDED ENDED
6/30/98 6/30/97
-------- -------
<S> <C> <C>
Net asset value, beginning of period....................
Income from investment operation:
Net investment loss...................................
Net realized and unrealized gain on investments.......
Total from investment operations......................
Less distributions:
Dividends from net investment income..................
Distributions from net realized gains.................
Total distributions...................................
Net asset value, end of period..........................
Total return (b)......................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)..................
Ratio of operating expenses to average net assets ....
Ratio of net investment loss to average net assets....
Portfolio turnover rate...............................
Ratio of operating expenses to average net assets w/o
expenses reimbursed...................................
Average commission rate paid(d).......................
</TABLE>
- --------------------
(a) The Munder Micro-Cap Equity Fund Class K Shares commenced operations on
December 31, 1996. The Munder Mid-Cap Growth Fund Class K Shares commenced
operations on October 2, 1995.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
15
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND(A)
----------------------------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/96(E) 6/30/95(D,G)
------- ---------- --------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period....................
Income from investment operation:
Net investment loss...................................
Net realized and unrealized gain on investments.......
Total from investment operations......................
Less distributions:
Dividends from net investment income..................
Distributions from net realized gains.................
Total distributions...................................
Net asset value, end of period........................
Total return (b)......................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)..................
Ratio of operating expenses to average net assets ....
Ratio of net investment loss to average net assets....
Portfolio turnover rate...............................
Ratio of operating expenses to average net assets w/o
expenses reimbursed...................................
Average commission rate paid(f).......................
</TABLE>
________________________________________
(a) The Munder Multi-Season Growth Fund Class K Shares commenced operations on
June 23, 1995.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(f) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
(h) Amount represents less than $0.01 per share.
16
<PAGE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY SMALL-CAP
INVESTMENT FUND(A) VALUE FUND(A)
--------------------------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/98 6/30/97(E)
---------- --------- -------- ---------
<S> <C> <C> <C>
Net asset value, beginning of period....................
Income from investment operations:
Net investment income...................................
Net realized and unrealized gain on investments.......
Total from investment operations......................
Less distributions:
Dividends from net investment income..................
Distributions from net realized gains.................
Distributions from paid-in capital
Total distributions...................................
Net asset value, end of period..........................
Total return (b)......................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)..................
Ratio of operating expenses to average net assets ....
Ratio of net investment income to average net assets..
Portfolio turnover rate...............................
Ratio of operating expenses to average net assets w/o
waivers and/or expenses reimbursed....................
Average commission rate paid(d).......................
</TABLE>
- --------------------
(a) The Munder Real Estate Equity Investment Fund Class K Shares commenced
operations on October 3, 1996. The Munder Small-Cap Value Fund Class K
Shares commenced operations on December 31, 1996.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
17
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND(A)
---------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(G) 6/30/96(G) 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93
------- ---------- ---------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period.................................
Income from investment operations:
Net investment loss..................
Net realized and unrealized
gain/(loss) on investments...........
Total from investment operations.....
Less distributions:
Dividends from net investment
income...............................
Distributions from net realized
gains................................
Total distributions..................
Net asset value, end of
period.................................
Total return (b).....................
Ratio to average net assets/
supplemental data:
Ratio of net investment loss to
average net assets...................
Portfolio turnover rate..............
Ratio of operating expenses to average
net assets w/o waivers...............
Average commission rate paid(f)......
</TABLE>
____________________________
(a) The Munder Small Company Growth Fund Class K Shares commenced operations on
November 23, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
18
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND(A)
------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/96(E)
------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of
period...........................................
Income from investment operations:
Net investment income..........................
Net realized and unrealized gain on
investments....................................
Total from investment operations...............
Less distributions:
Dividends from net investment
income.........................................
Distributions from net realized
gains..........................................
Total distributions............................
Net asset value, end of period...................
Total return (b)...............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)...........
Ratio of operating expenses to average net
assets ........................................
Ratio of net investment income to average net
assets.........................................
Portfolio turnover rate........................
Ratio of operating expenses to average net assets
w/o waivers and/or expenses reimbursed.........
Average commission rate paid(d)................
</TABLE>
_______________________________________
(a) The Munder Value Fund Class K Shares commenced operations on November 30,
1995.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
19
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON FRAMLINGTON FRAMLINGTON FRAMLINGTON
EMERGING HEALTHCARE INTERNATIONAL GROWTH GLOBAL FINANCIAL
MARKETS FUND(A) FUND(A) FUND(A) SERVICES FUND
------------------------------------------------------------------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/98 6/30/97 6/30/98 6/30/97(E) 6/30/98
------- ---------- ------- ------- ------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period..................................
Income from investment operations:
Net investment income/(loss)..........
Net realized and unrealized gain on
investments...........................
Total from investment operations......
Less distributions:
Dividends from net investment income..
Distributions from net realized
gains.................................
Total distributions...................
Net asset value, end of period..........
Total return (b)......................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's)................................
Ratio of operating expenses to
average net assets....................
Ratio of net investment income/(loss)
to average net assets.................
Portfolio turnover rate...............
Ratio of operating expenses to
average net assets w/o expenses
reimbursed............................
Average commission rate paid(d).......
</TABLE>
- ---------------------------------------
(a) The Munder Framlington Emerging Markets Fund Class K Shares commenced
operations on January 10, 1997. The Munder Framlington Healthcare Fund Class K
Shares commenced operations on April 1, 1997. The Munder Framlington
International Growth Fund Class K Shares commenced operations on January 10,
1997.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
20
<PAGE>
<TABLE>
<CAPTION>
BOND FUND(A)
--------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(E) 2/28/95(D,F) 2/28/94 2/28/93(E)
------- ------- ------- ---------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period................................
Income from investment operations:
Net investment income...............
Net realized and unrealized
gain/(loss) on investments..........
Total from investment operations....
Less distributions:
Dividends from net investment
income..............................
Distributions from net realized
gains...............................
Total Distributions.................
Net asset value, end of period........
Total Return (b)....................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's)..............................
Ratio of operating expenses to
average net assets..................
Ratio of net investment income to
average net assets..................
Portfolio turnover rate.............
Ratio of operating expenses to
average net assets w/o waivers......
</TABLE>
- ------------------------------------------
(a) The Munder Bond Fund Class K Shares commenced operations on November 23,
1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(e) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
21
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND(A)
------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93
------- ---------- ------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period................................
Income from investment operations:
Net investment income...............
Net realized and unrealized
gain/(loss) on investments..........
Total from investment operations....
Less distributions:
Dividends from net investment
income..............................
Distributions from net realized
gains...............................
Total Distributions.................
Net asset value, end of period........
Total Return (b)....................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's)..............................
Ratio of operating expenses to
average net assets..................
Ratio of net investment income to
average net assets..................
Portfolio turnover rate.............
Ratio of operating expenses to
average net assets w/o waivers......
</TABLE>
- --------------------------------------
(a) The Munder Intermediate Bond Fund Class K Shares commenced operations on
November 20, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
22
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL U.S. GOVERNMENT
BOND FUND(A) INCOME FUND(A)
------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/98 6/30/97 6/30/96(F) 6/30/95(D) 2/28/95(E)
------- ------- ------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period................................
Income from investment operations:
Net investment income...............
Net realized and unrealized
gain/(loss) on investments..........
Total from investment operations....
Less distributions:
Dividends from net investment
income..............................
Distributions from net realized
gains...............................
Total distributions.................
Net asset value, end of period........
Total return (b)....................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's)..............................
Ratio of operating expenses to
average net assets..................
Ratio of net investment income to
average net assets..................
Portfolio turnover rate.............
Ratio of operating expenses to
average net assets w/o waivers......
</TABLE>
- --------------------------------------------
(a) The Munder International Bond Fund Class K Shares commenced operations on
March 25, 1997. The Munder U.S. Government Income Fund Class K Shares commenced
operations on July 5, 1994.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(g) Amount represents less than $0.01 per share.
23
<PAGE>
<TABLE>
<CAPTION>
MICHIGAN TRIPLE TAX-FREE BOND FUND(A)
----------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(D) 6/30/96(D) 6/30/95(D,E) 2/28/95(D,F) 2/28/94
------- ---------- ---------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period................................
Income from investment operations:
Net investment income...............
Net realized and unrealized
gain/(loss) on investments..........
Total from investment operations....
Less distributions:
Dividends from net investment
income..............................
Distributions from net realized
gains...............................
Total distributions.................
Net asset value, end of period........
Total return (b)....................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's)..............................
Ratio of operating expenses to
average net assets..................
Ratio of net investment income to
average net assets..................
Portfolio turnover rate.............
Ratio of operating expenses to
average net assets w/o waivers
and/or expenses reimbursed..........
</TABLE>
- --------------------
(a) The Munder Michigan Triple Tax-Free Bond Fund Class K Shares commenced
operations on January 3, 1994.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(e) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Amount represents less than $0.01 per share.
24
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE BOND FUND(A)
-----------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(D,F) 2/28/95(E)
------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period................................
Income from investment operations:
Net investment income...............
Net realized and unrealized
gain on investments.................
Total from investment operations....
Less distributions:
Dividends from net investment
income..............................
Distributions from net realized
gains...............................
Total distributions.................
Net asset value, end of period........
Total return (b)....................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's)..............................
Ratio of operating expenses to
average net assets..................
Ratio of net investment income to
average net assets..................
Portfolio turnover rate.............
Ratio of operating expenses to
average net assets w/o waivers
and/or expenses reimbursed..........
</TABLE>
- ---------------------------------------
(a) The Munder Tax-Free Bond Fund Class K Shares commenced operations on July 5,
1994.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the monthly average shares
method, which more appropriately presents the per share data for the period
since the use of the undistributed net investment income method did not accord
with the results of operations.
25
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE BOND FUND(A)
---------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93
------- --------- --------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income........................
Net realized and unrealized gain/(loss) on
investments..................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment income to average net
assets.......................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers...........................
</TABLE>
- ------------------------------------
(a) The Munder Tax-Free Intermediate Bond Fund Class K Shares commenced
operations on February 9, 1987.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations
26
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE BOND FUND(A)
----------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
7/31/92(G) 7/31/91(G) 7/31/90(G) 7/31/89(G) 7/31/88(G) 7/31/87(G)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income........................
Net realized and unrealized gain/(loss) on
investments..................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment income to average net
assets.......................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers...........................
</TABLE>
- --------------------------------------------
(a) The Munder Tax-Free Intermediate Bond Fund Class K Shares commenced
operations on February 9, 1987.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
27
<PAGE>
<TABLE>
<CAPTION>
CASH INVESTMENT FUND(A)
-----------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93(E)
------- ------- ------- ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income........................
Net realized and unrealized gain/(loss) on
investments..................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment income to average net
assets.......................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers...........................
</TABLE>
- ---------------------------------------------
(a) The Munder Cash Investment Fund Class K Shares commenced operations on
November 23, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
28
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND(A)
---------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93
------- ------- ------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income........................
Net realized and unrealized gain/(loss) on
investments..................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment income to average net
assets.......................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers...........................
</TABLE>
- ----------------------------------------
(a) The Munder Tax-Free Money Market Fund Class K Shares commenced operations on
November 23, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
29
<PAGE>
<TABLE>
<CAPTION>
US TREASURY MONEY MARKET FUND(A)
---------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93
------- ------- ------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income........................
Net realized and unrealized gain/(loss) on
investments..................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment income to average net
assets.......................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers...........................
</TABLE>
- ---------------------------------------------
(a) The Munder U.S. Treasury Money Market Fund Class K Shares commenced
operations on November 25, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
30
<PAGE>
FUND CHOICES
WHAT FUNDS ARE OFFERED?
This Prospectus offers Class K Shares of the Funds described below. This
section summarizes each Fund's principal investments. The sections entitled
"What are the Funds' Investments and Investment Practices?" and "What are the
Risks of Investing in the Funds?" and the SAI give more information about the
Funds' investment techniques and risks. Capitalized terms are explained in the
section entitled "What are the Funds' Investments and Investment Practices?"
ACCELERATING GROWTH FUND
GOALS 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:
. the potential for accelerated earnings growth
. the maintenance of a substantial competitive advantage
. a focused management team
. a stable balance sheet.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
The Fund is closed to new investments.
BALANCED FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide an
attractive investment return through a combination of growth of capital and
current income. The Fund will allocate its assets among three asset groups:
Equity Securities, Fixed Income Securities and Cash Equivalents.
. The Fund normally will invest at least 25% of its assets in Fixed
Income Securities and no more than 75% of its assets in Equity
Securities. The Fund will notify shareholders at least 30 days before
changing this policy.
The Advisor will allocate the Fund's assets to the three asset groups based
on its view of the following factors, among others:
. general market and economic conditions and trends
. interest rates and inflation rates
. fiscal and monetary developments
. long-term corporate earnings growth.
The Advisor will try to take advantage of changing economic conditions by
adjusting the ratio of Equity Securities to Fixed Income Securities or Cash
Equivalents. For example, if the Advisor believes that rapid economic growth
will lead to better corporate earnings in the future, then it might increase the
Fund's Equity Securities holdings and reduce its Fixed Income Securities and
Cash Equivalents holdings.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
31
<PAGE>
GROWTH & INCOME FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide capital
appreciation and current income. It primarily invests in 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 Old MCM, Inc.
("MCM"), the predecessor to the Advisor, since January 1987.
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.
INDEX 500 FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide performance
and income that is comparable to the S&P 500. The S&P 500 is an index of 500
stocks which emphasize large capitalization companies. See Appendix A for more
information on the S&P 500. The Fund will normally hold the securities of at
least 400 of the stocks in the S&P 500.
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The Fund will try to achieve a correlation between the performance of its
portfolio and that of the S&P 500 of at least .95. A correlation of 1.0 would
mean that changes in the Fund's price mirror exactly changes in the S&P 500.
The timing of purchases and redemptions, changes in securities markets, level of
the Fund's assets and other factors affect the Fund's ability to exactly track
the S&P 500's performance.
The Fund is managed through the use of a "quantitative" investment approach
and tries to mirror the composition and performance of the S&P 500 through
statistical procedures. The Advisor does not use traditional methods of fund
investment management, i.e., it does not select stocks on the basis of economic,
financial and market analysis. Because the Fund pays brokerage costs and other
fees, its return may be lower than that of the S&P 500.
PORTFOLIO MANAGEMENT. Todd B. Johnson and Kenneth A. Schluchter III
jointly manage the Fund. Mr. Johnson, a Chief Investment Officer of the
Advisor, has served as the portfolio manager of the Fund since July 1992. Mr.
Schluchter, who has managed the Fund since June 1997, was previously a Systems
Developer and Data Analyst for Compuware Incorporated (1993-1995) and a Business
Analyst for Central Transport Incorporated (1989-1993).
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 (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.
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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.
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 of companies with market capitalizations of 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 April 1993.
Mr. Barr is the Senior Vice President and Director of Research of the Advisor.
From April 1988 to April 1993 he held similar positions with MCM. Mr. Munder is
the Chairman of the Advisor.
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 invests 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
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. 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 and Robert E. Crosby jointly manage
the Fund. Mr. Hoglund has managed the Fund since October 1996. Mr. Hoglund
formerly was the primary analyst of the Fund (October 1994 to October 1996).
Mr. Crosby has managed the Fund since March 1998. Mr. Crosby formerly was the
primary analyst of the Fund (1996-1998). Mr. Crosby has been with the Advisor
since 1993, and also serves as portfolio manager for separately managed
institutional accounts.
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 the company 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, Edward Eberle and Brian Wall jointly
manage the Fund. Mr. Seizert, a Chief Executive 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 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. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge Capital Management, Inc. ("Woodbridge") (1994-1995) and an Assistant
Vice President in Equity Research for Merrill Lynch, Pierce Fenner & Smith in
New York (1992-1994).
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
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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 from 1995 to 1996. Prior
to joining the Advisor in 1995, Mr. Wilk was a Senior Equity Research Analyst
for the Fund at Woodbridge. Mr. Gura has managed the Fund since March 1997.
Prior to joining the Advisor in 1995, Mr. Gura was a Vice President and Senior
Equity Analyst for the Fund at Woodbridge (1994-1995) and an investment officer
for Manufacturers National Bank Trust Department (1989-1994).
VALUE FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide
long-term capital appreciation, its secondary goal is to provide income. 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 the company 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, Edward Eberle and Brian Wall jointly
manage the Fund. Mr. Seizert, a Chief Executive 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 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. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge (1994-1995) and an Assistant Vice President in Equity Research for
Merrill Lynch, Pierce Fenner & Smith in New York (1992-1994).
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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. A committee of professional portfolio managers
employed by the Sub-Advisor makes investment decisions for the Fund. William
Calvert heads the committee.
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.
PORTFOLIO MANAGEMENT. A committee of professional managers employed by the
Advisor or the Sub-Advisor makes decisions for the Fund.
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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 these 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.
BOND FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide a
high level of current income, its secondary goal is 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 fifteen 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 Manager of the Advisor or MCM since 1995. Prior to
joining the Advisor, he was a Vice President and Senior Fund Manager for First
of America Investment Corp.
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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 MANAGEMENT. 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 Foreign 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 fifteen 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 or MCM, has managed the Fund since October 1996. Prior
to joining MCM 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 generally will be between
six and fifteen 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.
MICHIGAN TRIPLE TAX-FREE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide as high a
level of current interest income exempt from regular Federal income taxes,
Michigan state income and Michigan intangibles tax as is consistent with prudent
investment management and preservation of capital.
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. Except during temporary defensive periods, at least 80% of the Fund's
net assets are invested in Michigan Municipal Obligations.
. The Fund will invest primarily in Michigan Municipal Obligations which
have remaining maturities of between three and thirty years.
. The Fund's dollar-weighted average maturity will generally be between
ten and twenty years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank
(1985-1993).
TAX-FREE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a high level
of current interest income exempt from Federal income taxes and to generate as
competitive a long-term rate of return as is consistent with prudent investment
management and preservation of capital.
. Under normal market conditions, at least 65% of the Fund's assets will
be invested in Municipal Obligations.
. Except during temporary defensive periods, at least 80% of the Fund's
net assets will be invested in Municipal Obligations whose interest is
exempt from regular Federal income tax. This fundamental policy may
only be changed with shareholder approval.
. The Fund invests primarily in intermediate-term and long-term
Municipal Obligations which have remaining maturities of between three
and thirty years.
. The Fund's dollar-weighted average maturity will generally be between
ten and twenty years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank
(1985-1993).
TAX-FREE INTERMEDIATE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a
competitive level of current interest income exempt from regular Federal income
taxes and a total return which, over time, exceeds the rate of inflation and the
return provided by tax-free money market instruments.
. Under normal market conditions, at least 65% of the Fund's net assets
will be invested in Municipal Obligations.
. Except during temporary defensive periods, at least 80% of the Fund's
assets will be invested in Municipal Obligations whose interest is
exempt from regular Federal income tax.
. The Fund invests in Michigan Municipal Obligations from time to time.
. The Fund generally buys obligations with remaining maturities of ten
years or less.
. The Fund's dollar-weighted average maturity will generally be between
three and eight years, but may be up to ten years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank
(1985-1993).
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.
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. The Fund invests in a broad range of short-term, high quality, U.S.
dollar-denominated instruments.
TAX-FREE MONEY MARKET FUND
. The Fund's goal is to provide as high a level of current interest
income exempt from Federal income taxes as is consistent with
maintaining liquidity and stability of principal.
. The Fund invests substantially all of its assets in short-term, U.S.
dollar-denominated Municipal Obligations, the interest on which is
exempt from regular Federal income tax.
. Under normal market conditions, the Fund will invest at least 80% of
its net assets in Municipal Obligations.
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.
WHO MAY WANT TO INVEST IN THE FUNDS?
Equity Funds
These Funds are designed for investors who desire potentially high capital
appreciation and who can accept short-term variations in return for potentially
greater returns over the long term. In general, the greater the risk, the
greater the potential reward. Investors who have a short time horizon, who
desire a high level of income or who are conservative in their investment
approach may wish to invest in other portfolios offered by the Trust and the
Company.
Bond Funds and Tax-Free Funds
These Funds are designed for investors who desire potentially higher
returns than more conservative fixed rate investments or money market funds and
who seek current income. The Tax-Free Funds may be desirable for investors who
seek primarily tax-exempt income. When you choose among the Funds, you should
consider both the expected yield of the Funds and potential changes in each
Fund's share price. The yield and potential price changes of a Fund's shares
depend on the quality and maturity of the obligations in its portfolio, as well
as on other market conditions.
Money Market Funds
These Funds are designed for investors who desire a high level of income
and liquidity and stability of principal.
WHAT ARE THE FUNDS' INVESTMENTS AND INVESTMENTS PRACTICES?
Each Equity Fund invests in EQUITY SECURITIES, which include 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 Funds. 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
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investment in a company that encounters financial difficulty. Warrants are
rights to purchase securities at a specified time at a specified price.
Each Fund may invest in MONEY MARKET INSTRUMENTS, 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 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, EDRs and GLOBAL DEPOSITARY RECEIPTS
("GDRS"). 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 Funds (other than the U.S. Treasury Money Market Fund) may buy shares
of registered MONEY MARKET FUNDS. The 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 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.
Each Fund 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 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. Under normal
market conditions, the Equity Funds will not invest to a significant extent, or
on a routine basis, in U.S. Government Securities.
Each 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 can be changed only by
shareholders.
All of the Funds, other than the International Bond Fund, the Michigan
Triple Tax-Free Bond Fund and the Tax-Free Intermediate 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
non-diversified funds.
The Tax-Free Funds will acquire long-term instruments only if they are
rated "A" or better by Moody's Investors Service Inc. ("Moody's") or Standard &
Poor's Rating Service ("S&P") or, if unrated, are of comparable
42
<PAGE>
quality. These Funds will acquire short-term instruments only if they (i) have
short-term debt ratings in the top two categories by at least one nationally
recognized statistical rating organization, (ii) are issued by an issuer with
such ratings or (iii), if unrated, are of comparable quality.
The Advisor does not intend to invest more than 25% of a Fund's assets in
securities whose issuers are in the same state, except that the Advisor may
invest more than 25% of the Michigan Triple Tax-Free Bond Fund's and the Tax-
Free Intermediate Bond Fund's assets in Michigan Municipal Obligations.
Each Tax-Free Fund may invest in short-term money market instruments on a
temporary basis or for temporary investment purposes. Short-term money market
instruments include U.S. government obligations, debt securities of issuers
having a rating within the two highest categories of either S&P or Moody's, and
certificates of deposit or bankers' acceptances of domestic branches of U.S.
banks with at least $1 billion in assets.
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. Each Money Market
Fund may also hold uninvested cash pending investment of late payments for
purchase orders or during temporary defensive periods.
Investment Charts
The following charts summarize the Funds' investments and investment
practices. The SAI contains more details. All percentages are based on a
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 Funds'
investment practices.
43
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS
- -----------------------------------------------------------------------------------------------------------------------------
GROWTH INTER- MICRO-
INVESTMENTS AND ACCELERATING & GROWTH INDEX NATIONAL CAP
INVESTMENT PRACTICES GROWTH BALANCED INCOME OPPORTUNITIES 500 EQUITY EQUITY
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOREIGN SECURITIES. Includes 25% 25% 25% 25% 25% Y 25%
securities issued by non-U.S.
companies. Present more risks than
U.S. securities.
- -----------------------------------------------------------------------------------------------------------------------------
LOWER-RATED DEBT SECURITIES. Fixed Y Y 20% Y Y Y Y
Income Securities which are rated
below investment grade by Standard
& 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 N Y N N N N N
SECURITIES. Includes debt
securities backed by mortgages,
installment sales contracts and
credit card receivables.
- -----------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Includes N Y N N N N N
participations in trusts that hold
U.S. Treasury and agency securities
which represent either the interest
payments or principal payments on
the securities or combination of
both.
- -----------------------------------------------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE Y Y Y Y Y Y Y
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 gains from
currency changes.
- -----------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD Y Y Y Y Y Y Y
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 payment. Not to
be used for speculation.
- -----------------------------------------------------------------------------------------------------------------------------
FUTURES AND OPTIONS ON FUTURES. (1) Y Y Y Y Y Y Y
Contracts in which a Fund has the
right or the obligation, 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 liquidity.
- -----------------------------------------------------------------------------------------------------------------------------
OPTIONS. A Fund may buy options giving Y Y Y Y Y Y Y
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 securities
indices, individual securities, foreign
currencies or futures contracts. See
the SAI for more details and additional
limitations.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Key:
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1) THE LIMITATION ON MARGINS AND PREMIUMS FOR FUTURES AND OPTIONS ON FUTURES
IS 5% OF A FUND'S ASSETS.
(2) BASED ON NET ASSETS.
44
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS (continued)
- -----------------------------------------------------------------------------------------------------------------
MULTI- REAL ESTATE SMALL- SMALL FRAMLINGTON FRAMLINGTON FRAMLINGTON
SEASON EQUITY CAP COMPANY EMERGING GLOBAL FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
25% N 25% 25% 25% Y Y Y Y
- -----------------------------------------------------------------------------------------------------------------
Y 5% Y Y Y Y Y Y Y
- -----------------------------------------------------------------------------------------------------------------
N N N N N N Y N N
- -----------------------------------------------------------------------------------------------------------------
N N N N N N Y N N
- -----------------------------------------------------------------------------------------------------------------
Y N Y Y Y Y Y Y Y
- -----------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y
- -----------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y
- -----------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS (continued)
- -----------------------------------------------------------------------------------------------------------------------------
INTER- MICRO-
INVESTMENTS AND ACCELERATING GROWTH & GROWTH INDEX NATIONAL CAP
INVESTMENT PRACTICES GROWTH BALANCED INCOME OPPORTUNITIES 500 EQUITY EQUITY
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
REVERSE REPURCHASE AGREEMENTS. A Y Y Y Y Y Y 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.
- -----------------------------------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS. N N N N N N N
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 rates.
- -----------------------------------------------------------------------------------------------------------------------------
SHORT SALES. A transaction in which N N N N N N N
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 intend to deliver
to the buyer, a practice known as
selling short "against the box."
- -----------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
is no ready market for these
securities, which inhibits the
ability to sell them for full
market value, or there are legal
restrictions on their resale by
the Fund.
- -----------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend 25% 25% 25% 25% 25% 25% 25%
securities to financial
institutions which pay for the
use of the securities. May
increase return. Slight risk of
borrower failing financially.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y = INVESTMENT ALLOWED WITHOUT RESTRICTION
N = INVESTMENT NOT ALLOWED
(1) THE LIMITATION ON MARGINS AND PREMIUMS FOR FUTURES AND OPTIONS ON FUTURES
IS 5% OF A FUND'S ASSETS.
(2) BASED ON NET ASSETS.
46
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS (continued)
- ------------------------------------------------------------------------------------------------------------------
MULTI- REAL ESTATE SMALL- SMALL FRAMLINGTON FRAMLINGTON FRAMLINGTON
SEASON EQUITY CAP COMPANY EMERGING GLOBAL FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
- ------------------------------------------------------------------------------------------------------------------
15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
- ------------------------------------------------------------------------------------------------------------------
25% 25% 25% 25% 25% 25% 25% 25% 25%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
BOND FUNDS
- -----------------------------------------------------------------------------------------------------------------------
U.S.
INVESTMENTS AND BOND INTERMEDIATE INTERNATIONAL GOVERNMENT
INVESTMENT PRACTICES FUND BOND FUND BOND FUND INCOME FUND
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOREIGN SECURITIES. Securities issued by foreign governments 25% 25% Y 25%
and their agencies, instrumentalities or political
subdivisions, supranational organizations, and foreign
corporations. Does not include Bank obligations.
- -----------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Includes debt securities backed by Y Y Y Y
mortgages, installment sales contracts and credit card
receivables.
- -----------------------------------------------------------------------------------------------------------------------
INTEREST RATE AND CURRENCY SWAPS. Agreement to exchange payments Y(1) Y(1) Y Y(1)
calculated on the basis of relative interest or currency
rates. Derivative instruments used solely for hedging.
- -----------------------------------------------------------------------------------------------------------------------
INTEREST RATE CAPS AND FLOORS. Entitle purchaser to receive N N Y N
payments of interest to the extent that a specified reference
rate exceeds or falls below a predetermined level.
- -----------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS. Include securities issued by, or Y Y Y Y
guaranteed by, the U.S. Government or its agencies or
instrumentalities.
- -----------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Include participations in trusts that hold Y Y Y Y
U.S. Treasury and agency securities which represent either
the interest payments or principal payments on the securities
or combination of both.
- -----------------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund sells securities and Y Y Y Y
agrees to buy them back later at an agreed upon time and
price. A method to borrow money for temporary purposes.
- -----------------------------------------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Obligations of a Y Y Y Y
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 gains from currency
changes.
- -----------------------------------------------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. dollar denominated bank obligations, Y Y Y Y
including certificates of deposit, bankers' acceptances, bank
notes and time deposits, issued by U.S. or foreign banks or
savings institutions having total assets in excess of $1
billion.
- -----------------------------------------------------------------------------------------------------------------------
SUPRANATIONAL ORGANIZATION OBLIGATIONS. Fixed Income Securities N N Y N
issued or guaranteed by supranational organizations such as
the World Bank.
- -----------------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS. Agreements by a Fund to make Y Y Y Y
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 COMMITMENTS. Agreements by a [25%] [25%] [25%] [25%]
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 payment. Not to be
used for speculation.
- -----------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready market for 15%(2) 15%(2) 15%(2) 15%(2)
these securities, which inhibits the ability to sell them for
full market value, or there are legal restrictions on their
resale by the Fund.
- -----------------------------------------------------------------------------------------------------------------------
FUTURES AND OPTIONS ON FUTURES. (3) Contracts in which a Fund Y Y Y Y
has the right or the obligation, 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 liquidity.
- -----------------------------------------------------------------------------------------------------------------------
OPTIONS. A Fund may buy options giving it the right to require a Y Y Y Y
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
securities indices, individual securities, foreign currencies
or futures contracts. See the SAI for more details and
additional limitations.
- -----------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend securities to financial 25% 25% 25% 25%
institutions which pay for the use of the securities. May
increase return. Slight risk of borrower failing financially.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
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 AND OPTIONS ON FUTURES IS
5% OF A FUND'S ASSETS.
48
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE FUNDS
- -----------------------------------------------------------------------------------------------------------
INVESTMENTS AND MICHIGAN TRIPLE TAX-FREE BOND TAX-FREE INTERMEDIATE
INVESTMENT PRACTICES TAX-FREE BOND FUND FUND BOND FUND
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL OBLIGATIONS. Payable from the Y Y Y
issuer's general revenue, the revenue
of a specific project, current revenues
or a reserve fund.
- -----------------------------------------------------------------------------------------------------------
MICHIGAN MUNICIPAL OBLIGATIONS. Municipal Y Y Y
Obligations issued by the State of
Michigan and its political subdivisions.
- -----------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Securities issued by 10% 10% 10%
foreign governments and their agencies,
instrumentalities or political
subdivisions, supranational
organizations, and foreign
corporations. Does not include Bank
Obligations.
- -----------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD [25%] [25%] [25%]
COMMITMENTS. Agreements 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 payment. Not to be used for
speculation.
- -----------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no 15%(1) 15%(1) 15%(1)
ready market for these securities,
which inhibits the ability to sell them
for full market value, or there are
legal restrictions on their resale by
the Fund.
- -----------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend 25% 25% 25%
securities to financial institutions
which pay for the use of the
securities. May increase return.
Slight risk of borrower failing
financially.
- -----------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES. Includes U.S. Y Y Y
Treasury bills, notes and bonds.
- -----------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y = INVESTMENT ALLOWED WITHOUT RESTRICTION
N = INVESTMENT NOT ALLOWED
(1) BASED ON NET ASSETS.
49
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUNDS
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND CASH TAX-FREE U.S. TREASURY
INVESTMENT PRACTICES INVESTMENT MONEY MONEY
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE OBLIGATIONS:
. Commercial paper (including paper of Canadian Y N N
companies, Canadian branches of U.S. companies,
and Europaper) Y N N
. Corporate bonds Y N N
. Other short-term obligations Y N N
. Variable master demand notes Y N N
. Bond debentures Y N N
. Notes.
- ---------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Include debt securities backed by Y N N
mortgages, installment sales contracts and credit card
receivables.
- ---------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS:
. Issued or guaranteed by U.S. Government Y N Y
. Issued or guaranteed by U.S. Government Agencies Y N N
and instrumentalities
- ---------------------------------------------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. dollar denominated bank Y N N
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.
- ---------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES:
. Participation in trusts that hold U.S. Treasury and Y Y N
agency securities
. U.S. Treasury-issued receipts Y Y 35%
. Non-U.S. Treasury receipts. Y Y N
- ---------------------------------------------------------------------------------------------------------------------
MUNICIPAL REVENUE OBLIGATIONS. Obligations the interest on N Y N
which is paid solely from the revenues of similar projects.
- ---------------------------------------------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS. Payable from the issuer's general 5% No more than 25% N
revenue, the revenue of a specific project, current in any one state
revenues or a reserve fund.
- ---------------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund sells securities and Y N Y
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 by a Fund to Y N N
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 COMMITMENTS. Agreements [25%] [25%] [25%]
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 payment. Not to be used for speculation.
- ---------------------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Debt obligations issued by foreign 25% N N
governments, and their agencies, instrumentalities or
political subdivisions, supranational organizations and
foreign corporations. Does not include Bank Obligations.
- ---------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready market 10%(1) 10%(1) 10%(1)
for these securities, which inhibits the ability to sell
them for full market value, or there are legal restrictions
on their resale by the Fund.
- ---------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend securities to 25% 25% 25%
financial institutions which pay for the use of the
securities. May increase return. Slight risk of borrower
failing financially.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y = INVESTMENT ALLOWED WITHOUT RESTRICTION
N = INVESTMENT NOT ALLOWED
(1) BASED ON NET ASSETS.
50
<PAGE>
WHAT ARE THE RISKS OF INVESTING IN THE FUNDS?
All Funds
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 is a balanced investment program and
there is no guarantee that any Fund will achieve its investment objective since
there is uncertainty in every investment.
A Fund's risk is mostly dependent on the types of securities it purchases
and its investment techniques. Certain 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 a Fund to additional risks and
transaction costs. Risks inherent in the use of derivative instruments include:
(1) the risk that interest rates, securities prices and currency markets will
not move in the direction that a portfolio manager anticipates; (2) imperfect
correlation between the price of derivative instruments and movements in the
prices of the securities, interest rates or currencies being hedged; (3) the
fact that skills needed to use these strategies are different than those needed
to select portfolio securities; (4) the possible 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 Fund's initial investment in that instrument (in some cases, the potential
loss is unlimited); (6) particularly in the case of privately-negotiated
instruments, the risk that the counterparty will not perform its obligations,
which could leave the Fund worse off than if it had not entered into the
position and (7) inability to close out certain hedged positions to avoid
adverse tax consequences.
To the extent that a Fund invests in illiquid securities, the Fund risks
not being able to sell securities at the time and the price that it would like.
The Fund may therefore have to lower the price, sell substitute securities or
forego an investment opportunity, each of which might adversely affect the Fund.
The risks of the various investment techniques the 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.
Bond Funds and Tax-Free 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 these 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 diversity 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.
51
<PAGE>
Money Market Funds
Each Money Market Fund attempts to maintain a constant net asset value of
$1.00 per share. However, your investment in these Funds is not guaranteed.
Although the Cash Investment Fund and U.S. Treasury Money Market Fund
expect under normal market conditions to be as fully invested as possible, each
Fund may hold uninvested cash pending investment of late payments for purchase
orders (or other payments) or during temporary defensive periods. Uninvested
cash will not earn income. In general, investments in the Cash Investment Fund
and U.S. Treasury Money Market Fund will not earn as high a level of current
income as longer-term or lower quality securities. Longer-term and lower
quality securities, however, generally have less liquidity, greater market risk
and more fluctuation in market value.
Although the Tax-Free Money Market Fund may invest more than 25% of its net
assets in municipal revenue obligations, the interest on which is paid solely
from revenues of similar projects, the Tax-Fee Money Market Fund does not intend
to do so on a regular basis. If it does, the Fund will be riskier than a fund
which does not concentrate to such an extent on similar projects.
Growth Opportunities Fund, Micro-Cap Equity 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 Global Financial Services Fund,
Framlington International Growth Fund, International Equity Fund and
International Bond Fund
Investing in any of these Funds, with their 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,
52
<PAGE>
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.
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.
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.
International Bond Fund, Michigan Triple Tax-Free Bond Fund and Tax-Free
Intermediate Bond Fund
These Funds are non-diversified and hold securities of a limited number of
issuers. The Funds may, therefore, pose a greater risk to investors than an
investment in a diversified fund. The Michigan Triple Tax-Free Bond Fund
invests primarily in Michigan Municipal Obligations. If Michigan issuers suffer
serious financial difficulties jeopardizing their ability to pay their
obligations, the value of such Fund may decline.
PERFORMANCE
HOW IS THE FUND'S 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 current yield of shares in the Money Market Funds refers to the net
income generated by an investment in shares over a seven-day period (which
period will be stated in the advertisement). This income is then "annualized."
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. "Effective yield" is calculated similarly but,
when annualized, the income earned by an investment in a class is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment. The "tax-
equivalent yield" of shares of the Tax-Free Funds and the Tax-Free Money Market
Fund which may also be quoted from time to time, shows the level of taxable
yield needed to produce an after-tax
53
<PAGE>
equivalent to the tax-free yield of a particular class. This is done by
increasing the yield (calculated as above) by the amount necessary to reflect
the payment of Federal and/or state income taxes at a stated rate.
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 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 OF SHARES
Customers of banks and other institutions, and the immediate family members
of such Customers, that have entered into agreements with us to provide
shareholder services for Customers may purchase Class K Shares. Customers may
include individuals, trusts, partnerships and corporations. 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?
The purchase price for Class K Shares is the net asset value ("NAV") next
determined after we receive your order in proper form. Except in certain
limited circumstances, each Fund determines its 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.
HOW CAN I PURCHASE SHARES?
All share purchases are effected through a Customer's account at an
institution and confirmations of share purchases will be sent to the institution
involved. Institutions (or their nominees) will normally be the holders of
record of Fund shares acting on behalf of their Customers, and will reflect
their Customers' beneficial ownership of shares in the account statements
provided by them to their Customers.
54
<PAGE>
We do not issue share certificates. 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.
You may pay for shares of each Fund, other than the Real Estate Equity
Investment Fund, with securities which the Fund is allowed to hold.
REDEMPTIONS OF SHARES
WHAT PRICE DO I RECEIVE FOR REDEEMED SHARES?
The redemption price is the NAV next determined after we receive the
redemption request in proper form.
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 Fund cannot sell its assets or accurately determine the
value of its assets or if the SEC orders the Fund to suspend redemptions.
HOW CAN I REDEEM SHARES?
Redemption orders are effected at the NAV 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.
. Free Checkwriting. Free checkwriting is available to holders of Class K
Shares of the Bond Funds (other than the International Bond Fund), Tax-
Free Funds and Money Market Funds who complete the Signature Card
Section of the Account Application Form. You may write checks in the
amount of $500 or more but you may not close a Fund account by writing a
check. We may change or terminate this program on 30 days' notice to
you.
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 Trust, the Company and Framlington are each an open-end management
investment company, which is a mutual fund that sells and redeems shares every
day that it is open for business. They are managed under the direction of their
governing Boards of Trustees and Directors, which are responsible for the
overall management of the Trust, the Company and Framlington and supervise the
Funds' service providers. The Trust and Framlington are organized as
Massachusetts business trusts and the Company is a Maryland corporation.
WHO MANAGES AND SERVICES THE FUNDS?
INVESTMENT ADVISOR AND SUB-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
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<PAGE>
principal partners of the Advisor are MCM, Munder Group LLC and WAM Holdings,
Inc. ("WAM"). MCM was founded in April, 1985 as a Delaware corporation and was a
registered investment advisor. WAM is an indirect, wholly-owned subsidiary of
Comerica Incorporated which owns or controls approximately 88% of the
partnership interests in the Advisor. As of June 30, 1998, the Advisor and its
affiliates had approximately $48.2 billion in assets under management, of which
$25.4 billion were invested in equity securities, $8.1 billion were invested in
money market or other short-term instruments, $9.2 billion were invested in
other fixed income securities and $5.5 billion in non-discretionary assets.
The Advisor provides overall investment management and research and credit
analysis for each Fund and is responsible for all purchases and sales of
portfolio securities for each Fund other than the Framlington Funds.
Framlington Overseas Investment Management Limited is the sub-advisor of
the Framlington Funds. The Sub-Advisor is an indirect subsidiary of Framlington
Holdings Limited which is, in turn, owned 49% by the Advisor and 51% by Credit
Commercial de France S.A., a French banking corporation listed on the Societe
des Bourses Francaises.
The Sub-Advisor provides research and credit analysis for each of the
Framlington Funds and is responsible for all purchases and sales of portfolio
securities for each of the Framlington Funds other than the Framlington Global
Financial Services Fund. Each of the Advisor and Sub-Advisor manages a portion
of the assets of the Framlington Global Financial Services Fund. The Advisor is
responsible for all purchases and sales of domestic securities held by the Fund.
The Sub-Advisor is responsible for the allocation of the Fund's assets among
countries and for all purchases and sales of foreign securities held by the
Fund.
During the fiscal year ended June 30, 1998, the Advisor was paid an
advisory fee at an annual rate based on the average daily net assets of each
Fund (after waivers, if any) as follows:
<TABLE>
<S> <C> <C> <C>
Accelerating Growth Fund 0.75% Framlington Global Financial Services Fund 0.75%
Balanced Fund 0.65% Framlington Healthcare Fund 1.00%
Growth & Income Fund 0.75% Framlington International Growth Fund 1.00%
Growth Opportunities 0.75% Bond Fund 0.50%
Index 500 Fund 0.07% Intermediate Bond Fund 0.50%
International Equity Fund 0.75% International Bond Fund 0.50%
Micro-Cap Equity Fund 1.00% U.S. Government Income Fund 0.50%
Multi-Season Growth Fund 0.75% Michigan Triple Tax-Free Bond Fund 0.50%
Real Estate Equity Investment Fund 0.74% Tax-Free Bond Fund 0.50%
Small-Cap Value Fund 0.75% Tax-Free Intermediate Bond Fund 0.50%
Small Company Growth Fund 0.75% Cash Investment Fund 0.35%
Value Fund 0.74% Tax-Free Money Market Fund 0.35%
Framlington Emerging Markets Fund 1.25% U.S. Treasury Money Market Fund 0.35%
</TABLE>
The Advisor waived advisory fees during the past fiscal year for the Index
500 Fund and the Multi-Season Growth Fund. The Advisor is entitled to receive
an annual fee equal to .20% of the first $250 million of the Index 500 Fund's
average daily net assets, .12% of the next $250 million of the Fund's average
daily net assets and .07% of the Fund's average daily net assets over $500
million. The Advisor is also entitled to receive an annual fee equal to 1.00%
of the first $500 million of the Multi-Season Growth Fund's average daily net
assets and .75% of the Fund's average daily net assets over $500 million.
The Sub-Advisor is entitled to receive an advisory fee equal to one-half of
the fee paid to the Advisor by each of the Framlington Funds as compensation for
its services as Sub-Advisor. The Advisor pays fees to the Sub-Advisor and the
Framlington Funds pay no fees directly to the Sub-Advisor.
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
56
<PAGE>
shareholder servicing. The Advisor may make 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.
Performance Information. The tables below contain performance information
for certain Funds created through the conversion of a common or collective trust
fund which had investment objectives and policies materially equivalent to those
of the corresponding Funds. Immediately before and after the conversion, the
same person managed both the common or collective trust fund and the
corresponding Fund.
The table for each Fund:
. includes the average annual total returns of the common or collective
trust fund and the average annual total returns of the corresponding
Fund linked together;
. assumes that net investment income and dividends have been reinvested;
. assumes that the common or collective trust fund paid the same levels of
fees and expenses as the corresponding Fund currently pays;
. does not reflect any potential negative impact on the common and
collective trust funds' performance if they had been subjected to the
same regulatory restrictions (the Investment Company Act of 1940, as
amended (the "1940 Act") and the Internal Revenue Code of 1986, as
amended) as the corresponding Fund; and
. indicates past performance only and does not predict future results.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER ACCELERATING GROWTH
JUNE 30, 1998 FUND (CLASS K )* S&P 500**
------------- --------------- -------
<S> <C> <C>
1 Year.................................................... % %
3 Years................................................... % %
5 Years................................................... % %
Inception on January 1, 1990.............................. % %
</TABLE>
- ------------------
* Converted from collective trust fund to mutual fund on November 23, 1992.
** S&P 500 performance shows total return in U.S. dollars but does not reflect
the deduction of fees, expenses and taxes. Source: Lipper Analytical Services,
Inc.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER SMALL COMPANY RUSSELL 2000
JUNE 30, 1998 GROWTH FUND (CLASS K )* INDEX**
------------- ---------------------- -----
<S> <C> <C>
1 Year.................................................... % %
3 Years................................................... % %
5 Years................................................... % %
10 Years.................................................. % %
Inception on December 31, 1982............................ % %
</TABLE>
- ------------------
* Converted from collective trust fund to mutual fund on November 23, 1992.
** Russell 2000 Index performance shows total return in U.S. dollars but does
not reflect the deduction of fees, expenses and taxes. Source: Lipper Analytical
Services, Inc.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER INTERNATIONAL FT/S&P ACTUARIES WORLD
JUNE 30, 1998 EQUITY FUND (CLASS K)* INDEX EX. US**
------------- --------------------- ------------
<S> <C> <C>
1 Year.............................................. % %
3 Years............................................. % %
5 Years............................................. % %
Inception on September 30, 1990..................... % %
</TABLE>
- ----------------------
57
<PAGE>
* Converted from collective trust fund to mutual fund on November 23, 1992.
** FT/S&P Actuaries World Index ex. U.S. performance shows total return in U.S.
dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Ibbotson Associates, Inc.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER INDEX 500 FUND S&P 500
JUNE 30, 1998 (CLASS K )* INDEX**
------------- ---------- -----
<S> <C> <C>
1 Year.................................................... % %
3 Years................................................... % %
5 Years................................................... % %
10 Years.................................................. % %
Inception on January 27, 1988............................. % %
</TABLE>
- --------------------
* Converted from collective trust fund to mutual fund on December 7, 1992.
** S&P 500 Index performance shows total return in U.S. dollars but does not
reflect the deduction of fees, expenses and taxes. Source: Lipper Analytical
Services, Inc.
<TABLE>
<CAPTION>
LEHMAN BROTHERS
PERIOD ENDED MUNDER BOND FUND GOV'T/CORP. BOND
JUNE 30, 1998 (CLASS K)* INDEX**
------------- --------- -----
<S> <C> <C>
1 Year.................................................... % %
3 Years................................................... % %
5 Years................................................... % %
10 Years.................................................. % %
</TABLE>
- --------------------
* Converted from collective trust fund to mutual fund on November 23, 1992.
** Lehman Brothers Government/Corporate Bond Index performance shows total
return in U.S. dollars but does not reflect the deduction of fees, expenses and
taxes. Source: Lipper Analytical Services, Inc.
<TABLE>
<CAPTION>
MUNDER U.S. LEHMAN BROTHERS
GOVERNMENT GOV'T/CORP.
PERIOD ENDED INCOME FUND BOND
JUNE 30, 1998 (CLASS K)* INDEX**
------------- --------- ----------------
<S> <C> <C>
1 Year.................................................... % %
3 Years................................................... % %
5 Years................................................... % %
10 Years.................................................. % %
</TABLE>
- -------------------
*Converted from collective trust fund to mutual fund on July 5, 1994.
**Lehman Brothers Government/Corporate Bond Index performance shows total return
in U.S. dollars but does not reflect the deduction of fees, expenses and taxes.
Source: Lipper Analytical Services, Inc.
<TABLE>
<CAPTION>
MUNDER INTERMEDIATE LEHMAN BROTHERS
PERIOD ENDED BOND FUND INTERMEDIATE
JUNE 30, 1998 (CLASS K)* GOV'T/BOND INDEX**
------------- --------- ----------------
<S> <C> <C>
1 Year.................................................... % %
3 Years................................................... % %
5 Years................................................... % %
10 Years.................................................. % %
Inception on March 31, 1982............................... % %
</TABLE>
- -------------------
*Converted from collective trust fund to mutual fund on November 20, 1992.
**Lehman Brothers Intermediate Government/Corporate Bond Index performance shows
total return in U.S. dollars but does not reflect the deduction of fees,
expenses and taxes. Source: Lipper Analytical Services, Inc.
58
<PAGE>
<TABLE>
<CAPTION>
MUNDER TAX-FREE LEHMAN
PERIOD ENDED BOND FUND 20-YEAR MUNI
JUNE 30, 1998 (CLASS K)* BOND INDEX**
------------- --------- ----------
<S> <C> <C>
1 Year.................................................... % %
3 Years................................................... % %
5 Years................................................... % %
10 Years.................................................. % %
</TABLE>
- -----------------
*Converted from common trust fund to mutual fund on July 5, 1994.
**Lehman 20-Year Municipal Bond Index performance shows total return in U.S.
dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Lipper Analytical Services, Inc.
Indices
The S&P 500 is an unmanaged index of common stock prices, including
reinvestment of dividends.
The Russell 2000 Index is a capitalization weighted total return index
which is comprised of 2,000 of the smallest capitalized U.S. domiciled companies
whose stock is traded in the United States on the New York Stock Exchange,
American Stock Exchange and the NASDAQ.
The FT/S&P Actuaries World Index ex. U.S. is an unmanaged index used to
portray the global equity market excluding the U.S. The Index is weighted based
on the market capitalization of those stocks selected to represent each country
and includes gross reinvestment of dividends.
The Lehman Brothers Government/Corporate Bond Index is a weighted composite
of (i) Lehman Brothers Government Bond Index, which is comprised of all publicly
issued, non-convertible debt of the U.S. Government or any agency thereof,
quasi-Federal corporations, and corporate debt guaranteed by the U.S. Government
and (ii) Lehman Brothers Corporate Bond Index, which is comprised of all public
fixed-rate, non-convertible investment-grade domestic corporate debt, excluding
collateralized mortgage obligations.
The Lehman Brothers Intermediate Government/Corporate Bond Index is a
weighted composite of (i) Lehman Brothers Intermediate Government Bond Index,
which is comprised of all publicly issued, non-convertible debt of the U.S.
Government or any agency thereof, quasi-Federal corporations and corporate debt
guaranteed by the U.S. Government with a maturity of between one and ten years
and (ii) Lehman Brothers Corporate Bond Index.
The Lehman Brothers 20-Year Municipal Bond Index is a performance benchmark
for the long-term investment-grade tax-exempt bond market.
PERFORMANCE OF FRAMLINGTON ACCOUNTS MANAGED BY THE SUB-ADVISOR
The tables below contain certain performance information provided by the
Sub-Advisor relating to accounts managed by the Sub-Advisor and which have
investment objectives and policies similar to those of the corresponding
Framlington Funds. See "Fund Choices" and "What are the Funds' Investments and
Investment Practices?" In the case of the Healthcare portfolio performance, the
data relates to a unit trust organized under the laws of the United Kingdom
managed by the same personnel of the Sub-Advisor with similar investment
objectives and policies to the Framlington Healthcare Fund. In the case of
Emerging Markets portfolio performance, the data relates to a Canadian-based
institutional emerging markets portfolio managed by the same personnel of the
Sub-Advisor with similar investment objectives and policies to the Framlington
Emerging Markets Fund.
The trust account performance is provided by Micropal, an independent
research organization that is a recognized source of performance data in the UK
unit trust industry. The data is U.S. dollar adjusted on the basis of exchange
rates provided by Datastream using WM/Reuters closing rates. The performance
figures are net of brokerage commissions, actual investment advisory fees and
initial sales charges. The data assume the reinvestment
59
<PAGE>
of net income and capital gain distributions. The trust account returns are
calculated using beginning offer and ending bid prices for periods ended
December 31, 1996.
You should not rely on the following performance data of the Sub-Advisor's
client accounts as an indication of future performance of the Framlington Funds.
It should be noted that the management of the Funds will be affected by
regulatory requirements under the 1940 Act and requirements of the Internal
Revenue Code of 1986, as amended, to qualify as a regulated investment company.
<TABLE>
<CAPTION>
S&P HEALTHCARE
PERIOD ENDED UK HEALTH COMPOSITE INDEX CAPITAL
DECEMBER 31, 1996 PORTFOLIO CHANGE
----------------- --------- ------
<S> <C> <C>
1 Year..................................... 10.75% 18.48%
3 Years.................................... 96.93% 100.49%
5 Years.................................... 99.43% 45.60%
Inception on April 30, 1987................ 411.08% 239.64%
</TABLE>
Performance for the Health trust account is calculated on an offer-bid
basis; US Dollar adjusted total return net of all management fees but not
reflective of UK tax. Source: Micropal.
S&P Healthcare Composite Index performance shows capital change in U.S.
dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Datastream.
<TABLE>
<CAPTION>
PERIOD ENDED CANADIAN EMERGING MSCI EMERGING
DECEMBER 31, 1996 MARKETS ACCOUNT MARKETS FREE TOTAL RETURN
----------------- --------------- -------------------------
<S> <C> <C>
1 Year..................................... 5.16% 6.03%
Inception on November 1, 1994.............. (3.68)% (12.37)%
</TABLE>
MSCI Emerging Markets Free Index performance shows total return in U.S.
dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Datastream.
The performance of the Canadian institutional account is measured by the
World Markets Company on a total return basis and has been re-calculated net of
the management fee charged the Canadian institutional account. The inception
date of the Canadian institutional account is November 1, 1994.
Indices
The S&P Healthcare Composite Index is the composite Healthcare section of
the S&P 500 Index as defined and tracked by S&P. This index covers securities
listed in the United States only.
The MSCI Emerging Markets Free Index is maintained by Morgan Stanley
Capital International and covers 26 countries and represents the investment
opportunities in emerging markets available to foreign investors. Total return
is calculated using the prices of the companies tracked and assumes the
reinvestment of dividends.
TRANSFER AGENT. First Data Investor Services Group, Inc. is the Funds'
transfer agent. The Transfer Agent 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
"Administrator") is the Funds' 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 overseeing the maintenance of financial records and
fund accounting. As compensation for its services for the Company, the Trust
and Framlington, State Street is entitled to receive fees, based on the
aggregate daily net assets of the Funds and certain other investment portfolios
that are advised by the Advisor for which it provides services, computed daily
and payable monthly at the annual rate of 0.113% on the first $2.8 billion of
net assets, plus 0.103%
60
<PAGE>
on the next $2.2 billion of net assets, plus 0.101% on the next $2.5 billion of
net assets, plus 0.095% on the next $2.5 billion of net assets, plus 0.080% on
the next $2.5 billion of net assets, plus 0.070% on all net assets in excess of
$12.5 billion (with a $75,000 minimum fee per annum in the aggregate for all
portfolios with respect to the Administrator). If the assets of the Framlington
Funds do not exceed $120 million, the ultimate rate charged the Framlington
Funds will be reduced by their pro-rata portion of the total fees if calculated
at the rates of 0.062% of the first $2.8 billion of net assets, plus 0.052% of
the next $2.2 billion of net assets, plus 0.050% of all net assets in excess of
$5 billion.
State Street has entered into a Sub-Administration Agreement with the
Distributor under which the Distributor provides certain administrative services
with respect to the Funds. State Street pays the Distributor a fee for these
services out of its own resources at no cost to the Funds.
CUSTODIAN AND SUB-CUSTODIAN. Comerica Bank ("Comerica" or the
"Custodian"), whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, Michigan 48226, is the Funds' custodian. No
compensation is paid to the Custodian for its custodial services. Comerica
receives a fee of 0.01% of the aggregate average daily net assets of the Funds
beneficially owned by Comerica and its customers for certain shareholder
services provided by Comerica to the Funds. State Street serves as the Funds'
sub-custodian.
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.
The Funds have adopted a Shareholder Servicing Plan (the "Class K Plan")
under which Class K Shares are sold through institutions which enter into
shareholder servicing agreements with the Funds. The agreements require the
institutions to provide shareholder services to their Customers who from time to
time own of record or beneficially Class K Shares in return for payment by a
Fund at a rate not exceeding .25% (on an annualized basis) of the average daily
net asset value of the Class K Shares beneficially owned by the Customers. Class
K Shares bear all fees paid to institutions under the Class K Plan. Payments
under the Class K Plan are not tied exclusively to the shareholder expenses
actually incurred by the institutions and the payments may exceed service
expenses actually incurred.
The services provided by institutions under the Class K Plan may include
processing purchase, exchange and redemption requests from Customers and placing
orders with the Transfer Agent; processing dividend and distribution payments
from the Funds on behalf of Customers; providing information periodically to
Customers showing their positions in Class K Shares; providing sub-accounting
with respect to Class K Shares beneficially owned by Customers or the
information necessary for sub-accounting; responding to inquires from customers
concerning their investment in Class K Shares; arranging for bank wires; and
providing such other similar services as may be reasonably requested.
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 Trust, the Company or Framlington as a whole and affecting your particular
Fund. You will not vote by Class unless expressly required by law or when the
Trustees or Directors determine the matter to be voted on affects only the
interests of the holders of a particular class of shares. The Trust, the
Company and Framlington 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 Trustee or Director. Under
Massachusetts law, it is possible that a shareholder may be personally liable
for the Trust's or Framlington's obligations. If a shareholder were required to
pay a debt of a Fund, however, the Trust and Framlington have committed to
reimburse the shareholder in full from their assets. The SAI contains more
information regarding voting rights.
61
<PAGE>
Comerica 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 Trust, the Company
and Framlington.
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. The Accelerating Growth Fund,
Balanced Fund, Growth & Income Fund, Small Company Growth Fund and International
Bond Fund pay dividends quarterly. The Growth Opportunities Fund, Framlington
Emerging Markets Fund, Framlington Global Financial Services Fund, Framlington
Healthcare Fund, Framlington International Growth Fund, International Equity
Fund, Micro-Cap Equity Fund, Multi-Season Growth Fund, Small-Cap Value Fund and
Value Fund pay dividends at least annually. The Bond Funds (other than the
International Bond Fund) and the Tax-Free Funds pay dividends monthly.
Dividends for the Money Market Funds are declared daily and paid monthly.
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 Fund 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.
In general, as long as each Fund meets the requirements to qualify as a
regulated investment company ("RIC") under Federal tax laws, it will not be
subject to Federal income tax on its income and capital gains that it
distributes in a timely manner to its shareholders. Each Fund intends to
qualify annually as a RIC. Even if it qualifies as a RIC, a Fund may still be
liable for any excise tax on income that is not distributed in accordance with a
calendar year requirement; the Funds intend to avoid the excise tax by making
timely distributions.
Generally, you will owe tax on the amounts distributed to you, regardless
of whether you receive these amounts in cash or reinvest them in additional Fund
shares. Shareholders not subject to tax on their income generally will not be
required to pay any tax on amounts distributed to them. Federal income tax on
distributions to an IRA or to a qualified retirement plan will generally be
deferred.
Capital gains derived from sales of portfolio securities held by a Fund
will generally be designated as long-term or short-term. Distributions from a
Fund's long-term capital gains are generally taxed at the long-term capital
gains rate regardless of how long you have owned shares in the Fund. Dividends
from other sources are generally taxed as ordinary income.
62
<PAGE>
Dividends and capital gain distributions are generally taxable when you
receive them; however, if a distribution is declared in October, November or
December, but not paid until January of the following year, it will be
considered to be paid on December 31 in the year in which it was declared.
Shortly after the end of each year, you will receive from each Fund in which you
are a shareholder a statement of the amount and nature of the distributions made
to you during the year.
If you redeem, transfer or exchange Fund shares, you may have taxable gain
or a loss. If you hold Fund shares for six months or less, and during that time
you receive a capital gain dividend, any loss you realize on the sale of these
Fund shares will be treated as a long-term loss to the extent of the earlier
distribution.
Dividends and certain interest income earned from foreign securities by a
Fund may be subject to foreign withholding or other taxes. A Fund may be
permitted to pass on to its shareholders the right to a credit or deduction for
income or other tax credits earned from foreign investments and will do so if
possible. These deductions or credits may be subject to tax law limitations.
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 a 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 of the
QEF, regardless of whether received, and such amounts will be subject to the
various distribution requirements described above. The Funds may also elect to
mitigate the tax effects of owning PFIC stock by making an annual mark-to-market
election with respect to PFIC shares.
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.
YEAR 2000. The Funds' operations depend on the seamless functioning of
computer systems in the financial service industry, including those of its
service providers. Many computer software systems in use today cannot properly
process date-related information after December 31, 1999 because of the method
by which dates are encoded and calculated. This failure, commonly referred to
as the "Year 2000 Issue," could adversely affect the handling of securities
trades, pricing and account servicing for the Funds. The Funds have been
informed that their major service providers have made compliance with the Year
2000 Issue a high priority and are taking steps that they believe are reasonably
designed to address the Year 2000 Issue with respect to their computer systems.
There can be, however, no assurance that these steps will be successful, or that
interaction with other non-complying computer systems will not impair their
services at that time.
63
<PAGE>
APPENDIX A
The Index 500 Fund is not sponsored, endorsed, sold or promoted by S&P. S&P
makes no representation or warranty, express or implied, to the owners of the
Index 500 Fund or any member of the public regarding the advisability of
investing in securities generally or in the Index 500 Fund particularly or the
ability of the S&P 500 Index to trace general stock market performance. S&P's
only relationship to the Trust is the licensing of certain trademarks and trade
names of S&P and of the S&P 500 Index which is determined, composed and
calculated by S&P without regard to the Trust or the Index 500 Fund. S&P has no
obligation to take the needs of the Trust or the owners of the Index 500 Fund
into consideration in determining, composing or calculating the S&P 500 Index.
S&P is not responsible for and has not participated in the determination of the
prices and amount of the Index 500 Fund or the timing of the issuance or sale of
the Index 500 Fund or in the determination or calculation of the equation by
which the Index 500 Fund is to be converted into cash. S&P has no obligation or
liability in connection with the administration, marketing or trading of the
Index 500 Fund.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500
Index or any data included therein and S&P shall have no liability for any
errors, omissions, or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the Trust, owners of the Index 500
Fund, or any other person or entity from the use of the S&P 500 Index or any
data included therein. S&P makes no express or implied warranties, and
expressly disclaims all warranties of merchantability of fitness for a
particular purpose or use with respect to the S&P 500 Index or any data included
therein. Without limiting any of the foregoing, in no event shall S&P have any
liability for any special, punitive, indirect, or consequential damages
(including lost profits), even if notified of the possibility of such damages.
"Standard & Poor's," "S&P," "S&P 500," "Standard & Poor's 500," and "500"
are trademarks of McGraw-Hill, Inc. and have been licensed for use by the Trust.
The Index 500 Fund is not sponsored, endorsed, sold or promoted by S&P and S&P
makes no representation regarding the advisability of investing in the Index 500
Fund.
<PAGE>
CLASS Y SHARES
Prospectus
OCTOBER 27, 1998
THE MUNDER EQUITY FUNDS
Accelerating Growth
Balanced
Growth & Income
Growth Opportunities
International Equity
Micro-Cap Equity
Multi-Season Growth
NetNet
Real Estate Equity Investment
Small-Cap Value
Small Company Growth
Value
THE MUNDER FRAMLINGTON FUNDS
Framlington Emerging Markets
Framlington Global Financial Services
Framlington Healthcare
Framlington International Growth
THE MUNDER INCOME FUNDS
Bond
Intermediate Bond
International Bond
U.S. Government Income
Michigan Triple Tax-Free Bond
Tax-Free Bond
Tax-Free Intermediate Bond
Short Term Treasury
THE MUNDER MONEY MARKET FUNDS
Cash Investment
Money Market
Tax-Free Money Market
U.S. Treasury Money Market
Prospectus begins on next page
<PAGE>
PROSPECTUS
Class Y Shares
The Munder Funds Trust (the "Trust"), The Munder Funds, Inc. (the
"Company") and The Munder Framlington Funds Trust ("Framlington") are open-end
investment companies. This Prospectus describes the investment portfolios
offered by the Trust (the "Trust Funds"), the Company (the "Company Funds") and
Framlington ("Framlington Funds") described below (referred to as the "Funds"):
<TABLE>
<S> <C>
Munder Accelerating Growth Fund* Munder Framlington Healthcare Fund
Munder Balanced Fund Munder Framlington International Growth Fund
Munder Growth & Income Fund Munder Bond Fund
Munder Growth Opportunities Fund Munder Intermediate Bond Fund
Munder International Equity Fund Munder International Bond Fund
Munder Micro-Cap Equity Fund Munder U.S. Government Income Fund
Munder Multi-Season Growth Fund Munder Michigan Triple Tax-Free Bond Fund**
Munder NetNet Fund Munder Tax-Free Bond Fund
Munder Real Estate Equity Investment Fund Munder Tax-Free Intermediate Bond Fund
Munder Small-Cap Value Fund Munder Short Term Treasury Fund
Munder Small Company Growth Fund Munder Cash Investment Fund
Munder Value Fund Munder Money Market Fund
Munder Framlington Emerging Markets Fund Munder Tax-Free Money Market Fund
Munder Framlington Global Financial Services Fund Munder U.S. Treasury Money Market Fund
</TABLE>
* The Accelerating Growth Fund is closed to new investors.
** The Michigan Triple Tax-Free Bond Fund is offered only in the
State of Michigan.
Munder Capital Management (the "Advisor") serves as the investment
advisor of the Funds.
This Prospectus 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 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.
ALTHOUGH EACH OF THE CASH INVESTMENT FUND, MONEY MARKET FUND, TAX-FREE
MONEY MARKET FUND AND U.S. TREASURY MONEY MARKET FUND SEEKS TO MAINTAIN A
CONSTANT NET ASSET VALUE OF $1.00 PER SHARE, THERE CAN BE NO ASSURANCE THAT EACH
FUND CAN DO SO ON A CONTINUING BASIS.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS OCTOBER 27, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Fund Highlights
What are the key facts regarding the Funds?................. 3
Financial Information............................................ 7
Fund Choices
What Funds are offered?..................................... 36
Who may want to invest in the Funds?........................ 46
What are the Funds' investments and investment practices?... 47
What are the risks of investing in the Funds?............... 57
Performance
How is the Funds' performance calculated?................... 59
Where can I obtain performance data?........................ 60
Purchases of Shares
What price do I pay for shares?............................. 61
When can I purchase shares?................................. 61
What is the minimum required investment?.................... 61
How can I purchase shares?.................................. 61
How can I exchange shares?.................................. 62
Redemptions of Shares
What price do I receive for redeemed shares?................ 62
When can I redeem shares?................................... 62
How can I redeem shares?.................................... 62
When will I receive redemption amounts?..................... 63
Structure and Management of the Funds
How are the Funds structured?............................... 63
Who manages and services the Funds?......................... 63
What are my rights as a shareholder?........................ 68
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?........... 69
How will distributions be made?............................. 69
Are there tax implications of my investments in the Funds?.. 69
Additional Information........................................... 70
</TABLE>
2
<PAGE>
FUND HIGHLIGHTS
WHAT ARE THE KEY FACTS REGARDING THE FUNDS?
Q: What are the Funds' goals?
A:
. The Accelerating Growth Fund, Framlington Emerging Markets Fund,
Framlington Global Financial Services Fund, Framlington Healthcare Fund,
Framlington International Growth Fund, Growth Opportunities Fund,
International Equity Fund, Micro-Cap Equity Fund, Multi-Season Growth
Fund, NetNet Fund, Small-Cap Value Fund, Small Company Growth Fund and
Value Fund primarily seek to provide long-term capital appreciation.
. The Balanced Fund, Growth & Income Fund and Real Estate Equity Investment
Fund seek to provide capital appreciation and current income.
. The Bond Fund seeks to provide a high level of current income with capital
appreciation as a secondary consideration.
. The Intermediate Bond Fund seeks to provide a competitive rate of return
which exceeds the inflation rate and the return provided by money market
instruments.
. The International Bond Fund seeks to provide a competitive total return
through a combination of current income and capital appreciation.
. The U.S. Government Income Fund seeks to provide high current income.
. The Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund seek to provide
current interest income exempt from Federal income taxes.
. The Michigan Triple Tax-Free Bond Fund seeks to provide as high a level of
current interest income exempt from regular Federal income taxes, Michigan
state income tax and Michigan intangibles tax as is consistent with
prudent investment management and preservation of capital.
. The Short Term Treasury Fund seeks to provide an enhanced money market
return consistent with the preservation of capital.
. The Cash Investment Fund and U.S. Treasury Money Market Fund seek as high
a level of current interest income as is consistent with maintaining
liquidity and stability of principal.
. The Money Market Fund seeks to provide current income consistent with the
preservation of capital and liquidity.
. The Tax-Free Money Market Fund seeks to provide as high a level of current
interest income exempt from Federal income taxes as is consistent with
maintaining liquidity and stability of principal.
Q: What are the Funds' strategies?
A: BALANCED FUND
. This Fund allocates its assets primarily among three types of assets -
Equity Securities, Fixed Income Securities and Cash Equivalents. "Equity
Securities" include common stocks, preferred stocks, warrants and other
securities convertible into common stock. "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 rates. "Cash
Equivalents" are instruments which are highly liquid and virtually free of
investment risk.
3
<PAGE>
ACCELERATING GROWTH FUND, FRAMLINGTON EMERGING MARKETS FUND, FRAMLINGTON GLOBAL
FINANCIAL SERVICES FUND, FRAMLINGTON HEALTHCARE FUND, FRAMLINGTON INTERNATIONAL
GROWTH FUND, GROWTH & INCOME FUND, GROWTH OPPORTUNITIES FUND, INTERNATIONAL
EQUITY FUND, MICRO-CAP EQUITY FUND, MULTI-SEASON GROWTH FUND, NETNET FUND, REAL
ESTATE EQUITY INVESTMENT FUND, SMALL-CAP VALUE FUND, SMALL COMPANY GROWTH FUND
AND VALUE FUND (THE "EQUITY FUNDS")
. These Funds invest primarily in Equity Securities.
BOND FUND, INTERMEDIATE BOND FUND, INTERNATIONAL BOND FUND AND U.S. GOVERNMENT
INCOME FUND (THE "BOND FUNDS")
. These Funds, other than the U.S. Government Income Fund, invest
primarily in Fixed Income Securities.
. The U.S. Government Income Fund invests primarily in obligations of
the U.S. government and its agencies and instrumentalities.
SHORT TERM TREASURY FUND
. The Short Term Treasury Fund invests only in U.S. Treasury securities
and repurchase agreements relating to U.S. Treasury securities.
MICHIGAN TRIPLE TAX-FREE BOND FUND, TAX-FREE BOND FUND AND TAX-FREE INTERMEDIATE
BOND FUND (THE "TAX-FREE FUNDS")
. The Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund invest
primarily in Municipal Obligations. "Municipal Obligations" are
obligations of states, territories and possessions of the United
States and the District of Columbia, and their political subdivisions,
agencies, instrumentalities and authorities, the interest on which is
exempt from regular Federal income tax.
. The Michigan Triple Tax-Free Bond Fund invests primarily in Michigan
Municipal Obligations. "Michigan Municipal Obligations" are municipal
obligations issued by the State of Michigan and its political
subdivisions, the interest on which is exempt from Federal income
taxes, Michigan state income tax and Michigan intangibles tax.
CASH INVESTMENT FUND, MONEY MARKET FUND, TAX-FREE MONEY MARKET FUND AND U.S.
TREASURY MONEY MARKET FUND (THE "MONEY MARKET FUNDS")
. These Funds invest solely in dollar-denominated debt securities with
remaining maturities of 13 months or less and maintain an average
dollar-weighted portfolio maturity of 90 days or less.
Each Fund implements a different investment strategy which is described in
this Prospectus.
4
<PAGE>
Q: What are the Funds' risks?
A: The following table summarizes the primary risks of investing in the Funds:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
FUND RISK
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Equity Funds and Balanced Fund Potential loss of investment due to changes in the stock
market in general, changes in the stock prices of particular
companies and perceptions about particular industries.
- ------------------------------------------------------------------------------------------------------------------
Bond Funds, Tax-Free Funds and Short Term Treasury Potential loss of investment due to changes in the bond
Fund market in general, in the prices of debt securities of
particular companies and in interest rates.
- ------------------------------------------------------------------------------------------------------------------
Money Market Funds Potential failure to maintain a $1.00 net asset value.
- ------------------------------------------------------------------------------------------------------------------
Framlington Emerging Markets Fund, Framlington Because of large investments in foreign securities, the
Global Financial Services Fund, Framlington Funds are riskier than domestic funds due to factors such as
International Growth Fund, International Bond freezes on convertibility of currency, changes in exchange
Fund and International Equity Fund rates, political instability and differences in accounting
and reporting standards.
- ------------------------------------------------------------------------------------------------------------------
Growth Opportunities Fund, Micro-Cap Equity Fund, Because of large investments in mid-capitalization,
NetNet Fund, Small Company Growth Fund and small-capitalization and/or emerging growth companies, the
Small-Cap Value Fund Funds are riskier than large-capitalization funds since such
companies typically have greater earnings fluctuations and
greater reliance on a few key customers than larger
companies.
- ------------------------------------------------------------------------------------------------------------------
Real Estate Equity Investment Fund, Framlington These Funds concentrate their investments in single
Global Financial Services Fund, Framlington industries and could experience larger price fluctuations
Healthcare Fund and NetNet Fund than funds invested in a broader range of industries.
- ------------------------------------------------------------------------------------------------------------------
International Bond Fund, Michigan Triple Tax-Free These "non-diversified" Funds concentrate their investments
Bond Fund and Tax-Free Intermediate Bond Fund in fewer issuers than diversified funds, and could
experience larger price fluctuations than diversified funds.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Q: What are the options for investment in the Funds?
A: Each Equity Fund, other than the NetNet Fund offers five different
investment options, or classes: Class A, B, C, K and Y. The NetNet Fund offers
four different investment options, or classes: Class A, B, C and Y. Each Bond
and Tax-Free Fund offers five different investment options, or classes: Class A,
B, C, K and Y. The Short Term Treasury Fund offers Class Y Shares and Michigan
Municipal League Shares. The Money Market Fund offers Class A, B, C and Y
Shares and Cash Investment Fund, Tax-Free Money Market Fund and U.S. Treasury
Money Market Fund offer Class A, K and Y Shares. Class A, B, C, K and Michigan
Municipal League Shares are offered in other prospectuses.
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
5
<PAGE>
Investor Services Group, Inc. (the "Transfer Agent"), by mailing an Account
Application Form with a check to the Transfer Agent. Fiduciary and discretionary
accounts of institutions and institutional investors must invest at least
$500,000 for all Funds except Real Estate Equity Investment Fund which requires
an initial investment of $250,000. Other types of investors are not subject to
any required minimum investment.
Shares may be redeemed (sold back to the Fund) through your bank or financial
institution or, in some cases, through the free checkwriting privilege.
You may also acquire the Funds' shares by exchanging shares of the same class
of other funds of the Trust, the Company and Framlington, and exchange Fund
shares for shares of the same class of other funds of the Trust, the Company and
Framlington.
Q: What shareholder privileges do the Funds offer?
A:
. Automatic Investment Plan
. Reinvestment privilege
. Free Checkwriting (certain Funds only--See "Redemption of Shares")
Q: When and how are distributions made?
A: Dividend distributions are made from the dividends and interest earned on
investments after expenses. Dividends paid at least annually: Framlington
Emerging Markets Fund, Framlington Global Financial Services Fund, Framlington
Healthcare Fund, Framlington International Growth Fund, Growth Opportunities
Fund, International Equity Fund, Micro-Cap Equity Fund, Multi-Season Growth
Fund, NetNet Fund, Small-Cap Value Fund and Value Fund.
Dividends paid at least quarterly (if income is available): Accelerating
Growth Fund, Balanced Fund, Growth & Income Fund, Small Company Growth Fund and
International Bond Fund.
Dividends paid monthly: Real Estate Equity Investment Fund, Bond Fund,
Intermediate Bond Fund, U.S. Government Income Fund, Michigan Triple Tax-Free
Bond Fund, Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund.
Dividends declared daily and paid monthly: Short Term Treasury Fund, Cash
Investment Fund, Money Market Fund, Tax-Free Money Market Fund, and U.S.
Treasury Money Market Fund.
The Funds distribute capital gains at least annually. Unless you elect to
receive distributions in cash, we will use all dividends and capital gain
distributions of a Fund to purchase additional shares of that Fund.
Q: Who manages the Funds' assets?
A: Munder Capital Management is the Funds' investment advisor. The Advisor is
responsible for all purchases and sales of the securities held by the Funds
other than the Framlington Funds. The Advisor provides overall investment
management services for the Framlington Funds. Framlington Overseas Investment
Management Limited (the "Sub-Advisor") is responsible for all purchases and
sales of securities held by the Framlington Emerging Markets, Healthcare and
International Growth Funds. The Advisor is responsible for all purchases and
sales of domestic securities and the Sub-Advisor is responsible for sales of
foreign securities for the Framlington Global Financial Services Fund.
6
<PAGE>
FINANCIAL INFORMATION
SHAREHOLDER TRANSACTION EXPENSES(1)
The purpose of this table is to assist you in understanding the expenses a
shareholder in the Funds will bear directly.
Maximum Sales Charge on Purchase (as a % of Offering Price)............ None
Sales Charges Imposed on Reinvested Dividends.......................... None
Maximum Deferred Sales Charge.......................................... None
Redemption Fees (2).................................................... None
Exchange Fees.......................................................... None
- -----------------------
Notes:
(1) Does not include fees which institutions may charge for services they
provide to you.
(2) The 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
for the current fiscal year. 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 below are based on fees
for the Funds' past fiscal year, except (i) the fees for the Multi-Season Growth
Fund reflect an anticipated voluntary advisory fee waiver for the current fiscal
year and (ii) the fees for the Framlington Global Financial Services Fund, the
Growth Opportunities Fund, NetNet Fund, (Micro-Cap Equity Fund and Framlington
Healthcare Fund) are based on estimated operating expenses for the current
fiscal year and reflect anticipated voluntary expense reimbursements for the
Growth Opportunities Fund, NetNet Fund, Framlington Global Financial Services
Fund , (Micro-Cap Equity Fund and Framlington Healthcare Fund).
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING
EXPENSES ACCELERATING BALANCED GROWTH & GROWTH INTERNATIONAL
(AS A % OF AVERAGE NET ASSETS) GROWTH FUND FUND INCOME FUND OPPORTUNITIES FUND EQUITY FUND
- ------------------------------ ----------- ---- ----------- ------------------ -----------
<S> <C> <C> <C> <C> <C>
Advisory Fees........................... .75% .65% .75% .75% .75%
Other Expenses+......................... .20% .32% .20% .40%++ .26%
---- ---- ---- ---- ---
Total Fund Operating Expenses+.......... .95% .97% .95% 1.15%++ 1.01%
==== ==== ==== ===== =====
<CAPTION>
SMALL
ANNUAL FUND MICRO-CAP REAL ESTATE SMALL-CAP COMPANY
OPERATING EXPENSES EQUITY MULTI-SEASON EQUITY NETNET VALUE GROWTH
(AS A % OF AVERAGE NET ASSETS) FUND GROWTH FUND INVESTMENT FUND FUND FUND FUND
- ----------------------------- ---- ----------- --------------- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees................... 1.00% .75%* .74% 1.00% .75% .75%
Other Expenses+................. .25%++ .25% .11% .28%++ .38% .22%
------ ---- ---- ---- ---- ----
Total Fund Operating Expenses+.. 1.25%++ 1.00%* .85% 1.28%++ 1.13% .97%
======= ====== ==== ===== ===== ====
<CAPTION>
ANNUAL FUND OPERATING FRAMLINGTON FRAMLINGTON FRAMLINGTON FRAMLINGTON
EXPENSES VALUE GLOBAL FINANCIAL EMERGING HEALTHCARE INTERNATIONAL
(AS A % OF AVERAGE NET ASSETS) FUND SERVICES FUND MARKETS FUND FUND GROWTH FUND
- ----------------------------- ---- ------------- ------------ ---- -----------
<S> <C> <C> <C> <C> <C>
Advisory Fees........................ .74% .75% 1.25% 1.00% 1.00%
Other Expenses+...................... .28% .50%++ .29% .30%++ .30%
---- ---- ---- ------ ----
Total Fund Operating Expenses+....... 1.02% 1.25%++ 1.54% 1.30%++ 1.30%
===== ===== ===== ======= =====
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE INTERNATIONAL U.S. MICHIGAN TRIPLE
ANNUAL FUND OPERATING EXPENSES BOND BOND BOND GOVERNMENT TAX-FREE BOND
(AS A % OF AVERAGE NET ASSETS) FUND FUND FUND INCOME FUND FUND
- ----------------------------- ---- ---- ---- ----------- ----
<S> <C> <C> <C> <C> <C>
Advisory Fees.......................... .50% .50% .50% .50% .50%
Other Expenses......................... .21% .18% .35% .21% .13%
---- ---- ---- ---- ----
Total Fund Operating Expenses.......... .71% .68% .85% .71% .63%
==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
SHORT TAX-FREE
TAX-FREE TAX-FREE TERM CASH MONEY MONEY
ANNUAL FUND OPERATING EXPENSES BOND INTERMEDIATE TREASURY INVESTMENT MARKET MARKET
(AS A % OF AVERAGE NET ASSETS) FUND BOND FUND FUND FUND FUND FUND
- ----------------------------- ---- --------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees.......................... .50% .50% .25% .35% .40% .35%
Other Expenses........................ .20% .18% .27% .20% .24% .18%
---- ---- ---- ---- ---- ----
Total Fund Operating Expenses.......... .70% .68% .52% .55% .64% .53%
==== ==== ==== ==== ==== ====
<CAPTION>
ANNUAL FUND OPERATING U.S. TREASURY
EXPENSES MONEY
(AS A % OF AVERAGE NET ASSETS) MARKET FUND
- ----------------------------- -------------
<S> <C>
Advisory Fees......................... .35%
Other Expenses........................ .19%
----
Total Fund Operating Expenses.......... .54%
====
</TABLE>
- -------------------
* The Advisor expects to voluntarily waive a portion of its advisory fees for
the current fiscal year. Without waiver, the ratio of advisory fees to average
net assets would be 1.00% and total fund operating expenses would be at 1.25%.
+ After expense reimbursements, if any.
++ The Advisor expects to voluntarily reimburse the Funds for certain operating
expenses. In the absence of such expense reimbursements, it is estimated that
total fund operating expenses would be 1.28% for Growth Opportunities Fund,
1.42% for the Framlington Global Financial Services Fund, 1.51% for the
Framlington Healthcare Fund, 1.35% for the Micro-Cap Equity Fund and 2.09% for
the NetNet Fund.
8
<PAGE>
EXAMPLE
This example shows the amount of expenses you would pay (directly or
indirectly) on a $1,000 investment in the Funds assuming (1) a 5% annual return
and (2) redemption at the end of the time periods. 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 SHOWN.
<TABLE>
<CAPTION>
1 YEAR 3 YEAR 5 YEAR 10 YEARS
------ ------ ------ --------
<S> <C> <C> <C> <C>
Accelerating Growth Fund $10 $30 $53 $117
Balanced Fund $10 $31 $54 $119
Growth & Income Fund $10 $30 $53 $117
Growth Opportunities Fund $14 $45
International Equity Fund $10 $32 $56 $124
Micro-Cap Equity Fund $13 $40 $69 $151
Multi-Season Growth Fund $10 $32 $55 $122
NetNet Fund $13 $41 $71 $155
Real Estate Equity Investment Fund $11 $35 $61 $134
Small-Cap Value Fund $12 $36 $62 $137
Small Company Growth Fund $10 $31 $54 $119
Value Fund $10 $32 $56 $125
Framlington Emerging Markets Fund $16 $49 $84 $183
Framlington Global Financial Services Fund $15 $48
Framlington Healthcare Fund $13 $41 $71 $157
Framlington International Growth Fund $13 $41 $71 $157
Bond Fund $ 7 $23 $40 $ 88
Intermediate Bond Fund $ 7 $22 $38 $ 85
International Bond Fund $ 9 $27 $47 $105
U.S. Government Income Fund $ 7 $23 $40 $ 88
Michigan Triple Tax-Free Bond Fund $ 6 $20 $35 $ 79
Tax-Free Bond Fund $ 7 $22 $39 $ 87
Tax-Free Intermediate Bond Fund. $ 7 $22 $39 $ 85
Short Term Treasury Fund $ 5 $17 $29 $ 65
Cash Investment Fund $ 6 $18 $31 $ 69
Money Market Fund $ 7 $20 $36 $ 80
Tax-Free Money Market Fund $ 5 $17 $30 $ 66
U.S. Treasury Money Market Fund $ 6 $17 $30 $ 68
</TABLE>
9
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights were audited by Ernst & Young LLP,
independent auditors, except that, for periods ended prior to June 30, 1995 for
the Multi-Season Growth Fund and Money Market Fund, such financial highlights
were audited by another independent auditor. This information should be read in
conjunction with the Funds' most recent Annual Reports, which are incorporated
by reference into the SAI. You may obtain the Annual Reports without charge by
calling (800) 438-5789.
<TABLE>
<CAPTION>
ACCELERATING GROWTH FUND(A)
------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(I) 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93 2/29/92
------- ---------- ------- ---------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income........................
Net realized and unrealized gain on
investments..................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment income/loss to average
net assets...................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers...........................
Average commission rate (g)..................
</TABLE>
- --------------------------
(a) The Munder Accelerating Growth Fund Class Y Shares commenced operations on
December 1, 1991.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Amount rounds to less than 0.01%. (i) Per share numbers have been calculated
using the average shares method, which more appropriately presents the per share
data for the period since the use of the undistributed net investment income
method did not accord with the results of operations.
10
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND(A)
----------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(G) 6/30/96(G) 6/30/95(D) 2/28/95(E) 2/28/94
------- ---------- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income........................
Net realized and unrealized gain/(loss) on
investments..................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment income to average
net assets...................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers...........................
Average commission rate (f)..................
</TABLE>
- -------------------
(a) The Munder Balanced Fund Class Y Shares commenced operations on April 13,
1993.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
11
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND(A)
------------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(H) 6/30/96(H) 6/30/95(D) 2/28/95(E)
------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income........................
Net realized and unrealized gain on
investments..................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment income to average
net assets...................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers...........................
Average commission rate (g)..................
</TABLE>
- ---------------------
(a) The Munder Growth & Income Fund Class Y Shares commenced operations on July
5, 1994.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
12
<PAGE>
<TABLE>
<CAPTION>
GROWTH OPPORTUNITIES
FUND
--------------------------
PERIOD
ENDED
6/30/98
----------------
<S> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income........................
Net realized and unrealized gain on
investments..................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment income to average
net assets...................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers...........................
Average commission rate (d)..................
</TABLE>
- ----------
(a) The Growth Opportunities fund commenced operations on June 3, 1998.
13
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND(A)
------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(D) 2/28/95(E,F) 2/28/94 2/28/93 2/29/92
------- ---------- ---------- ---------- ------------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income........................
Net realized and unrealized gain/(loss) on
investments..................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Distributions from capital...................
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment loss to average
net assets...................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers...........................
Average commission rate (h)..................
</TABLE>
- -------------------
(a) The Munder International Equity Fund Class Y Shares commenced operations on
December 1, 1991.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(g) Amount represents less than $0.01 per share.
(h) Average commission rate paid per share of securities purchased and sold by
the Fund.
14
<PAGE>
<TABLE>
<CAPTION>
MICRO-CAP
EQUITY FUND(A)
---------------------
YEAR PERIOD
ENDED ENDED
6/30/98 6/30/97(E)
------- ----------
<S> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment loss........................
Net realized and unrealized gain on
investments..................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment loss to average
net assets...................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers...........................
Average commission rate (d)..................
</TABLE>
- -------------------
(a) The Munder Micro-Cap Equity Fund Class Y Shares commenced operations on
December 26, 1996.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
15
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND(A)
-------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(H) 6/30/96(H) 6/30/95(D,E,F) 12/31/94 12/31/93
------- ---------- ---------- -------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income........................
Net realized and unrealized gain/(loss) on
investments..................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment income to average
net assets...................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers...........................
Average commission rate (g)..................
</TABLE>
- --------------------
(a) The Munder Multi-Season Growth Fund Class Y Shares commenced operations on
August 16, 1993.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
December 31.
(e) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
(f) On February 1, 1995, the Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(i) Amount represents less than $0.01 per share.
16
<PAGE>
<TABLE>
<CAPTION>
NETNET FUND(a)
---------------
PERIOD
ENDED
6/30/98
---------------
<S> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income........................
Net realized and unrealized gain on
investments..................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets.......................................
Ratio of net investment income to average
net assets...................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers...........................
Average commission rate (d)..................
</TABLE>
- --------------------
(a) The NetNet Fund commenced operations on June 1, 1998.
17
<PAGE>
<TABLE>
<CAPTION>
SMALL-CAP VALUE
REAL ESTATE EQUITY INVESTMENT FUND(A) FUND(A)
-------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96(F) 6/30/95(D) 6/30/98 6/30/97(F)
-------- ------- ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period.............................
Income from investment operations:
Net investment income............
Net realized and unrealized gain
on investments..................
Total from investment operations.
Less distributions:
Dividends from net investment
income..........................
Distributions in excess of net
investment income...............
Distributions from paid-in
capital.........................
Total distributions..............
Net asset value at end of period....
Total return (b).................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's)...........................
Ratio of operating expenses to
average net assets...............
Ratio of net investment income to
average net assets...............
Portfolio turnover rate..........
Ratio of operating expenses to
average net assets w/o waivers
and/or expenses reimbursed.......
Average commission rate (e)......
</TABLE>
- -------------
(a) The Munder Real Estate Equity Investment Fund Class Y Shares commenced
operations on October 3, 1994. The Munder Small-Cap Value Fund Class Y Shares
commenced operations on December 26, 1996.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Average commission rate paid per share of securities purchased and sold by
the Fund.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
18
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND(A)
-----------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(E) 2/28/95(D) 2/28/94 2/28/93 2/29/92
------- ---------- ---------- ---------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............
Income from investment operations:
Net investment loss..........................
Net realized and unrealized gain/(loss)
on investments...............................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Total distributions..........................
Net asset value at end of period................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses
to average net assets........................
Ratio of net investment loss to
average net assets...........................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers...........................
Average commission rate (g)..................
</TABLE>
- --------------------
(a) The Munder Small Company Growth Fund Class Y Shares commenced operations on
December 1, 1991.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(e) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(g) Average commissions rate paid per share of securities purchased and sold by
the Fund.
19
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND(A)
--------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/96(E)
------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period.............
Income from investment operations:
Net investment income.........................
Net realized and unrealized gain on
investments..................................
Total from investment operations..............
Less distributions:
Dividends from net investment income..........
Distributions from net realized gains.........
Total distributions...........................
Net asset value at end of period.................
Total return (b)..............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)..........
Ratio of operating expenses to average net
assets.....................................
Ratio of net investment income/(loss) to
average net assets.........................
Portfolio turnover rate.......................
Ratio of operating expenses to average net
assets w/o waivers and expenses reimbursed.
Average commission rate(d)....................
</TABLE>
- -----------
(a) The Munder Value Fund Class Y Shares commenced operations on August 18,
1995.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
20
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON
GLOBAL
FRAMLINGTON FINANCIAL FRAMLINGTON FRAMLINGTON
EMERGING MARKETS SERVICES HEALTHCARE INTERNATIONAL GROWTH
FUND(A) FUND(A) FUND(A) FUND(A)
-----------------------------------------------------------------------------
YEAR PERIOD PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/98 6/30/98 6/30/97 6/30/98 6/30/97(E)
------- ---------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income.......................
Net realized and unrealized gain on
investments.................................
Total from investment operations............
Less distributions:
Dividends from net investment income........
Distributions from net realized gains.......
Total Distributions.........................
Net asset value at end of period ..............
Total Return(b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)........
Ratio of operating expenses to average net
assets .....................................
Ratio of net investment income to average
net assets..................................
Portfolio turnover rate.....................
Ratio of operating expenses to average net
assets w/o expenses reimbursed..............
Average commission rate(d)..................
</TABLE>
- --------------------
(a) The Munder Framlington Emerging Markets Fund, The Munder Framlington
Healthcare Fund and The Munder Framlington International Growth Fund Class Y
Shares all commenced operations on December 31, 1996. The Munder Framlington
Global Financial Services Fund commenced operations on June 15, 1998.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
21
<PAGE>
<TABLE>
<CAPTION>
BOND FUND(A)
-------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D) 2/28/95(E,F) 2/28/94 2/28/93 2/29/92(A)
------- ------- ------- ---------- ------------ ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period.............................
Income from investment operations:
Net investment income...........
Net realized and unrealized
gain/(loss) on investments......
Total from investment
operations......................
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gains...........................
Total distributions.............
Net asset value at end of period...
Total return (b)................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's)..........................
Ratio of operating expenses to
average net assets..............
Ratio of net investment income
to average net assets...........
Portfolio turnover rate.........
Ratio of operating expenses to
average net assets w/o waivers..
</TABLE>
- -------------------
(a) The Munder Bond Fund Class Y Shares commenced operations on December 1,
1991.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
22
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND(A)
--------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93 2/29/92
------- ---------- ------- ---------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period...........................
Income from investment operations:
Net investment income..........
Net realized and unrealized
gain/(loss) on investments.....
Total from investment
operations....................
Less distributions:
Dividends from net investment
income........................
Distributions from net realized
gains.........................
Total distributions............
Net asset value at end of period..
Total return(b)................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's)........................
Ratio of operating expenses to
average net assets............
Ratio of net investment income
to average net assets.........
Portfolio turnover rate........
Ratio of operating expenses to
average net assets w/o
waivers........................
</TABLE>
- -----------------------
(a) The Munder Intermediate Bond Fund Class Y Shares commenced operations on
December 1, 1991.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
23
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL U.S. GOVERNMENT INCOME FUND(A)
BOND FUND(A)
----------------------------------------------------------------------
YEAR PERIOD YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/98 6/30/97 6/30/96(F) 6/30/95(D) 2/28/95(E)
------- ------- ------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period .............................
Income from investment operations:
Net investment income............
Net realized and unrealized
gain/(loss) on investments......
Total from investment operations.
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gains...........................
Total distributions..............
Net asset value at end of period....
Total return(b)..................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's)..........................
Ratio of operating expenses to
average net assets..............
Ratio of net investment income to
average net assets..............
Portfolio turnover rate..........
Ratio of operating expenses to
average net assets w/o waivers..
</TABLE>
- -------------------------
(a) The Munder International Bond Fund Class Y Shares commenced operations on
October 2, 1996 and the U.S. Government Income Fund Class Y Shares commenced
operations on July 5, 1994.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
24
<PAGE>
<TABLE>
<CAPTION>
MICHIGAN TRIPLE-TAX-FREE BOND FUND(A)
--------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/96(E) 6/30/95(D,E) 2/28/95(E,F) 2/28/94
--------- ---------- --------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period................
Income from investment operations:
Net investment income...........................
Net realized and unrealized gain/(loss)
on investments..................................
Total from investment operations................
Less distributions:
Dividends from net investment income............
Distributions from net realized gains...........
Total distributions.............................
Net asset value at end of period....................
Total return (b)................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)............
Ratio of operating expenses to average
net assets .....................................
Ratio of net investment income to average net
assets..........................................
Portfolio turnover rate.........................
Ratio of operating expenses to average
net assets w/o waivers..........................
- --------------------
</TABLE>
(a) The Munder Michigan Triple Tax-Free Bond Fund Class Y Shares commenced
operations on January 3, 1994.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Amount represents less than $0.01 per share.
25
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE BOND FUND(A)
--------------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/96(E) 6/30/95(D,E) 2/28/95(F)
--------- ---------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.........................
Income from investment operations:
Net investment income.....................................
Net realized and unrealized gain on investments...........
Total from investment operations..........................
Less distributions:
Dividends from net investment income......................
Distributions from net realized gains.....................
Total distributions.......................................
Net asset value at end of period.............................
Total return (b)..........................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)......................
Ratio of operating expenses to average net assets.........
Ratio of net investment income to average net assets......
Portfolio turnover rate...................................
Ratio of operating expenses to average net assets
w/o waivers...............................................
</TABLE>
- --------------------
(a) The Munder Tax-Free Bond Fund Class Y Shares commenced operations on
July 21, 1994.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
26
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE BOND FUND(A)
------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93
-------- ---------- ----------- ---------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period..........
Income from investment operations:
Net investment income.....................
Net realized and unrealized
gain/(loss) on investments................
Total from investment operations..........
Less distributions:
Dividends from net investment income......
Distributions from net realized gains.....
Total distributions.......................
Net asset value at end of period..............
Total return (b)..........................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in 000's)......
Ratio of operating expenses
to average net assets.....................
Ratio of net investment
income to average net assets..............
Portfolio turnover rate...................
Ratio of operating expenses
to average net assets w/o
waivers...................................
</TABLE>
- --------------------
(a) The Munder Tax-Free Intermediate Bond Fund Class Y Shares commenced
operations on December 17, 1992.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
27
<PAGE>
<TABLE>
<CAPTION>
SHORT TERM TREASURY FUND (A)
-------------------------------
YEAR YEAR
ENDED ENDED
6/30/98 6/30/97
------------- -------------
<S> <C> <C>
Net asset value, beginning of period..................................
Income from investment operations:
Net investment income............................................
Net realized and unrealized gain/(loss) on investments...........
Total from investment operations.................................
Less distributions:
Dividends from net investment income.............................
Distributions from net realized gains............................
Total distributions..............................................
Net asset value at end of period......................................
Total return (b).................................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).............................
Ratio of operating expenses to average net assets................
Ratio of net investment income to average net assets.............
Portfolio turnover rate..........................................
Ratio of operating expenses to average net
assets w/o waivers...............................................
</TABLE>
- -----------------
(a) The Munder Short Term Treasury Fund Class Y Shares commenced operations on
January 29, 1997.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
28
<PAGE>
<TABLE>
<CAPTION>
CASH INVESTMENT FUND(A)
-------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(d) 2/28/95(e)
------- -------- ------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period...................
Income from investment operations:
Net investment income.............................
Total from investment operations..................
Less distributions:
Dividends from net investment income..............
Total distributions...............................
Net asset value at end of period.......................
Total return (b)..................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)..............
Ratio of operating expenses to
average net assets................................
Ratio of net investment income
to average net assets.............................
Ratio of operating expenses to
average net assets w/o waivers....................
</TABLE>
- ------------------
(a) The Munder Cash Investment Fund Class Y Shares commenced operations on March
14, 1990.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
29
<PAGE>
<TABLE>
<CAPTION>
CASH INVESTMENT FUND(A)
-------------------------------------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
2/28/94 2/28/93 2/29/92 2/28/91
---------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period......................
Income from investment operations:
Net investment income................................
Total from investment operations.....................
Less distributions:
Dividends from net investment income.................
Total distributions..................................
Net asset value at end of period..........................
Total return (b).....................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).................
Ratio of operating expenses to average net assets....
Ratio of net investment income to average net
assets...............................................
Ratio of operating expenses to average
net assets w/o waivers...............................
</TABLE>
- --------------------
(a) The Munder Cash Investment Fund Class Y Shares commenced operations on March
14, 1990.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
30
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND(A)
-----------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D,E) 12/31/94 12/31/93
----------- ------------ ----------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...........
Income from investment operations:
Net investment income.....................
Total from investment operations..........
Less distributions:
Dividends from net investment income......
Total distributions.......................
Net asset value at end of period...............
Total return (b)..........................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)......
Ratio of operating expenses to
average net assets........................
Ratio of net investment income to
average net assets........................
Ratio of operating expenses to
average net assets w/o waivers............
</TABLE>
- --------------------
(a) The Munder Money Market Fund Class Y Shares commenced operations on August
18, 1993.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end
was December 31.
(e) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
31
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND(A)
---------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D,E) 2/28/95(E)
------- ------- ------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............
Income from investment operations:
Net investment income.........................
Total from investment operations..............
Less distributions:
Dividends from net investment income..........
Total Distributions...........................
Net asset value at end of period................
Total Return (b)..............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)..........
Ratio of operating expenses to average net
assets .......................................
Ratio of net investment income to average net
assets........................................
Ratio of operating expenses to average net
assets w/o waivers............................
</TABLE>
_____________________
(a) The Munder Tax-Free Money Market fund Class 4 Shares commenced operations
on March 14, 1990.
(b) Total return represents aggregate total return for period indicated.
(c) Annualized.
(d) Fiscal year changed to June 30. Prior to this, the fiscal year end was the
last day of February.
(e) On February 1, 1995, Munder Capital Management, Inc. as investment advisor
for the Fund as a result of the consolidation of the investment advisory
business of woodbridge Capital Management, Inc. and Munder Capital
Management, Inc.
32
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND(A)
- -----------------------------------------------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
2/28/94 2/28/93 2/29/92 2/28/91
- ------- ------- ------- -------
<S> <C> <C> <C>
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND(A)
----------------------------------------------
YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D) 2/28/95(E)
------- ------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............
Income from investment operations:
Net investment income.........................
Total from investment operations..............
Less distributions:
Dividends from net investment income..........
Total distributions...........................
Net asset value at end of period................
Total return (b)..............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)..........
Ratio of operating expenses to average net
assets .......................................
Ratio of net investment income to average net
assets........................................
Ratio of operating expenses to average net
assets w/o waivers............................
</TABLE>
- --------------------
(a) The Munder U.S. Treasury Money Market Fund Class Y Shares commenced
operations on March 14, 1990.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
34
<PAGE>
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND(A)
- ----------------------------------------------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
2/28/94 2/28/93 2/29/92 2/28/91
- ------- ------- ------- -------
<S> <C> <C> <C>
</TABLE>
35
<PAGE>
FUND CHOICES
WHAT FUNDS ARE OFFERED?
This Prospectus offers Class Y Shares of the Funds described below. This
section summarizes each Fund's principal investments. The sections entitled
"What are the Funds' Investments and Investment Practices?" and "What are the
Risks of Investing in the Funds?" and the SAI give more information about the
Funds' investment techniques and risks. Capitalized terms are explained in the
section entitled "What are the Funds' Investments and Investment Practices?"
ACCELERATING GROWTH FUND
GOALS 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:
. the potential for accelerated earnings growth
. the maintenance of a substantial competitive advantage
. a focused management team
. a stable balance sheet.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
The Fund is closed to new investments.
BALANCED FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide an
attractive investment return through a combination of growth of capital and
current income. The Fund will allocate its assets among three asset groups:
Equity Securities, Fixed Income Securities and Cash Equivalents.
. The Fund normally will invest at least 25% of its assets in Fixed Income
Securities and no more than 75% of its assets in Equity Securities. The
Fund will notify shareholders at least 30 days before changing this
policy.
The Advisor will allocate the Fund's assets to the three asset groups based
on its view of the following factors, among others:
. general market and economic conditions and trends
. interest rates and inflation rates
. fiscal and monetary developments
. long-term corporate earnings growth.
The Advisor will try to take advantage of changing economic conditions by
adjusting the ratio of Equity Securities to Fixed Income Securities or Cash
Equivalents. For example, if the Advisor believes that rapid economic growth
will lead to better corporate earnings in the future, then it might increase the
Fund's Equity Securities holdings and reduce its Fixed Income Securities and
Cash Equivalents holdings.
36
<PAGE>
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
GROWTH & INCOME FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide capital
appreciation and current income. It primarily invests in 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 Standard and Poor's 500
Composite Price Index ("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 Old MCM, Inc.
("MCM"), the predecessor to the Advisor, since January 1987.
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.
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
37
<PAGE>
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 (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.
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 of companies with market capitalizations of over $1 billion.
38
<PAGE>
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 April 1993.
Mr. Barr is the Senior Vice President and Director of Research of the Advisor.
From April 1988 to April 1993 he held similar positions with MCM. Mr. Munder is
the Chairman of the Advisor.
NETNET FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's 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
invests in those companies listed on a U.S. securities exchange 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 invests 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
39
<PAGE>
. 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 and Robert E. Crosby jointly manage
the Fund. Mr. Hoglund has managed the Fund since October 1996. Mr. Hoglund was
formerly the primary analyst of the Fund (October 1994 to October 1996). Mr.
Crosby has managed the Fund since March 1998. Mr. Crosby was formerly the
primary analyst of the Fund (October 1996 to March 1998). Mr. Crosby has been
with the Advisor since 1993, and also serves as portfolio manager for separately
managed institutional accounts.
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 the company 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, Edward Eberle and Brian Wall jointly
manage the Fund. Mr. Seizert, a Chief Executive 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 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. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge Capital Management, Inc. ("Woodbridge") (1994-1995) and an Assistant
Vice President in Equity Research for Merrill Lynch, Pierce Fenner & Smith in
New York (1992-1994).
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
40
<PAGE>
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 from 1995 to 1996. Prior
to joining the Advisor in 1995, Mr. Wilk was a Senior Equity Research Analyst
for the Fund at Woodbridge. Mr. Gura has managed the Fund since March 1997.
Prior to joining the Advisor in 1995, Mr. Gura was a Vice President and Senior
Equity Analyst for the Fund at Woodbridge (1994-1995) and an investment officer
for Manufacturers National Bank Trust Department (1989-1994).
VALUE FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide
long-term capital appreciation, its secondary goal is to provide income. 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 the company 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, Edward Eberle and Brian Wall jointly
manage the Fund. Mr. Seizert, a Chief Executive 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 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. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge (1994-1995) and an Assistant Vice President in Equity Research for
Merrill Lynch, Pierce Fenner & Smith in New York (1992-1994).
41
<PAGE>
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. A committee of professional portfolio managers
employed by the Sub-Advisor makes investment decisions for the Fund. William
Calvert heads the committee.
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.
PORTFOLIO MANAGEMENT. A committee of professional managers employed by the
Advisor or the Sub-Advisor makes decisions for the Fund.
42
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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 these 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.
BOND FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide a
high level of current income, its secondary goal is 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 fifteen 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 Manager of the Advisor or MCM since 1995. Prior to
joining the Advisor, he was a Vice President and Senior Fund Manager for First
of America Investment Corp.
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<PAGE>
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 MANAGEMENT. 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 Foreign 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 fifteen 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 or MCM, has managed the Fund since October 1996. Prior
to joining MCM 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 generally will be between
six and fifteen 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.
MICHIGAN TRIPLE TAX-FREE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide as high a
level of current interest income exempt from regular Federal income taxes,
Michigan state income and Michigan intangibles tax as is consistent with prudent
investment management and preservation of capital.
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<PAGE>
. Except during temporary defensive periods, at least 80% of the Fund's
net assets are invested in Michigan Municipal Obligations.
. The Fund will invest primarily in Michigan Municipal Obligations which
have remaining maturities of between three and thirty years.
. The Fund's dollar-weighted average maturity will generally be between
ten and twenty years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank
(1985-1993).
TAX-FREE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a high level
of current interest income exempt from Federal income taxes and to generate as
competitive a long-term rate of return as is consistent with prudent investment
management and preservation of capital.
. Under normal market conditions, at least 65% of the Fund's assets will
be invested in Municipal Obligations.
. Except during temporary defensive periods, at least 80% of the Fund's
net assets will be invested in Municipal Obligations whose interest is
exempt from regular Federal income tax. This fundamental policy may
only be changed with shareholder approval.
. The Fund invests primarily in intermediate-term and long-term
Municipal Obligations which have remaining maturities of between three
and thirty years.
. The Fund's dollar-weighted average maturity will generally be between
ten and twenty years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank
(1985-1993).
TAX-FREE INTERMEDIATE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a
competitive level of current interest income exempt from regular Federal income
taxes and a total return which, over time, exceeds the rate of inflation and the
return provided by tax-free money market instruments.
. Under normal market conditions, at least 65% of the Fund's net assets
will be invested in Municipal Obligations.
. Except during temporary defensive periods, at least 80% of the Fund's
net assets will be invested in Municipal Obligations whose interest is
exempt from regular Federal income tax.
. The Fund invests in Michigan Municipal Obligations from time to time.
. The Fund generally buys obligations with remaining maturities of ten
years or less.
. The Fund's dollar-weighted average maturity will generally be between
three and eight years, but may be up to ten years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank.
SHORT TERM TREASURY FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide investors
with an enhanced money market return consistent with capital preservation.
Under normal conditions, the Fund invests all of its assets
45
<PAGE>
in U.S. Treasury securities and repurchase agreements fully collateralized by
U.S. Treasury securities. The Fund's dollar-weighted average portfolio maturity
usually will not exceed two years.
The Fund seeks to generate a total return which exceeds money market
instruments while minimizing the fluctuation of its net asset value. The Fund,
however, is not a money market fund and its net asset value may fluctuate.
PORTFOLIO MANAGEMENT. Sharon E. 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.
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.
TAX-FREE MONEY MARKET FUND
. The Fund's goal is to provide as high a level of current interest
income exempt from Federal income taxes as is consistent with
maintaining liquidity and stability of principal.
. The Fund invests substantially all of its assets in short-term, U.S.
dollar-denominated Municipal Obligations, the interest on which is
exempt from regular Federal income tax.
. Under normal market conditions, the Fund will invest at least 80% of
its net assets in Municipal Obligations.
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.
WHO MAY WANT TO INVEST IN THE FUNDS?
Equity Funds
These Funds are designed for investors who desire potentially high capital
appreciation and who can accept short-term variations in return for potentially
greater returns over the long term. In general, the greater the risk, the
greater the potential reward. Investors who have a short time horizon, who
desire a high level of income or who are conservative in their investment
approach may wish to invest in other portfolios offered by the Trust and the
Company.
Bond Funds and Tax-Free Funds
These Funds are designed for investors who desire potentially higher
returns than more conservative fixed rate investments or money market funds and
who seek current income. The Tax-Free Funds may be desirable for investors who
seek primarily tax-exempt income. When you choose among the Funds, you should
consider both the expected yield of the Funds and potential changes in each
Fund's share price. The yield and potential price changes of a Fund's shares
depend on the quality and maturity of the obligations in its portfolio, as well
as on other market conditions.
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<PAGE>
Short Term Treasury Fund and Money Market Funds
These Funds are designed for investors who desire a high level of income
and liquidity and, in the case of the Money Market Funds, stability of
principal.
WHAT ARE THE FUNDS' INVESTMENTS AND INVESTMENTS PRACTICES?
Each Equity Fund invests in EQUITY SECURITIES, which include 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 Funds. 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 (other than the Short Term Treasury Fund) may invest in MONEY
MARKET INSTRUMENTS, 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 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, EDRS AND GLOBAL DEPOSITARY RECEIPTS
("GDRS"). 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 Funds (other than the U.S. Treasury Money Market Fund and Short Term
Treasury Fund) may buy shares of registered MONEY MARKET FUNDS. The 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 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.
Each Fund (other than the Short Term Treasury Fund) 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 Fund (other than the Short Term Treasury 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.
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Under normal market conditions, the Equity Funds will not invest to a
significant extent, or on a routine basis, in U.S. Government Securities.
Each 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 can be changed only by
shareholders.
All of the Funds, other than the International Bond Fund, the Michigan
Triple Tax-Free Bond Fund and the Tax-Free Intermediate 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
non-diversified funds.
The Tax-Free Funds will acquire long-term instruments only if they are
rated "A" or better by Moody's Investors Service Inc. ("Moody's") or Standard &
Poor's Rating Service ("S&P") or, if unrated, are of comparable quality. These
Funds will acquire short-term instruments only if they (i) have short-term debt
ratings in the top two categories by at least one nationally recognized
statistical rating organization, (ii) are issued by an issuer with such ratings
or (iii), if unrated, are of comparable quality.
The Advisor does not intend to invest more than 25% of a Fund's assets in
securities whose issuers are in the same state, except that the Advisor may
invest more than 25% of the Michigan Triple Tax-Free Bond Fund's and the Tax-
Free Intermediate Bond Fund's assets in Michigan Municipal Obligations.
Each Tax-Free Fund may invest in short-term money market instruments on a
temporary basis or for temporary investment purposes. Short-term money market
instruments include U.S. government obligations, debt securities of issuers
having a rating within the two highest categories of either S&P or Moody's, and
certificates of deposit or bankers' acceptances of domestic branches of U.S.
banks with at least $1 billion in assets.
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. Each Money Market
Fund may also hold uninvested cash pending investment of late payments for
purchase orders or during temporary defensive periods.
Investment Charts
The following charts summarize the Funds' investments and investment
practices. The SAI contains more details. All percentages are based on a 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 Funds'
investment practices.
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49
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<TABLE>
<CAPTION>
EQUITY FUNDS
- ----------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND ACCELERATING GROWTH & GROWTH INTERNATIONAL MICRO-CAP
INVESTMENT PRACTICES GROWTH BALANCED INCOME OPPORTUNITIES EQUITY EQUITY
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOREIGN SECURITIES. Includes securities
issued by non-U.S. companies. Present 25% 25% 25% 25% Y 25%
more risks than U.S. securities.
- ----------------------------------------------------------------------------------------------------------------------------
LOWER-RATED DEBT SECURITIES. Fixed Income
Securities which are rated below
investment grade by Standard & Poor's
Ratings Service, Moody's Investors
Service, Inc. or other nationally Y Y 20% Y Y Y
recognized rating agency. Considered
riskier than investment grade securities.
- ----------------------------------------------------------------------------------------------------------------------------
INVESTMENT-GRADE ASSET BACKED SECURITIES.
Includes debt securities backed by
mortgages, installment sales contracts N Y N N N N
and credit card receivables.
- ----------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Includes
participations in trusts that hold U.S.
Treasury and agency securities which
represent either the interest payments N Y N N N N
or principal payments on the securities
or combination 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. May
decrease a Fund's loss due to a change Y Y Y Y Y Y
in a currency value, but also limits
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 Y Y Y Y Y Y
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 has the right
or the obligation, at maturity, to make
delivery of, or receive securities, the
cash value of an index, or foreign Y Y Y Y Y Y
currency. Used for hedging purposes or
to maintain 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 Y Y Y Y Y Y
a set price. Options may relate to
securities 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 upon time and price.
A method to borrow money for temporary Y Y Y Y Y Y
purposes.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y = INVESTMENT ALLOWED WITHOUT RESTRICTION
N = INVESTMENT NOT ALLOWED
(1) THE LIMITATION ON MARGINS AND PREMIUMS FOR FUTURES AND OPTIONS ON FUTURES
IS 5% OF A FUND'S ASSETS.
(2) BASED ON NET ASSETS.
50
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS (continued)
- ----------------------------------------------------------------------------------------------------------------------------
MULTI- REAL ESTATE SMALL- SMALL FRAMLINGTON FRAMLINGTON FRAMLINGTON
SEASON EQUITY CAP COMPANY EMERGING GLOBAL FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH NETNET INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
25% Y N 25% 25% 25% Y Y Y Y
- ----------------------------------------------------------------------------------------------------------------------------
Y N 5% Y Y Y Y Y Y Y
- ----------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ----------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ----------------------------------------------------------------------------------------------------------------------------
Y Y N Y Y Y Y Y Y Y
- ----------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ----------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ----------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ----------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS (continued)
- ----------------------------------------------------------------------------------------------------------------------------
MICRO-
INVESTMENTS AND ACCELERATING GROWTH & GROWTH INTERNATIONAL CAP
INVESTMENT PRACTICES GROWTH BALANCED INCOME OPPORTUNITIES EQUITY EQUITY
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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 N N N N N N
construction 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 N N N N N N
owns or has the right to acquire at no
additional cost but does not intend to
deliver to the buyer, a practice known as
selling short "against the box."
- ----------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no
ready market for these securities, which
inhibits the ability to sell them for
full market value, or there are legal 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
restrictions on their resale by the Fund.
- ----------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend
securities to financial institutions
which pay for the use of the securities.
May increase return. Slight risk of 25% 25% 25% 25% 25% 25%
borrower failing financially.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS (continued)
- ----------------------------------------------------------------------------------------------------------------------------
REAL ESTATE SMALL- SMALL FRAMLINGTON FRAMLINGTON FRAMLINGTON
MULTI-SEASON EQUITY CAP COMPANY EMERGING GLOBAL FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH NETNET INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Y Y Y Y Y Y Y Y Y Y
- ----------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ----------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ----------------------------------------------------------------------------------------------------------------------------
15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
- ----------------------------------------------------------------------------------------------------------------------------
25% 25% 25% 25% 25% 25% 25% 25% 25% 25%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Key:
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1) THE LIMITATION ON MARGINS AND PREMIUMS FOR FUTURES AND OPTIONS ON FUTURES
IS 5% OF A FUND'S ASSETS.
(2) BASED ON NET ASSETS.
53
<PAGE>
<TABLE>
<CAPTION>
BOND FUNDS
- ----------------------------------------------------------------------------------------------------------------------------
U.S.
GOVERNMENT
INVESTMENTS AND BOND INTERMEDIATE INTERNATIONAL INCOME
INVESTMENT PRACTICES FUND BOND FUND BOND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOREIGN SECURITIES. Securities issued by foreign governments 25% 25% Y 25%
and their agencies, instrumentalities or political
subdivisions, supranational organizations, and foreign
corporations. Does not include Bank Obligations.
- ----------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Includes debt securities backed by Y Y Y Y
mortgages, installment sales contracts and credit card
receivables.
- ----------------------------------------------------------------------------------------------------------------------------
INTEREST RATE AND CURRENCY SWAPS. Agreement to exchange payments Y(1) Y(1) Y Y(1)
calculated on the basis of relative interest or currency
rates. Derivative instruments used solely for hedging.
- ----------------------------------------------------------------------------------------------------------------------------
INTEREST RATE CAPS AND FLOORS. Entitle purchaser to receive N N Y N
payments of interest to the extent that a specified reference
rate exceeds or falls below a predetermined level.
- ----------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS. Include securities issued by, or Y Y Y Y
guaranteed by, the U.S. Government or its agencies or
instrumentalities.
- ----------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Include participations in trusts that hold Y Y Y Y
U.S. Treasury and agency securities which represent either
the interest payments or principal payments on the securities
or combination of both.
- ----------------------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund sells securities and Y Y Y Y
agrees to buy them back later at an agreed upon time and
price. A method to borrow money for temporary purposes.
- ----------------------------------------------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Obligations of a Y Y Y Y
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 gains from currency
changes.
- ----------------------------------------------------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. dollar denominated bank obligations, Y Y Y Y
including certificates of deposit, bankers' acceptances, bank
notes and time deposits, issued by U.S. or foreign banks or
savings institutions having total assets in excess of $1
billion.
- ----------------------------------------------------------------------------------------------------------------------------
SUPRANATIONAL ORGANIZATION OBLIGATIONS. Fixed Income Securities N N Y N
issued or guaranteed by supranational organizations such as
the World Bank.
- ----------------------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS. Agreements by a Fund to make
payments to an insurance company's general account in
exchange for a minimum level of interest based on an index. Y Y Y Y
- ----------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Agreements by a [25%] [25%] [25%] [25%]
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 payment. Not to be
used for speculation.
- ----------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready market for 15%(2) 15%(2) 15%(2) 15%(2)
these securities, which inhibits the ability to sell them for
full market value, or there are legal restrictions on their
resale by the Fund.
- ----------------------------------------------------------------------------------------------------------------------------
FUTURES AND OPTIONS ON FUTURES. (3) Contracts in which a Fund Y Y Y Y
has the right or the obligation, 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 liquidity.
- ----------------------------------------------------------------------------------------------------------------------------
OPTIONS. A Fund may buy options giving it the right to require a Y Y Y Y
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
securities indices, individual securities, foreign currencies
or futures contracts. See the SAI for more details and
additional limitations.
- ----------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend securities to financial 25% 25% 25% 25%
institutions which pay for the use of the securities. May
increase return. Slight risk of borrower failing financially.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
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 AND OPTIONS ON FUTURES
IS 5% OF A FUND'S ASSETS.
54
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE FUNDS
- -------------------------------------------------------------------------------------------------------------------------
MICHIGAN SHORT
TRIPLE TERM TAX-FREE
INVESTMENTS AND TAX-FREE TAX-FREE TREASURY INTERMEDIATE
INVESTMENT PRACTICES BOND FUND BOND FUND FUND BOND FUND
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL OBLIGATIONS. Payable from the issuer's Y Y N Y
general revenue, the revenue of a specific
project, current revenues or a reserve fund.
- -------------------------------------------------------------------------------------------------------------------------
MICHIGAN MUNICIPAL OBLIGATIONS. Municipal Y Y N Y
Obligations issued by the State of Michigan and
its political subdivisions.
- -------------------------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Securities issued by foreign 10% 10% N 10%
governments and their agencies,
instrumentalities or political subdivisions,
supranational organizations, and foreign
corporations. Does not include Bank Obligations.
- -------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. [25%] [25%] N [25%]
Agreements 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 payment.
Not to be used for speculation.
- -------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready 15%(1) 15%(1) N 15%(1)
market for these securities, which inhibits the
ability to sell them for full market value, or
there are legal restrictions on their resale by
the Fund.
- -------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend securities to 25% 25% 25% 25%
financial institutions which pay for the use of
the securities. May increase return. Slight
risk of borrower failing financially.
- -------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES. Includes U.S. Treasury Y Y Y Y
bills, notes and bonds.
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1) BASED ON NET ASSETS.
55
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUNDS
- -------------------------------------------------------------------------------------------------------------------------------
U.S.
INVESTMENTS CASH MONEY TAX-FREE TREASURY
AND INVESTMENT PRACTICES INVESTMENT MARKET MONEY MONEY
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CORPORATE OBLIGATIONS:
. Commercial paper (including paper of Canadian companies,
Canadian branches of U.S. companies, and Europaper) Y Y N N
. Corporate bonds Y Y N N
. Other short-term obligations Y Y N N
. Variable master demand notes Y Y N N
. Bond debentures Y Y N N
. Notes. Y Y N N
- -------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Include debt securities backed by mortgages, Y Y N N
installment sales contracts and credit card receivables.
- -------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS:
. Issued or guaranteed by U.S. Government Y Y N Y
. Issued or guaranteed by U.S. Government Agencies and
instrumentalities. Y Y N N
- -------------------------------------------------------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. dollar-denominated bank obligations, including Y Y N N
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.
- -------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES:
. Participation in trusts that hold U.S. Treasury and agency
securities Y Y Y N
. U.S. Treasury-issued receipts Y Y Y 35%
. Non-U.S. Treasury receipts. Y Y Y N
- -------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL REVENUE OBLIGATIONS. Obligations the interest on which is N N Y N
paid solely from the revenues of similar projects.
- -------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS. Payable from the issuer's general revenue, the 5% 5% no more N
revenue of a specific project, current revenues or a reserve fund. than 25% in
any one
state
- -------------------------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund sells securities and agrees to Y Y N Y
buy them back later at an agreed upon time and price. A method to
borrow money for temporary purposes.
- -------------------------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS. Agreements by a Fund to make payments Y Y N N
to an insurance company's general account in exchange for a minimum
level of interest based on an index.
- -------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Agreements by a Fund to [25%] [25%] [25%] [25%]
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 payment. Not to be used for speculation.
- -------------------------------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Debt obligations issued by foreign governments, 25% 25% N N
and their agencies, instrumentalities or political subdivisions,
supranational organizations and foreign corporations. Does not
include Bank Obligations.
- -------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready market for these 10%(1) 10%(1) 10%(1) 10%(1)
securities, which inhibits the ability to sell them for full market
value, or there are legal restrictions on their resale by the Fund.
- -------------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend securities to financial 25% 331/3% 25% 25%
institutions which pay for the use of the securities. May increase
return. Slight risk of borrower failing financially.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y = INVESTMENT ALLOWED WITHOUT RESTRICTION
N = INVESTMENT NOT ALLOWED
(1) BASED ON NET ASSETS.
56
<PAGE>
WHAT ARE THE RISKS OF INVESTING IN THE FUNDS?
All Funds
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 is a balanced investment program and
there is no guarantee that any Fund will achieve its investment objective since
there is uncertainty in every investment.
A Fund's risk is mostly dependent on the types of securities it purchases
and its investment techniques. Certain 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 a Fund to additional risks and
transaction costs. Risks inherent in the use of derivative instruments include:
(1) the risk that interest rates, securities prices and currency markets will
not move in the direction that a portfolio manager anticipates; (2) imperfect
correlation between the price of derivative instruments and movements in the
prices of the securities, interest rates or currencies being hedged; (3) the
fact that skills needed to use these strategies are different than those needed
to select portfolio securities; (4) the possible 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 Fund's initial investment in that instrument (in some cases, the potential
loss is unlimited); (6) particularly in the case of privately-negotiated
instruments, the risk that the counterparty will not perform its obligations,
which could leave the Fund worse off than if it had not entered into the
position and (7) inability to close out certain hedged positions to avoid
adverse tax consequences.
To the extent that a Fund invests in illiquid securities, the Fund risks
not being able to sell securities at the time and the price that it would like.
The Fund may therefore have to lower the price, sell substitute securities or
forego an investment opportunity, each of which might adversely affect the Fund.
The risks of the various investment techniques the 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.
Bond Funds, Tax-Free Funds and Short Term Treasury Fund
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 these 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 diversity 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
57
<PAGE>
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 these Funds is not guaranteed.
Although the Cash Investment Fund, Money Market Fund and U.S. Treasury
Money Market Fund expect under normal market conditions to be as fully invested
as possible, each Fund may hold uninvested cash pending investment of late
payments for purchase orders (or other payments) or during temporary defensive
periods. Uninvested cash will not earn income. In general, investments in the
Cash Investment Fund, Money Market Fund and U.S. Treasury Money Market Fund will
not earn as high a level of current income as longer-term or lower quality
securities. Longer-term and lower quality securities, however, generally have
less liquidity, greater market risk and more fluctuation in market value.
Although the Tax-Free Money Market Fund may invest more than 25% of its net
assets in municipal revenue obligations, the interest on which is paid solely
from revenues of similar projects, the Tax-Fee Money Market Fund does not intend
to do so on a regular basis. If it does, the Fund will be riskier than a fund
which does not concentrate to such an extent on similar projects.
Growth Opportunities Fund, Micro-Cap Equity 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 Global Financial Services Fund,
Framlington International Growth Fund, International Equity Fund and
International Bond Fund
Investing in any of these Funds, with their 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
58
<PAGE>
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.
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.
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.
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.
International Bond Fund, Michigan Triple Tax-Free Bond Fund and Tax-Free
Intermediate Bond Fund
These Funds are non-diversified and hold securities of a limited number of
issuers. The Funds may, therefore, pose a greater risk to investors than an
investment in a diversified fund. The Michigan Triple Tax-Free Bond Fund
invests primarily in Michigan Municipal Obligations. If Michigan issuers suffer
serious financial difficulties jeopardizing their ability to pay their
obligations, the value of such Fund may decline.
PERFORMANCE
HOW IS THE FUND'S 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.
59
<PAGE>
The current yield of shares in the Money Market Funds refers to the net
income generated by an investment in shares over a seven-day period (which
period will be stated in the advertisement). This income is then "annualized."
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. "Effective yield" is calculated similarly but,
when annualized, the income earned by an investment in a class is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment. The "tax-
equivalent yield" of shares of the Tax-Free Funds and the Tax-Free Money Market
Fund which may also be quoted from time to time, shows the level of taxable
yield needed to produce an after-tax equivalent to the tax-free yield of a
particular class. This is done by increasing the yield (calculated as above) by
the amount necessary to reflect the payment of Federal and/or state income taxes
at a stated rate.
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 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:
. fiduciary and discretionary accounts of institutions
. 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)
. directors, trustees, officers and employees of the Trust, the
Company, Framlington, the Advisor and the Distributor
. the Advisor's investment advisory clients
. 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.
60
<PAGE>
WHAT PRICE DO I PAY FOR SHARES?
The purchase price for Class Y Shares is the net asset value ("NAV") next
determined after we receive your order in proper form. 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 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 of the Real Estate
Equity Investment Fund is $250,000 and $500,000 for Class Y Shares of all other
Funds. 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.
. 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.
. BY MAIL. You may open an account by completing, signing and mailing an
Account Application Form and a check or other negotiable bank draft
(payable to The Munder Funds) to: The Munder Funds, c/o First Data
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 to the address listed above.
. BY WIRE. You may make additional investments in the Funds by wire.
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.:
Note that banks may charge fees for transmitting wires.
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<PAGE>
. 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. If
your account has been set up by a broker or other investment professional,
account activity will be detailed in their statements to you.
We do not issue share certificates. 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.
You may pay for shares of each Fund, other than the Real Estate Equity
Investment Fund, with securities which the Fund is allowed to hold.
See the SAI for further information regarding purchases of the Funds'
shares.
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 may be 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 NAV next determined after we receive the
redemption request in proper form.
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 Fund cannot sell its assets or accurately determine the
value of its assets or if the SEC orders the Fund to suspend redemptions.
HOW CAN I REDEEM SHARES?
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.
. INVOLUNTARY REDEMPTION. We may redeem your account if its value falls
below $250 as a result of redemptions (but not as a result of a
decline in NAV). You will be notified in writing and allowed 60 days
to increase the value of your account to the minimum investment level.
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<PAGE>
. FREE CHECKWRITING. Free checkwriting is available to holders of Class
Y Shares of the Bond Funds (other than the International Bond Fund),
Tax-Free Funds and Money Market Funds who complete the Signature Card
Section of the Account Application Form. You may write checks in the
amount of $500 or more but you may not close a Fund account by writing
a check. We may change or terminate this program on 30 days' notice to
you.
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 Trust, the Company and Framlington are each an open-end management
investment company, which is a mutual fund that sells and redeems shares every
day that it is open for business. They are managed under the direction of their
governing Boards of Trustees and Directors, which are responsible for the
overall management of the Trust, the Company and Framlington and supervise the
Funds' service providers. The Trust and Framlington are organized as
Massachusetts business trusts and the Company is a Maryland corporation.
WHO MANAGES AND SERVICES THE FUNDS?
INVESTMENT ADVISOR AND SUB-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 and WAM Holdings, Inc.
("WAM"). MCM was founded in April, 1985 as a Delaware corporation and was a
registered investment advisor. WAM is an indirect, wholly-owned subsidiary of
Comerica Incorporated which owns or controls approximately 88% of the
partnership interests in the Advisor. As of June 30, 1998, the Advisor and its
affiliates had approximately $48.2 billion in assets under management, of which
$25.4 billion were invested in equity securities, $8.1 billion were invested in
money market or other short-term instruments, $9.2 billion were invested in
other fixed income securities and $5.5 billion in non-discretionary assets.
The Advisor provides overall investment management and research and
credit analysis for each Fund and is responsible for all purchases and sales of
portfolio securities for each Fund other than the Framlington Funds.
Framlington Overseas Investment Management Limited is the sub-advisor
of the Framlington Funds. The Sub-Advisor is an indirect subsidiary of
Framlington Holdings Limited which is, in turn, owned 49% by the Advisor and 51%
by Credit Commercial de France S.A., a French banking corporation listed on the
Societe des Bourses Francaises.
The Sub-Advisor provides research and credit analysis for each of the
Framlington Funds and is responsible for all purchases and sales of portfolio
securities for each of the Framlington Funds other than the Framlington Global
Financial Services Fund. Each of the Advisor and Sub-Advisor manages a portion
of the assets of the Framlington Global Financial Services Fund. The Advisor is
responsible for all purchases and sales of domestic securities held by the Fund.
The Sub-Advisor is responsible for the allocation of the Fund's assets among
countries and for all purchases and sales of foreign securities held by the
Fund.
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<PAGE>
During the fiscal year ended June 30, 1998, the Advisor was paid an
advisory fee at an annual rate based on the average daily net assets of each
Fund (after waivers, if any) as follows:
<TABLE>
<S> <C> <C> <C>
Accelerating Growth Fund 0.75% Framlington Healthcare Fund 1.00%
Balanced Fund 0.65% Framlington International Growth Fund 1.00%
Growth & Income Fund 0.75% Bond Fund 0.50%
Growth Opportunities 0.75% Intermediate Bond Fund 0.50%
International Equity Fund 0.75% International Bond Fund 0.50%
Micro-Cap Equity Fund 1.00% U.S. Government Income Fund 0.50%
Multi-Season Growth Fund 0.75% Michigan Triple Tax-Free Bond Fund 0.50%
NetNet 1.00% Tax-Free Bond Fund 0.50%
Real Estate Equity Investment Fund 0.74% Tax-Free Intermediate Bond Fund 0.50%
Small-Cap Value Fund 0.75% Short Term Treasury Fund 0.25%
Small Company Growth Fund 0.75% Money Market Fund 0.40%
Value Fund 0.74% Cash Investment Fund 0.35%
Framlington Emerging Markets Fund 1.25% Tax-Free Money Market Fund 0.35%
Framlington Global Financial Services Fund 0.75% U.S. Treasury Money Market Fund 0.35%
</TABLE>
The Advisor waived advisory fees during the past fiscal year for the Multi-
Season Growth Fund. The Advisor is also entitled to receive an annual fee equal
to 1.00% of the first $500 million of the Multi-Season Growth Fund's average
daily net assets and .75% of the Fund's average daily net assets over $500
million.
The Sub-Advisor is entitled to receive an advisory fee equal to one-half of
the fee paid to the Advisor by each of the Framlington Funds as compensation for
its services as Sub-Advisor. The Advisor pays fees to the Sub-Advisor and the
Framlington Funds pay no fees directly to the Sub-Advisor.
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 may make 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.
PERFORMANCE INFORMATION. The tables below contain performance information
for certain Funds created through the conversion of a common or collective trust
fund which had investment objectives and policies materially equivalent to those
of the corresponding Funds. Immediately before and after the conversion, the
same person managed both the common or collective trust fund and the
corresponding Fund.
The table for each Fund:
. includes the average annual total returns of the common or collective
trust fund and the average annual total returns of the corresponding
Fund linked together;
. assumes that net investment income and dividends have been reinvested;
. assumes that the common or collective trust fund paid the same levels
of fees and expenses as the corresponding Fund currently pays;
. does not reflect any potential negative impact on the common and
collective trust funds' performance if they had been subjected to the
same regulatory restrictions (the Investment Company Act of 1940, as
amended (the "1940 Act") and the Internal Revenue Code of 1986, as
amended) as the corresponding Fund; and indicates past performance
. only and does not predict future results.
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<PAGE>
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER ACCELERATING GROWTH FUND
JUNE 30, 1998 (CLASS Y )* S&P 500**
------------- ---------- -------
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
Inception on January 1, 1990 % %
</TABLE>
_______________________________________
* Converted from collective trust fund to mutual fund on December 1, 1991.
** S&P 500 performance shows total return in U.S. dollars but does not reflect
the deduction of fees, expenses and taxes. Source: Lipper Analytical Services,
Inc.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER SMALL COMPANY RUSSELL 2000
JUNE 30, 1998 GROWTH FUND (CLASS Y )* INDEX**
------------- ---------------------- -----
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
10 Years % %
Inception on December 31, 1982 % %
</TABLE>
_______________________________________
* Converted from collective trust fund to mutual fund on December 1, 1991.
** Russell 2000 Index performance shows total return in U.S. dollars but does
not reflect the deduction of fees, expenses and taxes. Source: Lipper Analytical
Services, Inc.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER INTERNATIONAL EQUITY FUND FT/S&P ACTUARIES
JUNE 30, 1998 (CLASS Y )* WORLD INDEX EX. U.S.**
------------- ---------- --------------------
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
Inception on September 30, 1990 % %
</TABLE>
_______________________________________
* Converted from collective trust fund to mutual fund on December 1, 1991.
** FT/S&P Actuaries World Index ex. U.S. performance shows total return in U.S.
dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Ibbotson Associates, Inc.
<TABLE>
<CAPTION>
PERIOD ENDED
JUNE 30, 1998 MUNDER INDEX 500 FUND (CLASS Y )* S&P 500 INDEX**
------------- -------------------------------- -------------
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
10 Years % %
Inception on January 27, 1988 % %
</TABLE>
_______________________________________
* Converted from collective trust fund to mutual fund on December 1, 1991.
** S&P 500 Index performance shows total return in U.S. dollars but does not
reflect the deduction of fees, expenses and taxes. Source: Lipper Analytical
Services, Inc.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER BOND FUND LEHMAN BROTHERS
JUNE 30, 1998 (CLASS Y )* GOV'T/CORP. BOND INDEX**
------------- ---------- ----------------------
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
10 Years % %
</TABLE>
_______________________________________
* Converted from collective trust fund to mutual fund on December 1, 1991.
** Lehman Brothers Government/Corporate Bond Index performance shows total
return in U.S. dollars but does not reflect the deduction of fees, expenses and
taxes. Source: Lipper Analytical Services, Inc.
65
<PAGE>
<TABLE>
<CAPTION>
MUNDER U.S. GOVERNMENT
PERIOD ENDED INCOME FUND LEHMAN BROTHERS
JUNE 30, 1998 (CLASS Y)* GOV'T/CORP. BOND INDEX**
------------- --------- ----------------------
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
10 Years % %
</TABLE>
______________________________________
*Converted from collective trust fund to mutual fund on July 5, 1994.
**Lehman Brothers Government/Corporate Bond Index performance shows total return
in U.S. dollars but does not reflect the deduction of fees, expenses and taxes.
Source: Lipper Analytical Services, Inc.
<TABLE>
<CAPTION>
MUNDER INTERMEDIATE LEHMAN BROTHERS
PERIOD ENDED BOND FUND INTERMEDIATE GOV'T/BOND
JUNE 30, 1998 (CLASS Y)* INDEX**
------------- --------- -----
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
10 Years % %
Inception on March 31, 1982 % %
</TABLE>
______________________________________
*Converted from collective trust fund to mutual fund on December 1, 1991.
**Lehman Brothers Intermediate Government/Corporate Bond Index performance shows
total return in U.S. dollars but does not reflect the deduction of fees,
expenses and taxes. Source: Lipper Analytical Services, Inc.
<TABLE>
<CAPTION>
MUNDER TAX-FREE LEHMAN
PERIOD ENDED BOND FUND 20-YEAR MUNI
JUNE 30, 1998 (CLASS Y)* BOND INDEX**
------------- --------- ----------
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
10 Years % %
</TABLE>
_____________________________________
*Converted from common trust fund to mutual fund on July 21, 1994.
**Lehman 20-Year Municipal Bond Index performance shows total return in U.S.
dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Lipper Analytical Services, Inc.
Indices
The S&P 500 is an unmanaged index of common stock prices, including
reinvestment of dividends.
The Russell 2000 Index is a capitalization weighted total return index
which is comprised of 2,000 of the smallest capitalized U.S. domiciled companies
whose stock is traded in the United States on the New York Stock Exchange,
American Stock Exchange and the NASDAQ.
The FT/S&P Actuaries World Index ex. U.S. is an unmanaged index used to
portray the global equity market excluding the U.S. The Index is weighted based
on the market capitalization of those stocks selected to represent each country
and includes gross reinvestment of dividends.
The Lehman Brothers Government/Corporate Bond Index is a weighted composite
of (i) Lehman Brothers Government Bond Index, which is comprised of all publicly
issued, non-convertible debt of the U.S. Government or any agency thereof,
quasi-Federal corporations, and corporate debt guaranteed by the U.S. Government
and (ii) Lehman Brothers Corporate Bond Index, which is comprised of all public
fixed-rate, non-convertible investment-grade domestic corporate debt, excluding
collateralized mortgage obligations.
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<PAGE>
The Lehman Brothers Intermediate Government/Corporate Bond Index is a
weighted composite of (i) Lehman Brothers Intermediate Government Bond Index,
which is comprised of all publicly issued, non-convertible debt of the U.S.
Government or any agency thereof, quasi-Federal corporations and corporate debt
guaranteed by the U.S. Government with a maturity of between one and ten years
and (ii) Lehman Brothers Corporate Bond Index.
The Lehman Brothers 20-Year Municipal Bond Index is a performance benchmark
for the long-term investment-grade tax-exempt bond market.
PERFORMANCE OF FRAMLINGTON ACCOUNTS MANAGED BY THE SUB-ADVISOR
The tables below contain certain performance information provided by the
Sub-Advisor relating to accounts managed by the Sub-Advisor and which have
investment objectives and policies similar to those of the corresponding
Framlington Funds. See "Fund Choices" and "What are the Funds' Investments and
Investment Practices?" In the case of the Healthcare portfolio performance, the
data relates to a unit trust organized under the laws of the United Kingdom
managed by the same personnel of the Sub-Advisor with similar investment
objectives and policies to the Framlington Healthcare Fund. In the case of
Emerging Markets portfolio performance, the data relates to a Canadian-based
institutional emerging markets portfolio managed by the same personnel of the
Sub-Advisor with similar investment objectives and policies to the Framlington
Emerging Markets Fund.
The trust account performance is provided by Micropal, an independent
research organization that is a recognized source of performance data in the UK
unit trust industry. The data is U.S. dollar adjusted on the basis of exchange
rates provided by Datastream using WM/Reuters closing rates. The performance
figures are net of brokerage commissions, actual investment advisory fees and
initial sales charges. The data assume the reinvestment of net income and
capital gain distributions. The trust account returns are calculated using
beginning offer and ending bid prices for periods ended December 31, 1996.
You should not rely on the following performance data of the Sub-Advisor's
client accounts as an indication of future performance of the Framlington Funds.
It should be noted that the management of the Funds will be affected by
regulatory requirements under the 1940 Act and requirements of the Internal
Revenue Code of 1986, as amended, to qualify as a regulated investment
company.
<TABLE>
<CAPTION>
S&P HEALTHCARE
PERIOD ENDED COMPOSITE INDEX CAPITAL
DECEMBER 31, 1996 U.K. HEALTH PORTFOLIO CHANGE
----------------- ---------------------- ------
<S> <C> <C>
1 Year 10.75% 18.48%
3 Years 96.93% 100.49%
5 Years 99.43% 45.60%
Inception on April 30, 1987 411.08% 239.64%
</TABLE>
Performance for the Health trust account is calculated on an offer-bid
basis; U.S. Dollar adjusted total return net of all management fees but not
reflective of U.K. tax. Source: Micropal.
S&P Healthcare Composite Index performance shows capital change in U.S.
dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Datastream.
<TABLE>
<CAPTION>
MSCI EMERGING
PERIOD ENDED CANADIAN EMERGING MARKETS FREE TOTAL
DECEMBER 31, 1996 MARKETS ACCOUNT RETURN
----------------- --------------- ------
<S> <C> <C>
1 Year 5.16% 6.03%
Inception on November 1, 1994 (3.68)% (12.37)%
</TABLE>
MSCI Emerging Markets Free Index performance shows total return in U.S.
Dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Datastream.
67
<PAGE>
The performance of the Canadian institutional account is measured by the
World Markets Company on a total return basis and has been re-calculated net of
the management fee charged the Canadian institutional account. The inception
date of the Canadian institutional account is November 1, 1994.
Indices
The S&P Healthcare Composite Index is the composite Healthcare section of
the S&P 500 Index as defined and tracked by S&P. This index covers securities
listed in the United States only.
The MSCI Emerging Markets Free Index is maintained by Morgan Stanley
Capital International, and covers 26 countries and represents the investment
opportunities in emerging markets available to foreign investors. Total return
is calculated using the prices of the companies tracked and assumes the
reinvestment of dividends.
TRANSFER AGENT. First Data Investor Services Group, Inc. is the Funds'
transfer agent. The Transfer Agent 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
"Administrator") is the Funds' 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 overseeing the maintenance of financial records and
fund accounting. As compensation for its services for the Company, the Trust
and Framlington, State Street is entitled to receive fees, based on the
aggregate daily net assets of the Funds and certain other investment portfolios
that are advised by the Advisor for which it provides services, computed daily
and payable monthly at the annual rate of 0.113% on the first $2.8 billion of
net assets, plus 0.103% on the next $2.2 billion of net assets, plus 0.101% on
the next $2.5 billion of net assets, plus 0.095% on the next $2.5 billion of net
assets, plus 0.080% on the next $2.5 billion of net assets, plus 0.070% on all
net assets in excess of $12.5 billion (with a $75,000 minimum fee per annum in
the aggregate for all portfolios with respect to the Administrator). If the
assets of the Framlington Funds do not exceed $120 million, the ultimate rate
charged the Framlington Funds will be reduced by their pro-rata portion of the
total fees if calculated at the rates of 0.062% of the first $2.8 billion of net
assets, plus 0.052% of the next $2.2 billion of net assets, plus 0.050% of all
net assets in excess of $5 billion.
State Street has entered into a Sub-Administration Agreement with the
Distributor under which the Distributor provides certain administrative services
with respect to the Funds. State Street pays the Distributor a fee for these
services out of its own resources at no cost to the Funds.
CUSTODIAN AND SUB-CUSTODIAN. Comerica Bank ("Comerica" or the
"Custodian"), whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, Michigan 48226, is the Funds' custodian. No
compensation is paid to the Custodian for its custodial services. Comerica
receives a fee of 0.01% of the aggregate average daily net assets of the Funds
beneficially owned by Comerica and its customers for certain shareholder
services provided by Comerica to the Funds. State Street serves as the Funds'
sub-custodian.
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 Trust, the Company or Framlington as a whole and affecting your particular
Fund. You will not vote by Class unless expressly required by law or when the
Trustees or Directors determine the matter to be voted on affects only
68
<PAGE>
the interests of the holders of a particular class of shares. The Trust, the
Company and Framlington 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 Trustee or Director. Under
Massachusetts law, it is possible that a shareholder may be personally liable
for the Trust's or Framlington's obligations. If a shareholder were required to
pay a debt of a Fund, however, the Trust and Framlington have committed to
reimburse the shareholder in full from their assets. The SAI contains more
information regarding voting rights.
Comerica 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 Trust, the Company
and Framlington.
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. The Accelerating Growth Fund,
Balanced Fund, Growth & Income Fund, Small Company Growth Fund and International
Bond Fund pay dividends quarterly. The Framlington Emerging Markets Fund,
Framlington Global Financial Services Fund, Framlington Healthcare Fund,
Framlington International Growth Fund, Growth Opportunities Fund, International
Equity Fund, Micro-Cap Equity Fund, Multi-Season Growth Fund, NetNet Fund,
Small-Cap Value Fund and Value Fund pay dividends at least annually. The Bond
Funds (other than the International Bond Fund) pay dividends monthly. Dividends
for the Cash Investment Fund, Money Market Fund, U.S. Treasury Money Market Fund
and Tax-Free Money Market Fund are declared daily and paid monthly.
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 Fund 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.
In general, as long as each Fund meets the requirements to qualify as a
regulated investment company ("RIC") under Federal tax laws, it will not be
subject to Federal income tax on its income and capital gains that it
distributes in a timely manner to its shareholders. Each Fund intends to
qualify annually as a RIC. Even if it qualifies as a RIC, a Fund may still be
liable for any excise tax on income that is not distributed in accordance with a
calendar year requirement; the Funds intend to avoid the excise tax by making
timely distributions.
69
<PAGE>
Generally, you will owe tax on the amounts distributed to you, regardless
of whether you receive these amounts in cash or reinvest them in additional Fund
shares. Shareholders not subject to tax on their income generally will not be
required to pay any tax on amounts distributed to them. Federal income tax on
distributions to an IRA or to a qualified retirement plan will generally be
deferred.
Capital gains derived from sales of portfolio securities held by a Fund
will generally be designated as long-term or short-term. Distributions from a
Fund's long-term capital gains are generally taxed at the long-term capital
gains rate regardless of how long you have owned shares in the Fund. Dividends
from other sources are generally taxed as ordinary income.
Dividends and capital gain distributions are generally taxable when you
receive them; however, if a distribution is declared in October, November or
December, but not paid until January of the following year, it will be
considered to be paid on December 31 in the year in which it was declared.
Shortly after the end of each year, you will receive from each Fund in which you
are a shareholder a statement of the amount and nature of the distributions made
to you during the year.
If you redeem, transfer or exchange Fund shares, you may have taxable gain
or a loss. If you hold Fund shares for six months or less, and during that time
you receive a capital gain dividend, any loss you realize on the sale of these
Fund shares will be treated as a long-term loss to the extent of the earlier
distribution.
Dividends and certain interest income earned from foreign securities by a
Fund may be subject to foreign withholding or other taxes. A Fund may be
permitted to pass on to its shareholders the right to a credit or deduction for
income or other tax credits earned from foreign investments and will do so if
possible. These deductions or credits may be subject to tax law limitations.
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 a 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 of the
QEF, regardless of whether received, and such amounts will be subject to the
various distribution requirements described above. The Funds may also elect to
mitigate the tax effects of owning PFIC stock by making an annual mark-to-market
election with respect to PFIC shares.
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.
YEAR 2000. The Funds' operations depend on the seamless functioning of
computer systems in the financial service industry, including those of its
service providers. Many computer software systems in use today cannot properly
process date-related information after December 31, 1999 because of the method
by which dates are encoded and calculated. This failure, commonly referred to
as the "Year 2000 Issue," could adversely affect the handling of securities
trades, pricing and account servicing for the Funds. The Funds have been
informed that their major service providers have made compliance with the Year
2000 Issue a high priority and are taking steps that they believe are reasonably
designed to address the Year 2000 Issue with respect to their computer systems.
There can be, however, no assurance that these steps will be successful, or that
interaction with other non-complying computer systems will not impair their
services at that time.
70
<PAGE>
CLASS A, B & C SHARES
[Munder Logo]
Prospectus
October 27, 1998
THE MUNDER INCOME FUNDS
Bond
Intermediate Bond
International Bond
U.S. Government Income
Michigan Triple Tax-Free Bond
Tax-Free Bond
Tax-Free Intermediate Bond
Prospectus begins on next page
<PAGE>
PROSPECTUS
Class A, Class B and Class C Shares
The Munder Funds Trust (the "Trust") and The Munder Funds, Inc. (the
"Company") are open-end investment companies. This Prospectus describes six
investment portfolios offered by the Trust (the "Trust Funds") and two
investment portfolios offered by the Company (referred to as the "Funds"):
Munder Bond Fund
Munder Intermediate Bond Fund
Munder International Bond Fund
Munder U.S. Government Income Fund
Munder Michigan Triple Tax-Free Bond Fund*
Munder Tax-Free Bond Fund
Munder Tax-Free Intermediate Bond Fund
* The Michigan Triple Tax-Free Bond Fund is offered only in the State of
Michigan.
Munder Capital Management (the "Advisor") serves as the investment advisor
of the 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 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 PRINCIPLE AMOUNT INVESTED.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES:
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS OCTOBER 27, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Fund Highlights
What are the key facts regarding the Funds?................. 3
Financial Information............................................ 6
Fund Choices
What Funds are offered?..................................... 24
Who may want to invest in the Funds?........................ 26
What are the Funds' investments and investment practices?... 26
What are the risks of investing in the Funds?............... 30
Performance
How is the Funds' performance calculated?................... 31
Where can I obtain performance data?........................ 31
Purchases and Exchanges of Shares
What share class should I choose for my investment?......... 32
What price do I pay for shares?............................. 32
When can I purchase shares?................................. 34
What is the minimum required investment?.................... 35
How can I purchase shares?.................................. 35
How can I exchange shares?.................................. 36
Redemptions of Shares
What price do I receive for redeemed shares?................ 36
When can I redeem shares?................................... 37
How can I redeem shares?.................................... 38
When will I receive redemption amounts?..................... 39
Structure and Management of the Funds
How are the Funds structured?............................... 39
Who manages and services the Funds?......................... 39
What are my rights as a shareholder?........................ 40
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?........... 41
How will distributions be made?............................. 41
Are there tax implications of my investments in the Funds?.. 41
Additional Information........................................... 42
</TABLE>
2
<PAGE>
FUND HIGHLIGHTS
WHAT ARE THE KEY FACTS REGARDING THE FUNDS?
Q: What are the Funds' goals?
A:
. The Bond Fund seeks to provide a high level of current income with capital
appreciation as a secondary consideration.
. The Intermediate Bond Fund seeks to provide a competitive rate of return
which exceeds the inflation rate and the return provided by money market
instruments.
. The International Bond Fund seeks to provide a competitive total return
through a combination of current income and capital appreciation.
. The U.S. Government Income Fund seeks to provide high current income.
. The Tax-Free Intermediate Bond Fund and Tax-Free Bond Fund seek to provide
current interest income exempt from Federal income taxes.
. The Michigan Triple Tax-Free Bond Fund seeks to provide as high a level of
current interest income exempt from regular Federal income taxes, Michigan
state income tax and Michigan intangibles tax as is consistent with prudent
investment management and preservation of capital.
Q: What are the Funds' strategies?
A:
. The Funds, other than the Michigan Triple Tax-Free Bond Fund, the Tax-Free
Bond Fund and the Tax-Free Intermediate Bond Fund (together, the "Tax-Free
Funds"), and the U.S. Government Income Fund, invest primarily in 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 rates.
. The U.S. Government Income Fund invests primarily in obligations of the
U.S. government and its agencies and instrumentalities.
. The Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund invest primarily
in Municipal Obligations. "Municipal Obligations" are obligations of
states, territories and possessions of the United States and the District
of Columbia and their political subdivisions, agencies, instrumentalities
and authorities, the interest on which is exempt from regular Federal
income tax.
. The Michigan Triple Tax-Free Bond Fund invests primarily in Michigan
Municipal Obligations. "Michigan Municipal Obligations" are municipal
obligations issued by the State of Michigan and its political subdivisions,
the interest on which is exempt from Federal income taxes, Michigan state
income tax and Michigan intangibles tax.
3
<PAGE>
Q: What are the Funds' risks?
A: The following table summarizes the primary risks of investing in the Funds:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
FUND RISK
- ------------------------------------------------------------------------------------------------
<S> <C>
All Funds Potential loss of investment due to changes in
the bond market in general, in the prices of debt
securities of particular companies and in
interest rates.
- ------------------------------------------------------------------------------------------------
International Bond Fund Because of large investments in foreign
securities, the Fund is riskier than domestic
funds due to factors such as freezes on
convertibility of currency, changes in exchange
rates, political instability and differences in
accounting and reporting standards.
- ------------------------------------------------------------------------------------------------
International Bond Fund, Michigan Triple These "non-diversified" Funds concentrate their
Tax-Free Bond Fund and Tax-Free investments in fewer issuers than diversified
Intermediate Bond Fund funds, and could experience larger price
fluctuations than diversified funds.
- ------------------------------------------------------------------------------------------------
</TABLE>
Q: What are the options for investment in the Funds?
A: Each Fund offers five different investment options, or classes: Class A, B,
C, K and Y. Class K and Y Shares, which are only offered to institutional and
other qualified investors, are offered in other prospectuses.
<TABLE>
<CAPTION>
Maximum Front Maximum
Class Rule 12b-1 Fees* End Sales Load** CDSC***
- ----- ---------------- ----------------- ---------------------
<S> <C> <C> <C>
Class A 0.25% 4.0% None+
Class B 1% None 5%
Class C 1% None 1%, if redeemed within
1 year of purchase
</TABLE>
- -------------------------------------
* An annual fee for distributing shares and servicing shareholder accounts
paid 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 the shares.
+ A CDSC of 1% is imposed on certain redemptions of Class A Shares if
redeemed within one year of purchase.
(i) If you invest over $250,000, you must buy Class A or Class C Shares. (ii)
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 or
Class C Shares, both (i) and (ii) are 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 shares from the Distributor through broker-dealers or other
financial institutions or from the Funds' transfer agent, First Data Investor
Services Group, Inc. ("Transfer Agent"), by mailing the attached Account
Application Form with a check to the Transfer Agent. You must invest at least
$250 ($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 or by telephone.
4
<PAGE>
You may also acquire the Funds' shares by exchanging shares of the same
class of other funds of the Trust, the Company and The Munder Framlington Funds
Trust ("Framlington"), and exchange Fund shares for shares of the same class of
other funds of the Trust, the Company and Framlington.
Q: What shareholder privileges do the Funds offer?
A:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------- -------------- --------------
<S> <C> <C>
Automatic Investment Plan Automatic Investment Plan Automatic Investment Plan
Automatic Withdrawal Plan Automatic Withdrawal Plan Automatic Withdrawal Plan
Retirement Plans Retirement Plans Retirement Plans
Telephone Exchanges Telephone Exchanges Telephone Exchanges
Rights of Accumulation Reinvestment Privilege Reinvestment Privilege
Free Checkwriting*
Letter of Intent
Quantity Discounts
Reinvestment Privilege
</TABLE>
----------------
* Excluding the International Bond Fund
Q: When and how are distributions made?
A: Dividend distributions are made from the dividends and interest earned on
investments after expenses.
Dividends paid quarterly (if income is available): International Bond Fund.
Dividends paid monthly: Bond Fund, Intermediate Bond Fund, U.S. Government
Income Fund and the Tax-Free Funds.
The Funds distribute capital gains at least annually. Unless you elect to
receive distributions in cash, we will use all dividends and capital gain
distributions of a Fund to purchase additional shares of that Fund.
Q: Who manages the Funds' assets?
A: Munder Capital Management is the Funds' investment advisor. The Advisor is
responsible for all purchases and sales of the securities held by the Funds.
5
<PAGE>
FINANCIAL INFORMATION
SHAREHOLDER TRANSACTION EXPENSES(1)
The purpose of this table is to assist you in understanding the expenses a
shareholder in the Funds will bear directly.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
----------- ----------- ----------
<S> <C> <C> <C>
Maximum Sales Charge on Purchase (as a % of Offering Price)........ 4%(2) None None
Sales Charge Imposed on Reinvested Dividends....................... None None None
Maximum Deferred Sales Charge(3)................................... None(4) 5%(3) None(5)
Redemption Fees(6)................................................. None None None
Exchange Fees...................................................... None None None
</TABLE>
- ------------------------------------
Notes:
(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 contingent deferred sales charge ("CDSC") payable upon 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) A 1% CDSC applies to redemptions of Class C Shares within one year of
purchase.
(6) The Transfer Agent may charge a fee of $7.50 for wire redemptions under
$5,000.
6
<PAGE>
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
Trustees, Directors, auditors, legal counsel and service providers (such as the
Advisor), registration fees and distribution fees. The fees shown below are
based on fees for the Funds' past 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>
ANNUAL FUND OPERATING
EXPENSES
(AS A % OF AVERAGE NET ASSETS) BOND FUND INTERMEDIATE BOND FUND
- ------------------------------ --------------------------------------- --------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees ......................... .50% .50% .50% .50% .50% .50%
12b-1 Fees ............................ .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses ........................ .21% .21% .21% .18% .18% .18%
---- ---- ---- ---- ---- ----
Total Fund Operating Expenses ......... .96% 1.71% 1.71% .93% 1.68% 1.68%
==== ===== ===== ==== ===== =====
ANNUAL FUND OPERATING
EXPENSES INTERNATIONAL U.S. GOVERNMENT
(AS A % OF AVERAGE NET ASSETS) BOND FUND INCOME FUND
- ------------------------------ ---------------------------------------- --------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES HARES SHARES SHARES
------ ------ ------ ------ ------ ------
Advisory Fees ......................... .50% .50% .50% .50% .50% .50%
12b-1 Fees ............................ .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses ........................ .35% .35% .35% .21% .21% .21%
---- ---- ---- ---- ---- ----
Total Fund Operating Expenses ......... 1.10% 1.85% 1.85% .96% 1.71% 1.71%
==== ===== ===== ==== ===== =====
ANNUAL FUND OPERATING
EXPENSES MICHIGAN TRIPLE TAX-FREE
(AS A % OF AVERAGE NET ASSETS) TAX-FREE BOND FUND BOND FUND
- ------------------------------ --------------------------------------- --------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES
------ ------ ------ ------ ------ ------
Advisory Fees ......................... .50% .50% .50% .50% .50% .50%
12b-1 Fees ............................ .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses ........................ .13% .13% .13% .20% .20% .20%
---- ---- ---- ---- ---- ----
Total Fund Operating Expenses ......... .88 1.63% 1.63% .95% 1.70% 1.70%
==== ===== ===== ==== ===== =====
ANNUAL FUND OPERATING
EXPENSES TAX-FREE INTERMEDIATE
(AS A % OF AVERAGE NET ASSETS) BOND FUND
- ------------------------------ ---------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
Advisory Fees.......................... .50% .50% .50%
12b-1 Fees............................. .25% 1.00% 1.00%
Other Expenses......................... .18% .18% .18%
---- ---- ----
Total Fund Operating Expenses............ .93% 1.68% 1.68%
==== ===== =====
</TABLE>
7
<PAGE>
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,
(2) redemption at the end of the time period (including the deduction of the
deferred sales charge, if any) and (3) no redemption at the end of the time
period. 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>
BOND FUND INTERMEDIATE BOND FUND
--------------------------------------- --------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
1 Year
. Redemption ......................... $ 49 $ 67 $ 27 $ 49 $ 67 $ 27
. No Redemption ...................... $ 49 $ 17 $ 17 $ 49 $ 17 $ 17
3 Years
. Redemption ......................... $ 69 $ 84 $ 54 $ 68 $ 83 $ 53
. No Redemption ...................... $ 69 $ 54 $ 54 $ 68 $ 53 $ 53
5 Years
. Redemption ......................... $ 91 $113 $ 93 $ 89 $111 $ 91
. No Redemption ...................... $ 91 $ 93 $ 93 $ 89 $ 91 $ 91
10 Years
. Redemption ......................... $153 $202 $202 $150 $199 $199
. No Redemption ...................... $153 $202 $202 $150 $199 $199
<CAPTION>
INTERNATIONAL U.S. GOVERNMENT MICHIGAN TRIPLE
BOND FUND INCOME FUND TAX-FREE BOND FUND
----------------------------- ------------------------------ ------------------------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B C A B C A B C
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year
. Redemption ............ $ 51 $ 69 $ 29 $ 49 $ 67 $ 27 $ 49 $ 67 $ 27
. No Redemption ......... $ 51 $ 19 $ 19 $ 49 $ 17 $ 17 $ 49 $ 17 $ 17
3 Years
. Redemption ............ $ 74 $ 88 $ 58 $ 69 $ 84 $ 54 $ 67 $ 81 $ 51
. No Redemption ......... $ 74 $ 58 $ 58 $ 69 $ 54 $ 54 $ 67 $ 51 $ 51
5 Years
. Redemption ............ $ 98 $120 $102 $ 91 $113 $ 93 $ 87 $109 $ 89
. No Redemption ......... $ 98 $100 $100 $ 91 $ 93 $ 93 $ 87 $ 89 $ 89
10 Years
. Redemption ............ $169 $217 $217 $153 $202 $202 $144 $193 $193
. No Redemption ......... $169 $217 $217 $153 $202 $202 $144 $193 $193
<CAPTION>
TAX-FREE TAX-FREE INTERMEDIATE
BOND FUND BOND FUND
---------------------------------------- ----------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
1 Year
. Redemption ................... $ 49 $ 67 $ 27 $ 48 $ 65 $ 25
. No Redemption ................ $ 49 $ 17 $ 17 $ 48 $ 15 $ 15
3 Years
. Redemption ................... $ 68 $ 83 $ 53 $ 64 $ 78 $ 48
. No Redemption ................ $ 68 $ 53 $ 53 $ 64 $ 48 $ 48
5 Years
. Redemption ................... $ 89 $111 $ 91 $ 81 $103 $ 83
. No Redemption ................ $ 89 $ 91 $ 91 $ 81 $ 83 $ 83
10 Years
. Redemption ................... $150 $199 $199 $132 $181 $181
. No Redemption ................ $150 $199 $199 $132 $181 $181
</TABLE>
8
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
9
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights were audited by Ernst & Young LLP,
independent auditors. Class B Shares were not offered prior to March 1, 1994.
Class C Shares of the Tax-Free Intermediate Bond Fund was not offered during the
periods shown. This information should be read in conjunction with the Funds'
most recent Annual Reports, which are incorporated by reference into the SAI.
You may obtain the Annual Reports without charge by calling (800) 438-5789.
<TABLE>
<CAPTION>
BOND FUND(A)
---------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D)
CLASS A CLASS A CLASS A CLASS A
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period...................................
Income from investment operations:
Net investment income.............................................
Net realized and unrealized gain/(loss) on investments...........
Total from investment operations..................................
Less distributions:
Dividends from net investment income..............................
Distributions from net realized gains.............................
Total distributions...............................................
Net asset value at end of period.......................................
Total return (b)..................................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)..............................
Ratio of operating expenses to average net assets ................
Ratio of net investment income to average net assets..............
Portfolio turnover rate...........................................
Ratio of operating expenses to average net assets w/o waivers.....
</TABLE>
- -------------------
(a) The Munder Bond Fund Class A Shares, Class B Shares and Class C Shares
commenced operations on December 9, 1992, March 13, 1996 and March 25,
1996, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
10
<PAGE>
<TABLE>
<CAPTION>
BOND FUND(A)
- -------------------------------------------------------------------------------------------------
YEAR YEAR PERIOD YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/95(E,F) 2/28/94 2/28/93 6/30/98 6/30/97 6/30/96 6/30/98 6/30/97 6/30/96
CLASS A CLASS A CLASS A CLASS B CLASS B CLASS B CLASS C CLASS C CLASS C
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
--------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96 6/30/95(D) 2/28/95(E)
CLASS A CLASS A CLASS A CLASS A CLASS A
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............
Income from investment operations:
Net investment income......................
Net realized and unrealized
gain/(loss) on investments.................
Total from investment operations...........
Less distributions:
Dividends from net investment income.......
Distributions from net realized gains......
Total distributions........................
Net asset value at end of period.................
Total return (b)...........................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).......
Ratio of operating expenses to
average net assets.........................
Ratio of net investment income
to average net assets......................
Portfolio turnover rate....................
Ratio of operating expenses
to average net assets w/o waivers..........
</TABLE>
- ------------------
(a) The Munder Intermediate Bond Fund Class A Shares, Class B Shares and Class
C Shares commenced operations on November 24, 1992, October 25, 1994 and
April 19, 1996, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
12
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
- ------------------------------------------------------------------------------------
YEAR PERIOD YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/94 2/28/93 6/30/98 6/30/97(F) 6/30/96 6/30/95(D) 2/28/95(E)
CLASS A CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND(A)
------------------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96
CLASS C CLASS C CLASS C
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period.................................
Income from investment operations:
Net investment income...........................................
Net realized and unrealized gain/(loss) on investments.........
Total from investment operations................................
Less distributions:
Dividends from net investment income............................
Distributions from net realized gains...........................
Total distributions.............................................
Net asset value at end of period.....................................
Total return (b)................................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)............................
Ratio of operating expenses to average net assets...............
Ratio of net investment income to average net assets............
Portfolio turnover rate.........................................
Ratio of operating expenses
to average net assets w/o waivers...............................
</TABLE>
- -----------------------
(a) The Munder Intermediate Bond Fund Class A Shares, Class B Shares and Class
C Shares commenced operations on November 24, 1992, October 25, 1994 and
April 19, 1996, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
14
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL BOND FUND(A)
-----------------------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/98 6/30/97
CLASS A CLASS A CLASS B CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........................
Income from investment operations:
Net investment income..................................
Net realized and unrealized
gain/(loss) on investments.............................
Total from investment operations.......................
Less distributions:
Dividends from net investment income...................
Distributions from net realized gains..................
Total distributions....................................
Net asset value at end of period............................
Total return (b).......................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)...................
Ratio of operating expenses to average net assets......
Ratio of net investment income to average net assets...
Portfolio turnover rate................................
Ratio of operating expenses to average net assets
w/o waivers or expenses reimbursed.....................
</TABLE>
- ---------------------
(a) The Munder International Bond Fund Class A Shares and Class B Shares
commenced operations on October 17, 1996 and June 9, 1997, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(g) Amount represents less than $0.01 per share.
15
<PAGE>
<TABLE>
<CAPTION>
U.S. Government Income Fund(a)
------------------------------------------------
<S> <C> <C> <C> <C>
Period Year Year Period
Ended Ended Ended Ended
6/30/98 6/30/97 6/30/96(f) 6/30/95(d)
Class A Class A Class A Class A
------- ------- ------- -------
Net asset value, beginning of period.............................
Income from investment operations:
Net investment income.......................................
Net realized and unrealized
gain/(loss) on investments..................................
Total from investment operations............................
Less distributions:
Dividends from net investment income........................
Distributions from net realized gains.......................
Total Distributions.........................................
Net asset value at end of period.................................
Total Return(b).............................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).......................
Ratio of operating expenses to average net assets..........
Ratio of net investment income to average net assets.......
Portfolio turnover rate....................................
Ratio of operating expenses to average net assets w/o
waivers or expenses reimbursed.............................
</TABLE>
- --------------------
(a) The Munder U.S. Government Income Fund Class A Shares, Class B Shares and
Class C Shares commenced operations on July 28, 1994, September 6, 1995 and
August 12, 1996, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(g) Amount represents less than $0.01 per share.
16
<PAGE>
<TABLE>
<CAPTION>
U.S. Government Income Fund(a)
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Year Year Period Period Period
Ended Ended Ended Ended Ended Ended
2/28/95(e) 6/30/98 6/30/97 6/30/96(f) 6/30/98 6/30/97
Class A Class B Class B Class B Class C Class C
- ----------------------- ------- ------- ------- ------- -------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
MICHIGAN TRIPLE TAX-FREE BOND FUND(A)
---------------------------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/96(E) 6/30/95(D,E)
CLASS A CLASS A CLASS A CLASS A
------- ------- ------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period..........................
Income from investment operations:
Net investment income....................................
Net realized and unrealized
gain/(loss) on investments...............................
Total from investment operations.........................
Less distributions:
Dividends from net investment income.....................
Distributions from net realized gains....................
Total distributions......................................
Net asset value at end of period..............................
Total return (b).........................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).....................
Ratio of operating expenses to average net assets........
Ratio of net investment income to average net assets.....
Portfolio turnover rate..................................
Ratio of operating expenses
to average net assets w/o waivers........................
</TABLE>
- -------------------
(a) The Munder Michigan Triple Tax-Free Bond Fund Class A Shares, Class B
Shares and Class C Shares commenced operations on February 15, 1994, July
5, 1994, and October 4, 1996, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Amount represents less than $0.01 per share.
18
<PAGE>
<TABLE>
<CAPTION>
MICHIGAN TRIPLE TAX-FREE BOND FUND(A)
-------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
YEAR PERIOD YEAR YEAR YEAR PERIOD PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/95(E,F) 2/28/94 6/30/98 6/30/97(E) 6/30/96(E) 6/30/95(D,E) 2/28/95(E,F) 6/30/98 6/30/97(E)
CLASS A CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B CLASS C CLASS C
- -------------- ------- ------- ------- ------- ----------- ----------- ------- -------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE BOND FUND(A)
--------------------------------------------------
<S> <C> <C> <C> <C>
YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/96(E) 6/30/98
CLASS A CLASS A CLASS A CLASS B
------- ------- ------- -------
Net asset value, beginning of period.............................
Income from investment operations:
Net investment income.......................................
Net realized and unrealized
gain/(loss) on investments..................................
Total from investment operations............................
Less distributions:
Dividends from net investment income........................
Distributions from net realized gains.......................
Total distributions.........................................
Net asset value at end of period.................................
Total return (b)............................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)........................
Ratio of operating expenses to average net assets...........
Ratio of net investment income to average net assets........
Portfolio turnover rate.....................................
Ratio of operating expenses
to average net assets w/o waivers...........................
</TABLE>
- ------------------
(a) The Munder Tax-Free Bond Fund Class A Shares and Class B Shares commenced
operations on October 9, 1995 and December 6, 1994, respectively. The Fund
is authorized to issue Class C Shares. As of June 30, 1997, the Fund had
not commenced selling Class C Shares.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Total net assets for Class B Shares were $164 at February 28, 1995.
20
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE BOND FUND(A)
- -------------------------------------------------------------------------
<S>
<C> <C> <C> <C>
YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED
6/30/97(E) 6/30/96(E) 6/30/95(D,E) 2/28/95(F)
CLASS B CLASS B CLASS B CLASS B
------- ------- ------- -------
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE BOND FUND(A)
--------------------------------------------------
<S> <C> <C> <C> <C>
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(D)
CLASS A CLASS A CLASS A CLASS A
------- ------- ------- -------
Net asset value, beginning of period...........................
Income from investment operations:
Net investment income.....................................
Net realized and unrealized
gain/(loss) on investments................................
Total from investment operations..........................
Less distributions:
Dividends from net investment income......................
Distributions from net realized gains.....................
Total distributions.......................................
Net asset value at end of period...............................
Total return (b)..........................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)......................
Ratio of operating expenses to average net assets.........
Ratio of net investment income to average net assets......
Portfolio turnover rate...................................
Ratio of operating expenses to average net assets w/o
waivers or expenses reimbursed............................
</TABLE>
- ------------------
(a) The Munder Tax-Free Intermediate Bond Fund Class A Shares and Class B
Shares commenced operations on November 30, 1992 and May 16, 1996,
respectively. The Fund is authorized to issue Class C Shares. As of June
30, 1998, the Fund had not commenced selling Class C Shares.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
22
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE BOND FUND(A)
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
2/28/95(E) 2/28/94 2/28/93 6/30/98 6/30/97(F) 6/30/96(F)
CLASS A CLASS A CLASS A CLASS B CLASS B CLASS B
------- ------- ------- ------- ------- -------
</TABLE>
23
<PAGE>
FUND CHOICES
WHAT FUNDS ARE OFFERED?
This Prospectus offers Class A, Class B and Class C Shares of the Funds
described below. This section summarizes each Fund's goal and principal
investments. The sections entitled "What are the Funds' Investments and
Investment Practices?" and "What are the Risks of Investing in the Funds?" and
the SAI give more information about the Funds' investment techniques and risks.
Capitalized terms are explained in the section entitled "What are the Fund's
Investments and Investment Practices?"
BOND FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide a
high level of current income, its secondary goal is 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 fifteen 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 Old MCM, Inc. ("MCM"), the
predecessor to the Advisor, since 1987. Mr. Prost has been a Senior Fixed
Income Portfolio of the Advisor or MCM since 1995. 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 MANAGEMENT. 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 Foreign 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 fifteen 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.
24
<PAGE>
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 or MCM, has managed the Fund since October 1996. Prior
to joining MCM 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 fifteen 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.
MICHIGAN TRIPLE TAX-FREE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide as high a
level of current interest income exempt from regular Federal income taxes,
Michigan state income and Michigan intangibles tax as is consistent with prudent
investment management and preservation of capital.
. Except during temporary defensive periods, at least 80% of the Fund's net
assets are invested in Michigan Municipal Obligations.
. The Fund will invest primarily in michigan municipal obligations whicH
have remaining maturities of between three and thirty years.
. The Fund's dollar-weighted average maturity will generally be between ten
and twenty years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank
(1985-1993).
TAX-FREE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a high level
of current interest income exempt from Federal income taxes and to generate as
competitive a long-term rate of return as is consistent with prudent investment
management and preservation of capital.
. Under normal market conditions, at least 65% of the Fund's assets will
be invested in Municipal Obligations.
. Except during temporary defensive periods, at least 80% of the Fund's
net assets will be invested in Municipal Obligations whose interest is
exempt from regular Federal income tax. This fundamental policy may only
be changed with shareholder approval.
. The Fund invests primarily in intermediate-term and long-term Municipal
Obligations which have remaining maturities of between three and thirty
years.
. The Fund's dollar-weighted average maturity will generally be between
ten and twenty years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank.
25
<PAGE>
TAX-FREE INTERMEDIATE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a
competitive level of current interest income exempt from regular Federal income
taxes and a total return which, over time, exceeds the rate of inflation and the
return provided by tax-free money market instruments.
. Under normal market conditions, at least 65% of the Fund's assets will
be invested in Municipal Obligations.
. Except during temporary defensive periods, at least 80% of the Fund's
net assets will be invested in Municipal Obligations whose interest is
exempt from regular Federal income tax.
. The Fund invests in Michigan Municipal Obligations from time to time.
. The Fund generally buys obligations with remaining maturities of ten
years or less.
. The Funds dollar-weighted average maturity will generally be between
three and eight years, but may be up to ten years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank.
WHO MAY WANT TO INVEST IN THE FUNDS?
The Funds are designed for investors who desire potentially higher returns
than more conservative fixed rate investments or money market funds and who seek
current income. The Tax-Free Funds may be desirable for investors who seek
primarily tax-exempt income. When you choose among the Funds, you should
consider both the expected yield of the Funds and potential changes in each
Fund's share price. The yield and potential price changes of a Fund's shares
depend on the quality and maturity of the obligations in its portfolio, as well
as on other market conditions.
WHAT ARE THE FUNDS' INVESTMENTS AND INVESTMENT PRACTICES?
All of the Funds, other than the International Bond Fund, the Michigan
Triple Tax-Free Bond Fund and the Tax-Free Intermediate 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
non-diversified funds.
The Tax-Free Funds will acquire long-term instruments only which are rated
A or better by Moody's Investors Service Inc. ("Moody's") or Standard & Poor's
Rating Service ("S&P") or, if unrated, are of comparable quality. These Funds
will acquire short-term instruments only which (i) have short-term debt ratings
in the top two categories by at least one nationally recognized statistical
rating organization, (ii) are issued by an issuer with such ratings or (iii), if
unrated, are of comparable quality.
The Advisor does not intend to invest more than 25% of a Fund's assets in
securities whose issuers are in the same state, except that the Advisor may
invest more than 25% of the Michigan Triple Tax-Free Bond Fund's and the Tax-
Free Intermediate Bond Fund's assets in Michigan Municipal Obligations.
Each Tax-Free Fund may invest in short term money market instruments on a
temporary basis or for temporary investment purposes. Short term money market
instruments include U.S. government obligations, debt securities of issuers
having a rating within the two highest categories of either S&P or Moody's, and
certificates of deposit or bankers' acceptances of domestic branches of U.S.
banks with at least $1 billion in assets.
26
<PAGE>
Investment Charts
The following charts summarize the Funds' investments and investment
practices. The SAI contains more details. All percentages are based on a 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 Funds'
investment practices.
<TABLE>
<CAPTION>
BOND FUNDS
- -----------------------------------------------------------------------------------------------------------------
BOND INTERMEDIATE INTERNATIONAL U.S. GOVERNMENT INCOME
INVESTMENTS AND INVESTMENT PRACTICES FUND BOND FUND BOND FUND FUND
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIXED INCOME SECURITIES. Either pay
interest at set times at either fixed or
variable rates, or realize a discount at
maturity. Includes corporate bonds,
debentures, notes and other similar
corporate debt instruments, zero coupon Y Y Y Y
bonds (discount debt obligations that do
not make interest payments) and variable
master demand notes (permit the amount of
debt to vary and provide for periodic
adjustments in interest rates).
- -----------------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Securities issued by
foreign governments and their agencies, 25% 25% Y 25%
instrumentalities or political
subdivisions, supranational organizations,
and foreign corporations. Does not
include Bank Obligations.
- -----------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Includes debt
securities backed by mortgages, Y Y Y Y
installment sales contracts and credit
card receivables.
- -----------------------------------------------------------------------------------------------------------------
INTEREST RATE AND CURRENCY SWAPS.
Agreement to exchange payments calculated Y(1) Y(1) Y Y(1)
on the basis of relative interest or
currency rates. Derivative instruments
used solely for hedging.
- -----------------------------------------------------------------------------------------------------------------
INTEREST RATE CAPS AND FLOORS. Entitle
purchaser to receive payments of interest
to the extent that a specified reference N N Y N
rate exceeds or falls below a
predetermined level.
- -----------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS. Include
securities issued by, or guaranteed by, Y Y Y Y
the U.S. Government or its agencies or
instrumentalities.
- -----------------------------------------------------------------------------------------------------------------
SHORT TERM MONEY MARKET INSTRUMENTS. High
quality short-term instruments including,
among other things, commercial paper, Y Y Y Y
bankers' acceptances, certificates of
deposit and short-term corporate
obligations.
- -----------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Include
participations in trusts that hold U.S.
Treasury and agency securities which Y Y Y Y
represent either the interest payments or
principal payments on the securities or
combination of both.
- -----------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. A Fund buys
securities and agrees to sell them back at Y Y Y Y
a later time at a set price.
- -----------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund
sells securities and agrees to buy them
back later at an agreed upon time and Y Y Y Y
price. A method to borrow money for
temporary purposes.
- -----------------------------------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE
CONTRACTS. Obligations of a Fund to
Purchase or sell a specific currency at a Y Y Y Y
future date at a set price. May decrease
a Fund's loss due to a change in a
currency value, but also limits gains from
currency changes.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
BOND FUNDS (continued)
- -----------------------------------------------------------------------------------------------------------------
BOND INTERMEDIATE INTERNATIONAL U.S. GOVERNMENT INCOME
INVESTMENTS AND INVESTMENT PRACTICES FUND BOND FUND BOND FUND FUND
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BANK OBLIGATIONS. U.S. dollar denominated
Bank Obligations including certificates of
deposit, bankers' acceptances, bank notes Y Y Y Y
and time deposits, issued by U.S. or
foreign banks or savings institutions
having total assets in excess of $1
billion.
- -----------------------------------------------------------------------------------------------------------------
SUPRANATIONAL ORGANIZATION OBLIGATIONS.
Fixed Income Securities issued or N N Y N
guaranteed by supranational organizations
such as the World Bank.
- -----------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS.
Agreements by a Fund to make payments to
an insurance company's general account in Y Y Y Y
exchange for a minimum level of interest
based on an index.
- -----------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS. A Fund would bear the 10%/5% 10%/5% 10%/5% 10%/5%
expenses of money market funds whose in any in any in any in any
shares it purchased, in addition to the 1 Fund 1 Fund 1 Fund 1 Fund
Fund's own expenses.
- -----------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD
COMMITMENTS. Agreements by a Fund to
purchase securities at a set price, with
delivery and payment in the future. The [25%] [25%] [25%] [25%]
value of securities may change between the
time the price is set and payment. Not to
be used for speculation.
- -----------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is
no ready market for these securities,
which inhibits the ability to sell them 15%(2) 15%(2) 15%(2) 15%(2)
for full market value, or there are legal
restrictions on their resale by the Fund.
- -----------------------------------------------------------------------------------------------------------------
FUTURES AND OPTIONS ON FUTURES. (3)
Contracts in which a Fund has the right or
the obligation, at maturity, to make Y Y Y Y
delivery of, or receive securities, the
cash value of an index, or foreign
currency. Used for hedging purposes or to
maintain 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 Y Y Y Y
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 securities
indices, individual securities, foreign
currencies or futures contracts. See the
SAI for more details and additional limitations.
- -----------------------------------------------------------------------------------------------------------------
BORROWING. Borrowing for temporary
purposes/ borrowing to meet redemptions.
Fundamental policy that can only be 5%/33 1/3 5%/33 1/3 5%/33 1/3 5%/33 1/3
changed by shareholders.
- -----------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend
securities to financial institutions which
pay for the use of the securities. May 25% 25% 25% 25%
increase return. Slight risk of borrower
failing financially.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
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 AND OPTIONS ON FUTURES
IS 5% OF A FUND'S ASSETS.
28
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE FUNDS
- -----------------------------------------------------------------------------------------------------------------
TAX-FREE
INVESTMENTS AND INVESTMENT MICHIGAN TRIPLE INTERMEDIATE
PRACTICES TAX-FREE BOND FUND TAX-FREE BOND FUND BOND FUND
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL OBLIGATIONS. Payable
from the issuer's general revenue, Y Y Y
the revenue of a specific project,
current revenues or a reserve fund.
- -----------------------------------------------------------------------------------------------------------------
MICHIGAN MUNICIPAL OBLIGATIONS.
Municipal Obligations issued by Y Y Y
the State of Michigan and its
political subdivisions.
- -----------------------------------------------------------------------------------------------------------------
FIXED INCOME SECURITIES. Either
pay interest at set times at
either fixed or variable rates, or
realize a discount at maturity.
Includes corporate bonds,
debentures, notes and other Y Y Y
similar corporate debt instruments,
zero coupon bonds (discount debt
obligations that do not make interest
payments) and variable master demand
notes (permit the amount of debt to
vary and provide for periodic adjustments
in interest rates).
- -----------------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Securities
issued by foreign governments and 10% 10% 10%
their agencies, instrumentalities
or political subdivisions,
supranational organizations, and
foreign corporations. Does not
include Bank Obligations.
- -----------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. A Fund
buys securities and agrees to sell Y Y Y
them back at a later time at a set
price.
- -----------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS. A Fund would
bear the expenses of money market
funds whose shares it purchased, Y Y Y
in addition to the Fund's own
expenses.
- -----------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD
COMMITMENTS. Agreements by a Fund [25%] [25%] [25%]
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
payment. Not to be used for
speculation.
- -----------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically
there is no ready market for these
securities, which inhibits the 15%(1) 15%(1) 15%(1)
ability to sell them for full
market value, or there are legal
restrictions on their resale by
the Fund.
- -----------------------------------------------------------------------------------------------------------------
BORROWING. Borrowing for 5%/33 1/3% 5%/33 1/3% 5%/33 1/3%
temporary purposes/ borrowing to
meet redemptions. Fundamental
policy that can be changed only by
shareholders.
- -----------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may
lend securities to financial
institutions which pay for the use 25% 25% 25%
of the securities. May increase
return. Slight risk of borrower
failing financially.
- -----------------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES.
Includes U.S. Treasury bills, Y Y Y
notes and bonds.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1) BASED ON NET ASSETS.
29
<PAGE>
WHAT ARE THE RISKS OF INVESTING IN THE 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 diversity 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.
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 is a balanced investment program and
there is no guarantee that any Fund will achieve its investment objective since
there is uncertainty in every investment.
A Fund's risk is mostly dependent on the types of securities it purchases
and its investment techniques. Some Funds are authorized to use options,
futures, currency swaps, interest rate swaps and/or 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 a Fund to additional risks and transaction costs. Risks inherent in the
use of derivative instruments include: (1) the risk that interest rates,
securities prices and currency markets will not move in the direction that a
portfolio manager anticipates; (2) imperfect correlation between the price of
derivative instruments and movements in the prices of the securities, interest
rates or currencies being hedged; (3) the fact that skills needed to use these
strategies are different than those needed to select portfolio securities; (4)
inability to close out certain hedged positions to avoid adverse tax
consequences; (5) the possible absence of a liquid secondary market for any
particular instrument and possible exchange-imposed price fluctuation limits,
either of which may make it difficult or impossible to close out a position when
desired; (6) leverage risk, that is, the risk that adverse price movements in an
instrument can result in a loss substantially greater than the Fund's initial
investment in that instrument (in some cases, the potential loss is unlimited);
and (7) particularly in the case of privately-negotiated instruments, the risk
that the counterparty will not perform its obligations, which could leave the
Fund worse off than if it had not entered into the position.
International Bond Fund, Michigan Triple Tax-Free Bond Fund and Tax-Free
Intermediate Bond Fund
These Funds are non-diversified and hold securities of a limited number of
issuers. The Funds may, therefore, pose a greater risk to investors than an
investment in a diversified fund. The Michigan Triple Tax-Free Bond Fund
invests primarily in Michigan Municipal Securities. If Michigan issuers suffer
serious financial difficulties jeopardizing their ability to pay their
obligations, the net asset value of such Fund may decline.
Investing in the International Bond 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 the U.S. market, 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
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
30
<PAGE>
earned, gains and losses realized on the sale of securities, net investment
income and unrealized appreciation or depreciation of investments; and (8) the
possible imposition of dividend or interest withholding by a foreign country.
The risks of the various investment techniques the Funds use are described
in more detail in the SAI.
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 and Class C 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 4.0%, or a Class B or C 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 and Class C 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 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.
31
<PAGE>
PURCHASES AND EXCHANGES OF SHARES
WHICH SHARE CLASS SHOULD I CHOOSE FOR MY INVESTMENT?
Each of the Funds offers Class A, Class B and Class C 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>
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C>
. Front end sales charge. There . No front end sales charge. All . No front end sales charge or
are several ways to reduce these your money goes to work for you right CDSC, except for a CDSC for
sale charges. away. redemptions made within the first
. Lower annual expenses than . Higher annual expenses than Class A year after investing. All your
Class B and Class C Shares. Shares. money goes to work for you right
. A CDSC on shares you sell within away.
six years of purchase. . Shares do not convert to another
. Automatic conversion to Class A class.
Shares approximately six years after . Higher annual expenses than
issuance, thus reducing future annual Class A Shares.
expenses.
. CDSC is waived for certain
redemptions.
</TABLE>
Each Fund also issues Class K and Class Y Shares, which have different
sales charges, expense levels and performance. Class K and Class Y Shares are
available to limited types of investors. Call (800) 438-5789 to obtain more
information concerning Class K and Class Y Shares.
WHAT PRICE DO I PAY FOR SHARES?
The purchase price for Class A Shares is the net asset value ("NAV") next
determined after we receive your order in proper form plus any applicable sales
charge. The purchase price for Class B and Class C Shares is the NAV next
determined after we receive your order in proper form. 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 NAV on
each day the New York Stock Exchange ("NYSE") is open for trading (a "Business
Day") at the close of such trading on the NYSE (normally 4:00 p.m. Eastern
time). 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:
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF DISCOUNT TO SELECTED
--------------------------------- DEALERS AS A PERCENTAGE
YOUR INVESTMENT NET ASSET VALUE OF INVESTMENT
---------------- --------------- -------------
<S> <C> <C> <C>
Less than $100,000.................. 4.00% 4.17% 3.75%
$100,000 but less than $250,000..... 3.00% 3.09% 2.75%
$250,000 but less than $500,000..... 2.00% 2.04% 1.75%
$500,000 but less than $1,000,000... 1.25% 1.27% 1.00%
$1,000,000 or more.................. None* None* (see below)**
</TABLE>
32
<PAGE>
- --------------------
* 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. Class A Shares of the Trust Funds purchased on or before June 27,
1995 are subject to a different CDSC, which is described in the SAI.
** The Distributor may pay the entire commission to dealers. If that occurs, he
dealer may be considered an "underwriter" under who initiate and are responsible
for purchases of $1 million or more.
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' service providers 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 (including customers of such banks
and other financial institutions, and the immediate family members of
such customers);
(8) fee-based financial planners or employee benefit plan consultants
acting for the accounts of their clients;
(9) employer sponsored retirement plans which are administered by
Universal Pensions, Inc. ("UPI Plans");
(10) employer sponsored 401(k) plans which are administered by Merrill
Lynch Group Employee Services ("Merrill Lynch Plans") which meet the
criteria described below under "Qualified Employer Sponsored
Retirement Plans"; and
(11) individuals who reinvest proceeds of redemptions from Class A, Class B
or Class C Shares of the Munder Short Term Treasury Fund, provided,
such individuals were shareholders of the Munder Short Term Treasury
Fund on June 2, 1998.
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) or
Section 403(b) of the Code (each, a "Qualified Employee Benefit Plan") and that
(1) invest $1,000,000 or more in Class A Shares of investment portfolios offered
by the Trust, the Company or Framlington or (2) have at least 75 eligible plan
participants. In addition, we will waive the CDSC of 1% charged on certain
redemptions 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"), UPI Plans and Merrill Lynch 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 Plans for employees participating in an employer-sponsored or
administered retirement program operating under Section 408A of the Code and
(ii) the CDSC of 1% imposed on certain redemptions within one year of purchase
for these accounts. The
33
<PAGE>
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 the 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 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.
. 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.
. RIGHT OF ACCUMULATION. You may add the value of any shares of non-money
market funds of the Trust, the Company or Framlington you already own
to the amount of your next Class A Share 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.
34
<PAGE>
WHAT IS THE MINIMUM REQUIRED INVESTMENT?
The minimum initial investment for Class A, Class B and Class C Shares of a
Fund is $250 and subsequent investments must be at least $50. Purchases in
excess of $250,000 must be for Class A or Class C Shares.
HOW CAN I PURCHASE SHARES?
You can purchase Class A, Class B and Class C 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.
. 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.
. BY MAIL. You may open an account by completing, signing and mailing the
attached Account Application Form and a check or other negotiable bank
draft (payable to The Munder Funds) for $250 or more to: The Munder
Funds, c/o First Data Investor Services Group, P.O. Box 5130,
Westborough, Massachusetts 01581-5130. 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.
. 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 the Transfer Agent 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.
. 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.
. REINVESTMENT PRIVILEGE. Once a year you may reinvest redemption proceeds
from Class A, B and C 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. We do not issue
share
35
<PAGE>
certificates. 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?
You may exchange shares of the Funds for shares of the same class of other
Funds of the Trust, the Company or Framlington based on their relative net asset
values. 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 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 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.
. 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.
. EXCHANGES BY MAIL. You may send exchange orders to your broker or to the
Transfer Agent at The Munder Funds c/o First Data 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.
REDEMPTIONS OF SHARES
WHAT PRICE DO I RECEIVE FOR REDEEMED SHARES?
The redemption price is the NAV next determined after we receive the
redemption request in proper form. 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
. Class C Shares within one year of buying them.
These time periods include the time you held Class B or Class C Shares
which you may have exchanged for Class B or Class C Shares of the Funds.
The CDSC schedule for Class B shares purchased after June 27, 1995 is set
forth below. See the SAI for the CDSC schedule for Class B Shares purchased
before that time. 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.
36
<PAGE>
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%
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.
CDSC Waivers. We will waive the CDSC payable upon redemptions of shares
which you purchased after June 27, 1995 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
. redemptions limited to 10% per year of an account's NAV. For example, if
you maintain an annual balance of $10,000 you can redeem up to $1,000
annually free of charge.
Consult the SAI for Class B Share CDSC waivers which apply when you redeem
shares purchased on or before June 27, 1995.
We will waive the CDSC for Class B Shares for all redemptions by Merrill
Lynch Plans if: (i) the Plan is record kept on a daily valuation basis by
Merrill Lynch; or (ii) the Plan is record kept on a daily valuation basis by an
independent record keeper 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 Record keeping 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 Fund cannot sell its assets or accurately determine the
value of its assets or if the SEC orders the Fund to suspend redemptions.
37
<PAGE>
HOW CAN I REDEEM SHARES?
You may redeem shares of the Funds in several ways:
. BY MAIL. You may mail your redemption request to: The Munder Funds c/o
First Data 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.
. 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 CDSC's when you redeem shares.
. INVOLUNTARY REDEMPTION. We may redeem your account if its value falls
below $250 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.
38
<PAGE>
. FREE CHECKWRITING. Free checkwriting is available to holders of Class A
Shares of the Funds (other than the International Bond Fund) who
complete the Signature Card Section of the Account Application Form. You
may write checks in the amount of $500 or more but you may not close a
Fund account by writing a check. We may change or terminate this program
on 30 days' notice to you.
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 Trust and the Company are each an open-end management investment
company, which is a mutual fund that sells and redeems shares every day that it
is open for business. They are managed under the direction of their governing
Boards of Trustees and Directors, which are responsible for the overall
management of the Trust and the Company supervise the Funds' service providers.
The Trust is organized as Massachusetts business trust and the Company is a
Maryland corporation.
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 and WAM Holdings, Inc. ("WAM"). MCM was
founded in April, 1985 as a Delaware corporation and was a registered investment
advisor. WAM is an indirect, wholly-owned subsidiary of Comerica Incorporated
which owns or controls approximately 88% of the partnership interests in the
Advisor. As of June 30, 1998, the Advisor and its affiliates had approximately
$48.2 billion in assets under management, of which $25.4 billion were invested
in equity securities, $8.1 billion were invested in money market or other short-
term instruments, $9.2 billion were invested in other fixed income securities
and $5.5 billion in non-discretionary assets.
During the fiscal year ended June 30, 1998, the Advisor was paid an
advisory fee at an annual rate based on the average daily net assets of each
Fund (after waivers, if any) as follows:
Bond Fund........................................................... 0.50%
Intermediate Bond Fund.............................................. 0.50%
International Bond Fund............................................. 0.50%
U.S. Government Income Fund......................................... 0.50%
Michigan Triple Tax-Free Fund....................................... 0.50%
Tax-Free Bond Fund.................................................. 0.50%
Tax-Free Intermediate Bond Fund..................................... 0.50%
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.
39
<PAGE>
TRANSFER AGENT. First Data Investor Services Group, Inc. is the Funds'
transfer agent. The Transfer Agent 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
"Administrator") is the Funds' administrator. State Street is located at 225
Franklin Street, Boston, Massachusetts 02110. State Street generally assists
the Company and the Trust in all aspects of its administration and operations
including overseeing 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 Funds and certain other
investment portfolios that are advised by the Advisor for which it provides
services, computed daily and payable monthly at the annual rate of 0.113% on the
first $2.8 billion of net assets, plus 0.103% on the next $2.2 billion of net
assets, plus 0.101% on the next $2.5 billion of net assets, plus 0.095% on the
next $2.5 billion of net assets, plus 0.080% on the next $2.5 billion of net
assets, plus 0.070% on all net assets in excess of $12.5 billion (with a $75,000
minimum fee per annum in the aggregate for all portfolios with respect to the
Administrator).
State Street has entered into a Sub-Administration Agreement with the
Distributor under which the Distributor provides certain administrative services
with respect to the Funds. State Street pays the Distributor a fee for these
services out of its own resources at no cost to the Funds.
CUSTODIAN AND SUB-CUSTODIAN. Comercia Bank ("Comerica" or the
"Custodian"), whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, Michigan 48226, is the Funds' custodian. No
compensation is paid to the Custodian for its custodial services. Comerica
receives a fee of 0.01% of the aggregate average daily net assets of the Funds
beneficially owned by Comerica and its customers for certain shareholder
services provided by Comerica to the Funds. State Street serves as the Funds'
sub-custodian.
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 Investment Company Act of 1940, as amended, the
Funds have adopted Service Plans with respect to their Class A Shares and
Service and Distribution Plans with respect to their Class B and Class C 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 Shares.
The Distributor also is paid a service fee at an annual rate of 0.25% and a
distribution fee at an annual rate of up to 0.75% of the value of the average
daily net assets of the Funds' Class B and Class C 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 Trust and the Company as a whole and affecting your particular Fund. You
will not vote by Class unless expressly required by law or when the Trustees or
Directors determine the matter to be voted on affects only the interests of the
holders of a particular class of shares. The Trust and 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 Trustee or Director. Under Massachusetts law, it is
possible that a
40
<PAGE>
shareholder may be personally liable for the Trust's obligations. If a
shareholder were required to pay a debt of a Fund, however, the Trust has
committed to reimburse the shareholder in full from its assets. The SAI contains
more information regarding voting rights.
Comerica 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 Trust and 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. The International Bond Fund pays
dividends quarterly. The other Funds pay dividends monthly. Each Fund
distributes its net realized capital gains (including net short-term capital
gains), if any, at least annually.
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.
In general, as long as each Fund meets the requirements to qualify as a
regulated investment company ("RIC") under Federal tax laws, it will not be
subject to Federal income tax on its income and capital gains that it
distributes in a timely manner to its shareholders. Each Fund intends to
qualify annually as a RIC. Even if it qualifies as a RIC, a Fund may still be
liable for an excise tax on income that is not distributed in accordance with a
calendar year requirement; the Funds intend to avoid the excise tax by making
timely distributions.
Generally, you will owe tax on the amounts distributed to you, regardless
of whether you receive these amounts in cash or reinvest them in additional Fund
shares. Shareholders not subject to tax on their income generally will not be
required to pay any tax on amounts distributed to them. Federal income tax on
distributions to an IRA or to a qualified retirement plan will generally be
deferred.
Capital gains derived from sales of portfolio securities held by a Fund
will generally be designated as long-term or short-term. Distributions from a
Fund's long-term capital gains are generally taxed at the long-term capital
gains rate regardless of how long you have owned shares in the Fund. Dividends
from other sources are generally taxed as ordinary income.
Dividends and capital gain distributions are generally taxable when you
receive them; however, if a distribution is declared in October, November or
December, but not paid until January of the following year, it will be
considered to be paid on December 31 in the year in which it was declared.
Shortly after the end of each year, you will receive from each Fund in which you
are a shareholder a statement of the amount and nature of the distributions made
to you during the year.
41
<PAGE>
If you redeem, transfer or exchange Fund shares, you may have taxable gain
or a loss. If you hold Fund shares for six months or less, and during that time
you receive a capital gain dividend, any loss you realize on the sale of these
Fund shares will be treated as a long-term loss to the extent of the earlier
distribution.
Dividends and certain interest income earned from foreign securities by a
Fund may be subject to foreign withholding or other taxes. A Fund may be
permitted to pass on to its shareholders the right to a credit or deduction for
income or other tax credits earned from foreign investments and will do so if
possible. These deductions or credits may be subject to tax law limitations.
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 a PFIC as a "qualified electing fund"
("QEF") and the PFIC furnishes certain financial information in the required
form to such Fund, the Fund will instead be required to include in income each
year its allocable share of the ordinary earnings and net capital gains on the
QEF, regardless of whether received, and such amounts will be subject to the
various distribution requirements described above. The Funds may also elect to
mitigate the tax effects of owning PFIC stock by making an annual mark-to-
market election with respect to PFIC shares.
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.
YEAR 2000. The Funds' operations depend on the seamless functioning
of computer systems in the financial service industry, including those of its
service providers. Many computer software systems in use today cannot properly
process date-related information after December 31, 1999 because of the method
by which dates are encoded and calculated. This failure, commonly referred to
as the "Year 2000 Issue," could adversely affect the handling of securities
trades, pricing and account servicing for the Funds. The Funds have been
informed that their major service providers have made compliance with the Year
2000 Issue a high priority and are taking steps that they believe are reasonably
designed to address the Year 2000 Issue with respect to their computer systems.
There can be, however, no assurance that these steps will be successful, or that
interaction with other non-complying computer systems will not impair their
services at that time.
42
<PAGE>
CLASS A, B & C SHARES
Prospectus
October 27, 1998
THE MUNDER MONEY MARKET FUNDS
Cash Investment
Money Market
Tax-Free Money Market
U.S. Treasury Money Market
Prospectus begins on next page
<PAGE>
PROSPECTUS
Class A, Class B and Class C Shares
The Munder Funds Trust (the "Trust") and The Munder Funds, Inc. (the
"Company") are open-end investment companies. This Prospectus describes three
investment portfolios offered by the Trust (the "Trust Funds") and the Money
Market Fund offered by the Company (collectively, the "Funds"):
Munder Cash Investment Fund
Munder Money Market Fund
Munder Tax-Free Money Market Fund
Munder U.S. Treasury Money Market Fund
Munder Capital Management (the "Advisor") serves as the investment
advisor of the Funds. Only Class A Shares of the Trust Funds are currently
offered for sale to retail investors. Class A, Class B and Class C Shares of the
Money Market Fund may be acquired only through an exchange of shares from the
corresponding classes of other funds of the Company, the Trust or Munder
Framlington Funds Trust ("Framlington").
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 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 PRINCIPLE AMOUNT INVESTED.
ALTHOUGH THE FUNDS SEEK TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1.00
PER SHARE, THERE CAN BE NO ASSURANCE THAT THE FUNDS CAN DO SO ON A CONTINUING
BASIS.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES:
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS OCTOBER 27, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
Fund Highlights
What are the key facts regarding the Funds?...........................3
Financial Information.........................................................5
Fund Choices
What Funds are offered?..............................................13
Who may want to invest in the Funds?.................................13
What are the Funds' investments and investment practices?............14
What are the risks of investing in the Funds?........................16
Performance
How is the Funds' performance calculated?............................16
Where can I obtain performance data?.................................17
Purchases and Exchanges of Shares
What price do I pay for shares?......................................17
When can I purchase shares?..........................................17
What is the minimum required investment?.............................17
How can I purchase shares?...........................................17
How can I exchange shares?...........................................18
Redemptions of Shares
What price do I receive for redeemed shares?.........................19
When can I redeem shares?............................................20
How can I redeem shares?.............................................20
When will I receive redemption amounts?..............................21
Structure and Management of the Funds
How are the Funds structured?........................................21
Who manages and services the Funds?..................................21
What are my rights as a shareholder?.................................22
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?....................23
How will distributions be made? .....................................23
Are there tax implications of my investments in the Funds?...........23
Additional Information.......................................................24
2
<PAGE>
FUND HIGHLIGHTS
WHAT ARE THE KEY FACTS REGARDING THE FUNDS?
Q: What are the Funds' goals?
A:
. The Cash Investment Fund and U.S. Treasury Money Market Fund seek
as high a level of current interest income as is consistent with
maintaining liquidity and stability of principal.
. The Money Market Fund seeks to provide current income consistent
with the preservation of capital and liquidity.
. The Tax-Free Money Market Fund seeks to provide as high a level of
current interest income exempt from Federal income taxes as is
consistent with maintaining liquidity and stability of principal.
Q: What are the Funds' strategies?
A: The Funds invest solely in dollar-denominated debt securities with remaining
maturities of 13 months or less and maintain an average dollar-weighted
portfolio maturity of 90 days or less.
Q: What are the Funds' risks?
A: It is expected that the Funds will maintain a net asset value of $1.00 per
share, although there is no assurance that they will be able to do so on a
continuous basis. A Fund's performance per share may change daily based on many
factors, including interest rate levels, the quality of the instruments in the
Fund's investment portfolio, national and international economic conditions and
general market conditions.
Q: What are the options for investment in the Funds?
A: The Money Market Fund offers four different investment options, or classes:
Class A, B, C and Y. The Trust Funds offer only Class A, Class K and Class Y
Shares. Class K and Class Y Shares, which are offered only to institutional and
other qualified investors, are offered in other prospectuses.
Maximum Front Maximum
Class Rule 12b-1 Fees* End Sales Load** CDSC***
----- ---------------- ---------------- -------
Class A 0.25% None None
Class B 1% None 5%
Class C 1% None 1%, if redeemed
within 1 year
of purchase
- ------------
* 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.
*** 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 the shares.
Class B Shares convert automatically to Class A Shares after six years. Due
to the level of Rule 12b-1 fees on Class B Shares versus Class A or Class C
Shares, this conversion is to your economic benefit.
Q: How do I buy and sell shares of the Funds?
A: This Prospectus offers to investors one class of shares of the Trust Funds,
Class A Shares. The Money Market Fund offers Class A, Class B and Class C Shares
which may be acquired only through an exchange of shares of the corresponding
classes of another fund of the Company, the Trust or Framlington. Funds
Distributor, Inc. (the "Distributor") sells shares of the Funds. You may
purchase Class A Shares from the Distributor through broker-dealers or other
financial institutions or from the Funds' transfer agent, First Data Investor
Services Group, Inc. (the
3
<PAGE>
"Transfer Agent"), by mailing the attached Account Application Form with a check
to the Transfer Agent. You must invest at least $250 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, Munder and Framlington, and exchange Fund
shares for shares of the same class of other funds of the Company, Munder and
Framlington.
Q: What shareholder privileges do the Funds offer?
A: CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------- -------------- --------------
Automatic Investment Automatic Investment Automatic Investment
Plan Plan Plan
Automatic Withdrawal Automatic Withdrawal Automatic Withdrawal
Plan Plan Plan
Telephone Exchanges Telephone Exchanges Telephone Exchanges
Free Checkwriting
Q: When and how are distributions made?
A: Dividend distributions are made from the dividends and interest earned on
investments after expenses. The Funds declare dividends daily and pay them
monthly. The Funds distribute capital gains at least annually. Unless you elect
to receive distributions in cash, we will use all dividends and capital gain
distributions of a Fund to purchase additional shares of that Fund.
Q: Who manages the Funds' assets?
A: Munder Capital Management is the Funds' investment advisor. The Advisor is
responsible for all purchases and sales of the securities held by the Funds.
4
<PAGE>
FINANCIAL INFORMATION
SHAREHOLDER TRANSACTION EXPENSES(1)
The purpose of this table is to assist you in understanding the expenses a
shareholder in the Funds will bear directly.
<TABLE>
<CAPTION>
CASH INVESTMENT FUND
TAX-FREE MONEY MARKET FUND
U.S. TREASURY MONEY MARKET FUND MONEY MARKET FUND
------------------------------- -----------------
CLASS A CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES
------------------------------- ------ ------ ------
<S> <C> <C> <C> <C>
Maximum Sales Charge
on Purchase
(as a % of Offering Price)............... None None None None
Sales Charge Imposed on
Reinvested Dividends.................... None None None None
Maximum Deferred Sales Charge(3)........ None None(2) 5%(3) 1%(4)
Redemption Fees(6)...................... None None None None
Exchange Fees............................. None None None None
</TABLE>
- -------------
Notes:
(1) Does not include fees which institutions may charge for services they
provide to you.
(2) A 1% CDSC applies to redemptions of shares acquired through the
exchange of Class A Shares of other funds purchased on or after June
27, 1995 as part of an investment of $1,000,000 or more. See the SAI
for a description of Class A Shares acquired before June 27, 1995.
(3) The CDSC payable on redemption of Class B Shares declines over time.
(4) A 1% CDSC applies to redemptions within one year after the initial
investment in Class C Shares.
(5) The Transfer Agent may deduct a redemption 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 for the current fiscal year. 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 based on
fees for the Funds' past 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>
CLASS A SHARES
ANNUAL FUND OPERATING ---------------------------------------------------------------------------
EXPENSES TAX-FREE MONEY U.S. TREASURY MONEY
(AS A % OF AVERAGE NET ASSETS) CASH INVESTMENT FUND MARKET FUND MARKET FUND
- ------------------------------ -------------------- ----------- -----------
<S> <C> <C> <C>
Advisory Fees.......................... .35% .35% .35%
12b-1 Fees............................. .25% .25% .25%
Other Expenses......................... .20% .18% .19%
---- ---- ----
Total Fund Operating Expenses.......... .80% .78% .79%
==== ==== ====
<CAPTION>
MONEY MARKET FUND
ANNUAL FUND OPERATING ---------------------------------------------------------------------------
EXPENSES
(AS A % OF AVERAGE NET ASSETS) CLASS A SHARES CLASS B SHARES CLASS C SHARES
- ------------------------------ -------------- -------------- --------------
<S> <C> <C> <C>
Advisory Fees......................... .40% .40% .40%
12b-1 Fees............................ .25% 1.00% 1.00%
Other Expenses........................ .24% .24% .24%
---- ----- -----
Total Fund Operating Expenses.......... .89% 1.64% 1.64%
==== ===== =====
</TABLE>
5
<PAGE>
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. THIS EXAMPLE IS NOT A
REPRESENTATION OF PAST OR FUTURE PERFORMANCE OR OPERATING EXPENSES; ACTUAL
OPERATING PERFORMANCE OR EXPENSES MAY BE LARGER OR SMALLER THAN THOSE SHOWN.
<TABLE>
<CAPTION>
CLASS A SHARES
----------------------------------------------------------------------------------------------
TAX-FREE MONEY U.S. TREASURY MONEY
CASH INVESTMENT FUND MONEY MARKET FUND MARKET FUND MARKET FUND
-------------------- ----------------- ----------- -----------
<S> <C> <C> <C> <C>
1 Year.......... $ 8 $ 9 $ 8 $ 8
3 Years......... $26 $ 28 $25 $25
5 Years......... $44 $ 49 $43 $44
10 Years........ $99 $110 $97 $98
</TABLE>
This example shows the amount of expenses you would pay (directly or
indirectly) on a $1,000 investment in Class B Shares, assuming (1) a
hypothetical 5% annual return, (2) redemption at the end of the following time
period and (3) no redemption at the end of the following time periods:
<TABLE>
<CAPTION>
MONEY MARKET FUND
CLASS B SHARES
- --------------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS*
------ ------- ------- ---------
NO NO NO NO
REDEMPTION REDEMPTION REDEMPTION REDEMPTION REDEMPTION REDEMPTION REDEMPTION REDEMPTION
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$67 $17 $82 $52 $109 $89 $204 $194
</TABLE>
- ----------------------
* Reflects conversion of Class B Shares to Class A Shares (which pay lower
ongoing expenses) approximately six years after date of original purchase.
The following example shows the amount of expenses you would pay
(directly or indirectly) on a $1,000 investment in Class C Shares, assuming (1)
a hypothetical 5% annual return, (2) redemption at the end of the following time
periods and (3) no redemption at the end of one year:
<TABLE>
<CAPTION>
MONEY MARKET FUND
CLASS C SHARES
- --------------------------------------------------------------------------------------------------------------------
1 YEAR
- ----------------------------------
REDEMPTION NO REDEMPTION 3 YEARS 5 YEARS 10 YEARS*
---------- ------------- ------- ------- ---------
<S> <C> <C> <C> <C>
$27 $17 $52 $89 $194
</TABLE>
6
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
7
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights were audited by Ernst & Young LLP,
independent auditors, except that, for the periods ended prior to June 30, 1995
for the Money Market Fund, such financial highlights were audited by another
independent auditor. This information should be read in conjunction with the
Funds' most recent Annual Reports, which are incorporated by referenced into the
SAI. You may obtain the Annual Reports without charge by calling (800) 438-5789.
<TABLE>
<CAPTION>
CASH INVESTMENT FUND(A)
-------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D)
CLASS A CLASS A CLASS A CLASS A
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period............
Income from investment operations:
Net investment income.......................
Total from investment operations............
Less distributions:
Dividends from net investment income........
Total distributions.........................
Net asset value at end of period................
Total return (b)............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)........
Ratio of operating expenses to average net
assets ...................................
Ratio of net investment income to average net
assets....................................
Ratio of operating expenses to average net
assets w/o waivers........................
</TABLE>
- --------------------
(a) The Munder Cash Investment Fund Class A Shares commenced operations on
December 1, 1992. The Munder Money Market Fund Class A Shares, Class B
Shares and Class C Shares commenced operations on July 3, 1995, February
16, 1994 and October 17, 1996, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February and the fiscal year end for Money Market Fund was
December 31.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Cash Investment Fund as a
result of the consolidation of the investment advisory businesses of
Woodbridge Capital Management, Inc. and Munder Capital Management, Inc.
(f) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Money Market Fund as a
result of the consolidation of the investment advisory businesses of
Woodbridge Capital Management, Inc. and Munder Capital Management, Inc.
8
<PAGE>
<TABLE>
<CAPTION>
CASH INVESTMENT FUND(A) MONEY MARKET FUND(A)
- -------------------------------------- -----------------------------------------------------------------------------
YEAR YEAR PERIOD YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/95(E) 2/28/94 2/28/93 6/30/98 6/30/97 6/30/96 6/30/98 6/30/97 6/30/96
CLASS A CLASS A CLASS A CLASS A CLASS A CLASS A CLASS B CLASS B CLASS B
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND(A)
---------------------------------------------------------
PERIOD PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/95(D,F) 12/31/94 6/30/98 6/30/97
CLASS B CLASS B CLASS C CLASS C
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........................
Income from investment operations:
Net investment income...................................
Total from investment operations........................
Less distributions:
Dividends from net investment income....................
Total distributions.....................................
Net asset value at end of period............................
Total return (b)........................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)....................
Ratio of operating expenses to average net assets ......
Ratio of net investment income to average net assets....
Ratio of operating expenses to average net assets
w/o waivers...........................................
</TABLE>
- -------------------
(a) The Munder Money Market Fund Class A Shares, Class B Shares and Class C
Shares commenced operations on July 3, 1995, February 16, 1994 and October
17, 1996, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February and the fiscal year end for Money Market Fund was
December 31.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Cash Investment Fund as a
result of the consolidation of the investment advisory businesses of
Woodbridge Capital Management, Inc. and Munder Capital Management, Inc.
(f) On February 1, 1995, Munder Capital Management replaced Munder Capital
Management, Inc. as investment advisor for the Money Market Fund as a
result of the consolidation of the investment advisory businesses of
Woodbridge Capital Management, Inc. and Munder Capital Management, Inc.
10
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND(A)
--------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93
CLASS A CLASS A CLASS A CLASS A CLASS A CLASS A CLASS A
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...................
Income from investment operations:
Net investment income.............................
Total from investment operations..................
Less distributions:
Dividends from net investment income..............
Total distributions...............................
Net asset value at end of period.......................
Total return (b)..................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)..............
Ratio of operating expenses to average net assets.
Ratio of net investment income to average
net assets........................................
Ratio of operating expenses to average net assets
w/o waivers.......................................
</TABLE>
- --------------
(a) The Munder Tax-Free Money Market Fund Class A Shares commenced operations
on November 29, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
11
<PAGE>
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND
-------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93
CLASS A CLASS A CLASS A CLASS A CLASS A CLASS A CLASS A
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period...................................
Income from investment
operations:
Net investment income...............
Total from investment
operations..........................
Less distributions:
Dividends from net
investment income...................
Total distributions.................
Net asset value at end of period.........
Total return (b)....................
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's)..............................
Ratio of operating expenses
to average net assets ..............
Ratio of net investment
income to average net assets........
Ratio of operating expenses
to average net assets w/o
waivers.............................
</TABLE>
- -------------------
(a) The Munder U.S. Treasury Money Market Fund Class A Shares commenced
operations on November 24, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
12
<PAGE>
FUND CHOICES
WHAT FUNDS ARE OFFERED?
This Prospectus describes Class A Shares of the Cash Investment Fund,
U.S. Treasury Money Market Fund and Tax-Free Money Market Fund and Class A, B
and C Shares of the Money Market Fund. This section summarizes each Fund's goal
and principal investments. The sections entitled "What are the Funds'
Investments and Investment Practices?" and "What are the Risks of Investing in
the Funds?" and the SAI give more information about the Funds' investment
techniques and risks. Capitalized terms are explained in the section entitled
"What are the Funds' Investments and Investment Practices?"
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.
TAX-FREE MONEY MARKET FUND
. The Fund's goal is to provide as high a level of current interest
income exempt from Federal income taxes as is consistent with
maintaining liquidity and stability of principal.
. The Fund invests substantially all of its assets in short-term,
U.S. dollar-denominated Municipal Obligations, the interest on
which is exempt from regular Federal income tax.
. Under normal market conditions, the Fund will invest at least 80%
of its net assets in Municipal 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.
WHO MAY WANT TO INVEST IN THE FUNDS?
The Funds are designed for investors who desire a high level of income
and liquidity, and stability of principal. The Munder Money Market Fund is also
designed to be acquired by the exchange of shares of other Munder Funds for
investors who: (1) own other Munder Funds; (2) wish to be out of the market
temporarily; and (3) do not desire to incur redemption fees or sales charges.
The Funds invest their assets conservatively and as a result, they will not earn
as high a level of current income as funds that invest in longer-term or lower
quality debt securities or equity securities. Investors who are more aggressive
in their investment approach or who desire a higher rate of return may wish to
invest in other funds offered by the Trust, the Company and Framlington.
13
<PAGE>
WHAT ARE THE FUNDS' INVESTMENTS AND INVESTMENT PRACTICES?
Each 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 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. Each Fund may also hold uninvested cash pending
investment of late payments for purchase orders or during temporary defensive
periods.
Each 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 can be changed only by
shareholders.
Each of the Funds may Lend Securities to broker-dealers and other
financially sound institutional investors who will pay the Funds for the use of
the securities, thus increasing the Funds' returns. The borrower must set aside
cash or liquid securities equal to the value of the securities borrowed at all
times during the term of the loan. Loans may not exceed 25% of each Fund's
(except the Money Market Funds) total assets and 33 1/3% of the Money Market
Funds total assets. Risks involved in such transactions include possible delay
in recovering the loaned securities and possible loss of the securities or the
collateral if the borrower declares bankruptcy.
Investment Chart
The following chart summarizes the Funds' investments and investment
practices. The SAI contains more details. All percentages are based on a 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 Funds'
investment practices.
14
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUNDS
- ---------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY
INVESTMENTS AND CASH MONEY TAX-FREE MONEY
INVESTMENT PRACTICES INVESTMENT MARKET MONEY MARKET MARKET
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL REVENUE OBLIGATIONS. Obligations the interest on
which is paid solely from the revenues of similar projects. N N Y N
- ---------------------------------------------------------------------------------------------------------------------------
CORPORATE OBLIGATIONS.
. Commercial paper (including paper of Canadian Y Y N N
companies, Canadian branches of U.S. companies,
and Europaper) Y Y N N
. Corporate bonds Y Y N N
. Other short-term obligations Y Y N N
. Variable master demand notes Y Y N N
. Bond debentures Y Y N N
. Notes.
- ---------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Include debt securities backed by
mortgages, installment sales contracts and credit card
receivables. Y Y N N
- ---------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS.
. Issued or guaranteed by U.S. Government Y Y N Y
. Issued or guaranteed by U.S. Government Agencies Y Y N N
and instrumentalities.
- ---------------------------------------------------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. dollar denominated bank obligations,
including certificates of deposit, bankers' acceptances, Y Y N N
bank notes, time deposits issued by U.S. or foreign banks
or savings institutions having total assets in excess of $1
billion.
- ---------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES.
. Participation in trusts that hold U.S. Treasury Y Y Y N
and agency securities
. U.S. Treasury-issued receipts Y Y Y 35%
. Non-U.S. Treasury receipts. Y Y Y N
- ---------------------------------------------------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS. Payable from the issuer's general No more than
revenue, the revenue of a specific project, current 5% 5% 25% in any one N
revenues or a reserve fund. state
- ---------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. A Fund agrees to purchase securities
from a seller and the seller agrees to repurchase the Y Y N Y
securities at a later time at a set price (maturities
days).
- ---------------------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund sells securities and
agrees to buy them back later at an agreed upon time and Y Y N Y
price. A method to borrow money for temporary purposes.
- ---------------------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS. Agreements by a Fund to
make payments to an insurance company's general account in Y Y N N
exchange for a minimum level of interest based on an index.
- ---------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS. Securities issued by other investment
companies which invest in short-term debt securities and Y Y Y Y
seek to maintain $1.00 net asset value per share used only (1940 Act (1940 Act (1940 Act (1940 Act
to manage daily cash portions. limits) limits) limits) limits)
- ---------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Agreements
by a Fund to purchase securities at a set price, with [25%] [25%] [25%] [25%]
delivery and 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.
- ---------------------------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Debt obligations issued by foreign
governments, and their agencies, instrumentalities or 25% 25% N N
political subdivisions, supranational organizations and
foreign corporations. Does not include Bank Obligations.
- ---------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready market for
these securities, which inhibits the ability to sell them 10%(1) 10%(1) 10%(1) 10%(1)
for full market value, or there are legal restrictions on
their resale by the Fund.
- ---------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend securities to financial
institutions which pay for the use of the securities. May 25% 331/3% 25% 25%
increase return. Slight risk of borrower failing
financially.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Key:
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1) BASED ON NET ASSETS.
15
<PAGE>
WHAT ARE THE RISKS OF INVESTING IN THE FUNDS?
Each Fund attempts to maintain a constant net asset value of $1.00 per
share. However, your investment in the Funds is not guaranteed. By itself, no
Fund is a balanced investment program and there is no guarantee that any Fund
will achieve its investment objective since there is uncertainty in every
investment.
A Fund's risk is mostly dependent on the types of securities it
purchases and its investment techniques. Because the Funds invest mostly in debt
instruments, rises and falls in interest rate levels in general, as well as in
the value of the instruments in the Funds' portfolios, can affect the Funds'
performance.
The Cash Investment Fund and Money Market Fund may invest in securities
of foreign issuers. Foreign securities are generally considered to be riskier
than securities issued by U.S. companies due to factors such as freezes on
convertibility of currency, the rise and fall of foreign currency exchange
rates, political instability and differences in accounting and reporting
standards.
Although the Cash Investment Fund, Money Market Fund and U.S. Treasury
Money Market Fund expect under normal market conditions to be as fully invested
as possible, each Fund may hold uninvested cash pending investment of late
payments for purchase orders (or other payments) or during temporary defensive
periods. Uninvested cash will not earn income. In general, investments in the
Cash Investment Fund, Money Market Fund and U.S. Treasury Money Market Fund will
not earn as high a level of current income as longer-term or lower quality
securities. Longer-term and lower quality securities, however, generally have
less liquidity, greater market risk and more fluctuation in market value.
Although the Tax-Free Money Market Fund may invest more than 25% of its
net assets in municipal revenue obligations, the interest on which is paid
solely from revenues of similar projects, the Tax-Free Money Market Fund does
not intend to do so on a regular basis. If it does, the Fund will be riskier
than a fund which does not concentrate to such an extent on similar projects.
The risks of the various investment techniques the Funds use are
described in more detail in the SAI.
PERFORMANCE
HOW IS THE FUNDS' PERFORMANCE CALCULATED?
The current yield of shares in the Funds refers to the net income
generated by an investment in shares over a seven-day period (which period will
be stated in the advertisement). This income is then "annualized." That is, the
amount of income generated by the investment during that week is assumed to be
generated each week over 52-week period and is shown as a percentage of the
investment. "Effective yield" is calculated similarly but, when annualized, the
income earned by an investment in a class is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment. The "tax-equivalent yield" of
shares of the Tax-Free Money Market Fund which may also be quoted from time to
time, shows the level of taxable yield needed to produce an after-tax equivalent
to the tax-free yield of a particular class. This is done by increasing the
yield (calculated as above) by the amount necessary to reflect the payment of
Federal and/or state income taxes at a stated rate.
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. 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.
16
<PAGE>
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
WHAT PRICE DO I PAY FOR SHARES?
The purchase price for Class A Shares is the Fund's net asset value
("NAV") next determined after a purchase order in proper form and payment are
received. 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 NAV
on each day the New York Stock Exchange ("NYSE") is open for trading (a
"Business Day") at 2:45 p.m. (Eastern time) and at the close of trading on the
NYSE (normally 4:00 p.m. Eastern time). If we receive your purchase order and
payment by 2:45 p.m. 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 for Class A Shares of a Trust Fund is
$250 and subsequent investments must be at least $50.
HOW CAN I PURCHASE SHARES?
You can purchase Class A Shares in a number of different ways. You may
place orders for Class A Shares directly through the Transfer Agent or the
Distributor or through arrangements with your authorized broker. Class A, Class
B and Class C Shares of the Money Market Fund may be acquired only through an
exchange of shares from the corresponding class of another Fund of the Company,
the Trust or Framlington.
. BY BROKER. Any broker authorized by the Distributor can sell you Class
A Shares of the Funds. Please note that brokers may charge you fees for
their services.
. BY MAIL. You may open an account by completing, signing and mailing the
attached Account Application Form and a check or other negotiable bank
draft (payable to The Munder Funds) for $250 or more to: The Munder
Funds, c/o First Data Investor Services Group, P.O. Box 5130,
Westborough, Massachusetts 01581-5130. 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.
. 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 the Transfer Agent at the address provided
above. Wire instructions must state the Fund
17
<PAGE>
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.
. 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. If your account has been set up by a broker or other investment
professional, account activity will be detailed in their statements to you.
We do not issue share certificates. 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?
You may exchange Class A Shares of the Funds for Class A Shares of other
Funds of the Trust, the Company or Framlington based on their relative net asset
values and you may exchange Class B and C Shares of the Money Market Fund for
the corresponding class of shares of the other funds of the Company, the Trust
or Framlington. Class A Shares of the Funds that were (1) acquired through
exchange and (2) can be traced back to a purchase of shares in one or more funds
of the Trust, the Company or Framlington 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 of the Money Market Fund 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 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.
. 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.
. EXCHANGES BY MAIL. You may send exchange orders to your broker or to
us at the Munder Funds c/o First Data 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.
18
<PAGE>
REDEMPTIONS OF SHARES
WHAT PRICE DO I RECEIVE FOR REDEEMED SHARES?
The redemption price is the NAV next determined after we receive the
redemption request in proper form. If we receive your redemption request by 2:45
p.m. (Eastern time), you will not receive dividends for that day. The amount you
receive will be reduced 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 of the Money Market Fund within one year
. Class A Shares of the Money Market Fund acquired through the exchange
of Class A Shares of other funds purchased before June 27, 1995 as part
of an investment of $500,000 or more
. Class B Shares of the Money Market Fund within six years
. Class C Shares of the Money Market Fund within one year.
These time periods include the time you held the shares you exchanged
to acquire Money Market Fund shares.
You pay a 1% CDSC when you redeem Class A Shares of the Money Market
Fund:
. that you acquired through the exchange of initial Class A Shares of
other Funds of the Company, the Trust or Framlington;
. if you acquired the initial Class A Shares after June 27, 1995; and
. if the initial shares were purchased without a sales charge in
connection with an investment of $1,000,000 or more.
You pay a CDSC of 1% when you redeem Class C Shares of the Money Market Fund
within one year of the date you purchased the initial Class C Shares that you
exchanged to acquire Money Market Fund Shares.
The CDSC schedule for Class B Shares of the Money Market Fund purchased
after June 27, 1995 is set forth below. See the SAI for the CDSC schedule for
Class B Shares purchased before that time. The CDSC is based on the original
purchase price of your investment or the net asset value at the time of
redemption, whichever is lower.
<TABLE>
<CAPTION>
MONEY MARKET FUND
CLASS B SHARES
YEARS SINCE PURCHASE CDSC
- -------------------- ----
<S> <C>
First..................................................................... 5.00%
Second.................................................................... 4.00%
Third..................................................................... 3.00%
Fourth.................................................................... 3.00%
Fifth..................................................................... 2.00%
Sixth..................................................................... 1.00%
Seventh and thereafter.................................................... 0.00%
</TABLE>
Redeemed shares will not pay a CDSC to the extent that the value of such
shares represents:
. reinvestment of dividends or capital gains distributions
. capital appreciation of shares redeemed.
19
<PAGE>
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.
CDSC WAIVERS. We will waive the CDSC payable upon redemptions of Class
B Shares of the Money Market Fund which you purchased after June 27, 1995 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
. redemptions limited to 10% per year of the account's NAV. For
example, if you maintain an annual balance of $10,000 you can
redeem up to $1,000 annually free of charge.
Consult the SAI for Class A Share CDSC waivers and Class B Share CDSC
waivers which apply when you redeem shares of the Money Market Fund purchased on
or before June 27, 1995.
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 Fund cannot sell its assets or accurately
determine the value of its assets or if the SEC orders the Fund to suspend
redemptions.
HOW CAN I REDEEM SHARES?
You may redeem shares of the Funds in several ways:
. BY MAIL. You may mail your redemption request to: The Munder Funds
c/o First Data 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.
. 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
20
<PAGE>
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 CDSC's when you redeem shares.
. INVOLUNTARY REDEMPTION. We may redeem your account if its value
falls below $250 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.
. FREE CHECKWRITING. Free checkwriting is available to holders of
Class A Shares of the Money Market Funds who complete the
Signature Card Section of the Account Application Form. You may
write checks in the amount of $500 or more but you may not close a
Fund account by writing a check. We may change or terminate this
program on 30 days' notice to you.
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 Trust and the Company are each an open-end management investment
company, which is a mutual fund that sells and redeems shares every day that it
is open for business. They are managed under the direction of their governing
Board of Trustees and Directors, which are responsible for the overall
management of the Trust and the Company and supervise the Funds' service
providers. The Trust is organized as a Massachusetts business trust and the
Company is a Maryland corporation.
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 Old MCM, Inc. ("MCM"), Munder Group LLC and WAM Holdings, Inc. ("WAM"). MCM
was founded in April, 1985 as a Delaware corporation and was a registered
investment advisor. WAM is an indirect, wholly-owned subsidiary of Comerica
Incorporated which owns or controls approximately 88% of the partnership
interests in the Advisor. As of June 30, 1998, the Advisor and its affiliates
had approximately $48.2 billion in assets under management, of which $25.4
billion were invested in equity securities, $8.1 billion were invested in money
market or other short-term instruments, $9.2 billion were invested in other
fixed income securities and $5.5 billion in non-discretionary assets.
21
<PAGE>
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.
During the fiscal year ended June 30, 1998, the Advisor was paid an
advisory fee at an annual rate based on the average daily net assets of each
Fund (after waivers, if any) as follows:
<TABLE>
<CAPTION>
Tax-Free Money U.S. Treasury Money
Cash Investment Fund Market Fund Market Fund Money Market Fund
-------------------- ----------- ----------- -----------------
<S> <C> <C> <C>
.35% .35% .35% .40%
</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. The Transfer Agent 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
"Administrator") is the Funds' administrator. State Street is located at 225
Franklin Street, Boston, Massachusetts 02110. State Street generally assists the
Company and the Trust in all aspects of their administration and operations
including overseeing the maintenance of financial records and fund accounting.
As compensation for its services for the Company and the Trust, State Street is
entitled to receive fees, based on the aggregate daily net assets of the Funds
and certain other investment portfolios that are advised by the Advisor for
which it provides services, computed daily and payable monthly at the annual
rate of 0.113% on the first $2.8 billion of net assets, plus 0.103% on the next
$2.2 billion of net assets, plus 0.101% on the next $2.5 billion of net assets,
plus 0.095% on the next $2.5 billion of net assets, plus 0.080% on the next $2.5
billion of net assets, plus 0.070% on all net assets in excess of $12.5 billion
(with a $75,000 minimum fee per annum in the aggregate for all portfolios with
respect to the Administrator).
State Street has entered into a Sub-Administration Agreement with the
Distributor under which the Distributor provides certain administrative services
with respect to the Funds. State Street pays the Distributor a fee for these
services out of its own resources at no cost to the Funds.
CUSTODIAN AND SUB-CUSTODIAN. Comerica Bank ("Comerica" or the
"Custodian"), whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, Michigan 48226, is the Funds' custodian. No
compensation is paid to the Custodian for its custodial services. Comerica
receives a fee of 0.01% of the aggregate average daily net assets of the Funds
beneficially owned by Comerica and its customers for certain shareholder
services provided by Comerica to the Funds. State Street serves as the Funds'
sub-custodian.
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 Investment Company Act of 1940, as amended, the
Funds have adopted Service Plans with respect to their Class A Shares and the
Money Market Fund has adopted Service and Distribution Plans
22
<PAGE>
with respect to its Class B and Class C 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 Fund's Class A Shares. The Distributor is also paid a
service fee at an annual rate of 0.25% and a distribution fee at an annual rate
of up to 0.75% of the value of the average daily net assets of the Money Market
Funds' Class B and Class C 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 and the distribution fees to finance
activities relating to the distribution of Money Market Fund's Shares. 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
Trust or the Company as a whole and affecting your particular Fund. You will not
vote by Class unless expressly required by law or when the Trustees or Directors
determine the matter to be voted on affects only the interests of the holders of
a particular class of shares. The Trust and 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 Trustee or Director. Under Massachusetts law, it is possible that a
shareholder may be personally liable for the Trust's obligations. If a
shareholder were required to pay a debt of a Fund, however, the Trust is
committed to reimburse the shareholder in full from their assets.
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 and the
Trust.
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. The net income of
the Funds is declared daily and paid monthly. Each Fund distributes its net
realized capital gains (including net short-term capital gains), if any, at
least annually.
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.
In general, as long as each Fund meets the requirements to qualify as a
regulated investment company ("RIC") under Federal tax laws, it will not be
subject to Federal income tax on its income and capital gains that it
23
<PAGE>
qualifies as a RIC, a Fund may still be liable for an excise tax on income that
is not distributed in accordance with a calendar year requirement; the Funds
intend to avoid the excise tax by making timely distributions.
Generally, you will owe tax on the amounts distributed to you,
regardless of whether you receive these amounts in cash or reinvest them in
additional Fund shares. Shareholders not subject to tax on their income
generally will not be required to pay any tax on amounts distributed to them.
Federal income tax on distributions to an IRA or to a qualified retirement plan
will generally be deferred.
Capital gains, if any, derived from sales of portfolio securities held
by a Fund will generally be designated as long-term or short-term. Distributions
from a Fund's long-term capital gains are generally taxed at the long-term
capital gains rate regardless of how long you have owned shares in the Fund.
Dividends from other sources are generally taxed as ordinary income.
Dividends and capital gain distributions are generally taxable when you
receive them; however, if a distribution is declared in October, November or
December, but not paid until January of the following year, it will be
considered to be paid on December 31 in the year in which it was declared.
Shortly after the end of each year, you will receive from each Fund in which you
are a shareholder a statement of the amount and nature of the distributions made
to you during the year.
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.
YEAR 2000. The Funds' operations depend on the seamless functioning of
computer systems in the financial service industry, including those of its
service providers. Many computer software systems in use today cannot properly
process date-related information after December 31, 1999 because of the method
by which dates are encoded and calculated. This failure, commonly referred to as
the "Year 2000 Issue," could adversely affect the handling of securities trades,
pricing and account servicing for the Funds. The Funds have been informed that
their major service providers have made compliance with the Year 2000 Issue a
high priority and are taking steps that they believe are reasonably designed to
address the Year 2000 Issue with respect to their computer systems. There can
be, however, no assurance that these steps will be successful, or that
interaction with other non-complying computer systems will not impair their
services at that time.
24
<PAGE>
CLASS A & B SHARES
Prospectus
October 27, 1998
THE MUNDER LIFESTYLE FUNDS
All-Season Conservative
All-Season Moderate
All-Season Aggressive
Prospectus begins on next page
<PAGE>
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
Emerging Markets Fund, Framlington Global Financial Services Fund, Framlington
Healthcare Fund and Framlington International Growth Fund (the "Framlington
Funds"), four 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 SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES:
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS OCTOBER 27, 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Fund Highlights
What are the key facts regarding the Funds?........................................................3
Financial Information.......................................................................................4
Fund Choices
What Funds are offered?............................................................................9
Who may want to invest in the Funds?...............................................................9
What are the Funds' investments and investment practices?..........................................9
What are the Underlying Funds' investments and investment practices?..............................11
What are the risks of investing in the Funds?.....................................................29
Performance
How is the Funds' performance calculated?.........................................................31
Where can I obtain performance data?..............................................................32
Purchases and Exchanges of Shares
What share class should I choose for my investment?...............................................32
What price do I pay for shares?...................................................................32
When can I purchase shares?.......................................................................35
What is the minimum required investment?..........................................................35
How can I purchase shares?........................................................................35
How can I exchange shares?........................................................................36
Redemptions of Shares
What price do I receive for redeemed shares?......................................................37
When can I redeem shares?.........................................................................38
How can I redeem shares?..........................................................................38
When will I receive redemption amounts?...........................................................39
Structure and Management of the Funds
How are the Funds structured?.....................................................................39
Who manages and services the Funds?...............................................................39
What are my rights as a shareholder?..............................................................41
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?.................................................41
How will distributions be made?...................................................................41
Are there tax implications of my investments in the Funds?........................................41
Additional Information.....................................................................................42
Appendix A.................................................................................................A-1
</TABLE>
2
<PAGE>
FUND HIGHLIGHTS
What Are the Key Facts Regarding the Funds?
Q: What are the Funds' goals?
A:
. The Conservative Fund (formerly, "Munder All-Season Maintenance Fund")
seeks to provide current income, with capital appreciation as a
secondary objective.
. The Moderate Fund (formerly, "Munder All-Season Development Fund")
seeks to provide high total return through capital appreciation and
current income.
. The Aggressive Fund (formerly, "Munder All-Season Accumulation Fund")
seeks long-term capital appreciation.
Q: What are the Funds' strategies?
A: These Funds are "Funds of Funds" which means they invest primarily in other
Munder Funds.
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.
Maximum Front End
Class Rule 12b-1 Fees* Sales Load** Maximum CDSC***
----- ---------------- ---------- ------------
Class A .30% 5.50% None+
Class B 1.00% None 5%
- -----------------
* 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.
Class B Shares convert automatically to Class A Shares after six years.
Due to the lower expense ratio on Class A Shares versus Class B 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. (the "Transfer Agent"), by
mailing the attached Account Application Form with a check to the Transfer
Agent. You must invest at least $250 ($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 or telephone.
3
<PAGE>
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: Dividend distributions are made from the dividends and interest earned on
investments after expenses. 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 EXPENSES(1)
The purpose of this table is to assist you in understanding the expenses a
shareholder in the Funds will bear directly.
<TABLE>
<CAPTION>
Class A Class B
Shares Shares
------ ------
<S> <C> <C>
Maximum Sales Charge on Purchase (as a % of Offering Price)......................... 5.50%(2) None
Sales Charge Imposed on Reinvested Dividends........................................ None None
Maximum Deferred Sales Charge....................................................... None(3) 5%(4)
Redemption Fees(5).................................................................. None None
Exchange Fees....................................................................... None None
</TABLE>
- ------------------
Notes:
(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) 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.
(4) The CDSC payable on redemption of Class B Shares declines over time.
(5) The Transfer Agent may charge a fee of $7.50 for wire redemptions under
$5,000.
4
<PAGE>
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. 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 CONSERVATIVE MODERATE AGGRESSIVE
EXPENSES FUND FUND FUND
(AS A % OF AVERAGE NET ASSETS) -------------------- -------------------- ---------------------
- ------------------------------ 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 Framlington Global Financial Services Fund, Growth Opportunities Fund
and NetNet Fund. 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%
Growth & Income Fund ....................................................................... .95%
Growth Opportunities Fund .................................................................. 1.15%+
International Equity Fund .................................................................. 1.01%
Micro-Cap Equity Fund ...................................................................... 1.25%+
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%+
Index 500 Fund ............................................................................. .29%*
Intermediate Bond Fund ..................................................................... .68%
Bond Fund .................................................................................. .71%
International Bond Fund .................................................................... .89%+
U.S. Government Income Fund ................................................................ .71%
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Class Y
Shares
------
<S> <C>
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
would have been as follows: 1.25% for the Multi-Season Growth Fund and
0.37% for the Index 500 Fund.
+ 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.
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 CLASS B
------ ------
SHARES SHARES
------ ------
<S> <C> <C>
Conservative Fund........................................................ 1.63% 2.38%
Moderate Fund............................................................ 1.75% 2.50%
Aggressive Fund.......................................................... 1.83% 2.58%
</TABLE>
6
<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>
MODERATE FUND(a)
------------------------------------
YEAR PERIOD PERIOD
ENDED ENDED ENDED
6/30/98 6/30/97 6/30/98
CLASS A CLASS A CLASS B
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period..................................................
Income from investment operations:
Net investment income............................................................
Net realized and unrealized gain on investments..................................
Total from investment operations.................................................
Less distributions:
Dividends from net investment income.............................................
Total distributions..............................................................
Net asset value, end of period........................................................
Total return (c).................................................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).............................................
Ratio of operating expenses to average net assets................................
Ratio of net investment loss to average net assets...............................
Portfolio turnover rate..........................................................
Ratio of operating expenses to average net assets w/o expenses reimbursed........
</TABLE>
- -----------------
(a) The All-Season Moderate Fund Class A Shares and Class B Shares commenced
operations on April 4, 1997 and January 14, 1998, respectively.
(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.
7
<PAGE>
<TABLE>
<CAPTION>
CONSERVATIVE FUND(a) AGGRESSIVE FUND(a)
-------------------- -------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
6/30/98 6/30/98 6/30/98 6/30/98
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period..........................................
Income from investment operations:
Net investment income....................................................
Net realized and unrealized gain on investments..........................
Total from investment operations.........................................
Less distributions:
Dividends from net investment income.....................................
Total distributions......................................................
Net asset value, end of period................................................
Total Return (c).........................................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).....................................
Ratio of operating expenses to average net assets........................
Ratio of net investment loss to average net assets.......................
Portfolio turnover rate..................................................
Ratio of operating expenses to average net assets w/o expenses
reimbursed...............................................................
</TABLE>
- ------------------
(a) The All-Season Conservative Fund Class A Shares and B Shares commenced
operations on March 13, 1998 and January 14, 1998, respectively. The All-
Season Aggressive Fund Class A Shares and B Shares commenced operations on
October 8, 1997 and January 9, 1998, respectively.
(b) Annualized.
(c) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
8
<PAGE>
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 a majority of its assets 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, including convertible bonds and
convertible preferred 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 a majority of its assets 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 a majority of its assets 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:
9
<PAGE>
<TABLE>
<CAPTION>
CONSERVATIVE FUND MODERATE FUND AGGRESSIVE FUND
----------------- ------------- ---------------
MINIMUM MAXIMUM MINIMUM MAXIMUM MINIMUM MAXIMUM
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Equity Funds
Accelerating Growth Fund ........................ 0% 5% 0% 10% 0% 15%
Growth & Income Fund ............................ 0% 10% 0% 15% 0% 20%
Growth Opportunities Fund ....................... 0% 10% 0% 15% 0% 20%
Index 500 Fund................................... 0% 20% 0% 30% 0% 40%
International Equity Fund ....................... 0% 5% 0% 10% 0% 15%
Micro-Cap Equity Fund ........................... 0% 10% 0% 10% 0% 10%
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%
Framlington Emerging Markets Fund ............... 0% 5% 0% 10% 0% 15%
Framlington Global Financial Services 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%
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% 15% 0% 15% 0% 15%
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>
CONSERVATIVE FUND MODERATE FUND AGGRESSIVE FUND
<S> <C> <C> <C>
Equity Funds..................... 25% 65% 85%
Fixed Income Funds............... 70% 30% 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.
10
<PAGE>
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
GOALS 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:
. the potential for accelerated earnings growth
. the maintenance of a substantial competitive advantage
. a focused management team
. a stable balance sheet.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
The Fund is closed to new investments.
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 Standard & Poor's
500 Composite Stock Price Index ("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 Old MCM, Inc.
("MCM"), the predecessor to the Advisor, since January 1987.
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
11
<PAGE>
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.
INDEX 500 FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide
performance and income that is comparable to the S&P 500. The S&P 500 is an
index of 500 stocks which emphasize large capitalization companies. See Appendix
A for more information on the S&P 500. The Fund will normally hold the
securities of at least 400 of the stocks in the S&P 500.
The Fund will try to achieve a correlation between the performance of
its portfolio and that of the S&P 500 of at least .95. A correlation of 1.0
would mean that the changes in the Fund's price mirror exactly changes in the
S&P 500. The timing of purchases and redemptions, changes in securities markets,
level of the Fund's assets and other factors affect the Fund's ability to
exactly track the S&P 500's performance.
The Fund is managed through the use of a "quantitative" investment
approach and tries to mirror the composition and performance of the S&P 500
through statistical procedures. The Advisor does not use traditional methods of
fund investment management; i.e., it does not select stocks on the basis of
economic, financial and market analysis. Because the Fund pays brokerage costs
and other fees, its return may be lower than that of the S&P 500.
PORTFOLIO MANAGEMENT. Todd B. Johnson and Kenneth A. Schluchter III
jointly manage the Fund. Mr. Johnson, a Chief Investment Officer of the Advisor,
has served as the portfolio manager of the Fund since July 1992. Mr. Schluchter,
who has managed the Fund since June 1997, was previously a Systems Developer and
Data Analyst for Compuware Incorporated (1993-1995) and a Business Analyst for
Central Transport Incorporated (1989-1993).
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 and 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 (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.
12
<PAGE>
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.
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 April
1993. Mr. Barr is the Senior Vice President and Director of Research of the
Advisor. From April 1988 to April 1993 he held similar positions with MCM. Mr.
Munder is the Chairman of the Advisor.
NETNET FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's 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 invests in those companies listed on a U.S. securities exchange 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
13
<PAGE>
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 and Robert E. Crosby jointly
manage the Fund. Mr. Hoglund formerly was the primary analyst of the Fund
(October 1994 to October 1996). Mr. Crosby has managed the Fund since March
1998. Mr. Crosby was formerly the primary analyst of the Fund (October 1996 to
March 1998). Mr. Crosby has been with the Advisor since 1993, and also serves as
portfolio manager for separately managed institutional accounts.
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 the
company 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.
14
<PAGE>
PORTFOLIO MANAGEMENT. Gerald Seizert, Edward Eberle and Brian Wall
jointly manage the Fund. Mr. Seizert, a Chief Executive 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 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. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge Capital Management, Inc. ("Woodbridge") (1994-1995) and an Assistant
Vice President in Equity Research for Merrill Lynch, Pierce Fenner & Smith in
New York (1992-1994).
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 from 1995 to 1996. Prior
to joining the Advisor in 1995, Mr. Wilk was a Senior Equity Research Analyst
for the Fund at Woodbridge. Mr. Gura has managed the Fund since March 1997.
Prior to joining the Advisor in 1995, Mr. Gura was a Vice President and Senior
Equity Analyst for the Fund at Woodbridge (1994-1995) and an investment officer
for Manufacturers National Bank Trust Department (1989-1994).
VALUE FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide
long-term capital appreciation, its secondary goal is to provide income. 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 the
company 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
15
<PAGE>
. above-average growth prospects
. participation in a fast growing industry
. strategic niche position in a specialized market
. adequate capitalization.
PORTFOLIO MANAGEMENT. Gerald Seizert, Edward Eberle and Brian Wall
jointly manage the Fund. Mr. Seizert, a Chief Executive 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 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. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge (1994-1995) and an Assistant Vice President in Equity Research for
Merrill Lynch, Pierce Fenner & Smith in New York (1992-1994).
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. A committee of professional portfolio managers
employed by the Sub-Advisor makes investment decisions for the Fund. William
Calvert heads the Committee.
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.
16
<PAGE>
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.
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 these 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.
BOND FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide
a high level of current income, its secondary goal is capital appreciation.
17
<PAGE>
. 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 fifteen 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 1995. 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. The Fund three and eight years.
PORTFOLIO MANAGEMENT. 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 fifteen 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 fifteen years.
18
<PAGE>
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.
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. 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.
19
<PAGE>
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 can be changed only 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
The following 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.
20
<PAGE>
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21
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND ACCELERATING GROWTH & GROWTH INDEX 500 INTERNATIONAL MICRO-CAP
INVESTMENT PRACTICES GROWTH INCOME OPPORTUNITIES FUND EQUITY EQUITY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOREIGN SECURITIES. Includes securities
issued by non-U.S. companies. Present 25% 25% 25% 25% Y 25%
more risks than U.S. securities.
- ------------------------------------------------------------------------------------------------------------------------------------
LOWER-RATED DEBT SECURITIES. Fixed
Income Securities which are rated below
investment grade by Standard & Poor's
Ratings Service, Moody's Investors Y 20% Y N Y Y
Service, Inc. or other nationally
recognized rating agency. Considered
riskier than investment grade securities.
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT-GRADE ASSET BACKED
SECURITIES. Includes debt securities N N N N N N
backed by mortgages, installment sales
contracts and credit card receivables.
- ------------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Includes
participations in trusts that hold U.S.
Treasury and agency securities which N N N N N N
represent either the interest payments
or principal payments on the securities
or combination 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. May Y Y Y Y Y Y
decrease a Fund's loss due to a change
in a currency value, but also limits
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 Y Y Y Y Y Y
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 has the right
or the obligation, at maturity, to make
delivery of or receive securities, the Y Y Y Y Y Y
cash value of an index, or foreign
currency. Used for hedging purposes or
to maintain 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 Y Y Y Y Y Y
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
securities 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 upon time and Y Y Y Y Y Y
price. A method to borrow money for
temporary purposes.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1) THE LIMITATION ON MARGINS AND PREMIUMS FOR FUTURES AND OPTIONS ON FUTURES
IS 5% OF A FUND'S ASSETS.
(2) BASED ON NET ASSETS.
22
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
REAL FRAMLINGTON
MULTI- ESTATE SMALL- SMALL FRAMLINGTON GLOBAL FRAMLINGTON
SEASON NETNET EQUITY CAP COMPANY EMERGING FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH FUND INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
25% Y N 25% 25% 25% Y Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------
Y N 5% Y Y Y Y Y Y [N] or [Y]
- ---------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ---------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ---------------------------------------------------------------------------------------------------------------------------
Y Y N Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND ACCELERATING GROWTH & GROWTH INDEX 500 INTERNATIONAL MICRO-CAP
INVESTMENT PRACTICES GROWTH INCOME OPPORTUNITIES FUND EQUITY EQUITY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REAL ESTATE INVESTMENT TRUSTS.
Companies, usually traded publicly,
that manage a portfolio of real N N N N N N
estate. Risks involved in such
investments include vulnerability to
decline in real estate prices and new
construction rates.
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT SALES. A transaction in which
the Fund sells a security it does not
own in anticipation that the market N N N N N N
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 intend to deliver
to the buyer, a practice known as selling
short "against the box."
- ------------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there
is no ready market for these
securities, which inhibits the ability 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
to sell them for full market value, or
there are legal restrictions on their
resale by the Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend
securities to financial institutions
which pay for the use of the 25% 25% 25% 25% 25% 25%
securities. May increase return.
Slight risk of borrower failing
financially.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1) THE LIMITATION ON MARGINS AND PREMIUMS FOR FUTURES AND OPTIONS ON FUTURES
IS 5% OF A FUND'S ASSETS.
(2) BASED ON NET ASSETS.
24
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------------------
FRAMLINGTON
MULTI- REAL ESTATE SMALL- SMALL FRAMLINGTON GLOBAL FRAMLINGTON
SEASON NETNET EQUITY CAP COMPANY EMERGING FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH FUND INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
N N N N N N N Y N N
- ----------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ----------------------------------------------------------------------------------------------------------------------------
15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
- ----------------------------------------------------------------------------------------------------------------------------
25% 25% 25% 25% 25% 25% 25% 25% 25% 25%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
FIXED INCOME FUNDS
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND BOND INTERMEDIATE INTERNATIONAL U.S. GOVERNMENT
INVESTMENT PRACTICES FUND BOND FUND BOND FUND INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOREIGN SECURITIES. Securities issued by
foreign governments and their agencies, 25% 25% Y 25%
instrumentalities or political subdivisions,
supranational organizations, and foreign
corporations. Does not include Bank Obligations.
- ---------------------------------------------------------------------------------------------------------------------
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 Y(1) Y(1) Y Y(1)
relative interest or currency rates.
Derivative instruments used solely for hedging.
- ---------------------------------------------------------------------------------------------------------------------
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.
- ---------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS. Include
securities issued by, or guaranteed by, the Y Y Y Y
U.S. Government or its agencies or
instrumentalities.
- ---------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Include participations in
trusts that hold U.S. Treasury and agency
securities which represent either the interest Y Y Y Y
payments or principal payments on the
securities or combination 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 Y Y Y Y
borrow money for temporary purposes.
- ---------------------------------------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS.
Obligations of a Fund to purchase or sell a
specific currency at a future date at a set Y Y Y Y
price. May decrease a Fund's loss due to a
change in a currency value, but also limits
gains from currency changes.
- ---------------------------------------------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. dollar denominated bank
obligations, including certificates of deposit,
bankers' acceptances, bank notes and time Y Y Y Y
deposits issued by U.S. or foreign banks or
savings institutions having total assets in
excess of $1 billion.
- ---------------------------------------------------------------------------------------------------------------------
SUPRANATIONAL ORGANIZATION OBLIGATIONS. Fixed
Income Securities issued or guaranteed by N N Y N
supranational organizations such as the World
Bank.
- ---------------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS. Agreements by
a Fund to make payments to an insurance
company's general account in exchange for a Y Y Y Y
minimum level of interest based on an index.
- ---------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS.
Agreements by a Fund to purchase securities at
a set price, with delivery and payment in the [25%] [25%] [25%] [25%]
future. The value of securities may change
between the time the price is set and payment.
Not to be used for speculation.
- ---------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no
ready market for these securities, which
inhibits the ability to sell them for full 15%(2) 15%(2) 15%(2) 15%(2)
market value, or there are legal restrictions
on their resale by the Fund.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
FIXED INCOME FUNDS (CONTINUED)
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND BOND INTERMEDIATE INTERNATIONAL U.S. GOVERNMENT
INVESTMENT PRACTICES FUNDS BOND FUND BOND FUND INCOME FUND
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FUTURES AND OPTIONS ON FUTURES. (3) Contracts
in which a Fund has the right or the
obligation, at maturity, to make delivery of or Y Y Y Y
receive securities, the cash value of an index,
or foreign currency. Used for hedging purposes
or to maintain 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 Y Y Y Y
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 securities indices, individual securities, foreign
currencies or futures contracts. See the SAI for more
details and additional limitations.
- --------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend securities
to financial institutions which pay for the use
of the securities. May increase return. Slight 25% 25% 25% 25%
risk of borrower failing financially.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
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 AND OPTIONS ON FUTURES IS
5% OF A FUND'S ASSETS.
27
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUNDS
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND CASH U.S. TREASURY
INVESTMENT PRACTICES INVESTMENT MONEY MARKET MONEY
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE OBLIGATIONS:
. Commercial paper (including paper of Canadian companies, Canadian Y Y N
branches of U.S. companies, and Europaper)
. Corporate bonds Y Y N
. Other short-term obligations Y Y N
. Variable master demand notes Y Y N
. Bond debentures Y Y N
. Notes. Y Y N
- ---------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Include debt securities backed by mortgages,
installment sales contracts and credit card receivables. Y Y N
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS:
. Issued or guaranteed by U.S. Government Y Y Y
. Issued or guaranteed by U.S. Government agencies and
instrumentalities. Y Y N
- ---------------------------------------------------------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. dollar denominated bank obligations, including
certificates of deposit, bankers' acceptances, bank notes, deposit notes and Y Y N
interest-bearing savings and time deposits, issued by U.S. or foreign banks
or savings institutions having total assets in excess of $1 billion.
- ---------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES:
. Participation in trusts that hold U.S. Treasury and agency securities Y Y N
. U.S. Treasury-issued receipts Y Y 35%
. Non-U.S. Treasury receipts Y Y N
- ---------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS. Payable from the issuer's general revenue, the
revenue of a specific project, current revenues or a reserve fund. 5% 5% N
- ---------------------------------------------------------------------------------------------------------------------------------
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
- ---------------------------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS. Agreements by a Fund to make payments to an
insurance company's general account in exchange for a minimum level of
interest based on an index. Y Y N
- ---------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Agreements 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 payment. Not to be used for speculation. [25%] [25%] [25%]
- ---------------------------------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Debt obligations issued by foreign governments, and
their agencies instrumentalities or political subdivisions, supranational
organizations, and foreign corporations. Does not include Bank Obligations. 25% 25% N
- ---------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready market for these
securities, which inhibits the ability to sell them for full market value, 10%(1) 10%(1) 10%(1)
or there are legal restrictions on their resale by the Fund.
- ---------------------------------------------------------------------------------------------------------------------------------
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% 33 1/3% 25%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1) BASED ON NET ASSETS.
28
<PAGE>
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 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 is 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.
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 Underlying 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.
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 these 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 diversity does
not eliminate all risks. The Funds invest mostly in Fixed Income Securities,
whose values typically
29
<PAGE>
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 these 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.
Growth Opportunities Fund, Micro-Cap Equity 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 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 Global Financial Services
Fund, Framlington International Growth Fund, International Bond Fund and
International Equity 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 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
30
<PAGE>
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.
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.
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.
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.
31
<PAGE>
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 you
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.
CLASS A CLASS B
------- -------
. Front end sales charge. . No front end sales charge. All your
There are several ways to money goes to work for you right
reduce these sale charges. away.
. Higher annual expenses than Class A
Shares.
. Lower annual expenses than . A CDSC on shares you sell within six
Class B Shares 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.
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?
The purchase price for Class A Shares is the net asset value ("NAV")
next determined after we receive your order in proper form plus any applicable
sales charge. The purchase price for Class B Shares is the NAV next determined,
after we receive your order in proper form. You should be aware that
broker-dealers (other than the Distributor) may charge investors additional fees
if shares are purchased through them.
32
<PAGE>
Except in certain limited circumstances, each Fund determines its 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).
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:
<TABLE>
<CAPTION>
DISCOUNT TO
SALES CHARGE AS A PERCENTAGE OF SELECTED DEALERS AS
------------------------------- A PERCENTAGE OF
NET ASSET VALUE YOUR INVESTMENT INVESTMENT
--------------- --------------- ----------
<S> <C> <C> <C>
Less than $25,000..................... 5.50% 5.82% 5.00%
$25,000 but less than $50,000......... 5.25% 5.54% 4.75%
$50,000 but less than $100,000........ 4.50% 4.71% 4.00%
$100,000 but less than $250,000....... 3.50% 3.63% 3.25%
$250,000 but less than $500,000....... 2.50% 2.56% 2.25%
$500,000 but less than $1,000,000..... 1.50% 1.52% 1.25%
$1,000,000 or more.................... None* None* (see below)**
</TABLE>
- ---------------
* No initial sales charge applies on investments of $1 million or more.
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.
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' service providers 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 (including customers of such banks
and other financial institutions, and the immediate family members of
such customers);
(8) fee-based 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");
33
<PAGE>
(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"; and
(12) individuals who reinvest proceeds of redemptions from Class A, Class
B or Class C Shares of the Short Term Treasury Fund, provided such
individuals were shareholders of the Short Term Treasury Fund on June
2, 1998.
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)
or Section 403(b) of the Code (each, a "Qualified Employee Benefit Plan") and
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 Plans for employees participating in an employer-sponsored or
administered retirement program operating under Section 408A of the Code and
(ii) the CDSC of 1% imposed on certain redemptions within one year of purchase
for these accounts. 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 the 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 and Class B 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
34
<PAGE>
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.
. 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.
. RIGHT OF ACCUMULATION. You may add the value of any shares of
non-money market funds of the Trust, the Company or Framlington
you already own to the amount of your next Class A Share
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 $250 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.
. 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.
. BY MAIL. You may open an account by completing, signing and
mailing the attached Account Application Form and a check or other
negotiable bank draft (payable to The Munder Funds) for $250 or
more to: The Munder Funds, c/o First Data Investor Services Group,
P.O. Box 5130, Westborough, Massachusetts 01581-5130. 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.
. 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:
35
<PAGE>
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.
. 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.
. 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. We
do not issue share certificates. 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 table gives information about permitted and non-permitted
exchanges of shares.
CLASS HELD CLASS TO BE ACQUIRED PERMITTED?
- ---------- -------------------- ----------
Class A Shares of the Funds....... Class A Shares of the Other Yes
Funds(1)
Class B Shares of the Funds....... Class B Shares of the Other Yes
Funds
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 Exchange of Class K Shares
of the Other Funds................ Class A Shares of the Other No
Funds
Class A Shares of the Funds Acquired
through an Exchange of Class K Shares
of the Other Funds................ Class K Shares of the Other Yes
Funds
- ----------------------
(1) "Other Funds" are funds of the Company, the Trust and Framlington (other
than the Funds).
Class A Shares of a money market fund of the Trust or the Company that
were (1) acquired through exchange and (2) can be traced back to a purchase of
shares in one or more Funds 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 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.
36
<PAGE>
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.
. 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.
. EXCHANGES BY MAIL. You may send exchange orders to your broker or
to us at the Munder Funds c/o First Data 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.
REDEMPTIONS OF SHARES
WHAT PRICE DO I RECEIVE FOR REDEEMED SHARES?
The redemption price is the NAV next determined after we receive the
redemption request in proper form. 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.
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%
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.
37
<PAGE>
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.
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
. redemptions limited to 10% per year of an account's NAV. For
example, if you maintain an annual balance of $10,000 you can
redeem up to $1,000 annually free of charge.
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:
. BY MAIL. You may mail your redemption request to: The Munder Funds,
c/o First Data 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.
. 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
38
<PAGE>
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 CDSC's when you redeem shares.
. INVOLUNTARY REDEMPTION. We may redeem your account if its value
falls below $250 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 and WAM Holdings, Inc. ("WAM"). MCM was founded in
February, 1985 as a Delaware corporation and was a registered investment
advisor. WAM is an indirect, wholly-owned subsidiary of Comerica Incorporated
which owns or controls approximately 88% of the partnership interests in the
Advisor. As of June 30, 1998, the Advisor and its affiliates had approximately
$48.2 billion in assets under management, of which $25.4 billion were invested
in equity securities, $8.1 billion were invested in money market or other
short-term instruments, $9.2 billion were invested in other fixed income
securities and $5.5 billion in non-discretionary assets.
39
<PAGE>
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, a
Chief Executive 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, 1998, the Advisor was paid an
advisory fee at an annual rate based on the average daily net assets of each
Fund as follows:
Conservative Fund Moderate Fund Aggressive Fund
----------------- ------------- ---------------
.35% .35% .35%
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.
TRANSFER AGENT. First Data Investor Services Group, Inc. is the Funds'
transfer agent. The Transfer Agent 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
"Administrator") is the Funds' administrator. State Street is located at 225
Franklin Street, Boston, Massachusetts 02110. State Street generally assists the
Company in all aspects of its administration and operations including the
maintenance of financial records and fund accounting. As compensation for its
services, State Street is entitled to receive a fee of $27,000 for each Fund
plus fees based on the aggregate daily net assets of the Funds and certain other
investment portfolios that are advised by the Advisor for which it provides
services, computed daily and payable monthly at the annual rate of 0.062% on the
first $2.8 billion of net assets, plus 0.052% on the next $2.2 billion of net
assets, plus 0.050% on all net assets in excess of $5 billion.
State Street has entered into a Sub-Administration Agreement with the
Distributor under which the Distributor provides certain administrative services
with respect to the Funds. State Street pays the Distributor a fee for these
services out of its own resources at no cost to the Funds.
CUSTODIAN AND SUB-CUSTODIAN. Comerica Bank ("Comerica" or the
"Custodian"), whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, Michigan 48226, is the Funds' custodian. No
compensation is paid to the Custodian for its custodial services. Comerica
receives a fee of 0.01% of the aggregate average daily net assets of the Funds
beneficially owned by Comerica and its customers for certain shareholder
services provided by Comerica to the Funds. State Street serves as the Funds'
sub-custodian.
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 Investment Company Act of 1940, as amended, the
Funds have adopted 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
40
<PAGE>
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 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.
In general, as long as each Fund meets the requirements to qualify as a
regulated investment company ("RIC") under Federal tax laws, it will not be
subject to Federal income tax on its income and capital gains that it
distributes in a timely manner to its shareholders. Each Fund intends to qualify
annually as a RIC. Even if it qualifies as a RIC, a Fund may still be liable for
an excise tax on income that is not distributed in accordance with a calendar
year requirement; the Funds intend to avoid the excise tax by making timely
distributions.
41
<PAGE>
Generally, you will owe tax on the amounts distributed to you,
regardless of whether you receive these amounts in cash or reinvest them in
additional Fund shares. Shareholders not subject to tax on their income
generally will not be required to pay any tax on amounts distributed to them.
Federal income tax on distributions to an IRA or to a qualified retirement plan
will generally be deferred.
Capital gains derived from sales of portfolio securities held by a Fund
will generally be designated as long-term or short-term. Distributions from a
Fund's long-term capital gains are generally taxed at the long-term capital
gains rate regardless of how long you have owned shares in the Fund. Dividends
from other sources are generally taxed as ordinary income.
Dividends and capital gain distributions are generally taxable when you
receive them; however, if a distribution is declared in October, November or
December, but not paid until January of the following year, it will be
considered to be paid on December 31 in the year in which it was declared.
Shortly after the end of each year, you will receive from each Fund in which you
are a shareholder a statement of the amount and nature of the distributions made
to you during the year.
If you redeem, transfer or exchange Fund shares, you may have taxable
gain or a loss. If you hold Fund shares for six months or less, and during that
time you receive a capital gain dividend, any loss you realize on the sale of
these Fund shares will be treated as a long-term loss to the extent of the
earlier distribution.
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.
YEAR 2000. The Funds' operations depend on the seamless functioning of
computer systems in the financial service industry, including those of its
service providers. Many computer software systems in use today cannot properly
process date-related information after December 31, 1999 because of the method
by which dates are encoded and calculated. This failure, commonly referred to as
the "Year 2000 Issue," could adversely affect the handling of securities trades,
pricing and account servicing for the Funds. The Funds have been informed that
their major service providers have made compliance with the Year 2000 Issue a
high priority and are taking steps that they believe are reasonably designed to
address the Year 2000 Issue with respect to their computer systems. There can
be, however, no assurance that these steps will be successful, or that
interaction with other non-complying computer systems will not impair their
services at that time.
42
<PAGE>
APPENDIX A
The Index 500 Fund is not sponsored, endorsed, sold or promoted by Standard
& Poor's Ratings Service, a division of McGraw-Hill Companies, Inc. ("S&P"). S&P
makes no representation or warranty, express or implied, to the owners of the
Index 500 Fund or any member of the public regarding the advisability of
investing in securities generally or in the Index 500 Fund particularly or the
ability of the S&P 500 Index to trace general stock market performance. S&P's
only relationship to the Trust is the licensing of certain trademarks and trade
names of S&P and of the S&P 500 Index which is determined, composed and
calculated by S&P without regard to the Trust or the Index 500 Fund. S&P has no
obligation to take the needs of the Trust or the owners of the Index 500 Fund
into consideration in determining, composing or calculating the S&P 500 Index.
S&P is not responsible for and has not participated in the determination of the
prices and amount of the Index 500 Fund or the timing of the issuance or sale of
the Index 500 Fund or in the determination or calculation of the equation by
which the Index 500 Fund is to be converted into cash. S&P has no obligation or
liability in connection with the administration, marketing or trading of the
Index 500 Fund.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500
Index or any data included therein and S&P shall have no liability for any
errors, omissions, or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the Trust, owners of the Index 500
Fund, or any other person or entity from the use of the S&P 500 Index or any
data included therein. S&P makes no express or implied warranties, and expressly
disclaims all warranties of merchantability of fitness for a particular purpose
or use with respect to the S&P 500 Index or any data included therein. Without
limiting any of the foregoing, in no event shall S&P have any liability for any
special, punitive, indirect, or consequential damages (including lost profits),
even if notified of the possibility of such damages.
"Standard & Poor's", "S&P", "S&P 500", "Standard & Poor's 500", and "500"
are trademarks of McGraw-Hill, Inc. and have been licensed for use by the Trust.
The Index 500 Fund is not sponsored, endorsed, sold or promoted by S&P and S&P
makes no representation regarding the advisability of investing in the Index 500
Fund.
A-1
<PAGE>
CLASS Y SHARES
Prospectus
October 27, 1998
THE MUNDER LIFESTYLE FUNDS
All-Season Conservative
All-Season Moderate
All-Season Aggressive
Prospectus begins on next page
<PAGE>
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
Emerging Markets Fund, Framlington Global Financial Services Fund, Framlington
Healthcare Fund and Framlington International Growth Fund (the "Framlington
Funds"), four 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 SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES:
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS OCTOBER 27, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
----
<S> <C>
Fund Highlights
What are the key facts regarding the Funds?........................................................3
Financial Information.......................................................................................4
Fund Choices
What Funds are offered?............................................................................7
Who may want to invest in the Funds?...............................................................7
What are the Funds' investments and investment practices?..........................................7
What are the Underlying Funds' investments and investment practices?...............................9
What are the risks of investing in the Funds?.....................................................27
Performance
How is the Funds' performance calculated?.........................................................29
Where can I obtain performance data?..............................................................30
Purchases and Exchanges of Shares
What price do I pay for shares?...................................................................30
When can I purchase shares?.......................................................................30
What is the minimum required investment?..........................................................31
How can I purchase shares?........................................................................31
How can I exchange shares?........................................................................31
Redemptions of Shares
What price do I receive for redeemed shares?......................................................32
When can I redeem shares?.........................................................................32
How can I redeem shares?..........................................................................32
When will I receive redemption amounts?...........................................................32
Structure and Management of the Funds
How are the Funds structured?.....................................................................32
Who manages and services the Funds?...............................................................32
What are my rights as a shareholder?..............................................................33
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?.................................................34
How will distributions be made?...................................................................34
Are there tax implications of my investments in the Funds?........................................34
Additional Information.....................................................................................35
Appendix A................................................................................................A-1
</TABLE>
2
<PAGE>
FUND HIGHLIGHTS
WHAT ARE THE KEY FACTS REGARDING THE FUNDS?
Q: What are the Funds' goals?
A:
. The Conservative Fund (formerly "Munder All-Season Maintenance Fund")
seeks to provide current income, with capital appreciation as a
secondary objective.
. The Moderate Fund (formerly "Munder All-Season Development Fund") seeks
to provide high total return through capital appreciation and current
income.
. The Aggressive Fund (formerly "Munder All-Season Accumulation Fund")
seeks long-term capital appreciation.
Q: What are the Funds' strategies?
A: These Funds are "Funds of Funds" which means they invest primarily in other
Munder Funds.
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. (the "Transfer Agent"), by mailing an Account Application
Form with a check to the Transfer Agent. 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 or telephone.
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.
Q: What shareholder privileges do the Funds offer?
A: The Funds offer an Automatic Investment Plan. You may arrange for periodic
investments in the Funds through automatic deductions from savings or checking
accounts.
3
<PAGE>
Q: When and how are distributions made?
A: Dividend distributions are made from the dividends and interest earned on
investments after expenses. 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 EXPENSES(1)
The purpose of this table is to assist you in understanding the
expenses a shareholder in the Funds will bear directly.
<TABLE>
<S> <C>
Maximum Sales Charge on Purchase (as a % of Offering Price)................. None
Sales Charge Imposed on Reinvested Dividends................................ None
Maximum Deferred Sales Charge............................................... None
Redemption Fees(2).......................................................... None
Exchange Fees............................................................... None
</TABLE>
- -------------
Notes:
(1) Does not include fees which institutions may charge for services they
provide to you.
(2) The Fund's 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 for the current fiscal year. Such expenses include payments to
Directors, auditors, legal counsel, service providers (such as the Advisor),
registration fees and distribution fees. 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>
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.
4
<PAGE>
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.
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%
Growth & Income Fund ................................................................................. .95%
Growth Opportunities Fund ............................................................................ 1.15%
Index 500 Fund........................................................................................ .29%*
International Equity Fund ............................................................................ 1.01%
Micro-Cap Equity Fund ................................................................................ 1.25%+
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%
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 would
have been as follows: 1.25% for the Multi-Season Growth Fund and 0.37% for the
Index 500 Fund.
+ 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.
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 charges, 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.
5
<PAGE>
<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..................................................................... 1.50%
Aggressive Fund................................................................... 1.58%
</TABLE>
FINANCIAL HIGHLIGHTS
The following financial highlights were audited by Ernst & Young LLP,
independent auditors. This information should be read in conjunction with the
Fund's 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>
CONSERVATIVE CONSERVATIVE MODERATE MODERATE AGGRESSIVE AGGRESSIVE
FUND(A) FUND(A) FUND(A) FUND(A) FUND(A) FUND(A)
------- ------- ------- ------ ------- -------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/98 6/30/97 6/30/98 6/30/97
-------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period......................
Income from investment operations:
Net investment income................................
Net realized and unrealized gain on investments...
Total from investment operations.....................
Less distributions:
Dividends from net investment income.................
Total distributions..................................
Net asset value, end of period............................
Total return (c).....................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).................
Ratio of operating expenses to average net assets....
Ratio of net investment loss to average net assets...
Portfolio turnover rate..............................
Ratio of operating expenses to average net assets
without expenses reimbursed..........................
</TABLE>
- -------------------
(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.
6
<PAGE>
FUND CHOICES
WHAT FUNDS ARE OFFERED?
This Prospectus describes Class Y Shares of the 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 a majority of its assets 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, including
convertible bonds and convertible preferred 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 a majority of its assets 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 a majority of its assets 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 FUND'S 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:
7
<PAGE>
<TABLE>
<CAPTION>
CONSERVATIVE FUND MODERATE FUND AGGRESSIVE FUND
----------------- ------------- ---------------
MINIMUM MAXIMUM MINIMUM MAXIMUM MINIMUM MAXIMUM
------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Equity Funds
Accelerating Growth Fund ........................ 0% 5% 0% 10% 0% 15%
Growth & Income Fund ............................ 0% 10% 0% 15% 0% 20%
Growth Opportunities Fund ....................... 0% 10% 0% 15% 0% 20%
Index 500 Fund................................... 0% 20% 0% 30% 0% 40%
International Equity Fund ....................... 0% 5% 0% 10% 0% 15%
Micro-Cap Equity Fund ........................... 0% 10% 0% 10% 0% 10%
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%
Framlington Emerging Markets Fund ............... 0% 5% 0% 10% 0% 15%
Framlington Global
Financial Services 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%
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% 15% 0% 15% 0% 15%
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 et 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>
CONSERVATIVE FUND MODERATE FUND AGGRESSIVE FUND
----------------- ------------- ---------------
<S> <C> <C> <C>
Equity Funds...................................... 25% 65% 85%
Fixed Income Funds................................ 70% 30% 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.
8
<PAGE>
What are the Underlying Funds' Investments and Investment Practices?
ACCELERATING GROWTH FUND
GOALS 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:
. the potential for accelerated earnings growth
. the maintenance of a substantial competitive advantage
. a focused management team
. a stable balance sheet.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
The Fund is closed to new investments.
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 Standard & Poor's 500
Composite Stock Price Index ("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 Old MCM, Inc.
("MCM"), the predecessor to the Advisor, since January 1987.
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.
9
<PAGE>
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.
INDEX 500 FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide performance
and income that is comparable to the S&P 500. The S&P 500 is an index of 500
stocks which emphasize large capitalization companies. See Appendix A for more
information on the S&P 500. The Fund will normally hold the securities of at
least 400 of the stocks in the S&P 500.
The Fund will try to achieve a correlation between the performance of its
portfolio and that of the S&P 500 of at least 95. A correlation of 1.0 would
mean that the changes in the Fund's price mirror exactly changes in the S&P 500.
The timing of purchases and redemptions, changes in securities markets, level of
the Fund's assets and other factors affect the Fund's ability to exactly track
the S&P 500's performance.
The Fund is managed through the use of a "quantitative" investment approach
and tries to mirror the composition and performance of the S&P 500 through
statistical procedures. The Advisor does not use traditional methods of fund
investment management; i.e., it does not select stocks on the basis of economic,
financial and market analysis. Because the Fund pays brokerage costs and other
fees, its return may be lower than that of the S&P 500.
PORTFOLIO MANAGEMENT. Todd B. Johnson and Kenneth A. Schluchter III
jointly manage the Fund. Mr. Johnson, a Chief Investment Officer of the Advisor,
has served as the portfolio manager of the Fund since July 1992. Mr. Schluchter,
who has managed the Fund since June 1997, was previously a Systems Developer and
Data Analyst for Compuware Incorporated (1993-1995) and a Business Analyst for
Central Transport Incorporated (1989-1993).
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 and 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 (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
10
<PAGE>
. 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.
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 April
1993. Mr. Barr is the Senior Vice President and Director of Research of the
Advisor. From April 1988 to April 1993 he held similar positions with MCM. Mr.
Munder is the Chairman of the Advisor.
NETNET FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's 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 invests in those companies listed on a U.S. securities exchange 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:
11
<PAGE>
. 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 and Robert E. Crosby jointly
manage the Fund. Mr. Hoglund has managed the Fund since October 1996. Mr.
Hoglund formerly was the primary analyst of the Fund (October 1994 to October
1996). Mr. Crosby has managed the Fund since March 1998. Mr. Crosby was formerly
the primary analyst of the Fund (October 1996 to March 1998). Mr. Crosby has
been with the Advisor since 1993, and also serves as portfolio manager for
separately managed institutional accounts.
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 the
company 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, Edward Eberle and Brian Wall
jointly manage the Fund. Mr. Seizert, a Chief Executive 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 March 1997, was
formerly the primary analyst for the
12
<PAGE>
Fund. Prior to joining the Advisor in 1995, he was an Executive Vice President
and Portfolio Manager for Westpointe Financial Corporation. Mr. Wall was
formerly a primary analyst for the Fund. Prior to joining the Advisor in 1995,
he was a Senior Equity Analyst with Woodbridge Capital Management, Inc.
("Woodbridge") (1994-1995) and an Assistant Vice President in Equity Research
for Merrill Lynch, Pierce Fenner & Smith in New York (1992-1994).
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 from 1995 to 1996. Prior
to joining the Advisor in 1995, Mr. Wilk was a Senior Equity Research Analyst
for the Fund at Woodbridge. Mr. Gura has managed the Fund since March 1997.
Prior to joining the Advisor in 1995, Mr. Gura was a Vice President and Senior
Equity Analyst for the Fund at Woodbridge (1994-1995) and an investment officer
for Manufacturers National Bank Trust Department (1989-1994).
VALUE FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide
long-term capital appreciation, its secondary goal is to provide income. 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 the company 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.
13
<PAGE>
PORTFOLIO MANAGEMENT. Gerald Seizert, Edward Eberle and Brian Wall
jointly manage the Fund. Mr. Seizert, a Chief Executive 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 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. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge Capital Management, Inc. ("Woodbridge") (1994-1995) and an Assistant
Vice President in Equity Research for Merrill Lynch, Pierce Fenner & Smith in
New York (1992-1994).
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. A committee of professional portfolio managers
employed by the Sub-Advisor makes investment decisions for the Fund. William
Calvert heads the Committee.
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.
14
<PAGE>
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.
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 these 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.
BOND FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide
a high level of current income, its secondary goal is 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 fifteen years.
15
<PAGE>
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 1995. 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 MANAGEMENT. 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 fifteen 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 fifteen 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.
16
<PAGE>
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. 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, 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
17
<PAGE>
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 can be changed only 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
The following 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.
18
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
19
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS
- -----------------------------------------------------------------------------------------------------------------------------
INDEX
INVESTMENTS AND ACCELERATING GROWTH & GROWTH 500 INTERNATIONAL MICRO-CAP
INVESTMENT PRACTICES GROWTH INCOME OPPORTUNITIES FUND EQUITY EQUITY
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOREIGN SECURITIES. Includes
securities issued by non-U.S. 25% 25% 25% 25% Y 25%
companies. Present more risks than
U.S. securities.
- -----------------------------------------------------------------------------------------------------------------------------
LOWER-RATED DEBT SECURITIES. Fixed
Income Securities which are rated
below investment grade by Standard
& Poor's Ratings Service, Moody's Y 20% Y N Y Y
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 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 N
which represent either the interest
payments or principal payments on
the securities or combination 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 Y Y Y Y Y Y
price. May decrease a Fund's loss
due to a change in a currency
value, but also limits 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 Y Y Y Y Y Y
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 has the
right or the obligation, at
maturity, to make delivery of or Y Y Y Y Y Y
receive securities, the cash value
of an index, or foreign currency.
Used for hedging purposes or to
maintain 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) Y 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
securities indices, individual
securities, foreign currencies or
futures contracts. See the SAI for
more details and additional
limitations.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y = INVESTMENT ALLOWED WITHOUT RESTRICTION
N = INVESTMENT NOT ALLOWED
(1) THE LIMITATION ON MARGINS AND PREMIUMS FOR FUTURES AND OPTIONS ON FUTURES IS
5% OF A FUND'S ASSETS.
(2) BASED ON NET ASSETS.
20
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS (continued)
- ------------------------------------------------------------------------------------------------------------------------
REAL FRAMLINGTON
MULTI- ESTATE SMALL- SMALL FRAMLINGTON GLOBAL FRAMLINGTON
SEASON NETNET EQUITY CAP COMPANY EMERGING FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH FUND INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
25% Y N 25% 25% 25% Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------
Y N 5% Y Y Y Y Y Y [N] or [Y]
- ------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ------------------------------------------------------------------------------------------------------------------------
Y Y N Y Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND ACCELERATING GROWTH & GROWTH INDEX 500 INTERNATIONAL MICRO-CAP
INVESTMENT PRACTICES GROWTH INCOME OPPORTUNITIES FUND EQUITY EQUITY
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVERSE REPURCHASE AGREEMENTS. A Fund
sells securities and agrees to buy
them back later at an agreed upon time Y Y Y Y Y Y
and price. A method to borrow money
for temporary purposes.
- ---------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS.
Companies, usually traded publicly,
that manage a portfolio of real N N N N N N
estate. Risks involved in such
investments include vulnerability to
decline in real estate prices and new
construction rates.
- ---------------------------------------------------------------------------------------------------------------------------------
SHORT SALES. A transaction in which
the Fund sells a security it does not
own in anticipation that the market N N N N N N
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 intend to
deliver to the buyer, a practice known
as selling short "against the box."
- ---------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there
is no ready market for these
securities, which inhibits the ability 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
to sell them for full market value, or
there are legal restrictions on their
resale by the Fund.
- ---------------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend
securities to financial institutions
which pay for the use of the 25% 25% 25% 25% 25% 25%
securities. May increase return.
Slight risk of borrower failing
financially.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1) THE LIMITATION ON MARGINS AND PREMIUMS FOR FUTURES AND OPTIONS ON FUTURES
IS 5% OF A FUND'S ASSETS.
(2) BASED ON NET ASSETS.
22
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS (continued)
- ------------------------------------------------------------------------------------------------------------------------
FRAMLINGTON
MULTI- REAL ESTATE SMALL- SMALL FRAMLINGTON GLOBAL FRAMLINGTON
SEASON NETNET EQUITY CAP COMPANY EMERGING FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH FUND INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Y Y Y Y Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ------------------------------------------------------------------------------------------------------------------------
15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
- ------------------------------------------------------------------------------------------------------------------------
25% 25% 25% 25% 25% 25% 25% 25% 25% 25%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
FIXED INCOME FUNDS
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND BOND INTERMEDIATE INTERNATIONAL U.S. GOVERNMENT
INVESTMENT PRACTICES FUND BOND FUND BOND FUND INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOREIGN SECURITIES. Securities issued by
foreign governments and their agencies, 25% 25% Y 25%
instrumentalities or political
subdivisions, supranational
organizations, and foreign corporations.
Does not include Bank Obligations.
- ---------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Includes debt
securities backed by mortgages,
installment sales contracts and credit Y Y Y Y
card receivables.
- ---------------------------------------------------------------------------------------------------------------------
INTEREST RATE AND CURRENCY SWAPS.
Agreement to exchange payments Y(1) Y(1) Y Y(1)
calculated on the basis of relative
interest or currency rates. Derivative
instruments used solely for hedging.
- ---------------------------------------------------------------------------------------------------------------------
INTEREST RATE CAPS AND FLOORS. Entitle
purchaser to receive payments of
interest to the extent that a specified N N Y N
reference rate exceeds or falls below a
predetermined level.
- ---------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS. Include
securities issued by, or guaranteed by, Y Y Y Y
the U.S. Government or its agencies or
instrumentalities.
- ---------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Include
participations in trusts that hold U.S.
Treasury and agency securities which Y Y Y Y
represent either the interest payments
or principal payments on the securities
or combination of both.
- ---------------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund
sells securities and agrees to buy them
back later at an agreed upon time and Y Y Y Y
price. A method to borrow money for
temporary purposes.
- ---------------------------------------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE
CONTRACTS. Obligations of a Fund to
purchase or sell a specific currency at Y Y Y Y
a future date at a set price. May
decrease a Fund's loss due to a change
in a currency value, but also limits
gains from currency changes.
- ---------------------------------------------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. dollar
denominated bank obligations, including
certificates of deposit, bankers' Y Y Y Y
acceptances, bank notes and time
deposits issued by U.S. or foreign banks
or savings institutions having total
assets in excess of $1 billion.
- ---------------------------------------------------------------------------------------------------------------------
SUPRANATIONAL ORGANIZATION OBLIGATIONS.
Fixed Income Securities issued or N N Y N
guaranteed by supranational
organizations such as the World Bank.
- ---------------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS.
Agreements by a Fund to make payments to
an insurance company's general account Y Y Y Y
in exchange for a minimum level of
interest based on an index.
- ---------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD
COMMITMENTS. Agreements by a Fund to
purchase securities at a set price, with [25%] [25%] [25%] [25%]
delivery and 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.
- ---------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is
no ready market for these securities,
which inhibits the ability to sell them 15%(2) 15%(2) 15%(2) 15%(2)
for full market value, or there are
legal restrictions on their resale by
the Fund.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
FIXED INCOME FUNDS (continued)
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND BOND INTERMEDIATE INTERNATIONAL U.S. GOVERNMENT
INVESTMENT PRACTICES FUND BOND FUND BOND FUND INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FUTURES AND OPTIONS ON FUTURES. (3)
Contracts in which a Fund has the right
or the obligation, at maturity, to make Y Y Y Y
delivery of or receive securities, the
cash value of an index, or foreign
currency. Used for hedging purposes or
to maintain 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 Y Y Y Y
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 securities indices,
individual securities, foreign currencies or futures
contracts. See the SAI for more details and
additional limitations.
- ---------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend
securities to financial institutions
which pay for the use of the securities. 25% 25% 25% 25%
May increase return. Slight risk of
borrower failing financially.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
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 AND OPTIONS ON FUTURES
IS 5% OF A FUND'S ASSETS.
25
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUNDS
- --------------------------------------------------------------------------------------------------------------------------------
CASH U.S. TREASURY
INVESTMENTS & INVESTMENT PRACTICES INVESTMENT MONEY MARKET MONEY
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE OBLIGATIONS:
. Commercial paper (including paper of Canadian companies, Canadian Y Y N
branches of U.S. companies, and Europaper)
. Corporate bonds Y Y N
. Other short-term obligations Y Y N
. Variable master demand notes Y Y N
. Bond debentures Y Y N
. Notes. Y Y N
- --------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Include debt securities backed by mortgages,
installment sales contracts and credit card receivables. Y Y N
- --------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS:
. Issued or guaranteed by U.S. Government Y Y Y
. Issued or guaranteed by U.S. Government agencies and Y Y N
instrumentalities.
- --------------------------------------------------------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. dollar denominated bank obligations, including
certificates of deposit, bankers' acceptances, bank notes, deposit notes and Y Y N
interest-bearing savings and time deposits, issued by U.S. or foreign banks
or savings institutions having total assets in excess of $1 billion.
- --------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES:
. Participation in trusts that hold U.S. Treasury and agency securities Y Y N
. U.S. Treasury-issued receipts Y Y 35%
. Non-U.S. Treasury receipts Y Y N
- --------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS. Payable from the issuer's general revenue, the
revenue of a specific project, current revenues or a reserve fund. 5% 5% N
- --------------------------------------------------------------------------------------------------------------------------------
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 Y Y Y
for temporary purposes.
- --------------------------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS. Agreements by a Fund to make payments to an
insurance company's general account in exchange for a minimum level of Y Y N
interest based on an index.
- --------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Agreements by a Fund to
purchase securities at a set price, with delivery and payment in the [25%] [25%] [25%]
future. The value of securities may change between the time the price is
set and payment. Not to be used for speculation.
- --------------------------------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Debt obligations issued by foreign governments, and
their agencies instrumentalities or political subdivisions, supranational 25% 25% N
organizations, and foreign corporations. Does not include Bank Obligations.
- --------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready market for these
securities, which inhibits the ability to sell them for full market value, 10%(1) 10%(1) 10%(1)
or there are legal restrictions on their resale by the Fund.
- --------------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend securities to financial institutions
which pay for the use of the securities. May increase return. Slight risk 25% 331/3% 25%
of borrower failing financially.
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1) BASED ON NET ASSETS.
26
<PAGE>
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
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 is 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.
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 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 these 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 diversity 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
27
<PAGE>
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 these 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.
Growth Opportunities Fund, Micro-Cap Equity 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 Global Financial Services
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 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,
28
<PAGE>
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.
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.
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.
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
29
<PAGE>
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:
. fiduciary and discretionary accounts of institutions
. 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)
. directors, trustees, officers and employees of the Trust, the Company,
Framlington, the Advisor and the Distributor
. the Advisor's investment advisory clients
. 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?
The purchase price for Class Y Shares is the net asset value ("NAV") next
determined after we receive your order in proper form. 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 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). 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.
30
<PAGE>
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.
. 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.
. BY MAIL. You may open an account by completing, signing and mailing an
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 to the address listed above.
. BY WIRE. You may make additional investments in the Funds by wire. 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.:
Note that banks may charge fees for transmitting wires.
. 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. We do
not issue shares certificates. 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.
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
31
<PAGE>
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 NAV 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 NAV 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.
. INVOLUNTARY REDEMPTION. We may redeem your account if its value falls
below $250 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. 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 and WAM Holdings, Inc. ("WAM"). MCM was founded in
April, 1985 as a Delaware corporation and was a registered investment advisor.
WAM is an indirect, wholly-owned subsidiary of Comerica Incorporated which owns
or controls approximately 88% of the partnership interests in the Advisor. As of
June 30, 1998, the Advisor and its affiliates had approximately $48.2 billion in
assets under management, of which $25.4 billion were invested in equity
securities, $8.1 billion were invested in money market or other short-
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<PAGE>
term instruments, $9.2 billion were invested in other fixed income securities
and $5.5 billion in non-discretionary assets.
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, a
Chief Executive 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, 1998, the Advisor was paid an
advisory fee at an annual rate based on the average daily net assets of each
Fund as follows:
<TABLE>
Conservative Fund Moderate Fund Aggressive Fund
----------------- ------------- ---------------
<S> <C> <C> <C>
.35% .35% .35%
</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.
TRANSFER AGENT. First Data Investor Services Group, Inc. is the Funds'
transfer agent. The Transfer Agent 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
"Administrator") is the Funds' administrator. State Street is located at 225
Franklin Street, Boston, Massachusetts 02110. State Street generally assists the
Company in all aspects of its administration and operations including the
maintenance of financial records and fund accounting. As compensation for its
services, State Street is entitled to receive a fee of $27,000 for each Fund
plus fees based on the aggregate daily net assets of the Funds and certain other
investment portfolios that are advised by the Advisor for which it provides
services, computed daily and payable monthly at the annual rate of 0.062% on the
first $2.8 billion of net assets, plus 0.052% on the next $2.2 billion of net
assets, plus 0.050% on all net assets in excess of $5 billion.
State Street has entered into a Sub-Administration Agreement with the
Distributor under which the Distributor provides certain administrative services
with respect to the Funds. State Street pays the Distributor a fee for these
services out of its own resources at no cost to the Funds.
CUSTODIAN AND SUB-CUSTODIAN. Comerica Bank ("Comerica" or the
"Custodian"), whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, Michigan 48226, is the Funds' custodian. No
compensation is paid to the Custodian for its custodial services. Comerica
receives a fee of 0.01% of the aggregate average daily net assets of the Funds
beneficially owned by Comerica and its customers for certain shareholder
services provided by Comerica to the Funds. State Street serves as the Funds'
sub-custodian.
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
33
<PAGE>
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 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.
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.
In general, as long as each Fund meets the requirements to qualify as a
regulated investment company ("RIC") under Federal tax laws, it will not be
subject to Federal income tax on its income and capital gains that it
distributes in a timely manner to its shareholders. Each Fund intends to qualify
annually as a RIC. Even if it qualifies as a RIC, a Fund may still be liable for
an excise tax on income that is not distributed in accordance with a calendar
year requirement; the Funds intend to avoid the excise tax by making timely
distributions.
Generally, you will owe tax on the amounts distributed to you,
regardless of whether you receive these amounts in cash or reinvest them in
additional Fund shares. Shareholders not subject to tax on their income
generally will not be required to pay any tax on amounts distributed to them.
Federal income tax on distributions to an IRA or to a qualified retirement plan
will generally be deferred.
Capital gains derived from sales of portfolio securities held by a Fund
will generally be designated as long-term or short-term. Distributions from a
Fund's long-term capital gains are generally taxed at the long-term capital
gains rate regardless of how long you have owned shares in the Fund. Dividends
from other sources are generally taxed as ordinary income.
Dividends and capital gain distributions are generally taxable when you
receive them; however, if a distribution is declared in October, November or
December, but not paid until January of the following year, it will be
considered to be paid on December 31 in the year in which it was declared.
Shortly after the end of each year, you will receive from each Fund in which you
are a shareholder a statement of the amount and nature of the distributions made
to you during the year.
34
<PAGE>
If you redeem, transfer or exchange Fund shares, you may have taxable
gain or a loss. If you hold Fund shares for six months or less, and during that
time you receive a capital gain dividend, any loss you realize on the sale of
these Fund shares will be treated as a long-term loss to the extent of the
earlier distribution.
ADDITIONAL INFORMATION
SHAREHOLDERS 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.
YEAR 2000. The Funds' operations depend on the seamless functioning of
computer systems in the financial service industry, including those of its
service providers. Many computer software systems in use today cannot properly
process date-related information after December 31, 1999 because of the method
by which dates are encoded and calculated. This failure, commonly referred to as
the "Year 2000 Issue," could adversely affect the handling of securities trades,
pricing and account servicing for the Funds. The Funds have been informed that
their major service providers have made compliance with the Year 2000 Issue a
high priority and are taking steps that they believe are reasonably designed to
address the Year 2000 Issue with respect to their computer systems. There can
be, however, no assurance that these steps will be successful, or that
interaction with other non-complying computer systems will not impair their
services at that time.
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<PAGE>
APPENDIX A
The Index 500 Fund is not sponsored, endorsed, sold or promoted by Standard
& Poor's Ratings Service, a division of McGraw-Hill Companies, Inc. ("S&P"). S&P
makes no representation or warranty, express or implied, to the owners of the
Index 500 Fund or any member of the public regarding the advisability of
investing in securities generally or in the Index 500 Fund particularly or the
ability of the S&P 500 Index to trace general stock market performance. S&P's
only relationship to the Trust is the licensing of certain trademarks and trade
names of S&P and of the S&P 500 Index which is determined, composed and
calculated by S&P without regard to the Trust or the Index 500 Fund. S&P has no
obligation to take the needs of the Trust or the owners of the Index 500 Fund
into consideration in determining, composing or calculating the S&P 500 Index.
S&P is not responsible for and has not participated in the determination of the
prices and amount of the Index 500 Fund or the timing of the issuance or sale of
the Index 500 Fund or in the determination or calculation of the equation by
which the Index 500 Fund is to be converted into cash. S&P has no obligation or
liability in connection with the administration, marketing or trading of the
Index 500 Fund.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500
Index or any data included therein and S&P shall have no liability for any
errors, omissions, or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the Trust, owners of the Index 500
Fund, or any other person or entity from the use of the S&P 500 Index or any
data included therein. S&P makes no express or implied warranties, and expressly
disclaims all warranties of merchantability of fitness for a particular purpose
or use with respect to the S&P 500 Index or any data included therein. Without
limiting any of the foregoing, in no event shall S&P have any liability for any
special, punitive, indirect, or consequential damages (including lost profits),
even if notified of the possibility of such damages.
"Standard & Poor's", "S&P", "S&P 500", "Standard & Poor's 500", and "500"
are trademarks of McGraw-Hill, Inc. and have been licensed for use by the Trust.
The Index 500 Fund is not sponsored, endorsed, sold or promoted by S&P and S&P
makes no representation regarding the advisability of investing in the Index 500
Fund.
A-1
<PAGE>
Michigan Municipal Shares
Prospectus
October 27, 1998
Short Term Treasury Fund
Prospectus begins on next page
<PAGE>
PROSPECTUS
Munder Short Term Treasury Fund
Michigan Municipal Shares
The Munder Short Term Treasury Fund (the "Fund") is a mutual fund that
seeks to provide an enhanced money market return consistent with the
preservation of capital. The Fund is a portfolio of The Munder Funds, Inc. (the
"Company"), an open-end investment company.
Munder Capital Management (the "Advisor") serves as investment advisor
of the Fund.
This Prospectus explains the objective, policies, risks and fees of the
Fund. You should read this Prospectus carefully before investing and retain it
for future reference. A Statement of Additional Information ("SAI") describing
the Fund has been filed with the Securities and Exchange Commission (the "SEC")
and is incorporated by reference into this Prospectus. You may obtain the SAI
free of charge by calling the Fund 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 Fund.
SHARES OF THE FUND 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 FUND INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
THE PRINCIPAL AMOUNT INVESTED.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES:
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS OCTOBER 27, 1998
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
Fund Highlights.............................................................................................3
What are the key facts regarding the Fund?.........................................................3
Financial Information.......................................................................................4
Fund Information............................................................................................5
Who may want to invest in the Fund?................................................................6
What are the Fund's investments and investment practices?..........................................6
What are the risks of investing in the Fund?.......................................................7
Performance.................................................................................................7
How is the Fund's performance calculated?..........................................................7
Where can I obtain performance data?...............................................................8
Purchases of Shares.........................................................................................8
What price do I pay for shares?....................................................................8
When can I purchase shares?........................................................................8
How can I purchase shares?.........................................................................8
Redemption of Shares........................................................................................9
What price do I receive for redeemed shares?.......................................................9
When can I redeem shares?..........................................................................9
How can I redeem shares?...........................................................................9
When will I receive redemption amounts?...........................................................10
Structure and Management of the Fund.......................................................................10
How is the Fund structured?.......................................................................10
Who manages and services the Fund?................................................................10
What are my rights as a shareholder?..............................................................11
Dividends, Distributions and Taxes.........................................................................12
When will I receive distributions from the Fund?..................................................12
How will distributions be made?...................................................................12
Are there tax implications of my investments in the Fund?.........................................12
Additional Information.....................................................................................13
</TABLE>
2
<PAGE>
FUND HIGHLIGHTS
WHAT ARE THE KEY FACTS REGARDING THE FUND?
Q: What is the Fund's goal?
A: The Fund seeks to provide an enhanced money market return consistent
with the preservation of capital.
Q: What is the Fund's strategy?
A: The Fund invests only in U.S. Treasury securities and repurchase
agreements relating to U.S. Treasury securities.
Q: What are the Fund's risks?
A: The Fund's net asset value, which is determined on every business day,
will change daily. The net asset value changes are due to changes in the price
of securities owned by the Fund as a result of rises and falls in the bond
market in general, in the price of U.S. Treasury securities and in interest
rates. You should note that you could lose a portion of the amount you invest in
the Fund.
Q: What are the options for investment in the Fund?
A: The Fund offers two classes of shares: Michigan Municipal League Shares
and Class Y Shares. Class Y Shares are described in a separate prospectus.
Q: How do I buy and sell shares of the Fund?
A: Michigan Municipal Shares of the Fund are available exclusively to
governmental entities which are governed by Michigan Public Act 20 for
investment purposes and are full members or associate members (full service or
limited) of the Michigan Municipal League. You may purchase shares from the
Fund's Transfer Agent, First Data Investor Services Group, Inc. (the "Transfer
Agent") by mailing an Account Application Form with a check to the Transfer
Agent.
Shares may be redeemed (sold back to the Fund) through the Transfer
Agent by mail or by telephone.
Q: When and how are distributions made?
A: Dividend distributions are made from the dividends and interest earned
on investments after expenses. The Fund pays dividends monthly and distributes
capital gains at least annually. Unless you elect to receive distributions in
cash, all dividends and capital gains distributions of the Fund will be
automatically used to purchase additional shares of the Fund.
Q: Who manages the Fund's assets?
A: Munder Capital Management is the Fund's investment advisor. The Advisor
is responsible for all purchases and sales of the securities held by the Fund.
3
<PAGE>
FINANCIAL INFORMATION
SHAREHOLDER TRANSACTION EXPENSES (1)
The purpose of this table is to assist you in understanding the
expenses a shareholder in the Fund will bear directly.
<TABLE>
<CAPTION>
<S> <C>
Maximum Sales Charge on Purchase (as a % of Offering Price)....................................................None
Sales Charge Imposed on Reinvested Dividends...................................................................None
Maximum Deferred Sales Charge..................................................................................None
Redemption Fees (2)............................................................................................None
Exchange Fees..................................................................................................None
</TABLE>
- ------------------
Notes:
(1) Does not include fees which institutions may charge for services they
provide to you.
(2) The Fund's 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 the Fund, which investors in the Fund 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 below are based on fees for the Fund's
past fiscal year and restated to reflect the termination of shareholder
servicing fees effective as of the date of this prospectus.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a % of average net assets)
- ------------------------------
<S> <C>
Advisory Fees............................................................................................. .25%
12b-1 Fees................................................................................................ None
Other Expenses............................................................................................ .27%
---
Total Fund Operating Expenses............................................................................. .52%
===
</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 following time periods. 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.
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$5 $17 $29 $65
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights for the fiscal period ended June 30,
1998 have been audited by Ernst & Young LLP, independent auditors. This
information is part of the Fund's audited financial statements which are
included in the Fund's Annual Report, which is incorporated by reference into
the SAI. This information should be read in conjunction with the financial
statements and notes thereto. You may obtain the Annual Report without charge by
calling (800) 438-5789.
<TABLE>
<CAPTION>
SHORT TERM TREASURY FUND
---------------------------------------------
YEAR PERIOD
ENDED ENDED
6/30/98 6/30/97(A)
------- -------
<S> <C> <C>
Net asset value, beginning of period..............................
Income frominvestment operations:
Net investment income.........................................
Net realized and unrealized gain on investments...............
Total from investment operations..............................
Less distributions:
Dividends from net investment income..........................
Total distributions...........................................
Net asset value, end of period....................................
Total return (b)..............................................
Ratio to average net assets/supplemental data:
Net assets, end of period (in 000's)..........................
Ratio of operating expenses to average net assets.............
Ratio of net investment income to average net assets..........
Portfolio turnover rate.......................................
Ratio of operating expenses to average net assets
without expenses reimbursed.................................
</TABLE>
- -----------------------
(a) The Michigan Municipal League Shares of the Fund (formerly called the Class
K Shares) commenced operations on April 2, 1997.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the result of operations.
FUND INFORMATION
This Prospectus offers Michigan Municipal Shares of the Fund. This
section summarizes the Fund's principal investments. The sections entitled "What
are the Fund's Investments and Investment Practices?" and "What are the Risks of
Investing in the Fund?" and the SAI give more information about the Fund's
investment techniques and risks. Capitalized terms are explained in the section
"What are the Fund's Investments and Investment Practices?"
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide investors
with an enhanced money market return consistent with capital preservation. Under
normal conditions, the Fund invests all of its assets in U.S. Treasury
securities and repurchase agreements fully collateralized by U.S. Treasury
securities. The Fund's dollar-weighted average portfolio maturity usually will
not exceed two years.
5
<PAGE>
The Fund seeks to generate a total return which exceeds money market
instruments while minimizing the fluctuation of its net asset value. The Fund,
however, is not a money market fund and its net asset value may fluctuate.
PORTFOLIO MANAGEMENT. Sharon E. Fayolle, Vice President and Director of
Money Market Trading for the Advisor, has managed the Fund since commencement of
operations. Prior to joining the Advisor in 1996, she was a European Portfolio
Manager for Ford Motor Company.
WHO MAY WANT TO INVEST IN THE FUND?
The Fund is designed for investors who desire a high level of income
and liquidity.
WHAT ARE THE FUND'S INVESTMENTS AND INVESTMENT PRACTICES?
The Fund may enter into REPURCHASE AGREEMENTS. Under a repurchase
agreement, the Fund purchases 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.
The Fund may purchase U.S. TREASURY SECURITIES, which are direct
obligations of the U.S. Treasury and are guaranteed by the full faith and credit
of the U.S. government. Such securities include U.S. Treasury bills, which have
initial maturities of one year or less, 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.
The Fund may purchase ZERO COUPON TREASURY SECURITIES, which are U.S.
Treasury notes and bonds which have been stripped of their unmatured interest
coupons and receipts or which are certificates representing interests in such
securities. These securities are purchased at a discount from their face amount,
giving the purchaser the right to receive their full value at maturity. A zero
coupon security pays no interest to its holder during its life. The Fund will
only purchase Zero Coupon Treasury Securities which have been stripped by the
Federal Reserve Bank.
The Fund may purchase securities on a "WHEN-ISSUED" basis and may
purchase securities on a "FORWARD COMMITMENT" basis. Although the price
to be paid by the Fund is set at the time of the agreement, the Fund usually
does not pay for the securities until they are received. The value of securities
may change between the time the price is set and payment. When the Fund
purchases securities for future delivery, the Fund's custodian will set aside
cash or liquid securities to "cover" the Fund's position. The Fund does not
intend to purchase securities for future delivery for speculative purposes.
The Fund may LEND SECURITIES to broker-dealers and other financially
sound institutional investors who will pay the Fund for the use of the
securities, thus potentially increasing the Fund's returns. The borrower must
set
6
<PAGE>
aside cash or liquid securities equal to the value of the securities borrowed at
all times during the terms of the loan. Loans may not exceed 33 1/3% of the
value of the Fund's total assets. Risks involved in such transactions include
possible delay in recovering the loaned securities and possible loss of the
securities or the collateral if the borrower fails financially.
The 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 can be changed only by
shareholders.
The Fund is classified as a "diversified fund" which means with respect
to 75% of its assets, the 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, the Fund cannot invest more than 25% of its assets in a single
issuer.
WHAT ARE THE RISKS OF INVESTING IN THE FUND?
Consistent with a long-term investment approach, investors in the Fund
should be prepared and able to maintain their investments during periods of
adverse market conditions. By itself, no Fund is 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 value of the 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 Fund may be less risky than investing in individual U.S. Treasury
Securities due to the diversification of investing in a portfolio containing
many different U.S. Treasury Securities; however, such diversity does not
eliminate all risks. The Fund invests mostly in U.S. Treasury Securities, whose
values typically rise when interest rates fall and fall when interest rates
rise. U.S. Treasury 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.
The risks of various investment techniques the Fund uses are described
in more detail in the SAI.
PERFORMANCE
HOW IS THE FUND'S PERFORMANCE CALCULATED?
There are various ways in which the Fund may calculate and report its
performance. Performance is calculated separately for each class of shares.
One method is to show the Fund's total return. Cumulative total return
is the percentage change in the value of an amount invested in a class of shares
of the Fund over a stated period of time and takes into account reinvested
dividends. Cumulative total return most closely reflects the actual performance
of the Fund.
Average annual total return refers to the average annual compounded
rates of return over a specified period on an investment in shares of the Fund
determined by comparing the initial amount invested to the ending redeemable
value of the amount, taking into account reinvested dividends.
7
<PAGE>
The Fund may also publish its current yield. Yield is the net
investment income generated by a share of the Fund during a 30-day period
divided by the maximum offering price per share on the 30th day.
You should be aware that (i) past performance does not indicate how the
Fund will perform in the future; and (ii) the Fund's return and net asset value
will fluctuate, so you cannot use the Fund's performance data to compare it to
investments in certificates of deposit, savings accounts or other investments
that provide a fixed or guaranteed yield.
The 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
Morningstar, Inc., Money Magazine, Forbes, Barron's, The Wall Street Journal and
The New York Times) or in local or regional publications. The Fund may also
compare its total return to 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 Fund 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 Fund's 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 OF SHARES
Michigan Municipal Shares of the Fund are available exclusively to
governmental entities which are governed by Michigan Public Act 20 for
investment purposes and are full members or associate members (full service or
limited) of the Michigan Municipal League. The Fund also issues Class Y Shares.
Call (800) 438-5789 to obtain more information concerning the Fund's Class Y
Shares.
WHAT PRICE DO I PAY FOR SHARES?
The purchase price for Michigan Municipal Shares is the net asset value
("NAV") next determined after we receive your order in proper form. Except in
certain limited circumstances, the Fund determines its 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 Fund calculates NAV
separately for each class of shares. NAV is calculated by totaling the value of
all of the assets of the 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 the class outstanding.
WHEN CAN I PURCHASE SHARES?
Shares of the Fund are sold on a continuous basis and can be purchased
on any Business Day.
HOW CAN I PURCHASE SHARES?
You can purchase shares in a number of different ways. You may place
purchase orders directly through the Transfer Agent or by calling (800) 438-
5789. Prior to your purchase of Michigan Municipal Shares, a copy of your
investment guidelines or policies must be reviewed by the Advisor to confirm
that the Fund is a permissible investment under the guidelines or policies.
Please contact the Fund at (800) 438-5789 to arrange for this review. Any change
or modification to your investment guidelines or policies must be reviewed by
the Advisor to confirm that the Fund remains a permissible investment.
. 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 $1,000 or more to: The Munder Funds,
c/o First Data Investor Services Group, P.O. Box 5130, Westborough,
Massachusetts 01581-5130. 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.
8
<PAGE>
. BY WIRE. To open a new account, you should call the Fund 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 the Transfer Agent at the address provided
above. Wire instructions must state the name of the Fund, 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.
The Transfer Agent will send 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. We do not issue
share certificates. We reserve the right to (i) reject any purchase order if, in
our opinion, it is in the Fund's best interest to do so and (ii) if we have not
received and reviewed your investment policies or guidelines or if the Fund is
not a permissible investment under such guidelines or policies and (iii) suspend
the offering of Michigan Municipal Shares for any period of time.
See the SAI for further information regarding purchases of the Fund's
shares.
REDEMPTIONS OF SHARES
WHAT PRICE DO I RECEIVE FOR REDEEMED SHARES?
The redemption price is the NAV 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"). The Fund may temporarily
stop redeeming shares when the NYSE is closed or trading on the NYSE is
restricted, when an emergency exists and the Fund cannot sell its assets or
accurately determine the value of its assets or if the SEC orders the Fund to
suspend redemptions.
HOW CAN I REDEEM SHARES?
You may redeem shares of the Fund in several ways:
. BY MAIL. You may mail your redemption request to: The Munder Funds, c/o
First Data 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.
A SIGNATURE GUARANTEE is required for the following redemption
requests: (a) redemption 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
9
<PAGE>
bank, trust company, savings association or from a
securities firm having membership on a recognized securities exchange.
. BY TELEPHONE. You can redeem your shares by calling your broker or the
Fund 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 reasonable procedures to ensure
against unauthorized transactions, neither the Company, Funds
Distributor, Inc. (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.
. INVOLUNTARY REDEMPTION. We may redeem your account if its value falls
below $250 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 the 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. 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 FUND
HOW IS THE FUND 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 Fund's service providers. The Company is a Maryland corporation.
WHO MANAGES AND SERVICES THE FUND?
INVESTMENT ADVISOR. The Fund's 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 Old MCM, Inc. ("MCM"), Munder Group LLC, and WAM Holdings, Inc. ("WAM"). MCM
was founded in April, 1985 as a Delaware corporation and was a registered
investment advisor. WAM is an indirect, wholly-owned subsidiary of Comerica
Incorporated which owns or controls approximately 88% of the partnership
interests in the Advisor. As of June 30, 1998, the Advisor and its affiliates
had approximately $48.2 billion in assets under management, of which $25.4
billion were invested in equity securities, $8.1 billion were invested in money
market or other short-term instruments, $9.2 billion were invested in other
fixed income securities, and $5.5 billion in non-discretionary assets.
10
<PAGE>
The Advisor provides overall investment management for the Fund,
provides research and credit analysis and is responsible for all purchases and
sales of portfolio securities.
The Advisor is entitled to receive a fee at an annual rate equal to
0.25% of the average daily net assets of the Fund.
The Advisor may, from time to time, make payments to banks,
broker-dealers or other financial institutions for certain services to the Fund
and/or their shareholders, including sub-administration, sub-transfer agency and
shareholder servicing. The Advisor may make such payments out of its own
resources and there are no additional costs to the Fund or its shareholders. The
Advisor has entered into a licensing agreement with the Michigan Municipal
League to permit the Fund to use the Michigan Municipal League's name with
respect to the Michigan Municipal League Shares. In exchange for the ability to
use the name of the Michigan Municipal League, the Advisor pays the Michigan
Municipal League a fee based on the net assets of the Michigan Municipal League
Shares.
The Advisor selects broker-dealers to execute portfolio transactions
for the Fund 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 Fund's
transfer agent. The Transfer Agent 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. The Administrator is located
at 225 Franklin Street, Boston, Massachusetts 02110. The Administrator generally
assists the Company in all aspects of its administration and operations
including overseeing 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 annual rate of 0.113% on the first
$2.8 billion of net assets, plus 0.103% on the next $2.2 billion of net assets,
plus 0.101% on the next $2.5 billion of net assets, plus 0.095% on the next $2.5
billion of net assets, plus 0.080% on the next $2.5 billion of net assets, plus
0.070% on all net assets in excess of $12.5 billion (with a $75,000 minimum fee
per annum in the aggregate for all portfolios with respect to the
Administrator).
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 AND SUB-CUSTODIAN. Comerica Bank (the "Comerica" or the
"Custodian") whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, Michigan 48226, is the Fund's custodian. No
compensation is paid to the Custodian for its custodial services. Comerica
receives a fee of 0.01% of the aggregate average daily net assets of the Fund
beneficially owned by Comerica and its customers for certain shareholder
services provided by Comerica to the Fund. State Street serves as the Fund's
sub-custodian.
DISTRIBUTOR. Funds Distributor, Inc. is the distributor of the Fund's
shares and is located at 60 State Street, Boston, Massachusetts 02109. It
markets and sells the Fund's 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
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the Company as a whole and affecting the Fund. You will not vote by Class unless
expressly required by law or when the Directors determine that 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.
DIVIDENDS, DISTRIBUTIONS AND TAXES
WHEN WILL I RECEIVE DISTRIBUTIONS FROM THE FUND?
As a shareholder, you are entitled to your share of net income and
capital gains, if any, on the Fund's investments. The Fund passes its earnings
along to its investors in the form of dividends. Dividend distributions are the
dividends or interest earned on investments after expenses. The Fund pays
dividends monthly.
The Fund's net realized capital gains (including net short-term capital
gains), if any, are distributed at least annually.
It is possible that the 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. To the extent that the amount of any such distribution
exceeds your basis in your shares, you will treat the excess as gain from a sale
or exchange of the shares.
HOW WILL DISTRIBUTIONS BE MADE?
The Fund will pay dividend and capital gains distributions in
additional shares of the same class of the Fund. If you wish to receive
distributions in cash, either indicate this request on your Account Application
Form or notify the Fund at (800) 438-5789.
ARE THERE TAX IMPLICATIONS OF MY INVESTMENTS IN THE FUND?
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.
In general, as long as the Fund meets the requirements to qualify as a
regulated investment company ("RIC") under Federal tax laws, it will not be
subject to Federal income tax on its income and capital gains that it
distributes in a timely manner to its shareholders. The Fund intends to qualify
annually as a RIC. Even if it qualifies as a RIC, the Fund may still be liable
for any excise tax on income that is not distributed in accordance with a
calendar year requirement; the Fund intends to avoid the excise tax by making
timely distributions.
Generally, you will owe tax on the amounts distributed to you,
regardless of whether you receive these amounts in cash or reinvest them in
additional Fund shares. Shareholders not subject to tax on their income
generally will not be required to pay any tax on amounts distributed to them.
Federal income tax on distributions to an IRA or to a qualified retirement plan
will generally be deferred.
Capital gains derived from sales of portfolio securities held by the
Fund will generally be designated as long-term or short-term. Distributions from
the Fund's long-term capital gains are generally taxed at the long-term capital
gains rates, regardless of how long you have owned shares in the Fund. Dividends
derived from other sources are generally taxed as ordinary income.
Dividends and capital gain distributions are generally taxable when you
receive them; however, if a distribution is declared in October, November or
December, but not paid until January of the following year, it will be
considered to be paid on December 31 in the year in which it was declared.
Shortly after the end of each year,
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you will receive from the Fund a statement of the amount and nature of the
distributions made to you during the year.
If you redeem, transfer or exchange Fund shares, you may have taxable
gain or a loss. If you hold Fund shares for six months or less, and during that
time you receive a capital gain dividend, any loss you realize on the sale of
these Fund shares will be treated as a long-term loss to the extent of the
earlier distribution.
ADDITIONAL INFORMATION
SHAREHOLDER COMMUNICATIONS. You will receive unaudited Semi-Annual
Reports and audited Annual Reports on a regular basis from the Fund. In
addition, you will also receive updated Prospectuses or Supplements to this
Prospectus. In order to eliminate duplicate mailings, the Fund 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.
YEAR 2000. The Fund's operations depend on the seamless functioning of
computer systems in the financial service industry, including those of its
service providers. Many computer software systems in use today cannot properly
process date-related information after December 31, 1999 because of the method
by which dates are encoded and calculated. This failure, commonly referred to as
the "Year 2000 Issue," could adversely affect the handling of securities trades,
pricing and account servicing for the Fund. The Fund has been informed that
their major service providers have made compliance with the Year 2000 Issue a
high priority and are taking steps that they believe are reasonably designed to
address the Year 2000 Issue with respect to their computer systems. There can
be, however, no assurance that these steps will be successful, or that
interaction with other non-complying computer systems will not impair their
services at that time.
MICHIGAN MUNICIPAL LEAGUE. Michigan Municipal League is
____________________. The Michigan Municipal League does not sponsor or provide
services to the Fund.
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<TABLE>
<S> <C>
Munder Accelerating Growth Fund* Munder Framlington Healthcare Fund
Munder Balanced Fund Munder Framlington International Growth Fund
Munder Growth Opportunities Fund Munder Bond Fund
Munder Index 500 Fund Munder Intermediate Bond Fund
Munder Growth & Income Fund Munder International Bond Fund
Munder International Equity Fund Munder Short Term Treasury Fund
Munder Micro-Cap Equity Fund Munder U.S. Government Income Fund
Munder Multi-Season Growth Fund Munder Michigan Triple Tax-Free Bond Fund
Munder Real Estate Equity Investment Fund Munder Tax-Free Bond Fund
Munder Small-Cap Value Fund Munder Tax-Free Intermediate Bond Fund
Munder Small Company Growth Fund Munder Cash Investment Fund
Munder Value Fund Munder Money Market Fund
Munder NetNet Fund Munder Tax-Free Money Market Fund
Munder Framlington Emerging Markets Fund Munder U.S. Treasury Money Market Fund
Munder Framlington Global Financial Services Fund
</TABLE>
* The Munder Accelerating Growth Fund is close to new investments.
(collectively, the "Funds")
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information, which has been filed with the
Securities and Exchange Commission (the "SEC"), provides supplementary
information pertaining to all classes of shares representing interests in each
of the investment portfolios listed above. The Munder Funds, Inc. (the
"Company") currently offers a selection of fourteen investment portfolios, ten
of which are described in this Statement of Additional Information; The Munder
Funds Trust (the "Trust") currently offers a selection of fifteen investment
portfolios, each of which is described in this Statement of Additional
Information; and The Munder Framlington Funds Trust ("Framlington") currently
offers a selection of four investment portfolios, each of which is described in
this Statement of Additional Information. This Statement of Additional
Information is not a prospectus, and should be read only in conjunction with the
Company's, the Trust's, and Framlington's Prospectuses dated October 27, 1998. A
copy of each Prospectus may be obtained through Funds Distributor, Inc. (the
"Distributor"), or by calling (800) 438-5789. This Statement of Additional
Information is dated October 27, 1998.
Shares of the Funds are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and are not insured or guaranteed by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency. An
investment in the Funds involves investment risks, including the possible loss
of principal.
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
----
<S> <C>
General...........................................................................................................3
Fund Investments..................................................................................................4
Risk Factors and Special Considerations -- Index 500 Fund........................................................20
Risk Factors and Special Considerations -- Michigan Triple Tax-Free Bond Fund
and Tax-Free Intermediate Bond Fund..............................................................................21
Investment Limitations...........................................................................................23
Trustees, Directors and Officers.................................................................................27
Investment Advisory and Other Service Arrangements...............................................................32
Portfolio Transactions...........................................................................................47
Additional Purchase and Redemption Information...................................................................50
Net Asset Value..................................................................................................52
Performance Information..........................................................................................53
Taxes............................................................................................................63
Additional Information Concerning Shares.........................................................................70
Miscellaneous....................................................................................................72
Registration Statement...........................................................................................72
Financial Statements.............................................................................................73
Appendix A......................................................................................................A-1
Appendix B......................................................................................................B-1
</TABLE>
No person has been authorized to give any information or to make any
representations not contained in this Statement of Additional Information or in
each Prospectus in connection with the offering made by each Prospectus and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Funds or the Distributor. The Prospectuses do not
constitute an offering by the Funds or by the Distributor in any jurisdiction in
which such offering may not lawfully be made.
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<PAGE>
GENERAL
The following Funds are described in this Statement of Additional Information:
The Munder Funds Trust
Munder Accelerating Growth Fund ("Accelerating Growth Fund")*
Munder Balanced Fund ("Balanced Fund")
Munder Growth & Income Fund ("Growth & Income Fund")
Munder Index 500 Fund ("Index 500 Fund")
Munder International Equity Fund ("International Equity Fund")
Munder Small Company Growth Fund ("Small Company Growth Fund")
Munder Bond Fund ("Bond Fund")
Munder Intermediate Bond Fund ("Intermediate Bond Fund")
Munder U.S. Government Income Fund ("U.S. Income Fund")
Munder Michigan Triple Tax-Free Bond Fund ("Michigan Bond Fund")
Munder Tax-Free Bond Fund ("Tax-Free Bond Fund")
Munder Tax-Free Intermediate Bond Fund ("Tax-Free Intermediate Bond Fund")
Munder Cash Investment Fund ("Cash Investment Fund")
Munder Tax-Free Money Market Fund ("Tax-Free Money Market Fund")
Munder U.S. Treasury Money Market Fund ("U.S. Treasury Money Market Fund")
The Munder Funds, Inc.
- ----------------------
Munder Growth Opportunities Fund ("Growth Opportunities Fund")
Munder Micro-Cap Equity Fund ("Micro-Cap Fund")
Munder Multi-Season Growth Fund ("Multi-Season Fund")
Munder NetNet Fund ("NetNet Fund")
Munder Real Estate Equity Investment Fund ("Real Estate Fund")
Munder Small-Cap Value Fund ("Small-Cap Value Fund")
Munder Value Fund ("Value Fund")
Munder International Bond Fund ("International Bond Fund")
Munder Short Term Treasury Fund ("Short Term Treasury Fund")
Munder Money Market Fund ("Money Market Fund")
The Munder Framlington Funds Trust
- ----------------------------------
Munder Framlington Emerging Markets Fund ("Emerging Markets Fund")
Munder Framlington Global Financial Services Fund ("Global Financial Services
Fund")
Munder Framlington Healthcare Fund ("Healthcare Fund")
Munder Framlington International Growth Fund ("International Growth Fund")
* The Accelerating Growth Fund is closed to new investors.
The Trust was organized on August 30, 1989 under the name "PDB Fund,"
which was changed in November 1989 to "Opportunity Funds," in February 1990 to
"Ambassador Funds" and in June 1995 to "The Munder Funds Trust." The Tax-Free
Intermediate Bond Fund originally commenced operations on February 9, 1987 as a
separate portfolio of the St. Clair Tax-Free Fund, Inc. On November 20, 1992,
the St. Clair Tax-Free Intermediate Bond Fund was reorganized as the Ambassador
Tax-Free Intermediate Bond Fund. The Company was organized as a Maryland
corporation on November 18, 1992. Framlington was organized as a Massachusetts
business trust on October 30, 1996.
As stated in each Prospectus, the investment advisor of each Fund is
Munder Capital Management (the "Advisor"). The principal partners of the Advisor
are Old MCM, Inc. ("MCM"), Munder Group LLC and WAM
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Holdings, Inc. ("WAM"). MCM was founded in April 1985 as a Delaware
corporation and was a registered investment advisor. WAM is an indirect, wholly-
owned subsidiary of Comerica Incorporated which owns or controls approximately
88% of the partnership interests in the Advisor.
Framlington Overseas Investment Management Limited (the "Sub-Advisor")
serves as sub-advisor for the four Framlington Funds. The Sub-Advisor is a
subsidiary of Framlington Group Limited, incorporated in England and Wales
which, through its subsidiaries, provides a wide range of investment services.
Framlington Group Limited is a wholly owned subsidiary of Framlington Holdings
Limited which is, in turn, owned 49% by the Advisor and 51% by Credit Commercial
de France S.A., a French banking corporation listed on the Societe des Bourses
Francaises.
Capitalized terms used in this Statement of Additional Information and
not otherwise defined have the same meanings as are given to them in each
Prospectus.
FUND INVESTMENTS
The following supplements the information contained in each Prospectus
concerning the investment objectives and policies of the Funds. With the
exception of the investment objectives of Multi-Season Fund, Real Estate Fund
and Money Market Fund, each Fund's investment objective is a non-fundamental
policy and may be changed without the authorization of the holders of a majority
of the Fund's outstanding shares. The Tax-Free Bond Fund and Tax-Free Money
Market Fund each have a fundamental policy to invest at least 80% of its
respective assets in municipal obligations bearing tax-exempt interest; all
other investment policies, other than those specifically designated as
fundamental, are non-fundamental policies and may be changed without the
authorization of the holders of a majority of a 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 to this Statement of
Additional Information. For purposes of this Statement of Additional
Information, the Accelerating Growth Fund, Global Financial Services Fund,
Growth & Income Fund, Growth Opportunities Fund, Index 500 Fund, International
Equity Fund, Micro-Cap Fund, Multi-Season Fund, NetNet Fund, Real Estate Fund,
Small-Cap Value Fund, Small Company Growth Fund, Value Fund, International
Growth Fund, Emerging Markets Fund and Healthcare Fund are referred to as the
"Equity Funds"; the Bond Fund, Intermediate Bond Fund and U.S. Income Fund are
referred to as the "Bond Funds"; the Michigan Bond Fund, Tax-Free Bond Fund,
Tax-Free Intermediate Bond Fund and Short Term Treasury Fund are referred to as
the "Tax-Free Bond Funds" and Cash Investment Fund, Money Market Fund, Tax-Free
Money Fund and U.S. Treasury Money Market Fund are referred to as the "Money
Market Funds."
BORROWING. The Funds are authorized to borrow money in amounts up to 5%
of the value of their total assets at the time of such borrowings for temporary
purposes, and are authorized to borrow money in excess of the 5% limit as
permitted by the Investment Company Act of 1940, as amended (the "1940 Act"), to
meet redemption requests. This borrowing may be unsecured. The 1940 Act requires
the Funds to maintain continuous asset coverage of 300% of the amount borrowed.
If the 300% asset coverage should decline as a result of market fluctuations or
other reasons, the Funds may be required to sell some of their portfolio
holdings within three days to reduce the debt and restore the 300% asset
coverage, even though it may be disadvantageous from an investment standpoint to
sell securities at that time. Borrowed funds are subject to interest costs that
may or may not be offset by amounts earned on the borrowed funds. A Fund 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. Each Fund may, in connection with permissible borrowings,
transfer as collateral securities owned by the Funds.
FOREIGN SECURITIES. Each Equity Fund (except Global Financial Services
Fund, Real Estate Fund, International Equity Fund, International Growth Fund,
Emerging Markets Fund and Healthcare Fund), each Bond Fund, each Tax-Free Bond
Fund, the Balanced Fund, the Cash Investment Fund and the Money Market Fund may
invest up to 25% of its assets in foreign securities. Under normal market
conditions, the International Equity Fund, International Bond Fund and
International Growth Fund will each invest at least 65% of its assets in
securities of issuers located in at least three countries other than the United
States. The Global Financial Services Fund will invest at least 65 % of its
assets in securities of issuers located in at least three countries, one of
which may be the
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<PAGE>
United States. The Emerging Markets Fund will invest at least 65% of its assets
in emerging market countries. There is no limit on the Healthcare Fund's
investments in foreign securities. The Multi-Season Fund and NetNet Fund
typically will only purchase foreign securities which are represented by
American Depositary Receipts ("ADRs") listed on a domestic securities exchange
or included in the NASDAQ National Market System, or foreign securities listed
directly on a domestic securities exchange or included in the NASDAQ National
Market System. ADRs are receipts typically issued by a United States bank or
trust company evidencing ownership of the underlying foreign securities. Certain
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 Funds may also purchase Global Depositary Receipts ("GDRs") or
European Depositary Receipts ("EDRs"), which are receipts issued by European
financial institutions evidencing ownership of the underlying foreign
securities.
The International Bond Fund will primarily invest in foreign debt
obligations denominated in foreign currencies, including the European Currency
Unit ("ECU"), which are issued by foreign governments and governmental agencies,
instrumentalities or political subdivisions; debt securities issued or
guaranteed by supranational organizations (as defined below); corporate debt
securities; bank or bank holding company debt securities and other debt
securities including those convertible into foreign stock. For the purposes of
the 65% minimum 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 foreign 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 a
Fund's investment opportunities, including restrictions on investment in issuers
or industries deemed sensitive to national interest; (iv) foreign taxation; (v)
the absence of developed legal structures governing private or foreign
investment or allowing for judicial redress for injury to private property; (vi)
the absence, until recently in certain Eastern European countries, of a capital
market structure or market-oriented economy; and (vii) the possibility that
recent favorable economic developments in Eastern Europe may be slowed or
reversed by unanticipated political or social events in such countries.
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, the Fund could lose a substantial
portion of any investments it has made in the affected countries. Further, no
accounting standards exist in Eastern European countries. Finally, even though
certain Eastern European currencies may be convertible into United States
dollars, the conversion rates may be artificial to the actual market values and
may be adverse to a Fund.
5
<PAGE>
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 the Fund changes investments from one country
to another or when proceeds of the sale of Fund shares in U.S. dollars are used
for the purchase of securities in foreign countries. Also, some countries may
adopt policies which would prevent the Fund from transferring cash out of the
country or withhold portions of interest and dividends at the source. There is
the possibility of expropriation, nationalization or confiscatory taxation,
withholding and other foreign taxes on income or other amounts, foreign exchange
controls (which may include suspension of the ability to transfer currency from
a given country), default in foreign government securities, political or social
instability or diplomatic developments that could affect investments in
securities of issuers in foreign nations.
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 a Fund are uninvested and no return is earned
thereon. The inability of a 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 a 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.
A Fund may be affected either unfavorably or favorably by fluctuations
in the relative rates of exchange between the currencies of different nations,
by exchange control regulations and by indigenous economic and political
developments. Changes in foreign currency exchange rates will influence values
within a Fund from the perspective of U.S. investors, and may also affect the
value of dividends and interest earned, gains and losses realized on the sale of
securities, and net investment income and gains, if any, to be distributed to
shareholders by a Fund. The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand in the foreign
exchange markets. These forces are affected by the international balance of
payments and other economic and financial conditions, government intervention,
speculation and other factors. The Advisor (Sub-Advisor with respect to the
Framlington Fund), will attempt to avoid unfavorable consequences and to take
advantage of favorable developments in particular nations where, from time to
time, it places a Fund's investments.
The exercise of this flexible policy may include decisions to purchase
securities with substantial risk characteristics and other decisions such as
changing the emphasis on investments from one nation to another and from one
type of security to another. Some of these decisions may later prove profitable
and others may not. No assurance can be given that profits, if any, will exceed
losses.
FORWARD FOREIGN CURRENCY TRANSACTIONS. In order to protect against a
possible loss on investments resulting from a decline or appreciation in the
value of a particular foreign currency against the U.S. dollar or another
foreign currency, the Equity Funds (excluding the Real Estate Fund), the
Balanced Fund, the Bond Funds and the International Bond Fund are authorized to
enter into forward foreign currency exchange contracts ("forward currency
contracts"). These contracts involve an obligation to purchase or sell a
specified currency at a future date at a price set at the time of the contract.
Forward currency contracts do not eliminate fluctuations in the values of
portfolio securities but rather allow a Fund to establish a rate of currency
exchange for a future point in time.
When entering into a contract for the purchase or sale of a security, a
Fund may enter into a forward 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, a Fund may enter into a forward contract to sell, for a fixed amount, the
amount of foreign currency approximating the value of some or all of the Fund's
securities denominated in such foreign currency. Similarly, when the
6
<PAGE>
obligations held by a Fund create a short position in a foreign currency, the
Fund may enter into a forward contract to buy, for a fixed amount, an amount of
foreign currency approximating the short position. With respect to any forward
currency contract, it will not generally be possible to match precisely the
amount covered by that contract and the value of the securities involved due to
the changes in the values of such securities resulting from market movements
between the date the forward contract is entered into and the date it matures.
In addition, while forward contracts may offer protection from losses resulting
from declines or appreciation in the value of a particular foreign currency,
they also limit potential gains which might result from changes in the value of
such currency. A Fund will also incur costs in connection with forward currency
contracts and conversions of foreign currencies and U.S. dollars.
Cash or liquid securities equal to the amount of a Fund's assets that
could be required to consummate forward contracts will be designated on the
records of the Fund or the Funds' sub-custodian except to the extent the
contracts are otherwise "covered." For the purpose of determining the adequacy
of the securities in the account, the deposited securities will be valued at
market or fair value. If the market or fair value of such securities declines,
additional cash or securities will be placed in the account daily so that the
value of the account will equal the amount of such commitments by the Fund. A
forward contract to sell a foreign currency is "covered" if a Fund owns the
currency (or securities denominated in the currency) underlying the contract, or
holds a forward contract (or call option) permitting the Fund to buy the same
currency at a price no higher than the Fund's price to sell the currency. A
forward contract to buy a foreign currency is "covered" if a Fund holds a
forward contract (or put option) permitting the Fund to sell the same currency
at a price as high as or higher than the Fund's price to buy the currency.
FUTURES CONTRACTS AND RELATED OPTIONS. The Equity Funds, the Balanced
Fund, the Bond Funds, the Tax-Free Bond Funds and the International Bond Fund
may purchase and sell futures contracts on interest-bearing securities or
securities 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.
ILLIQUID SECURITIES. Each of the Equity Funds and the Bond Funds
(except Short Term Treasury Fund) may invest up to 15%, and each of the Money
Market Funds may invest up to 10%, of the value of its net assets (determined at
time of acquisition) in securities that are illiquid. Illiquid securities would
generally include securities for which there is a limited trading market,
repurchase agreements and time deposits with notice/termination dates in excess
of seven days, and certain securities that are subject to trading restrictions
because they are not registered under the Securities Act of 1933, as amended
(the "Act"). If, after the time of acquisition, events cause this limit to be
exceeded, the Fund will take steps to reduce the aggregate amount of illiquid
securities as soon as reasonably practicable in accordance with the policies of
the SEC.
Each Fund (except U.S. Treasury Money Market Fund and Short Term
Treasury Fund) may invest in commercial obligations issued in reliance on the
"private placement" exemption from registration afforded by Section 4(2) of the
Act ("Section 4(2) paper"). A Fund may also purchase securities that are not
registered under the Act, but which can be sold to qualified institutional
buyers in accordance with Rule 144A under the Act, ("Rule 144A securities").
Section 4(2) paper is restricted as to disposition under the Federal securities
laws, and generally is sold to institutional investors who agree that they are
purchasing the paper for investment and not with a view to public distribution.
Any resale by the purchaser must be in an exempt transaction. Section 4(2) paper
normally is resold to other institutional investors through or with the
assistance of the issuer or investment dealers which make a market in the
Section 4(2) paper, thus providing liquidity. Rule 144A securities generally
must be sold only to other qualified institutional buyers. If a particular
investment in Section 4(2) paper or Rule 144A securities is not determined to be
liquid, that investment will be included within the Fund's limitation on
investment in illiquid securities. The Advisor will determine the liquidity of
such investments pursuant to guidelines established by the Boards of
Directors/Trustees. It is possible that unregistered securities purchased by the
Fund in reliance upon Rule 144A could have the effect of increasing the level of
the Fund's illiquidity to the extent that qualified institutional buyers become,
for a period, uninterested in purchasing these securities.
INTEREST RATE SWAP TRANSACTIONS. Each of the Bond Funds and the
International Bond Fund may enter into interest rate swap agreements for
purposes of attempting to obtain a particular desired return at a lower cost to
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<PAGE>
the Funds than if the Funds had invested directly in an instrument that yielded
that desired return. Interest rate swap transactions involve the exchange by a
Bond Fund or the International Bond Fund with another party of its commitments
to pay or receive interest, such as an exchange of fixed rate payments for
floating rate payments. Typically, the parties with which the Bond Funds and the
International Bond Fund will enter into interest rate swap transactions will be
brokers, dealers or other financial institutions known as "counterparties."
Certain Federal income tax requirements may, however, limit the Bond Funds' and
the International Bond Fund's ability to engage in certain interest rate
transactions. Gains from transaction in interest rate swaps distributed to
shareholders of the Bond Funds and the International Bond Fund will be taxable
as ordinary income or, in certain circumstances, as long-term capital gains to
the shareholders.
Each of the Bond Funds' and the International Bond Fund's obligations
(or rights) under a swap agreement will generally be equal only to the net
amount to be paid or received under the agreement based on the relative values
of the positions held by each party to the agreement (the "net amount"). Each of
the Bond Funds' and the International Bond Fund's obligations under a swap
agreement will be accrued daily (offset against any amounts owed to the Fund).
Accrued but unpaid net amounts owed to a swap counterparty will be covered by
earmarking cash, U.S. Government securities or other high-grade liquid
securities on the books of the Fund or the Fund's sub-custodian, to avoid any
potential leveraging of a Fund's portfolio.
The Bond Funds and the International Bond Fund will not enter into any
interest rate swap transaction unless the credit quality of the unsecured senior
debt or the claims-paying ability of the other party to the transaction is rated
in one of the highest four rating categories by at least one
nationally-recognized statistical rating organization ("NRSRO") or is believed
by the Advisor to be equivalent to that rating. If the other party to a
transaction defaults, the Bond Funds and the International Bond Fund will have
contractual remedies pursuant to the agreements related to the transactions.
The use of interest rate swaps is a highly specialized activity that
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If the Advisor is incorrect in its
forecasts of market values, interest rates and other applicable factors, the
investment performance of each of the Bond Funds and the International Bond Fund
would be lower than it would have been if interest rate swaps were not used. The
swaps market has grown substantially in recent years with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. As a result, the swaps market has
become relatively liquid in comparison with other similar instruments traded in
the interbank market. The swaps market is a relatively new market and is largely
unregulated. It is possible that developments in the swaps market, including
potential government regulation, could adversely affect the Bond Funds' and the
International Bond Fund's ability to terminate existing swap agreements or to
realize amounts to be received under such agreements.
INVESTMENT COMPANY SECURITIES. The Funds (other than the Short Term
Treasury Fund) may invest in securities issued by other investment companies. As
a shareholder of another investment company, a Fund would bear its pro rata
portion of the other investment company's expenses, including advisory fees.
These expenses would be in addition to the expenses each Fund bears directly in
connection with its own operations. Each Fund currently intends to limit its
investments in securities issued by other investment companies so that, as
determined immediately after a purchase of such securities is made: (i) not more
than 5% of the value of the Fund's total assets will be invested in the
securities of any one investment company; (ii) not more than 10% of the value of
its total assets will be invested in the aggregate in securities of investment
companies as a group; and (iii) not more than 3% of the outstanding voting stock
of any one investment company will be owned by the Fund.
LENDING OF PORTFOLIO SECURITIES. To enhance the return on its
portfolio, each of the Funds may lend securities in its portfolio (subject to a
limit of 25% of each Fund's, other than the Money Market Fund's, total assets;
and 33 1/3% of the Money Market Fund's total assets) to securities firms and
financial institutions, provided that each loan is secured continuously by
collateral in the form of cash, high quality money market instruments or
short-term U.S. Government securities adjusted daily to have a market value at
least equal to the current market value of the securities loaned. These loans
are terminable at any time, and the Funds will receive any interest or dividends
paid on the loaned securities. In addition, it is anticipated that a Fund may
share with the borrower some
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of the income received on the collateral for the loan or the Fund will be paid a
premium for the loan. The risk in lending portfolio securities, as with other
extensions of credit, consists of possible delay in recovery of the securities
or possible loss of rights in the collateral should the borrower fail
financially. In determining whether the Funds will lend securities, the Advisor
(Sub-Advisor with respect to the Framlington Funds) will consider all relevant
facts and circumstances. The Funds will only enter into loan arrangements with
broker-dealers, banks or other institutions which the Advisor (Sub-Advisor with
respect to the Framlington Funds) has determined are creditworthy under
guidelines established by the Boards of Directors/Trustees.
LOWER-RATED DEBT SECURITIES. It is expected that each Fund (other than
the Money Market Funds, Index 500 Fund and 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 Rating Service, a division of McGraw-Hill Companies,
Inc. ("S&P"), or Moody's Investors Service, Inc. ("Moody's"), or in comparable
unrated securities. 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 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 Funds may
incur additional expenses to the extent that they are required to seek recovery
upon a default in the payment of principal or interest on their portfolio
holdings. The existence of limited markets for lower-rated debt and comparable
unrated securities may diminish each of the Fund's ability to (a) obtain
accurate market quotations for purposes of valuing such securities and
calculating its net asset value and (b) sell the securities at fair value either
to meet redemption requests or to respond to changes in the economy or in
financial markets.
Lower-rated debt securities and comparable unrated securities may have
call or buy-back features that permit their issuers to call or repurchase the
securities from their holders. If an issuer exercises these rights during
periods of declining interest rates, the Funds may have to replace the security
with a lower yielding security, thus resulting in a decreased return to the
Funds. A description of applicable credit ratings is set forth in Appendix A
hereto.
MONEY MARKET INSTRUMENTS. As described in their Prospectuses, the
Equity Funds, the Balanced Fund, the Bond Funds, the International Bond Fund,
the Tax-Free Bond Funds, and the Money Market Funds may invest from time to time
in "money market instruments," a term that includes, among other things, bank
obligations, commercial paper, variable amount master demand notes and corporate
bonds with remaining maturities of 397 days or less.
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Bank obligations include bankers' acceptances, negotiable certificates
of deposit and non-negotiable time deposits, including U.S. dollar-denominated
instruments issued or supported by the credit of U.S. or foreign banks or
savings institutions. Although the Funds will invest in obligations of foreign
banks or foreign branches of U.S. banks only where the Advisor (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 in commercial paper will consist of issues rated
at the time A-1 and/or P-1 by S&P or Moody's. In addition, the Funds may acquire
unrated commercial paper and corporate bonds that are determined by the Advisor
(Sub-Advisor with respect to the Framlington Funds) at the time of purchase to
be of comparable quality to rated instruments that may be acquired by such Fund
as previously described.
The Funds may also purchase variable amount master demand notes which
are unsecured instruments that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate. Although the notes are
not normally traded and there may be no secondary market in the notes, a Fund
may demand payment of the principal of the instrument at any time. The notes are
not typically rated by credit rating agencies, but issuers of variable amount
master demand notes must satisfy the same criteria as set forth above for
issuers of commercial paper. If an issuer of a variable amount master demand
note defaulted on its payment obligation, a Fund might be unable to dispose of
the note because of the absence of a secondary market and might, for this or
other reasons, suffer a loss to the extent of the default. The Funds invest in
variable amount master notes only when the Advisor deems the investment to
involve minimal credit risk.
MORTGAGE-RELATED SECURITIES. There are a number of important
differences Among the agencies and instrumentalities of the U.S. Government that
issue mortgage-related securities and among the securities that they issue.
Mortgage-related securities guaranteed by the Government National Mortgage
Association ("GNMA") include GNMA Mortgage Pass-Through Certificates (also known
as "Ginnie Maes") which are guaranteed as to the timely payment of principal and
interest by GNMA and such guarantee is backed by the full faith and credit of
the United States. GNMA is a wholly-owned U.S. Government corporation within the
Department of Housing and Urban Development. GNMA certificates also are
supported by the authority of GNMA to borrow funds from the U.S. Treasury to
make payments under its guarantee. Mortgage-related securities issued by the
Federal National Mortgage Association ("FNMA") include FNMA Guaranteed Mortgage
Pass-Through Certificates (also known as "Fannie Maes") which are solely the
obligations of the FNMA and are not backed by or entitled to the full faith and
credit of the United States, but are supported by the right of the issuer to
borrow from the Treasury. FNMA is a government-sponsored organization owned
entirely by private stockholders. Fannie Maes are guaranteed as to timely
payment of the principal and interest by FNMA. Mortgage-related securities
issued by the Federal Home Loan Mortgage Corporation ("FHLMC") include FHLMC
Mortgage Participation Certificates (also known as "Freddie Macs" or "PCs").
FHLMC is a corporate instrumentality of the United States, created pursuant to
an Act of Congress, which is owned entirely by Federal Home Loan Banks. Freddie
Macs are not guaranteed by the United States or by any Federal Home Loan Banks
and do not constitute a debt or obligation of the United States or of any
Federal Home Loan Bank. Freddie Macs entitle the holder to timely payment of
interest, which is guaranteed by the FHLMC. FHLMC guarantees either ultimate
collection or timely payment of all principal payments on the underlying
mortgage loans. When FHLMC does not guarantee timely payment of principal, FHLMC
may remit the amount due on account of its guarantee of ultimate payment of
principal at any time after default on an underlying mortgage, but in no event
later than one year after it becomes payable.
MUNICIPAL OBLIGATIONS. Opinions relating to the validity of municipal
obligations and to the exemption of interest thereon from regular Federal income
tax are rendered by bond counsel or counsel to the respective issuers at the
time of issuance. Neither the Trust nor the Advisor will review the proceedings
relating to the issuance of municipal obligations or the bases for such
opinions.
An issuer's obligations under its municipal obligations are subject to
the provisions of bankruptcy, insolvency and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code, and
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laws, if any, which may be enacted by Federal or state legislatures extending
the time for payment of principal or interest, or both, or imposing other
constraints upon enforcement of such obligations or upon the ability of
municipalities to levy taxes. The power or ability of an issuer to meet its
obligations for the payment of interest on and principal of its municipal
obligations may be materially adversely affected by litigation or other
conditions.
From time to time proposals have been introduced before Congress for
the purpose of restricting or eliminating the Federal income tax exemption for
interest on municipal obligations. For example, under the Tax Reform Act of 1986
interest on certain private activity bonds must be included in an investor's
Federal alternative minimum taxable income, and corporate investors must include
all tax-exempt interest in their Federal alternative minimum taxable income. The
Trust cannot predict what legislation, if any, may be proposed in Congress in
the future as regards the Federal income tax status of interest on municipal
obligations in general, or which proposals, if any, might be enacted. Such
proposals, if enacted, might materially adversely affect the availability of
municipal obligations for investment by the Tax-Free Bond Funds and the Tax-Free
Money Market Fund and the liquidity and value of such Funds. In such an event
the Board of Trustees would reevaluate the Fund's investment objective and
policies and consider changes in its structure or possible dissolution.
The Cash Investment Fund and the Money Market Fund each may, when
deemed appropriate by the Advisor in light of the Fund's investment objective,
invest in high quality municipal obligations issued by state and local
governmental issuers, the interest on which may be taxable or tax-exempt for
Federal income tax purposes, provided that such obligations carry yields that
are competitive with those of other types of money market instruments of
comparable quality. The Cash Investment Fund and the Money Market Fund each do
not expect to invest more than 5% of its net assets in such municipal
obligations during the current fiscal year.
NON-DOMESTIC BANK OBLIGATIONS. Non-domestic bank obligations include
Eurodollar Certificates of Deposit ("ECDs"), which are U.S. dollar-denominated
certificates of deposit issued by offices of foreign and domestic banks located
outside the United States; Eurodollar Time Deposits ("ETDs"), which are U.S.
dollar-denominated deposits in a foreign branch of a U.S. bank or a foreign
bank; Canadian Time Deposits ("CTDs"), which are essentially the same as ETDs
except they are issued by Canadian offices of major Canadian banks; Schedule Bs
which are obligations issued by Canadian branches of foreign or domestic banks;
Yankee Certificates of Deposit ("Yankee CDs"), which are U.S. dollar-denominated
certificates of deposit issued by a U.S. branch of a foreign bank and held in
the United States; and Yankee Bankers' Acceptances ("Yankee BAs"), which are
U.S. dollar denominated bankers' acceptances issued by a U.S. branch of a
foreign bank and held in the United States.
OPTIONS. The Equity Funds, Balanced Fund, Bond Funds, International
Bond Fund and Tax-Free Bond Funds (other than Tax-Free Intermediate Bond Fund)
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 wishes 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
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purchase plus transaction costs may be greater than the premium received upon
the original option, in which event each Fund will have incurred a loss in the
transaction. There is no guarantee that either a closing purchase or a closing
sale transaction can be effected.
Effecting a closing transaction in the case of a written call option
will permit the Funds to write another call option on the underlying security
with either a different exercise price or expiration date or both, or in the
case of a written put option, will permit the Funds to write another put option
to the extent that the exercise price thereof is secured by deposited cash or
short-term securities. Also, effecting a closing transaction will permit the
cash or proceeds from the concurrent sale of any securities subject to the
option to be used for other Fund investments. If a Fund desires to sell a
particular security from its portfolio on which it has written a call option, it
will effect a closing transaction prior to or concurrent with the sale of the
security.
The Equity Funds, Balanced Fund, Bond Funds, Tax-Free Bond Funds (other
than the Tax-Free Intermediate Bond Fund) and International Bond Fund may write
options in connection with buy-and-write transactions; that is, the Funds may
purchase a security and then write a call option against that security. The
exercise price of the call the Funds determine to write will depend upon the
expected price movement of the underlying security. The exercise price of a call
option may be below ("in-the-money"), equal to ("at-the-money") or above
("out-of-the-money") the current value of the underlying security at the time
the option is written. Buy-and-write transactions using in-the-money call
options may be used when it is expected that the price of the underlying
security will remain flat or decline moderately during the option period.
Buy-and-write transactions using out-of-the-money call options may be used when
it is expected that the premiums received from writing the call option plus the
appreciation in the market price of the underlying security up to the exercise
price will be greater than the appreciation in the price of the underlying
security alone. If the call options are exercised in such transactions, the
maximum gain to the relevant Fund will be the premium received by it for writing
the option, adjusted upwards or downwards by the difference between the Fund's
purchase price of the security and the exercise price. If the options are not
exercised and the price of the underlying security declines, the amount of such
decline will be offset in part, or entirely, by the premium received.
In the case of a call option on a security, the option is "covered" if
a Fund owns the security underlying the call or has an absolute and immediate
right to acquire that security without additional cash consideration (or, if
additional cash consideration is required, cash or liquid securities in such
amount as are earmarked on the books of the Fund or the Fund's sub-custodian)
upon conversion or exchange of other securities held by it. For a call option on
an index, the option is covered if a Fund maintains with its custodian cash or
liquid securities equal to the contract value. A call option is also covered if
a Fund holds a call on the same security or index as the call written where the
exercise price of the call held is (i) equal to or less than the exercise price
of the call written, or (ii) greater than the exercise price of the call written
provided the difference in cash or liquid securities is earmarked on the books
of the Fund or the Fund's sub-custodian. Each of the 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. Each of the Funds will write put options only if
they are "secured" by cash or liquid securities earmarked on the books of the
Fund or the Fund's sub-custodian in an amount not less than the exercise price
of the option at all times during the option period.
The writing of covered put options is similar in terms of risk/return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and the relevant Fund's gain will be limited to the
premium received. If the market price of the underlying security declines or
otherwise is below the exercise price, the Fund may elect to close the position
or take delivery of the security at the exercise price and the Fund's return
will be the premium received from the put option minus the amount by which the
market price of the security is below the exercise price.
Each of the Funds may purchase put options to hedge against a decline
in the value of its portfolio. By using put options in this way, each 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 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
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the Funds upon exercise of the option, and, unless the price of the underlying
security rises sufficiently, the option may expire worthless to the Fund.
When a Fund purchases an option, the premium paid by it is recorded as
an asset of the Fund. When the Fund writes an option, an amount equal to the net
premium (the premium less the commission) received by the Fund is included in
the liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of this asset or deferred credit will be
subsequently marked-to-market to reflect the current value of the option
purchased or written. The current value of the traded option is the last sale
price or, in the absence of a sale, the average of the closing bid and asked
prices. If an option purchased by the Fund expires unexercised the Fund realizes
a loss equal to the premium paid. If the Fund enters into a closing sale
transaction on an option purchased by it, the Fund will realize a gain if the
premium received by the Fund on the closing transaction is more than the premium
paid to purchase the option, or a loss if it is less. If an option written by
the Fund expires on the stipulated expiration date or if the Fund enters into a
closing purchase transaction, it will realize a gain (or loss if the cost of a
closing purchase transaction exceeds the net premium received when the option is
sold) and the deferred credit related to such option will be eliminated. If an
option written by the Fund is exercised, the proceeds of the sale will be
increased by the net premium originally received and the Fund will realize a
gain or loss.
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 earmarked securities (in the case of a secured put
option) until the option expires or the optioned security is delivered upon
exercise with the result that the writer in such circumstances will be subject
to the risk of market decline or appreciation in the security during such
period.
There is no assurance that a Fund will be able to close an unlisted
option position. Furthermore, unlisted options are not subject to the
protections afforded purchasers of listed options by the Options Clearing
Corporation, which performs the obligations of its members who fail to do so in
connection with the purchase or sale of options.
In addition, a liquid secondary market for particular options, whether
traded over-the-counter or on a national securities exchange ("Exchange") may be
absent for reasons which include the following: there may be insufficient
trading interest in certain options; restrictions may be imposed by an Exchange
on opening transactions or closing transactions or both; trading halts,
suspensions or other restrictions may be imposed with respect to particular
classes or series of options or underlying securities; unusual or unforeseen
circumstances may interrupt normal operations on an Exchange; the facilities of
an Exchange or the Options Clearing Corporation may not at all times be adequate
to handle current trading value; or one or more Exchanges could, for economic or
other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that Exchange (or in that class or series of options)
would cease to exist, although outstanding options that had been issued by the
Options Clearing Corporation as a result of trades on that Exchange would
continue to be exercisable in accordance with their terms.
Currency transactions, including options on currencies and currency
futures, are subject to risks different from those of other portfolio
transactions. Because currency control is of great importance to the issuing
governments and influences economic planning and policy, purchases and sales of
currency and related instruments can be negatively affected by government
exchange controls, blockages, and manipulations or exchange restrictions imposed
by governments. These can result in losses to the Fund if it is unable to
deliver or receive currency or funds in settlement of obligations and could also
cause hedges it has entered into to be rendered useless, resulting in full
currency exposure as well as the incurring of transaction costs. Buyers and
sellers of currency futures are subject to the same risks that apply to the use
of futures generally. Further, settlement of a currency futures contract for the
purchase of most currencies must occur at a bank based in the issuing nation.
Trading options on currency futures is relatively new, and the ability to
establish and close out positions on such options is subject to the maintenance
of a liquid market which may not always be available. Currency exchange rates
may fluctuate based on factors extrinsic to that country's economy.
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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, the appeal of properties
to tenants and changes in interest rates.
In addition to these risks, Equity REITs may be affected by changes in
the value of the underlying property owned by the trusts, while Mortgage REITs
may be affected by the quality of any credit extended. Further, Equity and
Mortgage REITs are dependent upon management skills and generally may not be
diversified. Equity and Mortgage REITs are also subject to heavy cash flow
dependency, defaults by borrowers and self-liquidation. In addition, Equity and
Mortgage REITs could possibly fail to qualify for the beneficial tax treatment
available to real estate investment trusts under the Internal Revenue Code of
1986, as amended (the "Code"), or to maintain their exemptions from registration
under the 1940 Act. The above factors may also adversely affect a borrower's or
a lessee's ability to meet its obligations to the REIT. In the event of a
default by a borrower or lessee, the REIT may experience delays in enforcing its
rights as a mortgagee or lessor and may incur substantial costs associated with
protecting investments.
REPURCHASE AGREEMENTS. The Funds may agree to purchase securities from
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
Short Term Treasury Fund will only invest in repurchase agreements fully
collateralized by U.S. Treasury securities. 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 earmarked on the books of the Fund or the
Fund's sub-custodian 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 or less.
The repurchase price under repurchase agreements 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 under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS. Each Fund (except the Tax-Free Money
Market Fund and Tax-Free Bond Funds) may borrow funds for temporary or emergency
purposes by selling portfolio securities to financial
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institutions such as banks and broker/dealers and agreeing to repurchase them at
a mutually specified date and price ("reverse repurchase agreements"). Reverse
repurchase agreements involve the risk that the market value of the securities
sold by a Fund may decline below the repurchase price. A Fund will pay interest
on amounts obtained pursuant to a reverse repurchase agreement. While reverse
repurchase agreements are outstanding, a Fund will maintain cash, U.S.
Government securities or other liquid high-grade securities earmarked on the
books of the Fund or the Fund's sub-custodian in an amount at least equal to the
market value of the securities, plus accrued interest, subject to the agreement.
RIGHTS AND WARRANTS. As stated in their Prospectuses, the Equity Funds
and the Balanced Fund may purchase warrants, which are privileges issued by
corporations enabling the owners to subscribe to and purchase a specified number
of shares of the corporation at a specified price during a specified period of
time. Subscription rights normally have a short life span to expiration. The
purchase of warrants involves the risk that a Fund could lose the purchase value
of a warrant if the right to subscribe to additional shares is not exercised
prior to the warrant's expiration. Also, the purchase of warrants involves the
risk that the effective price paid for the warrant added to the subscription
price of the related security may exceed the value of the subscribed security's
market price such as when there is no movement in the level of the underlying
security.
SHORT SALES. The Global Financial Services Fund may make short sales of
securities. A short sale is a transaction in which the Fund sells a security it
does not own in anticipation that the market price of that security will
decline. When the Fund makes a short sale, 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. The Fund may also sell securities that it owns or has the right to acquire
at no additional cost but does not intend to deliver to the buyer, a practice
known as selling short "against-the-box." The Fund may have to pay a fee to
borrow particular securities and is often obligated to pay over any payments
received on such borrowed securities. The Fund's obligation to replace the
borrowed security will be secured by collateral deposited with the
broker-dealers, usually cash, U.S. Government securities or other highly liquid
securities similar to those borrowed. The Fund will also be required to deposit
similar collateral with its custodian or sub-custodian to the extent necessary
so that the value of both collateral deposits in the aggregate is at all times
equal to as least 100% of the current market value of the security sold short.
Depending on arrangements made with the broker-dealer from which it borrowed the
security regarding payment over any received by the Fund on such security, the
Fund may not received any payments (including interest) on its collateral
deposited with such broker-dealer. The Fund will incur transaction costs,
including interest expenses, in connection with opening, maintaining, and
closing short sales.
If the price of the security sold short increases between the time of
the short sale and the time the Fund replaces the borrowed security, the Fund
will incur a loss; conversely, if the price declines, the Fund will realize a
capital gain. Any gain is limited to the price at which it sold the security
short; its potential loss is theoretically unlimited.
STAND-BY COMMITMENTS. The Balanced Fund, the Cash Investment Fund, the
Money Market Fund, the Tax-Free Bond Funds and the Tax-Free Money Market Fund
may each enter into stand-by commitments with respect to municipal obligations
held by it. Under a stand-by commitment, a dealer agrees to purchase at the
Fund's option a specified municipal obligation at its amortized cost value to
the Fund plus accrued interest, if any. Stand-by commitments may be exercisable
by a Fund at any time before the maturity of the underlying municipal
obligations and may be sold, transferred or assigned only with the instruments
involved.
The Trust expects that stand-by commitments will generally be available
without the payment of any direct or indirect consideration. However, if
necessary or advisable, a Fund may pay for a stand-by commitment either
separately in cash or by paying a higher price for municipal obligations which
are acquired subject to the commitment (thus reducing the yield to maturity
otherwise available for the same securities). The total amount paid in either
manner for outstanding stand-by commitments held by a Fund will not exceed 1/2
of 1% of the value of such Fund's total assets calculated immediately after each
stand-by commitment is acquired.
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The Balanced Fund, Cash Investment Fund, Money Market Fund, Tax-Free
Bond Funds and the Tax-Free Money Market Fund intend to enter into stand-by
commitments only with dealers, banks and broker/dealers which, in the Advisor's
opinion, present minimal credit risks. The Tax-Free Bond Funds and the Tax-Free
Money Market Fund will acquire stand-by commitments solely to facilitate
portfolio liquidity and do not intend to exercise their rights thereunder for
trading purposes. The acquisition of a stand-by commitment will not affect the
valuation of the underlying municipal obligation. The actual stand-by commitment
will be valued at zero in determining net asset value. Accordingly, where a Fund
pays directly or indirectly for a stand-by commitment, its cost will be
reflected as an unrealized loss for the period during which the commitment is
held by such Fund and will be reflected in realized gain or loss when the
commitment is exercised or expires.
STOCK INDEX FUTURES, OPTIONS ON STOCK AND BOND INDICES AND OPTIONS ON
STOCK AND BOND INDEX FUTURES CONTRACTS. The Equity Funds, the Balanced Fund, the
Bond Funds and the Tax-Free Bond Funds (other than the Tax-Free Intermediate
Bond Fund) may purchase and sell stock index futures, options on stock and bond
indices and options on stock index futures contracts as a hedge against
movements in the equity and bond markets. The Tax-Free Intermediate Bond Fund
may purchase and sell bond index futures contracts. 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 futures contract or index option resulting from the
increase in the index. If, on the other hand, the Advisor or Sub-Advisor, as the
case may be, expects general stock or bond market prices to decline, it might
sell a futures contract, or purchase a put option, on the index. If that index
does in fact decline, the value of some or all of the securities in the Funds'
portfolio may also be expected to decline, but that decrease would be offset in
part by the increase in the value of the Fund's position in such futures
contract or put option.
The Equity Funds, the Balanced Fund, the Bond Funds and the Tax-Free
Bond Funds (other than Tax-Free Intermediate Bond Fund) may purchase and write
call and put options on stock index futures contracts and each such Fund and the
International Bond Fund may purchase and write call and put options on bond
index futures contracts. Each such Fund may use such options on futures
contracts in connection with its hedging strategies in lieu of purchasing and
selling the underlying futures or purchasing and writing options directly on the
underlying securities or indices. For example, such Funds may purchase put
options or write call options on stock and bond index futures (only bond index
futures in the case of the International Bond Fund), rather than selling futures
contracts, in anticipation of a decline in general stock or bond market prices
or purchase call options or write put options on stock or bond index futures,
rather than purchasing such futures, to hedge against possible increases in the
price of securities which such Funds intend to purchase.
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In connection with transactions in stock or bond index futures, stock
or bond index options and options on stock or bond index futures, such Funds
will be required to deposit as "initial margin" an amount of cash and short-term
U.S. Government securities equal to between 5% to 8% of the contract amount.
Thereafter, subsequent payments (referred to as "variation margin") are made to
and from the broker to reflect changes in the value of the option or futures
contract. No such Fund may at any time commit more than 5% of its total assets
to initial margin deposits on futures contracts, index options and options on
futures contracts.
STRIPPED SECURITIES. Certain 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, the Trust and Framlington are 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 on
Treasury securities through the Federal Reserve book-entry record-keeping
system. The Federal Reserve program as established by the Treasury Department is
known as "STRIPS" or "Separate Trading of Registered Interest and Principal of
Securities." Under the STRIPS program, a Fund is able to have its beneficial
ownership of zero coupon securities recorded directly in the book-entry
record-keeping system in lieu of having to hold certificates or other evidences
of ownership of the underlying U.S. Treasury securities.
In addition, the Bond Fund, Intermediate Bond Fund, International Bond
Fund and U.S. Government Income Fund may invest in stripped mortgage-backed
securities ("SMBS"), which represent beneficial ownership interests in the
principal distributions and/or the interest distributions on mortgage assets.
SMBS are usually structured with two classes that receive different proportions
of the interest and principal distributions on a pool of mortgage assets. One
type of SMBS will have one class receiving some of the interest and most of the
principal from the mortgage assets, while the other class will receive most of
the interest and the remainder of the principal. In the most common case, one
class of SMBS will receive all of the interest (the interest-only or "IO"
class), while the other class will receive all of the principal (the
principal-only or "PO" class). SMBS may be issued by FNMA or FHLMC.
The original principal amount, if any, of each SMBS class represents
the amount payable to the holder thereof over the life of such SMBS class from
principal distributions of the underlying mortgage assets, which will be zero in
the case of an IO class. Interest distributions allocable to a class of SMBS, if
any, consist of interest at a specified rate on its principal amount, if any, or
its notional principal amount in the case of an IO class. The notional principal
amount is used solely for purposes of the determination of interest
distributions and certain other rights of holders of such IO class and does not
represent an interest in principal distributions of the mortgage assets.
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Yields on SMBS will be extremely sensitive to the prepayment experience
on the underlying mortgage loans, and there are other associated risks. For IO
classes of SMBS and SMBS that were purchased at prices exceeding their principal
amounts there is a risk that a Fund may not fully recover its initial
investment.
The determination of whether a particular government-issued IO or PO
backed by fixed-rate mortgages is liquid may be made under guidelines and
standards established by the Boards 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 a Fund's
net asset value per share.
SUPRANATIONAL BANK OBLIGATIONS. Supranational banks are international
banking institutions designed or supported by national governments to promote
economic reconstruction, development or trade between nations (e.g., The World
Bank). Obligations of supranational banks may be supported by appropriated but
unpaid commitments of their member countries and there is no assurance these
commitments will be undertaken or met in the future.
U.S. GOVERNMENT OBLIGATIONS. The Funds may purchase obligations issued
or guaranteed by the U.S. Government and, except in the case of the U.S.
Treasury Money Market Fund, U.S. Government agencies and instrumentalities.
Obligations of certain agencies and instrumentalities of the U.S. Government,
such as those of the GNMA, are supported by the full faith and credit of the
U.S. Treasury. Others, such as those of the Export-Import Bank of the United
States, are supported by the right of the issuer to borrow from the U.S.
Treasury; and still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the agency or instrumentality
issuing the obligation. No assurance can be given that the U.S. Government would
provide financial support to U.S. government-sponsored instrumentalities if it
is not obligated to do so by law. Examples of the types of U.S. Government
obligations that may be acquired by the Funds include U.S. Treasury Bills,
Treasury Notes and Treasury Bonds and the obligations of Federal Home Loan
Banks, Federal Farm Credit Banks, Federal Land Banks, the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, FNMA, Government National Mortgage
Association, General Services Administration, Student Loan Marketing
Association, Central Bank for Cooperatives, FHLMC, Federal Intermediate Credit
Banks and Maritime Administration.
VARIABLE AND FLOATING RATE INSTRUMENTS. Debt instruments may be
structured to have variable or floating interest rates. Variable and floating
rate obligations purchased by a Fund may have stated maturities in excess of a
Fund's maturity limitation if the Fund can demand payment of the principal of
the instrument at least once during such period on not more than thirty days'
notice (this demand feature is not required if the instrument is guaranteed by
the U.S. Government or an agency thereof). These instruments may include
variable amount master demand notes that permit the indebtedness to vary in
addition to providing for periodic adjustments in the interest rates. The
Advisor or Sub-Advisor, as the case may be, will consider the earning power,
cash flows and other liquidity ratios of the issuers and guarantors of such
instruments and, if the instrument is subject to a demand feature, will
continuously monitor their financial ability to meet payment on demand. Where
necessary to ensure that a variable or floating rate instrument is equivalent to
the quality standards applicable to a Fund, the issuer's obligation to pay the
principal of the instrument will be backed by an unconditional bank letter or
line of credit, guarantee or commitment to lend. The Money Market Funds will
invest in variable and floating rate instruments only when the Advisor deems the
investment to involve minimal credit risk.
In determining average weighted portfolio maturity of the Funds, an
instrument will usually be deemed to have a maturity equal to the longer of the
period remaining until the next interest rate adjustment or the time the Fund
involved can recover payment of principal as specified in the instrument.
Variable rate U.S. Government obligations held by the Funds, however, will be
deemed to have maturities equal to the period remaining until the next interest
rate adjustment.
The absence of an active secondary market for certain variable and
floating rate notes could make it difficult to dispose of the instruments, and a
Fund could suffer a loss if the issuer defaulted or during periods that a Fund
is not entitled to exercise its demand rights.
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Variable and floating rate instruments held by a Fund will be subject
to the Fund's limitation on illiquid investments when the Fund may not demand
payment of the principal amount within seven days absent a reliable trading
market.
GUARANTEED INVESTMENT CONTRACTS. The Bond Funds, the International Bond
Fund, 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, a Fund makes cash contributions to a
deposit fund of the insurance company's general account. The insurance company
then credits to the Fund on a monthly basis interest which is based on an index
(in most cases this index is expected to be the Salomon Brothers CD Index), but
is guaranteed not to be less than a certain minimum rate. A GIC is normally a
general obligation of the issuing insurance company and not funded by a separate
account. The purchase price paid for a GIC becomes part of the general assets of
the insurance company, and the contract is paid from the company's general
assets. A Fund will only purchase GICs from insurance companies which, at the
time of purchase, have assets of $1 billion or more and meet quality and credit
standards established by the Advisor pursuant to guidelines approved by the
Boards 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 a Fund to purchase or sell particular
securities with payment and delivery to occur at a future date (perhaps one or
two months later). These transactions permit the Fund to lock-in a price or
yield on a security, regardless of future changes in interest rates.
When a Fund agrees to purchase securities on a when-issued or forward
commitment basis, the Fund will earmark cash or liquid portfolio securities
equal to the amount of the commitment. Normally, the Fund will earmark portfolio
securities to satisfy a purchase commitment, and in such a case the Fund may be
required subsequently to earmark additional assets in order to ensure that the
value of the account remains equal to the amount of the Fund's commitments. It
may be expected that the market value of the Fund's net assets will fluctuate to
a greater degree when it earmarks portfolio securities to cover such purchase
commitments than when it earmarks cash. Because a Fund's liquidity and ability
to manage its portfolio might be affected when it earmarks cash or portfolio
securities to cover such purchase commitments, the Advisor (Sub-Advisor with
respect to the Framlington Funds) expects that its commitments to purchase
when-issued securities and forward commitments will not exceed 25% of the value
of a Fund's total assets absent unusual market conditions.
A Fund will purchase securities on a when-issued or forward commitment
basis only with the intention of completing the transaction and actually
purchasing the securities. If deemed advisable as a matter of investment
strategy, however, a Fund may dispose of or renegotiate a commitment after it is
entered into, and may sell securities it has committed to purchase before those
securities are delivered to the Fund on the settlement date. In these cases the
Fund may realize a taxable capital gain or loss.
When a Fund engages in when-issued and forward commitment transactions,
it relies on the other party to consummate the trade. Failure of such party to
do so may result in the Fund's incurring a loss or missing an opportunity to
obtain a price considered to be advantageous.
The market value of the securities underlying a when-issued purchase or
a forward commitment to purchase securities, and any subsequent fluctuations in
their market value, are taken into account when determining the market value of
a Fund starting on the day the Fund agrees to purchase the securities. The Fund
does not earn interest on the securities it has committed to purchase until they
are paid for and delivered on the settlement date.
YIELDS AND RATINGS. The yields on certain obligations, including the
money market instruments in which each Fund may invest (such as commercial paper
and bank obligations), are dependent on a variety of factors, including general
money market conditions, conditions in the particular market for the obligation,
the financial condition of the issuer, the size of the offering, the maturity of
the obligation and the ratings of the issue. The ratings of S&P, Moody's, Duff &
Phelps Credit Rating Co., Thomson Bank Watch, Inc., and other nationally
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recognized statistical rating organizations ("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 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. Each of the Cash Investment
Fund, the Money Market Fund and the Tax-Free Money Market Fund intends to limit
investments in the securities of any single issuer (other than securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities) to not
more than 5% of the Fund's total assets at the time of purchase, provided that
the Fund may invest up to 25% of its total assets in the securities of any one
issuer rated in the highest rating category by an NRSRO for a period of up to
three business days. Unrated and certain single rated securities (other than
U.S. Government securities) may be purchased by the Money Market Funds, but are
subject to a determination by the Advisor, in accordance with procedures
established by the Boards of Trustees and Directors, that the unrated and single
rated securities are of comparable quality to the appropriate rated securities.
Other. Subsequent to its purchase by a Fund, a rated security may cease
to be rated or its rating may be reduced below the minimum rating required for
purchase by the Fund. The Boards of Trustees and Directors or the Advisor
(Sub-Advisor with respect to the Framlington Funds), pursuant to guidelines
established by the Boards, will consider such an event in determining whether
the Fund involved should continue to hold the security in accordance with the
interests of the Fund and applicable regulations of the SEC.
RISK FACTORS AND SPECIAL CONSIDERATIONS -- INDEX 500 FUND
Traditional methods of fund investment management typically involve
relatively frequent changes in a portfolio of securities on the basis of
economic, financial and market analysis. Index funds such as the Index 500 Fund
are not managed in this manner. Instead, with the aid of a computer program, the
Advisor purchases and sells securities for the Fund in an attempt to produce
investment results that substantially duplicate the performance of the common
stocks included in the S&P 500 Composite Stock Price Index ("S&P 500"), taking
into account redemptions, sales of additional Fund shares, and other adjustments
as described below.
The Fund does not expect to hold at any particular time all of the
stocks included in the S&P 500. The Advisor believes, however, that through the
application of capitalization weighing and sector balancing techniques it will
be able to construct and maintain the Fund's investment portfolio so that it
reasonably tracks the performance of the S&P 500. The Advisor will compare the
industry sector diversification of the stocks the Fund would acquire solely on
the basis of their weighted capitalizations with the industry sector
diversification of all issuers included in the S&P 500. This comparison is made
because the Advisor believes that, unless the Fund holds all stocks included in
the S&P 500, the selection of stocks for purchase by the Fund solely on the
basis of their weighted market capitalizations would tend to place heavier
concentration in certain industry sectors that are dominated by the larger
corporations, such as communications, automobile, oil and energy. As a result,
events disproportionately affecting such industries could affect the performance
of the Fund differently than the performance of the S&P 500. Conversely, if
smaller companies were not purchased by the Fund, the representation of
industries included in the S&P 500 that are not dominated by the most heavily
market-capitalized companies would be reduced or eliminated.
For these reasons, the Advisor will identify the sectors which are (or,
except for sector balancing, would be) most underrepresented in the Fund's
portfolio and will purchase balancing securities in these sectors until the
portfolio's sector weightings closely match those of the S&P 500. This process
continues until the portfolio is fully invested (except for cash holdings).
Redemptions of a substantial number of shares of the Fund could reduce
the number of issuers represented in the Fund's investment portfolio, which
could, in turn, adversely affect the accuracy with which the Fund tracks the
performance of the S&P 500.
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If an issuer drops in ranking, or is eliminated entirely from the S&P
500, the Advisor may be required to sell some or all of the common stock of such
issuer then held by the Fund. Sales of portfolio securities may be made at times
when, if the Advisor were not required to effect purchases and sales of
portfolio securities in accordance with the S&P 500, such securities might not
be sold. Such sales may result in lower prices for such securities than may have
been realized or in losses that may not have been incurred if the Advisor were
not required to effect the purchases and sales. The failure of an issuer to
declare or pay dividends, the institution against an issuer of potentially
materially adverse legal proceedings, the existence or threat of defaults
materially and adversely affecting an issuer's future declaration and payment of
dividends, or the existence of other materially adverse credit factors will not
necessarily be the basis for the disposition of portfolio securities, unless
such event causes the issuer to be eliminated entirely from the S&P 500.
However, although the Advisor does not intend to screen securities for
investment by the Fund by traditional methods of financial and market analysis,
the Advisor will monitor the Fund's investment with a view towards removing
stocks of companies which exhibit extreme financial distress or which may impair
for any reason the Fund's ability to achieve its investment objective.
The Fund will invest primarily in the common stocks that constitute the
S&P 500 in accordance with their relative capitalization and sector weightings
as described above. It is possible, however, that the Fund will from time to
time receive, as part of a "spin-off" or other corporate reorganization of an
issuer included in the S&P 500, securities that are themselves outside the S&P
500. Such securities will be disposed of by the Fund in due course consistent
with the Fund's investment objective.
In addition, the Index 500 Fund may invest in Standard & Poor's
Depository Receipts ("SPDRs"). SPDRs are securities that represent ownership in
the SPDR Trust, a long-term unit investment trust which is intended to provide
investment results that generally correspond to the price and yield performance
of the S&P 500. SPDR holders are paid a "Dividend Equivalent Amount" that
corresponds to the amount of cash dividends accruing to the securities in the
SPDR Trust, net of certain fees and expenses charged to the Trust. Because of
these fees and expenses, the dividend yield for SPDRs may be less than that of
the S&P 500. SPDRs are traded on the American Stock Exchange.
The Fund may also purchase put and call options on the S&P 500 and S&P
100 stock indices, which are traded on national securities exchanges. In
addition, the Fund may enter into transactions involving futures contracts (and
futures options) on these two stock indices and may purchase securities of other
investment companies that are structured to seek a similar correlation to the
S&P 500. These transactions are effected in an effort to have fuller exposure to
price movements in the S&P 500 pending investment of purchase orders or while
maintaining liquidity to meet potential shareholder redemptions. Transactions in
option and stock index futures contracts may be desirable to hedge against a
price movement in the S&P 500 at times when the Fund is not fully invested in
stocks that are included in the S&P 500. For example, by purchasing a futures
contract, the Fund may be able to reduce the potential that cash inflows will
disrupt its ability to track the S&P 500, since the futures contracts may serve
as a temporary substitute for stocks which may then be purchased in an orderly
fashion. Similarly, because futures contracts only require a small initial
margin deposit, the Fund may be able, as an effective matter, to be fully
invested in the S&P 500 while keeping a cash reserve to meet potential
redemptions. See Appendix B to this Statement of Additional Information.
RISK FACTORS AND SPECIAL CONSIDERATIONS -- MICHIGAN BOND FUND AND
TAX-FREE INTERMEDIATE BOND FUND
The information set forth below is derived in substantial part from the
official statements prepared in connection with the issuance of Michigan
municipal bonds and similar obligations and other sources that are generally
available to investors. The information is provided as general information
intended to give a recent historical description and is not intended to indicate
future or continuing trends in the financial or other positions of the State of
Michigan (the "State"). The Company has not independently verified this
information.
The State's Constitution limits the amount of total State revenues
raised from taxes and other sources. State revenues (excluding federal aid and
revenues for payment of principal and interest on general obligation
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bonds) in any fiscal year are limited to a specified percentage of State
personal income in the prior calendar year or average of the prior three
calendar years, whichever is greater. The percentage is based upon the ratio of
the 1978-79 fiscal year revenues to total 1977 State personal income. If any
fiscal year revenues exceed the revenue limitation by 1%, the entire amount
exceeding the limitation must be rebated in the following fiscal year's personal
income tax or single business tax. Annual excesses of less than 1% may be
transferred into the State's Budget Stabilization Fund. The State may raise
taxes in excess of the limit in emergency situations.
The State Constitution limits the purposes for which State general
obligation debt may be issued. Such debt is limited to short-term debt for State
operating purposes, short and long-term debt for the purpose of making loans to
school districts and long-term debt for voter approved purposes. The State's
Constitution also directs or restricts the use of certain revenues.
The State finances its operations through the State's General Fund and
special revenue funds. The General Fund receives revenues of the State that are
not specifically required to be included in the special revenue funds. General
Fund revenues are obtained approximately 55% from the payment of State taxes and
45% from federal and non-tax revenue sources. Tax revenues credited to the
General Fund include the personal income tax, the single business tax and
approximately 15% of the sales tax collections.
Expenditures are not permitted by the State Constitution to exceed
available revenues. The State Constitution requires that the Governor, with the
approval of the appropriating committees of the State House and Senate, reduce
expenditures whenever it appears that the actual revenues will be less than the
originally projected revenues upon which the budget was based.
In 1994, a ballot proposal ("Proposal A") to implement extensive
property tax and school finance reform measures was subject to voter approval
and in fact approved on March 15, 1994. Under Proposal A as approved, effective
May 1, 1994, the State sales and use tax increased from 4% to 6%, the State
income tax decreased from 4.6% to 4.4%, the cigarette tax increased from $.25 to
$.75 per pack, and an additional tax of 16% of the wholesale price is imposed on
certain other tobacco products. As of January 1, 1995, a 0.75% real estate
transfer tax also became effective. In 1994, a State education property tax of 6
mills was imposed on all real property and personal property currently subject
to the general property tax. In addition, all school boards can now, with voter
approval, levy up to the lesser of 18 mills or the number of mills levied in
1993 for school operating purposes, on non-homestead property. Proposal A
contained additional provisions regarding the ability of local school districts
to levy taxes as well as a limit on assessment increases for each parcel of
property, beginning in 1995 to the lesser of 5% or the rate of inflation. When
property is subsequently sold, its assessed value is adjusted equal to 50% of
true cash value. Under Proposal A, much of the additional revenue generated by
these taxes is dedicated to the State School Aid Fund.
Proposal A shifts significant portions of the cost of local school
operations from local school districts to the State and raises additional State
revenues to fund these additional State expenses. These additional revenues will
be included within the State's constitutional revenue limitations and may impact
the State's ability to raise additional revenues in the future.
The State is a party to various legal proceedings seeking damages or
injunctive or other relief. In addition to routine litigation, certain of these
proceedings could, if unfavorably resolved from the point of view of the State,
substantially affect State programs or finances. These lawsuits involve programs
generally in the areas of corrections, highway maintenance, social services, tax
collection, commerce and budgetary reductions to school districts and
governmental units and court funding.
The principal sectors of Michigan's diversified economy are
manufacturing of durable goods (including automobiles and components and office
equipment), tourism and agriculture. The health of the State's economy, and in
particular its durable goods manufacturing industry, is susceptible to a
long-term increase in the cost of energy and energy related products. As
reflected in historical employment figures, the State's economy has lessened its
dependence upon durable foods manufacturing. In 1960, employment in such
industry accounted for 33% of the State's work force. By 1996, this figure had
fallen to 15%. However, manufacturing (including auto-
22
<PAGE>
related manufacturing) continues to be an important part of the State's economy.
The particular industries are highly cyclical and in the period 1996-1997 are
expected to operate at somewhat less than full capacity, but at higher levels
than in the immediate prior years. This factor can usually adversely affect the
revenue streams of the State and its political subdivisions because it adversely
impacts tax sources, particularly sales, income taxes and single business taxes.
As of the date of this Statement of Additional Information, the State's
general obligation bonds are rated "A2" by Moody's and "AA" by Fitch. To the
extent that either the Michigan Bond Fund or the Tax-Free Intermediate Bond Fund
is comprised of revenue or general obligations of local governments or
authorities, rather than general obligations of the State of Michigan itself,
ratings on such Michigan obligations will be different from those given to the
State of Michigan and their value may be independently affected by economic
matters not directly impacting the State.
INVESTMENT LIMITATIONS
Each Fund is subject to the investment limitations enumerated in this
section which may be changed with respect to a particular Fund only by a vote of
the holders of a majority of such Fund's outstanding shares (as defined under
"Miscellaneous Shareholder Approvals").
No Fund of the Trust may:
1. Purchase securities of any one issuer (other than securities
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or certificates of deposit for any such
securities) if more than 5% of the value of the Fund's total
assets (taken at current value) would be invested in the
securities of such issuer, or more than 10% of the issuer's
outstanding voting securities would be owned by the Fund or the
Trust, except that (a) with respect to each Fund, other than the
Michigan Bond Fund and the Tax-Free Intermediate Bond Fund, up to
25% of the value of the Fund's total assets (taken at current
value) may be invested without regard to these limitations and
(b) with respect to the Michigan Bond Fund and the Tax-Free
Intermediate Bond Fund, up to 50% of the value of the Fund's
total assets may be invested without regard to these limitations
so long as no more than 25% of the value of the Fund's total
assets are invested in the securities of any one issuer. For
purposes of this limitation, a security is considered to be
issued by the entity (or entities) whose assets and revenues back
the security. A guarantee of a security is not deemed to be a
security issued by the guarantor when the value of all securities
issued and guaranteed by the guarantor, and owned by the Fund,
does not exceed 10% of the value of the Fund's total assets;
2. Borrow money or issue senior securities except that each Fund may
borrow from banks and enter into reverse repurchase agreements
for temporary purposes in amounts up to one-third of the value of
its total assets at the time of such borrowing; or mortgage,
pledge or hypothecate any assets, except in connection with any
such borrowing and then in amounts not in excess of one-third of
the value of the Fund's total assets at the time of such
borrowing. No Fund will purchase securities while its aggregate
borrowings (including reverse repurchase agreements and borrowing
from banks) in excess of 5% of its total assets are outstanding.
Securities held in escrow or earmarked on the books of the Fund
or the Fund's sub-custodian in connection with a Fund's
investment practices are not deemed to be pledged for purposes of
this limitation;
3. Purchase any securities which would cause 25% or more of the
value of the Fund's total assets at the time of purchase to be
invested in the securities of one or more issuers conducting
their principal business activities in the same industry,
provided that (a) there is no limitation with respect to (i)
instruments that are issued (as defined in investment limitation
1 above) or guaranteed by the United States, any state, territory
or possession of the United States, the District of Columbia or
any of their authorities, agencies, instrumentalities or
political subdivisions, (ii) with respect to the Money Market
Funds only, instruments issued by domestic branches of U.S. banks
and (iii) repurchase agreements secured by the instruments
described in clauses (i) and,
23
<PAGE>
with respect to the Money Market Funds, (ii); (b) wholly-owned
finance companies will be considered to be in the industries of
their parents if their activities are primarily related to
financing the activities of the parents; and (c) utilities will
be divided according to their services, for example, gas, gas
transmission, electric and gas, electric and telephone will each
be considered a separate industry;
4. Purchase or sell real estate, except that each Fund may purchase
securities of issuers which deal in real estate and may purchase
securities which are secured by interests in real estate;
5. Acquire any other investment company or investment company
security except in connection with a merger, consolidation,
reorganization or acquisition of assets or where otherwise
permitted by the 1940 Act;
6. Act as an underwriter of securities within the meaning of the
Securities Act of 1933, as amended, except to the extent that the
purchase of obligations directly from the issuer thereof, or the
disposition of securities, in accordance with the Fund's
investment objective, policies and limitations may be deemed to
be underwriting;
7. Write or sell put options, call options, straddles, spreads, or
any combination thereof except for transactions in options on
securities, securities indices, futures contracts, options on
futures contracts and transactions in securities on a when-issued
or forward commitment basis, and except that each Equity and Bond
Fund may enter into forward currency contracts in accordance with
its investment objectives and policies. Notwithstanding the
above, the Tax-Free Intermediate Bond Fund may not write or
purchase options, including puts, calls, straddles, spreads, or
any combination thereof;
8. Purchase securities of companies for the purpose of exercising
control;
9. Purchase securities on margin, make short sales of securities or
maintain a short position, except that (a) this investment
limitation shall not apply to a Fund's transactions in futures
contracts and related options, a Fund's sale of securities short
against the box or a Fund's transactions in securities on a
when-issued or forward commitment basis, and (b) a Fund may
obtain short-term credit as may be necessary for the clearance of
purchases and sales of portfolio securities;
10. Purchase or sell commodity contracts, or invest in oil, gas or
mineral exploration or development programs, except that each
Fund may, to the extent appropriate to its investment policies,
purchase publicly traded securities of companies engaging in
whole or in part in such activities, may enter into futures
contracts and related options, and may engage in transactions in
securities on a when-issued or forward commitment basis, and
except that each Equity and Bond Fund may enter into forward
currency contracts in accordance with its investment objectives
and policies; or
11. Make loans, except that each Fund may purchase and hold debt
instruments (whether such instruments are part of a public
offering or privately negotiated), may enter into repurchase
agreements and may lend portfolio securities in accordance with
its investment objective and policies.
In addition, the Tax-Free Intermediate Bond Fund may not:
1. Purchase or retain securities of any issuer if the officers or
Trustees of the Trust or its Advisor own beneficially more than
one-half of 1% of the securities of such issuer together own
beneficially more than 5% of such securities;
2. Invest more than 10% of its total assets in the securities of
issuers which together with any predecessors have a record of
less than three years continuous operation; or
24
<PAGE>
3. Participate on a joint or joint and several basis in any
securities trading account.
No Fund of Framlington may:
1. Purchase securities (except U.S. Government securities) if more
than 5% of its total assets will be invested in the securities of
any one issuer, except that up to 25% of the assets of the Fund
may be invested without regard to this 5% limitation;
2. Invest 25% or more of its total assets in securities issued by
one or more issuers conducting their principal business
activities in the same industry (except that the Healthcare Fund
will invest more than 25% of its total assets in securities of
issuers conducting their principal business activities in
healthcare industries and the Global Financial Services Fund will
invest more than 25% of its total assets in securities of issuers
conducting their principal business activities in the financial
services industry);
3. Borrow money or enter into reverse repurchase agreement except
that the Fund 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 for the
purpose of meeting redemption requests, in amounts (when
aggregated with amounts borrowed under clause (i)) not exceeding
33 1/3% of its total assets;
4. Pledge, mortgage or hypothecate its assets other than to secure
borrowings permitted by investment limitation 3 above (collateral
arrangements with respect to margin requirements for options and
futures transactions are not deemed to be pledges or
hypothecations for this purpose);
5. Make loans of securities to other persons in excess of 25% of the
Fund's total assets; provided the Fund 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 the
Fund may be deemed an underwriter under the Securities Act of
1933, as amended, in selling portfolio securities;
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;
8. Purchase securities on margin, or make short sales of securities
(except that the Global Financial Services Fund may make short
sales of securities), except for the use of short-term credit
necessary for the clearance of purchases and sales of portfolio
securities, but the Fund may make margin deposits in connection
with transactions in options, futures and options of futures;
9. Make investments for the purpose of exercising control or
management;
10. Invest in commodities or commodity futures contracts, provided
that this limitation shall not prohibit the purchase or sale by
the Fund of forward foreign currency exchange contracts,
financial futures contracts and options on financial futures
contracts, foreign currency futures contracts, and options on
securities, foreign currencies and securities indices, as
permitted by the Fund's Prospectus; or
11. Issue senior securities, except as permitted by the 1940 Act.
Additional investment restrictions adopted by each Fund of Framlington
which may be changed by the Board of Trustees, provide that each Fund
may not:
25
<PAGE>
1. Invest more than 15% of its net assets in illiquid securities;
2. Own more than 10% (taken at market value at the time of
purchase) of the outstanding voting securities of any single
issuer; or
3. Invest in other investment companies except as permitted under
the 1940 Act.
No Fund of the Company may:
1. Invest more than 25% of its total assets in any one industry
(securities issued or guaranteed by the United States
Government, its agencies or instrumentalities are not
considered to represent industries) (except that the Real
Estate Fund will invest more than 25% of its assets in
securities of issuers in the real estate industry);
2. (For each Fund except the International Bond Fund) with
respect to 75% of the Fund's assets, invest more than 5% of
the Fund's assets (taken at a market value at the time of
purchase) in the outstanding securities of any single issuer
or own more than 10% of the outstanding voting securities of
any one issuer, in each case other than securities issued or
guaranteed by the United States Government, its agencies or
instrumentalities;
3. (For each Fund except Short Term Treasury Fund) borrow money
or issue senior securities (as defined in the 1940 Act) except
that the Funds may borrow (i) for temporary purposes in
amounts not exceeding 5% of its total assets and (ii) to meet
redemption requests, in amounts (when aggregated with amounts
borrowed under clause (i)) not exceeding 33 1/3% of its total
assets;
4. Pledge, mortgage or hypothecate its assets other than to
secure borrowings permitted by investment limitation 3 above
(collateral arrangements with respect to margin requirements
for options and futures transactions are not deemed to be
pledges or hypothecations for this purpose);
5. Make loans of securities to other persons in excess of 25% of
a Fund's total assets and 33 1/3% of the Money Market Fund's
total assets; provided the Funds may invest without limitation
in short-term debt obligations (including repurchase
agreements) and publicly distributed debt obligations;
6. Underwrite securities of other issuers, except insofar as a
Fund may be deemed an underwriter under the Securities Act of
1933, as amended, in selling portfolio securities;
7. (For each Fund except the Real Estate Fund) purchase or sell
real estate or any interest therein, including interests in
real estate limited partnerships, except securities issued by
companies (including real estate investment trusts) that
invest in real estate or interests therein. The Real Estate
Fund may not buy or sell real estate; however, this
prohibition does not apply to the purchase or sale of (i)
securities which are secured by real estate, (ii) securities
representing interests in real estate, (iii) securities of
companies operating in the real estate industry including real
estate investment trusts, and (iv) the holding and sale of
real estate acquired as a result of the ownership of
securities;
8. Purchase securities on margin, or make short sales of
securities, except for the use of short-term credit necessary
for the clearance of purchases and sales of portfolio
securities, but the Funds (with the exception of the Money
Market Fund and Short Term Treasury Fund) may make margin
deposits in connection with transactions in options, futures
and options on futures;
9. Make investments for the purpose of exercising control or
management; or
26
<PAGE>
10. Invest in commodities or commodity futures contracts, provided
that this limitation shall not prohibit the purchase or sale
by the Growth Opportunities, Multi-Season, NetNet, Real
Estate, Value and International Bond Funds of forward foreign
currency exchange contracts, financial futures contracts and
options on financial futures contracts, and options on
securities and on securities, foreign currencies and on
securities indices, as permitted by each Fund's prospectus.
In addition, the Short Term Treasury Fund may not:
1. Borrow money or enter into reverse repurchase agreements
except that the Fund may (i) borrow money or enter into
reverse repurchase agreements for temporary purposes in
amounts exceeding 5% of its total assets and (ii) borrow money
for the purpose of meeting redemption requests, in amounts
(when aggregated with amounts borrowed under clause (i)) not
exceeding 33 1/3% of its total assets;
2. Pledge, mortgage or hypothecate its assets other than to
secure borrowings permitted by investment limitation 1 above;
or
3. Issue any senior securities (as such term is defined in
Section 18(f) of the 1940 Act) except to the extent the
activities permitted by other enumerated investment
limitations for the Company above may be deemed to give rise
to a senior security.
Additional investment restrictions adopted by each Fund of the Company,
which may be changed by the Board of Directors, provide that a Fund may not:
1. Invest more than 15% of its net assets (10% of net assets for
the Money Market Fund) (taken at market value at the time of
purchase) in securities which cannot be readily resold because
of legal or contractual restrictions and (in the case of
International Bond Fund and Short Term Treasury Fund only)
which are not otherwise marketable;
2. (For each Fund except the International Bond Fund and Short
Term Treasury Fund) own more than 10% (taken at market value
at the time of purchase) of the outstanding voting securities
of any single issuer;
3. (For each Fund except Short Term Treasury Fund) purchase or
sell interests in oil, gas or other mineral exploration or
development plans or leases); or
4. Invest in other investment companies except as permitted under
the 1940 Act.
In addition, the International Bond Fund may not with respect to 50% of
the Fund's assets, invest more than 5% of the Fund's assets (taken at a market
value at the time of purchase) in the outstanding securities of any single
issuer or own more than 10% of the outstanding voting securities of any one
issuer, in each case other than securities issued or guaranteed by the United
States Government, its agencies or instrumentalities, at the close of each
quarter of its taxable year.
If a percentage limitation is satisfied at the time of investment, a
later increase or decrease in such percentage resulting from a change in the
value of a Fund's investments will not constitute a violation of such
limitation, except that any borrowing by a Fund that exceeds the fundamental
investment limitations stated above must be reduced to meet such limitations
within the period required by the 1940 Act (currently three days). Otherwise, a
Fund may continue to hold a security even though it causes the Fund to exceed a
percentage limitation because of fluctuation in the value of the Fund's assets.
27
<PAGE>
TRUSTEES, DIRECTORS AND OFFICERS
The trustees, directors and executive officers of the Trust,
Framlington and the Company, and their business addresses and principal
occupations during the past five years, are:
<TABLE>
<CAPTION>
Positions with Trust, Company and Principal Occupation
Name, Address and Age Framlington During Past Five Years
- --------------------- ----------- ----------------------
<S> <C> <C>
Charles W. Elliott Chairman of the Board of Senior Advisor to the President -
1024 Essex Circle Trustees and Directors Western Michigan University since July
Kalamazoo, MI 49008 1995; Executive Vice President -
Age: 66 Administration & Chief Financial
Officer, Kellogg Company from January
1987 through June 1995; before that
Price Waterhouse. Board of Directors,
Steelcase Financial Corporation; and Board of Directors,
Enesco Group.
John Rakolta, Jr. Trustee/Director and Vice Chairman Chairman and Chief Executive Officer,
1876 Rathmor of the Boards of Trustees and Walbridge Aldinger Company
Bloomfield Hills, MI 48304 Directors (construction company).
Age: 51
Thomas B. Bender Trustee/Director Investment Advisor, Financial &
7 Wood Ridge Road Investment Management Group (since
Glen Arbor, MI 49636 April, 1991).
Age:65
David J. Brophy Trustee/Director Professor, University of Michigan;
1025 Martin Place Director, River Place Financial Corporation.
Ann Arbor, MI 48104
Age: 62
Dr. Joseph E. Champagne Trustee/Director Dean, University Center, Macomb
319 East Snell Road College since September 1997;
Rochester, MI 48306 Corporate and Executive Consultant
Age: 60 since September 1995; prior to that
Chancellor Lamar University from
September 1994 until September 1995;
before that Consultant to Management;
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; Chairman, Board of
Directors Ross Operating Valve of Troy, MI.
</TABLE>
28
<PAGE>
<TABLE>
<S> <C> <C>
Thomas D. Eckert Trustee/Director President and Chief Executive Officer,
10726 Falls Pointe Drive Capital Automotive REIT from November
Great Falls, VA 22066 1997 to present (real estate
Age: 51 investment trust specializing in
retail automotive properties); prior
to that President and COO, Mid-Atlantic
Group of Pulte Home Corporation
(developer of residential land and
construction of housing units) from 1983
until 1997.
Lee P. Munder* Trustee/Director and President Chairman of the Advisor since February
1029 N. Ocean Blvd. 1998; Chief Executive Officer of
Palm Beach, FL 33480 World Asset Management since January
Age: 53 1995; Chief Executive Officer of Old
MCM (predecessor of Advisor) since
1985; and Director, LPM Investment
Services, Inc. ("LPM").
Terry H. Gardner Vice President, Vice President and Chief Financial
480 Pierce Street Chief Financial Officer Officer of the Advisor, Vice President
Suite 300 and Treasurer and Chief Financial Officer of Old MCM
Birmingham, MI 48009 (February 1993 to present); Secretary
Age: 38 of LPM
Paul Tobias Vice President Chief Executive Officer of the Advisor
480 Pierce Street (since February 1998); Chief Operating
Suite 300 Officer of the Advisor (since April
Birmingham, MI 48009 1995); Executive Vice President (April
Age: 46 1995 to February 1998) and Executive
Vice President of Comercia, Inc.
Gerald Seizert Vice President Chief Executive Officer of the Advisor
480 Pierce Street (since February 1998); Chief
Suite 300 Investment Officer/Equities of the
Birmingham, MI 48009 Advisor (since April 1995); Executive
Age: 45 Vice President (April 1995 to February
1998); Managing Director (1991-1995),
Director (1992-1995) and Vice President
(1984-1991) of Loomis, Sayles and Company, L.P.
Elyse G. Essick Vice President Vice President and Director of
480 Pierce Street Marketing for the Advisor; Vice
Suite 300 President and Director of Client
Birmingham, MI 48009 Services of Old MCM (August 1988 to
Age: 40 December 1994).
</TABLE>
29
<PAGE>
<TABLE>
<S> <C> <C>
James C. Robinson Vice President Vice President and Chief Investment
480 Pierce Street Officer/Fixed Income for the Advisor;
Suite 300 Vice President and Director of Fixed
Birmingham, MI 48009 Income of Old MCM (1987-1994).
Age: 36
Leonard J. Barr Vice President Vice President and Director of Core
480 Pierce Street Equity Research of the Advisor;
Suite 300 Director and Senior Vice President of
Birmingham, MI 48009 Old MCM (since 1988); Director of LPM.
Age: 53
Ann F. Putallaz Vice President Vice President and Director of
480 Pierce Street Fiduciary Services of the Advisor
Suite 300 (since January 1995); Director of
Birmingham, MI 48009 Client and Marketing Services of
Age: 52 Woodbridge.
Lisa A. Rosen Secretary, Assistant Treasurer General Counsel of the Advisor (since
480 Pierce Street May, 1996); formerly, Counsel, First
Suite 300 Data Investor Services Group, Inc.;
Birmingham, MI 48009 Assistant Vice President and Counsel
Age: 31 with The Boston Company Advisors,
Inc.; Associate with Hutchins, Wheeler
& Dittmar.
Therese Hogan Assistant Secretary Director, State Regulation Department,
53 State Street First Data Investor Services Group
Boston, MA 02109 (June 1994-present); formerly Senior
Age: 36 Legal Assistant, Palmer & Dodge
(October 1993-June 1994); Blue Sky
Paralegal, Robinson & Cole (February
1984-October 1993).
</TABLE>
* Trustee/Director is an "Interested person" of the Trust, Framlington or
the Company as defined in the 1940 Act.
Trustees of the Trust and Framlington and Directors of the Company
receive an aggregate fee from the Trust, Framlington the Company and St. Clair
Funds, Inc. ("St. Clair") for service on those organizations' respective Boards,
comprised of an annual retainer fee of $30,000, and a fee of $2,500 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 Trust,
Framlington, the Company and St. Clair to their respective Trustees/Directors
for the year ended June 30, 1998.
30
<PAGE>
<TABLE>
<CAPTION>
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Aggregate John Rakolta, Thomas B. Bender, Dr. Joseph E. Champagne, Thomas D. Eckert,
Compensation Charles W. Jr., Trustee and Trustee and Trustee and
from a Fund Elliot, Chairman Vice Chairman Director Director Director
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
<S> <C> <C> <C> <C> <C>
Accelerating
Growth Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Balanced Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Index 500 Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Growth & Income
Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
International
Equity Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Small Company
Growth Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Bond Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Intermediate Bond
Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
U.S. Income Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Michigan Bond Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Tax-Free Bond Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Cash Investment
Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Tax-Free Money
Market Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
U.S. Treasury
Money Market Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Growth
Opportunities Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Micro-Cap Equity
Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Multi-Season
Growth Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
NetNet Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Real Estate
Equity Investment
Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Small-Cap Value
Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Value Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
International
Bond Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Short Term
Treasury Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Money Market Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Emerging Markets
Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Global Financial
Services Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
Healthcare Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
All-Season
Conservative Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
All-Season
Moderate Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
All-Season
Aggressive Fund
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
TOTAL
COMPENSATION FROM
THE FUND COMPLEX
- ------------------- ------------------- ------------------- ------------------- ------------------------ --------------------
</TABLE>
31
<PAGE>
No officer, director or employee of the Advisor, Sub-Advisor, Comerica
Incorporated ("Comerica"), the Sub-Custodian, the Distributor, the Administrator
or the Transfer Agent currently receives any compensation from the Trust,
Framlington or the Company. As of October __, 1998, the Trustees and officers of
the Trust, as a group, owned less than 1% of all classes of outstanding shares
of the Funds of the Trust, the Trustees and officers of Framlington, as a group,
owned less than 1% of all classes of outstanding shares of the Funds of
Framlington except the Healthcare Fund in which Trustees and officers, as a
group, owned ________% of Class _________. [Update]
Gerald Seizert, Paul Tobias and Terry H. Gardner are administrators of
a pension plan for employees of Munder Capital Management, which as of October
__, 1998, owned ____________ Class ___ shares [update].
As of October __, 1998, Munder Capital Management and affiliates of
Munder Capital Management, through common ownership, owned beneficially ________
Class ____ shares of ________. [Update]
SHAREHOLDER AND TRUSTEE LIABILITY. Under Massachusetts law,
shareholders of a business trust may, under certain circumstances, be held
personally liable as partners for the obligations of the trust. However, the
Trust's and Framlington's Declaration of Trust, as amended, each provide that
shareholders shall not be subject to any personal liability in connection with
the assets of the Trust or Framlington for the acts or obligations of the Trust
or Framlington, and that every note, bond, contract, order or other undertaking
made by the Trust or Framlington shall contain a provision to the effect that
the shareholders are not personally liable thereunder. Each Declaration of
Trust, as amended, provides for indemnification out of the trust property of any
shareholder held personally liable solely by reason of his or her being or
having been a shareholder and not because of his or her acts or omissions or
some other reason. Each Declaration of Trust, as amended, also provides that the
Trust and Framlington shall, upon request, assume the defense of any claim made
against any shareholder for any act or obligation of the Trust or Framlington,
and shall satisfy any judgment thereon. Thus, the risk of a shareholder's
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Trust or Framlington itself would be unable to meet
its obligations.
Each Declaration of Trust, as amended, further provides that all
persons having any claim against the Trustees, the Trust or Framlington shall
look solely to the trust property for payment; that no Trustee of the Trust or
Framlington shall be personally liable for or on account of any contract, debt,
tort, claim, damage, judgment or decree arising out of or connected with the
administration or preservation of the trust property or the conduct of any
business of the Trust or Framlington; and that no Trustee shall be personally
liable to any person for any action or failure to act except by reason of his
own bad faith, willful misfeasance, gross negligence or reckless disregard of
his duties as a trustee. With the exception stated, each Declaration of Trust,
as amended, provides that a Trustee is entitled to be indemnified against all
liabilities and expenses reasonably incurred by him in connection with the
defense or disposition of any proceeding in which he may be involved or with
which he may be threatened by reason of being or having been a Trustee, and that
the Trustees will indemnify officers, representatives and employees of the Trust
and Framlington to the same extent that Trustees are entitled to
indemnification.
INVESTMENT ADVISORY AND OTHER SERVICE ARRANGEMENTS
INVESTMENT ADVISOR AND SUB-ADVISOR. The Advisor of each Fund is Munder
Capital Management, a Delaware general partnership. The Advisor replaced
Woodbridge Capital Management, Inc. ("Woodbridge") as investment advisor to the
investment portfolios of the Trust and replaced Munder Capital Management, Inc.
as the investment advisor to the investment portfolios of the Company on January
31, 1995, upon the closing agreement (the "Joint Venture Agreement") among MCM,
Comerica, Woodbridge and WAM, pursuant to which MCM contributed its investment
advisory business and Comerica contributed the investment advisor business of
its indirect subsidiaries, Woodbridge and World Asset Management, to the
Advisor. The general partners of the Advisor are WAM, MCM and Munder Group LLC.
WAM is a wholly-owned subsidiary of Comerica Bank - Ann Arbor, which in turn is
a wholly-owned subsidiary of Comerica Incorporated, a publicly-held bank holding
company.
32
<PAGE>
The Funds have entered into new Investment Advisory Agreements (the
"Advisory Agreements"), dated July 2, 1998, with the Advisor pursuant to terms
of an Exemptive Order (the "Order") granted by the Securities and Exchange
Commission. Under the terms of the Order, the Advisory Agreements must be
approved by the shareholders within one hundred and fifty (150) days but no
later than November 30, 1998. The Funds will call a special meeting of the
shareholders to approve the Advisory Agreements. Until shareholder approval, the
fees paid to the Advisor will be paid into an escrow account. If the Advisory
Agreements are not approved by the shareholders, the Board of Directors and/or
the Board of Trustees will consider appropriate action.
Once the Advisory Agreements are approved by shareholders, they will
continue in effect for a period of two years from their effective dates. If not
sooner terminated, each Advisory Agreement will continue in effect for
successive one year periods thereafter, provided that each continuance is
specifically approved annually by (a) the vote of a majority of the Boards of
Directors/Trustees who are not parties to the Advisory Agreement or interested
persons (as defined in the 1940 Act), cast in person at a meeting called for the
purpose of voting on approval, and (b) either (i) the vote of a majority of the
outstanding voting securities of the affected Fund, or (ii) the vote of a
majority of the Boards of Directors/Trustees. Each Advisory Agreement is
terminable with respect to a Fund by vote of the Boards of Directors/Trustees,
or by the holders of a majority of the outstanding voting securities of the
Fund, at any time without penalty, on 60 days' written notice to the Advisor.
The Advisor may also terminate its advisory relationship with respect to a Fund
without penalty on 90 days' written notice to the Trust, Framlington or the
Company, as applicable. Each Advisory Agreement terminates automatically in the
event of its assignment (as defined in the 1940 Act).
The Sub-Advisor is a subsidiary of Framlington Group Limited, which is
incorporated in England and Wales and, through its subsidiaries, provides a wide
range of investment services. Framlington Group Limited is a wholly owned
subsidiary of Framlington Holdings Limited which is, in turn, owned 49% by the
Advisor and 51% by Credit Commercial de France S.A., a French banking
corporation listed on the Societe des Bourses Francaises.
The Sub-Advisory Agreements between Advisor and the Sub-Advisor on
behalf of the Emerging Markets Fund, the Healthcare Fund and the International
Growth Fund were approved by the Board of Trustees of Framlington on November 7,
1996 and by shareholders on December 31, 1996. The Sub-Advisory Agreement
between the Advisor and the Sub-Advisor on behalf of the Global Financial
Services Fund was approved by the Board of Trustees of Framlington on February
24, 1998. Under the terms of the Sub-Advisory Agreement, the Sub-Advisor
provides sub-advisory services to the International Growth, Emerging Markets,
Global Financial Services and Healthcare Funds. Subject to supervision of the
Advisor, the Sub-Advisor is responsible for the management of each Fund's
portfolio, including decisions regarding purchases and sales of portfolio
securities by the Funds. The Sub-Advisor is also responsible for arranging the
execution of portfolio management decisions, including the selection of brokers
to execute trades and the negotiation of brokerage commissions in connection
therewith.
The Sub-Advisory Agreement, with respect to each Fund, will continue in
effect with respect to each Fund for a period of two years from its effective
date. If not sooner terminated, the Sub-Advisory Agreement will continue in
effect for successive one year periods thereafter, provided that each
continuance is specifically approved annually by (a) the vote of a majority of
the Board of Trustees who are not parties to the Sub-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) with respect to
a Fund, the vote of a majority of the outstanding voting securities of that
Fund, or (ii) the vote of a majority of the Board of Trustees. The Sub-Advisory
Agreement is terminable by vote of the Board of Trustees, or, with respect to a
Fund, by the holders of a majority of the outstanding voting securities of that
Fund, at any time without penalty, on 60 days' written notice to the
Sub-Advisor, or by the Advisor on 90 days' written notice to the Sub-Advisor.
The Sub-Advisor may also terminate its sub-advisory relationship with a Fund
without penalty on 90 days' written notice to Framlington. The Sub-Advisory
Agreement terminates automatically in the event of its assignment (as defined in
the 1940 Act).
33
<PAGE>
For the advisory services provided and expenses assumed by it, the
Advisor has agreed to a fee from each Fund computed daily and payable monthly at
the rates set forth below:
<TABLE>
<CAPTION>
Fund Management Fee
- ---- --------------
<S> <C>
Accelerating Growth Fund .75% of average daily net assets
Balanced Fund .65% of average daily net assets
Bond Fund .50% of average daily net assets
Cash Investment Fund .25% of average daily net assets
Emerging Markets Fund 1.25% of average daily net assets
Global Financial Services Fund .75% of average daily net assets
Growth & Income Fund .75% of average daily net assets
Growth Opportunities Fund .75% of average daily net assets
Income Fund .50% of average daily net assets
Index 500 Fund* .20% of the first $250 million of average daily net
assets; .12% of the next $250 million of net assets and
.07% of net assets in excess of $500
Intermediate Bond Fund .50% of average daily net assets
International Bond Fund .50% of average daily net assets
International Equity Fund .75% of average daily net assets
International Growth Fund 1.00% of the first $250 million of average daily net
assets and .75% of net assets in excess of $250 million
Healthcare Fund** 1.00% of the first $250 million of average daily net
assets and .75% of net assets in excess of $250 million
Michigan Bond Fund .50% of average daily net assets
Micro-Cap Fund 1.00% of average daily net assets
Money Market Fund .40% of average daily net assets
Multi-Season Fund 1.00% of the first $500 million of average daily net
assets and .75% of net assets in excess of $500 million
NetNet Fund 1.00% of average daily net assets
Real Estate Fund .74% of average daily net assets
Small-Cap Value Fund .75% of average daily net assets
Small Company Growth Fund .75% of average daily net assets
Short Term Treasury Fund .25% of average daily net assets
Tax-Free Bond Fund .50% of average daily net assets
Tax-Free Intermediate Bond Fund .50% of average daily net assets
Tax-Free Money Market Fund .40% of average daily net assets
Treasury Fund .35% of average daily net assets
Value Fund .74% of average daily net assets
</TABLE>
- ---------------------------------
* The Advisor expects to receive, after waivers, an advisory fee at the
annual rate of .75% of average daily net assets of Multi-Season Fund and
.07% of average daily net assets of the Index 500 Fund during the current
fiscal year.
** The Advisor expects to voluntarily reimburse expenses during the current
fiscal year with respect to the Micro-Cap Fund and the Healthcare Fund.
The Advisor may discontinue such fee waivers and/or expense
reimbursements at any time, in its sole discretion.
The Advisor pays the Sub-Advisor a monthly fee equal on an annual basis
to up to 0.50% of average daily net assets up to $250 million, reduced to .375%
of average daily net assets in excess of $250 million for the International
Growth Fund and the Healthcare Fund, up to .625% of average daily net assets for
the Emerging Markets Fund and .375% of average daily net assets for the Global
Financial Services Fund.
34
<PAGE>
For the fiscal year ended June 30, 1998 (and for the period from
commencement of operations to June 30, 1998 for the Global Financial Services
Fund, Growth Opportunities Fund and NetNet Fund), the Advisor received fees
after waivers, if any, of $____________ for the Accelerating Growth Fund,
$_____________ for the Balanced Fund, $_____________ for the Growth & Income
Fund, $_____________ for the Index 500 Fund, $_____________ for the
International Equity Fund, $_____________ for the Small Company Growth Fund,
$_____________ for the Bond Fund, $_____________ for the Intermediate Bond Fund,
$_____________ for the U.S. Government Fund, $_____________ for the Michigan
Bond Fund, $_____________ for the Tax-Free Bond Fund, $_____________ for the
Tax-Free Intermediate Fund, $_____________ for the Cash Investment Fund,
$_____________ for the Tax-Free Money Market Fund, $_____________ for the U.S.
Treasury Money Market Fund, $_____________ for the Multi-Season Fund,
$_____________ for the Real Estate Fund, $_____________ for the Money Market
Fund, $_____________ for the Value Fund, $_____________ for the International
Growth Fund, $_____________ for the Emerging Markets Fund, $_____________ for
the Healthcare Fund, $_____________ for the Micro-Cap Equity Fund,
$_____________ for the Small-Cap Value Fund, $_____________ for the Short Term
Treasury Fund, $_____________ for the International Bond Fund, $_____________
for NetNet Fund, $_____________ for the Global Financial Services Fund and
$_____________ for the Growth Opportunities Fund.
For the fiscal year ended June 30, 1997 (and for the period from
commencement of operations to June 30, 1997 for the International Growth,
Emerging Markets, Healthcare, Micro-Cap, Small-Cap Value, Short Term Treasury
and International Bond Funds), the Advisor received fees after waivers, if any,
of $2,040,543 for the Accelerating Growth Fund, $445,259 for the Balanced Fund,
$1,650,704 for the Growth & Income Fund, $249,764 for the Index 500 Fund,
$1,720,496 for the International Equity Fund, $1,884,242 for the Small Company
Growth Fund, $751,954 for the Bond Fund, $2,554,647 for the Intermediate Bond
Fund, $1,175,733 for the U.S. Government Fund, $132,451 for the Michigan Bond
Fund, $1,006,688 for the Tax-Free Bond Fund, $1,584,769 for the Tax-Free
Intermediate Fund, $3,454,159 for the Cash Investment Fund, $879,155 for the
Tax-Free Money Market Fund, $1,101,183 for the U.S. Treasury Money Market Fund,
$3,189,742 for the Multi-Season Fund, $259,015 for the Real Estate Fund,
$599,286 for the Money Market Fund, $401,505 for the Value Fund, $71,843 for the
International Growth Fund, $25,210 for the Emerging Markets Fund, $11,440 for
the Healthcare Fund, $6,479 for the Micro-Cap Equity Fund, $20,442 for the
Small-Cap Value Fund, $51,885 for the Short Term Treasury Fund and $143,476 for
the International Bond Fund.
For the fiscal year ended June 30, 1996 (and for the period from
commencement of operations to June 30, 1996 for the Value Fund) the Advisor
received fees after waivers, if any, of $2,275,469 for the Multi-Season Fund,
$114,330 for the Real Estate Fund, $1,025,924 for the Money Market Fund and
$189,909 for the Value Fund.
For the period ended June 30, 1998, the Advisor voluntarily reimbursed
expenses in the amounts of $_____________ for the ________ Fund. [Update]
For the fiscal year ended June 30, 1997 the Advisor voluntarily waived
advisory fees and/or reimbursed expenses in the amounts of $1,063,248 for the
Multi-Season Fund, $10,143 for the Real Estate Fund, $17,688 for the Value Fund,
$360,721 for the Index 500 Fund and $51,815 for the Michigan Bond Fund.
For the fiscal year ended June 30, 1996, the Advisor voluntarily
reimbursed expenses in the following amounts: $34,671 for the Real Estate Fund,
$70,016 for the Value Fund and $21,376 for the Index 500 Fund.
DISTRIBUTION AGREEMENTS. The Trust, Framlington and the Company have
entered into distribution agreements, under which the Distributor, as agent,
sells shares of each Fund on a continuous basis. The Distributor has agreed to
use appropriate efforts to solicit orders for the purchase of shares of each
Fund, although it is not obligated to sell any particular amount of shares. The
Distributor pays the cost of printing and distributing prospectuses to persons
who are not holders of shares of the Funds (excluding preparation and printing
expenses necessary for the continued registration of the shares) and of printing
and distributing all sales literature. The Distributor's principal offices are
located at 60 State Street, Boston, Massachusetts 02109.
35
<PAGE>
DISTRIBUTION SERVICES ARRANGEMENTS - CLASS A, CLASS B AND CLASS C
SHARES. Each Fund has adopted a Service and Distribution Plan with respect to
its Class A Shares pursuant to which it uses its assets to finance activities
relating to the provision of certain shareholder services. Under the Service and
Distribution Plans for Class A Shares, the Distributor is paid an annual service
fee at the rate of up to 0.25% of the value of average daily net assets of the
Class A Shares of each Fund. Each Fund has also adopted a Service and
Distribution Plan with respect to its Class B and Class C Shares, pursuant to
which it uses its assets to finance activities relating to the distribution of
its shares to investors and provision of certain shareholder services. Under the
Service and Distribution Plans for Class B and Class C Shares, the Distributor
is paid an annual service fee of up to 0.25% of the value of average daily net
assets of the Class B and Class C Shares of each Fund and an annual distribution
fee at the rate of up to 0.75% of the value of average daily net assets of the
Class B and Class C Shares of each Fund.
Under the terms of the Service and Distribution Plans (collectively,
the "Plans"), each Plan continues from year to year, provided such continuance
is approved annually by vote of the Boards of Directors/Trustees, including a
majority of the Boards of Directors/Trustees who are not interested persons of
the Trust, Framlington or the Company, as applicable, and who have no direct or
indirect financial interest in the operation of that Plan (the "Non-Interested
Plan Directors"). The Plans may not be amended to increase the amount to be
spent for the services provided by the Distributor without shareholder approval,
and all amendments of the Plans also must be approved by the Trustees/Directors
in the manner described above. Each Plan may be terminated at any time, without
penalty, by vote of a majority of the Non-Interested Plan Directors or by a vote
of a majority of the outstanding voting securities of the relevant class of the
respective Fund (as defined in the 1940 Act) on not more than 30 days' written
notice to any other party to the Plan. Pursuant to each Plan, the Distributor
will provide the Boards of Trustees and Directors periodic reports of amounts
expended under the Plan and the purpose for which such expenditures were made.
The Trustees/Directors have determined that the Plans will benefit the
Trust, Framlington, the Company and their respective shareholders by (i)
providing an incentive for broker or bank personnel to provide continuous
shareholder servicing after the time of sale; (ii) retention of existing
accounts; (iii) facilitating portfolio management flexibility through continued
cash flow into the Funds; and (iv) maintaining a competitive sales structure in
the mutual fund industry.
With respect to Class B and Class C Shares of each Fund, the
Distributor expects to pay sales commissions to dealers authorized to sell a
Fund's Class B and Class C Shares at the time of sale. The Distributor will use
its own funds (which may be borrowed) to pay such commissions pending
reimbursement by the relevant Service and Distribution Plan. In addition, the
Advisor may use its own resources to make payments to the Distributor or dealers
authorized to sell the Funds' shares to support their sales efforts.
36
<PAGE>
Fees paid to the Distributor Pursuant to Class A Service Plans
FISCAL FISCAL FISCAL
YEAR YEAR YEAR
ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96
- --------------------------------------------------------------------------------
Accelerating Growth Fund $ $16,419 $1,916.29
Balanced Fund $ $981 $136.95
Growth & Income Fund $ $5,324 $268.00
Index 500 Fund $ $48,763 $23,640.4
International Equity Fund $ $13,505 $1,946.82
Small Company Growth Fund $ $17,843 $1,158.43
Bond Fund $ $2,203 $29.40
Intermediate Bond Fund $ $13,919 $345.66
Michigan Triple Tax-Free Bond Fund $ $1,206 $23.32
Tax-Free Bond Fund $ $4,973 $0.03
Tax-Free Intermediate Bond Fund $ $14,678 $85.26
Growth Opportunities Fund $ + N/A N/A
Multi-Season Fund $ $30,811 $1,945.49
Real Estate Fund $ $1,559 $179.10
Value Fund $ $2,347 $41.77
Money Market Fund $ $1,198* N/A
NetNet Fund $ + N/A N/A
Micro-Cap Fund $ $79* N/A
Small-Cap Value Fund $ $558* N/A
International Bond Fund $ $39* N/A
International Growth Fund $ $759 N/A
Emerging Markets Fund $ $285 N/A
Global Financial Services Fund $ + N/A N/A
Healthcare Fund $ $241 N/A
$
- ------------------------------------
* Figures reflect period from commencement of operations to June 30, 1997.
+ Figures reflect period from commencement of operations to June 30, 1998.
37
<PAGE>
Fees paid to the Distributor Pursuant to Class B Service and Distribution Plans
for the fiscal year ended June 30, 1998.
DISTRIBUTION
AND SERVICER FEES CDSC's
- --------------------------------------------------------------------------------
Accelerating Growth Fund $ $
Balanced Fund $ $
Growth Opportunities Fund $ + $ +
Growth & Income Fund $ $
Index 500 Fund $ $
International Equity Fund $ $
Micro-Cap Fund* $ $
Multi-Season Fund $ $
NetNet Fund $ + $ +
Real Estate Fund $ $
Small-Cap Value Fund* $ $
Small Company Growth Fund $ $
Value Fund $ $
Global Financial Services Fund $ + $ +
International Growth Fund* $ $
Emerging Markets Fund* $ $
Healthcare Fund* $ $
Bond Fund $ $
International Bond Fund* $ $
Intermediate Bond Fund $ $
Short Term Treasury Fund* ++ $ $
US Government Income Fund $ $
Michigan Bond Fund $ $
Tax-Free Bond Fund $ $
Tax-Free Intermediate Bond Fund $ $
Money Market Fund $ $
- -------------------------------------
* Figures reflect period from commencement of operations to June 30, 1997.
+ Figures reflect period from commencement of operations to June 30, 1998.
++ As of June 2, 1998 Class A, Class B and Class C Shares of Short Term
Treasury Fund were closed to all investments.
38
<PAGE>
Fees paid to the Distributor Pursuant to Class B Service and Distribution Plans
for the fiscal year ended June 30, 1997.
DISTRIBUTION
AND SERVICER FEES CDSC's
- --------------------------------------------------------------------------------
Accelerating Growth Fund $3,607 $150.00
Balanced Fund $1,249 $0.00
Growth & Income Fund $3,519 $535.41
Index 500 Fund $153,426 $0.00
International Equity Fund $10,398 $318.86
Micro-Cap Fund* $513 $0.00
Multi-Season Fund $731,958 $26,020.64
Real Estate Fund $27,446 $0.00
Small-Cap Value Fund* $648 $0.00
Small Company Growth Fund $21,679 $930.13
Value Fund $2,689 $0.00
International Growth Fund* $175 $0.00
Emerging Markets Fund* $95 $0.00
Healthcare Fund* $1,240 $0.00
Bond Fund $5,482 $447.26
International Bond Fund* $11 $0.00
Intermediate Bond Fund $2,627 $0.00
Short Term Treasury Fund* $116 $0.00
US Government Income Fund $13,452 $0.00
Michigan Bond Fund $2,779 $0.00
Tax-Free Bond Fund $566 $0.00
Tax-Free Intermediate Bond Fund $1,782 $0.00
Money Market Fund $1,925 $711.20
- -------------------------------------
* Figures reflect period from commencement of operations to June 30, 1997.
39
<PAGE>
Fees paid to the Distributor Pursuant to Class B Service and Distribution Plans
for the fiscal year ended June 30, 1996
DISTRIBUTION SERVICER
FEES FEES CDSC's
- -------------------------------------------------------------------------------
Accelerating Growth Fund $1,268.42 $422.83 $238.16
Balanced Fund $400.45 $133.48 $199.11
Growth & Income Fund $1,147.15 $382.37 $300.00
Index 500 Fund $15,750.66 $4,500.20 $1,207.75
International Equity Fund $3,131.06 $1,043.68 $1,008.01
Mid-Cap Growth Fund $88.71 $29.54 $0.00
Multi-Season Fund $454,197.35 $151,399.12 $155,014.33
Real Estate Fund $12,014.27 $4,004.75 $4,278.33
Small Company Growth Fund $2,247.94 $749.31 $100.00
Value Fund $424.07 $141.36 $181.56
Bond Fund $590.01 $196.67 $861.49
Intermediate Bond Fund $206.34 $68.79 $0.00
US Government Income Fund $3,656.37 $1,218.79 $199.27
Michigan Bond Fund $1,923.70 $641.24 $405.63
Tax-Free Bond Fund $131.90 $43.96 $979.34
Tax-Free Intermediate Bond Fund $298.44 $99.48 $0.53
Money Market Fund $1,496.13 $498.72 $0.00
40
<PAGE>
Fees paid to the Distributor Pursuant to Class C Service and Distribution Plans
for the fiscal year ended June 30, 1998*
DISTRIBUTION
AND SERVICER FEES CDSC's
- --------------------------------------------------------------------------------
Accelerating Growth Fund $ $
Balanced Fund $ $
Growth & Income Fund $ $
Growth Opportunities Fund $ + $ +
Global Financial Services Fund $ + $ +
International Growth Fund $ $
Emerging Markets Fund $ $
Healthcare Fund $ $
International Equity Fund $ $
Index 500* N/A N/A
Multi-Season Fund $ $
Real Estate Fund $ $
Micro-Cap Fund $ + $ +
NetNet Fund* N/A $
Small-Cap Value Fund $ N/A
Small Company Growth Fund $ $
Value Fund $ $
Bond Fund $ $
Intermediate Bond Fund $ $
US Government Income Fund $ $
Michigan Bond Fund $ $
Money Market Fund $
- -----------------------------------
* As of June 30, 1998 the following funds had not commenced selling Class C
shares: NetNet Fund and Index 500. As of June 2, 1998, Class C Shares of
+ Short Term Treasury were closed to all investments.
Figures reflect period from commencement of operations to June 30, 1998.
41
<PAGE>
Fees paid to the Distributor Pursuant to Class C Service and Distribution Plans
for the fiscal year ended June 30, 1997*
DISTRIBUTION
AND SERVICER FEES CDSC's
- --------------------------------------------------------------------------------
Accelerating Growth Fund $2,146 $0.00
Balanced Fund $337 $0.00
Growth & Income Fund $2,683 $0.00
International Growth Fund** $63 $0.00
Emerging Markets Fund** $49 $0.00
Healthcare Fund** $125 $0.00
International Equity Fund $18,452 $0.00
Multi-Season Fund $73,808 $391.84
Real Estate Fund $1,829 $2.38
Micro-Cap Fund** $48 $0.00
Small-Cap Value Fund** $223 $0.00
Small Company Growth Fund $13,938 $212.00
Value Fund $4,397 $0.00
Bond Fund $787 $0.00
Intermediate Bond Fund $1,136 $0.00
US Government Income Fund $93 $0.00
Michigan Bond Fund $568 $0.00
Money Market Fund $5,932 $0.00
- -----------------------------------
* As of June 30, 1997, the following funds had not commenced selling Class C
Shares: Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund, International
Bond Fund and Short Term Treasury Fund.
** Figures reflect period from commencement of operations to June 30, 1997.
Fees paid to the Distributor Pursuant to Class C Service and Distribution Plans
for the fiscal year ended June 30, 1996*
DISTRIBUTION
FEES AND SERVICER
FEES CDSC's
- --------------------------------------------------------------------------------
Accelerating Growth Fund $351.28 $188.66
Balanced Fund $4.9 $100.01
Growth & Income Fund $119.64 $0.00
International Equity Fund $4,780.52 $293.87
Multi-Season Fund $42,836.64 $798.25
Real Estate Fund $17.76 $7.50
Small Company Growth Fund $228.27 $149.87
Value Fund $1,141.17 $0.00
Bond Fund $123.26 $0.00
Intermediate Bond Fund $98.38 $0.00
- --------------------------------------
* As of June 30, 1996, the following funds had not commenced selling Class C
Shares: Index 500 Fund, US Government Income Fund, Michigan Bond Fund, Tax-Free
Bond Fund, Tax-Free Intermediate Bond Fund and Money Market Fund
42
<PAGE>
The following amounts were paid by each Fund under its Class B Service
and Distribution Plans during the fiscal year ended June 30, 1998.
<TABLE>
<CAPTION>
Printing and
Mailing of Interest
Prospectuses to Carrying
other than or other
Current Compensation to Compensation to Compensation Financing
Advertising Shareholders Underwriters Dealers to Personnel Charges
----------- ------------ ------------ ------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Accelerating Growth Fund $ $ $ $ $ $
Balanced Fund $ $ $ $ $ $
Index 500 Fund $ $ $ $ $ $
Global Financial Services $ $ $ $ $ $
Fund*
International Growth Fund $ $ $ $ $ $
Emerging Markets Fund $ $ $ $ $ $
Healthcare Fund $ $ $ $ $ $
Growth & Income Fund $ $ $ $ $ $
Growth Opportunities Fund* $ $ $ $ $ $
International Equity Fund $ $ $ $ $ $
Micro-Cap Equity Fund $ $ $ $ $ $
Multi-Season Growth Fund $ $ $ $ $ $
NetNet Fund* $ $ $ $ $ $
Real Estate Equity $ $ $ $ $ $
Investment Fund
Short Term Treasury $ $ $ $ $ $
Fund+
Small-Cap Value Fund $ $ $ $ $ $
Small Company Growth Fund $ $ $ $ $ $
Value Fund $ $ $ $ $ $
Bond Fund $ $ $ $ $ $
Intermediate Bond Fund $ $ $ $ $ $
International Bond Fund $ $ $ $ $ $
U.S. Government Income $ $ $ $ $ $
Fund
Michigan Bond Fund $ $ $ $ $ $
Tax-Free Bond Fund $ $ $ $ $ $
Tax-Free Intermediate $ $ $ $ $ $
Bond Fund
Money Market Fund $ $ $ $ $ $
</TABLE>
- -----------------------------------------
* Figures reflect period from commencement of operations to June 30, 1998.
+ As of June 2, 1998 Class A, Class B and Class C Shares of Short Term
Treasury Fund were closed to all investments.
43
<PAGE>
The following amounts were paid by each Fund under its Class C Service
and Distribution Plans during the fiscal year ended June 30, 1998.
<TABLE>
<CAPTION>
Printing and
Mailing of Interest
Prospectuses Carrying or
to other than other
Current Compensation Compensation Compensation Financing
Advertising Shareholders to Underwriters to Dealers to Personnel Charges
----------- ------------ ------------ ---------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Accelerating Growth Fund $ $ $ $ $ $
Balanced Fund $ $ $ $ $ $
Index 500 Fund $ $ $ $ $ $
Global Financial $ $ $ $ $ $
Services Fund*
International Growth $ $ $ $ $ $
Fund
Emerging Markets Fund $ $ $ $ $ $
Healthcare Fund $ $ $ $ $ $
Growth & Income Fund $ $ $ $ $ $
Growth Opportunities $ $ $ $ $ $
Fund*
International Equity $ $ $ $ $ $
Fund
Micro-Cap Equity Fund $ $ $ $ $ $
Multi-Season Growth Fund $ $ $ $ $ $
NetNet Fund** N/A N/A N/A N/A N/A N/A
Real Estate Equity $ $ $ $ $ $
Investment Fund
Short Term Treasury $ $ $ $ $ $
Fund+
Small-Cap Value Fund $ $ $ $ $ $
Small Company Growth $ $ $ $ $ $
Fund
Value Fund $ $ $ $ $ $
Bond Fund $ $ $ $ $ $
Intermediate Bond Fund $ $ $ $ $ $
International Bond Fund $ $ $ $ $ $
U.S. Government Income $ $ $ $ $ $
Fund
Michigan Bond Fund $ $ $ $ $ $
Tax-Free Bond Fund $ $ $ $ $ $
Tax-Free Intermediate $ $ $ $ $ $
Bond Fund
Money Market Fund $ $ $ $ $ $
</TABLE>
- -----------------------------------------
* Figures reflect period from commencement of operations to June 30, 1998.
** As of June 30, 1998, the fund had not commenced selling Class C Shares.
+ As of June 2, 1998 Class A, Class B and Class C Shares of Short Term
Treasury Fund were closed to all investments.
Shareholder Servicing Arrangements - Class K Shares. As stated in each
Fund's Prospectus, Class K Shares are sold to investors through institutions
which enter into Shareholder Servicing Agreements with the Trust,
44
<PAGE>
Framlington or the Company to provide support services to their Customers who
beneficially own Class K Shares in consideration of the Funds' payment of not
more than 0.25% (on an annualized basis) of the average daily net asset value of
the Class K Shares beneficially owned by the Customers.
Services provided by institutions under their service agreements may
include: (i) aggregating and processing purchase and redemption requests for
Class K Shares from Customers and placing net purchase and redemption orders
with the Distributor; (ii) providing Customers with a service that invests the
assets of their accounts in Class K Shares pursuant to specific or
pre-authorized instructions; (iii) processing dividend payments on behalf of
Customers; (iv) providing information periodically to Customers showing their
positions in Class K Shares; (v) arranging for bank wires; (vi) responding to
Customer inquiries relating to the services performed by the institutions; (vii)
providing subaccounting with respect to Class K Shares beneficially owned by
Customers or the information necessary for subaccounting; (viii) if required by
law, forwarding shareholder communications from the Trust, the Framlington Trust
or the Company (such as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices) to Customers;
(ix) forwarding to Customers proxy statements and proxies containing any
proposals regarding the Trust's or Framlington's or the Company's arrangements
with institutions; and (x) providing such other similar services as the Trust,
Framlington or the Company may reasonably request to the extent the institutions
are permitted to do so under applicable statutes, rules and regulations.
Pursuant to the Trust's, Framlington's and the Company's agreements
with such institutions, the Boards of Trustees and Directors will review, at
least quarterly, a written report of the amounts expended under Trust's, the
Framlington's and the Company's agreements with Institutions and the purposes
for which the expenditures were made. In addition, the arrangements with
Institutions must be approved annually by a majority of the Boards of Trustees
and Directors, including a majority of the Trustees/Directors who are not
"interested persons" as defined in the 1940 Act, and have no direct or indirect
financial interest in such arrangements.
The Boards of Trustees and Directors have approved the arrangements
with Institutions based on information provided by the service contractors that
there is a reasonable likelihood that the arrangements will benefit the Funds
and their shareholders by affording the Funds greater flexibility in connection
with the servicing of the accounts of the beneficial owners of their shares in
an efficient manner.
ADMINISTRATION AGREEMENT. State Street Bank and Trust Company ("State
Street"), whose principal business address is 225 Franklin Street, Boston,
Massachusetts, 02110, serves as administrator for the Trust, Framlington and the
Company pursuant to administration agreements (each, an "Administration
Agreement"). State Street has agreed to maintain office facilities for the
Trust, Framlington and the Company; 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. 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.
Each 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.
For the period November 1, 1997 through June 30, 1998, administration
fees of State Street accrued were: $--------------- [list all funds].
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 of July 1, 1997 through October 31, 1997, administration
fees to Investor Services Group accrued were: $_____________ (list funds)
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For the fiscal years ended June 30, 1997, the administration fees of
Investor Services Group accrued as follows: Accelerating Growth Fund - $307,521;
Balanced Fund - $77,364; Growth & Income Fund - $248,644; Index 500 Fund -
$405,016; International Equity Fund - $259,162; Small Company Growth Fund -
$283,755; Bond Fund - $169,932; Intermediate Bond Fund - $577,425; U.S.
Government Income Fund - $265,637; Michigan Bond Fund - $41,620; Tax-Free Bond
Fund - $227,508; Tax-Free Intermediate Bond Fund - $358,214; Cash Investment
Fund - $1,115,110; Tax-Free Money Market Fund - $283,803; $480,310-Multi-Season
Fund; $39,493-Real Estate Fund, $169,405-Money Market Fund, $61,224-Value Fund
and U.S. Treasury Money Market Fund - $355,592, respectively.
For the period ended June 30, 1997, administration fees of Investor
Services Group accrued were $9,644- Emerging Markets Fund; $9,644-Healthcare
Fund, $9,644-International Growth Fund, $730-Micro-Cap Fund; $14,220-Small-Cap
Value Fund; $32,343-International Bond Fund and $23,349-Short Term Treasury
Fund.
For the fiscal year ended June 30, 1996, administration fees of
Investor Services Group accrued were: $322,120 - Accelerating Growth Fund,
$62,095 - Balanced Fund, $202,655 - Growth & Income Fund, $188,416 - Index 500
Fund, $201,299 - International Equity Fund, $194,176 - Small Company Growth
Fund, $190,967 - Bond Fund, $587,790 - Intermediate Bond Fund, $216,970 - U.S.
Government Income Fund, $31,899 - Michigan Bond Fund, $245,271 - Tax-Free Bond
Fund, $400,485 - Tax-Free Intermediate Bond Fund, $1,183,419 - Cash Investment
Fund, $378,955 U.S. Treasury Money Market Fund, $285,214 - Tax-Free Money Market
Fund, $345,388 - Multi-Season Fund, $19,120 Real Estate Fund and $292,172 -
Money Market Fund.
For the period ended June 30, 1996, administration fees of the
Administrator accrued were: $29,705 -Value 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, is the custodian of each Fund pursuant to
custodian agreements (each, a "Custody Agreement") with each of the Trust,
Framlington and the Company. The Custodian receives no compensation for such
services. State Street serves as the sub-custodian to the Funds pursuant to a
sub-custodian agreements (each a "Sub-Custodian Contract") among the Company,
Trust, Framlington, Comerica Bank and State Street. State Street is also the
sub-custodian with respect to the custody of foreign securities held by the
Funds. State Street has in turn entered into additional agreements with
financial institutions and depositaries located in foreign countries with
respect to the custody of such securities. Under the Sub-Custodian Contracts,
the Sub-Custodian (i) maintains a separate account in the name of each Fund,
(ii) holds and transfers portfolio securities on account of each Fund, (iii)
accepts receipts and makes disbursements of money on behalf of each Fund, (iv)
collects and receives all income and other payments and distributions on account
of each Fund's securities and (v) makes periodic reports to the Board of
Directors concerning the Funds' operations.
Prior to November 1, 1997, the Custodian was compensated for its
services as custodian. For the period July 1, 1997 to October 31, 1997 the
Custodian earned $___________.
For the fiscal year ended June 30, 1998, the Sub-Custodian earned
$__________.
Investor Services Group serves as the transfer and dividend disbursing
agent for the Funds pursuant to transfer agency agreements (the "Transfer Agency
Agreement") with each of the Trust, Framlington and 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 Trustees and Directors concerning the
operations of each Fund.
COMERICA. As stated in the Funds' Class K Shares Prospectus, Class K
Shares of the Funds are sold to customers of banks and other institutions. Such
banks and institutions may include Comerica Incorporated (a publicly-held bank
holding company), its affiliates and subsidiaries ("Comerica") and other
institutions that have
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entered into agreements with the Company, the Trust and Framlington providing
for shareholder services for their customers.
Banking laws and regulations currently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from underwriting securities, but such banking laws and regulations do not
prohibit such a holding company or affiliate or banks generally from acting as
investment advisor, administrator, transfer agent or custodian to such an
investment company, or from purchasing shares of such a company as agent for and
upon the order of customers. The Advisor and the Custodian are subject to such
banking laws and regulations.
The Advisor and the Custodian believe they may perform the services for
the Trust, Framlington and the Company contemplated by their respective
agreements with each of them without violation of applicable banking laws and
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 certain services for the Funds.
Should future legislative, judicial or administrative action prohibit
or restrict the activities of such companies in connection with the provision of
services on behalf of the Trust, Framlington or the Company, the Trust,
Framlington or the Company might be required to alter materially or discontinue
the arrangements with the institutions and change the method of operations. It
is not anticipated, however, that any change in the Funds' method of operations
would affect the net asset value per share of the Funds or result in a financial
loss to any shareholder of the Funds.
It should be noted that future changes in either Federal or state
statutes and regulations relating to permissible activities of banks and their
subsidiaries or affiliates, as well as future judicial or administrative
decisions or interpretations of current and future statutes and regulations,
could prevent Comerica and certain other institutions from continuing to perform
certain services for Class K shares of the Funds.
Should future legislative, judicial or administrative action prohibit
or restrict the activities of Comerica and/or other institutions in connection
with the provision of services on behalf of Class K shares of the Fund, the
Trust, Framlington or the Company might be required to alter materially or
discontinue the arrangements with the institutions and change the method of
operations with respect to Comerica and certain other institutions. It is not
anticipated, however, that any change in the Funds' method of operations would
affect the net asset value per share of the Funds or result in a financial loss
to any holder of Class K shares of the Funds.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board Members, the Advisor or
the Sub-Advisor, as the case may be, makes decisions with respect to and places
orders for all purchases and sales of portfolio securities for the Funds.
Transactions on U.S. stock exchanges involve the payment of negotiated
brokerage commissions. On exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers. Transactions on foreign
stock exchanges involve payment for brokerage commissions which are generally
fixed.
For the fiscal year ended June 30, 1996, the Funds paid brokerage
commissions as follows: $474,252 Accelerating Growth Fund, $52,376-Balanced
Fund, $202,292 - Growth & Income Fund, $41,009 - Index 500 Fund, $428,699 -
International Equity Fund, $424,580 - Multi-Season Fund, $40,182 - Real Estate
Fund and
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$203,936 Small Company Growth Fund. The other Funds of the Company and the Trust
did not pay brokerage commissions during the fiscal year ended June 30, 1996.
For the period ended June 30, 1996, the Value Fund paid brokerage
commissions of $169,335.
For the fiscal year ended June 30, 1997, the Funds paid brokerage
commissions as follows: $506,861-Accelerating Growth Fund, $54,221-Balanced
Fund, $336,161-Growth & Income Fund, $61,393 - Index 500 Fund,
$155,081-International Equity Fund, $366,346-Multi-Season Fund, $66,879-Real
Estate Fund and $355,997-Small Company Growth Fund. The other Funds of the
Company and the Trust did not pay brokerage commissions during the fiscal year
ended June 30, 1997.
For the period ended June 30, 1997, the Funds paid brokerage
commissions as follows: $2,045-Micro-Cap Fund, $82,304-Small-Cap Value Fund,
$228,545-Value Fund, $0-International Bond Fund, $0-Short Term Treasury Fund.,
$43,256-Emerging Markets Fund, $87,694-International Growth Fund and
$3,325-Healthcare Fund.
For the fiscal year ended June 30, 1998, the Funds paid brokerage
commission as follows: $_______.
For the period ended June 30, 1998, the Funds paid brokerage
commission as follows: $___________.
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 or the
Sub-Advisor, as the case may be, will normally deal directly with dealers who
make a market in the instruments involved except in those circumstances where
more favorable prices and execution are available elsewhere. The cost of foreign
and domestic securities purchased from underwriters includes an underwriting
commission or concession, and the prices at which securities are purchased from
and sold to dealers include a dealer's mark-up or mark-down.
The Funds may participate, if and when practicable, in bidding for the
purchase of portfolio securities directly from an issuer in order to take
advantage of the lower purchase price available to members of a bidding group.
The Funds will engage in this practice, however, only when the Advisor or
Sub-Advisor, as the case may be, believes such practice to be in the Funds'
interests.
Since the Money Market Funds will invest only in short-term debt
instruments, their annual portfolio turnover rates will be relatively high, but
brokerage commissions are normally not paid on money market instruments, and
portfolio turnover is not expected to have a material effect on the net
investment income of a Money Market Fund. The portfolio turnover rate of a Fund
is calculated by dividing the lesser of a Fund's annual sales or purchases of
portfolio securities (exclusive of purchases or sales of securities whose
maturities at the time of acquisition were thirteen months or less for the Money
Market Funds or one year or less for the Equity and Bond Funds) by the monthly
average value of the securities held by the Fund during the year. The Equity and
Bond Funds may engage in short-term trading to achieve their investment
objectives. Portfolio turnover may vary greatly from year to year as well as
within a particular year.
Each Fund's portfolio turnover rate is included in the prospectuses
under the section entitled "Financial Highlights." For the fiscal year ended
June 30, 1998, the portfolio turnover rate for the Bond Fund and the
Intermediate Bond Fund was ____% and ____%, respectively. The portfolio turnover
of the Bond Fund and the Intermediate Bond Fund was affected by fluctuating
interest rate conditions which at times required increased dispositions and
acquisitions of securities to maintain each Fund's maturity structure.
In its Advisory Agreements, the Advisor (and, in the case of the Funds
of Framlington, the Sub-Advisor pursuant to the Sub-Advisory Agreement) agrees
to select broker-dealers in accordance with guidelines established by the Boards
of Trustees and Directors from time to time and in accordance with applicable
law. In assessing the terms available for any transaction, the Advisor or
Sub-Advisor, as the case may be, 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
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transaction and on a continuing basis. In addition, the Advisory and Sub-
Advisory Agreements authorize the Advisor or Sub-Advisor, as the case may be,
subject to the prior approval of the Boards of Trustees and 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 or Sub-Advisor, as
the case may be, 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 or Sub-Advisor,
as the case may be, and does not reduce the advisory fees payable to the Advisor
or Sub-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,
Sub-Advisor, Distributor or any affiliated person (as defined in the 1940 Act)
of the foregoing entities except to the extent permitted by SEC exemptive order
or by applicable law.
Investment decisions for each Fund and for other investment accounts
managed by the Advisor and Sub-Advisor are made independently of each other in
the light of differing conditions. However, the same investment decision may be
made for two or more of such accounts. In such cases, simultaneous transactions
are inevitable. Purchases or sales are then averaged as to price and allocated
as to amount in a manner deemed equitable to each such account. While in some
cases this practice could have a detrimental effect on the price or value of the
security as far as a Fund is concerned, in other cases it is believed to be
beneficial to a Fund. To the extent permitted by law, the Advisor or
Sub-Advisor, as the case may be, may aggregate the securities to be sold or
purchased for a Fund with those to be sold or purchased for other investment
companies or accounts in executing transactions.
A Fund will not purchase securities during the existence of any
underwriting or selling group relating to such securities of which the Advisor,
Sub-Advisor or any affiliated person (as defined in the 1940 Act) thereof is a
member except pursuant to procedures adopted by the Trust's or Framlington Board
of Trustees and the Company's Board of Directors in accordance with Rule 10f-3
under the 1940 Act.
[UPDATE The Trust and the Company are required to identify the
securities of their regular brokers or dealers (as defined in Rule 10b-1 under
the 1940) Act or their parent companies held by them as of the close of their
most recent fiscal year and state the value of such holdings. As of June 30,
1998, ________ Fund held securities of _______________ [list all brokers
holdings]
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, Sub-Advisor, Administrator, Custodian, Sub-Custodian and Transfer
Agent; fees and expenses of officers and Boards of Directors/Trustees; taxes;
interest; legal and auditing fees; brokerage fees and commissions; certain fees
and expenses in registering and qualifying the Fund and its shares for
distribution under Federal and state securities laws; expenses of preparing
prospectuses and statements of additional information and of printing and
distributing prospectuses and statements of additional information to existing
shareholders; the expense of reports to shareholders, shareholders' meetings and
proxy solicitations; fidelity bond and directors' 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
Trust, Framlington or the Company that are not readily identifiable as belonging
to a particular investment portfolio of the Trust, Framlington or the Company
are allocated among all investment portfolios of the Trust, Framlington or the
Company by or under the direction of the Boards of Trustees and Directors in a
manner that the Boards of Trustees and Directors determine to be fair and
equitable.
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The Advisor, Sub-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' Prospectuses 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 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 Fund's Prospectuses, shares of
the Funds may be redeemed in a number of different ways:
. By Mail
. By Telephone
. Automatic Withdrawal Plan
The redemption price for Fund shares is the net asset value next determined
after receipt of the redemption request in proper order. The redemption proceeds
will be reduced by the amount of any applicable contingent deferred sales charge
("CDSC").
CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES. Class B Shares
redeemed within six years of purchase are subject to a CDSC. The CDSC is based
on the original net asset value at the time of investment or the net asset value
at the time of redemption, whichever is lower.
The CDSC Schedule for Class B Shares of the Trust Funds purchased
before June 27, 1995 is set forth below. The Prospectuses describe the CDSC
Schedule for Class B Shares of Funds of the Trust, the Company and Framlington
purchased after June 27, 1995.
CLASS B SHARES OF THE TRUST FUNDS
PURCHASED ON OR BEFORE JUNE 27, 1995
REDEMPTION DURING CDSC
- -------------------------------------------------------------------------
1st Year Since Purchase......................................... 4.00%
2nd Year Since Purchase......................................... 4.00%
3rd Year Since Purchase......................................... 3.00%
4th Year Since Purchase......................................... 3.00%
5th Year Since Purchase......................................... 2.00%
6th Year Since Purchase......................................... 1.00%
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CDSC WAIVERS - Class B Shares of the Trust Funds Purchased on or before
June 27, 1995. The CDSC will be waived with respect to Class B Shares of the
Trust Funds purchased on or before June 27, 1995 in the following circumstances:
(1) total or partial redemptions made within one year following
the death or disability of a shareholder or registered joint
owner;
(2) minimum required distributions made in connection with an IRA
or other retirement plan following attainment of age 59 1/2;
and
(3) redemptions pursuant to a Fund's right to liquidate a
shareholder's account involuntarily.
CDSC Waivers - Class B Shares of the Company Funds Purchased on or
before June 27, 1995. The CDSC will be waived on the following types of
redemptions with respect to Class B Shares of the Company Funds purchased on or
before June 27, 1995:
(1) redemptions by investors who have invested a lump sum amount
of $1 million or more in the Fund; (2) redemptions by the
officers, directors, and employees of the Advisor or the
Distributor and such persons' immediate families;
(3) dealers or brokers who have a sales agreement with the
Distributor, for their own accounts, or for retirement plans
for their employees or sold to registered representatives or
full time employees (and their families) that certify to the
Distributor at the time of purchase that such purchase is for
their own account (or for the benefit of their families);
(4) involuntary redemptions effected pursuant to the Fund's right
to liquidate shareholder accounts having an aggregate net
asset value of less than $250; and
(5) redemptions the proceeds of which are reinvested in the Fund
within 90 days of the redemption.
Contingent Deferred Sales Charge - Class A and Class C Shares. The
Prospectuses describe the CDSC for Class A or C Shares of the Funds of the
Trust, the Company and Framlington purchased after June 27, 1995.
Class A Shares of the Trust Funds purchased on or before June 27, 1995
without a sales charge by reason of a purchase of $500,000 or more are subject
to a CDSC of 1.00% of the lower of the original purchase price or the net asset
value at the time of redemption if such shares are redeemed within two years of
the date of purchase. Class A Shares of the Trust Funds purchased on or before
June 27, 1995 that are redeemed will not be subject to the CDSC to the extent
that the value of such shares represents: (1) reinvestment of dividends or other
distributions; (2) Class A Shares redeemed more than two years after their
purchase; (3) a minimum required distribution made in connection with IRA or
other retirement plans following attainment of age 59 1/2; or (4) total or
partial redemptions made within one year following the death or disability of a
shareholder or registered joint owner.
No CDSC is imposed to the extent that the current net asset value of
the shares redeemed does not exceed (a) the current net asset value of shares
purchased through reinvestment of dividends or capital gain distributions plus
(b) the current net asset value of shares purchased more than one year prior to
the redemption, plus (c) increases in the net asset value of the shareholder's
shares above the purchase payments made during the preceding one year.
The holding period of Class A or Class C Shares of a Fund acquired
through an exchange of the corresponding class of shares of the Munder Money
Market Fund (which are available only by exchange of Class A or Class C Shares
of the Fund, as the case may be) and the Company Funds and the non-money market
funds of the Trust will be calculated from the date that the Class A or Class C
Shares of the Fund were initially purchased.
In determining whether a CDSC is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible rate.
It will be assumed that the redemption is made first of amounts representing all
Class A Shares on which a front-end sales charge has been assessed; then of
shares acquired pursuant to the reinvestment of dividends and distributions; and
then of amounts representing the cost of shares purchased one year or more prior
to the redemption.
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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 (the "NYSE") is
restricted by applicable rules and regulations of the SEC; (ii) the NYSE is
closed for other than customary weekend and holiday closings; (iii) the SEC has
by order permitted such suspension or postponement for the protection of the
shareholders; or (iv) an emergency, as determined by the SEC, exists, making
disposal of portfolio securities or valuation of net assets of a Fund not
reasonably practicable.
The Funds may involuntarily redeem an investor's shares if the net
asset value of such shares is less than $250; 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 $250 or more. A check for the redemption proceeds
payable to the investor will be mailed to the investor at the address of record.
EXCHANGES. In addition to the method of exchanging shares described in
the Funds' Prospectuses, a shareholder exchanging at least $1,000 of shares (for
which certificates have not been issued) and who has authorized expedited
exchanges on the application form filed with the Transfer Agent may exchange
shares by telephoning the Funds at (800) 438-5789. Telephone exchange
instructions must be received by the Transfer Agent by 4:00 p.m., Eastern time.
The Funds, Distributor and Transfer Agent reserve the right at any time to
suspend or terminate the expedited exchange procedure or to impose a fee for
this service. During periods of unusual economic or market changes, shareholders
may experience difficulties or delays in effecting telephone exchanges. Neither
the Funds nor the Transfer Agent will be responsible for any loss, damages,
expense or cost arising out of any telephone exchanges effected upon
instructions believed by them to be genuine. The Transfer Agent has instituted
procedures that it believes are reasonably designed to insure that exchange
instructions communicated by telephone are genuine, and could be liable for
losses caused by unauthorized or fraudulent instructions in the absence of such
procedures. The procedures currently include a recorded verification of the
shareholder's name, social security number and account number, followed by the
mailing of a statement confirming the transaction, which is sent to the address
of record.
NET ASSET VALUE
MONEY MARKET FUNDS. The value of the portfolio securities of the Money
Market Funds is calculated using the amortized cost method of valuation. Under
this method the market value of an instrument is approximated by amortizing the
difference between the acquisition cost and value at maturity of the instrument
on a straight-line basis over the remaining life of the instrument. The effect
of changes in the market value of a security as a result of fluctuating interest
rates is not taken into account. The market value of debt securities usually
reflects yields generally available on securities of similar quality. When such
yields decline, market values can be expected to increase, and when yields
increase, market values can be expected to decline.
As indicated, the amortized cost method of valuation may result in the
value of a security being higher or lower than its market price, the price a
Fund would receive if the security were sold prior to maturity. The Boards of
Trustees and Directors have established procedures reasonably designed, taking
into account current market conditions and the Funds' investment objectives, for
the purpose of maintaining a stable net asset value of $1.00 per share for each
Fund for purposes of sales and redemptions. These procedures include a review by
the Boards of Directors/Trustees, at such intervals as they deem appropriate, of
the extent of any deviation of net asset value per share, based on available
market quotations, from the $1.00 amortized cost per share. Should that
deviation exceed 1/2 of 1% for a Fund, the Boards of Trustees and Directors will
promptly consider whether any and, if any, what
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action should be initiated. If the Board of Trustees or Directors believes that
the extent of any deviation from a Fund's $1.00 amortized cost price per share
may result in material dilution of other unfair results to new or existing
investors, it will take such steps as it considers appropriate to eliminate or
reduce any such dilution or unfair results to the extent reasonably practicable.
Such action may include redeeming shares in kind, selling portfolio securities
prior to maturity, reducing or withholding dividends, shortening the average
portfolio maturity, reducing the number of outstanding shares without monetary
consideration, and utilizing a net asset value per share as determined by using
available market quotations.
Pursuant to Rule 2a-7, each of the Money Market Funds will maintain a
dollar-weighted average portfolio maturity appropriate to its objective of
maintaining a stable net asset value per share, provided that such Funds will
not purchase any security with a remaining maturity (within the meaning of Rule
2a-7 under the 1940 Act) greater than 397 days (securities subject to repurchase
agreements, variable and floating rate securities, and certain other securities
may bear longer maturities), nor maintain a dollar-weighted average portfolio
maturity which exceeds 90 days. In addition, the Funds may acquire only U.S.
dollar denominated obligations that present minimal credit risks and that are
"First Tier Securities" at the time of investment. First Tier Securities are
those that are rated in the highest rating category by at least two nationally
recognized security rating organizations NRSROs or by one if it is the only
NRSRO rating such obligation or, if unrated, determined to be of comparable
quality. A security is deemed to be rated if the issuer has any security
outstanding of comparable priority and security which has received a short-term
rating by an NRSRO. The Advisor will determine that an obligation presents
minimal credit risks or that unrated investments are of comparable quality, in
accordance with guidelines established by the Board of Directors or Trustees.
There can be no assurance that a constant net asset value will be maintained for
each Money Market Fund.
ALL FUNDS. In determining the approximate market value of portfolio
investments, the Trust, Framlington or the Company may employ outside
organizations, which may use matrix or formula methods that take into
consideration market indices, matrices, yield curves and other specific
adjustments. This may result in the securities being valued at a price different
from the price that would have been determined had the matrix or formula methods
not been used. All cash, receivables and current payables are carried on the
Trust's, Framlington's or the Company's books at their face value. Other assets,
if any, are valued at fair value as determined in good faith under the
supervision of the Board Members.
IN-KIND PURCHASES
With the exception of the Real Estate Fund, payment for shares may, in
the discretion of the Advisor, be made in the form of securities that are
permissible investments for the Funds as described in the Prospectuses. Shares
of the Real Estate Fund will not be issued for consideration other than cash.
For further information about this form of payment please contact the Transfer
Agent. In connection with an in-kind securities payment, a Fund will require,
among other things, that the securities (a) meet the investment objectives and
policies of the Funds; (b) are acquired for investment and not for resale; (c)
are liquid securities that are not restricted as to transfer either by law or
liquidity of markets; (d) have a value that is readily ascertainable by a
listing on a nationally recognized securities exchange; and (e) are valued on
the day of purchase in accordance with the pricing methods used by the Fund and
that the Fund receive satisfactory assurances that (i) it will have good and
marketable title to the securities received by it; (ii) that the securities are
in proper form for transfer to the Fund; and (iii) adequate information will be
provided concerning the basis and other tax matters relating to the securities.
PERFORMANCE INFORMATION
YIELD OF THE MONEY MARKET FUNDS
The Money Market Funds' current and effective yields are computed using
standardized methods required by the SEC. The annualized yield is computed by:
(a) determining the net change in the value of a hypothetical account having a
balance of one share at the beginning of a seven-calendar day period; (b)
dividing the net change by the value of the account at the beginning of the
period to obtain the base period return; and (c) annualizing the results (i.e.,
multiplying the base period return by 365/7). The net change in the value of the
account reflects the
53
<PAGE>
value of additional shares purchased with dividends declared and all dividends
declared on both the original share and such additional shares, but does not
include realized gains and losses or unrealized appreciation and depreciation.
Compound effective yields are computed by adding1 to the base period return
(calculated as described above), raising the sum to a power equal to 365/7 and
subtracting 1. Based on the foregoing computations, the table below shows, the
annualized yields for all share classes of the Cash Investment, Money Market,
Tax-Free Money Market and U.S. Treasury Money Market Funds for the seven-day
period ended June 30, 1998.
<TABLE>
<CAPTION>
- -------------------- --------------------- ----------------------- ------------------------ -------------------------
Class A Class B Class K Class Y
- -------------------- --------- ----------- ---------- ------------ ---------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tax-Equivalent Tax-Equivalent Tax-Equivalent Tax-Equivalent
Yield Yield Yield Yield
Yield Yield Yield Yield
- -------------------- --------- ----------- ---------- ------------ ---------- ------------- ------------ ------------
Cash Investment
Fund
- -------------------- --------- ----------- ---------- ------------ ---------- ------------- ------------ ------------
Money Market Fund
- -------------------- --------- ----------- ---------- ------------ ---------- ------------- ------------ ------------
Tax-Free Money
Market Fund
- -------------------- --------- ----------- ---------- ------------ ---------- ------------- ------------ ------------
U.S. Treasury Fund
- -------------------- --------- ----------- ---------- ------------ ---------- ------------- ------------ ------------
</TABLE>
In addition, a standardized "tax-equivalent yield" may be quoted for
the Tax-Free Money Market Fund, which is computed by: (a) dividing the portion
of the Fund's yield (as calculated above) that is exempt from Federal income tax
by one minus a stated Federal income tax rate; and (b) adding the figure
resulting from (a) above to that portion, if any, of the yield that is not
exempt from Federal income tax. For the seven-day period ended June 30, 1998,
the tax-equivalent yield for Class Y, Class K and Class A Shares of the Tax-Free
Money Market Fund was ______% (Class Y), ______% (Class K) and _____% (Class A)
calculated for all share classes based on a stated tax rate of 31%. The fees
which may be imposed by institutions on their Customers are not reflected in the
calculations of yields for the Funds.
Yield may fluctuate daily and does not provide a basis for determining
future yields. Because the yields of each Fund will fluctuate, they cannot be
compared with yields on savings accounts or other investment alternatives that
provide an agreed to or guaranteed fixed yield for a stated period of time.
However, yield information may be useful to an investor considering temporary
investments in money market instruments. In comparing the yield of one money
market fund to another, consideration should be given to each Fund's investment
policies including the types of investments made, lengths of maturities of the
portfolio securities, and whether there are any special account charges which
may reduce the effective yield.
YIELD AND PERFORMANCE OF THE NON-MONEY MARKET FUNDS
The Bond Funds', International Bond Fund's and Short Term Treasury
Fund's 30-day (or one month) standard yield described in the applicable
Prospectus is calculated for each Fund in accordance with the method prescribed
by the SEC for mutual funds:
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
54
<PAGE>
each month, or, with respect to obligations purchased during the month, the
purchase price (plus actual accrued interest). Such yield is then divided by 360
and the quotient is multiplied by the market value of the obligation (including
actual accrued interest) in order to determine the interest income on the
obligation for each day of the subsequent month that the obligation is in the
portfolio. It is assumed in the above calculation that each month contains 30
days. The maturity of a debt obligation with a call provision is deemed to be
the next call date on which the obligation reasonably may be expected to be
called or, if none, the maturity date. For the purpose of computing yield on
equity securities held by a Fund, dividend income is recognized by accruing
1/360 of the stated dividend rate of the security for each day that the security
is held by the Fund.
Interest earned on tax-exempt obligations that are issued without
original issue discount and have a current market discount is calculated by
using the coupon rate of interest instead of the yield to maturity. In the case
of tax-exempt obligations that are issued with original issue discount but which
have discounts based on current market value that exceed the then-remaining
portion of the original issue discount (market discount), the yield to maturity
is the imputed rate based on the original issue discount calculation. On the
other hand, in the case of tax-exempt obligations that are issued with original
issue discount but which have the discounts based on current market value that
are less than the then-remaining portion of the original issue discount (market
premium), the yield to maturity is based on the market value.
With respect to mortgage or other receivables-backed debt obligations
purchased at a discount or premium, the formula generally calls for amortization
of the discount or premium. The amortization schedule will be adjusted monthly
to reflect changes in the market value of such debt obligations. Expenses
accrued for the period (variable "b" in the formula) include all recurring fees
charged by a Fund to all shareholder accounts in proportion to the length of the
base period and the Fund's mean (or median) account size. Undeclared earned
income will be subtracted from the offering price per share (variable "d" in the
formula). A Fund's maximum offering price per share for purposes of the formula
includes the maximum sales charge imposed -- currently 5.50% of the per share
offering price for Class A Shares of the Equity Funds (with the exception of the
Index 500 Fund, currently 2.50% of the per share offering price for Class A) and
the Balanced Fund and 4.00% of the per share offering price for Class A Shares
of the Bond Fund, International Bond Fund, Short Term Treasury Fund and Tax-Free
Bond Funds. The tax-equivalent yield for each Fund below is based on a stated
federal tax rate of 31% and, with respect to Michigan Bond Fund, a Michigan
state tax rate of 4%.
CLASS A SHARES
- --------------
The standard yields and/or tax-equivalent yields of the Class A Shares
of the following Funds for the 30-day period ended June 30, 1998 were:
30-DAY YIELD TAX-EQUIVALENT 30-DAY YIELD
------------- ---------------------------
Bond Fund % %
Intermediate Bond Fund % %
US Government Income Fund % %
International Bond Fund % %
Short Term Treasury Fund+ % %
Michigan Bond Fund % %
Tax-Free Bond Fund % %
Tax-Free Intermediate Bond Fund % %
+ As of June 2, 1998, Class A, Class B and Class C Shares of Short Term
Treasury Fund were closed to all investments.
55
<PAGE>
Class B Shares
- --------------
The standard yields and/or tax-equivalent yields of the Class B Shares
of the following Funds for the 30-day period ended June 30, 1998 were:
30-DAY YIELD TAX-EQUIVALENT 30-DAY YIELD
------------ ---------------------------
Bond Fund % %
Intermediate Bond Fund % %
US Government Income Fund % %
International Bond Fund % %
Short Term Treasury Fund+ % %
Michigan Bond Fund % %
Tax-Free Bond Fund % %
Tax-Free Intermediate Bond Fund % %
+ As of June 2, 1998, Class A, Class B and Class C Shares of Short Term
Treasury Fund were closed to all investments.
Class C Shares
- --------------
The standard yields and/or tax-equivalent yields of the Class C Shares
of the following Funds for the 30-day period ended June 30, 1998 were:
30-DAY YIELD TAX-EQUIVALENT 30-DAY YIELD
------------ ---------------------------
Bond Fund % %
Intermediate Bond Fund % %
US Government Income Fund % %
International Bond Fund % %
Short Term Treasury Fund+ % %
Michigan Bond Fund % %
Tax-Free Bond Fund % %
Tax-Free Intermediate Bond Fund % %
+ As of June 2, 1998, Class A, Class B and Class C Shares of Short Term
Treasury Fund were closed to all investments.
Class K Shares
- --------------
The standard yields and/or tax-equivalent yields of the Class K Shares
of the following Funds for the 30-day period ended June 30, 1998 were:
30-DAY YIELD TAX-EQUIVALENT 30-DAY YIELD
------------ ---------------------------
Bond Fund % %
Intermediate Bond Fund % %
US Government Income Fund % %
International Bond Fund % %
Short Term Treasury Fund+ % %
Michigan Bond Fund % %
Tax-Free Bond Fund % %
Tax-Free Intermediate Bond Fund % %
+ As of June 15, 1998, Class K Shares of Short Term Treasury Fund were renamed
the Michigan Municipal Shares and the 0.25% shareholder servicing fee was
terminated.
56
<PAGE>
CLASS Y SHARES
- --------------
The standard yields and/or tax-equivalent yields of the Class Y Shares
of the following Funds for the 30-day period ended June 30, 1998 were:
30-DAY YIELD TAX-EQUIVALENT 30-DAY YIELD
------------ ---------------------------
Bond Fund % %
Intermediate Bond Fund % %
US Government Income Fund % %
International Bond Fund % %
Short Term Treasury Fund % %
Michigan Bond Fund % %
Tax-Free Bond Fund % %
Tax-Free Intermediate Bond Fund % %
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:
P (1 + T)n = ERV
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
n = period covered by the computation, expressed in years.
Each Fund that advertises its "aggregate total return" computes such
returns by determining the aggregate compounded rates of return during specified
periods that likewise equate the initial amount invested to the ending
redeemable value of such investment. The formula for calculating aggregate total
return is as follows:
(ERV) - 1
-----
Aggregate Total Return = P
The calculations are made assuming that (1) all dividends and capital
gain distributions are reinvested on the reinvestment dates at the price per
share existing on the reinvestment date, (2) all recurring fees charged to all
shareholder accounts are included, and (3) for any account fees that vary with
the size of the account, a mean (or median) account size in the Fund during the
periods is reflected. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment after deduction of all non-recurring charges at the end of the
measuring period. The Funds' average annual total return and load adjusted
aggregate total return quotations for Class A Shares will reflect the deduction
of the maximum sales charge charged in connection with the purchase of such
shares - currently 5.50% of the per share offering price for Class A Shares of
the Equity Funds (with the exception of the Index 500 Fund, currently 2.50% of
the per share offering price for Class A) and the Balanced Fund and 4.00% of the
per share offering price for Class A Shares of the Bond Fund, International Bond
Fund and Tax-Free Bond Funds; and the Funds' load adjusted average annual total
return and load adjusted aggregate total return quotations for Class B Shares
will reflect any applicable CDSC; provided that the Funds may also advertise
total return data without reflecting any applicable CDSC sales charge imposed on
the purchase of Class A Shares or Class B Shares in accordance with the views of
the SEC. Quotations which do not reflect the sales charge will, of course, be
higher than quotations which do.
57
<PAGE>
Based on the foregoing calculation, set forth below are the average
annual total return figures for the Class A, B, C, K and Y Shares of each of the
following Funds for the 12 month and 5 year periods ended June 30, 1998 and
since commencement of operations.
<TABLE>
<CAPTION>
Fund-Inception Date
- ---------------------- ------------------ ------------------ ----------------- ------------------ ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
ACCELERATING GROWTH 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
FUND ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ----------------- -------------
Class A-11/23/92
Class B-4/25/94
Class C-9/26/95
Class K-11/23/92
Class Y-12/1/91
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
BALANCED 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
FUND ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-4/30/93
Class B-6/21/94
Class C-1/24/96
Class K-4/16/93
Class Y-4/13/93
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
GROWTH & INCOME FUND 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-8/8/94
Class B-8/9/94
Class C-12/5/95
Class K-7/5/94
Class Y-7/5/94
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
INDEX 500 FUND 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-12/9/92
Class B-10/31/95
Class C+ N/A N/A N/A N/A N/A N/A
Class K12/7/92
Class Y-12/1/91
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
+ As of June 30, 1998, Class C had not commenced operations.
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
INTERNATIONAL 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
EQUITY ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
FUND 6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-11/30/92
Class B-3/9/94
Class C-9/29/95
Class K-11/23/92
Class Y-12/1/91
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
</TABLE>
58
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
INTERNATIONAL GROWTH 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
FUND ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-2/20/97
Class B-3/19/97
Class C-2/13/97
Class K-1/10/97
Class Y-12/31/96
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
EMERGING 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
MARKETS FUND ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-1/14/97
Class B-2/25/97
Class C-3/3/97
Class K-1/10/97
Class Y-12/31/96
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
HEALTHCARE FUND 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-2/14/97
Class B-1/31/97
Class C-1/13/97
Class K-4/1/97
Class Y-12/31/96
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
MICRO-CAP FUND 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-12/26/96
Class B-2/24/97
Class C-3/31/97
Class K-12/31/96
Class Y-12/26/96
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
SMALL-CAP FUND 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-1/10/97
Class B-2/11/97
Class C-1/13/97
Class K-12/31/96
Class Y-12/26/96
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
</TABLE>
59
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
NETNET FUND 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-8/19/96 N/A N/A N/A N/A
Class B-6/1/98 N/A N/A N/A N/A
Class C * N/A N/A N/A N/A N/A N/A
Class Y-6/1/98 N/A N/A N/A N/A
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
* As of June 30, 1998, Class C had not commenced operations.
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
GROWTH OPPORTUNITIES 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
FUND ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A * N/A N/A N/A N/A
Class B * N/A N/A N/A N/A
Class C * N/A N/A N/A N/A
Class K * N/A N/A N/A N/A
Class Y-6/24/98 N/A N/A N/A N/A
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
* As of June 30, 1998, Class A, B, C and K had not commenced operations.
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
GLOBAL FINANCIAL 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
SERVICES FUND ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A # N/A N/A N/A N/A
Class B # N/A N/A N/A N/A
Class C # N/A N/A N/A N/A
Class K # N/A N/A N/A N/A
Class Y # N/A N/A N/A N/A
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
# As of June 30, 1998, Class A, B, C and K had not commenced operations.
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
INTERNATIONAL BOND 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
FUND ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-10/17/96
Class B-6/9/97
Class C-6/3/98
Class K-3/24/97
Class Y-10/2/96
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
MULTI-SEASON FUND 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-8/4/93
Class B-4/29/93
Class C-9/20/93
Class K-6/23/95
Class Y-8/16/93
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
</TABLE>
60
<PAGE>
<TABLE>
<CAPTION>
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
REAL ESTATE FUND 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-9/30/94
Class B-10/3/94
Class C-1/5/96
Class K-10/3/96
Class Y-10/3/94
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
SMALL COMPANY GROWTH 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
FUND ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-11/23/92
Class B-4/28/94
Class C-9/26/95
Class K-11/23/92
Class Y-12/1/91
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
VALUE FUND 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-9/14/95
Class B-9/19/95
Class C-2/9/96
Class K-11/30/95
Class Y-8/18/95
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
BOND FUND 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-12/9/92
Class B-3/13/96
Class C-3/25/96
Class K-11/23/92
Class Y-12/1/91
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
INTERMEDIATE BOND 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
FUND ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-11/24/92
Class B-10/25/94
Class C-4/19/96
Class K-11/20/92
Class Y-12/1/91
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
</TABLE>
61
<PAGE>
<TABLE>
<CAPTION>
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT INCOME 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
FUND ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-7/28/94
Class B-9/6/95
Class C-8/12/96
Class K-7/5/94
Class Y-7/5/94
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
SHORT TERM TREASURY 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
FUND ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class B*-4/4/97
Michigan Municipal
Shares**4/2/97
Class Y-1/29/97
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
*As of June 2, 1998, Class B Shares of Short Term Treasury Fund were closed to
all investments.
**As of June 15, 1998, Class K Shares of Short Term Treasury Fund were renamed
the Michigan Municipal Shares.
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
MICHIGAN BOND FUND 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-2/15/94
Class B-7/5/94
Class C-10/4/96
Class K-1/3/94
Class Y-1/3/94
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
TAX-FREE BOND FUND 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-10/9/95
Class B-12/6/94
Class C-7/7/97
Class K-7/5/94
Class Y-7/21/94
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
TAX-FREE 12 MONTH PERIOD 5 YEAR INCEPTION 12 MONTH PERIOD 5 YEAR INCEPTION
INTERMEDIATE BOND ENDED 6/30/98* PERIOD ENDED THROUGH ENDED 6/30/98** PERIOD ENDED THROUGH
FUND 6/30/98* 6/30/98* 6/30/98** 6/30/98**
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
Class A-11/30/92
Class B-5/16/96
Class C-7/8/98
Class K-2/9/87
Class Y-12/17/92
- ---------------------- ------------------ ------------------ ----------------- ------------------ ------------------ ------------
* Figures do not include the effect of the sales charge.
** Figures include the effect of the applicable sales charge.
</TABLE>
62
<PAGE>
As of June 30, 1998, the following Classes had not commenced
operations: Class A Shares of Global Financial Services Fund and Growth
Opportunities Fund; Class B Shares of Global Financial Services Fund, Growth
Opportunities Fund, Cash Investment Fund, International Bond Fund, Global
Financial Services Fund, Growth Opportunities Fund, NetNet Fund, Tax-Free Money
Market Fund and U.S. Treasury Money Market Fund; Class C Shares of Global
Financial Services Fund, Growth Opportunities Fund, Cash Investment Fund,
Tax-Free Money Market Fund, Index 500 Fund, Tax-Free Intermediate Bond Fund and
NetNet Fund and U.S. Treasury Money Market Fund, and Class K Shares of Global
Financial Services Fund, Growth Opportunities Fund and NetNet Fund.
The foregoing performance data reflects the imposition of the maximum
sales load on Class A Shares but does not reflect payments under the Trust's
Class K Plan or Class A Plan, which were not imposed before December 31, 1993.
ALL FUNDS. The performance of any investment is generally a function
of portfolio quality and maturity, type of investment and operating expenses.
From time to time, in advertisements or in reports to shareholders, a
Fund's yields or total returns may be quoted and compared to those of other
mutual funds with similar investment objectives and to stock or other relevant
indices. For example, a Fund's yield may be compared to the IBC/Donoghue's Money
Fund Average, which is an average compiled by Donoghue's MONEY FUND REPORT of
Holliston, MA 01746, a widely recognized independent publication that monitors
the performance of money market funds, or to the data prepared by Lipper
Analytical Services, Inc., a widely recognized independent service that monitors
the performance of mutual funds. In addition, as stated in the Funds'
Prospectuses, the tax-equivalent yield (and hypothetical examples illustrating
the effect of tax-equivalent yields) of a Fund may be quoted in advertisements
or reports to shareholders. Hypothetical examples showing the difference between
a taxable and a tax-free investment may also be provided to shareholders.
TAXES
The following summarizes certain additional federal and state income
tax considerations generally affecting the Funds and their shareholders that are
not described in the Funds' Prospectuses. No attempt is made to present a
detailed explanation of the tax treatment of the Funds or their shareholders,
and the discussion here and in the applicable Prospectus is not intended as a
substitute for careful tax planning. This discussion is based upon present
provisions of the Code, the regulations promulgated thereunder, and judicial and
administrative ruling authorities, all of which are subject to change, which
change may be retroactive. Prospective investors should consult their own tax
advisors with regard to the federal tax consequences of the purchase, ownership
and disposition of Fund shares, as well as the tax consequences arising under
the laws of any state, foreign country, or other taxing jurisdiction.
GENERAL. Each Fund intends to elect and qualify to be taxed separately
as a regulated investment company under 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
63
<PAGE>
with respect to its business of investing in such stock, securities, or
currencies (the "Income Requirement"). Interest (including original issue
discount and "accrued market discount") received by a Fund at maturity or on
disposition of a security held for less than three months will not be treated
(in contrast to other income which is attributable to realized market
appreciation) as gross income from the sale or other disposition of securities
held for less than three months for this purpose.
In addition to the foregoing requirements, at the close of each quarter
of its taxable year, at least 50% of the value of each Fund's assets must
consist of cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and securities of other issuers (as to which a
Fund has not invested more than 5% of the value of its total assets in
securities of such issuer and as to which a Fund does not hold more than 10% of
the outstanding voting securities of such issuer) and no more than 25% of the
value of each Fund's total assets may be invested in the securities of any one
issuer (other than U.S. Government securities and securities of other regulated
investment companies), or in two or more issuers which such Fund controls and
which are engaged in the same or similar trades or businesses.
Distributions of net investment income received by a Fund from
investments in debt securities (other than interest on tax-exempt municipal
obligations held by the Tax-Free Bond Funds and Tax-Free Money Market Fund) and
any net realized short-term capital gains distributed by a Fund will be taxable
to shareholders as ordinary income and will not be eligible for the dividends
received deduction for corporations.
Each Fund intends to distribute to shareholders any excess of net
long-term capital gain over net short-term capital loss ("net capital gain") for
each taxable year. Such gain is distributed as a capital gain dividend and is
taxable to shareholders as gain from the sale or exchange of a capital asset
held for more than one year, regardless of the length of time a shareholder has
held his or her Fund shares and regardless of whether the distribution is paid
in cash or reinvested in shares. The Funds expect that capital gain dividends
will be taxable to shareholders as long-term gain. Capital gain dividends are
not eligible for the dividends received deduction.
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.
Amounts not distributed on a timely basis in accordance with a calendar
year distribution requirement are subject to a nondeductible 4% excise tax. To
prevent imposition of the excise tax, a Fund must distribute during each
calendar year an amount equal to the sum of (1) at least 98% of its ordinary
income (not taking into account any capital gains or losses) for the calendar
year, (2) at least 98% of its capital gains in excess of its capital losses
(adjusted for certain ordinary losses, as prescribed by the Code) for the
one-year period ending on October 31 of the calendar year, and (3) any ordinary
income and capital gains for previous years that was not distributed during
those years. A distribution will be treated as paid on December 31 of the
current calendar year if it is declared by a Fund in October, November or
December with a record date in such a month and paid by a Fund during January of
the following calendar year. Such distributions will be taxable to shareholders
in the calendar year in which the distributions are declared, rather than the
calendar year in which the distributions are received. To prevent application of
the excise tax, a Fund intends to make its distributions in accordance with the
calendar year distribution requirement.
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<PAGE>
Although a 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, a Fund may be subject to
the tax laws of such states or localities.
The Trust, the Framlington Trust and the Company will be required in
certain cases to withhold and remit to the United States Treasury 31% of taxable
distributions, including gross proceeds realized upon sale or other dispositions
paid to any shareholder (i) who has provided an incorrect tax identification
number or no number at all, (ii) who is subject to backup withholding by the
Internal Revenue Service for failure to report the receipt of taxable interest
or dividend income properly, or (iii) who has failed to certify that he is not
subject to backup withholding or that he is an "exempt recipient."
DISPOSITION OF SHARES. Upon a redemption, sale or exchange of his or
her shares, a shareholder will realize a taxable gain or loss depending upon his
or her basis in the shares. Such gain or loss will be treated as capital gain or
loss if the shares are capital assets in the shareholder's hands and will be
long-term or short-term, generally, depending upon the shareholder's holding
period for the shares. Any loss realized on a redemption, sale or exchange will
be disallowed to the extent the shares disposed of are replaced (including
through reinvestment of dividends) within a period of 61 days beginning 30 days
before and ending 30 days after the shares are disposed of. In such a case, the
basis of the shares acquired will be adjusted to reflect the 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 and treated
as long-term capital gains. 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, be disallowed if such shares have been held by the shareholder for
six months or less.
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.
TAX-FREE BOND FUNDS AND TAX-FREE MONEY MARKET FUND. The Michigan Bond
Fund, Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund, and Tax-Free Money
Market Fund are designed to provide investors with current tax-exempt interest
income. Shares of the Funds would not be suitable for tax-exempt institutions
and may not be suitable for retirement plans qualified under Section 401 of the
Code, H.R. 10 plans and individual retirement accounts since such plans and
accounts are generally tax-exempt and, therefore, not only would not gain any
additional benefit from the Funds' dividends being tax-exempt but also such
dividends would be taxable when distributed to the beneficiary. In addition, the
Funds may not be an appropriate investment for entities which are "substantial
users" of facilities financed by private activity bonds or "related persons"
thereof. "Substantial user" is defined under U.S. Treasury Regulations to
include a non-exempt person who regularly uses a part of such facilities in his
trade or business and (a) whose gross revenues derived with respect to the
facilities financed by the issuance of bonds are more than 5% of the total
revenues derived by all users of such facilities, (b) who occupies more than 5%
of the entire usable area of such facilities, or (c) for whom such facilities or
a part thereof were specifically
65
<PAGE>
constructed, reconstructed or acquired. "Related persons" generally include
certain related natural persons, affiliated corporations, a partnership and its
partners and an S corporation and its shareholders.
In order for the Funds to pay exempt-interest dividends with respect to
any taxable year, at the close of each quarter of each Fund's taxable year at
least 50% of the value of the Fund's assets must consist of tax-exempt municipal
obligations. Exempt-interest dividends distributed to shareholders are not
included in the shareholder's gross income for regular federal income tax
purposes. However, all shareholders required to file a federal income tax return
are required to report the receipt of exempt-interest dividends and other
tax-exempt interest on their returns. Moreover, while such dividends and
interest are exempt from regular federal income tax, they may be subject to
alternative minimum tax in two circumstances. First, exempt-interest dividends
derived from certain "private activity" bonds issued after August 7, 1986 will
generally constitute an item of tax preference for both corporate and
non-corporate taxpayers. Second, exempt-interest dividends derived from all
bonds, regardless of the date of issue, must be taken into account by corporate
taxpayers in determining the amount of certain adjustments for alternative
minimum tax purposes. Receipt of exempt-interest dividends may result in
collateral federal income tax consequences to certain other taxpayers, including
financial institutions, property and casualty insurance companies, individual
recipients of Social Security or Railroad Retirement benefits, and foreign
corporations engaged in a trade or business in the United States. Prospective
investors should consult their own tax advisors as to such consequences.
The percentage of total dividends paid by the Fund with respect to any
taxable year which qualifies as federal exempt-interest dividends will be the
same for all shareholders receiving dividends during such year. If a shareholder
receives an exempt-interest dividend with respect to any share and such share is
held for six months or less, any loss on the sale or exchange of such share will
be disallowed to the extent of the amount of such dividends.
Interest on indebtedness incurred by a shareholder to purchase or carry
shares of the Funds generally is not deductible for federal income tax purposes
if the Funds distribute exempt-interest dividends during the shareholder's
taxable year.
Investors may be subject to state and local taxes on income derived
from an investment in a Fund. In certain states, income derived from a Fund
which is attributable to interest on obligations of that state or any
municipality or political subdivision thereof may be exempt from taxation.
Shareholders are advised to consult their own tax advisers with respect
to the particular tax consequences to them of an investment in a Fund. Persons
who may be "substantial users" (or "related persons" of substantial users) of
facilities financed by industrial development bonds should consult their tax
advisers before investing in a Fund.
MICHIGAN TAX CONSIDERATIONS - MICHIGAN BOND FUND AND TAX-FREE
INTERMEDIATE BOND FUND. As stated in the Michigan Bond Fund Prospectus and the
Tax-Free Intermediate Bond Fund Prospectus, dividends paid by the Fund that are
derived from interest attributable to tax-exempt Michigan Municipal Obligations
will be exempt from Michigan Income Tax, Michigan Intangibles Tax and Michigan
Single Business Tax. Conversely, to the extent that the Fund's dividends are
derived from interest on obligations other than Michigan Municipal Obligations,
such dividends will be subject to Michigan Income, Intangibles and Michigan
Single Business Taxes, even though the dividends may be exempt for federal
Income Tax purposes.
In particular, gross interest income and dividends derived from
obligations or securities of the State of Michigan and its political
subdivisions, exempt from federal Income Tax, are exempt from Michigan Income
Tax under Act No. 281, Public Acts of Michigan, 1967, as amended, and are exempt
from Michigan Single Business Tax under Act No. 228, Public Acts of Michigan,
1975, as amended. The Michigan Income Tax act levies a flat-rate income tax on
individuals, estates, and trusts. The Single Business Tax Act levies a tax upon
the "adjusted tax base" of most individuals, corporations, financial
organizations, partnerships, joint ventures, estates, and trusts with "business
activity" in Michigan.
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<PAGE>
Bonds or other similar obligations of the State of Michigan or of a
political subdivision of the State of Michigan are exempt from Michigan
Intangibles Tax under Act No. 301, Public Acts of Michigan, 1939, as amended. In
1986, the Michigan Department of Treasury issued a Bulletin stating that holders
of interests in investment companies who are subject to the Michigan intangibles
tax will be exempt from the tax to the extent that the investment portfolio
consists of items such as Michigan Municipal Obligations.
The transfer of obligations or securities of the State of Michigan and
its political subdivisions by the Fund, as well as the transfer of Fund shares
by a shareholder, is subject to Michigan taxes measured by gain on the sale,
payment, or other disposition thereof.]
International Equity Fund, International Growth Fund, Global Financial
Services Fund, Emerging Markets Fund and International Bond Fund. Income
received by the International Equity Fund, the International Growth Fund, the
Emerging Markets Fund, the Global Financial Services Fund and the International
Bond Fund from sources within foreign countries may be subject to withholding
and other foreign taxes. The payment of such taxes will reduce the amount of
dividends and distributions paid to the Funds' shareholders. So long as a Fund
qualifies as a regulated investment company, certain distribution requirements
are satisfied, and more than 50% of the value of the Fund's assets at the close
of the taxable year consists of securities of foreign corporations, the Fund may
elect, subject to limitation, to pass through its foreign tax credits to its
shareholders. The Fund may qualify for and make this election in some, but not
necessarily all, of its taxable years. If a Fund were to make an election, an
amount equal to the foreign income taxes paid by the Fund would be included in
the income of its shareholders and the shareholders would be entitled to credit
their portions of this amount against their U.S. tax due, if any, or to deduct
such portions from their U.S. taxable income, if any. Shortly after any year for
which it makes such an election, a Fund will report to its shareholders, in
writing, the amount per share of such foreign tax that must be included in each
shareholder's gross income and the amount which will be available for deduction
or credit. No deduction for foreign taxes may be claimed by a shareholder who
does not itemize deductions. Certain limitations are imposed on the extent to
which the credit (but not the deduction) for foreign taxes may be claimed.
Shareholders who choose to utilize a credit (rather than a deduction)
for foreign taxes will be subject to limitations, including the restriction that
the credit may not exceed the shareholder's United States tax (determined
without regard to the availability of the credit) attributable to his or her
total foreign source taxable income. For this purpose, the portion of dividends
and distributions paid by the Fund from its foreign source income will be
treated as foreign source income. The Fund's gains and losses from the sale of
securities will generally be treated as derived from United States sources and
certain foreign currency gains and losses likewise will be treated as derived
from United States sources. The limitation on the foreign tax credit is applied
separately to foreign source "passive income", such as the portion of dividends
received from the Fund which qualifies as foreign source income. In addition,
only a portion of the foreign tax credit will be allowed to offset any
alternative minimum tax imposed on corporations and individuals. Because of
these limitations, shareholders may be unable to claim a credit for the full
amount of their proportionate shares of the foreign income taxes paid by the
Fund.
TAXATION OF CERTAIN FINANCIAL INSTRUMENTS. Special rules govern the
Federal income tax treatment of financial instruments that may be held by some
of the Funds. These rules may have a particular impact on the amount of income
or gain that the Funds must distribute to their respective shareholders to
comply with the Distribution Requirement, on the income or gain qualifying under
the Income Requirement all described above.
MARKET DISCOUNT. If a Fund purchases a debt security at a price lower
than the stated redemption price of such debt security, the excess of the stated
redemption price over the purchase price is "market discount". If the amount of
market discount is more than a de minimis amount, a portion of such market
discount must be included as ordinary income (not capital gain) by the Fund in
each taxable year in which the Fund owns an interest in such debt security and
receives a principal payment on it. In particular, the Fund will be required to
allocate that principal payment first to the portion of the market discount on
the debt security that has accrued but has not previously been includable in
income. In general, the amount of market discount that must be included for each
period is equal to the lesser of (i) the amount of market discount accruing
during such period (plus any accrued
67
<PAGE>
market discount for prior periods not previously taken into account) or (ii) the
amount of the principal payment with respect to such period. Generally, market
discount accrues on a daily basis for each day the debt security is held by a
Fund at a constant rate over the time remaining to the debt security's maturity
or, at the election of the Fund, at a constant yield to maturity which takes
into account the semi-annual compounding of interest. Gain realized on the
disposition of a market discount obligations must be recognized as ordinary
interest income (not capital gain) to the extent of the "accrued market
discount."
ORIGINAL ISSUE DISCOUNT. Certain debt securities acquired by the Funds
may be treated as debt securities that were originally issued at a discount.
Very generally, original issue discount is defined as the difference between the
price at which a security was issued and its stated redemption price at
maturity. Although no cash income on account of such discount is actually
received by a Fund, original issue discount that accrues on a debt security in a
given year generally is treated for federal income tax purposes as interest and,
therefore, such income would be subject to the distribution requirements
applicable to regulated investment companies.
Some debt securities may be purchased by the Fund, at a discount that
exceeds the original issue discount on such debt securities, if any. This
additional discount represents market discount for federal income tax purposes
(see above).
HEDGING TRANSACTIONS. The taxation of equity options and
over-the-counter options on debt securities is governed by Code section 1234.
Pursuant to Code section 1234, the premium received by a Fund for selling a put
or call option is not included in income at the time of receipt. If the option
expires, the premium is short-term capital gain to the Fund. If the Fund enters
into a closing transaction, the difference between the amount paid to close out
its position and the premium received is short-term capital gain or loss. If a
call option written by a Fund is exercised, thereby requiring the Fund to sell
the underlying security, the premium will increase the amount realized upon the
sale of such security and any resulting gain or loss will be a capital gain or
loss, and will be long-term or short-term depending upon the holding period of
the security. With respect to a put or call option that is purchased by a Fund,
if the option is sold, any resulting gain or loss will be a capital gain or
loss, and will be long-term or short-term, depending upon the holding period of
the option. If the option expires, the resulting loss is a capital loss and is
long-term or short-term, depending upon the holding period of the option. If the
option is exercised, the cost of the option, in the case of a call option, is
added to the basis of the purchased security and, in the case of a put option,
reduces the amount realized on the underlying security in determining gain or
loss.
Any regulated futures and foreign currency contracts and certain
options (namely, nonequity options and dealer equity options) in which a Fund
may invest may be "section 1256 contracts." Gains or losses on section 1256
contracts are generally considered 60% long-term and 40% short-term capital
gains or losses; however, foreign currency gains or losses arising from certain
section 1256 contracts may be treated as ordinary income or loss. Also, section,
1256 contracts held by a Fund at the end of each taxable year (and generally for
purposes of the 4% excise tax, on October 31 of each year) are
"marked-to-market" with the result that unrealized gains or losses are treated
as though they were realized.
Generally, hedging transactions, if any, undertaken by a Fund may
result in "straddles" for U.S. federal income tax purposes. The straddle rules
may affect the character of gains (or losses) realized by the Funds. In
addition, losses realized by a Fund on positions that are part of a straddle may
be deferred under the straddle rules, rather than being taken into account in
calculating the taxable income for the taxable year in which such losses are
realized. Because only a few regulations implementing the straddle rules have
been promulgated, the tax consequences of hedging transactions to the Funds are
not entirely clear. The hedging transactions may increase the amount of
short-term capital gain realized by the Funds which is taxed as ordinary income
when distributed to shareholders.
The Funds may make one or more of the elections available under the
Code which are applicable to straddles. If a Fund makes any of the elections,
the amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections may
operate to accelerate the recognition of gains or losses from the affected
straddle positions.
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<PAGE>
Because application of the straddle rules may affect the character of
gains or losses, defer losses and/or accelerate the recognition of gains or
losses from the affected straddle positions, the amount which must be
distributed to shareholders, and which will be taxed to shareholders as ordinary
income or long-term capital gain, may be increased or decreased substantially as
compared to a fund that did not engage in such hedging transactions.
The diversification requirements applicable to the Funds' assets may
limit the extent to which the Funds will be able to engage in transactions in
options, futures or forward contracts.
CONSTRUCTIVE SALES. Recently enacted rules may affect the timing and
character of gain if a Fund engages in transactions that reduce or eliminate its
risk of loss with respect to appreciated financial positions. If the Fund enters
into certain transactions in property while holding substantially identical
property, the Fund would be treated as if it had sold and immediately
repurchased the property and would be taxed on any gain (but not loss) from the
constructive sale. The character of gain from a constructive sale would depend
upon the Fund's holding period in the property. Loss from a constructive sale
would be recognized when the property was subsequently disposed of, and its
character would depend on the Fund's holding period and the application of
various loss deferral provisions of the Code.
CURRENCY FLUCTUATIONS - "SECTION 988" GAINS OR LOSSES. Under the Code,
gains or losses attributable to fluctuations in exchange rates which occur
between the time a Fund accrues receivables or liabilities denominated in a
foreign currency and the time the Fund actually collects such receivables or
pays such liabilities generally are treated as ordinary income and loss.
Similarly, on disposition of debt securities denominated in a foreign currency
and on disposition of certain futures, forward contracts and options, gains or
losses attributable to fluctuations in the value of the foreign currency between
the date of acquisition of the security or contract and the date of disposition
also are treated as ordinary gain or loss. These gains or losses, referred to
under the Code as "Section 988" gains or losses, may increase or decrease the
amount of a Fund's investment company taxable income to be distributed to its
shareholders as ordinary income.
PASSIVE FOREIGN INVESTMENT COMPANIES. Certain Funds may invest in
shares of foreign corporations that may be classified under the Code as passive
foreign investment companies ("PFICs"). In general, a foreign corporation is
classified as a PFIC if at least on-half of its assets constitute
investment-type assets, or 75% or more of its gross income investment-type
income. If a Fund receives a so-called "excess distribution" with respect to
PFIC stock, the Fund itself may be subject to a tax on a portion of the excess
distribution, whether or not the corresponding income is distributed by the Fund
to shareholders. In general, under the PFIC rules, an excess distribution is
treated as having been realized ratably over the period during which the Fund
held the PFIC shares. Each Fund will itself be subject to tax on the portion, if
any, of an excess distribution that is so allocated to prior Fund taxable years
and an interest factor will be added to the tax, as if the tax had been payable
in such prior taxable years. Certain distributions from a PFIC as well as gain
from the sale of PFIC shares are treated as excess distributions. Excess
distributions are characterized as ordinary income even though, absent
application of the PFIC rules, certain excess distributions might have been
classified as capital gain.
The Funds may be eligible to elect alternative tax treatment with
respect to PFIC shares. Under an election that currently is available in some
circumstances, a Fund generally would be required to include in its gross income
its share of the earnings of a PFIC on a current basis, regardless of whether
distributions were received from the PFIC in a given year. If this election were
made, the special rules, discussed above, relating to the taxation of excess
distributions, would not apply. In addition, another election would involve
marking to market the Fund's PFIC shares at the end of each taxable year, with
the result that unrealized gains would be treated as though they were realized
and reported as ordinary income. Any mark-to market losses and any loss from an
actual disposition of Fund shares would be deductible as ordinary losses to the
extent of any net mark-to-market gains included in income in prior years.
Income received by a Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries.
69
<PAGE>
Fund shareholders may be subject to state, local and foreign taxes on
their Fund distributions. In many states, Fund distributions which are derived
from interest on certain U.S. Government obligations are exempt from taxation.
The tax consequences to a foreign shareholder of an investment in the Fund may
be different from those described herein. Foreign shareholders are advised to
consult their own tax advisers with respect to the particular tax consequences
to them of an investment in the Fund. Shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them of an
investment in the Fund.
OTHER TAXATION
The foregoing discussion relates only to U.S. federal income tax law
and certain state taxes as applicable to U.S. persons (i.e., U.S. citizens and
residents and domestic corporations, partnerships, trusts and estates).
Distributions by the Funds, and dispositions of Fund shares also may be subject
to other 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). Future legislative or administrative
changes or court decisions may significantly change the conclusions expressed
herein, and any such changes or decisions may have a retroactive effect with
respect to the transactions contemplated herein.
ADDITIONAL INFORMATION CONCERNING SHARES
The Trust and Framlington are Massachusetts business trusts. Under each
Declaration of Trust, the beneficial interest in the Trust or Framlington may be
divided into an unlimited number of full and fractional transferable shares. The
Company is a Maryland corporation. The Trust's and Framlington's Declaration of
Trust and the Company's Articles of Incorporation authorize the Boards of
Trustees and Directors to classify or reclassify any unissued shares of the
Trust, Framlington and the Company into one or more classes by setting or
changing, in any one or more respects, their respective designations,
preferences, conversion or other rights, voting powers, restrictions,
limitations, qualifications and terms and conditions of redemption. Pursuant to
such authority, the Trust's Board of Trustees has authorized the issuance of an
unlimited number of shares of beneficial interest in the Trust, representing
interests in the Accelerating Growth, Balanced, Growth & Income, Index 500,
International Equity, Small Company Growth, Bond, Intermediate Bond, U.S.
Government Income, Michigan Bond, Tax-Free Bond, Tax-Free Intermediate Bond,
Cash Investment, Tax-Free Money Market and U.S. Treasury Money Market Funds. The
shares of each Fund (other than the Cash Investment Fund, Tax-Free Money Market
Fund and U.S. Treasury Money Market Fund) are offered in five separate classes:
Class A, Class B, Class C, Class K and Class Y Shares. The Cash Investment Fund,
Tax-Free Money Market Fund and U.S. Treasury Money Market Fund offer only Class
Y Shares, Class K Shares and Class A Shares. Pursuant to the authority of
Framlington's Declaration of Trust, the Trustees have authorized the issuance of
an unlimited number of shares of beneficial interest in Framlington representing
interests in the International Growth Fund, Emerging Markets Fund, Global
Financial Services Fund and Healthcare Fund. The shares of each Fund are offered
in five separate classes: Class A, Class B, Class C, Class K and Class Y Shares.
Pursuant to the authority of the Company's Articles of Incorporation, the
Directors have authorized the issuance of shares of common stock representing
interests in the Growth Opportunities Fund, Micro-Cap Fund, Multi-Season Fund,
Real Estate Fund, Small-Cap Value Fund, Value Fund, International Bond Fund,
Money Market Fund, All-Season Conservative Fund, All-Season Moderate Fund and
All-Season Aggressive Fund, Short Term Treasury Fund and NetNet Fund,
respectively. The shares of each Fund (other than the Money Market Fund, All-
Season Conservative Fund, All-Season Moderate Fund and All-Season Aggressive
Fund, Short Term Treasury Fund and the NetNet Fund) are offered in five separate
classes: Class A, Class B, Class C, Class K and Class Y Shares. The Money Market
Fund offers only Class A, Class B and Class C Shares (which may be acquired only
through an exchange of shares from the corresponding classes of other funds of
the Trust, Framlington the Company) and Class Y Shares. The All-Season
Conservative Fund, All-Season Moderate Fund and All-Season Aggressive Fund offer
only Class A, Class B and Class Y Shares. The Short Term Treasury Fund offers
Class Y Shares and the Michigan Municipal Shares (formerly, Class
70
<PAGE>
K Shares). The NetNet Fund offers only Class A, Class B, Class C and Class Y
Shares.
At a meeting on April 25 and 26, 1995, the Boards of the Trust and the
Company, and at a meeting on November 7, 1996, the Board of Framlington Trust
adopted plans pursuant to Rule 18f-3 under the 1940 Act ("Multi-Class Plans") on
behalf of each Fund At a meeting on February 4, 1997, the Trust, Framlington and
the Company adopted Amended and Restated Multi-Class Plans on behalf of each
Fund. At a meeting on May 5, 1998, the Company adopted a Second Amended and
Restated Multi-Class Plan on behalf of each Fund. At a meeting on August 4,
1998, the Company adopted a Third Amended Restated Multi-Class Plan on behalf of
each Fund. Each Multi-Class Plan provides that shares of each class of a Fund
are identical, except for one or more expense variables, certain related rights,
exchange privileges, class designation and sales loads assessed due to differing
distribution methods.
In the event of a liquidation or dissolution of each of the Trust,
Framlington or the Company or an individual Fund, shareholders of a particular
Fund would be entitled to receive the assets available for distribution
belonging to such Fund, and a proportionate distribution, based upon the
relative net asset values of the Trust's, Framlington Trust's or the Company's
respective Funds, of any general assets not belonging to any particular Fund
which are available for distribution. Shareholders of a Fund are entitled to
participate in the net distributable assets of the particular Fund involved on
liquidation, based on the number of shares of the Fund that are held by each
shareholder.
Holders of all outstanding shares of a particular Fund will vote
together in the aggregate and not by class on all matters, except that only
Class A Shares of a Fund will be entitled to vote on matters submitted to a vote
of shareholders pertaining to the Fund's Class A Plan, only Class B Shares will
be entitled to vote on matters submitted to a vote of shareholders pertaining to
the Fund's Class B Plan, only Class C Shares of a Fund will be entitled to vote
on matters submitted to a vote of shareholders pertaining to the Fund's Class C
Plan, and only Class K Shares of a Fund will be entitled to vote on matters
submitted to a vote of shareholders pertaining to the Class K Plan. Further,
shareholders of all of the Funds, as well as those of any other investment
portfolio now or hereafter offered by the Trust, Framlington or the Company,
will vote together in the aggregate and not separately on a Fund-by-Fund basis,
except as otherwise required by law or when permitted by the Boards of Trustees
and Directors. Rule 18f-2 under the 1940 Act provides that any matter required
to be submitted to the holders of the outstanding voting securities of an
investment company such as the Trust, Framlington or the Company shall not be
deemed to have been effectively acted upon unless approved by the holders of a
majority of the outstanding shares of each Fund affected by the matter. A Fund
is affected by a matter, (i) unless it is clear that the interests of each Fund
in the matter are substantially identical or (ii) that the matter does not
affect any interest of the Fund. Under the Rule, the approval of an investment
advisory agreement, sub-advisory agreement or any change in a fundamental
investment policy would be effectively acted upon with respect to a Fund only if
approved by a majority of the outstanding shares of such Fund. However, the Rule
also provides that the ratification of the appointment of independent auditors,
the approval of principal underwriting contracts and the election of trustees
may be effectively acted upon by shareholders of the Trust, Framlington or the
Company voting together in the aggregate without regard to a particular Fund.
Shares of each of the Trust, Framlington and the Company have
noncumulative voting rights and, accordingly, the holders of more than 50% of
each of the Trust's, Framlington's and the Company's outstanding shares
(irrespective of class) may elect all of the trustees or directors. Shares have
no preemptive rights and only such conversion and exchange rights as the Board
may grant in its discretion. When issued for payment as described in the
applicable Prospectus, shares will be fully paid and non-assessable by each of
the Trust, Framlington and the Company.
Shareholder meetings to elect trustees or directors will not be held
unless and until such time as required by law. At that time, the trustees then
in office will call a shareholders' meeting to elect trustees. Except as set
forth above, the trustees will continue to hold office and may appoint successor
trustees. Meetings of the shareholders of the Trust, Framlington or the Company
shall be called by the trustees or directors upon the written request of
shareholders owning at least 10% of the outstanding shares entitled to vote.
71
<PAGE>
The Trust's and Framlington's Declaration of Trust, as amended,
authorizes the Board of Trustees, without shareholder approval (unless otherwise
required by applicable law), to: (i) sell and convey the assets belonging to a
class of shares to another management investment company for consideration which
may include securities issued by the purchaser and, in connection therewith, to
cause all outstanding shares of such class to be redeemed at a price which is
equal to their net asset value and which may be paid in cash or by distribution
of the securities or other consideration received from the sale and conveyance;
(ii) sell and convert the assets belonging to one or more classes of shares into
money and, in connection therewith, to cause all outstanding shares of such
class to be redeemed at their net asset value; or (iii) combine the assets
belonging to a class of shares with the assets belonging to one or more other
classes of shares if the Board of Trustees reasonably determines that such
combination will not have a material adverse effect on the shareholders of any
class participating in such combination and, in connection therewith, to cause
all outstanding shares of any such class to be redeemed or converted into shares
of another class of shares at their net asset value. However, the exercise of
such authority may be subject to certain restrictions under the 1940 Act. The
Trust's and Framlington's Board of Trustees may authorize the termination of any
class of shares after the assets belonging to such class have been distributed
to its shareholders.
MISCELLANEOUS
COUNSEL. The law firm of Dechert Price & Rhoads, 1775 Eye Street, N.W.,
Washington, DC 20006, has passed upon certain legal matters in connection with
the shares offered by the Funds and serves as counsel to the Trust, Framlington
and the Company.
INDEPENDENT AUDITORS. Ernst & Young LLP, 200 Clarendon Street, Boston,
Massachusetts 02116, serves as the Trust's, Framlington's and the Company's
independent auditors.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES. As of October __,
1998, Comerica Bank, One Detroit Center, 500 Woodward Ave., Detroit, Michigan
48226, held of record substantially all of the outstanding shares of the Funds
as agent, custodian or trustee for its customers. As of such date, the following
persons were beneficial owners of 5% or more of the outstanding shares of a Fund
because they possessed voting or investment power with respect to such shares:
<TABLE>
<CAPTION>
<S> <C> <C>
Name of Fund Name and Address Percent of Total Shares Outstanding
[UPDATE ] As of October __, 1998, Munder Capital Management, on behalf of their clients owned %
_________________________. [Update]
The Munder All-Season Aggressive Fund, as of October __, 1998, held the following positions in
______________________________. [Update]
The Munder All-Season Conservative Fund, as of October __, 1998, held the following positions in
______________________________. [Update]
The Munder All-Season Moderate Fund, as of October __, 1998, held the following positions in
______________________________. [Update]
</TABLE>
SHAREHOLDER APPROVALS. As used in this Statement of Additional
Information and in each Prospectus, a "majority of the outstanding shares" of a
Fund or investment portfolio means the lesser of (a) 67% of the shares of the
particular Fund or portfolio represented at a meeting at which the holders of
more than 50% of the outstanding shares of such Fund or portfolio are present in
person or by proxy, or (b) more than 50% of the outstanding shares of such Fund
or portfolio.
72
<PAGE>
REGISTRATION STATEMENT
This Statement of Additional Information and each of the Fund's
Prospectuses do not contain all the information included in the Fund's
registration statement filed with the SEC under the 1933 Act with respect to the
securities offered hereby, certain portions of which have been omitted pursuant
to the rules and regulations of the SEC. The registration statement, including
the exhibits filed therewith, may be examined at the offices of the SEC in
Washington, D.C.
Statements contained herein and in each of the Fund's Prospectuses as
to the contents of any contract of other documents referred to are not
necessarily complete, and, in such instance, reference is made to the copy of
such contract or other documents filed as an exhibit to the Fund's registration
statement, each such statement being qualified in all respects by such
reference.
FINANCIAL STATEMENTS
(update)
73
<PAGE>
APPENDIX A
----------
- Rated Investments -
Corporate Bonds
- ---------------
Excerpts from Moody's Investors Services, Inc. ("Moody's") description of
its bond ratings:
"Aaa":
Bonds that are rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred
to as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
"Aa":
Bonds that are rated "Aa" are judged to be of high-quality by all
standards. Together with the "Aaa" group they comprise what are
generally known as "high-grade" bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in "Aaa"
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risks appear somewhat larger than in "Aaa" securities.
"A":
Bonds that are rated "A" possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
"Baa":
Bonds that are rated "Baa" are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appears adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
"Ba":
Bonds that are rated "Ba" are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
"B":
Bonds that are rated "B" generally lack characteristics of desirable
investments. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
"Caa":
Bonds that are rated "Caa" are of poor standing. These issues may be
in default or present elements of danger may exist with respect to
principal or interest.
Moody's applies numerical modifiers (1, 2 and 3) with respect to bonds
rated "Aa" through "B". The modifier 1 indicates that the bond being rated
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the bond ranks in the
lower end of its generic rating category.
A-1
<PAGE>
Excerpts from Standard & Poor's Corporation ("S&P") description of its bond
ratings:
"AAA":
Debt rated "AAA" has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
"AA":
Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from "AAA" issues by a small degree.
"A":
Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher
rated categories.
"BBB":
Bonds rated "BBB" are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds in
higher rated categories.
"BB", "B" and "CCC":
Bonds rated "BB" and "B" are regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal
in accordance with the terms of the obligations. "BB" represents a lower
degree of speculation than "B" and "CCC" the highest degree of
speculation. While such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions.
To provide more detailed indications of credit quality, the "AA" or "A"
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
Commercial Paper
- ----------------
The rating "Prime-1" is the highest commercial paper rating assigned by
Moody's. These issues (or related supporting institutions) are considered to
have a superior capacity for repayment of short-term promissory obligations.
Issues rated "Prime-2" (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics of "Prime-1" rated issues, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
Commercial paper ratings of S&P are current assessments of the likelihood
of timely payment of debt having original maturities of no more than 365 days.
Commercial paper rated "A-1" by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted "A-1+."
Commercial paper rated "A-2" by S&P indicates that capacity for timely payment
is strong. However, the relative degree of safety is not as high as for issues
designated "A-1."
A-2
<PAGE>
APPENDIX A
- Rated Investments -
Commercial Paper
- ----------------
Rated commercial paper purchased by a Fund must have (at the time of
purchase) the highest quality rating assigned to short-term debt securities or,
if not rated, or rated by only one agency, are determined to be of comparative
quality pursuant to guidelines approved by a Fund's Boards of Trustees and
Directors. Highest quality ratings for commercial paper for Moody's and S&P are
as follows:
Moody's: The rating "Prime-1" is the highest commercial paper rating
-------
category assigned by Moody's. These issues (or related supporting institutions)
are considered to have a superior capacity for repayment of short-term
promissory obligations.
S&P: Commercial paper ratings of S&P are current assessments of the
---
likelihood of timely payment of debts having original maturities of no more than
365 days. Commercial paper rated in the "A-1" category by S&P indicates that the
degree of safety regarding timely payment is either overwhelming or very strong.
Those issues determined to possess overwhelming safety characteristics are
denoted "A-1+".
A-3
<PAGE>
APPENDIX B
As stated in the 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.
B-1
<PAGE>
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
B-2
<PAGE>
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.
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
- -------------------------------------------------------------------------------
Portfolio Futures
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Anticipate buying $62,500 in Equity Securities -Day Hedge is Placed-
Buying 1 Index Futures at 125
Value of Futures = $62,500/Contract
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Buy Equity Securities with Actual Cost = $65,000 -Day Hedge is Lifted-
Increase in Purchase Price = $2,500 Sell 1 Index Futures at 130
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
- -------------------------------------------------------------------------------
Anticipate Selling $1,000,000 in Equity Securities -Day Hedge is Placed-
Sell 16 Index Futures at 125
Value of Futures = $1,000,000
Equity Securities - Own Stock -Day Hedge is Lifted-
Loss in Portfolio Value = $40,000 Buy 16 Index Futures at 120 with Value
= $960,000
Value of Futures = $960,000
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
B-4
<PAGE>
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.
B-5
<PAGE>
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
B-6
<PAGE>
Moody's, respectively, or that have an equivalent rating from a NRSRO or are
determined to be of equivalent credit quality by the Advisor.
The Fund's dealings in forward currency contracts and other currency
transactions such as futures, options, options on futures and swaps will be
limited to hedging involving either specific transactions or portfolio
positions. Transaction hedging is entering into a currency transaction with
respect to specific assets or liabilities of the Fund, which will generally
arise in connection with the purchase or sale of its portfolio securities or the
receipt of income therefrom. Position hedging is entering into a currency
transaction with respect to portfolio security positions denominated or
generally quoted in that currency.
The Fund will not enter into a transaction to hedge currency exposure to an
extent greater after netting all transactions intended wholly or partially to
offset other transactions, than the aggregate market value (at the time of
entering into the transaction) of the securities held in its portfolio that are
denominated or generally quoted in or currently convertible into such currency,
other than with respect to proxy hedging as described below.
The Fund may also cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which the Fund has or in which the Fund expects
to have portfolio exposure.
To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, the Fund may also engage proxy
hedging. Proxy hedging is often used when the currency to which the Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar.
Proxy hedging 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. 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. U.S. dollar, the Advisor
may enter into a commitment or option to sell D-marks and buy dollars. Currency
hedging involves some of the same risks and considerations as other transactions
with similar instruments. Currency transactions can result in losses to the
Fund if the currency being hedged fluctuates in value to a degree or in a
direction that is not anticipated. Further, there is the risk that the
perceived correlation between various currencies may not be present or may not
be present during the particular time that the Fund is engaging in proxy
hedging. If a Fund enters into a currency hedging transaction, the Fund will
comply with the asset segregation requirements. Under such requirements, the
Fund will segregate liquid, high grade assets with the custodian to the extent
the Fund's obligations are not otherwise "covered" through ownership of the
underlying currency.
Currency transactions are subject to risks different from those of other
portfolio transactions. Because currency control is of great importance to the
issuing governments and influences economic planning and policy, purchases and
sales of currency and related instruments can be negatively affected by
government exchange controls, blockages, and manipulations or exchange
restrictions imposed by governments. These can result in losses to the Fund if
it is unable to deliver or receive currency or funds in settlement of
obligations and could also cause hedges it has entered into to be rendered
useless, resulting in full currency exposure as well as incurring transaction
costs. Buyers and sellers of currency futures are subject to the same risks
that apply to the use of futures generally. Further, settlement of a currency
futures contract for the purchase of most currencies must occur at a bank based
in the issuing nation. Trading options on currency futures is relatively new,
and the ability to establish and close to positions on such options is subject
to the maintenance of a liquid market which may not always be available.
Currency exchange rates may fluctuate based on factors extrinsic to that
country's economy.
VII. Other Matters
-------------
Accounting for futures contracts will be in accordance with generally
accepted accounting principles.
B-7
<PAGE>
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 October 27, 1998. 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 October 27, 1998.
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
<TABLE>
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Page
----
<S> <C>
General................................................... 3
Fund Investments.......................................... 3
Risk Factors and Special Considerations-Index 500 Fund.... 20
Investment Limitations.................................... 20
Directors and Officers.................................... 21
Investment Advisory and Other Service Arrangements........ 25
Portfolio Transactions.................................... 29
Additional Purchase and Redemption Information............ 31
Net Asset Value........................................... 32
Performance Information................................... 32
Taxes..................................................... 34
Additional Information Concerning Shares.................. 38
Miscellaneous............................................. 39
Registration Statement.................................... 40
Financial Statements...................................... 40
Appendix A................................................ A-1
Appendix B................................................ B-1
</TABLE>
No person has been authorized to give any information or to make any
representations not contained in this Statement of Additional Information or in
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.
2
<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 each 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. ("MCM"), Munder Group LLC
and WAM Holdings, Inc. ("WAM"). MCM was founded in April 1985 as a Delaware
corporation and was a registered investment advisor. WAM is an indirect,
wholly-owned subsidiary of Comerica Incorporated which owns or controls
approximately 88% of the partnership interests in the Advisor.
Framlington Overseas Investment Management Limited serves as sub-advisor
("Sub-Advisor") to the Framlington Emerging Markets Fund, Framlington Global
Financial Services Fund, Framlington Healthcare Fund and the Framlington
International Growth Fund, (collectively, the "Framlington Funds"), which are
the four series of Framlington. The Sub-Advisor is a subsidiary of Framlington
Group Limited, incorporated in England and Wales which, through its
subsidiaries, provides a wide range of investment services. Framlington Group
Limited is a wholly-owned subsidiary of Framlington Holdings Limited which is,
in turn, owned 49% by the Advisor and 51% by Credit Commercial de France S.A., a
French banking corporation listed on the Societe des Bourses Francaises.
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.
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 to this Statement of Additional
Information. For purposes of this Statement of Additional Information, the
Accelerating Growth Fund, Growth & Income Fund, Growth
3
<PAGE>
Opportunities Fund, Index 500 Fund, International Equity Fund, Micro-Cap Equity
Fund, Multi-Season Growth Fund (the "Multi-Season Fund"), NetNet Fund, Real
Estate Equity Investment Fund (the "Real Estate Fund"), Small-Cap Value Fund,
Small Company Growth Fund, Value Fund and the Framlington Funds 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 that may or may not be offset by amounts earned on the
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 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 Emerging Markets Fund, Framlington
Global Financial Services Fund, Framlington Healthcare Fund and Framlington
International Growth Fund), each Fixed Income Fund (except International Bond
Fund), each of the Cash Investment Fund and the Money Market 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, one of which
may be the United States. Framlington Global Financial Services Fund will
invest at least 65% of its assets in securities of issuers located in at least
three countries other than the United States. The Framlington Emerging Markets
Fund will invest at least 65% of its assets in companies in emerging market
countries. There is no limit on the Framlington Healthcare Fund's investments
in foreign securities. The Multi-Season Fund and the NetNet Fund typically will
only purchase foreign securities which are represented by American Depositary
Receipts ("ADRs") listed on a domestic securities exchange or included in the
NASDAQ National Market System, or foreign securities listed directly on a
domestic securities exchange or included in the NASDAQ National Market System.
ADRs are receipts typically issued by a United States bank or trust company
evidencing ownership of the underlying foreign securities. Certain 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 Funds may also purchase Global Depositary Receipts ("GDRs") or European
Depositary Receipts ("EDRs"), which are receipts issued by European financial
institutions evidencing ownership of the underlying foreign securities.
4
<PAGE>
The International Bond Fund will primarily invest in foreign debt
obligations denominated in foreign currencies, including the European Currency
Unit ("ECU"), which are issued by foreign governments and governmental agencies,
instrumentalities or political subdivisions; debt securities issued or
guaranteed by supranational organizations (as defined below); corporate debt
securities; bank or bank holding company debt securities and other debt
securities including those convertible into foreign stock. For the purposes of
the 65% minimum 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 foreign 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 an Underlying Fund.
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.
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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 (Sub-Advisor with respect to the Framlington Funds) 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 currency 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 currency 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 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 currency contracts and conversions of foreign
currencies and U.S. dollars.
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Cash or liquid securities equal to the amount of an Underlying Fund's
assets that could be required to consummate forward contracts will be designated
on the records of the Underlying Funds or the Underlying Fund's sub-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
may purchase and sell futures contracts on interest-bearing securities or
securities 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.
ILLIQUID SECURITIES. Each of the Equity Funds and the Fixed Income Funds
may invest up to 15%, and each of the Money Market Funds may invest up to 10%,
of the value of its net assets (determined at time of acquisition) in securities
that are illiquid. Illiquid securities would generally include securities for
which there is a limited trading market, repurchase agreements and time deposits
with notice/termination dates in excess of seven days, and certain securities
that are subject to trading restrictions because they are not registered under
the Securities Act of 1933, as amended (the "Act"). If, after the time of
acquisition, events cause this limit to be exceeded, the Underlying Fund will
take steps to reduce the aggregate amount of illiquid securities as soon as
reasonably practicable in accordance with the policies of the SEC.
Each Underlying Fund (except U.S. Treasury Money Market Fund) may invest in
commercial obligations issued in reliance on the "private placement" exemption
from registration afforded by Section 4(2) of the Act ("Section 4(2) paper").
An Underlying Fund may also purchase securities that are not registered under
the Act, but which can be sold to qualified institutional buyers in accordance
with Rule 144A under the Act, ("Rule 144A securities"). Section 4(2) paper is
restricted as to disposition under the Federal securities laws, and generally is
sold to institutional investors who agree that they are purchasing the paper for
investment and not with a view to public distribution. Any resale by the
purchaser must be in an exempt transaction. Section 4(2) paper normally is
resold to other institutional investors through or with the assistance of the
issuer or investment dealers which make a market in the Section 4(2) paper, thus
providing liquidity. Rule 144A securities generally must be sold only to other
qualified institutional buyers. If a particular investment in Section 4(2)
paper or Rule 144A securities is not determined to be liquid, that investment
will be included within the Underlying Fund's limitation on investment in
illiquid securities. The Advisor (Sub-Advisor with respect to the Framlington
Funds) will determine the liquidity of such investments pursuant to guidelines
established by the Boards of Directors/Trustees. It is possible that
unregistered securities purchased by the Underlying Fund in reliance upon Rule
144A 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.
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.
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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 earmarking cash, U.S. Government securities
or other high-grade debt securities on the books of the Underlying Fund or the
Underlying Fund's sub-custodian, 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.
INVESTMENT COMPANY SECURITIES. The Underlying Funds may invest in
securities issued by other investment companies. As a shareholder of another
investment company, an Underlying Fund would bear its pro rata portion of the
other investment company's expenses, including advisory fees. These expenses
would be in addition to the expenses each Underlying Fund bears directly in
connection with its own operations. Each Underlying Fund currently intends to
limit its investments in securities issued by other investment companies so
that, as determined immediately after a purchase of such securities is made: (i)
not more than 5% of the value of the Underlying Fund's total assets will be
invested in the securities of any one investment company; (ii) not more than 10%
of the value of its total assets will be invested in the aggregate in securities
of investment companies as a group; and (iii) not more than 3% of the
outstanding voting stock of any one investment company will be owned by the
Underlying Fund.
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 each Fund's, other than the Money Market Fund's, total assets;
and 33 1/3% of the Money Market Fund's total assets) to securities firms and
financial institutions, provided that each loan is secured continuously by
collateral in the form of cash, high quality money market instruments or short-
term U.S. Government securities adjusted daily to have a market value at least
equal to the current market value of the securities loaned. These loans are
terminable at any time, and the 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 with
respect to the Framlington Funds) has determined are creditworthy under
guidelines established by the Boards of Directors/Trustees.
LOWER-RATED DEBT SECURITIES. It is expected that each Underlying Fund
(other than the Money Market Funds, Index 500 Fund and Growth & Income Fund)
will invest not more than 5% of its total assets in securities that are rated
below
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investment grade by Standard & Poor's Rating Service, a division of McGraw-Hill
Companies, Inc. ("S&P") or Moody's Investor Services, Inc. ("Moody's"), or in
comparable unrated securities. 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. A description of applicable credit ratings is set forth in
Appendix A hereto.
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. In
addition, the Funds and the Underlying Funds may acquire unrated commercial
paper and corporate bonds that are determined by the Advisor (Sub-Advisor with
respect to the
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Framlington Funds) 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 Underlying
Fund might be unable to dispose of the note because of the absence of a
secondary market and might, for this or other reasons, suffer a loss to the
extent of the default. The Funds and the Underlying Funds invest in variable
amount master notes only when the Advisor (Sub-Advisor with respect to the
Framlington Funds) 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. Opinions relating to the validity of municipal
obligations and to the exemption of interest thereon from regular Federal income
tax are rendered by bond counsel or counsel to the respective issuers at the
time of issuance. Neither the Trust nor the Advisor will review the proceedings
relating to the issuance of municipal obligations or the bases for such
opinions.
An issuer's obligations under its municipal obligations are subject to the
provisions of bankruptcy, insolvency and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any,
which may be enacted by Federal or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
enforcement of such obligations or upon the ability of municipalities to levy
taxes. The power or ability of an issuer to meet its obligations for the
payment of interest on and principal of its municipal obligations may be
materially adversely affected by litigation or other conditions.
From time to time proposals have been introduced before Congress for the
purpose of restricting or eliminating the Federal income tax exemption for
interest on municipal obligations. For example, under the Tax Reform Act of
1986 interest on certain private activity bonds must be included in an
investor's Federal alternative minimum taxable income, and corporate investors
must include all tax-exempt interest in their Federal alternative
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minimum taxable income. The Trust cannot predict what legislation, if any, may
be proposed in Congress in the future as regards the Federal income tax status
of interest on municipal obligations in general, or which proposals, if any,
might be enacted. Such proposals, if enacted, might materially adversely affect
the availability of municipal obligations for investment by the Tax-Free Bond
Funds and the Tax-Free Money Market Fund and the liquidity and value of such
Funds. In such an event the Board of Trustees would reevaluate the Fund's
investment objective and policies and consider changes in its structure or
possible dissolution.
The Cash Investment Fund and the Money Market Fund each 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 the current fiscal year.
NON-DOMESTIC BANK OBLIGATIONS. Non-domestic bank obligations include
Eurodollar Certificates of Deposit ("ECDs"), which are U.S. dollar-denominated
certificates of deposit issued by offices of foreign and domestic banks located
outside the United States; Eurodollar Time Deposits ("ETDs"), which are U.S.
U.S. dollar-denominated deposits in a foreign branch of a U.S. bank or a foreign
bank; Canadian Time Deposits ("CTDs"), which are essentially the same as ETDs
except they are issued by Canadian offices of major Canadian banks; Schedule Bs
which are obligations issued by Canadian branches of foreign or domestic banks;
Yankee Certificates of Deposit ("Yankee CDs"), which are U.S. dollar-denominated
certificates of deposit issued by a U.S. branch of a foreign bank and held in
the United States; and Yankee Bankers' Acceptances (Yankee BAs"), which are U.S.
dollar-denominated bankers' acceptances issued by a U.S. branch of a foreign
bank and held in the United States.
OPTIONS. The 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
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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 liquid securities in
such amount as are earmarked on the books of the Underlying Fund or the
Underlying Fund's sub-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 liquid securities 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 in cash or liquid securities is earmarked on the books of the
Underlying Fund or the Underlying Fund's sub-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 liquid securities
earmarked on the books of the Underlying Fund or the Underlying Fund's sub-
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
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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 earmarked securities (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
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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, 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
purchase securities from 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 or less.
The repurchase price under repurchase agreements 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.
REVERSE REPURCHASE AGREEMENTS. Each Underlying 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 cash, U.S. Government securities or other liquid
high-grade securities earmarked on the books of the Underlying Fund or the
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Underlying Fund's sub-custodian an amount at least equal to the market value of
the securities, plus accrued interest, subject to the agreement.
RIGHTS AND WARRANTS. As stated in 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.
SHORT SALES. The Global Financial Services Fund may make short sales of
securities. A short sale is a transaction in which the Underlying Fund sells a
security it does not own in anticipation that the market price of that security
will decline. When the Underlying Fund makes a short sale, 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. The Underlying Fund may also sell securities that it
owns or has the right to acquire at no additional cost but does not intend to
deliver to the buyer, a practice known as selling short "against-the-box." The
Underlying Fund may have to pay a fee to borrow particular securities and is
often obligated to pay over any payments received on such borrowed securities.
The Underlying Fund's obligation to replace the borrowed security will be
secured by collateral deposited with the broker-dealers, usually cash, U.S.
Government securities or other highly liquid securities similar to those
borrowed. The Underlying Fund will also be required to deposit similar
collateral with its custodian or sub-custodian to the extent necessary so that
the value of both collateral deposits in the aggregate is at all times equal to
as least 100% of the current market value of the security sold short. Depending
on arrangements made with the broker-dealer from which it borrowed the security
regarding payment over any received by the Underlying Fund on such security, the
Fund may not received any payments (including interest) on its collateral
deposited with such broker-dealer. The Underlying Fund will incur transaction
costs, including interest expenses, in connection with opening, maintaining, and
closing short sales.
If the price of the security sold short increases between the time of the
short sale and the time the Underlying Fund replaces the borrowed security, the
Fund will incur a loss; conversely, if the price declines, the Fund will realize
a capital gain. Any gain is limited to the price at which it sold the security
short; its potential loss is theoretically unlimited.
STAND-BY COMMITMENTS. The Cash Investment Fund and the Money Market 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.
The Cash Investment Fund and the Money Market Fund intend to enter into
stand-by commitments only with dealers, banks and broker/dealers which, in the
Advisor's opinion, present minimal credit risks. The acquisition of a stand-by
commitment will not affect the valuation of the underlying municipal obligation.
The actual stand-by commitment will be valued at zero in determining net asset
value. Accordingly, where an Underlying Fund pays directly or indirectly for a
stand-by commitment, its cost will be reflected as an unrealized
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loss for the period during which the commitment is held by an Underlying Fund
and will be reflected in realized gain or loss when the commitment is exercised
or expires.
STOCK INDEX FUTURES, OPTIONS ON STOCK AND BOND INDICES AND OPTIONS ON STOCK
AND BOND INDEX FUTURES CONTRACTS. The Equity 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
with respect to the Framlington Funds) 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 or bond index 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% to 8% of the contract
amount. Thereafter, subsequent payments (referred to as "variation margin") are
made to and from the broker to reflect changes in the value of the option or
futures contract. No such 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.
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STRIPPED SECURITIES. Certain 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 on
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 Boards 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.
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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
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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 Boards 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 Fund will earmark cash or liquid portfolio
securities equal to the amount of the commitment in a separate account.
Normally, the Underlying Fund will earmark portfolio securities to satisfy a
purchase commitment, and in such a case the Underlying Fund may be required
subsequently to earmark additional assets 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 earmarks portfolio securities to
cover such purchase commitments than when it earmarks 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 (Sub-Advisor with respect to the Framlington Funds)
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 rating organizations
("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.
19
<PAGE>
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 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. The Cash Investment Fund
and the Money Market Fund intend 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 rated in the highest rating category by an NRSRO 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.
RISK FACTORS AND SPECIAL CONSIDERATIONS -- INDEX 500 FUND
Traditional methods of fund investment management typically involve
relatively frequent changes in a portfolio of securities on the basis of
economic, financial and market analysis. Index funds such as the Index 500 Fund
are not managed in this manner. Instead, with the aid of a computer program, the
Advisor purchases and sells securities for the Fund in an attempt to produce
investment results that substantially duplicate the performance of the common
stock included in the S&P 500 Composite Stock Price Index ("S&P 500"), taking
into account redemptions, sales of additional Fund shares, and other adjustments
as described below.
The Fund does not expect to hold at any particular time all of the stocks
included in the S&P 500. The Advisor believes, however, that through the
application of capitalization weighing and sector balancing techniques it will
be able to construct and maintain the Fund's investment portfolio so that it
reasonably tracks the performance of the S&P 500. The Advisor will compare the
industry sector diversification of the stocks the Fund would acquire solely on
the basis of their weighted capitalizations with the industry sector
diversification of all issuers included in the S&P 500. This comparison is made
because the Advisor believes that, unless the Fund holds all stocks included in
the S&P 500, the selection of stocks for purchase by the Fund solely on the
basis of their weighted market capitalizations would tend to place heavier
concentration in certain industry sectors that are dominated by the larger
corporations, such as communications, automobile, oil and energy. As a result,
events disproportionately affecting such industries could affect the performance
of the Fund differently than the performance of the S&P 500. Conversely, if
smaller companies were not purchased by the Fund, the representation of
industries included in the S&P 500 that are not dominated by the most heavily
market-capitalized companies would be reduced or eliminated.
For these reasons, the Advisor will identify the sectors which are (or,
except for sector balancing, would be) most underrepresented in the Fund's
portfolio and will purchase balancing securities in these sectors until the
portfolio's sector weightings closely match those of the S&P 500. This process
continues until the portfolio is fully invested (except for cash holdings).
Redemptions of a substantial number of shares of the Fund could reduce the
number of issuers represented in the Fund's investment portfolio, which could,
in turn, adversely affect the accuracy with which the Fund tracks the
performance of the S&P 500.
If an issuer drops in ranking, or is eliminated entirely from the S&P 500,
the Advisor may be required to sell some or all of the common stock of such
issuer then held by the Fund. Sales of portfolio securities may be made at times
when, if the Advisor were not required to effect purchases and sales of
portfolio securities in accordance with the S&P 500, such securities might not
be sold. Such sales may result in lower prices for such securities than may have
been realized or in losses that may not have been incurred in the Advisor were
not required to effect the purchases and sales. The failure of an issuer to
declare or pay dividends, the institution against an issuer of potentially
materially adverse legal proceedings, the existence or threat of defaults
materially and adversely affecting an issuer's future declaration and payment of
dividends, or the existence or other materially adverse credit factors will not
necessarily be the basis for the disposition of portfolio securities, unless
such event causes the issuer to be eliminated entirely from the S&P 500.
However, although the Advisor does not intend to screen securities for
investment by the Fund by traditional methods of financial and market analysis,
the Advisor will monitor the Fund's investment with a view towards removing
stocks of companies which exhibit extreme financial distress or which may impair
for any reason the Fund's ability to achieve its investment objective.
The Fund will invest primarily in the common stocks that constitute the S&P
500 in accordance with their relative capitalization and sector weightings as
described above. It is possible, however, that the Fund will from time to time
receive, as part of a "spin-off" or other corporate reorganization of an issuer
included in the S&P 500, securities that are themselves outside the S&P 500.
Such securities will be disposed of by the Fund in due course consistent with
the Fund's investment objective.
In addition, the Index 500 Fund may invest in Standard & Poor's Depository
Receipts ("SPDRs"). SPDRs are securities that represent ownership in the SPDR
Trust, a long-term unit investment trust which is intended to provide investment
results that generally correspond to the price and yield performance of the S&P
500. SPDR holders are paid a "Dividend Equivalent Amount" that corresponds to
the amount of cash dividends accruing to the securities in the SPDR Trust, net
of certain fees and expenses charged to the Trust. Because of these fees and
expenses, the dividend yield for SPDRs may be less than that of the S&P 500.
SPDRs are traded on the American Stock Exchange.
The Fund may also purchase put and call options on the S&P 500 and S&P 100
stock indices, which are traded on national securities exchanges. In addition,
the Fund may enter into transactions involving futures contracts (and futures
options) on these two stock indices and may purchase securities of other
investment companies that are structured to seek a similar correlation to the
S&P 500. These transactions are effected in an effort to have fuller exposure to
price movements in the S&P 500 pending investment of purchase orders or while
maintaining liquidity to meet potential shareholder redemptions. Transactions in
option and stock index futures contracts may be desirable to hedge against a
price movement in the S&P 500 at times when the Fund is not fully invested in
stocks that are included in the S&P 500. For example, by purchasing a futures
contract, the Fund may be able to reduce the potential that cash inflows will
disrupt its ability to track the S&P 500, since the futures contracts may serve
as a temporary substitute for stocks which may then be purchased in an orderly
fashion. Similarly, because futures contracts only require a small initial
margin deposit, the Fund may be able, as an effective matter, to be fully
invested in the S&P 500 while keeping a cash reserve to meet potential
redemptions. See Appendix B to this Statement of Additional Information.
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
20
<PAGE>
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>
Positions Principal Occupation
Name, Address and Age With Company During Past Five Years
- --------------------- ------------ ----------------------
<S> <C> <C>
Charles W. Elliott Chairman of the Board of Senior Advisor to the President -
1024 Essex Circle Directors Western Michigan University since
Kalamazoo, MI 49008 July 1995; Executive Vice
Age: 66 President - Administration & Chief
Financial Officer, Kellogg Company
from January 1987 through June
1995; before that Price
Waterhouse. Board of Directors,
Steelcase Financial Corporation;
and Board of Directors, Enesco Group.
John Rakolta, Jr. Director and Vice Chairman of the Chairman and Chief Executive
1876 Rathmor Boards of Directors Officer, Walbridge Aldinger
Bloomfield Hills, MI 48304 Company (construction company).
Age: 51
Thomas B. Bender Director Investment Advisor, Financial &
7 Wood Ridge Road Investment Management Group
Glen Arbor, MI 49636 (since April, 1991).
Age: 65
David J. Brophy Director Professor, University of Michigan;
1025 Martin Place Director, River Place Financial
Ann Arbor, MI 48104 Corporation.
Age: 62
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Positions Principal Occupation
Name, Address and Age With Company During Past Five Years
- --------------------- ------------ ----------------------
<S> <C> <C>
Dr. Joseph E. Champagne Director Dean, University Center, Macomb
319 East Snell Road College since September 1997;
Rochester, MI 48306 Corporate and Executive Consultant
Age: 60 since September 1995; prior to
that Chancellor Lamar University
from September 1994 until
September 1995; before that
Consultant to Management;
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;
Chairman, Board of Directors Ross
Operating Valve of Troy, MI.
Thomas D. Eckert Director President and Chief Executive
10726 Falls Pointe Drive Officer, Capital Automotive REIT
Great Falls, VA 22066 from November 1997 to present
Age: 51 (real estate investment trust
specializing in retail automotive
properties); prior to that
President and COO, Mid-Atlantic
Group of Pulte Home Corporation
(developer of residential land and
construction of housing units)
from 1983 until 1997.
Lee P. Munder* Director and President Chairman of the Advisor since
10291 N. Ocean Blvd. February 1998; Chief Executive
Palm Beach, Fl Officer of World Asset Management
33480 since January 1995; Chief
Age 53 Executive Officer of Old MCM
(predecessor to Advisor) since
1985; and Director, LPM Investment
Services Inc. ("LPM").
Terry H. Gardner Vice President, Vice President and Chief Financial
480 Pierce Street Chief Financial Officer Officer of the Advisor, Vice
Suite 300 and Treasurer President and Chief Financial
Birmingham, MI 48009 Officer of Old MCM (February 1993
Age: 38 to present); Secretary of LPM
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Positions Principal Occupation
Name, Address and Age With Company During Past Five Years
- --------------------- ------------ ----------------------
<S> <C> <C>
Paul Tobias Vice President Chief Executive Officer of the
480 Pierce Street Advisor (since February 1998);
Suite 300 Chief Operating Officer of the
Birmingham, MI 48009 Advisor (since April 1995);
Age: 46 Executive Vice President ( April
1995 to February 1998) and
Executive Vice President of
Comercia, Inc.
Gerald Seizert Vice President Chief Executive Officer of the
480 Pierce Street Advisor (since February 1998);
Suite 300 Chief Investment Officer/Equities
Birmingham, MI 48009 of the Advisor (since April 1995);
Age: 45 Executive Vice President (April
1995 to February 1998); Managing
Director (1991-1995), Director
(1992-1995) and Vice President
(1984-1991) of Loomis, Sayles and
Company, L.P.
Elyse G. Essick Vice President Vice President and Director of
480 Pierce Street Marketing for the Advisor; Vice
Suite 300 President and Director of Client
Birmingham, MI 48009 Services of Old MCM (August 1988
Age: 40 to December 1994).
James C. Robinson Vice President Vice President and Chief
480 Pierce Street Investment Officer/Fixed Income
Suite 300 for the Advisor; Vice President
Birmingham, MI 48009 and Director of Fixed Income of
Age: 36 Old MCM (1987-1994).
Leonard J. Barr Vice President Vice President and Director of
480 Pierce Street Core Equity Research of the
Suite 300 Advisor; Director and Senior Vice
Birmingham, MI 48009 President of Old MCM (since 1988);
Age: 53 Director of LPM.
Ann F. Putallaz Vice President Vice President and Director of
480 Pierce Street Fiduciary Services of the Advisor
Suite 300 (since January 1995); Director of
Birmingham, MI 48009 Client and Marketing Services of
Age: 52 Woodbridge.
</TABLE>
23
<PAGE>
<TABLE>
Positions Principal Occupation
Name, Address and Age with the Company During Past Five Years
- --------------------- ---------------- ----------------------
<S> <C> <C>
Lisa A. Rosen Secretary, Assistant Treasurer General Counsel of the Advisor
480 Pierce Street (since May, 1996); formerly,
Suite 300 Counsel, First Data Investor
Birmingham, MI 48009 Services Group, Inc.; Assistant
Age: 31 Vice President and Counsel with
The Boston Company Advisors,
Inc.; Associate with Hutchins,
Wheeler & Dittmar.
Therese Hogan Assistant Secretary Director, State Regulation
53 State Street Department, First Data Investor
Boston, MA 02109 Services Group (June
Age: 36 1994-present); formerly Senior
Legal Assistant, Palmer & Dodge
(October 1993-June 1994);
Blue Sky Paralegal, Robinson & Cole
(February 1984-October 1993).
</TABLE>
- ------------------
* Director is an "Interested person" of the Company as defined in the 1940 Act.
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 $30,000,
and a fee of $2,500 for each Board meeting attended; and are reimbursed for all
out-of-pocket expenses elating to attendance at meetings.
The following table summarizes the compensation paid by the Trust,
Framlington, the Company and St. Clair to their respective Directors/Trustees
for the year ended June 30, 1998.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Aggregate Charles W. John Rakolta, Thomas B. Bender, Dr. Joseph E. Thomas D. Eckert,
Compensation Elliot, Jr., Vice Trustee and Champagne, Trustee Trustee and
from a Fund Chairman Chairman Directors and Director Director
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Accelerating Growth
Fund
- ----------------------------------------------------------------------------------------------------------------------
Balanced Fund
- ----------------------------------------------------------------------------------------------------------------------
Index 500 Fund
- ----------------------------------------------------------------------------------------------------------------------
Growth & Income Fund
- ----------------------------------------------------------------------------------------------------------------------
International Equity
Fund
- ----------------------------------------------------------------------------------------------------------------------
Small Company Growth
Fund
- ----------------------------------------------------------------------------------------------------------------------
Bond Fund
- ----------------------------------------------------------------------------------------------------------------------
Intermediate Bond Fund
- ----------------------------------------------------------------------------------------------------------------------
U.S. Income Fund
- ----------------------------------------------------------------------------------------------------------------------
Michigan Bond Fund
- ----------------------------------------------------------------------------------------------------------------------
Tax-Free Bond Fund
- ----------------------------------------------------------------------------------------------------------------------
Cash Investment Fund
- ----------------------------------------------------------------------------------------------------------------------
Tax-Free Money Market
Fund
- ----------------------------------------------------------------------------------------------------------------------
U.S. Treasury Money
Market Fund
- ----------------------------------------------------------------------------------------------------------------------
Growth Opportunities
Fund
- ----------------------------------------------------------------------------------------------------------------------
Micro-Cap Equity Fund
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Aggregate Charles W. John Rakolta, Thomas B. Bender, Dr. Joseph E. Thomas D. Eckert,
Compensation Elliot, Jr., Vice Trustee and Champagne, Trustee Trustee and
from a Fund Chairman Chairman Directors and Director Director
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Multi-Season Growth
Fund
- ----------------------------------------------------------------------------------------------------------------------
NetNet Fund
- ----------------------------------------------------------------------------------------------------------------------
Real Estate Equity
Investment Fund
- ----------------------------------------------------------------------------------------------------------------------
Small-Cap Value Fund
- ----------------------------------------------------------------------------------------------------------------------
Value Fund
- ----------------------------------------------------------------------------------------------------------------------
International Bond
Fund
- ----------------------------------------------------------------------------------------------------------------------
Short Term Treasury
Fund
- ----------------------------------------------------------------------------------------------------------------------
Money Market Fund
- ----------------------------------------------------------------------------------------------------------------------
Emerging Markets Fund
- ----------------------------------------------------------------------------------------------------------------------
Global Financial
Services Fund
- ----------------------------------------------------------------------------------------------------------------------
Healthcare Fund
- ----------------------------------------------------------------------------------------------------------------------
International Growth
Fund
- ----------------------------------------------------------------------------------------------------------------------
All-Season
Conservative Fund
- ----------------------------------------------------------------------------------------------------------------------
All-Season Moderate
Fund
- ----------------------------------------------------------------------------------------------------------------------
All-Season Aggressive
Fund
- ----------------------------------------------------------------------------------------------------------------------
TOTAL COMPENSATION
FROM THE FUND COMPLEX
- ----------------------------------------------------------------------------------------------------------------------
</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 ___, 1998, 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.
INVESTMENT ADVISORY AND OTHER SERVICE ARRANGEMENTS
INVESTMENT ADVISOR. The Advisor of each Fund is Munder Capital
Management, a Delaware general partnership. The Advisor replaced Woodbridge
Capital Management, Inc. ("Woodbridge") as investment advisor to the investment
portfolios of the Trust and replaced Munder Capital Management, Inc. as the
investment advisor to the investment portfolios of the Company on January 31,
1995, upon the closing agreement (the "Joint Venture Agreement") among MCM,
Comerica, Woodbridge and WAM, pursuant to which MCM contributed its investment
advisory business and Comerica contributed the investment advisor business of
its indirect subsidiaries, Woodbridge and World Asset Management, to the
Advisor. The principal partners of the Advisor are MCM, Munder Group, LLC and
WAM. MCM was founded in February 1985 as a Delaware corporation and was a
registered investment advisor. WAM is an indirect, wholly-owned subsidiary of
Comerica Incorporated which owns or controls approximately 88% of the
partnership interests in the Advisor.
The Funds have entered into a new Investment Advisory Agreement (the
"Advisory Agreement"), dated July 2, 1998, with the Advisor pursuant to terms of
an Exemptive Order (the "Order") granted by the Securities and Exchange
Commission. Under the terms of the Order, the Advisory Agreement must be
approved by the shareholders within one hundred and fifty (150) days but no
later than November 30, 1998. The Funds will call a special meeting of the
shareholders to approve the Advisory Agreement. Until shareholder approval, the
fees paid to the Advisor will be paid into an escrow account. If the Advisory
Agreement is not approved by the shareholders, the Board of Directors will
consider appropriate action.
25
<PAGE>
Once the Advisory Agreement is approved by shareholders, it will continue
in effect for a period of two years from its effective date. If not sooner
terminated, the Advisory Agreement will continue in effect for successive one
year periods thereafter, provided that each continuance is specifically approved
annually by (a) the vote of a majority of the Board of Directors who are not
parties to the Advisory Agreement or interested persons (as defined in the 1940
Act), cast in person at a meeting called for the purpose of voting on approval,
and (b) either (i) the vote of a majority of the outstanding voting securities
of the affected Fund, or (ii) the vote of a majority of the Board of 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.
Each 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
Board 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,
1998, the Advisor received fees, after waivers, of $____ for the Conservative
Fund, $_________ for the Moderate Fund and $_________ for the Aggressive Fund.
In addition, for the period ended June 30, 1998, the Advisor reimbursed expenses
of $__________, $_____________ and $_________, 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 Company's and Framlington's current
fiscal year with respect to the Micro-Cap Equity Fund, the NetNet Fund and the
Framlington Healthcare Fund.] 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, 1998 (and for the Growth Opportunities
Fund and Framlington Global Financial Services for the period from commencement
of operations to June 30, 1998) 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, Growth Opportunities 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 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; .20% of average daily net assets of the Index 500 Fund; and
1.25% of average daily net assets of the Framlington Emerging Markets Fund.
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
26
<PAGE>
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 the terms of the Service and Distribution Plans
(collectively, the "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 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.
CLASS A SERVICE AND CLASS B SERVICE AND
DISTRIBUTION PLAN DISTRIBUTION PLAN**
----------------- -----------------
Conservative Fund $ 0* $0
Moderate Fund $98 $0
Aggressive Fund $ 0 $0
- ----------------------
* Prior to June 30, 1997, Class A of the Conservative Fund had not commenced
operations.
** Prior to June 30, 1997, Class B of the Funds had not commenced operations.
27
<PAGE>
For the fiscal year ended June 30, 1998, the following fees were paid to
the Distributor pursuant to the Class A and Class B Service and Distribution
Plans.
<TABLE>
<CAPTION>
CLASS A SERVICE AND CLASS B SERVICE AND
DISTRIBUTION PLAN DISTRIBUTION PLAN
----------------- -----------------
<S> <C> <C>
Conservative Fund $ ** $ **
Moderate Fund $ $ **
Aggressive Fund $ $ ***
</TABLE>
* Commenced operations on March 13, 1998.
** Commenced operations on January 14, 1998.
*** Commenced operations on January 9, 1998.
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, 1998:
<TABLE>
<CAPTION>
PRINTING AND
MAILING OF
PROSPECTUSES
TO OTHER THAN COMPENSATION INTEREST CARRYING
CURRENT COMPENSATION COMPENSATION TO TO SALES OR OTHER
ADVERTISING SHAREHOLDERS TO UNDERWRITERS DEALERS PERSONNEL FINANCING CHARGES
----------- ------------ --------------- ------- --------- -----------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B A B A B A B A B A B
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
administration agreements (an "Administration Agreement"). State Street has
agreed to maintain office facilities for the Company; 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. 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.
For the fiscal year ended June 30, 1998, administration fees of State
Street accrued were: $____________ - Conservative Fund, $___________ - Moderate
Fund and $_____________ - Aggressive Fund.
28
<PAGE>
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, is the custodian of each Fund pursuant to a
custodian agreement ("Custody Agreement") with the Company. The Custodian
receives no compensation for such services. State Street serves as the sub-
custodian to the Funds pursuant to a sub-custodian agreements ("Sub-Custodian
Contract") among the Company, Comerica Bank and State Street. State Street is
also the sub-custodian with respect to the custody of foreign securities held by
the Funds. State Street has in turn entered into additional agreements with
financial institutions and depositaries located in foreign countries with
respect to the custody of such securities. Under the Sub-Custodian Contract, the
Sub-Custodian (i) maintains a separate account in the name of each Fund, (ii)
holds and transfers portfolio securities on account of each Fund, (iii) accepts
receipts and makes disbursements of money on behalf of each Fund, (iv) collects
and receives all income and other payments and distributions on account of each
Fund's securities and (v) makes periodic reports to the Board of Directors
concerning the Funds' operations.
Prior to November 1, 1997, the Custodian was compensated for its services
as custodian. For the period July 1, 1997 to October 31, 1997 the Custodian
earned $___________.
For the fiscal year ended June 30, 1998, the Sub-Custodian earned
$__________.
Investor Services Group serves as the transfer and dividend disbursing
agent for the Funds pursuant to transfer agency agreements (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 Trustees and
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.
For the fiscal year ended June 30, 1998, the Funds [did not pay any
brokerage commission/paid brokerage commissions of $_____________.]
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 the section entitled "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.
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<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 parent
companies held by them as of the close of their most recent fiscal year. As of
June 30, 1998, the Funds held no such securities.
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; brokerage fees and commissions; 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
30
<PAGE>
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 determine 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:
. By Mail
. By Telephone
. Automatic Withdrawal Plan
The redemption price for Fund shares is the net asset value next determined
after receipt of the redemption request in proper order. The redemption
proceeds will be reduced by the amount of any applicable contingent deferred
sales charge ("CDSC").
CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES. Class B Shares redeemed
within six years of purchase are subject to a CDSC. The CDSC is based on the
original net asset value at the time of investment or the net asset value at the
time of redemption, whichever is lower.
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 (the "NYSE") is
restricted by applicable rules and regulations of, the SEC; (ii) the NYSE is
closed for other than customary weekend and holiday closings; (iii) the SEC has
by order permitted such suspension or postponement for the protection of the
shareholders; or (iv) an emergency, as determined by the SEC, exists, making
disposal of portfolio securities or valuation of net assets of a Fund not
reasonably practicable.
31
<PAGE>
The Funds may involuntarily redeem an investor's shares if the net asset
value of such shares is less than $250; 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 $250 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., Eastern time. The Funds, the
Distributor and the Transfer Agent reserve the right at any time to suspend or
terminate the expedited exchange procedure or to impose a fee for this service.
During periods of unusual economic or market changes, shareholders may
experience difficulties or delays in effecting telephone exchanges. Neither the
Funds nor the Transfer Agent will be responsible for any loss, damages, expense
or cost arising out of any telephone exchanges effected upon instructions
believed by them to be genuine. The Transfer Agent has instituted procedures
that it believes are reasonably designed to insure that exchange instructions
communicated by telephone are genuine, and could be liable for losses caused by
unauthorized or fraudulent instructions in the absence of such procedures. The
procedures currently include a recorded verification of the shareholder's name,
social security number and account number, followed by the mailing of a
statement confirming the transaction, which is sent to the address of record.
NET ASSET VALUE
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) to the sixth power -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
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<PAGE>
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) one divided by the nth power -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
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.
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<PAGE>
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, 1998:
12 MONTH PERIOD INCEPTION THROUGH
FUND-INCEPTION DATE ENDED JUNE 30, 1998 JUNE 30,1998
- ------------------- ------------------- ------------
Conservative Fund
- -----------------
Class A - 3/13/98
Class B - 1/14/98
Class Y - 4/3/97
Moderate Fund
- -------------
Class A - 4/4/97
Class B - 1/14/98
Class Y - 4/3/97
Aggressive Fund
- ---------------
Class A - 10/8/97
Class B - 1/9/98
Class Y - 4/3/97
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 federal income 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. This discussion is based upon present provisions of
the Code, the regulations promulgated thereunder, and judicial and
administrative ruling authorities, all of which are subject to change, which
change may be retroactive. Prospective investors should consult their own tax
advisors with regard to the federal tax consequences of the purchase, ownership
and disposition of Fund shares, as well as the tax consequences arising under
the laws of any state, foreign country, or other taxing jurisdiction.
GENERAL. Each Fund intends to elect and qualify to be taxed separately as
a regulated investment company under 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.
34
<PAGE>
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"). Interest
(including original issue discount and "accrued market discount") received by a
Fund at maturity or on disposition of a security held for less than three months
will not be treated (in contrast to other income which is attributable to
realized market appreciation) as gross income from the sale or other disposition
of securities held for less than three months for this purpose.
In addition to the foregoing requirements, at the close of each quarter of
its taxable year, at least 50% of the value of each Fund's assets must consist
of cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and securities of other issuers (as to which a
Fund has not invested more than 5% of the value of its total assets in
securities of such issuer and as to which a Fund does not hold more than 10% of
the outstanding voting securities of such issuer) and no more than 25% of the
value of each Fund's total assets may be invested in the securities of any one
issuer (other than U.S. Government securities and securities of other regulated
investment companies), or in two or more issuers which such Fund controls and
which are engaged in the same or similar trades or businesses.
Distributions of net investment income received by a Fund from investments
in debt securities 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 gain from the sale or exchange of a capital asset
held for more than one year, regardless of the length of time a shareholder has
held his or her Fund shares and regardless of whether the distribution is paid
in cash or reinvested in additional Fund shares. The Funds expect that capital
gain dividends will be taxable to shareholders as long-term capital gain.
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 distribute in each calendar year 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
35
<PAGE>
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 Company 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 and treated
as long-term capital gain. 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, be disallowed if such shares have been held by the shareholder for
six months or less.
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
36
<PAGE>
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," should be taxable as mid-term or 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.
MARKET DISCOUNT. If a Fund purchases a debt security at a price lower than
the stated redemption price of such debt security, the excess of the stated
redemption price over the purchase price is "market discount". If the amount of
market discount is more than a de minimis amount, a portion of such market
discount must be included as ordinary income (not capital gain) by the Fund in
each taxable year in which the Fund owns an interest in such debt security and
receives a principal payment on it. In particular, the Fund will be required to
allocate that principal payment first to the portion of the market discount on
the debt security that has accrued but has not previously been includable in
income. In general, the amount of market discount that must be included for
each period is equal to the lesser of (i) the amount of market discount accruing
during such period (plus any accrued market discount for prior periods not
previously taken into account) or (ii) the amount of the principal payment with
respect to such period. Generally, market discount accrues on a daily basis for
each day the debt security is held by a Fund at a constant rate over the time
remaining to the debt security's maturity or, at the election of the Fund, at a
constant yield to maturity which takes into account the semi-annual compounding
of interest. Gain realized on the disposition of a market discount obligation
must be recognized as ordinary interest income (not capital gain) to the extent
of the "accrued market discount."
ORIGINAL ISSUE DISCOUNT. Certain debt securities acquired by the Funds may
be treated as debt securities that were originally issued at a discount. Very
generally, original issue discount is defined as the difference between the
price at which a security was issued and its stated redemption price at
maturity. Although no cash income on account of such discount is actually
received by a Fund, original issue discount that accrues on a debt security in a
given year generally is treated for federal income tax purposes as interest and,
therefore, such income would be subject to the distribution requirements
applicable to regulated investment companies.
Some debt securities may be purchased by the Funds, at a discount that
exceeds the original issue discount on such debt securities, if any. This
additional discount represents market discount for federal income tax purposes
(see above).
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 Funds and
distributions of Fund shares 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).
37
<PAGE>
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
Growth Opportunities Fund, Micro-Cap Equity 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, 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.
38
<PAGE>
MISCELLANEOUS
COUNSEL. The law firm of Dechert Price & Rhoads, 1775 Eye Street, N.W.,
Washington, DC 20006, 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 __,
1998, Comerica Bank, One Detroit Center, 500 Woodward Avenue, Detroit, Michigan
48226, held of record ___________% of the outstanding shares of the following as
agent, custodian or trustee for its customers. As of the date, the following
persons were beneficial owners of 5% of more of the outstanding shares of the
Fund because they possessed voting or investment power with respect to such
shares:
Percent of Total
------------------
Name of Fund Name and Address Shares Outstanding
------------ ---------------- ------------------
As of October __, 1998, Munder Capital Management on behalf of its clients
owned __________% of the outstanding __________ shares of
_______________________.
As of October __, 1998, Funds Distributor, Inc. on behalf of their clients
owned ___________% of the outstanding ______ shares
_____________________________.
As of October __, 1998, Merrill Lynch Pierce Fenner and Smith on behalf of
their clients owned approximately __________% of the outstanding __________
shares of the ________________.
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
39
<PAGE>
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.
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
(update)
40
<PAGE>
APPENDIX A
----------
- Rated Investments -
Corporate Bonds
- ---------------
Excerpts from Moody's Investors Services, Inc. ("Moody's") description of
its bond ratings:
"Aaa":
Bonds that are rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred
to as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
"Aa":
Bonds that are rated "Aa" are judged to be of high-quality by all
standards. Together with the "Aaa" group they comprise what are
generally known as "high-grade" bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in "Aaa"
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risks appear somewhat larger than in "Aaa" securities.
"A":
Bonds that are rated "A" possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
"Baa":
Bonds that are rated "Baa" are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appears adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
"Ba":
Bonds that are rated "Ba" are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
"B":
Bonds that are rated "B" generally lack characteristics of desirable
investments. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
"Caa":
Bonds that are rated "Caa" are of poor standing. These issues may be
in default or present elements of danger may exist with respect to
principal or interest.
Moody's applies numerical modifiers (1, 2 and 3) with respect to bonds
rated "Aa" through "B". The modifier 1 indicates that the bond being rated
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the bond ranks in the
lower end of its generic rating category.
A-1
<PAGE>
Excerpts from Standard & Poor's Corporation ("S&P") description of its bond
ratings:
"AAA":
Debt rated "AAA" has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
"AA":
Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from "AAA" issues by a small degree.
"A":
Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher
rated categories.
"BBB":
Bonds rated "BBB" are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds in
higher rated categories.
"BB", "B" and "CCC":
Bonds rated "BB" and "B" are regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal
in accordance with the terms of the obligations. "BB" represents a lower
degree of speculation than "B" and "CCC" the highest degree of
speculation. While such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions.
To provide more detailed indications of credit quality, the "AA" or "A"
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
Commercial Paper
- ----------------
The rating "Prime-1" is the highest commercial paper rating assigned by
Moody's. These issues (or related supporting institutions) are considered to
have a superior capacity for repayment of short-term promissory obligations.
Issues rated "Prime-2" (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics of "Prime-1" rated issues, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
Commercial paper ratings of S&P are current assessments of the likelihood
of timely payment of debt having original maturities of no more than 365 days.
Commercial paper rated "A-1" by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted "A-1+."
Commercial paper rated "A-2" by S&P indicates that capacity for timely payment
is strong. However, the relative degree of safety is not as high as for issues
designated "A-1."
A-2
<PAGE>
APPENDIX 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.
B-1
<PAGE>
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
B-2
<PAGE>
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.
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
Portfolio Futures
- -----------------
<TABLE>
<CAPTION>
<S> <C>
Anticipate buying $62,500 in Equity Securities -Day Hedge is Placed-
Buying 1 Index Futures at 125
Value of Futures = $62,500/Contract
Buy Equity Securities with Actual Cost = $65,000 -Day Hedge is Lifted-
Increase in Purchase Price = $2,500 Sell 1 Index Futures at 130
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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
Anticipate Selling $1,000,000 in Equity Securities -Day Hedge is Placed-
Sell 16 Index Futures at 125
Value of Futures = $1,000,000
Equity Securities - Own Stock -Day Hedge is Lifted-
Loss in Portfolio Value = $40,000 Buy 16 Index Futures at 120 with Value
= $960,000
Value of Futures = $960,000
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.
B-4
<PAGE>
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
B-5
<PAGE>
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
B-6
<PAGE>
involves a privately negotiated obligation to purchase or sell (with delivery
generally required) a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. A currency swap is an agreement to
exchange cash flows based on the notional difference among two or more
currencies and operates similarly to an interest rate swap as described in the
Statement of Additional Information. The Fund may enter into currency
transactions with counterparties which have received (or the guarantors of the
obligations which have received) a credit rating of A-1 or P-1 by S&P or
Moody's, respectively, or that have an equivalent rating from a NRSRO or are
determined to be of equivalent credit quality by the Advisor.
The Fund's dealings in forward currency contracts and other currency
transactions such as futures, options, options on futures and swaps will be
limited to hedging involving either specific transactions or portfolio
positions. Transaction hedging is entering into a currency transaction with
respect to specific assets or liabilities of the Fund, which will generally
arise in connection with the purchase or sale of its portfolio securities or the
receipt of income therefrom. Position hedging is entering into a currency
transaction with respect to portfolio security positions denominated or
generally quoted in that currency.
The Fund will not enter into a transaction to hedge currency exposure to an
extent greater after netting all transactions intended wholly or partially to
offset other transactions, than the aggregate market value (at the time of
entering into the transaction) of the securities held in its portfolio that are
denominated or generally quoted in or currently convertible into such currency,
other than with respect to proxy hedging as described below.
The Fund may also cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which the Fund has or in which the Fund expects
to have portfolio exposure.
To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, the Fund may also engage proxy
hedging. Proxy hedging is often used when the currency to which the Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar.
Proxy hedging 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. 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. 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.
B-7
<PAGE>
VII. Other Matters
-------------
Accounting for futures contracts will be in accordance with generally
accepted accounting principles.
B-8
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
---------------------------------
(a) Included in Part A:
Financial Highlights to be filed by amendment.
Included in Part B:
Audited Financial Statements as of June 30, 1998 to be filed by
amendment.
Included on Part C:
Consent of Independent Public Accountants to be filed by
amendment.
(b) Exhibits:
(1) (a) Articles of Incorporation, dated November 18, 1992, are
incorporated herein by reference to Post-Effective Amendment No.
18 to Registrant's Registration Statement on Form N-1A filed with
the Commission on August 14, 1996.
(b) Articles of Amendment, dated February 12, 1993, are incorporated
herein by reference to Post-Effective Amendment No. 18 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 14, 1996.
(c) Articles Supplementary, dated July 20, 1993, August 9, 1994,
April 26, 1995, June 27, 1995 and May 6, 1996, are incorporated
herein by reference to Post-Effective Amendment No. 18 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 14, 1996.
(d) Articles Supplementary, dated August 6, 1996, are incorporated
herein by reference to Post-Effective Amendment No. 20 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on October 28, 1996 relating to the Munder Small-Cap
Value Fund, the Munder Equity Selection Fund, the Munder Micro-
Cap Equity Fund, and the NetNet Fund.
(e) Articles Supplementary, dated November 6, 1996, are incorporated
herein by reference to Post-Effective Amendment No. 21 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on December 13, 1996 relating to the Munder Short Term
Treasury Fund.
(f) Articles Supplementary, dated February 4, 1997, are incorporated
herein by reference to Post-Effective Amendment No. 23 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on February 18, 1997 relating to the Munder All-Season
Conservative Fund, the Munder All-Season Moderate Fund and the
Munder All-Season Aggressive Fund.
<PAGE>
(g) Articles Supplementary, dated March 12, 1997, are incorporated
herein by reference to Post-Effective Amendment No. 25 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on May 14, 1997 relating 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 Fund.
(h) Articles Supplementary, dated May 6, 1997, are incorporated
herein by reference to Post-Effective Amendment No. 28 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on July 28, 1997 relating to the Munder Financial
Services Fund.
(i) Articles Supplementary, dated August 5, 1997, are filed herein
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 from the Munder All-Season
Maintenance Fund, the Munder All-Season Development Fund and the
Munder All-Season Accumulation Fund.
(j) Articles Supplementary, dated February 24, 1998, are incorporated
herein by reference to Post-Effective Amendment No. 32 to
Registrant's Registration Statement filed with the Commission on
March 20, 1998 relating to the Munder Growth Opportunities Fund.
(k) Articles Supplementary, dated June 1, 1998, relating to the
Munder Convertible Securities Fund, NetNet Fund and the Munder
Short-Term Treasury Fund is filed herein.
(l) Articles Supplementary, dated July 1, 1998, relating 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 is filed herein.
(2) By-Laws are incorporated herein by reference to Registrant's initial
Registration Statement on Form N-1A, filed on November 18, 1992.
(3) Not Applicable.
(4) Not Applicable.
(5) (a) Investment Advisory Agreement, dated July 2, 1998, between
Registrant and Munder Capital Management with respect to the
Munder Emerging Growth Fund, Munder Equity Selection Fund, Munder
Financial Services Fund, Munder Micro-Cap Equity Fund, Munder
Multi-Season Growth Fund, Munder Growth Opportunities Fund,
NetNet Fund, Munder Real Estate Equity Investment Fund, Munder
Small-Cap Value Fund, Munder Value Fund, Munder International
Bond Fund, Munder Short Term Treasury Fund, Munder Money Market
Fund,
2
<PAGE>
Munder All-Season Conservative Fund, Munder All-Season Moderate
Fund and Munder All-Season Aggressive Fund is filed herein.
(6) (a) Underwriting Agreement, dated January 13, 1995, is incorporated
herein by reference to Post-Effective Amendment No. 16 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on June 25, 1996.
(b) Notice to Underwriting Agreement between Registrant and Funds
Distributor, Inc. with respect to the Munder Value Fund is
incorporated herein by reference to Post-Effective Amendment No.
16 to Registrant's Registration Statement on Form N-1A filed with
the Commission on June 25, 1996.
(c) Notice to Underwriting Agreement between Registrant and Funds
Distributor, Inc. with respect to the Munder International Bond
Fund is incorporated herein by reference to Post-Effective
Amendment No. 16 to Registrant's Registration Statement on Form
N-1A filed with the Commission on June 25, 1996.
(d) Notice to Underwriting Agreement between Registrant and Funds
Distributor, Inc. with respect to the Munder Small-Cap Value
Fund, the Munder Equity Selection Fund, the Munder Micro-Cap
Equity Fund, and the NetNet Fund is incorporated herein by
reference to Post-Effective Amendment No. 18 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
August 14, 1996.
(e) Form of Notice to Underwriting Agreement between Registrant and
Funds Distributor, Inc. with respect to the Munder Short Term
Treasury Fund is incorporated herein by reference to Post-
Effective Amendment No. 21 to Registrant's Registration Statement
on Form N-1A filed with the Commission on December 13, 1996.
(f) Distribution Agreement, dated February 4, 1997, between
Registrant and Funds Distributor, Inc. with respect to the Munder
All-Season Conservative Fund, the Munder All-Season Moderate Fund
and the Munder All-Season Aggressive Fund is filed herein.
(g) Form of Distribution Agreement between Registrant and Funds
Distributor, Inc. with respect to the Munder Financial Services
Fund is incorporated herein by reference to Post-Effective
Amendment No. 28 to Registrant's Registration Statement on Form
N-1A filed with the Commission on July 28, 1997.
(h) Form of Distribution Agreement between Registrant and Funds
Distributor, Inc. with respect to the Munder Growth Opportunities
Fund is incorporated herein by reference to Post-Effective
Amendment No. 32 to Registrant's Registration Statement on Form
N-1A filed with the Commission on March 20, 1998.
(7) Not Applicable.
3
<PAGE>
(8) (a) Form of Custodian Contract between Registrant and Comerica Bank
is incorporated herein by reference to Post-Effective Amendment
No. 16 to Registrant's Registration Statement on Form N-1A filed
with the Commission on June 25, 1996.
(b) Notice to Custodian Contract, dated May 1, 1995, between
Registrant and Comerica Bank with respect to the Munder Value
Fund is incorporated herein by reference to Post-Effective
Amendment No. 16 to Registrant's Registration Statement on Form
N-1A filed with the Commission on June 25, 1996.
(c) Notice to Custodian Contract, dated May 1, 1995, between
Registrant and Comerica Bank with respect to the Munder
International Bond Fund is incorporated herein by reference to
Post-Effective Amendment No. 16 to Registrant's Registration
Statement on Form N-1A filed with the Commission on June 25,
1996.
(d) Notice to Custodian Contract, dated May 1, 1995, between
Registrant and Comerica Bank with respect to the Munder Small-Cap
Value Fund, the Munder Equity Selection Fund, the Munder Micro-
Cap Equity Fund and the NetNet Fund is incorporated herein by
reference to Post-Effective Amendment No. 18 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
August 14, 1996.
(e) Notice to the Custodian Contract, dated November 7, 1996, between
Registrant and Comerica Bank with respect to the Munder Short
Term Treasury Fund is filed herein.
(f) Notice to the Custody Agreement, dated February 4, 1997, between
Registrant and Comerica Bank with respect to the Munder All-
Season Conservative Fund, the Munder All-Season Moderate Fund and
the Munder All-Season Aggressive Fund is filed herein.
(g) Form of Notice to the Custodian Agreement between Registrant and
Comerica Bank with respect to the Munder Financial Services Fund
is incorporated herein by reference to Post-Effective Amendment
No. 28 to Registrant's Registration Statement on Form N-1A filed
with the Commission on July 28, 1997.
(h) Notice to the Custodian Agreement, dated February 24, 1998,
between Registrant and Comerica Bank with respect to the Munder
Growth Opportunities Fund is filed herein.
(i) Form of Sub-Custodian Agreement among Registrant, Comerica Bank
and State Street Bank and Trust Company with respect to the
Munder All-Season Aggressive Fund, Munder All-Season Conservative
Fund, Munder All-Season Moderate Fund, Munder International Bond
Fund, Munder Micro-Cap Equity Fund, Munder Money Market Fund,
Munder Multi-Season Growth Fund, Munder Real Estate Equity
Investment Fund, Munder Small-Cap Value Fund, Munder Short Term
Treasury Fund, Munder Value Fund and NetNet Fund is incorporated
herein by reference to Post-Effective Amendment No. 32 to
Registrant's
4
<PAGE>
Registration Statement on Form N-1A filed with the
Commission on March 20, 1998.
(j) Notice to Sub-Custodian Agreement, dated February 24, 1998, among
Registrant, Comerica Bank and State Street Bank and Trust Company
with respect to the Munder Growth Opportunities Fund is filed
herein.
(k) Form of Amendment to Sub-Custodian Agreement among Registrant,
Comerica Bank and State Street Bank and Trust Company is
incorporated herein by reference to Post-Effective Amendment No.
33 to the Registrant's Registration Statement on Form N-1A filed
with the Commission on May 22, 1998.
(9) (a) Transfer Agency and Service Agreement, dated June 19, 1995,
between Registrant and First Data Investor Services Group, Inc.
is incorporated herein by reference to Post-Effective Amendment
No. 16 to Registrant's Registration Statement on Form N-1A filed
with the Commission on June 25, 1996.
(b) Notice to Transfer Agency and Service Agreement, dated July 20,
1995, between Registrant and First Data Investor Services Group,
Inc. with respect to the Munder Value Fund is incorporated herein
by reference to Post-Effective Amendment No. 16 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
June 25, 1996.
(c) Notice to Transfer Agency and Service Agreement, dated May 6,
1996, between Registrant and First Data Investor Services Group,
Inc. with respect to the Munder International Bond Fund is
incorporated herein by reference to Post-Effective Amendment No.
16 to Registrant's Registration Statement on Form N-1A filed with
the Commission on June 25, 1996.
(d) Notice to Transfer Agency and Service Agreement between
Registrant and First Data Investor Services Group, Inc. with
respect to the Munder Small-Cap Value Fund, the Munder Equity
Selection Fund, the Munder Micro-Cap Equity Fund and the NetNet
Fund is incorporated herein by reference to Post-Effective
Amendment No. 18 to Registrant's Registration Statement on Form
N-1A filed with the Commission on August 14, 1996.
(e) Notice to Transfer Agency and Service Agreement between
Registrant and First Data Investor Services Group, Inc. with
respect to the Munder Short Term Treasury Fund is incorporated
herein by reference to Post-Effective Amendment No. 21 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on December 13, 1996.
(f) Form of Amendment to the Transfer Agency and Registrar Agreement
between Registrant and First Data Investor Services Group, Inc.
with respect to the Munder All-Season Conservative Fund, the
Munder All-Season Moderate Fund and the Munder All-Season
Aggressive Fund is incorporated herein by reference to Post-
Effective Amendment No. 23 to Registrant's Registration Statement
on Form N-1A filed with the Commission on February 18, 1997.
5
<PAGE>
(g) Form of Notice to the Transfer Agency and Registrar Agreement
between Registrant and First Data Investor Services Group, Inc.
with respect to the Munder Financial Services Fund is
incorporated herein by reference to Post-Effective Amendment No.
28 to Registrant's Registration Statement on Form N-1A filed with
the Commission on July 28, 1997.
(h) Form of Amendment to the Transfer Agency and Registrar Agreement
between Registrant and First Data Investor Services Group, Inc.
with respect to the Munder Financial Services Fund is
incorporated herein by reference to Post-Effective Amendment No.
28 to Registrant's Registration Statement on Form N-1A filed with
the Commission on July 28, 1997.
(i) Form of Notice to the Transfer Agency and Registrar Agreement
between Registrant and First Data Investor Services Group, Inc.
with respect to the Munder Growth Opportunities Fund is
incorporated herein by reference to Post-Effective Amendment No.
32 to Registrant's Registration Statement on Form N-1A filed with
the Commission on March 20, 1998.
(j) Form of Amendment to the Transfer Agency and Registrar Agreement
between Registrant and First Data Investor Services Group, Inc.
with respect to the Munder Growth Opportunities Fund is
incorporated herein by reference to Post-Effective Amendment No.
32 to Registrant's Registration Statement on Form N-1A filed with
the Commission on March 20, 1998.
(k) Amendment to the Transfer Agency Agreement between Registrant and
First Data Investor Services Group, Inc. dated June 1, 1998 is
filed herein.
(l) Amendment to the Transfer Agency and Registrar Agreement between
Registrant and First Data Investor Services Group, Inc. dated
June 1, 1998 is filed herein.
(m) Amendment to the Transfer Agency and Registar Agreement between
Registrant and First Data Investor Services, Inc. dated June
1, 1998 is filed herein.
(n) Administration Agreement, dated October 31, 1997, between
Registrant and State Street Bank and Trust Company with respect
to the Munder All-Season Aggressive Fund, Munder All-Season
Conservative Fund, Munder All-Season Moderate Fund, Munder
International Bond Fund, Munder Micro-Cap Equity Fund, Munder
Money Market Fund, Munder Multi-Season Growth Fund, Munder Real
Estate Equity Investment Fund, Munder Small-Cap Value Fund,
Munder Short Term Treasury Fund, Munder Value Fund and NetNet
Fund is incorporated herein by reference to Post-Effective
Amendment No. 32 to Registrant's Registration Statement on Form
N-1A filed with the Commission on March 20, 1998.
(o) Notice to Administration Agreement, dated February 24, 1998,
between Registrant and State Street Bank and Trust Company with
respect to the Munder Growth Opportunities Fund is filed herein.
6
<PAGE>
(10) (a) Opinion and Consent of Counsel is incorporated by reference to
the Rule 24f-2 Notice filed on August 28, 1997, Accession Number
0000927405-97-000309.
(b) Opinion and Consent of Counsel with respect to the Munder Growth
Opportunities Fund to be filed by amendment.
(11) (a) Consent of Independent Public Accountants to be filed by
amendment.
(b) Consent of Arthur Andersen LLP is incorporated herein by
reference to Post-Effective Amendment No. 12 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
August 29, 1995.
(c) Letter of Arthur Andersen LLP regarding change in independent
auditor required by Item 304 of Regulation S-K is incorporated
herein by reference to Post-Effective Amendment No. 12 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 29, 1995.
(d) Powers of Attorney, dated February 24, 1998, are incorporated
herein by reference to Post-Effective Amendment No. 32 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on March 20, 1998.
(e) Certified Resolution of Board, dated February 24, 1998,
authorizing signature on behalf of Registrant pursuant to power
of attorney is incorporated herein by reference to Post-Effective
Amendment No. 32 to Registrant's Registration Statement on Form
N-1A filed with the Commission on March 20, 1998.
(12) Not Applicable.
(13) Initial Capital Agreement is incorporated herein by reference to Pre-
Effective Amendment No. 2 to Registrant's Registration Statement on
Form N-1A filed with the Commission on February 26, 1993.
(14) Not Applicable.
(15) (a) Service Plan, dated January 13, 1995, for the Munder Multi-
Season Growth Fund Class A Shares is incorporated herein by
reference to Post-Effective Amendment No. 8 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
February 28, 1995.
(b) Service and Distribution Plan, dated January 13, 1995, for the
Munder Multi-Season Growth Fund Class B Shares is incorporated
herein by reference to Post-Effective Amendment No. 8 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on February 28, 1995.
(c) Amended and Restated Service and Distribution Plan, dated May 6,
1997, for the Munder Multi-Season Growth Fund Class C Shares is
filed herein.
(d) Service and Distribution Plan, dated January 13, 1995, for the
Munder Money Market Fund Class A Shares is incorporated herein by
reference to Post-
7
<PAGE>
Effective Amendment No. 8 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
February 28, 1995.
(e) Service and Distribution Plan, dated January 13, 1995, for the
Munder Money Market Fund Class B Shares is incorporated herein by
reference to Post-Effective Amendment No. 8 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
February 28, 1995.
(f) Amended and Restated Service and Distribution Plan, dated May 6,
1997, for the Munder Money Market Fund Class C Shares is filed
herein.
(g) Service Plan, dated January 13, 1995, for the Munder Real Estate
Equity Investment Fund Class A Shares is incorporated herein by
reference to Post-Effective Amendment No. 8 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
February 28, 1995.
(h) Service and Distribution Plan, dated January 13, 1995, for the
Munder Real Estate Equity Investment Fund Class B Shares is
incorporated herein by reference Post-Effective Amendment No. 8
to Registrant's Registration Statement on Form N-1A filed with
the Commission on February 28, 1995.
(i) Amended and Restated Service and Distribution Plan, dated May 6,
1997, for the Munder Real Estate Equity Investment Fund Class C
Shares is filed herein.
(j) Service Plan, dated August 6, 1996, for the Munder Equity
Selection Fund Class A Shares is filed herein.
(k) Service and Distribution Plan, dated August 6, 1996, for the
Munder Equity Selection Fund Class B Shares is filed herein.
(l) Service and Distribution Plan, dated August 6, 1996, for the
Munder Equity Selection Fund Class C Shares is filed herein.
(m) Service Plan, dated May 6, 1996, for the Munder International
Bond Fund Class A Shares is filed herein.
(n) Service and Distribution Plan, dated May 6, 1996, for the Munder
International Bond Fund Class B Shares is filed herein.
(o) Service and Distribution Plan, dated May 6, 1996, for the Munder
International Bond Fund Class C Shares is filed herein.
(p) Service Plan, dated August 6, 1996, for the Munder Micro-Cap
Equity Fund Class A Shares is filed herein.
(q) Service and Distribution Plan, dated August 6, 1996, for the
Munder Micro-Cap Equity Fund Class B Shares is filed herein.
8
<PAGE>
(r) Service and Distribution Plan, dated August 6, 1996, for the
Munder Micro-Cap Equity Fund Class C Shares is filed herein.
(s) Service Plan, dated November 7, 1996, for the Munder Short Term
Treasury Fund Class A Shares is filed herein.
(t) Service and Distribution Plan, dated November 7, 1996, for the
Munder Short Term Treasury Fund Class B Shares is filed herein.
(u) Service and Distribution Plan, dated November 7, 1996, for the
Munder Short Term Treasury Fund Class C Shares is filed herein.
(v) Service and Distribution Plan, dated February 4, 1997, for the
Munder All-Season Aggressive Fund (formerly the Munder All-Season
Accumulation Fund) Class A Shares is filed herein.
(w) Service and Distribution Plan, dated February 4, 1997, for the
Munder All-Season Aggressive Fund (formerly the Munder All-Season
Accumulation Fund) Class B Shares is filed herein.
(x) Service and Distribution Plan, dated February 4, 1997, for the
Munder All-Season Conservative Fund (formerly the Munder All-
Season Maintenance Fund) Class A Shares is filed herein.
(y) Service and Distribution Plan, dated February 4, 1997, for the
Munder All-Season Conservative Fund (formerly the Munder All-
Season Maintenance Fund) Class B Shares is filed herein.
(z) Service and Distribution Plan, dated February 4, 1997, for the
Munder All-Season Moderate Fund (formerly the Munder All-Season
Development Fund) Class A Shares is filed herein.
(aa) Service and Distribution Plan, dated February 4, 1997, for the
Munder All-Season Moderate Fund (formerly the Munder All-Season
Development Fund) Class B Shares is filed herein.
(bb) Service Plan, dated August 6, 1996, for the Munder Small-Cap
Value Fund Class A Shares is filed herein.
(cc) Service and Distribution Plan, dated August 6, 1996, for the
Munder Small-Cap Value Fund Class B Shares is filed herein.
(dd) Service and Distribution Plan, dated August 6, 1996, for the
Munder Small-Cap Value Fund Class C Shares is filed herein.
(ee) Form of Service Plan for Class A Shares of the Munder Funds, Inc.
is incorporated herein by reference to Post-Effective Amendment
No. 18 to Registrant's Registration Statement on Form N-1A filed
with the Commission on August 14, 1996.
9
<PAGE>
(ff) Form of Distribution and Service Plan for Class B Shares for The
Munder Funds, Inc. is incorporated herein by reference to Post-
Effective Amendment No. 18 to Registrant's Registration Statement
on Form N-1A filed with the Commission on August 14, 1996.
(gg) Form of Distribution and Service Plan for Class C Shares for The
Munder Funds, Inc. is incorporated herein by reference to Post-
Effective Amendment No. 18 to Registrant's Registration Statement
on Form N-1A filed with the Commission on August 14, 1996.
(hh) Form of Service Plan for Class K Shares of the Munder Funds, Inc.
is incorporated herein by reference to Post-Effective Amendment
No. 18 to Registrant's Registration Statement on Form N-1A filed
with the Commission on August 14, 1996.
(ii) Service and Distibution Plan dated August 6, 1996 with respect to
the NetNet Fund is filed herein.
(jj) Form of Service Plan for Class A Shares with respect to the
Munder Growth Opportunities Fund is filed herein.
(kk) Form of Distribution and Service Plan for Class B Shares with
respect to the Munder Growth Opportunities Fund is filed herein.
(ll) Form of Distribution and Service Plan for Class C Shares with
respect to the Munder Growth Opportunities Fund is filed herein.
(mm) Amended and Restated Service Plan for Class K Shares is
incorporated herein by reference to Post-Effective Amendment No.
29 to Registrant's Registration Statement on Form N-1A filed with
the Commission on August 29, 1997.
(nn) Amended and Restated Service Plan for Class K Shares with respect
to the Munder Growth Opportunities Fund is filed herein.
(oo) Form of Amendment to Service and Distribution Plan with respect
to the NetNet Fund is incorporated herein by reference to Post-
Effective Amendment No. 33 to Registrant's Registration Statement
on Form N-1A filed with the Commission on May 22, 1998.
(pp) Form of Service and Distribution Plan for Class B Shares with
respect to the NetNet Fund is incorporated herein by reference to
Post-Effective Amendment No. 33 to Registrant's Registration
Statement on Form N-1A filed with the Commission on May 22, 1998.
(qq) Service Plan, dated July 31, 1995, for the Munder Value Fund
Class A Shares is filed herein.
10
<PAGE>
(rr) Service and Distribution Plan, dated July 31, 1995, for the
Munder Value Fund Class B Shares is filed herein.
(ss) Service and Distribution Plan, dated July 31, 1995, for the
Munder Value Fund Class C Shares is filed herein.
(16) Schedule for Computation of Performance Quotations to be filed by
amendment.
(17) Financial Data Schedules to be filed by amendment.
(18) Form of Third Amended and Restated Multi-Class Plan is filed
herein.
Item 25. Persons Controlled by or Under Common Control with Registrant.
-------------------------------------------------------------
Not Applicable.
Item 26. Number of Holders of Securities.
-------------------------------
As of August 1, 1998, 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>
- -----------------------------------------------------------------------------------------------------------------------------
Class A Class B Class C Class K Class Y
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Munder Growth Opportunities Fund N/A N/A N/A N/A 13
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Munder Multi-Season Growth Fund 183 1,953 84 183 192
- -----------------------------------------------------------------------------------------------------------------------------
Munder Money Market Fund 118 52 19 N/A 71
- -----------------------------------------------------------------------------------------------------------------------------
Munder Real Estate Equity Investment Fund 108 153 63 2 86
- -----------------------------------------------------------------------------------------------------------------------------
Munder Value Fund 214 64 42 2 97
- -----------------------------------------------------------------------------------------------------------------------------
Munder International Bond Fund 4 3 2 2 10
- -----------------------------------------------------------------------------------------------------------------------------
Munder Small-Cap Value Fund 207 178 97 65 120
- -----------------------------------------------------------------------------------------------------------------------------
Munder Micro-Cap Equity Fund 896 1080 470 9 111
- -----------------------------------------------------------------------------------------------------------------------------
Munder Short Term Treasury Fund N/A N/A N/A 2 11
- -----------------------------------------------------------------------------------------------------------------------------
Munder All-Season Conservative Fund 13 2 N/A N/A 7
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Class A Class B Class C Class K Class Y
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Munder All-Season Moderate Fund 35 3 N/A N/A 11
- -----------------------------------------------------------------------------------------------------------------------------
Munder All-Season Aggressive Fund 80 11 N/A N/A 50
- -----------------------------------------------------------------------------------------------------------------------------
NetNet Fund 4,013 2,307 N/A N/A 58
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Munder Financial Services Fund - As of the date of this filing, the Fund had not
commenced operations.
Munder Equity Selection Fund - As of the date of this filing, the Fund had not
commenced operations.
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 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.
12
<PAGE>
Item 28. Business and Other Connections of Investment Advisor.
----------------------------------------------------
Munder Capital Management
-------------------------
<TABLE>
<CAPTION>
Name Position with Advisor
- --- ---------------------
<S> <C>
Old MCM, Inc. Partner
Munder Group LLC Partner
WAM Holdings, Inc. Partner
Lee P. Munder President and Chairman
Leonard J. Barr, II Senior Vice President and Director of
Research
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
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
James C. Robinson Vice President and Chief Investment
Officer/Fixed Income
Gerald L. Seizert Chief Executive Officer and Chief Investment
Officer/Equity
Paul D. Tobias Chief Executive Officer 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, Suite
1300, Boston, Massachusetts 02109. 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 and is a member of the National Association of Securities
Dealers. FDI acts as principal underwriter of the following
investment companies other than the Registrant:
<TABLE>
<S> <C>
American Century California Tax-Free and Municipal Funds JP Morgan Institutional Funds
American Century Capital Portfolios, Inc. JP Morgan Funds
American Century Government Income Trust JPM Series Trust
American Century International Bond Funds JPM Series Trust II
American Century Investment Trust LaSalle Partners Funds, Inc.
American Century Municipal Trust Monetta Fund, Inc.
American Century Mutual Funds, Inc. Monetta Trust
American Century Premium Reserves, Inc. The Montgomery Funds
The Montgomery Funds II
American Century Quantitative Equity Funds The Munder Framlington Funds Trust
American Century Strategic Asset Allocations, Inc. The Munder Funds, Inc.
American Century Target Maturities Trust The Munder Funds Trust
American Century Variable Portfolios, Inc. National Investors Cash Management
Fund, Inc.
American Century World Mutual Funds, Inc. Orbitex Group of Funds
BJB Investment Funds St. Clair Funds, Inc.
The Brinson Funds The Skyline Funds
Dresdner RCM Capital Funds, Inc. Waterhouse Investor Family of Funds,
Inc.
Dresdner RCM Equity Funds, Inc. WEBS Index Fund, Inc.
Founders Funds, Inc.
Harris Insight Funds Trust
HT Insight Funds, Inc. d/b/a Harris Insight Funds
</TABLE>
(b) The following is a list of the executive officers, directors and
partners of Funds Distributor, Inc.
14
<PAGE>
<TABLE>
<S> <C>
Director, President and Chief Executive Officer -Marie E. Connolly
Executive Vice President -George A. Rio
Executive Vice President -Richard W. Ingram
Executive Vice President -Donald R. Roberson
Executive Vice President -William S. Nichols
Senior Vice President -Michael S. Petrucelli
Senior Vice President, General Counsel, Chief Compliance Officer, -Margaret W. Chambers
Secretary and Clerk
Director, Senior Vice President, Treasurer and Chief Financial Officer -Joseph F. Tower, III
Senior Vice President -Paula R. David
Senior Vice President -Bernard A. Whalen
Senior Vice President -Allen B. Closser
Chairman and 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 transfer agent);
(3) State Street Bank and Trust Company, 150 Newport Avenue, North
Quincy, Massachusetts 02171 (records relating to its function as
administrator and subcustodian);
(4) Funds Distributor, Inc., 60 State Street, Boston, Massachusetts
02109 (records relating to its function as distributor); and
(5) 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.
------------
15
<PAGE>
(a) Not Applicable.
(b) Not Applicable.
(c) 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.
(d) 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.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant certifies that this
Post-Effective Amendment No. 35 to the Registration Statement meets the
requirements for effectiveness pursuant to Rule 485(a) of the Securities Act of
1933, as amended, and the Registrant has duly caused this Post-Effective
Amendment No. 35 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Quincy and The Commonwealth of Massachusetts, on the
28th day of August 1998.
THE MUNDER FUNDS, INC.
By: * _______________________
Lee P. Munder
* By: /s/ Cynthia Surprise
-----------------------
Cynthia Surprise
as Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed by the following persons
in the capacities and on the date indicated:
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
*_____________________ Director and August 28th, 1998
Lee P. Munder President
*_____________________ Director August 28th, 1998
Charles W. Elliott
*_____________________ Director August 28th, 1998
Joseph E. Champagne
*_____________________ Director August 28th, 1998
Thomas B. Bender
*_____________________ Director August 28th, 1998
Thomas D. Eckert
*_____________________ Director August 28th, 1998
John Rakolta, Jr.
*_____________________ Director August 28th, 1998
David J. Brophy
</TABLE>
17
<PAGE>
<TABLE>
<S> <C> <C>
*_____________________ Vice President, August 28th, 1998
Terry H. Gardner Treasurer and
Chief Financial Officer
</TABLE>
*By: /s/ Cynthia Surprise
--------------------
Cynthia Surprise
as Attorney-in-Fact
18
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ---------- -----------
<S> <C>
1(i) Articles Supplementary for the Registrant
1(k) Articles Supplementary for the Registrant
5(a) Investment Advisory Agreement between Registrant and Munder Capital
Management on behalf of the Funds
6(f) Distribution Agreement between Registrant and Funds Distributor,
Inc. with respect to Munder All-Season Maintenance Fund, Munder All-
Season Development Fund and Munder All-Season Accumulation Fund
8(e) Notice of Custodian Contract between Registrant and Comerica Bank
with respect to the Munder Short Term Treasury Fund
8(f) Notice of Custodian Contract between Registrant and Comerica Bank
with respect to the Munder All-Season Maintenance Fund, Munder All-
Season Development Fund and Munder All-Season Accumulation Fund
8(h) Notice of Custodian Contract between Registrant and Comerica Bank
with respect to the Munder Growth Opportunities Fund
8(j) Notice of Sub-Custodian Contract between Registrant and State Street
Bank with respect to the Munder Growth Opportunities Fund
9(k) Amendment to the Transfer Agency Agreement
9(l) Amendment to the Transfer Agency and Registrar Agreement
9(m) Amendment to Transfer Agency and Registrar Agreement
9(o) Notice of Administration Agreement between Registrant and State
Street Bank with respect to the Munder Growth Opportunities Fund
15(c) Amended and Restated Service and Distribution Plan for Class C
Shares with respect to the Munder Multi-Season Growth Fund
15(f) Amended and Restated Service and Distribution Plan for Class C
Shares with respect to the Munder Money Market Fund
15(i) Amended and Restated Service and Distribution Plan for Class C
Shares with respect to the Munder Real Estate Equity Investment Fund
15(j) Service Plan for Class A Shares with respect to the Munder Equity
Selection Fund
15(k) Service and Distribution Plan for Class B Shares with respect to the
Munder Equity Selection Fund
15(l) Service and Distribution Plan for Class C Shares with respect to the
Munder Equity Selection Fund
15(m) Service Plan for Class A Shares with respect to the Munder
International Bond Fund
15(n) Service and Distribution Plan for Class B Shares with respect to the
Munder International Bond Fund
15(o) Service and Distribution Plan for Class C Shares with respect to the
Munder International Bond Fund
15(p) Service Plan for Class A Shares with respect to the Munder Micro-Cap
Equity Fund
15(q) Service and Distribution Plan for Class B Shares with respect to the
Munder Micro-Cap Equity Fund
15(r) Service and Distribution Plan for Class C Shares with respect to the
Munder Micro-Cap Equity Fund
15(s) Service Plan for Class A Shares with respect to the Munder Short
Term Treasury Fund
15(t) Service and Distribution Plan for Class B Shares with respect to the
Munder Short Term Treasury Fund
15(u) Service and Distribution Plan for Class C Shares with respect to the
Munder Short Term
</TABLE>
19
<PAGE>
<TABLE>
<S> <C>
Treasury Fund
15(v) Service and Distribution Plan for Class A Shares with respect to the
Munder All-Season Accumulation Fund
15(w) Service and Distribution Plan for Class B Shares with respect to the
Munder All-Season Accumulation Fund
15(x) Service and Distribution Plan for Class A Shares with respect to the
Munder All-Season Maintenance Fund
15(y) Service and Distribution Plan for Class B Shares with respect to the
Munder All-Season Maintenance Fund
15(z) Service and Distribution Plan for Class A Shares with respect to the
Munder All-Season Development Fund
15(aa) Service and Distribution Plan for Class B Shares with respect to the
Munder All-Season Development Fund
15(bb) Service Plan for Class A Shares with respect to the Munder Small-Cap
Value Fund
15(cc) Service and Distribution Plan for Class B Shares with respect to the
Munder Small-Cap Value Fund
15(dd) Service and Distribution Plan for Class C Shares with respect to the
Munder Small-Cap Value Fund
15(ii) Service and Distribution Plan with respect to the NetNet Fund
15(jj) Form of Service Plan for Class A Shares with respect to the Munder
Growth Opportunities Fund
15(kk) Form of Service and Distribution Plan for Class B Shares of Munder
Growth Opportunities Fund
15(ll) Form of Service and Distribution Plan for Class C Shares of Munder
Growth Opportunities Fund
15(nn) Amended and Restated Service Plan for Class K Shares of Munder
Growth Opportunities Fund
15(qq) Service Plan for Class A Shares with respect to the Munder Value
Fund
15(rr) Service and Distribution Plan for Class B Shares with respect to the
Munder Value Fund
15(ss) Service and Distribution Plan for Class C Shares with respect to the
Munder Value Fund
18 Third Amended and Restated Multi-Class Plan for the Funds
</TABLE>
20
<PAGE>
Exhibit l(i)
THE MUNDER FUNDS, INC.
ARTICLES SUPPLEMENTARY
THE MUNDER FUNDS, INC., a Maryland corporation registered as an open-end
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), having its principal office in the State of Maryland in Baltimore
City, Maryland (hereinafter called the "Corporation"), hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: The Board of Directors of the Corporation, by a resolution adopted
on August 5, 1997, has changed the names, including each class thereof, as
follows, pursuant to Section 2-605(a)(4) of the Maryland General Corporate Law:
<TABLE>
<CAPTION>
OLD NAME NEW NAME
- -------- --------
<S> <C>
The Munder All-Season Maintenance Fund The Munder All-Season Conservative Fund
The Munder All-Season Development Fund The Munder All-Season Moderate Fund
The Munder All-Season Accumulation Fund The Munder All-Season Aggressive Fund
</TABLE>
SECOND: The Corporation is registered as an open-end investment company
under the 1940 Act.
IN WITNESS WHEREOF, The Munder Funds, Inc. has caused these Articles
Supplementary to be signed in its name on its behalf by its authorized officers
who acknowledge that these Articles Supplementary are the act of the
Corporation, that to the best of their knowledge, information and belief, all
matters and facts set forth herein relating to the authorization and approval of
these Articles Supplementary are true in all material respects and that this
statement is made under the penalties of perjury.
Date: July 1, 1998 THE MUNDER FUNDS, INC.
[CORPORATE SEAL]
By: /s/ Terry H. Gardner
---------------------------
Terry H. Gardner
Vice President
Attest:
<PAGE>
/s/ Lisa Anne Rosen
- ----------------------
Lisa Anne Rosen
Secretary
2
<PAGE>
Exhibit 1(k)
THE MUNDER FUNDS, INC.
ARTICLES SUPPLEMENTARY
THE MUNDER FUNDS, INC., a Maryland corporation registered as an open-end
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and having its principal office in the State of Maryland in
Baltimore City, Maryland (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: In accordance with procedures established in the Corporation's
Charter, the Board of Directors of the Corporation, by resolution dated May 5,
1998 pursuant to Section 2-208 of Maryland General Corporate Law, duly (i)
designated fifty million (50,000,000) shares of the unissued, authorized capital
stock of the Corporation into the following additional series, and classified
the shares of such series as follows:
<TABLE>
<CAPTION>
NAME OF SERIES NUMBER OF SHARES ALLOCATED BY CLASS (IN MILLIONS)
- -------------- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
A B Y C K
Munder Convertible Securities Fund 5 5 30 N/A 10
</TABLE>
; (ii) reclassified, effective July 1, 1998, twenty million (20,000,000) shares
of authorized capital stock previously classified as Class A shares, forty
million (40,000,000) shares previously classified as Class B shares, ten million
(10,000,000) shares previously classified as Class C shares, ten million
(10,000,000) shares previously classified as Class K shares and twenty million
(20,000,000) shares previously classified as Class Y shares of the Munder Short
Term Treasury Fund as follows:
<TABLE>
<CAPTION>
NAME OF SERIES RECLASSIFIED SHARES ALLOCATED BY CLASS (IN MILLIONS)
- -------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C>
A B Y C K
Munder Short Term Treasury Fund 0 0 90 0 10
</TABLE>
<PAGE>
; (iii) reclassified, effective July 1, 1998, all Class K shares of the Munder
Short Term Treasury Fund as "Michigan Municipal League" shares; and (iv)
classified the fifty million (50,000,000) shares previously designated as
"NetNet Fund" shares as follows:
<TABLE>
<CAPTION>
NAME OF SERIES RECLASSIFIED SHARES ALLOCATED BY CLASS (IN MILLIONS)
- -------------- ----------------------------------------------------
<S> <C> <C> <C>
A B Y
NetNet Fund 15 20 15
</TABLE>
SECOND: The shares of the Corporation classified or reclassified pursuant
to Article First of these Articles Supplementary have been so classified or
reclassified by the Board of Directors under the authority contained in the
Charter of the Corporation. The number of shares of capital stock of the
various classes that the Corporation has authority to issue has been established
by the Board of Directors in accordance with Section 2-105(c) of the Maryland
General Corporation Law.
THIRD: Immediately prior to the effectiveness of the Articles
Supplementary of the Corporation as hereinabove set forth, the Corporation had
the authority to issue two billion, three-hundred million (2,300,000,000) shares
of Common Stock of the par value of $0.01 per share and of the aggregate par
value of twenty-three million dollars ($23,000,000), of which the Board of
Directors had designated one billion, eight hundred and fifty-five million
(1,855,000,000) shares into Series and classified the shares of each Series as
follows:
PREVIOUSLY CLASSIFIED SHARES
----------------------------
<TABLE>
<CAPTION>
Authorized Shares
Name of Series (In Millions)
- -------------- -------------
<S> <C>
NetNet Fund 50
Munder Financial Services Fund 50
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Authorized
Shares by Class (in millions)
-----------------------------
<S> <C> <C> <C> <C> <C>
A B Y C K
Munder Multi-Season Growth Fund 10 60 50 10 50
Munder Money Market Fund 55 20 500 20 200
Munder Real Estate Equity Investment Fund 10 50 10 10 10
Munder Equity Selection Fund 20 40 20 10 10
Munder International Bond Fund 20 40 20 10 10
Munder Mid-Cap Growth Fund 5 10 10 5 10
Munder Value Fund 5 10 10 5 10
Munder Micro-Cap Equity Fund 10 15 10 10 10
Munder Small-Cap Value Fund 10 15 10 10 10
Munder Short Term Treasury Fund 20 40 20 10 10
Munder All-Season Conservative Fund 12.5 12.5 25 N/A N/A
Munder All-Season Moderate Fund 12.5 12.5 25 N/A N/A
Munder All-Season Aggressive Fund 12.5 12.5 25 N/A N/A
Munder Growth Opportunities Fund 3.4 3.3 20 3.3 20
</TABLE>
As amended hereby, the Corporation's Articles of Incorporation authorize
the issuance of two billion, three-hundred million (2,300,000,000) shares of
Common Stock of the par value of $0.01 per share and having an aggregate par
value of twenty-three million dollars ($23,000,000), of which the Board of
Directors has designated one billion, nine hundred five million, (1,905,000,000)
(including the 1,855,000,000 shares previously designated) shares into Series
and classified the shares of each Series as follows:
Current Classification of Shares
--------------------------------
<TABLE>
<CAPTION>
Authorized Shares
Name of Series (In Millions)
- -------------- -------------
<S> <C>
Munder Financial Services Fund 50
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Authorized
Shares by Class (in millions)
-----------------------------
<S> <C> <C> <C> <C> <C>
A B Y C K
Munder Multi-Season Growth Fund 10 60 50 10 50
Munder Money Market Fund 55 20 500 20 200
Munder Real Estate Equity Investment Fund 10 50 10 10 10
Munder Equity Selection Fund 20 40 20 10 10
Munder International Bond Fund 20 40 20 10 10
Munder Mid-Cap Growth fund 5 10 10 5 10
Munder Value Fund 5 10 10 5 10
Munder Micro-Cap Equity Fund 10 15 10 10 10
Munder Small-Cap Value Fund 10 15 10 10 10
Munder All-Season Conservative Fund 12.5 12.5 25 N/A N/A
Munder All-Season Moderate Fund 12.5 12.5 25 N/A N/A
Munder All-Season Aggressive Fund 12.5 12.5 25 N/A N/A
Munder Emerging Growth Fund 3.4 3.3 20 3.3 20
Munder Convertible Securities Fund 5 5 30 0 10
NetNet Fund 15 20 15 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
AUTHORIZED
Shares by Class (in millions)
-----------------------------
<S> <C> <C> <C> <C> <C>
A B Y C Michigan
Municipal
League
(formerly "K")
Munder Short Term Treasury Fund 0 0 90 0 10
</TABLE>
FOURTH: The preferences, rights, voting powers, restrictions, limitations
as to dividends, qualifications and terms and conditions of redemption of the
various classes of shares shall be as set forth in the Corporation's Articles of
Incorporation and shall be subject to all provisions of the Articles of
Incorporation relating to shares of the Corporation generally, and those set
forth as follows:
(a) The assets of each Class of a Series shall be invested in the same
investment portfolio of the Corporation.
(b) The dividends and distributions of investment income and capital gains
with respect to each class of shares shall be in such amount as may be
declared from time to
4
<PAGE>
time by the Board of Directors, and the dividends and distributions of each
class of shares may vary from the dividends and distributions of the other
classes of shares to reflect differing allocations of the expenses of the
Corporation among the holders of each class and any resultant differences
between the net asset value per share of each class, to such extent and for
such purposes as the Board of Directors may deem appropriate. The
allocation of investment income or capital gains and expenses and
liabilities of the Corporation among the classes shall be determined by the
Board of Directors in a manner it deems appropriate.
(c) Class A shares of each Series (including fractional shares) may be
subject to an initial sales charge pursuant to the terms of the issuance of
such shares.
(d) The proceeds of the redemption of Class B shares of each Series
(including fractional shares) may be reduced by the amount of any
contingent deferred sales charge payable on such redemption pursuant to the
terms of the issuance of such shares.
(e) The holders of Class A shares, Class B shares and Class Y shares of
each Series shall have (i) exclusive voting rights with respect to
provisions of any service plan or service and distribution plan adopted by
the Corporation pursuant to Rule 12b-1 under the Investment Company Act of
1940 (a "Plan") applicable to the respective class of the respective Series
and (ii) no voting rights with respect to the provisions of any Plan
applicable to any other class or Series of shares or with regard to any
other matter submitted to a vote of shareholders which does not affect
holders of that respective class of the respective Series of shares.
(f)(1) Each Class B share of each Series, other than a share purchased
through the automatic reinvestment of a dividend or a distribution with
respect to Class B shares, shall be converted automatically, and without
any action or choice on the part of the holder thereof, into Class A shares
of that Series on the date that is the first business day of the month in
which the sixth anniversary of the issuance of the Class B shares occurs
(the "Conversion Date"). With respect to Class B shares issued in an
exchange or series of exchanges for shares of capital stock of another
investment company or class or series thereof registered under the
Investment Company Act of 1940 pursuant to an exchange privilege granted by
the Corporation, the date of issuance of the Class B shares for
5
<PAGE>
purposes of the immediately preceding sentence shall be the date of
issuance of the original shares of capital stock.
(2) Each Class B share of a Series purchased through the automatic
reinvestment of a dividend or a distribution with respect to Class B shares
shall be segregated in a separate sub-account. Each time any Class B
shares in a shareholder's Fund account (other than those in the sub-
account) convert to Class A shares, an equal pro rata portion of the Class
B shares then in the sub-account shall also convert automatically to Class
A shares without any action or choice on the part of the holder thereof.
The portion shall be determined by the ratio that the shareholder's Class B
shares of a Series converting to Class A shares bears to the shareholder's
total Class B shares of that Series not acquired through dividends and
distributions.
(3) The conversion of Class B shares to Class A shares is subject to
the continuing availability of an opinion of counsel or a ruling of the
Internal Revenue Service that payment of different dividends on Class A and
Class B shares does not result in the Corporation's dividends or
distributions constituting "preferential dividends" under the Internal
Revenue Code of 1986, as amended, and that the conversion of shares does
not constitute a taxable event under federal income tax law.
(4) The number of Class A shares of a Series into which a share of
Class B shares is converted pursuant to paragraphs (f)(1) and (f)(2) hereof
shall equal the number (including for this purpose fractions of shares)
obtained by dividing the net asset value per share of the Class B shares of
the Series (for purposes of sales and redemptions thereof on the Conversion
Date) by the net asset value per share of the Class A shares of the Series
(for purposes of sales and redemptions thereof on the Conversion Date).
(5) On the Conversion Date, the Class B shares of a Series converted
into Class A shares will cease to accrue dividends and will no longer be
deemed outstanding and the rights of the holders thereof (except the right
to receive (i) the number of Class A shares into which the Class B shares
have been converted and (ii) declared but unpaid dividends to the
Conversion Date) will cease. Certificates representing Class A shares
resulting from the conversion need not be issued until certificates
representing Class B
6
<PAGE>
shares converted, if issued, have been received by the Corporation or its
agent duly endorsed for transfer.
IN WITNESS WHEREOF, The Munder Funds, Inc. has caused these Articles
Supplementary to be signed in its name on its behalf by its authorized officers
who acknowledge that these Articles Supplementary are the act of the
Corporation, that to the best of their knowledge, information and belief, all
matters and facts set forth herein relating to the authorization and approval of
these Articles Supplementary are true in all material respects and that this
statement is made under the penalties of perjury.
Date: June 1, 1998
THE MUNDER FUNDS, INC.
[CORPORATE SEAL]
By: /s/ Terry H. Gardner
--------------------------
Terry H. Gardner
Attest:
/s/ Lisa Anne Rosen
- ---------------------------
Lisa Anne Rosen
Secretary
7
<PAGE>
Exhibit 5(a)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made this 2nd day of July, 1998, between The Munder Funds, Inc.
(the "Company") on behalf of each Fund (collectively, the "Funds") set forth on
Schedule A attached hereto, and Munder Capital Management (the "Advisor"), a
Delaware partnership.
WHEREAS, the Company is a Maryland corporation authorized to issue shares
in series and is registered as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), and each Fund
is a series of the Company;
WHEREAS, the Advisor is registered as an investment advisor under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, the Company wishes to retain the Advisor to render investment
advisory services to the Funds, and the Advisor is willing to furnish such
services to the Funds;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Company and the Advisor as follows:
1. APPOINTMENT
(a) The Company hereby appoints the Advisor to act as investment advisor to
the Funds for the periods and on the terms set forth herein. The Advisor
accepts the appointment and agrees to furnish the services set forth herein for
the compensation provided herein.
(b) In the event that the Company establishes one or more portfolios other
than the Funds listed on Schedule A attached hereto, with respect to which it
desires to retain the Investment Advisor to act as investment advisor hereunder,
it shall notify the Investment Advisor in writing. If the Investment Advisor is
willing to render such services under this Agreement it shall notify the Company
in writing whereupon such portfolio shall become a Fund hereunder and shall be
subject to the provisions of this Agreement to the same extent as the Funds
named above except to the extent that said provisions (including those relating
to the compensation payable by the Fund to the Investment Advisor) are modified
with respect to such Fund in writing by the Company and the Investment Advisor
at the that time.
2. SERVICES AS INVESTMENT ADVISOR
Subject to the general supervision and direction of the Board of Directors
of the Company, the Advisor will (a) manage the Funds in accordance with each
Fund's investment objective and policies as stated in the Fund's Prospectus and
the Statement of Additional Information filed with the Securities and Exchange
Commission, as they may be amended from time to time; (b) make investment
decisions for the Funds; (c) place purchase and sale orders on behalf of the
Funds; and (d) employ professional portfolio managers and securities analysts to
provide research services to the Funds. In providing those services, the
Advisor will provide the Funds with ongoing research, analysis, advice and
judgments regarding individual investments, general economic conditions and
trends and long-range investment
<PAGE>
policy. In addition, the Advisor will furnish the Funds with whatever
statistical information the Funds may reasonably request with respect to the
securities that the Funds may hold or contemplate purchasing.
The Advisor further agrees that, in performing its duties hereunder, it
will:
(a) comply with the 1940 Act and all rules and regulations thereunder and
under the Advisers Act, the Internal Revenue Code of 1986, as amended (the
"Code"), and all other applicable federal and state law and regulations, and
with any applicable procedures adopted by the Directors;
(b) use reasonable efforts to manage each Fund so that it will qualify, and
continue to qualify, as a regulated investment company under Subchapter M of the
Code and regulations issued thereunder;
(c) maintain books and records with respect to each Fund's securities
transactions, render to the Board of Directors of the Company such periodic and
special reports as the Board may reasonably request, and keep the Directors
informed of developments materially affecting each Fund's portfolio;
(d) make available to the Funds' administrator and the Company, promptly
upon their request, such copies of its investment records and ledgers with
respect to the Funds as may be required to assist the administrator and the
Company in their compliance with applicable laws and regulations. The Advisor
will furnish the Directors with such periodic and special reports regarding the
Funds as they may reasonably request; and
(e) immediately notify the Company in the event that the Advisor or any of
its affiliates: (1) becomes aware that it is subject to a statutory
disqualification that prevents the Advisor from serving as investment advisor
pursuant to this Agreement; or (2) becomes aware that it is the subject of an
administrative proceeding or enforcement action by the Securities and Exchange
Commission or other regulatory authority. The Advisor further agrees to notify
the Company immediately of any material fact known to the Advisor respecting or
relating to the Advisor that is not contained in the Company's Registration
Statement regarding the Funds, or any amendment or supplement thereto, but that
is required to be disclosed therein, and of any statement contained therein that
becomes untrue in any material respect.
3. DOCUMENTS
The Company has delivered properly certified or authenticated copies of
each of the following documents to the Advisor and will deliver to it all future
amendments and supplements thereto, if any:
(a) certified resolution of the Board of Directors of the Company
authorizing the appointment of the Advisor and approving the form of this
Agreement;
(b) the Registration Statement as filed with the Securities and Exchange
Commission and any amendments thereto; and
(c) exhibits, powers of attorneys, certificates and any and all other
documents relating to or filed in connection with the Registration Statement
described above.
4. BROKERAGE
2
<PAGE>
In selecting brokers or dealers to execute transactions on behalf of the
Funds, the Advisor will use its best efforts to seek the best overall terms
available. In assessing the best overall terms available for any Fund
transaction, the Advisor will consider all factors it deems relevant, including,
but not limited to, the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer and the reasonableness of the commission, if any, for the specific
transaction and on a continuing basis. In selecting brokers or dealers to
execute a particular transaction, and in evaluating the best overall terms
available, the Advisor is authorized to consider the brokerage and research
services (as those terms are defined in Section 28(e) of the Securities Exchange
Act of 1934, as amended (the "1934 Act")) provided to the Funds and/or other
accounts over which the Advisor or its affiliates exercise investment
discretion. The parties hereto acknowledge that it is desirable for the Trust
that the Advisor have access to supplemental investment and market research and
security and economic analysis provided by brokers-dealers who may execute
brokerage transactions at a higher cost to the Trust than may result when
allocating brokerage to other brokers on the basis of seeking the most favorable
price and efficient execution. Therefore, the Advisor may cause the Fund 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 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
Fund. It is understood that the services provided by such brokers may be useful
to the Advisor in connection with the Advisor's services to other clients. In
accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T) thereunder and
subject to any other applicable laws and regulations, the Advisor and its
affiliates are authorized to effect portfolio transactions for the Funds and to
retain brokerage commissions on such transactions.
5. RECORDS
The Advisor agrees to maintain and to preserve for the periods prescribed
under the 1940 Act any such records as are required to be maintained by the
Advisor with respect to the Funds by the 1940 Act. The Advisor further agrees
that all records which it maintains for the Funds are the property of the Funds
and it will promptly surrender any of such records upon request.
6. STANDARD OF CARE
The Advisor shall exercise its best judgment in rendering the services
under this Agreement. The Advisor shall not be liable for any error of judgment
or mistake of law or for any loss suffered by a Fund or the Funds' shareholders
in connection with the matters to which this Agreement relates, provided that
nothing herein shall be deemed to protect or purport to protect the Advisor
against any liability to a Fund or to its shareholders to which the Advisor
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or by reason of the
Advisor's reckless disregard of its obligations and duties under this Agreement.
As used in this Section 6, the term "Advisor" shall include any officers,
directors, employees, or other affiliates of the Advisor performing services
with respect to a Fund.
7. COMPENSATION
In consideration of the services rendered pursuant to this Agreement, each
Fund will pay the Advisor a fee as set forth on Schedule B attached hereto.
This fee shall be computed and accrued daily and payable monthly; however, with
respect to any Fund for which the effective date of this Agreement is prior to
November 30, 1998, the fee shall be maintained in an interest-bearing escrow
account until
3
<PAGE>
such time as shareholders of the Fund approve the payment of fees pursuant to
this agreement. If shareholders do not approve such payment of fees on or before
November 30, 1998, the balance in the escrow account shall be paid to the Fund.
For the purpose of determining fees payable to the Advisor, the value of a
Fund's average daily net assets shall be computed at the times and in the manner
specified in the Fund's Prospectus or Statement of Additional Information.
8. EXPENSES
The Advisor will bear all expenses in connection with the performance of
its services under this Agreement. Each Fund will bear certain other expenses
to be incurred in its operation, including: taxes, interest, brokerage fees and
commissions, if any, fees of Directors of the Company who are not officers,
directors or employees of the Advisor, Securities and Exchange Commission fees
and state blue sky fees; charges of custodians and transfer and dividend
disbursing agents; the Fund's proportionate share of insurance premiums; outside
auditing and legal expenses; costs of maintenance of the Fund's existence; costs
attributable to investor services, including, without limitation, telephone and
personal expenses; charges of an independent pricing service, costs of preparing
and printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders; costs of
shareholders' reports and meetings of the shareholders of the Fund and of the
officers of Board of Directors of the Company; and any extraordinary expenses.
9. SERVICES TO OTHER COMPANIES OR ACCOUNTS
The investment advisory services of the Advisor to the Funds under this
Agreement are not to be deemed exclusive, and the Advisor, or any affiliate
thereof, shall be free to render similar services to other investment companies
and clients (whether or not their investment objective and policies are similar
those of a Fund) and to engage in activities so long as its services hereunder
are not impaired thereby.
10. DURATION AND TERMINATION
This Agreement shall become effective on the date of this Agreement
provided that with respect to any Fund, this Agreement shall not take effect
unless it has been approved (a) by a vote of a majority of the Board of
Directors of the Company, including a majority of those Directors who are not
"interested persons" (as defined in the 1940 Act) of any party to this Agreement
cast in person at a meeting called for the purpose of voting such approval, and
(b) by vote of a majority of that Fund's outstanding voting securities and shall
continue in effect with respect to the Fund, unless sooner terminated as
provided herein, for two years from such date and shall continue from year to
year thereafter, provided each continuance is specifically approved at least
annually by (i) the vote of a majority of the Board of Directors of the Company
or (ii) a vote of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities, provided that in either event the continuance is
also approved by a majority of the Board of Directors who are not "interested
persons" (as defined in the 1940 Act) of any party to this Agreement, by vote
cast in person at a meeting called for the purpose of voting on such approval.
This Agreement is terminable with respect to the Funds, or any Fund, without
penalty, on sixty (60) days' written notice by the Board of Directors of the
Company or by vote of the holders of a "majority" (as defined in the 1940 Act)
of the shares of the affected Funds or upon ninety (90) days' written notice by
the Advisor. Termination of this Agreement with respect to any given Fund,
shall in no way affect the continued validity of this Agreement or the
performance thereunder with respect to any other Fund. This Agreement will be
terminated automatically in the event of its "assignment" (as defined in the
1940 Act).
4
<PAGE>
11. AMENDMENT
No provision of this Agreement shall be changed, waived or discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement with respect to any Fund shall be
effective until approved by an affirmative vote of (i) a majority of the
outstanding voting securities of that Fund, and (ii) a majority of the Directors
of the Company, including a majority of Directors who are not "interested
persons" (as defined in the 1940 Act) of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval, if such
approval is required by applicable law.
12. USE OF NAME
It is understood that the name of Munder Capital Management or any
derivative thereof or logo associated with that name is the valuable property of
the Advisor and its affiliates, and that the Company and each Fund have the
right to use such name (or derivable or logo) only so long as this Agreement
shall continue with respect to a given Fund. Upon termination of this Agreement
or upon termination of this Agreement with respect to a given Fund, the Company
and any Fund affected shall forthwith cease to use such name (or derivable or
logo) and the Company shall promptly amend its Articles of Incorporation to
change the Fund name to comply herewith.
13. MISCELLANEOUS
(a) This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof.
(b) Titles or captions of sections in this Agreement are inserted only as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or the intent of any provisions thereof.
(c) This Agreement may be executed in several counterparts, all of which
together shall for all purposes constitute one Agreement, binding on all the
parties.
(d) This Agreement and the rights and obligations of the parties hereunder
shall be governed by, and interpreted, construed and enforced in accordance with
the laws of the State of Michigan.
(e) If any provisions of this Agreement or the application thereof to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder of this
Agreement or the application of such provision to such person circumstance,
other than these as to which it so determined to be invalid or unenforceable,
shall not be affected thereby, and each provision hereof shall be valid and
shall be enforced to the fullest extent permitted by law.
(f) Notices of any kind to be given to the Advisor by the Company shall be
in writing and shall be duly given if mailed or delivered to the Advisor at 480
Pierce Street, Birmingham, Michigan 48009, or at such other address or to such
individual as shall be specified by the Advisor to the Company. Notices of any
kind to be given to the Company by the Advisor shall be in writing and shall be
duly given if mailed or delivered to 480 Pierce Street, Birmingham, Michigan
48009, or at such the address to such individual as shall be specified by the
Company to the Advisor.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first above
written.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
-------------------
Lisa Anne Rosen
MUNDER CAPITAL MANAGEMENT
By: /s/ Terry H. Gardner
-------------------
Terry H. Gardner
6
<PAGE>
SCHEDULE A
Munder All-Season Aggressive Fund
Munder All-Season Conservative Fund
Munder All-Season Moderate Fund
Munder Equity Selection Fund
Munder Financial Services Fund
Munder Growth Opportunities Fund
Munder International Bond Fund
Munder Micro-Cap Equity Fund
Munder Mid-Cap Growth Fund
Munder Money Market Fund
Munder Multi-Season Growth Fund
Munder NetNet Fund
Munder Real Estate Equity Investment Fund
Munder Short Term Treasury Fund
Munder Small-Cap Value Fund
Munder Value Fund
7
<PAGE>
SCHEDULE B
<TABLE>
<CAPTION>
FUND ANNUAL FEES (AS A PERCENTAGE OF
AVERAGE DAILY NET ASSETS)
<S> <C>
Munder All-Season Aggressive Fund 0.35%
Munder All-Season Conservative Fund 0.35%
Munder All-Season Moderate Fund 0.35%
Munder Convertible Securities Fund 0.75%
Munder Equity Selection Fund 0.75%
Munder Financial Services Fund 0.75%
Munder Growth Opportunities Fund 0.75%
Munder International Bond Fund 0.50%
Munder Micro-Cap Equity Fund 1.00%
Munder Mid-Cap Growth Fund 0.75%
Munder Money Market Fund 0.40%
Munder Multi-Season Growth Fund 1.00% of up to $500 million then
reduced to 0.75% of the Funds average
daily net assets in excess of
$500 million
Munder NetNet Fund 1.00%
Munder Real Estate Equity Investment Fund 0.74%
Munder Short Term Treasury Fund 0.25%
Munder Small-Cap Value Fund 0.75%
Munder Value Fund 0.75%
</TABLE>
8
<PAGE>
Exhibit 6(f)
DISTRIBUTION AGREEMENT
----------------------
This Distribution Agreement is made as of this 4th day of February, 1997 by
and between THE MUNDER FUNDS, INC., a Maryland Corporation (the "Fund"), and
FUNDS DISTRIBUTOR, INC., a Massachusetts corporation ("Funds Distributor").
WHEREAS, the Fund is an open-end management investment company and is so
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Fund desires to retain Funds Distributor as Distributor for
the Fund's shares of common stock in Class A, Class B and Class Y Shares
representing interests in the Fund's three separate portfolios, Munder All-
Season Maintenance Fund, Munder All-Season Development Fund and Munder All-
Season Accumulation Fund (individually, a "Portfolio" and collectively, the
"Portfolios"), to provide for the sale and distribution of shares of the
Portfolios (the "Shares"), and Funds Distributor is willing to render such
services;
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein and intending to be legally bound hereby, the parties hereto agree
as follows:
I. DELIVERY OF DOCUMENTS
---------------------
The Fund has delivered to Funds Distributor copies of each of the following
documents and will deliver to it all future amendments and supplements thereto,
if any:
(a) Resolutions of the Fund's Board of Directors authorizing the execution
and delivery of this Agreement;
(b) The Fund's Articles of Incorporation as filed with the State of
Maryland - Department of Assessments and Taxation on November 18,
1992;
(c) The Fund's By-Laws;
(d) The Fund's Notification of Registration on Form N-8A under the 1940
Act as filed with the Securities and Exchange Commission ("SEC");
(e) The Fund's Registration Statement on Form N-1A (the "Registration
Statement") under the Securities Act of 1933 (the "1933 Act") and the
1940 Act, as filed with the SEC on November 18, 1992, and all
amendments thereto; and
<PAGE>
(f) The Fund's most recent Prospectuses and Statements of Additional
Information and all amendments and supplements thereto (collectively,
the "Prospectuses").
II. DISTRIBUTION
------------
1. Appointment of Distributor. The Fund hereby appoints Funds Distributor as
---------------------------
Distributor of the Portfolios' Shares and Funds Distributor hereby accepts such
appointment and agrees to render the services and duties set forth in this
Section II. In the event that the Fund establishes one or more additional
portfolios or classes of shares other than the Portfolios and the Shares with
respect to which it decides to retain Funds Distributor to act as distributor
hereunder, the Fund shall notify Funds Distributor in writing. If Funds
Distributor is willing to render such services, it shall so notify the Fund in
writing whereupon such portfolio and such shares shall become a Portfolio and
Shares hereunder and shall be subject to the provisions of this Agreement,
except to the extent that said provision is modified with respect to such
portfolio or shares in writing by the Fund and Funds Distributor at the time.
2. Services and Duties.
--------------------
(a) The Fund agrees to sell through Funds Distributor, as agent, from time
to time during the term of this Agreement, Shares (whether authorized but
unissued or treasury shares, in the Fund's sole discretion) upon the terms and
at the current offering price as described in the applicable Prospectus. Funds
Distributor will act only in its own behalf as principal in making agreements
with selected dealers or others for the sale and redemption of Shares, and shall
sell Shares only at the offering price thereof as set forth in the applicable
Prospectus. Funds Distributor shall devote appropriate efforts to effect sales
of Shares of each of the Portfolios, but shall not be obligated to sell any
certain number of Shares.
(b) In all matters relating to the sale and redemption of Shares, Funds
Distributor will act in conformity with the Fund's Articles of Incorporation,
By-Laws and applicable Prospectuses and with the instructions and directions of
the Board of Directors of the Fund and will conform to and comply with the
requirements of the 1933 Act, the 1940 Act, the regulations of the National
Association of Securities Dealers, Inc. and all other applicable Federal or
state laws and regulations.
(c) Funds Distributor will bear the cost of printing and distributing any
Prospectus (including any supplement or amendment thereto), provided, however,
-------- -------
that Funds Distributor shall not be obligated to bear the expenses incurred by
the Fund in connection with (i) the preparation and printing of any supplement
or amendment to a Registration Statement or Prospectus necessary for the
continued effective registration of the Shares under the 1933 Act or state
securities laws; and (ii) the printing and distribution of any Prospectus,
supplement or amendment thereto for existing shareholders of the class ("Class")
of Shares described therein.
<PAGE>
(d) All Shares of the Portfolios offered for sale by Funds Distributor
shall be offered for sale to the public at a price per share (the "offering
price") equal to (i) their net asset value (determined in the manner set forth
in the applicable Prospectuses) plus, except to those classes of persons set
forth in the applicable Prospectuses, (ii) a sales charge which shall be the
percentage of the offering price of such Shares as set forth in the applicable
Prospectuses. The offering price, if not an exact multiple of one cent, shall be
adjusted to the nearest cent. Concessions paid by Funds Distributor to broker-
dealers and other persons shall be set forth in either the selling agreements
between Funds Distributor and such broker-dealers and persons or, if such
concessions are described in the applicable Prospectuses, shall be as so set
forth. No broker-dealer or other person who enters into a selling or
distribution and servicing agreement with Funds Distributor shall be authorized
to act as agent for the Fund in connection with the offering or sale of Shares
to the public or otherwise.
(e) If any shares sold by Funds Distributor under the terms of this
Agreement are redeemed or repurchased by the Fund or by Funds Distributor as
agent or are tendered for redemption within seven business days after the date
of confirmation of the original purchase of said Shares, Funds Distributor shall
forfeit the amount above the net asset value received by it with respect to such
Shares, provided that the portion, if any, of such amount re-allowed by Funds
Distributor to broker-dealers or other persons shall be repayable to the Fund
only to the extent recovered by Funds Distributor from the broker-dealer or
other persons concerned. Funds Distributor shall include in the form of
agreement with such broker-dealers and other persons a corresponding provision
for the forfeiture by them of their concession with respect to Shares sold by
them or their principals and redeemed or repurchased by the Fund or by Funds
Distributor as agent (or tendered for redemption) within seven business days
after the date of confirmation of such initial purchases.
(f) Funds Distributor may be reimbursed for all or a portion of the
expenses described above to the extent permitted by one or more distribution
plans adopted by the Fund on behalf of a Portfolio pursuant to Rule 12b-1 under
the 1940 Act. No provision of this Agreement may be deemed to prohibit any
payments by a Portfolio to Funds Distributor or by a Portfolio or Funds
Distributor to investment dealers, banks or other financial institutions through
whom shares of the Fund are sold where such payments are made under a
distribution plan adopted by the Fund on behalf of such Portfolio pursuant to
Rule 12b-1 under the Act (the "Plan"). The Fund agrees that it shall provide
notice to Funds Distributor at least 30 days prior to the effective date of the
elimination of or the decrease in the amount of expenses reimbursable under such
a distribution plan.
(g) With respect to such classes of shares, if any, that are sold with a
contingent deferred sales charge ("CDSC"), Funds Distributor shall impose a CDSC
in connection with the redemption of the Shares of such classes, not to exceed a
specified percentage of the original purchase price of the Shares, as from time
to time set forth in the applicable Prospectuses. Funds Distributor may retain
(or receive from the Fund, as the case may
<PAGE>
be) all of any CDSC. Funds Distributor may pay to broker-dealers or other
persons through whom such Shares are sold a commission or other payment to the
extent consistent with the current Prospectuses and applicable rules and
regulations.
3. Sales and Redemptions.
----------------------
(a) The Fund shall pay all costs and expenses in connection with the
registration of the Shares under the 1933 Act, and all expenses in connection
with maintaining facilities for the issue and transfer of the Shares and for
supplying information, prices and other data to be furnished by the Fund
hereunder, and all expenses in connection with preparing, printing and
distributing the Prospectuses except as set forth in subsection 2(c) of Section
II hereof.
(b) The Fund shall execute all documents, furnish all information and
otherwise take all actions which may be reasonably necessary in the discretion
of the Fund's officers in connection with the sale of the Shares in such states
as Funds Distributor may designate to the Fund and the Fund may approve, and the
Fund shall pay all filing fees which may be incurred in connection with such
sale. Funds Distributor shall pay all other expenses incurred by Funds
Distributor in connection with the sale of the Shares, except as otherwise
specifically provided in this Agreement.
(c) The Fund shall have the right to suspend the sale of Shares at any
time in response to conditions in the securities markets or otherwise, and to
suspend the redemption of Shares of any Portfolio at any time permitted by the
1940 Act or the rules of the SEC ("Rules").
(d) The Fund reserves the right to reject any order for Shares, but will
not do so arbitrarily or without reasonable cause.
III. LIMITATIONS OF LIABILITY
------------------------
Funds Distributor shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Fund or any Portfolio in connection with
the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
IV. CONFIDENTIALITY
---------------
Funds Distributor will treat confidentially and as proprietary information
of the Fund all records and other information relative to the Fund, to the
Fund's prior or current shareholders and to those persons or entities who
respond to Funds Distributor's inquiries concerning investment in the Fund, and,
except as provided below, will not use such records and information for any
purpose other than the performance of its responsibilities
<PAGE>
and duties hereunder. Any other use by Funds Distributor of the information and
records referred to above may be made only after prior notification to and
approval in writing by the Fund. Such approval shall not be unreasonably
withheld and may not be withheld where: (i) Funds Distributor may be exposed to
civil or criminal contempt proceedings for failure to divulge such information;
(ii) Funds Distributor is requested to divulge such information by duly
constituted authorities; or (iii) Funds Distributor is so requested by the Fund.
V. INDEMNIFICATION
---------------
1. Fund Representation. The Fund represents and warrants to Funds
--------------------
Distributor that at all times the Registration Statement and Prospectuses will
in all material respects conform to the applicable requirements of the 1933 Act
and the Rules thereunder and will not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, except that no representation or warranty
in this subsection shall apply to statements or omissions made in reliance upon
and in conformity with written information furnished to the Fund by or on behalf
of and with respect to Funds Distributor expressly for use in the Registration
Statement or Prospectuses.
2. Funds Distributor Representation. Funds Distributor represents and
---------------------------------
warrants to the Fund that it is duly organized as a Massachusetts corporation
and is and at all times will remain duly authorized and licensed to carry out
its services as contemplated herein.
3. Fund Indemnification. The Fund, on behalf of each Portfolio, agrees
---------------------
that each Portfolio will indemnify, defend and hold harmless Funds Distributor,
its several officers and directors, and any person who controls Funds
Distributor within the meaning of Section 15 of the 1933 Act, from and against
any losses, claims, damages or liabilities, joint or several, to which any of
them may become subject under the 1933 Act or otherwise, insofar as such losses,
claims damages or liabilities (or actions or proceedings in respect thereof)
arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
Prospectuses or in any application or other document executed by or on behalf of
a Portfolio, or arise out of or based upon, information furnished by or on
behalf of a Portfolio, filed in any state in order to sell the Shares under the
securities or blue sky laws thereof ("Blue Sky Application"), or arise out of,
or are based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse Funds Distributor, its several officers and
directors, and any person who controls Funds Distributor within the meaning of
Section 15 of the 1933 Act, for any legal or other expenses reasonably incurred
by any of them in investigating, defending or preparing to defend any such
action, proceeding or claim; provided, however, that neither the Fund nor any
-------- -------
Portfolio shall be liable in any case to the extent that such loss, claim,
damage or liability arises out of, or is based upon, any untrue statement,
alleged untrue statement, or omission or alleged omission made in the
<PAGE>
Registration Statement, the Prospectuses, any Blue Sky Application or any
application or other document executed by or on behalf of the Fund in reliance
upon and in conformity with written information furnished to the Fund by or on
behalf of Funds Distributor specifically for inclusion therein.
A Portfolio shall not indemnify any person pursuant to this subsection 3
unless the court or other body before which the proceeding was brought has
rendered a final decision on the merits that such person was not liable by
reason of his willful misfeasance, bad faith or gross negligence in the
performance of his duties, or his reckless disregard of his obligations and
duties, under this Agreement ("disabling conduct") or, in the absence of such a
decision, a reasonable determination (based upon a review of the facts) that
such person was not liable by reason of disabling conduct has been made by the
vote of a majority of a quorum of Directors of the Fund who are neither
"interested parties" of the Fund (as defined in the 1940 Act) nor parties to the
proceeding, or by an independent legal counsel in a written opinion.
Each Portfolio shall advance attorneys' fees and other expenses incurred by
any person in defending any claim, demand, action or suit which is the subject
of a claim for indemnification pursuant to this subsection 3, so long as: (i)
such person shall undertake to repay all such advances unless it is ultimately
determined that he or she is entitled to indemnification hereunder; and (ii)
such person shall provide security for such undertaking, or the Portfolio shall
be insured against losses arising by reason of any lawful advances, or a
majority of a quorum of the disinterested, non-party Directors of the Fund (or
an independent legal counsel in a written opinion) shall determine based on a
review of readily available facts (as opposed to a full trial-type inquiry) that
there is reason to believe that such person ultimately will be found entitled to
indemnification hereunder.
The obligations of each portfolio under this subsection 3 shall be the
several (and not joint or joint and several) obligation of each Portfolio.
4. Funds Distributor Indemnification. Funds Distributor will indemnify,
----------------------------------
defend and hold harmless the Fund, each Portfolio, the Fund's several officers
and Directors and any person who controls the Fund or any Portfolio within the
meaning of Section 15 of the 1933 Act, from and against any losses, claims,
damages or liabilities, joint or several, to which any of them may become
subject under the 1933 Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect hereof) arise out of, or
are based upon, any breach of its representations, warranties and agreements
herein, or which arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, the Prospectuses, any Blue Sky Application or any application or
other documents executed by or on behalf of the Fund or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, which statement or
omission was made in reliance upon and in conformity with information furnished
in writing to the Fund or any of its several officers and
<PAGE>
Directors by or on behalf of Funds Distributor specifically for inclusion
therein, and will reimburse the Fund, each Portfolio, the Fund's several
officers and trustees, and any person who controls the Fund or any Portfolio
within the meaning of Section 15 of the 1933 Act, for any legal or other
expenses reasonably incurred by any of them in investigating, defending or
preparing to defend any such action, proceeding or claim.
5. General Indemnity Provision. No indemnifying party shall be liable
----------------------------
under its indemnity agreement contained in subsection 3 or 4 hereof with respect
to any claim made against such indemnifying party unless the indemnified party
shall have notified the indemnifying party in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon the indemnified party (or after the
indemnified party shall have received notice of such service on any designated
agent), but failure to notify the indemnifying party of any such claim shall not
relieve it from any liability which it may otherwise have to the indemnified
party. The indemnifying party will be entitled to participate at its own expense
in the defense or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, and if the indemnifying party elects to assume the
defense, such defense shall be conducted by counsel chosen by it and reasonably
satisfactory to the indemnified party. In the event the indemnifying party
elects to assume the defense of any such suit and retain such counsel, the
indemnified party shall bear the fees and expenses of any additional counsel
retained by the indemnified party.
VI. DURATION AND TERMINATION
------------------------
This Agreement shall become effective as of the date first above written,
and, unless sooner terminated as provided herein, shall continue until February
4, 1999. Thereafter, if not terminated, this Agreement shall continue
automatically for successive terms of one year, provided that such continuance
is specifically approved at least annually by a vote of the majority of the
Board of Directors of the Fund, including a majority of the Directors who are
not "interested persons" of the Fund and have no direct or indirect financial
interest in the operation of the Plan, this Agreement, or in any agreement
relating to the Plan (the "Plan Directors"), by vote cast in person at a meeting
called for the purpose of voting on such approval; provided, however, that this
-------- -------
Agreement may be terminated with respect to any Portfolio by the Fund at any
time, without the payment of any penalty, by vote of a majority of the Directors
or by a vote of a "majority of the outstanding voting securities" of such
Portfolio on 60 days' written notice to Funds Distributor, or by Funds
Distributor at any time, without the payment of any penalty, on 60 days' written
notice to the Fund. This Agreement will automatically and immediately terminate
in the event of its `assignment" (As used in this Agreement, the terms "majority
of the outstanding voting securities" "interested person" and "assignment" shall
have the same meanings as such terms have in the 1940 Act.)
VII. AMENDMENT OF THIS AGREEMENT
---------------------------
<PAGE>
No provision of this Agreement may be changed, waived, discharged or
terminated except by an instrument in writing signed by the party against which
an enforcement of the change, waiver, discharge or termination is sought.
VIII. NOTICES
-------
Notices of any kind to be given to the Fund hereunder by Funds Distributor
shall be in writing and shall be duly given if mailed or delivered to the Fund
at 480 Pierce Street, Suite 300, Birmingham, Michigan 48009, Attention: Lee
Munder, with a copy to Paul F. Roye, Esq., Dechert Price & Rhoads, 1500 K Street
N.W., Washington, D.C. 20005-1208, or at such other address or to such
individual as shall be so specified by the Fund to Funds Distributor. Notices
of any kind to be given to Funds Distributor hereunder by the Fund shall be in
writing and shall be duly given if mailed or delivered to Funds Distributor at
60 State Street, Suite 1300, Boston, Massachusetts 02109, Attention: Marie
Connolly or at such other address or to such individual as shall be so specified
by Funds Distributor to the Fund.
IX. MISCELLANEOUS
-------------
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall
be held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. Subject to the
provisions of Section VI hereof, this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
shall be governed by Maryland law; provided, however, that nothing herein shall
-------- -------
be construed in a manner inconsistent with the 1940 Act or any rule or
regulation of the SEC thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THE MUNDER FUNDS, INC.
By: /s/ Lee P. Munder
-------------------
Name: Lee P. Munder
Title: President
Attest: ____________________________
FUNDS DISTRIBUTOR, INC.
<PAGE>
By: /s/ Marie E. Connolly
---------------------
Name: Marie Connolly
Title: President
Attest: ____________________________
<PAGE>
Exhibit 8(e)
Comercia bank
One Detroit Center
500 Woodward Avenue
Detroit, Michigan 48226
Gentlemen:
Reference is made to the Custody Agreement between us dated as of May 1,
1995 (the "Agreement").
Pursuant to the Agreement, this letter is to provide notice of the creation
of an additional investment portfolio of The Munder Funds, Inc., the Munder
Short Term Treasury Fund (the "New Portfolio").
We request that you act as Custodian under the Agreement with respect to
the New Portfolio.
If the foregoing is in accordance with your understanding, please so
indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
The Munder Funds, Inc.
By: /s/ Lisa Anne Rosen
-------------------
Lisa Anne Rosen
Accepted:
Comercia Bank
Date: November 7, 1996 By: /s/ Julie Elya
--------------
Julie Elya
<PAGE>
Exhibit 8(f)
Comercia bank
One Detroit Center
500 Woodward Avenue
Detroit, Michigan 48226
Gentlemen:
Reference is made to the Custody Agreement between us dated as of May 1,
1995 (the "Agreement").
Pursuant to the Agreement, this letter is to provide notice of the creation
of three additional investment portfolios of The Munder Funds, Inc., namely the
Munder All-Season Maintenance Fund, the Munder All-Season Accumulation Fund and
the Munder All-Season Development Fund (the "New Portfolios").
We request that you act as Custodian under the Agreement with respect to
the New Portfolios.
If the foregoing is in accordance with your understanding, please so
indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
The Munder Funds, Inc.
By: /s/ Lisa Anne Rosen
-------------------
Lisa Anne Rosen
Accepted:
Comercia Bank
Date: February 4, 1997 By: /s/ Julie Elya
--------------
Julie Elya
<PAGE>
Exhibit 8(h)
Comercia bank
One Detroit Center
500 Woodward Avenue
Detroit, Michigan 48226
Gentlemen:
Reference is made to the Custody Agreement between us dated as of May 1,
1995 (the "Agreement").
Pursuant to the Agreement, this letter is to provide notice of the creation
of three additional investment portfolios of The Munder Funds, Inc., namely the
Munder Growth Opportunities Fund (the "New Portfolio").
We request that you act as Custodian under the Agreement with respect to
the New Portfolios.
If the foregoing is in accordance with your understanding, please so
indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
The Munder Funds, Inc.
By: /s/ Terry H. Gardner
--------------------
Terry H. Gardner
Accepted:
Comercia Bank
Date: February 24, 1998 By: /s/ Scott D. Seibert
--------------------
Scott D. Seibert
<PAGE>
Exhibit 8(j)
State Street Bank and Trust Company
1776 Heritage Drive, AFB
North Quincy, MA 02171
Ladies and Gentlemen:
Reference is made to the Sub-Custodian Contract between us dated as of
October 1, 1997 (the "Agreement").
Pursuant to the Agreement, this letter is to provide notice of the creation
of an additional investment portfolio of The Munder Funds, Inc., namely the
Munder Growth Opportunities Fund (the "New Portfolio").
In accordance with the Additional Portfolios provision of Section 16 of the
Agreement, we request that you act as Sub-Custodian with respect to the New
Portfolio.
Please indicate your acceptance of the foregoing by executing two copies of
this Agreement, returning one to the Fund and retaining one copy for your
records.
Very truly yours,
The Munder Funds, Inc.
By:/s/ Terry H. Gardner
---------------------------
Terry H. Gardner
Accepted:
State Street Bank and Trust Company
By:/s/ Nick Bonos
---------------------------
Nick Bonos
Comerica Bank
By:/s/ Scott Seibert
---------------------------
Scott Seibert
Date: February 24, 1998
<PAGE>
Exhibit 9(k)
AMENDMENT TO THE TRANSFER AGENCY AGREEMENT
This Amendment dated as of 1st day of June, 1998 (the "Amendment") is made
to the Transfer Agency and Registrar Agreement(s) (the "Agreement(s)") between
each of the Funds executing this Amendment and listed on Exhibit 1 of this
Amendment attached hereto and incorporated herein (hereinafter individually and
collectively referred to as the "Fund") and First Data Investor Services Group,
Inc. ("Investor Services Group").
WITNESSTH
WHEREAS, the Fund desires to enable the shareholders of the Funds and their
respective Portfolios of the Fund as applicable set forth in Exhibit 1, to
access certain Fund information maintained by Investor Services Group on behalf
of the Fund through use of the Internet (as hereinafter defined) and Investor
Services Group desires to allow such access and provide certain services as more
fully described below in connection therewith;
NOW THEREFORE, the Fund and Investor Services Group agree that as of the
date first referenced above, Investor Services Group Agreement shall be amended
as follows:
1. The following definitions are hereby incorporated into Agreement:
(a) "Investor Services Group Secure Net Gateway" shall mean the system of
computer hardware and software and network established by Investor
Services Group to provide access between Investor Services Group
recordkeeping system and the Internet;
(b) "Investor Services Group Web Transaction Engine" shall mean the system
of computer hardware and software created and established by Investor
Services Group in order to enable Shareholders of the Fund to perform
the transactions contemplated hereunder.
(c) "Internet" shall mean the communications network comprised of multiple
communications networks linking education, government, industrial and
private computer network.
(d) "Fund Home Page" shall mean the Fund's proprietary web site on the
Internet used by the Fund to provide information to its shareholders
and potential shareholders.
2. In addition to the services rendered by Investor Services Group as set forth
in the Agreement, Investor Services Group agrees to provide the following
services for the fees set forth in the Schedule of IMPRESSNet Fees attached
hereto as Schedule A of this Amendment:
<PAGE>
(a) in accordance with the written procedures established between the fund and
Investor Services Group, enable the Fund and its Shareholders utilize the
Internet in order to access Fund information maintained by Investor
Services Group through the use of the Investor Services Group Web
Transaction Engine and Secure Net Gateway;
(b) allow the Shareholders to perform account inquiries and transactions;
(c) maintenance of the Investor Services Group Secure Net Gateway and the
Investor Services Group Web Transaction Engine.
3. Responsibility of the Fund. In connection with the services provided by
Investor Services Group hereunder, the Fund shall be responsible for the
following:
(a) establishment and maintenance of the Fund Home Page on the Internet;
(b) services and relationships between the Fund and any third party on-line
service providers to enable the Shareholders to access the Fund Home
Page;
(c) provide Investor Services Group with access to and information
regarding the Fund Home Page in order to enable Investor Services Group
to provide the services contemplated hereunder;
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment 2 to be
executed by their duly authorized officers, as of the day and year first above
written.
THE MUNDER FUNDS, INC. THE MUNDER FUNDS TRUST
/s/ Terry H. Gardner /s/ Terry H. Gardner
- -------------------------------- --------------------------------
By: Terry H. Gardner By: Terry H. Gardner
----------------------------- ---------------------------
Title: Vice President and Title: Vice President and
-------------------------- -------------------------
Chief Financial Officer Chief Financial Officer
- -------------------------------- --------------------------------
ST. CLAIR FUNDS, INC. THE MUNDER FRAMLINGTON FUNDS TRUST
/s/ Terry H. Gardner /s/ Terry H. Gardner
- -------------------------------- --------------------------------
By: Terry H. Gardner By: Terry H. Gardner
----------------------------- ---------------------------
Title: Vice President and Title: Vice President and
-------------------------- -------------------------
Chief Financial Officer Chief Financial Officer
- -------------------------------- --------------------------------
FIRST DATA INVESTOR SERVICES
GROUP, INC.
/s/ Gerald G. Kokos
- --------------------------------
By: Gerald G. Kokos
-----------------------------
Title: Executive Vice President
--------------------------
<PAGE>
EXHIBIT 1
LIST OF FUNDS AND PORTFOLIOS
The Munder Funds Trust
Munder Accelerating Growth Fund
Munder Balanced Fund
Munder Bond Fund
Munder Cash Investment Fund
Munder Growth & Income Fund
Munder Index 500 Fund
Munder Intermediate Bond Fund
Munder International Equity Fund
Munder Michigan Triple Tax-Free Bond Fund
Munder Small Company Growth Fund
Munder Tax-Free Bond Fund
Munder Tax-Free Intermediate Bond Fund
Munder Tax-Free Money Market Fund
Munder U.S. Government Income Fund
Munder U.S. Treasury Money Market Fund
The Munder Funds, Inc.
Munder Multi-Season Growth Fund
Munder Money Market Fund
Munder Real Estate Equity Investment Fund
Munder Value Fund
Munder Mid-Cap Growth Fund
St. Clair Funds, Inc.
Liquidity Plus Money Market Fund
Munder S&P 500 Index Equity Fund
Munder S&P MidCap Index Equity Fund
Munder S&P SmallCap Index Equity Fund
Munder Foreign Equity Fund
Munder Aggregate Bond Index Fund
Munder Framlington Funds Trust
Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund
Munder Framlington International Growth Fund
<PAGE>
Schedule A
IMPRESSNet Fees
Web Transaction Engine
Transaction Cost:
. Account Inquiry $.10 per inquiry
. Financial Transactions $.50 per transaction
*Hardware Maintenance Fee Including Hardware and Software: $50,000 per annum
. Does not include client hardware and software requirements. That is an out-
of-pocket expense for the client
. Installation of hardware is billed as time and materials
. Does not include third party hardware and software maintenance agreements
. Does not include hardware upgrades
*Customized Development: $150 Per hour
Call Center Services for Registration (one-time): $2.50 per call
*Network Fee (one-time): $2,100
Per Pin Assignment (one-time): $2.50
*Cumulative charge with respect to all Funds executing this Amendment and such
other Funds advised by Munder Asset Management services by Investor Services
Group.
Investor Services Group will provide an invoice as soon as practicable after the
end of each calendar month. The Fund agrees to pay to Investor Services Group
the amounts so billed by Federal Funds Wire within fifteen (15) business days
after the Fund's receipt of invoice. In addition, with respect to all fees,
Investor Services Group may charge a service fee equal to the lesser of (i) one
and one half percent (1-1/2%) per month or (ii) the highest rate legally
permitted on any past due invoiced amounts.
<PAGE>
Exhibit 9(l)
AMENDMENT TO THE TRANSFER AGENCY AND REGISTRAR AGREEMENT
This Amendment dated as of June 1, 1998 is made to the Transfer Agency
Agreement(s) (the "Agreement(s)") between each of the Funds executing this
Amendment and listed on Exhibit 1 of this Amendment attached hereto and
incorporated herein (hereinafter individually and collectively referred to as
the "Fund") and First Data Investor Services Group, Inc. ("Investor Services
Group").
1. Modify Paragraph "(a)" of Section 15 "Term and Termination" by deleting the
contents of this paragraph in its entirety and inserting the following new
paragraph in its place:
"(a) Except as otherwise set forth herein, this Agreement shall be
effective as of the dates first written above and shall continue until June
1, 2000 (the "Initial Term"). Upon the expiration of the Initial Term,
this Agreement shall automatically renew for successive terms of one (1)
year ("Renewal Terms") each, unless the Trust or the Transfer Agent
provides written notice to the other of its intent not to renew. Such
notice must be received not less than ninety (90) days and not more than
one-hundred eighty (180) days prior to the expiration of the Initial Term
or the then current Renewal Term."
2. Modify Schedule A "Transfer Agent Fees" by deleting this Schedule in its
entirety and insert the attached new Schedule A in its place.
3. Modify Schedule B "Out-of-Pocket Expenses" by deleting this Schedule in its
entirety and insert the attached new Schedule B in its place.
4. Modify Exhibit 1 to Schedule C insert the following additional bullet:
. Identify area responsible for gain/loss purposes due to "as/of"
processing and daily reconciliation of processing to identify gains
and/or losses which impact the Fund. Any gain or loss will be netted out
on a quarterly basis. The Transfer Agent will compensate the Fund for
any Losses attributable to Transfer Agent processing errors.
<PAGE>
This Amendment contains the entire understanding among the parties with respect
to the transactions contemplated hereby. To the extent that any provision of
this Amendment modifies or is otherwise inconsistent with any provisions of the
prior agreements and related agreements, this Amendment shall control, but the
prior agreements and all related documents shall otherwise remain in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers, as of the day and year first above
written.
THE MUNDER FUNDS, INC. THE MUNDER FUNDS TRUST
/s/ Terry H. Gardner /s/ Terry H. Gardner
- -------------------------------- --------------------------------
By: Terry H. Gardner By: Terry H. Gardner
----------------------------- ----------------------------
Title: Vice President and Title: Vice President and
-------------------------- -------------------------
Chief Financial Officer Chief Financial Officer
- -------------------------------- --------------------------------
ST. CLAIR FUNDS, INC. THE MUNDER FRAMLINGTON FUNDS TRUST
/s/ Terry H. Gardner /s/ Terry H. Gardner
- -------------------------------- --------------------------------
By: Terry H. Gardner By: Terry H. Gardner
----------------------------- -----------------------------
Title: Vice President and Title: Vice President and
-------------------------- -------------------------
Chief Financial Officer Chief Financial Officer
- -------------------------------- --------------------------------
FIRST DATA INVESTOR SERVICES
GROUP, INC.
/s/ Gerald G. Kokos
- --------------------------------
By: Gerald G. Kokos
-----------------------------
Title: Executive Vice President
--------------------------
<PAGE>
SCHEDULE A
TRANSFER AGENT'S FEES
<TABLE>
<S> <C>
1. Fund Complex Minimum* $90,000 per month
2. Asset Based Fees 2.00 Basis Points for assets less than 5 billion
1.50 Basis Points for assets 5 billion-9 billion
1.00 Basis Points for assets greater than 9 billion
3. Other Fees: IRA accounts will be charged $10.00 per global
account per annum (excluding Consumer's Energy
Group)
NSCC Transaction Charge is $.15 per financial transaction
Client defined system enhancements will be agreed
upon by Transfer Agent and Munder Capital and
billed at a rate of $150.00 per hour
</TABLE>
* The Fund Complex minimum will apply to all existing and any future funds
offered by Munder Capital Management which are serviced by the Transfer
Agent. The fees specified herein may be adjusted at any time upon written
agreement between the parties. After March 1, 2000 the parties agree to
review the fees charged for services under this Agreement.
<PAGE>
SCHEDULE B
OUT-OF-POCKET EXPENSES
----------------------
The Fund shall reimburse the Transfer Agent monthly for applicable out-of-
pocket expenses, including, but not limited to the following items:
<TABLE>
<S> <C>
. Microfiche/microfilm production
. Magnetic media tapes and freight
. Printing costs, including certificates, envelopes, checks and stationery
. Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct pass through to the
Fund
. Due diligence mailings
. Telephone and telecommunication costs, including all lease, maintenance and line
costs
. Ad hoc reports
. Proxy solicitations, mailings and tabulations
. Daily & Distribution advice mailings
. Shipping, Certified and Overnight mail and insurance
. Year-end form production and mailings
. Terminals, communication lines, printers and other equipment specifically
required by the Fund
. Duplicating services
. Courier services
. Incoming and outgoing wire charges
. Overtime, as approved by the Fund
. Temporary staff, as approved by the Fund
. Travel and entertainment, as approved by the Fund
. Federal Reserve changes for check clearance
. Record retention, retrieval and destruction costs
. Third party audit reviews
. Insurance
. Such other miscellaneous expenses reasonably incurred by the Transfer Agent in
performing its duties and responsibilities under this Agreement as approved the
Fund
</TABLE>
The Company agrees that postage and mailing expenses will be paid on the
day of or price to mailing as agreed with the Transfer Agent. In addition, the
Company will promptly reimburse the Transfer Agent for any other unscheduled
expenses incurred by the Transfer Agent whenever the Company and the Transfer
Agent mutually agree that such expenses are not otherwise properly borne by the
Transfer Agent as part of its duties and obligations under the Agreement.
<PAGE>
EXHIBIT 1
LIST OF FUNDS AND PORTFOLIOS
The Munder Funds Trust
- ----------------------
Munder Accelerating Growth Fund
Munder Balanced Fund
Munder Bond Fund
Munder Cash Investment Fund
Munder Growth & Income Fund
Munder Index 500 Fund
Munder Intermediate Bond Fund
Munder International Equity Fund
Munder Michigan Triple Tax-Free Bond Fund
Munder Small Company Growth Fund
Munder Tax-Free Bond Fund
Munder Tax-Free Intermediate Bond Fund
Munder Tax-Free Money Market Fund
Munder U.S. Government Income Fund
Munder U.S. Treasury Money Market Fund
The Munder Funds, Inc.
- ----------------------
Munder Multi-Season Growth Fund
Munder Money Market Fund
Munder Real Estate Equity Investment Fund
Munder Value Fund
Munder Mid-Cap Growth Fund
St. Clair Funds, Inc.
- ---------------------
Liquidity Plus Money Market Fund
Munder S&P 500 Index Equity Fund
Munder S&P MidCap Index Equity Fund
Munder S&P SmallCap Index Equity Fund
Munder Foreign Equity Fund
Munder Aggregate Bond Index Fund
Munder Framlington Funds Trust
- ------------------------------
Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund
Munder Framlington International Growth Fund
<PAGE>
Exhibit 9(m)
AMENDMENT TO THE
TRANSFER AGENCY AND REGISTRAR AGREEMENT
THIS AMENDMENT, dated as of June 1, 1998 is made to the Transfer Agency
Agreement[s] (the "Agreement[s]") between each of the Funds executing this
Amendment and listed on Exhibit 1 of this Amendment attached hereto and
incorporated herein (hereinafter individually and collectively referred to as
the "Fund") and FIRST DATA INVESTOR SERVICES GROUP, INC. ("Investor Services
Group").
1. Amendment # 2 to the Transfer Agency and Registrar Agreement between The
Munder Funds Trust and First Data Investor Services Group, Inc. for
retirement account fees and services, dated June 1, 1998 is deleted in its
entirety.
2. Schedule C is modified by adding the following new Section 10:
"10.Retirement Account Services The Transfer Agent agrees to perform
the services set forth in the Attached Exhibit 2 of this Schedule C
with respect to those retirement plans offered by the Fund."
This Amendment contains the entire understanding among the parties with respect
to the transactions contemplated hereby. To the extent that any provision of
this Amendment modifies or is otherwise inconsistent with any provision of the
prior agreements and related agreements, this Amendment shall control, but the
prior agreements and all related documents shall otherwise remain in full force
and effect.
IN WITNESS WHEREOF, each party has caused this Amendment to be executed by
its duly authorized representative on the date first stated above.
THE MUNDER FUNDS, INC. THE MUNDER FUNDS TRUST
/s/ Terry H. Gardner /s/ Terry H. Gardner
- ---------------------------- ----------------------------------
By: Terry H. Gardner By: Terry H. Gardner
Title: Vice President Title: Vice President
ST. CLAIR FUNDS, INC. THE MUNDER FRAMLINGTON FUNDS TRUST
/s/ Terry H. Gardner /s/ Terry H. Gardner
- ---------------------------- ----------------------------------
By: Terry H. Gardner By: Terry H. Gardner
Title: Vice President Title: Vice President
FIRST DATA INVESTOR SERVICES
GROUP, INC.
/s/ Gerald G. Kokos
- ----------------------------
By: Gerald G. Kokos
Title: Executive Vice President
<PAGE>
Exhibit 1
List of Funds and Portfolios
THE MUNDER FUNDS TRUST
- ----------------------
Munder Accelerating Growth Fund
Munder Balanced Fund
Munder Bond Fund
Munder Cash Investment Fund
Munder Growth & Income Fund
Munder Index 500 Fund
Munder Intermediate Bond Fund
Munder International Equity Fund
Munder Michigan Triple Tax-Free Bond Fund
Munder Small Company Growth Fund
Munder Tax-Free Bond Fund
Munder Tax-Free Intermediate Bond Fund
Munder Tax-Free Money Market Fund
Munder U.S. Government Income Fund
Munder U.S. Treasury Money Market Fund
THE MUNDER FUNDS INC.
- ---------------------
The Munder Multi-Season Growth Fund
The Munder Money Market Fund
The Munder Real Estate Equity Investment Fund
The Munder Value Fund
The Munder Mid-Cap Growth Fund
THE ST. CLAIR FUND INC.
- -----------------------
Liquidity Plus Money Market Fund
Munder S&P 500 Index Equity Fund
Munder S&P MidCap Index Equity Fund
Munder S&P SmallCap Index Equity Fund
Munder Foreign Equity Fund
Munder Aggregate Bond Index Fund
THE MUNDER FRAMLINGTON FUNDS TRUST
- ----------------------------------
Framlington Emerging Markets Fund
Framlington Healthcare Fund
Framlington International Growth Fund
<PAGE>
Exhibit 2 to Schedule C
RETIREMENT ACCOUNT SERVICES
- ---------------------------
(a) Process new accounts, verify completeness of application forms; establish
new account records with standard abbreviations and registration formats,
including proper account identification codes.
(b) Examine and process contributions and invest monies received in Investments
in accordance with the written instructions of the Participant/Employer, as
the case may be.
(c) Process transactions in Custodial Accounts upon receipt of proper
documentation and in accordance with the terms of the plan.
(d) Reinvest income dividends and capital gains distributions in Investments
selected by the Participant.
(e) Send a confirmation to the proper person(s) with respect to each
transaction in the account.
(f) Examine and process requests for distributions, subject to receipt of
required legal documents; verify eligibility of the recipient and make
payments.
(g) Establish a record of types and reasons for distributions (i.e., attainment
of age 59-1/2, disability, death, return of excess contributions, etc.)
(h) Record method of distribution requested and/or made.
(i) Distribute the account in the event of death as required in writing by the
Participant/Beneficiary, subject to receipt of required legal documents.
(j) Receive and process designation of the beneficiary forms.
(k) Examine and process requests for direct transfers between
custodians/trustees, transfer and pay over to the successor assets in the
account and records pertaining thereto as requested;
(l) Send to each Participant/Beneficiary/Employer notices, prospectuses,
account statements, proxies and other documents or communications relating
to Fund shares or other Investments; send such other notices, documents or
other communications to Participants/Beneficiaries/Employers as the Fund
may direct FDISG to deliver.
(m) Maintain records of contributions, distributions, and other transactions.
(n) Prepare any annual reports or returns required to be prepared and/or filed
by a custodian of a Plan, including, but not limited to, an annual fair
market value report, Forms 1099R and 5498 and file with the IRS and provide
to Participant/Beneficiary.
(o) Send Participants/Beneficiaries an annual TEFRA notice regarding required
federal tax withholding.
(p) Answer Participant/ Beneficiary telephone, written or other inquiries
concerning the plan and Investments under the Plan.
(q) Process requested changes to account information.
(r) Retain original source documents, such as applications and correspondence,
microfilm original source documents, as required.
(s) Respond to research inquiries from Fund or as requested by Custodian is
directed by the Fund. Perform applicable withholding for accounts.
(t) Purge "closed" accounts as directed by the Fund.
<PAGE>
Exhibit 9(o)
State Street Bank and Trust Company
1776 Heritage Drive, AFB
North Quincy, MA 02171
Ladies and Gentlemen:
Reference is made to the Administration Agreement between us dated as of
October 31, 1997 (the "Agreement").
Pursuant to the Agreement, this letter is to provide notice of the creation
of an additional investment portfolio of The Munder Funds, Inc., namely the
Munder Growth Opportunities Fund (the "New Portfolio").
In accordance with the Additonal Portfolios provision of Section 1 of the
Agreement, we request that you act as Administrator with respect to the New
Portfolio.
Please indicate your acceptance of the foregoing by executing two copies of
this Agreement, returning one to the Fund and retaining one copy for your
records.
Very truly yours,
The Munder Funds, Inc.
By:/s/ Terry H. Gardner
-----------------------
Terry H. Gardner
Accepted:
State Street Bank and Trust Company
By:/s/ Rick Enfield
------------------------
Rick Enfield
Date: February 24, 1998
<PAGE>
Exhibit 15(c)
Amended and Restated Service and Distribution Plan for
The Munder Multi-Season Growth Fund
Class C Shares
<PAGE>
AMENDED AND RESTATED SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as The Munder Multi-Season Growth
Fund (the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class C;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
WHEREAS, this Plan was adopted and approved by the Company and its
shareholders on July 20, 1993, and is hereby amended and restated in order to
specifically designate the shares previously designated as Class D Shares as
Class C Shares hereunder.
NOW THEREFORE, the Company hereby adopts on behalf of the Fund with respect
to its Class C shares, and the Distributor hereby agrees to the terms of, the
Plan, in accordance with Rule 12b-1 under the Act on the following terms and
conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class C shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
C Shares, provided that, at any time such payment is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fees shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the distributor of the
Class C shares of the Fund, a service fee at the rate of 0.25% on an annualized
basis of the average daily net assets of the Fund's Class C shares, provided
that, at any time such payment is made, whether or not this Plan continues in
effect, the making thereof will not cause the limitation upon such payments
established by this Plan to be exceeded. Such fee shall be calculated and
accrued daily and paid at such intervals as the Board of
<PAGE>
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Fund in
connection with any activities or expenses primarily intended to result in the
sale of the Class C shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations (collectively, the "Service Organizations") to obtain various
distribution related and/or administrative services for the Fund. These services
include, among other things, processing new shareholder account applications,
preparing and transmitting to the Fund's Transfer Agent computer processable
tapes of all transactions by customers and serving as the primary source of
information to customers in answering questions concerning the Fund and their
transactions with the Fund. The Distributor is also authorized to engage in
advertising, the preparation and distribution of sales literature and other
promotional activities on behalf of the Fund. In addition, this Plan hereby
authorizes payment by the Fund of the cost of preparing, printing and
distributing Fund Prospectuses and Statements of Additional Information to
prospective investors and of implementing and operating the Plan. Distribution
expenses also include an allocation of overhead of the Distributor and accruals
for interest on the amount of distribution expenses that exceed distribution
fees and contingent deferred sales charge received by the Distributor. Payments
under the plan are not tied exclusively to actual distribution and service
expenses, and the payments may exceed distribution and service expenses actually
incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. The Plan shall not take effect with respect to the Class C shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class C shares of the Fund.
4. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
5. After approval as set forth in paragraph 3 and 4, this Plan shall take
effect. The Plan of Distribution shall continue in full force and effect as to
the Class C shares of
<PAGE>
the Fund for so long as such continuance is specifically approved at least
annually in the manner provided for approval for this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
7. This Plan may be terminated as to the Fund at any time, without
payment of any penalty, by vote of the Directors of the Company, by vote of a
majority of the Rule 12b-1 Directors, or by a vote of a majority of the
outstanding voting securities of Class C shares of the Fund on not more than 30
days' written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless such amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Company
shall be committed to the discretion of the Directors who are not such
interested persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof, for a period of
not less than six years from the date of this Plan, any such agreement or any
such report, as the case may be, the first two years in an easily accessible
place.
Adopted: July 20, 1993
Amended and Restated: January 13, 1995
Amended and Restated: May 6, 1997
<PAGE>
Exhibit 15(f)
Amended and Restated Service and Distribution Plan for
The Munder Money Market Fund
Class C Shares
<PAGE>
AMENDED AND RESTATED SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as The Munder Money Market Fund
(the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class C;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
WHEREAS, this Plan was adopted and approved by the Company and its
shareholders on July 20, 1993, and is hereby amended and restated in order to
specifically designate the shares previously designated as Class D Shares as
Class C Shares hereunder.
NOW THEREFORE, the Company hereby adopts on behalf of the Fund with respect
to its Class C shares, and the Distributor hereby agrees to the terms of, the
Plan, in accordance with Rule 12b-1 under the Act on the following terms and
conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class C shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
C Shares, provided that, at any time such payment is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fees shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the distributor of the
Class C shares of the Fund, a service fee at the rate of 0.25% on an annualized
basis of the average daily net assets of the Fund's Class C shares, provided
that, at any time such payment is made, whether or not this Plan continues in
effect, the making thereof will not cause the limitation upon such payments
established by this Plan to be exceeded. Such fee shall be calculated and
accrued daily and paid at such intervals as the Board of
<PAGE>
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Fund in
connection with any activities or expenses primarily intended to result in the
sale of the Class C shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations (collectively, the "Service Organizations") to obtain various
distribution related and/or administrative services for the Fund. These services
include, among other things, processing new shareholder account applications,
preparing and transmitting to the Fund's Transfer Agent computer processable
tapes of all transactions by customers and serving as the primary source of
information to customers in answering questions concerning the Fund and their
transactions with the Fund. The Distributor is also authorized to engage in
advertising, the preparation and distribution of sales literature and other
promotional activities on behalf of the Fund. In addition, this Plan hereby
authorizes payment by the Fund of the cost of preparing, printing and
distributing Fund Prospectuses and Statements of Additional Information to
prospective investors and of implementing and operating the Plan. Distribution
expenses also include an allocation of overhead of the Distributor and accruals
for interest on the amount of distribution expenses that exceed distribution
fees and contingent deferred sales charge received by the Distributor. Payments
under the plan are not tied exclusively to actual distribution and service
expenses, and the payments may exceed distribution and service expenses actually
incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. The Plan shall not take effect with respect to the Class C shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class C shares of the Fund.
4. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
5. After approval as set forth in paragraph 3 and 4, this Plan shall take
effect. The Plan of Distribution shall continue in full force and effect as to
the Class C shares of
<PAGE>
the Fund for so long as such continuance is specifically approved at least
annually in the manner provided for approval for this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
7. This Plan may be terminated as to the Fund at any time, without
payment of any penalty, by vote of the Directors of the Company, by vote of a
majority of the Rule 12b-1 Directors, or by a vote of a majority of the
outstanding voting securities of Class C shares of the Fund on not more than 30
days' written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless such amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Company
shall be committed to the discretion of the Directors who are not such
interested persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof, for a period of
not less than six years from the date of this Plan, any such agreement or any
such report, as the case may be, the first two years in an easily accessible
place.
Adopted: July 20, 1993
Amended and Restated: January 13, 1995
Amended and Restated: May 6, 1997
<PAGE>
Exhibit 15(i)
Amended and Restated Service and Distribution Plan for
The Munder Real Estate Equity Investment Fund
Class C Shares
<PAGE>
AMENDED AND RESTATED SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as The Munder Real Estate Equity
Investment Fund (the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class C;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
WHEREAS, this Plan was adopted and approved by the Company and its
shareholders on August 30, 1994, and is hereby amended and restated in order to
specifically designate the shares previously designated as Class D Shares as
Class C Shares hereunder.
NOW THEREFORE, the Company hereby adopts on behalf of the Fund with respect
to its Class C shares, and the Distributor hereby agrees to the terms of, the
Plan, in accordance with Rule 12b-1 under the Act on the following terms and
conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class C shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
C Shares, provided that, at any time such payment is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fees shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
C. The Fund shall pay to the Distributor, as the distributor of the
Class C shares of the Fund, a service fee at the rate of 0.25% on an annualized
basis of the average daily net assets of the Fund's Class C shares, provided
that, at any time such payment is made, whether or not this Plan continues in
effect, the making thereof will not cause the limitation upon such payments
established by this Plan to be exceeded. Such fee shall be calculated and
accrued daily and paid at such intervals as the Board of
<PAGE>
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Fund in
connection with any activities or expenses primarily intended to result in the
sale of the Class C shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations (collectively, the "Service Organizations") to obtain various
distribution related and/or administrative services for the Fund. These services
include, among other things, processing new shareholder account applications,
preparing and transmitting to the Fund's Transfer Agent computer processable
tapes of all transactions by customers and serving as the primary source of
information to customers in answering questions concerning the Fund and their
transactions with the Fund. The Distributor is also authorized to engage in
advertising, the preparation and distribution of sales literature and other
promotional activities on behalf of the Fund. In addition, this Plan hereby
authorizes payment by the Fund of the cost of preparing, printing and
distributing Fund Prospectuses and Statements of Additional Information to
prospective investors and of implementing and operating the Plan. Distribution
expenses also include an allocation of overhead of the Distributor and accruals
for interest on the amount of distribution expenses that exceed distribution
fees and contingent deferred sales charge received by the Distributor. Payments
under the plan are not tied exclusively to actual distribution and service
expenses, and the payments may exceed distribution and service expenses actually
incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. The Plan shall not take effect with respect to the Class C shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class C shares of the Fund.
4. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
5. After approval as set forth in paragraph 3 and 4, this Plan shall take
effect. The Plan of Distribution shall continue in full force and effect as to
the Class C shares of
<PAGE>
the Fund for so long as such continuance is specifically approved at least
annually in the manner provided for approval for this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
7. This Plan may be terminated as to the Fund at any time, without
payment of any penalty, by vote of the Directors of the Company, by vote of a
majority of the Rule 12b-1 Directors, or by a vote of a majority of the
outstanding voting securities of Class C shares of the Fund on not more than 30
days' written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless such amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Company
shall be committed to the discretion of the Directors who are not such
interested persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof, for a period of
not less than six years from the date of this Plan, any such agreement or any
such report, as the case may be, the first two years in an easily accessible
place.
Adopted: August 30, 1994
Amended and Restated: January 13, 1995
Amended and Restated: May 6, 1997
<PAGE>
Exhibit 15(j)
Service Plan
Class A Shares of
Munder Equity Selection Fund
<PAGE>
SERVICE PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder Equity Selection Fund
(the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class A;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class A shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. The Fund shall pay to the Distributor, as the distributor of the Class
A shares of the Fund, a service fee at the rate of .25% on an annualized basis
of the average daily net assets of the Fund's Class A shares, provided that, at
any time such payments is made, whether or not this Plan continues in effect,
the making thereof will not cause the limitation upon such payments established
by this Plan to be exceeded. Such fee shall be calculated and accrued daily and
paid at such intervals as the Board of Directors shall determine, subject to any
applicable restriction imposed by rules of the National Association of
Securities Dealers, Inc.
2. The amount set forth in paragraph 1 of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares. Payments under this Plan are not tied exclusively to actual
distribution and service expenses, and the payments may exceed distribution and
service expenses actually incurred.
3. The Plan shall not take effect with respect to the Class A Shares of
the Fund until is has been approved by a vote of the then sole shareholder of
the Class A Shares of the Fund.
4. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any
<PAGE>
agreements related to it (the "Rule 12b-1 Directors"), cast in person at a
meeting (or meetings) called for the purpose of voting on this Plan and such
related agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class A
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class A shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
service fee provided for in paragraph 1 hereof unless such amendment is approved
in the manner provided for initial approval in paragraph 3 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for approval and annual renewal in paragraph 4 hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service Plan as of the 6th day of August, 1996.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
-------------------
Lisa Anne Rosen
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
---------------------
Marie E. Connolly
2
<PAGE>
Exhibit 15(k)
Service and Distribution Plan
Class B Shares of
Munder Equity Selection Fund
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder Equity Selection Fund
(the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class B;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class B shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
B shares, provided that, at any time such payments is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a service fee at the rate of .25% on an annualized
basis of the average daily net asset of the Fund's Class B shares, provided
that, at any time such payment is made, whether or not this Plan continues in
effect, the making thereof will not cause the limitation upon such payments
established by this Plan to be exceeded. Such fee shall be calculated and
accrued daily and paid at such intervals as the Board of Directors shall
determine, subject to any applicable restriction imposed by rules of the
National Securities Association of Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Funds in
connection with any activities or expenses primarily intended to result in the
sale of the Class B shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations to
<PAGE>
obtain various distribution related and/or administrative services for the Fund.
These services include, among other things, processing new shareholder account
applications, preparing and transmitting to the Fund's Transfer Agent computer
processable tapes of all transactions by customers and serving as the primary
source of information to customers in answering questions concerning the Fund
and their transactions with the Fund. The Distributor is also authorized to
engage in advertising, the preparation and distribution of sales literature and
other promotional activities on behalf of the Fund. In addition, this Plan
hereby authorizes payment by the Fund of the cost of preparing, printing and
distributing the Fund's Prospectuses and Statements of Additional Information to
prospective investors and of implementing and operating the Plan. Distribution
expenses also include an allocation of overhead of the Distributor and accruals
for interest on the amount of distribution expenses that exceed distribution
fees and contingent deferred sales charges received by the Distributor.
Payments under the Plan are not tied exclusively to actual distribution and
service expenses, and the payments may exceed distribution and service expenses
actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect with respect to the Class B Shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class B Shares of the Fund.
4. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class B
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
2
<PAGE>
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class B shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service and Distribution Plan as of the 6th day of August,
1996.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
-------------------
Lisa Anne Rosen
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
---------------------
Marie E. Connolly
3
<PAGE>
Exhibit 15(l)
Service and Distribution Plan
Class C Shares of
Munder Equity Selection Fund
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder Equity Selection Fund
(the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class C;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class C shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class C shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
C shares, provided that, at any time such payments is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the distributor of the Class
C shares of the Fund, a service fee at the rate of .25% on an annualized basis
of the average daily net asset of the Fund's Class C shares, provided that, at
any time such payment is made, whether or not this Plan continues in effect, the
making thereof will not cause the limitation upon such payments established by
this Plan to be exceeded. Such fee shall be calculated and accrued daily and
paid at such intervals as the Board of Directors shall determine, subject to any
applicable restriction imposed by rules of the National Securities Association
of Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Funds in
connection with any activities or expenses primarily intended to result in the
sale of the Class C shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations to
1
<PAGE>
obtain various distribution related and/or administrative services for the Fund.
These services include, among other things, processing new shareholder account
applications, preparing and transmitting to the Fund's Transfer Agent computer
processable tapes of all transactions by customers and serving as the primary
source of information to customers in answering questions concerning the Fund
and their transactions with the Fund. The Distributor is also authorized to
engage in advertising, the preparation and distribution of sales literature and
other promotional activities on behalf of the Fund. In addition, this Plan
hereby authorizes payment by the Fund of the cost of preparing, printing and
distributing the Fund's Prospectuses and Statements of Additional Information to
prospective investors and of implementing and operating the Plan. Distribution
expenses also include an allocation of overhead of the Distributor and accruals
for interest on the amount of distribution expenses that exceed distribution
fees and contingent deferred sales charges received by the Distributor.
Payments under the Plan are not tied exclusively to actual distribution and
service expenses, and the payments may exceed distribution and service expenses
actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect with respect to the Class C Shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class C Shares of the Fund.
4. This Plan shall not take effect until it, with any related agreements,
has been approved by votes of a majority of both (a) the Directors of the
Company and (b) those Directors of the Company who are not "interested persons"
of the Company (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan and such related agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class C
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
2
<PAGE>
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class C shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service and Distribution Plan as of the 6th day of August,
1996.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
-------------------
Lisa Anne Rosen
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
---------------------
Marie E. Connolly
3
<PAGE>
Exhibit 15(m)
Service Plan
Class A Shares of
Munder International Bond Fund
<PAGE>
SERVICE PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder International Bond Fund
(the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class A;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class A shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. The Fund shall pay to the Distributor, as the distributor of the Class
A shares of the Fund, a service fee at the rate of .25% on an annualized basis
of the average daily net assets of the Fund's Class A shares, provided that, at
any time such payments is made, whether or not this Plan continues in effect,
the making thereof will not cause the limitation upon such payments established
by this Plan to be exceeded. Such fee shall be calculated and accrued daily and
paid at such intervals as the Board of Directors shall determine, subject to any
applicable restriction imposed by rules of the National Association of
Securities Dealers, Inc.
2. The amount set forth in paragraph 1 of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. The Plan shall not take effect with respect to the Class A Shares of
the Fund until is has been approved by a vote of the then sole shareholder of
the Class A Shares of the Fund.
4. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
<PAGE>
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class A
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class A shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
service fee provided for in paragraph 1 hereof unless such amendment is approved
in the manner provided for initial approval in paragraph 3 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for approval and annual renewal in paragraph 4 hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service Plan as of the 6th day of May, 1996.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
-------------------
Lisa Anne Rosen
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
---------------------
Marie E. Connolly
2
<PAGE>
Exhibit 15(n)
Service and Distribution Plan
Class B Shares of
Munder International Bond Fund
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder International Bond Fund
(the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class B;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class B shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
B shares, provided that, at any time such payments is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the distributor of the Class
B shares of the Fund, a service fee at the rate of .25% on an annualized basis
of the average daily net asset of the Fund's Class B shares, provided that, at
any time such payment is made, whether or not this Plan continues in effect, the
making thereof will not cause the limitation upon such payments established by
this Plan to be exceeded. Such fee shall be calculated and accrued daily and
paid at such intervals as the Board of Directors shall determine, subject to any
applicable restriction imposed by rules of the National Securities Association
of Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Funds in
connection with any activities or expenses primarily intended to result in the
sale of the Class B shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations to
<PAGE>
obtain various distribution related and/or administrative services for the Fund.
These services include, among other things, processing new shareholder account
applications, preparing and transmitting to the Fund's Transfer Agent computer
processable tapes of all transactions by customers and serving as the primary
source of information to customers in answering questions concerning the Fund
and their transactions with the Fund. The Distributor is also authorized to
engage in advertising, the preparation and distribution of sales literature and
other promotional activities on behalf of the Fund. In addition, this Plan
hereby authorizes payment by the Fund of the cost of preparing, printing and
distributing the Fund's Prospectuses and Statements of Additional Information to
prospective investors and of implementing and operating the Plan. Distribution
expenses also include an allocation of overhead of the Distributor and accruals
for interest on the amount of distribution expenses that exceed distribution
fees and contingent deferred sales charges received by the Distributor.
Payments under the Plan are not tied exclusively to actual distribution and
service expenses, and the payments may exceed distribution and service expenses
actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect with respect to the Class B Shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class B Shares of the Fund.
4. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class B
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
2
<PAGE>
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class B shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service and Distribution Plan as of the 6th day of May, 1996.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
-------------------
Lisa Anne Rosen
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
---------------------
Marie E. Connolly
3
<PAGE>
Exhibit 15(o)
Service and Distribution Plan
Class C Shares of
Munder International Bond Fund
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder International Bond Fund
(the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class C;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class C shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class C shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
C shares, provided that, at any time such payments is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the distributor of the
Class C shares of the Fund, a service fee at the rate of .25% on an annualized
basis of the average daily net asset of the Fund's Class C shares, provided
that, at any time such payment is made, whether or not this Plan continues in
effect, the making thereof will not cause the limitation upon such payments
established by this Plan to be exceeded. Such fee shall be calculated and
accrued daily and paid at such intervals as the Board of Directors shall
determine, subject to any applicable restriction imposed by rules of the
National Securities Association of Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Funds in
connection with any activities or expenses primarily intended to result in the
sale of the Class C shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations to
1
<PAGE>
obtain various distribution related and/or administrative services for the Fund.
These services include, among other things, processing new shareholder account
applications, preparing and transmitting to the Fund's Transfer Agent computer
processable tapes of all transactions by customers and serving as the primary
source of information to customers in answering questions concerning the Fund
and their transactions with the Fund. The Distributor is also authorized to
engage in advertising, the preparation and distribution of sales literature and
other promotional activities on behalf of the Fund. In addition, this Plan
hereby authorizes payment by the Fund of the cost of preparing, printing and
distributing the Fund's Prospectuses and Statements of Additional Information to
prospective investors and of implementing and operating the Plan. Distribution
expenses also include an allocation of overhead of the Distributor and accruals
for interest on the amount of distribution expenses that exceed distribution
fees and contingent deferred sales charges received by the Distributor.
Payments under the Plan are not tied exclusively to actual distribution and
service expenses, and the payments may exceed distribution and service expenses
actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect with respect to the Class C Shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class C Shares of the Fund.
4. This Plan shall not take effect until it, with any related agreements,
has been approved by votes of a majority of both (a) the Directors of the
Company and (b) those Directors of the Company who are not "interested persons"
of the Company (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan and such related agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class C
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
2
<PAGE>
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class C shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service and Distribution Plan as of the 6th day of May, 1996.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
-------------------
Lisa Anne Rosen
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
---------------------
Marie E. Connolly
3
<PAGE>
Exhibit 15(p)
Service Plan
Class A Shares of
Munder Micro-Cap Equity Fund
<PAGE>
SERVICE PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder Micro-Cap Equity Fund
(the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class A;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class A shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. The Fund shall pay to the Distributor, as the distributor of the Class
A shares of the Fund, a service fee at the rate of .25% on an annualized basis
of the average daily net assets of the Fund's Class A shares, provided that, at
any time such payments is made, whether or not this Plan continues in effect,
the making thereof will not cause the limitation upon such payments established
by this Plan to be exceeded. Such fee shall be calculated and accrued daily and
paid at such intervals as the Board of Directors shall determine, subject to any
applicable restriction imposed by rules of the National Association of
Securities Dealers, Inc.
2. The amount set forth in paragraph 1 of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. The Plan shall not take effect with respect to the Class A Shares of
the Fund until is has been approved by a vote of the then sole shareholder of
the Class A Shares of the Fund.
4. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
1
<PAGE>
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class A
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class A shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
service fee provided for in paragraph 1 hereof unless such amendment is approved
in the manner provided for initial approval in paragraph 3 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for approval and annual renewal in paragraph 4 hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service Plan as of the 6th day of August, 1996.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
-------------------
Lisa Anne Rosen
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
---------------------
Marie E. Connolly
2
<PAGE>
Exhibit 15(q)
Service and Distribution Plan
Class B Shares of
Munder Micro-Cap Equity Fund
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder Micro-Cap Equity Fund
(the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class B;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class B shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
B shares, provided that, at any time such payments is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a service fee at the rate of .25% on an annualized
basis of the average daily net asset of the Fund's Class B shares, provided
that, at any time such payment is made, whether or not this Plan continues in
effect, the making thereof will not cause the limitation upon such payments
established by this Plan to be exceeded. Such fee shall be calculated and
accrued daily and paid at such intervals as the Board of Directors shall
determine, subject to any applicable restriction imposed by rules of the
National Securities Association of Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Funds in
connection with any activities or expenses primarily intended to result in the
sale of the Class B shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations to
1
<PAGE>
obtain various distribution related and/or administrative services for the Fund.
These services include, among other things, processing new shareholder account
applications, preparing and transmitting to the Fund's Transfer Agent computer
processable tapes of all transactions by customers and serving as the primary
source of information to customers in answering questions concerning the Fund
and their transactions with the Fund. The Distributor is also authorized to
engage in advertising, the preparation and distribution of sales literature and
other promotional activities on behalf of the Fund. In addition, this Plan
hereby authorizes payment by the Fund of the cost of preparing, printing and
distributing the Fund's Prospectuses and Statements of Additional Information to
prospective investors and of implementing and operating the Plan. Distribution
expenses also include an allocation of overhead of the Distributor and accruals
for interest on the amount of distribution expenses that exceed distribution
fees and contingent deferred sales charges received by the Distributor.
Payments under the Plan are not tied exclusively to actual distribution and
service expenses, and the payments may exceed distribution and service expenses
actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect with respect to the Class B Shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class B Shares of the Fund.
4. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class B
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
2
<PAGE>
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class B shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service and Distribution Plan as of the 6th day of August,
1996.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
-------------------
Lisa Anne Rosen
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
---------------------
Marie E. Connolly
3
<PAGE>
Exhibit 15(r)
Service and Distribution Plan
Class C Shares of
Munder Micro-Cap Equity Fund
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder Micro-Cap Equity Fund
(the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class C;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class C shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class C shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
C shares, provided that, at any time such payments is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the distributor of the
Class C shares of the Fund, a service fee at the rate of .25% on an annualized
basis of the average daily net asset of the Fund's Class C shares, provided
that, at any time such payment is made, whether or not this Plan continues in
effect, the making thereof will not cause the limitation upon such payments
established by this Plan to be exceeded. Such fee shall be calculated and
accrued daily and paid at such intervals as the Board of Directors shall
determine, subject to any applicable restriction imposed by rules of the
National Securities Association of Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Funds in
connection with any activities or expenses primarily intended to result in the
sale of the Class C shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations to
1
<PAGE>
obtain various distribution related and/or administrative services for the Fund.
These services include, among other things, processing new shareholder account
applications, preparing and transmitting to the Fund's Transfer Agent computer
processable tapes of all transactions by customers and serving as the primary
source of information to customers in answering questions concerning the Fund
and their transactions with the Fund. The Distributor is also authorized to
engage in advertising, the preparation and distribution of sales literature and
other promotional activities on behalf of the Fund. In addition, this Plan
hereby authorizes payment by the Fund of the cost of preparing, printing and
distributing the Fund's Prospectuses and Statements of Additional Information to
prospective investors and of implementing and operating the Plan. Distribution
expenses also include an allocation of overhead of the Distributor and accruals
for interest on the amount of distribution expenses that exceed distribution
fees and contingent deferred sales charges received by the Distributor.
Payments under the Plan are not tied exclusively to actual distribution and
service expenses, and the payments may exceed distribution and service expenses
actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect with respect to the Class C Shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class C Shares of the Fund.
4. This Plan shall not take effect until it, with any related agreements,
has been approved by votes of a majority of both (a) the Directors of the
Company and (b) those Directors of the Company who are not "interested persons"
of the Company (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan and such related agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class C
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
2
<PAGE>
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class C shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service and Distribution Plan as of the 6th day of August,
1996.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
-------------------
Lisa Anne Rosen
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
---------------------
Marie E. Connolly
3
<PAGE>
Exhibit 15(s)
Service Plan
Class A Shares of
Munder Short Term Treasury Fund
<PAGE>
SERVICE PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as the Munder Short Term Treasury
Fund (the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class A;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer;
WHEREAS, the Company and the Distributor have entered into an Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company; and
WHEREAS, this Service Plan (the "Plan") was adopted and approved by the
Company and its shareholders on November 7, 1996, and is hereby amended and
restated in order to specifically designate Funds Distributor, Inc. as the
Distributor hereunder.
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class A shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. The Fund shall pay to the Distributor, as the distributor of the Class
A shares of the Fund, a service fee at the rate of .25% on an annualized basis
of the average daily net assets of the Fund's Class A shares, provided that, at
any time such payments is made, whether or not this Plan continues in effect,
the making thereof will not cause the limitation upon such payments established
by this Plan to be exceeded. Such fee shall be calculated and accrued daily and
paid at such intervals as the Board of Directors shall determine, subject to any
applicable restriction imposed by rules of the National Association of
Securities Dealers, Inc.
2. The amount set forth in paragraph 1 of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. The Plan shall not take effect with respect to the Class A Shares of
the Fund until is has been approved by a vote of the then sole shareholder of
the Class A Shares of the Fund.
4. This Plan shall not take effect until it, with any related agreements,
has been approved by votes of a majority of both (a) the Directors of the
Company and (b) those Directors
2
<PAGE>
of the Company who are not "interested persons" of the Company (as defined in
the Act) and who have no direct or indirect financial interest in the operation
of this Plan or any agreements related to it (the "Rule 12b-1 Directors"), cast
in person at a meeting (or meetings) called for the purpose of voting on this
Plan and such related agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class A
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class A shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
service fee provided for in paragraph 1 hereof unless such amendment is approved
in the manner provided for initial approval in paragraph 3 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for approval and annual renewal in paragraph 4 hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service Plan as of the 7th day of November, 1996.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
-------------------
Lisa Anne Rosen
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
---------------------
Marie E. Connolly
3
<PAGE>
Exhibit 15(t)
Service and Distribution Plan
Class B Shares of
Munder Short Term Treasury Fund
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as the Munder Short Term Treasury
Fund (the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class B;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Distribution
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class B shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
B shares, provided that, at any time such payments is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. In addition to the distribution fee distributed above, the Fund
shall pay to the Distributor, as the distributor of the Class B shares of the
Fund, a service fee at the rate f .25% on an annualized basis of the average
daily net asset of the Fund's Class B shares, provided that, at any time such
payment is made, whether or not this Plan continues in effect, the making
thereof will not cause the limitation upon such payments established by this
Plan to be exceeded. Such fee shall be calculated and accrued daily and paid at
such intervals as the Board of Directors shall determine, subject to any
applicable restriction imposed by rules of the National Securities Association
of Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Funds in
connection with any activities or expenses primarily intended to result in the
sale of the Class B shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers
1
<PAGE>
(which may include the Distributor itself) and other financial institutions and
organizations to obtain various distribution related and/or administrative
services for the Fund. These services include, among other things, processing
new shareholder account applications, preparing and transmitting to the Fund's
Transfer Agent computer processable tapes of all transactions by customers and
serving as the primary source of information to customers in answering questions
concerning the Fund and their transactions with the Fund. The Distributor is
also authorized to engage in advertising, the preparation and distribution of
sales literature and other promotional activities on behalf of the Fund. In
addition, this Plan hereby authorizes payment by the Fund of the cost of
preparing, printing and distributing the Fund's Prospectuses and Statements of
Additional Information to prospective investors and of implementing and
operating the Plan. Distribution expenses also include an allocation of
overhead of the Distributor and accruals for interest on the amount of
distribution expenses that exceed distribution fees and contingent deferred
sales charges received by the Distributor. Payments under the Plan are not tied
exclusively to actual distribution and service expenses, and the payments may
exceed distribution and service expenses actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect with respect to the Class B Shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class B Shares of the Fund.
4. This Plan shall not take effect until it, with any related agreements,
has been approved by votes of a majority of both (a) the Directors of the
Company and (b) those Directors of the Company who are not "interested persons"
of the Company (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan and such related agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class B
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
2
<PAGE>
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class B shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service and Distribution Plan as of the 7th day of November,
1996.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
-------------------
Lisa Anne Rosen
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
---------------------
Marie E. Connolly
3
<PAGE>
Exhibit 15(u)
Service and Distribution Plan
Class C Shares of
Munder Short Term Treasury Fund
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as the Munder Short Term Treasury
Fund (the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class C;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Distribution
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class C shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class C shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
C shares, provided that, at any time such payments is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. In addition to the distribution fee distributed above, the Fund
shall pay to the Distributor, as the distributor of the Class C shares of the
Fund, a service fee at the rate of .25% on an annualized basis of the average
daily net asset of the Fund's Class C shares, provided that, at any time such
payment is made, whether or not this Plan continues in effect, the making
thereof will not cause the limitation upon such payments established by this
Plan to be exceeded. Such fee shall be calculated and accrued daily and paid at
such intervals as the Board of Directors shall determine, subject to any
applicable restriction imposed by rules of the National Securities Association
of Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Funds in
connection with any activities or expenses primarily intended to result in the
sale of the Class C shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers
<PAGE>
(which may include the Distributor itself) and other financial institutions and
organizations to obtain various distribution related and/or administrative
services for the Fund. These services include, among other things, processing
new shareholder account applications, preparing and transmitting to the Fund's
Transfer Agent computer processable tapes of all transactions by customers and
serving as the primary source of information to customers in answering questions
concerning the Fund and their transactions with the Fund. The Distributor is
also authorized to engage in advertising, the preparation and distribution of
sales literature and other promotional activities on behalf of the Fund. In
addition, this Plan hereby authorizes payment by the Fund of the cost of
preparing, printing and distributing the Fund's Prospectuses and Statements of
Additional Information to prospective investors and of implementing and
operating the Plan. Distribution expenses also include an allocation of
overhead of the Distributor and accruals for interest on the amount of
distribution expenses that exceed distribution fees and contingent deferred
sales charges received by the Distributor. Payments under the Plan are not tied
exclusively to actual distribution and service expenses, and the payments may
exceed distribution and service expenses actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect with respect to the Class C Shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class C Shares of the Fund.
4. This Plan shall not take effect until it, with any related agreements,
has been approved by votes of a majority of both (a) the Directors of the
Company and (b) those Directors of the Company who are not "interested persons"
of the Company (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan and such related agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class C
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
<PAGE>
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class C shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service and Distribution Plan as of the 7th day of November,
1996.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
-------------------
Lisa Anne Rosen
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
---------------------
Marie E. Connolly
<PAGE>
Exhibit 15(v)
Service and Distribution Plan for
The Munder All-Season Accumulation Fund
Class A Shares
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as the Munder All-Season
Accumulation Fund (the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class A;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into an Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW THEREFORE, the Company hereby adopts this Plan, in accordance with Rule
12b-1 under the Act on the following terms and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class A shares of the Fund, a fee for distribution of the shares at the rate of
.05% on an annualized basis of the average daily net assets of the Fund's Class
A shares, provided that, at any time such payment is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the distributor of the
Class A shares of the Fund, a service fee at the rate of .25% on an annualized
basis of the average daily net assets of the Fund's Class A shares, provided
that, at any time such payment is made, whether or not this Plan continues in
effect, the making thereof will not cause the limitation upon such payments
established by this Plan to be exceeded. Such fee shall be calculated and
accrued daily and paid at such intervals as the Board of Directors shall
determine, subject to any applicable restriction imposed by rules of the
National Association of Securities Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Fund in
connection with any activities or expenses primarily intended to result in the
sale of the Class A shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include Distributor itself) and other financial institutions and
organizations to obtain various distribution related and/or administrative
services for the Fund. These services include, among other things, processing
new shareholder account applications, preparing and transmitting to the Fund's
Transfer Agent computer processable tapes of all transactions by customers and
serving as the primary source of information to customers in answering questions
concerning the Fund and their transactions with the Fund. The Distributor is
also authorized to engage in advertising, the preparation and distribution of
sales literature and other promotional activities on behalf of the Fund. In
addition, this Plan hereby authorizes payment by the Fund of the cost of
preparing, printing and distributing Fund Prospectuses and Statements of
Additional Information to prospective investors and of implementing and
operating the Plan. Distribution expenses also include an allocation of overhead
of the Distributor and accruals for interest on the amount of distribution
expenses that exceed distribution fees and contingent deferred sales charges
received by the Distributor. Payments under this
1
<PAGE>
Plan are not tied exclusively to actual distribution and service expenses, and
the payments may exceed distribution and service expenses actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. The Plan shall not take effect with respect to the Class A shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class A shares of the Fund.
4. This Plan shall not take effect until it, together with many related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall
take effect. The Plan of Distribution shall continue in full force and effect as
to the Class A shares of the Fund for so long as such continuance is
specifically approved at least annually in the manner provided for approval of
this plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
7. This Plan may be terminated as to the Fund at any time, without
payment of any penalty, by vote of the Directors of the Company, by vote of a
majority of the Rule 12b-1 Directors, or by a vote of a majority of the
outstanding voting securities of Class A shares of the Fund on not more than 30
days' written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless such amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Company
shall be committed to the discretion of the Directors who are not such
interested persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof, for a period of
not less than six years from the date of this Plan, any such agreement or any
such report, as the case may be, the first two years in an easily accessible
place.
Adopted by the Board: February 4, 1997
2
<PAGE>
Exhibit 15(w)
Service and Distribution Plan for
The Munder All-Season Accumulation Fund
Class B Shares
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as the Munder All-Season
Accumulation Fund (the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class B;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into an Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW THEREFORE, the Company hereby adopts this Plan on behalf of the Fund
with respect to its Class B shares, in accordance with Rule 12b-1 under the Act
on the following terms and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a fee for distribution of the shares at the rate of
.75% on an annualized basis of the average daily net assets of the Fund's Class
B shares, provided that, at any time such payment is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a service fee at the rate of .25% on an annualized
basis of the average daily net assets of the Fund's Class B shares, provided
that, at any time such payment is made, whether or not this Plan continues in
effect, the making thereof will not cause the limitation upon such payments
established by this Plan to be exceeded. Such fee shall be calculated and
accrued daily and paid at such intervals as the Board of Directors shall
determine, subject to any applicable restriction imposed by rules of the
National Association of Securities Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Fund in
connection with any activities or expenses primarily intended to result in the
sale of the Class B shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include Distributor itself) and other financial institutions and
organizations (collectively, the "Service Organizations") to obtain various
distribution related and/or administrative services for the Fund. These services
include, among other things, processing new shareholder account applications,
preparing and transmitting to the Fund's Transfer Agent computer processable
tapes of all transactions by customers and serving as the primary source of
information to customers in answering questions concerning the Fund and their
transactions with the Fund. The Distributor is also authorized to engage in
advertising, the preparation and distribution of sales literature and other
promotional activities on behalf of the Fund. In addition, this Plan hereby
authorizes payment by the Fund of the cost of preparing, printing and
distributing Fund Prospectuses and Statements of Additional Information to
prospective investors and of implementing and operating the Plan. Distribution
expenses also include an allocation of overhead of the Distributor and accruals
for interest on the amount of distribution expenses that exceed distribution
fees and contingent deferred sales charges
1
<PAGE>
received by the Distributor. Payments under this Plan are not tied exclusively
to actual distribution and service expenses, and the payments may exceed
distribution and service expenses actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. The Plan shall not take effect with respect to the Class B shares of the
Fund until it has been approved by a vote of the then sole shareholder of the
Class B shares of the Fund.
4. This Plan shall not take effect until it, together with many related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan of Distribution shall continue in full force and effect as to
the Class B shares of the fund for so long as such continuance is specifically
approved at least annually in the manner provided for approval for this Plan in
paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class B shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless such amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof, for a period of
not less than six years from the date of this Plan, any such agreement or any
such report, as the case may be, the first two years in an easily accessible
place.
Adopted by the Board: February 4, 1997
2
<PAGE>
Exhibit 15(x)
Service and Distribution Plan for
The Munder All-Season Maintenance Fund
Class A Shares
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as the Munder All-Season
Maintenance Fund (the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class A;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into an Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW THEREFORE, the Company hereby adopts this Plan, in accordance with Rule
12b-1 under the Act on the following terms and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class A shares of the Fund, a fee for distribution of the shares at the rate of
.05% on an annualized basis of the average daily net assets of the Fund's Class
A shares, provided that, at any time such payment is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the distributor of the
Class A shares of the Fund, a service fee at the rate of .25% on an annualized
basis of the average daily net assets of the Fund's Class A shares, provided
that, at any time such payment is made, whether or not this Plan continues in
effect, the making thereof will not cause the limitation upon such payments
established by this Plan to be exceeded. Such fee shall be calculated and
accrued daily and paid at such intervals as the Board of Directors shall
determine, subject to any applicable restriction imposed by rules of the
National Association of Securities Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Fund in
connection with any activities or expenses primarily intended to result in the
sale of the Class A shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include Distributor itself) and other financial institutions and
organizations to obtain various distribution related and/or administrative
services for the Fund. These services include, among other things, processing
new shareholder account applications, preparing and transmitting to the Fund's
Transfer Agent computer processable tapes of all transactions by customers and
serving as the primary source of information to customers in answering questions
concerning the Fund and their transactions with the Fund. The Distributor is
also authorized to engage in advertising, the preparation and distribution of
sales literature and other promotional activities on behalf of the Fund. In
addition, this Plan hereby authorizes payment by the Fund of the cost of
preparing, printing and distributing Fund Prospectuses and Statements of
Additional Information to prospective investors and of implementing and
operating the Plan. Distribution expenses also include an allocation of overhead
of the Distributor and accruals for interest on the amount of distribution
expenses that exceed distribution fees and contingent deferred sales charges
received by the Distributor. Payments under this
1
<PAGE>
Plan are not tied exclusively to actual distribution and
service expenses, and the payments may exceed distribution and service expenses
actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. The Plan shall not take effect with respect to the Class A shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class A shares of the Fund.
4. This Plan shall not take effect until it, together with many related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan of Distribution shall continue in full force and effect as to
the Class A shares of the Fund for so long as such continuance is specifically
approved at least annually in the manner provided for approval of this plan in
paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class A shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless such amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof, for a period of
not less than six years from the date of this Plan, any such agreement or any
such report, as the case may be, the first two years in an easily accessible
place.
Adopted by the Board: February 4, 1997
2
<PAGE>
Exhibit 15(y)
Service and Distribution Plan for
The Munder All-Season Maintenance Fund
Class B Shares
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as the Munder All-Season
Maintenance Fund (the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class B;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into an Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW THEREFORE, the Company hereby adopts this Plan on behalf of the Fund
with respect to its Class B shares, in accordance with Rule 12b-1 under the Act
on the following terms and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a fee for distribution of the shares at the rate of
.75% on an annualized basis of the average daily net assets of the Fund's Class
B shares, provided that, at any time such payment is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a service fee at the rate of .25% on an annualized
basis of the average daily net assets of the Fund's Class B shares, provided
that, at any time such payment is made, whether or not this Plan continues in
effect, the making thereof will not cause the limitation upon such payments
established by this Plan to be exceeded. Such fee shall be calculated and
accrued daily and paid at such intervals as the Board of Directors shall
determine, subject to any applicable restriction imposed by rules of the
National Association of Securities Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Fund in
connection with any activities or expenses primarily intended to result in the
sale of the Class B shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include Distributor itself) and other financial institutions and
organizations (collectively, the "Service Organizations") to obtain various
distribution related and/or administrative services for the Fund. These services
include, among other things, processing new shareholder account applications,
preparing and transmitting to the Fund's Transfer Agent computer processable
tapes of all transactions by customers and serving as the primary source of
information to customers in answering questions concerning the Fund and their
transactions with the Fund. The Distributor is also authorized to engage in
advertising, the preparation and distribution of sales literature and other
promotional activities on behalf of the Fund. In addition, this Plan hereby
authorizes payment by the Fund of the cost of preparing, printing and
distributing Fund Prospectuses and Statements of Additional Information to
prospective investors and of implementing and operating the Plan. Distribution
expenses also include an allocation of overhead of the Distributor and accruals
for interest on the amount of distribution expenses that exceed distribution
fees and contingent deferred sales charges
1
<PAGE>
received by the Distributor. Payments under this Plan are not tied exclusively
to actual distribution and service expenses, and the payments may exceed
distribution and service expenses actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. The Plan shall not take effect with respect to the Class B shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class B shares of the Fund.
4. This Plan shall not take effect until it, together with many related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall
take effect. The Plan of Distribution shall continue in full force and effect as
to the Class B shares of the fund for so long as such continuance is
specifically approved at least annually in the manner provided for approval for
this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
7. This Plan may be terminated as to the Fund at any time, without
payment of any penalty, by vote of the Directors of the Company, by vote of a
majority of the Rule 12b-1 Directors, or by a vote of a majority of the
outstanding voting securities of Class B shares of the Fund on not more than 30
days' written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless such amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof, for a period of
not less than six years from the date of this Plan, any such agreement or any
such report, as the case may be, the first two years in an easily accessible
place.
Adopted by the Board: February 4, 1997
2
<PAGE>
Exhibit 15(z)
Service and Distribution Plan for
The Munder All-Season Development Fund
Class A Shares
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as the Munder All-Season
Development Fund (the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class A;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into an Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW THEREFORE, the Company hereby adopts this Plan, in accordance with Rule
12b-1 under the Act on the following terms and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class A shares of the Fund, a fee for distribution of the shares at the rate of
.05% on an annualized basis of the average daily net assets of the Fund's Class
A shares, provided that, at any time such payment is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the distributor of the
Class A shares of the Fund, a service fee at the rate of .25% on an annualized
basis of the average daily net assets of the Fund's Class A shares, provided
that, at any time such payment is made, whether or not this Plan continues in
effect, the making thereof will not cause the limitation upon such payments
established by this Plan to be exceeded. Such fee shall be calculated and
accrued daily and paid at such intervals as the Board of Directors shall
determine, subject to any applicable restriction imposed by rules of the
National Association of Securities Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Fund in
connection with any activities or expenses primarily intended to result in the
sale of the Class A shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include Distributor itself) and other financial institutions and
organizations to obtain various distribution related and/or administrative
services for the Fund. These services include, among other things, processing
new shareholder account applications, preparing and transmitting to the Fund's
Transfer Agent computer processable tapes of all transactions by customers and
serving as the primary source of information to customers in answering questions
concerning the Fund and their transactions with the Fund. The Distributor is
also authorized to engage in advertising, the preparation and distribution of
sales literature and other promotional activities on behalf of the Fund. In
addition, this Plan hereby authorizes payment by the Fund of the cost of
preparing, printing and distributing Fund Prospectuses and Statements of
Additional Information to prospective investors and of implementing and
operating the Plan. Distribution expenses also include an allocation of overhead
of the Distributor and accruals for interest on the amount of distribution
expenses that exceed distribution fees and contingent deferred sales charges
received by the Distributor. Payments under this
1
<PAGE>
Plan are not tied exclusively to actual distribution and service expenses, and
the payments may exceed distribution and service expenses actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. The Plan shall not take effect with respect to the Class A shares of the
Fund until it has been approved by a vote of the then sole shareholder of the
Class A shares of the Fund.
4. This Plan shall not take effect until it, together with many related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan of Distribution shall continue in full force and effect as to
the Class A shares of the Fund for so long as such continuance is specifically
approved at least annually in the manner provided for approval of this plan in
paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class A shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless such amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof, for a period of
not less than six years from the date of this Plan, any such agreement or any
such report, as the case may be, the first two years in an easily accessible
place.
Adopted by the Board: February 4, 1997
2
<PAGE>
Exhibit 15(aa)
Service and Distribution Plan for
The Munder All-Season Development Fund
Class B Shares
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as the Munder All-Season
Development Fund (the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class B;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into an Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW THEREFORE, the Company hereby adopts this Plan on behalf of the Fund
with respect to its Class B shares, in accordance with Rule 12b-1 under the Act
on the following terms and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a fee for distribution of the shares at the rate of
.75% on an annualized basis of the average daily net assets of the Fund's Class
B shares, provided that, at any time such payment is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a service fee at the rate of .25% on an annualized
basis of the average daily net assets of the Fund's Class B shares, provided
that, at any time such payment is made, whether or not this Plan continues in
effect, the making thereof will not cause the limitation upon such payments
established by this Plan to be exceeded. Such fee shall be calculated and
accrued daily and paid at such intervals as the Board of Directors shall
determine, subject to any applicable restriction imposed by rules of the
National Association of Securities Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Fund in
connection with any activities or expenses primarily intended to result in the
sale of the Class B shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include Distributor itself) and other financial institutions and
organizations (collectively, the "Service Organizations") to obtain various
distribution related and/or administrative services for the Fund. These services
include, among other things, processing new shareholder account applications,
preparing and transmitting to the Fund's Transfer Agent computer processable
tapes of all transactions by customers and serving as the primary source of
information to customers in answering questions concerning the Fund and their
transactions with the Fund. The Distributor is also authorized to engage in
advertising, the preparation and distribution of sales literature and other
promotional activities on behalf of the Fund. In addition, this Plan hereby
authorizes payment by the Fund of the cost of preparing, printing and
distributing Fund Prospectuses and Statements of Additional Information to
prospective investors and of implementing and operating the Plan. Distribution
expenses also include an allocation of overhead of the Distributor and accruals
for interest on the amount of distribution expenses that exceed distribution
fees and contingent deferred sales charges
1
<PAGE>
received by the Distributor. Payments under this Plan are not tied exclusively
to actual distribution and service expenses, and the payments may exceed
distribution and service expenses actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. The Plan shall not take effect with respect to the Class B shares of
Fund until it has been approved by a vote of the then sole shareholder of the
Class B shares of the Fund.
4. This Plan shall not take effect until it, together with many related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan of Distribution shall continue in full force and effect as to
the Class B shares of the fund for so long as such continuance is specifically
approved at least annually in the manner provided for approval for this Plan in
paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class B shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless such amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof, for a period of
not less than six years from the date of this Plan, any such agreement or any
such report, as the case may be, the first two years in an easily accessible
place.
Adopted by the Board: February 4, 1997
2
<PAGE>
Exhibit 15(bb)
Service Plan
Class A Shares of
Munder Small-Cap Value Fund
<PAGE>
SERVICE PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder Small-Cap Value Fund (the
"Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class A;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class A shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. The Fund shall pay to the Distributor, as the distributor of the Class
A shares of the Fund, a service fee at the rate of .25% on an annualized basis
of the average daily net assets of the Fund's Class A shares, provided that, at
any time such payments is made, whether or not this Plan continues in effect,
the making thereof will not cause the limitation upon such payments established
by this Plan to be exceeded. Such fee shall be calculated and accrued daily and
paid at such intervals as the Board of Directors shall determine, subject to any
applicable restriction imposed by rules of the National Association of
Securities Dealers, Inc.
2. The amount set forth in paragraph 1 of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. The Plan shall not take effect with respect to the Class A Shares of
the Fund until is has been approved by a vote of the then sole shareholder of
the Class A Shares of the Fund.
4. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
1
<PAGE>
5. After approval as set forth in paragraphs 3 and 4, this Plan shall
take effect. The Plan shall continue in full force and effect as to the Class A
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
7. This Plan may be terminated as to the Fund at any time, without
payment of any penalty, by vote of the Directors of the Company, by vote of a
majority of the Rule 12b-1 Directors, or by a vote of a majority of the
outstanding voting securities of Class A shares of the Fund on not more than 30
days' written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
service fee provided for in paragraph 1 hereof unless such amendment is approved
in the manner provided for initial approval in paragraph 3 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for approval and annual renewal in paragraph 4 hereof.
9. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Company
shall be committed to the discretion of the Directors who are not such
interested persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service Plan as of the 6th day of August, 1996.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
-----------------------------
Lisa Anne Rosen
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
-----------------------------
Marie E. Connolly
2
<PAGE>
Exhibit 15(cc)
Service and Distribution Plan
Class B Shares of
Munder Small-Cap Value Fund
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder Small-Cap Value Fund (the
"Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class B;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class B shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
B shares, provided that, at any time such payments is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a service fee at the rate of .25% on an annualized
basis of the average daily net asset of the Fund's Class B shares, provided
that, at any time such payment is made, whether or not this Plan continues in
effect, the making thereof will not cause the limitation upon such payments
established by this Plan to be exceeded. Such fee shall be calculated and
accrued daily and paid at such intervals as the Board of Directors shall
determine, subject to any applicable restriction imposed by rules of the
National Securities Association of Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Funds in
connection with any activities or expenses primarily intended to result in the
sale of the Class B shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations to
<PAGE>
obtain various distribution related and/or administrative services for the Fund.
These services include, among other things, processing new shareholder account
applications, preparing and transmitting to the Fund's Transfer Agent computer
processable tapes of all transactions by customers and serving as the primary
source of information to customers in answering questions concerning the Fund
and their transactions with the Fund. The Distributor is also authorized to
engage in advertising, the preparation and distribution of sales literature and
other promotional activities on behalf of the Fund. In addition, this Plan
hereby authorizes payment by the Fund of the cost of preparing, printing and
distributing the Fund's Prospectuses and Statements of Additional Information to
prospective investors and of implementing and operating the Plan. Distribution
expenses also include an allocation of overhead of the Distributor and accruals
for interest on the amount of distribution expenses that exceed distribution
fees and contingent deferred sales charges received by the Distributor.
Payments under the Plan are not tied exclusively to actual distribution and
service expenses, and the payments may exceed distribution and service expenses
actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect with respect to the Class B Shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class B Shares of the Fund.
4. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class B
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
2
<PAGE>
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class B shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service and Distribution Plan as of the 6th day of August,
1996.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
---------------------
Lisa Anne Rosen
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
---------------------
Marie E. Connolly
3
<PAGE>
Exhibit 15(dd)
Service and Distribution Plan
Class C Shares of
Munder Small-Cap Value Fund
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder Small-Cap Value Fund (the
"Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class C;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class C shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class C shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
C shares, provided that, at any time such payments is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the distributor of the Class
C shares of the Fund, a service fee at the rate of .25% on an annualized basis
of the average daily net asset of the Fund's Class C shares, provided that, at
any time such payment is made, whether or not this Plan continues in effect, the
making thereof will not cause the limitation upon such payments established by
this Plan to be exceeded. Such fee shall be calculated and accrued daily and
paid at such intervals as the Board of Directors shall determine, subject to any
applicable restriction imposed by rules of the National Securities Association
of Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Funds in
connection with any activities or expenses primarily intended to result in the
sale of the Class C shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations to
1
<PAGE>
obtain various distribution related and/or administrative services for the Fund.
These services include, among other things, processing new shareholder account
applications, preparing and transmitting to the Fund's Transfer Agent computer
processable tapes of all transactions by customers and serving as the primary
source of information to customers in answering questions concerning the Fund
and their transactions with the Fund. The Distributor is also authorized to
engage in advertising, the preparation and distribution of sales literature and
other promotional activities on behalf of the Fund. In addition, this Plan
hereby authorizes payment by the Fund of the cost of preparing, printing and
distributing the Fund's Prospectuses and Statements of Additional Information to
prospective investors and of implementing and operating the Plan. Distribution
expenses also include an allocation of overhead of the Distributor and accruals
for interest on the amount of distribution expenses that exceed distribution
fees and contingent deferred sales charges received by the Distributor.
Payments under the Plan are not tied exclusively to actual distribution and
service expenses, and the payments may exceed distribution and service expenses
actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect with respect to the Class C Shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class C Shares of the Fund.
4. This Plan shall not take effect until it, with any related agreements,
has been approved by votes of a majority of both (a) the Directors of the
Company and (b) those Directors of the Company who are not "interested persons"
of the Company (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan and such related agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class C
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
2
<PAGE>
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class C shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service and Distribution Plan as of the 6th day of August,
1996.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
------------------------------------
Lisa Anne Rosen
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
-------------------------------------
Marie E. Connolly
3
<PAGE>
Exhibit 15(ii)
Service and Distribution Plan for
The NetNet Fund
1
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as the NetNet Fund (the "Fund");
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into an Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund and the
Distributor hereby agrees to the terms of, the Plan, in accordance with Rule
12b-1 under the Act on the following terms and conditions:
1. The Fund shall pay to the Distributor, as the distributor of the Fund,
a service and distribution fee at the rate of .25% on an annualized basis of the
average daily net assets of the Fund's shares, provided that, at any time such
payments is made, whether or not this Plan continues in effect, the making
thereof will not cause the limitation upon such payments established by this
Plan to be exceeded. Such fee shall be calculated and accrued daily and paid at
such intervals as the Board of Directors shall determine, subject to any
applicable restriction imposed by rules of the National Association of
Securities Dealers, Inc.
2. The amount set forth in paragraph 1 of this Plan shall be paid for the
Distributor's services as distributor of the shares of the Fund in connection
with any activities or expenses primarily intended to result in the sale of the
shares of the Fund, including, but not limited to, payment of compensation,
including incentive compensation, to securities dealers (which may include the
Distributor itself) and other financial institutions and organizations to obtain
various distribution related and/or administrative services for the Fund and for
servicing shareholder accounts, including a continuing fee which may accrue
immediately after the sales of the shares. These services include, among other
things, processing new shareholder account applications, preparing and
transmitting to the Fund's Transfer Agent computer processable tapes of all
transactions by customers and serving as the primary source of information to
customers in answering questions concerning the Fund and their transactions with
the Fund. The Distributor is also authorized to engage in advertising, the
preparation and distribution of sales literature and other promotional
activities on behalf of the Fund. In addition, this Plan hereby authorizes
payment by the Fund of the cost of preparing, printing and distributing Fund
Prospectuses and Statements of Additional Information to prospective investors
and of implementing and operating the Plan. Distribution expenses also include
an allocation of overhead of the Distributor and accruals for interest on the
amount of distribution expenses that exceed
2
<PAGE>
distribution fees and contingent deferred sales charges received by the
Distributor. Payments under the Plan are not tied exclusively to actual
distribution and service expenses, and the payments may exceed distribution and
service expenses actually incurred.
3. The Plan shall not take effect with respect to the Fund until is has
been approved by a vote of the then sole shareholder of the Fund.
4. This Plan shall not take effect until it, with any related agreements,
has been approved by votes of a majority of both (a) the Directors of the
Company and (b) those Directors of the Company who are not "interested persons"
of the Company (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan and such related agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Fund for so
long as such continuance is specifically approved at least annually in the
manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class B shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless such amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
3
<PAGE>
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service and Distribution Plan as of the 6th day of August,
1996.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
---------------------------
Lisa Anne Rosen
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
---------------------------
Marie E. Connolly
4
<PAGE>
Exhibit 15(jj)
Service Plan
Class A Shares of
Munder Growth Opportunities Fund
<PAGE>
SERVICE PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder Growth Opportunities Fund
(the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class A;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer;
WHEREAS, the Company and the Distributor have entered into a Distribution
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company; and
WHEREAS, this Service Plan (the "Plan") was adopted and approved by the
Company on February 24, 1998;
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class A shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. The Fund shall pay to the Distributor, as the distributor of the Class
A shares of the Fund, a service fee at the rate of .25% on an annualized basis
of the average daily net assets of the Fund's Class A shares, provided that, at
any time such payments is made, whether or not this Plan continues in effect,
the making thereof will not cause the limitation upon such payments established
by this Plan to be exceeded. Such fee shall be calculated and accrued daily and
paid at such intervals as the Board of Directors shall determine, subject to any
applicable restriction imposed by rules of the National Association of
Securities Dealers, Inc.
2. The amount set forth in paragraph 1 of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. The Plan shall not take effect with respect to the Class A Shares of
the Fund until is has been approved by a vote of the then sole shareholder of
the Class A Shares of the Fund.
4. This Plan shall not take effect until it, with any related agreements,
has been approved by votes of a majority of both (a) the Directors of the
Company and (b) those Directors of the Company who are not "interested persons"
of the Company (as defined in the Act) and
1
<PAGE>
who have no direct or indirect financial interest in the operation of this Plan
or any agreements related to it (the "Rule 12b-1 Directors"), cast in person at
a meeting (or meetings) called for the purpose of voting on this Plan and such
related agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class A
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class A shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
service fee provided for in paragraph 1 hereof unless such amendment is approved
in the manner provided for initial approval in paragraph 3 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for approval and annual renewal in paragraph 4 hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service Plan as of the 24th day of February, 1998.
THE MUNDER FUNDS, INC.
By:
------------------------
FUNDS DISTRIBUTOR, INC.
By:
------------------------
2
<PAGE>
Exhibit 15(kk)
Service and Distribution Plan
Class B Shares of
Munder Growth Opportunities Fund
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder Growth Opportunities Fund
(the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class B;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer;
WHEREAS, the Company and the Distributor have entered into a Distribution
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company; and
WHEREAS, this Service and Distribution Plan (the "Plan") was adopted and
approved by the Company on February 24, 1998;
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class B shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
B shares, provided that, at any time such payments is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. In addition to the distribution fee distributed above, the Fund
shall pay to the Distributor, as the distributor of the Class B shares of the
Fund, a service fee at the rate of .25% on an annualized basis of the average
daily net asset of the Fund's Class B shares, provided that, at any time such
payment is made, whether or not this Plan continues in effect, the making
thereof will not cause the limitation upon such payments established by this
Plan to be exceeded. Such fee shall be calculated and accrued daily and paid at
such intervals as the Board of Directors shall determine, subject to any
applicable restriction imposed by rules of the National Securities Association
of Dealers, Inc.
1
<PAGE>
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Funds in
connection with any activities or expenses primarily intended to result in the
sale of the Class B shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations to obtain various distribution related and/or administrative
services for the Fund. These services include, among other things, processing
new shareholder account applications, preparing and transmitting to the Fund's
Transfer Agent computer processable tapes of all transactions by customers and
serving as the primary source of information to customers in answering questions
concerning the Fund and their transactions with the Fund. The Distributor is
also authorized to engage in advertising, the preparation and distribution of
sales literature and other promotional activities on behalf of the Fund. In
addition, this Plan hereby authorizes payment by the Fund of the cost of
preparing, printing and distributing the Fund's Prospectuses and Statements of
Additional Information to prospective investors and of implementing and
operating the Plan. Distribution expenses also include an allocation of
overhead of the Distributor and accruals for interest on the amount of
distribution expenses that exceed distribution fees and contingent deferred
sales charges received by the Distributor. Payments under the Plan are not tied
exclusively to actual distribution and service expenses, and the payments may
exceed distribution and service expenses actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect with respect to the Class B Shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class B Shares of the Fund.
4. This Plan shall not take effect until it, with any related agreements,
has been approved by votes of a majority of both (a) the Directors of the
Company and (b) those Directors of the Company who are not "interested persons"
of the Company (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan and such related agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class B
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
2
<PAGE>
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class B shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service and Distribution Plan as of the 24th day of February,
1998.
THE MUNDER FUNDS, INC.
By:
--------------------------------
FUNDS DISTRIBUTOR, INC.
By:
--------------------------------
3
<PAGE>
Exhibit 15(ll)
Service and Distribution Plan
Class C Shares of
Munder Growth Opportunities Fund
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder Growth Opportunities Fund
(the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class C;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer;
WHEREAS, the Company and the Distributor have entered into a Distribution
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company; and
WHEREAS, this Service and Distribution Plan (the "Plan") was adopted and
approved by the Company on February 24, 1998;
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class C shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class C shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
C shares, provided that, at any time such payments is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. In addition to the distribution fee distributed above, the Fund shall
pay to the Distributor, as the distributor of the Class C shares of the Fund, a
service fee at the rate of .25% on an annualized basis of the average daily net
asset of the Fund's Class C shares, provided that, at any time such payment is
made, whether or not this Plan continues in effect, the making thereof will not
cause the limitation upon such payments established by this Plan to be exceeded.
Such fee shall be calculated and accrued daily and paid at such intervals as the
Board of Directors shall determine, subject to any applicable restriction
imposed by rules of the National Securities Association of Dealers, Inc.
<PAGE>
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Funds in
connection with any activities or expenses primarily intended to result in the
sale of the Class C shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations to obtain various distribution related and/or administrative
services for the Fund. These services include, among other things, processing
new shareholder account applications, preparing and transmitting to the Fund's
Transfer Agent computer processable tapes of all transactions by customers and
serving as the primary source of information to customers in answering questions
concerning the Fund and their transactions with the Fund. The Distributor is
also authorized to engage in advertising, the preparation and distribution of
sales literature and other promotional activities on behalf of the Fund. In
addition, this Plan hereby authorizes payment by the Fund of the cost of
preparing, printing and distributing the Fund's Prospectuses and Statements of
Additional Information to prospective investors and of implementing and
operating the Plan. Distribution expenses also include an allocation of
overhead of the Distributor and accruals for interest on the amount of
distribution expenses that exceed distribution fees and contingent deferred
sales charges received by the Distributor. Payments under the Plan are not tied
exclusively to actual distribution and service expenses, and the payments may
exceed distribution and service expenses actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect with respect to the Class C Shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class C Shares of the Fund.
4. This Plan shall not take effect until it, with any related agreements,
has been approved by votes of a majority of both (a) the Directors of the
Company and (b) those Directors of the Company who are not "interested persons"
of the Company (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan and such related agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class C
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
2
<PAGE>
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class C shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service and Distribution Plan as of the 24th day of February,
1998.
THE MUNDER FUNDS, INC.
By:
----------------------------
FUNDS DISTRIBUTOR, INC.
By:
----------------------------
3
<PAGE>
Exhibit 15(nn)
THE MUNDER FUNDS, INC.
SERVICE PLAN
Section 1. Any officer of The Munder Funds, Inc. (the "Company") is
authorized to execute and deliver, in the name and on behalf of the Company,
written agreements based on the form attached hereto as Appendix A or any other
form duly approved by the Company's Board of Directors ("Agreements") with
institutional investors ("Shareholder Organizations") which are shareholders or
dealers of record or which have a servicing relationship with the beneficial
owners of shares of the Class K shares of the Growth Opportunities Fund (the
"Fund') of the Company. Pursuant to such Agreements, Shareholder Organizations
shall provide support services as set forth therein to their clients who
beneficially own Class K Shares in consideration of a fee, computed monthly in
the manner set forth in the Agreements, at an annual rate of up to 0.25% of the
average daily net asset value of the Class K Shares beneficially owned by such
clients. Comerica Bank and its affiliates are eligible to become Shareholder
Organizations and to receive fees under this Plan.
Section 2. Funds Distributor, Inc. ("FDI"), the Funds' distributor shall
monitor the arrangements pertaining to the Company's Agreements with Shareholder
Organizations in accordance with the terms of FDI's agreement with the Company.
FDI shall not, however, be obligated by this Plan to recommend, and the Company
shall not be obligated to execute, any Agreement with any qualifying Shareholder
Organization.
Section 3. So long as this Plan is in effect, FDI shall provide to the
Company's Board of Directors, and the Directors shall review, at least
quarterly, a written report of the amounts expended pursuant to this Plan and
the purposes for which such expenditures were made.
Section 4. This Plan shall become effective immediately with respect to
Class K Shares of the Fund upon the approval of the Plan (and the form of
Agreement attached hereto) by a majority of the Company's Board of Directors,
including a majority of the Directors who are not "interested persons," as
defined in the Investment Company Act of 1940, as amended (the "Act"), of the
Company and who have no direct or indirect financial interest in the operation
of this Plan or in any Agreement related to this Plan (the "Disinterested
Directors"), pursuant to a vote cast in person at a meeting called for the
purpose of voting on the approval of this Plan (and form of Agreement).
Section 5. Unless sooner terminated, this Plan shall continue in effect
for so long as its continuance is approved at least annually in the manner set
forth in Section 4.
Section 6. This Plan may be amended at any time with respect to Class K
Shares of the Fund by the Company's Board of Directors, provided that this Plan
may not be amended to increase materially the fee provided for in Section 1
hereof unless such amendment is approved by the shareholders of the Fund in a
manner provided in the Act, and no material amendment of the terms of this Plan
shall become effective unless approved in the manner set forth in Section 4.
<PAGE>
Section 7. This Plan is terminable at any time with respect to Class K
Shares of the Fund by vote of a majority of the Disinterested Directors.
Section 8. While this Plan is in effect, the selection and nomination of
those directors who are not "interested persons" (as defined in the Act) of the
Company shall be committed to the discretion of such non-interested Directors.
2
<PAGE>
APPENDIX A
THE MUNDER FUNDS, INC.
SERVICING AGREEMENT
To: [ ]
We wish to enter into this Servicing Agreement with you concerning the
provision of support services to your clients ("Clients") who may from time to
time beneficially own shares of Class K ("Shares") of the portfolio series of
The Munder Funds, Inc. (the "Funds") offered by us.
The terms and conditions of this Servicing Agreement are as follows:
1. You agree to provide the following support services to Clients who may
from time to time beneficially own Shares:/1/ (i) establishing and maintaining
accounts and records relating to Clients that invest in Shares; (ii) processing
dividend and distribution payments from us on behalf of Clients; (iii) providing
information periodically to Clients showing their positions in Shares and
integrating such statements with those of other transactions and balances in
Client's other accounts serviced by you; (iv) arranging for bank wires; (v)
responding to Client inquiries relating to the services performed by you; (vi)
responding to routine inquiries from Clients concerning their investments in
Shares; (vii) providing subaccounting with respect to Shares beneficially owned
by Clients or the information to us necessary for subaccounting; (viii) if
required by law, forwarding shareholder communications from us (such proxies,
shareholder reports, annual and semi-annual financial statements and dividend,
distribution and tax notices) to Clients; (ix) assisting in processing purchase,
exchange and redemption requests from Clients and in placing such orders with
our servicing contractors; (x) assisting Clients in changing dividend options,
account designations and addresses; (xi) providing Clients with a service that
invests the assets of their accounts in Shares pursuant to specific or pre-
authorized instructions; and (xii) providing such other similar services as we
may reasonably request to the extent you are permitted to do so under applicable
statutes, rules and regulations.
Section 2. You will provide such office space and equipment, telephone
facilities and personnel (which may be any part of the space, equipment and
facilities currently used in your business, or any personnel employed by you) as
may be reasonably necessary or beneficial in order to provide the aforementioned
services and assistance to Clients.
Section 3. Neither you nor any of your officers, employees or agents are
authorized to make any representations concerning us or the shares except those
contained in our then current prospectuses and statements of additional
information for Shares, copies of which will be supplied by us to you, or in
such supplemental literature or advertising as may be authorized by us in
writing.
- ----------------------
/1/ Services may be modified or omitted in the particular case and items
renumbered.
1
<PAGE>
Section 4. For all purposes of this Agreement, you will be deemed to be an
independent contractor and will have no authority to act as agent for us in any
matter or in any respect. By your written acceptance of this Agreement, you
agree to and do release, indemnify and hold us harmless from and against any and
all direct or indirect liabilities or losses resulting from requests,
directions, actions or inactions of or by you or your officers, employees or
agents regarding your responsibilities hereunder or the purchase, redemption,
transfer or registration of Shares (or orders relating to the same) by or on
behalf of Clients. You and your employees will, upon request, be available
during normal business hours to consult with us or our designees concerning the
performance of your responsibilities under this Agreement.
Section 5. In consideration of the services and facilities provided by you
hereunder, we will pay to you, and you will accept as full payment therefor, a
fee at the annual rate of .25% of the average daily net asset value of the
Shares beneficially owned by your Clients for whom you are the dealer of record
or holder of record or with whom you have a servicing relationship (the
"Clients' Shares"), which fee will be computed daily and payable monthly. For
purposes of determining the fees payable under this Section 5, the average daily
net asset value of the Clients' Shares will be computed in the manner specified
in our Registration Statement (as the same is in effect from time to time) in
connection with the computation of the net asset value of Shares for purposes of
purchases and redemptions. By your written acceptance of this Agreement, you
agree to and do waive such portion of any fee payable to you hereunder to the
extent necessary to assure that such fee and other expenses required to be
accrued by us on any day with respect to the Clients' Shares in any Fund that
declares its net investment income as a dividend to shareholders on a daily
basis does not exceed the income to be accrued by us to such Shares on that day.
The fee rate stated above may be prospectively increased or decreased by us, in
our sole discretion, at any time upon notice to you. Further, we may, in our
discretion and without notice, suspend or withdraw the sale of Shares, including
the sale of Shares to you for the account of any Client or Clients.
Section 6. Any person authorized to direct the disposition of monies paid
or payable by us pursuant to this Agreement will provide the Board of Directors,
and our Directors will review, at least quarterly, a written report of the
amounts so expended and the purposes for which such expenditures were made. In
addition, you will furnish us or our designees with such information as we or
they may reasonably request (including, without limitation, periodic
certifications confirming the provision to Clients of the services described
herein), and will otherwise cooperate with us and our designees (including,
without limitation, any auditors designated by us), in connection with the
preparation of reports to our Board of Directors concerning this Agreement and
the monies paid or payable by us pursuant hereto, as well as any other reports
or filings that may be required by law.
Section 7. We may enter into other similar Servicing Agreements with any
other persons without your consent.
Section 8. By your written acceptance of this Agreement, you represent,
warrant and agree that: (i) the compensation payable to you in connection with
the investment of your Clients' assets in Shares will be disclosed by you to
your Clients, will be authorized by your Clients and will not be excessive; (ii)
the services provided by you under this Agreement will in
2
<PAGE>
no event be primarily intended to result in the sale of shares of Shares; and
(iii) in the event an issue pertaining to our Service Plan is submitted for
shareholder approval, you will vote any shares held for your own account in the
same proportion as the vote of those shares held for your Client's accounts.
Section 9. This Agreement will become effective on the date a fully
executed copy of this Agreement is received by us or our designee. Unless
sooner terminated, this Agreement will continue until __________, 1999, and
thereafter will continue automatically for successive annual periods provided
such continuance is specifically approved at least annually by us in the manner
described in Section 12. This Agreement is terminable with respect to the
Shares, without penalty, at any time by us (which termination will be by vote of
a majority of the Disinterested Directors as defined in Section 12) or by you
upon written notice to the other party hereto.
Section 10. All notices and other communications hereunder will be duly
given if mailed, telegraphed, telexed or transmitted by similar
telecommunications device to the appropriate address stated herein, or to such
other address as either party shall so provide the other.
Section 11. This Agreement will be construed in accordance with the laws
of the State of Michigan and is non-assignable by the parties hereto.
Section 12. This Agreement has been approved by vote of a majority of (i)
our Board of Directors, and (ii) those Directors who are not "interested
persons" (as defined in the Investment Company Act of 1940) of us and have no
direct or indirect financial interest in the operation of the Service Plan
adopted by us regarding the provision of support services to the beneficial
owners of Shares or in any agreement related thereto cast in person at a meeting
called for the purpose of voting on such approval ("Disinterested Directors").
If you agree to be legally bound by the provisions of this Agreement,
please sign a copy of this letter where indicated below and promptly return it
to us, c/o Funds Distributor, Inc., 60 State Street, Boston, Massachusetts
02109.
Very truly yours,
THE MUNDER FUNDS, INC.
DATE:_____________________ BY:____________________________
(AUTHORIZED OFFICER)
<PAGE>
ACCEPTED AND AGREED TO:
[SHAREHOLDER ORGANIZATION]
BY:______________________________
DATE: _____________________ (AUTHORIZED OFFICER)
ADDRESS OF SHAREHOLDER ORGANIZATION: _________________________________
_________________________________
_________________________________
<PAGE>
Exhibit 15(qq)
Service Plan
Class A Shares of
Munder Value Fund
<PAGE>
SERVICE PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder Value Fund (the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class A;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class A shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. The Fund shall pay to the Distributor, as the distributor of the Class
A shares of the Fund, a service fee at the rate of .25% on an annualized basis
of the average daily net assets of the Fund's Class A shares, provided that, at
any time such payments is made, whether or not this Plan continues in effect,
the making thereof will not cause the limitation upon such payments established
by this Plan to be exceeded. Such fee shall be calculated and accrued daily and
paid at such intervals as the Board of Directors shall determine, subject to any
applicable restriction imposed by rules of the National Association of
Securities Dealers, Inc.
2. The amount set forth in paragraph 1 of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. The Plan shall not take effect with respect to the Class A Shares of
the Fund until is has been approved by a vote of the then sole shareholder of
the Class A Shares of the Fund.
4. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
1
<PAGE>
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class A
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class A shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
service fee provided for in paragraph 1 hereof unless such amendment is approved
in the manner provided for initial approval in paragraph 3 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for approval and annual renewal in paragraph 4 hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service Plan as of the 31st day of July, 1995.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
-------------------
Lisa Anne Rosen
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
---------------------
Marie E. Connolly
2
<PAGE>
Exhibit 15(rr)
Service and Distribution Plan
Class B Shares of
Munder Value Fund
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder Value Fund (the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class B;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class B shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
B shares, provided that, at any time such payments is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a service fee at the rate of .25% on an annualized
basis of the average daily net asset of the Fund's Class B shares, provided
that, at any time such payment is made, whether or not this Plan continues in
effect, the making thereof will not cause the limitation upon such payments
established by this Plan to be exceeded. Such fee shall be calculated and
accrued daily and paid at such intervals as the Board of Directors shall
determine, subject to any applicable restriction imposed by rules of the
National Securities Association of Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Funds in
connection with any activities or expenses primarily intended to result in the
sale of the Class B shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations to
1
<PAGE>
obtain various distribution related and/or administrative services for the Fund.
These services include, among other things, processing new shareholder account
applications, preparing and transmitting to the Fund's Transfer Agent computer
processable tapes of all transactions by customers and serving as the primary
source of information to customers in answering questions concerning the Fund
and their transactions with the Fund. The Distributor is also authorized to
engage in advertising, the preparation and distribution of sales literature and
other promotional activities on behalf of the Fund. In addition, this Plan
hereby authorizes payment by the Fund of the cost of preparing, printing and
distributing the Fund's Prospectuses and Statements of Additional Information to
prospective investors and of implementing and operating the Plan. Distribution
expenses also include an allocation of overhead of the Distributor and accruals
for interest on the amount of distribution expenses that exceed distribution
fees and contingent deferred sales charges received by the Distributor.
Payments under the Plan are not tied exclusively to actual distribution and
service expenses, and the payments may exceed distribution and service expenses
actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect with respect to the Class B Shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class B Shares of the Fund.
4. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class B
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
2
<PAGE>
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class B shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service and Distribution Plan as of the 31st day of July,
1995.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
-------------------
Lisa Anne Rosen
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
---------------------
Marie E. Connolly
3
<PAGE>
Exhibit 15(ss)
Service and Distribution Plan
Class C Shares of
Munder Value Fund
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder Value Fund (the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class C;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer; and
WHEREAS, the Company and the Distributor have entered into a Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company.
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class C shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class C shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
C shares, provided that, at any time such payments is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. The Fund shall pay to the Distributor, as the distributor of the
Class C shares of the Fund, a service fee at the rate of .25% on an annualized
basis of the average daily net asset of the Fund's Class C shares, provided
that, at any time such payment is made, whether or not this Plan continues in
effect, the making thereof will not cause the limitation upon such payments
established by this Plan to be exceeded. Such fee shall be calculated and
accrued daily and paid at such intervals as the Board of Directors shall
determine, subject to any applicable restriction imposed by rules of the
National Securities Association of Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Funds in
connection with any activities or expenses primarily intended to result in the
sale of the Class C shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations to
1
<PAGE>
obtain various distribution related and/or administrative services for the Fund.
These services include, among other things, processing new shareholder account
applications, preparing and transmitting to the Fund's Transfer Agent computer
processable tapes of all transactions by customers and serving as the primary
source of information to customers in answering questions concerning the Fund
and their transactions with the Fund. The Distributor is also authorized to
engage in advertising, the preparation and distribution of sales literature and
other promotional activities on behalf of the Fund. In addition, this Plan
hereby authorizes payment by the Fund of the cost of preparing, printing and
distributing the Fund's Prospectuses and Statements of Additional Information to
prospective investors and of implementing and operating the Plan. Distribution
expenses also include an allocation of overhead of the Distributor and accruals
for interest on the amount of distribution expenses that exceed distribution
fees and contingent deferred sales charges received by the Distributor.
Payments under the Plan are not tied exclusively to actual distribution and
service expenses, and the payments may exceed distribution and service expenses
actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect with respect to the Class C Shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class C Shares of the Fund.
4. This Plan shall not take effect until it, with any related agreements,
has been approved by votes of a majority of both (a) the Directors of the
Company and (b) those Directors of the Company who are not "interested persons"
of the Company (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan and such related agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class C
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
2
<PAGE>
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class C shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service and Distribution Plan as of the 31st day of July,
1995.
THE MUNDER FUNDS, INC.
By: /s/ Lisa Anne Rosen
-------------------
Lisa Anne Rosen
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
---------------------
Marie E. Connolly
3
<PAGE>
Exhibit 18
THE MUNDER FUNDS, INC.
Third Amended and Restated Multi-Class Plan
-------------------------------------------
Introduction
------------
The purpose of this Plan is to specify the attributes of the classes of
shares offered by The Munder Funds, Inc. (the "Company"), including the sales
loads, expense allocations, conversion features and exchange features of each
class, as required by Rule 18f-3 under the Investment Company Act of 1940, as
amended (the "1940 Act").
Each of the Company's investment portfolios (each, a "Fund"), other than
the Munder All-Season Conservative Fund, the Munder All-Season Moderate Fund and
the Munder All-Season Aggressive Fund (together, the "Lifestyle Funds"), the
Money Market Fund, the Munder NetNet Fund and the Munder Short Term Treasury
Fund, issues its shares of common stock in five classes: "Class A" Shares,
"Class B" Shares, "Class C" Shares, "Class K" Shares and "Class Y" Shares. The
Munder Short Term Treasury Fund issues its share of common stock in five
classes: "Class A" Shares, "Class B" Shares, "Class C" Shares, "Class Y" Shares
and "Michigan Municipal League" Shares. The Money Market Fund issues its shares
of common stock in four classes: "Class A" Shares, "Class B" Shares, "Class C"
Shares and "Class Y" Shares. The Munder NetNet Fund issues shares of common
stock in four classes: "Class A" Shares, "Class B" Shares, "Class C" Shares and
"Class Y" Shares. Each of the Lifestyle Funds issues its shares of common stock
in three classes: "Class A" Shares, "Class B" Shares and "Class Y" Shares.
Shares of each Class of a Fund shall represent an equal pro rata interest in
such Fund, and generally, shall have identical voting, dividend, liquidation and
other rights, preferences, powers, restrictions, limitations, qualifications,
and terms and conditions, except that: (a) each Class shall have a different
designation; (b) each Class may have a different sales charge structure; (c)
each Class of shares shall bear any Class Expenses, as defined below; (d) each
Class shall have exclusive voting rights on any matter submitted to shareholders
that relates solely to its arrangement and each Class shall have separate voting
rights on any matter submitted to shareholders in which the interests of one
Class differ from the interests of any other Class; and (e) each Class may have
different exchange and/or conversion features as described below.
Allocation of Expenses
----------------------
To the extent practicable, certain expenses (other than Class Expenses as
defined below which shall be allocated more specifically), shall be subtracted
from the gross income allocated to each Class of a Fund on the basis of net
assets of each Class of the Fund. These expenses include:
(1) Expenses incurred by the Company (for example, fees of Directors,
auditors, and legal counsel) not attributable to a particular Fund or to a
particular Class of shares of a Fund ("Company Level Expenses"); and
(2) Expenses incurred by a Fund not attributable to any particular Class of
the Fund's shares (for example, advisory fees, custodial fees, or other expenses
relating to the management of the Fund's assets) ("Fund Expenses").
<PAGE>
Expenses attributable to a particular Class ("Class Expenses") shall be
limited to: (i) payments made pursuant to a Service Plan, Service and
Distribution Plan or Shareholder Servicing Plan; (ii) transfer agent fees
attributable to a specific Class; (iii) printing and postage expenses related to
preparing and distributing materials such as shareholder reports, prospectuses
and proxies to current shareholders of a specific Class; (iv) Blue Sky fees
incurred by a Class; (v) Securities and Exchange Commission registration fees
incurred by a Class; (vi) the expense of administrative personnel and services
to support the shareholders of a specific Class; (vii) litigation or other legal
expenses relating solely to one Class; and (viii) Directors' fees incurred as a
result of issues relating solely to one Class. Expenses in category (i) above
must be allocated to the Class for which such expenses are incurred. For all
other "Class Expenses" listed in categories (ii) - (viii) above, the President
and Chief Financial Officer shall determine, subject to Board approval or
ratification, which such categories of expenses will be treated as Class
Expenses, consistent with applicable legal principles under the Act and the
Internal Revenue Code of 1986, as amended, any private letter ruling with
respect to the Company issued by the Internal Revenue Service.
Therefore, expenses of a Fund shall be apportioned to each Class of shares
depending upon the nature of the expense item. Company Level Expenses and Fund
Expenses will be allocated among the Classes of shares based on their relative
net asset values. Approved Class Expenses shall be allocated to the particular
Class to which they are attributable. In addition, certain expenses may be
allocated differently if their method of imposition changes. Thus, if a Class
Expense can no longer be attributed to a Class, it shall be charged to a Fund
for allocation among Classes, as may be appropriate; however, any additional
Class Expenses not specifically identified above which are subsequently
identified and determined to be properly allocated to one Class of shares shall
not be so allocated until approved by the Board of Directors of the Company in
light of the requirements of the Act and the Internal Revenue Code of 1986, as
amended.
Class A Shares
--------------
Class A Shares of a Fund are offered at net asset value plus, for Funds
other than the Money Market Fund, an initial sales charge as set forth in the
then-current prospectus of the Fund. The initial sales charge may be waived or
reduced on certain types of purchases as set forth in a Fund's then-current
prospectus. A contingent deferred sales charge may apply to certain redemptions
made within a specified period as set forth in the Fund's then-current
prospectus. Class A Shares of a Fund may be exchanged for Class A Shares of
another fund of the Company, The Munder Framlington Funds Trust or The Munder
Funds Trust subject to any sales charge differential.
Class A Shares of the Funds pay a Rule 12b-1 service fee of up to 0.25%
(annualized) of the average daily net assets of a Fund's Class A Shares.
Distribution and support services provided by brokers, dealers and other
institutions may include forwarding sales literature and advertising materials
provided by the Company's distributor; processing purchase, exchange and
redemption requests from customers placing orders with the Company's transfer
agent; processing dividend and distribution payments from the Funds of the
Company on behalf of customers; providing information periodically to customers
showing their positions in Class A Shares; providing sub-accounting with respect
to Class A Shares beneficially owned by customers or the information necessary
for sub-accounting; responding to inquiries from customers concerning their
investments in Class A Shares; arranging for bank wires; and providing such
other similar services as may reasonably be requested.
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<PAGE>
Class B Shares
--------------
Class B Shares of the Funds are offered without an initial sales charge but
are subject to a contingent deferred sales charge payable upon certain
redemptions as set forth in the Fund's then-current prospectus. Class B Shares
of a Fund may be exchanged for Class B Shares of another fund of the Company,
The Munder Framlington Funds Trust or The Munder Funds Trust subject to any
sales charge differential.
Class B Shares of a Fund will automatically convert to Class A Shares of
the Fund on the first business day of the month on which the sixth anniversary
of the issuance of the Class B Shares occurs. The conversion will be effected
at the relative net asset values per share of the two classes.
Class B Shares pay a Rule 12b-1 service fee of up to 0.25% (annualized) and
a distribution fee of up to 0.75% (annualized) of the average daily net assets
of a Fund's Class B Shares. Brokers, dealers and other institutions may
maintain Class B shareholder accounts and provide personal service to Class B
shareholders. Services relating to the sale of Class B Shares may include, but
not be limited to, preparation, printing and distribution of prospectuses, sales
literature and advertising materials by the Company's distributor, or, as
applicable, brokers, dealer or other institutions; commissions, incentive
compensation or other compensation to, and expenses of, account executives or
other employees of the Company's distributor or brokers, dealers and other
institutions; overhead and other office expenses of the Company's distributor
attributable to distribution or sales support activities; and opportunity costs
related to the foregoing (which may be calculated as a carrying charge on the
Company's distributor unreimbursed expenses) incurred in connection with
distribution or sales support activities. The overhead and other office
expenses referenced above may include, without limitation, (a) the expenses of
operating the Company's distributor's offices in connection with the sale of the
Class B Shares of the Funds, including lease costs, the salaries and employee
benefit costs of administrative, operations and support personnel, utility
costs, communication costs and the costs of stationery and supplies, (b) the
costs of client sales seminars and travel related to distribution and sales
support activities, and (c) other expenses relating to distribution and sales
support activities.
Class C Shares
--------------
Class C Shares of the Funds are offered at net asset value. A contingent
deferred sales charge may apply to certain redemptions made within the first
year of investing as set forth in the relevant Fund's then-current prospectus.
Class C Shares of a Fund may be exchanged for Class C Shares of another fund of
the Company, The Munder Framlington Funds Trust and The Munder Funds Trust
subject to any sales charge differential.
Class C Shares pay a Rule 12b-1 service fee up to 0.25% (annualized) and a
distribution fee of up to 0.75% (annualized) of the average daily net assets of
a Fund's Class C Shares. Brokers, dealers and other institutions may maintain
Class C shareholder accounts and provide personal services to Class C
shareholders. Services relating to the sale of Class C Shares may include, but
not be limited to, preparation, printing and distribution of prospectuses, sales
literature and advertising materials by the Company's distributor, or, as
applicable, brokers, dealers or other institutions; commissions, incentive
compensation or other compensation to, and expenses of, account executives or
other employees of the Company's distributor or brokers, dealers and other
institutions; overhead and other office expenses of the Company's distributor
attributable to distribution or sales support activities; and opportunity costs
related to the foregoing (which may be calculated as a carrying charge on the
Company's distributor
3
<PAGE>
unreimbursed expenses) incurred in connection with distribution or sales support
activities. The overhead and other office expenses referenced above may include,
without limitation, (a) the expenses of operating the Company's distributor's
offices in connection with the sale of the Class C Shares of the Funds,
including lease costs, the salaries and employee benefit costs of
administrative, operations and support personnel, utility costs, communication
costs and costs of stationery and supplies; (b) the costs of client sales
seminars and travel related to distribution and sales support activities, and
(c) other expenses relating to distribution and sales support activities.
Class Y Shares
--------------
Class Y Shares of a Fund are offered at net asset value. Class Y Shares of
a Fund may be exchanged for Class Y Shares of another fund of the Company, The
Munder Framlington Funds Trust or The Munder Funds Trust without the imposition
of a sales charge.
Class K Shares
--------------
Class K Shares of a Fund are offered at net asset value. Class K Shares of
a Fund may be exchanged for Class K Shares of another fund of the Company, The
Munder Framlington Funds Trust or The Munder Funds Trust without the imposition
of a sales charge.
Class K Shares pay a service fee of up to 0.25% (annualized) of the average
daily net assets of a Fund's Class K Shares. Services provided by brokers,
dealers and other institutions for such service fees include: processing
purchase, exchange and redemption requests from customers and placing orders
with the Company's transfer agent; processing dividend and distribution payments
from the Funds on behalf of customers; providing information periodically to
customers showing their positions in Class K Shares; providing sub-accounting
with respect to Class K Shares beneficially owned by customers or the
information necessary for sub-accounting; responding to inquiries from customers
concerning their investment in Class K Shares; arranging for bank wires; and
providing such other similar services as may reasonably be requested.
Michigan Municipal League Shares
--------------------------------
Michigan Municipal League Shares of the Short Term Treasury Fund are
offered at net asset value.
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