<PAGE>
As filed with the Securities and Exchange Commission
on March 20, 1998
Registration Nos. 33-54748
811-7348
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933[ X ]
Pre-Effective Amendment No. ---- [ ]
Post-Effective Amendment No. 32 [ X ]
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940[ X ]
Amendment No. 34 [ X ]
(Check appropriate box or boxes)
The Munder Funds, Inc.
(Exact Name of Registrant as Specified in Charter)
480 Pierce Street, Birmingham, Michigan 48009
(Address of Principal Executive Offices) (Zip code)
Registrant's Telephone Number: (810) 647-9200
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
Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement becomes
effective.
[X] It is proposed that this filing will become effective 75 days after filing
pursuant to paragraph (a)(2) of Rule 485
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Munder Emerging Growth Fund 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 Cover Page; Fund Highlights;
Registrant 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 Structure and Management of Fund;
Securities Purchases and Exchanges of Shares;
Redemption of Shares; Dividends,
Distributions and Taxes
7. Purchase of Securities Being Purchases and Exchanges of Shares
Offered
7. Redemption or Repurchase Redemptions of Shares
8. Pending Legal Proceedings Not Applicable
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Munder Emerging Growth Fund Class K 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 Cover Page; Fund Highlights;
Registrant 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 Structure and Management of Fund;
Securities Purchases and Exchanges of Shares;
Redemption of Shares; Dividends,
Distributions and Taxes
7. Purchase of Securities Being Purchases and Exchanges of Shares
Offered
7. Redemption or Repurchase Redemptions of Shares
8. Pending Legal Proceedings Not Applicable
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Munder Emerging Growth Fund Class Y 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 Cover Page; Fund Highlights;
Registrant 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 Structure and Management of Fund;
Securities Purchases and Exchanges of Shares;
Redemption of Shares; Dividends,
Distributions and Taxes
7. Purchase of Securities Being Purchases and Exchanges of Shares
Offered
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 Emerging Growth Fund)
Part B
------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and See Prospectus --"Structure and
History Management of the Fund;" General;
Directors and Officers
13. Investment Objectives and Fund Investments; Investment
Policies 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 Investment Advisory Services and Other
and Other Service Arrangements; See Prospectus -
-"Structure and Management of the
Fund"
17. Brokerage Allocation and Other Portfolio Transactions
18. Capital Stock and Other See Prospectus --"Structure and
Securities Management of the Fund;" Additional
Information Concerning Shares
19. Purchase, Redemption and Additional Purchase and Redemption
Pricing of Securities Being Information; Net Asset Value;
Offered Additional Information Concerning
Shares
20. Tax Status Taxes
21. Underwriters Investment Advisory and Other Service
Arrangements
22. Calculation of Performance Performance Information
Data
<PAGE>
23. Financial Statements Not applicable
<PAGE>
THE MUNDER FUNDS, INC.
The purpose of this Post-Effective Amendment filing is to add one new
portfolio to the Company's Registration Statement, namely the Munder Emerging
Growth Fund.
The Prospectuses and Statements of Additional Information for 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 Mid-Cap Growth 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
the NetNet Fund are not included in this filing.
<PAGE>
PROSPECTUS
CLASS A, CLASS B AND CLASS C SHARES
The Munder Emerging Growth Fund (the "Fund") is a mutual fund that seeks to
provide long-term capital appreciation. The Fund invests primarily in equity
securities. 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") has
been filed with the Securities and Exchange Commission (the "SEC") and is
incorporated by reference into this Prospectus. The SAI may be obtained free
of charge by calling the Company 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
PRINCIPAL.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES:
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS JUNE___, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
----
Fund Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
What are the key facts regarding the Fund?. . . . . . . . . . . . . .3
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?. . . . . . . . . . . . .8
Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
How is the Fund's performance calculated? . . . . . . . . . . . . . .9
Where can I obtain performance data?. . . . . . . . . . . . . . . . 10
Purchases and Exchange of Shares . . . . . . . . . . . . . . . . . . . . 10
Which share class should I choose for my investment?. . . . . . . . 10
What price do I pay for shares? . . . . . . . . . . . . . . . . . . 11
When can I purchase shares? . . . . . . . . . . . . . . . . . . . . 13
What is the minimum required investment?. . . . . . . . . . . . . . 13
How can I purchase shares?. . . . . . . . . . . . . . . . . . . . . 13
How can I exchange shares?. . . . . . . . . . . . . . . . . . . . . 14
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 15
What price do I receive for redeemed shares?. . . . . . . . . . . . 15
When can I redeem shares? . . . . . . . . . . . . . . . . . . . . . 16
How can I redeem shares?. . . . . . . . . . . . . . . . . . . . . . 16
When will I receive redemption amounts? . . . . . . . . . . . . . . 17
Structure and Management of the Fund . . . . . . . . . . . . . . . . . . 17
How is the Fund structured? . . . . . . . . . . . . . . . . . . . . 17
Who manages and services the Fund?. . . . . . . . . . . . . . . . . 17
What are my rights as a shareholder?. . . . . . . . . . . . . . . . 19
Dividends, Distributions and Taxes . . . . . . . . . . . . . . . . . . . 19
When will I receive distributions from the Fund?. . . . . . . . . . 19
How will distributions be made? . . . . . . . . . . . . . . . . . . 19
Are there tax implications of my investments in the Fund? . . . . . 19
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . 20
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 long-term capital appreciation.
Q: WHAT IS THE FUND'S STRATEGY?
A: The Fund invests primarily in equity 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 stock market
in general, perceptions about the stock of particular companies and perceptions
about particular industries. You should note that you could lose a portion of
the amount you invest in the Fund. As a result of large investments in
mid-capitalization, small-capitalization and/or emerging growth companies, the
Fund is riskier than a large-capitalization fund since such companies typically
have greater earning fluctuations, and greater reliance on a few key customers
than larger companies.
Q: WHAT ARE THE OPTIONS FOR INVESTMENT IN THE FUND?
A: The Fund has registered five classes of shares: 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 END MAXIMUM
CLASS RULE 12B-1 FEES* 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.
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 FUND?
A: Funds Distributor, Inc. (the "Distributor") sells shares of the Fund. You
may purchase shares from the Distributor through broker-dealers or other
financial institutions or from the Fund's 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.
3
<PAGE>
You may also acquire the Fund's shares by exchanging shares of the same
class of other funds of the Company, The Munder Funds Trust (the "Trust") and
The Munder Framlington Funds Trust ("Framlington"), and exchange Fund shares for
shares of the same class of other funds of the Company, the Trust and
Framlington.
Q: WHAT SHAREHOLDER PRIVILEGES DOES THE FUND 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>
Q: WHEN AND HOW ARE DISTRIBUTIONS MADE?
A: Dividend distributions are made from the dividends and interest earned on
investments. The Fund pays dividends at least annually and distributes capital
gains at least annually. Unless you elect to receive distributions in cash, all
dividends and capital gains distributions 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.
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>
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 redemption 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 Fund's 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 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),
registration fees and distribution fees. The fees shown below are estimated for
the Fund's current fiscal year and reflects anticipated voluntary expense
reimbursements. 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 percentage of average net assets)
Class A Class B Class C
Shares Shares Shares
------ ------ ------
<S> <C> <C> <C>
Advisory Fees .75% .75% .75%
12b-1 Fees .25% 1.00% 1.00%
Other Expenses+ []%++ []%++ []%++
---- ---- ----
Total Fund Operating Expenses+ []%++ []%++ []%++
---- ---- ----
---- ---- ----
</TABLE>
- ------------
+ After expense reimbursements, if any.
++ The Advisor expects to voluntarily reimburse the Fund for certain operating
expenses. In the absence of expense reimbursements, the total fund operating
expenses would be _____% for Class A Shares, ____% for Class B Shares and _____%
for Class C Shares of the Fund's average net assets.
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 (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>
Class A Class B Class C
Shares Shares Shares
------ ------ ------
<S> <C> <C> <C>
1 Year
- Redemption...................... $[] $[] $[]
- No Redemption................... $[] $[] $[]
3 Years
- Redemption....................... $[] $[] $[]
- No Redemption.................... $[] $[] $[]
</TABLE>
FUND INFORMATION
This Prospectus describes Class A, Class B and Class C 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.
5
<PAGE>
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.
WHO MAY WANT TO INVEST IN THE FUND?
The Fund is 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 Company.
WHAT ARE THE FUND'S INVESTMENTS AND INVESTMENT PRACTICES?
The Fund will invest in EQUITY SECURITIES which includes common stocks,
preferred stocks, warrants and other securities convertible into common stocks.
Many of the common stocks the 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
the 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.
The Fund may invest up to 25% of its assets in FOREIGN SECURITIES. Foreign
Securities are securities issued by non-U.S. companies and governments.
Investments in Foreign Securities are riskier than investments in U.S. companies
because (i) foreign companies may be subject to different accounting, auditing
and financial reporting standards than U.S. companies, (ii) there is generally
less public information available about foreign companies, (iii) there may be
less governmental regulation and supervision of foreign stock exchanges,
securities markets and companies and (iv) foreign securities may be less liquid
and more volatile than U.S. securities markets.
The Fund may purchase AMERICAN DEPOSITARY RECEIPTS ("ADRS"), EUROPEAN
DEPOSITARY RECEIPTS ("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 Fund may invest in FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS, which
are obligations of the Fund to purchase or sell a specific currency at a future
date at a set price. These contracts may decrease the Fund's loss due to a
change in currency value, but also limits gains from currency changes.
6
<PAGE>
The Fund may invest in FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS.
Future contracts are contracts in which the Fund agrees, at maturity, to make
delivery of or receive securities, the cash value of an index or foreign
currency. Future contracts and options on futures contracts are used for
hedging purposes or to maintain liquidity. The Fund may not purchase or sell a
futures contract unless immediately after any such transaction the sum of the
aggregate amount of margin deposits on its existing futures positions and the
amount of premiums paid for related options is 5% or less of its total assets.
The Fund will set aside cash or other liquid securities to "cover" the Fund's
position in futures.
The Fund may purchase or sell OPTIONS. The Fund may buy options giving it
the right to require a buyer to buy a security held by the Fund (put options),
buy options giving it the right to require a seller to sell securities to the
Fund (call options), sell (write) options giving a buyer the right to require
the Fund to buy securities from the buyer or write options giving a buyer the
right to require the Fund to sell securities to the buyer during a set time at a
set price. Options may relate to stock indices, individual securities, foreign
currencies or futures contracts. See the SAI for more details and additional
limitations.
The Fund may purchase securities on a "WHEN-ISSUED" basis and may purchase
or sell 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 enter into REPURCHASE AGREEMENTS. Under a repurchase
agreement, the 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 Fund may invest in REVERSE REPURCHASE AGREEMENTS. Under a reverse
repurchase agreement, the Fund sells securities and agrees to buy them back
later at an agreed upon time and price. Reverse repurchase agreements are used
to borrow money for temporary 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 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 25% 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 buy shares of registered MONEY MARKET FUNDS. The Fund 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 the Fund's own
expenses. The 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 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 the
Fund is investing defensively, it may not be pursuing its investment objective.
7
<PAGE>
The 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.
The Fund may invest up to 5% of its total assets in LOWER-RATED DEBT
SECURITIES. Lower-Rated Debt Securities are securities that are rated below
investment grade by Standard & Poor's Rating Service, Moody's Investors Service,
Inc. or other nationally recognized rating agency. Such securities are also
known as "junk bonds" and are considered riskier than investment grade
securities.
The 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.
The Fund may invest up to 15% of the value of its net assets in ILLIQUID
SECURITIES. Illiquid Securities are securities for which there is no ready
market, which inhibits the ability to sell them and obtain their full market
value, or which are legal restricted as to their resale by the Fund.
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 only can be changed by shareholders.
The Fund is classified as a "diversified fund" which means that with
respect to 75% of it's 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?
The Fund is not meant to provide a vehicle for playing short-term swings in
the stock market. 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, the Fund does not constitute a
balanced investment program and there is no guarantee that the Fund will achieve
its investment objectives since there is uncertainty in every investment.
Investing in the Fund 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 Fund
invests 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
Fund, can affect the Fund's performance. Your investment in the Fund is not
guaranteed. The net asset value of the Fund will change daily and you might not
recoup the amount you invest in the Fund.
A fund's risk is mostly dependent on the types of securities it purchases
and its investment techniques. The 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 the 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
8
<PAGE>
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); and (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.
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 Standard &
Poor's 500 Composite Stock Price Index ("S&P 500").
To the extent that the 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.
There are certain risks and costs involved in investing in securities of
companies and governments of foreign nations, which are in addition to the usual
risks inherent in U.S. investments. These considerations include the
possibility of political instability (including revolution), future political
and economic developments and dependence on foreign economic assistance.
Investments in companies domiciled in foreign countries, therefore, may be
subject to potentially higher risks than investments in the United States.
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 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 the
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 the 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.
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. "Maximum offering price"
includes the sales charge for Class A Shares.
The Fund 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
the Fund will perform in the future; and (ii) the Fund's return and net asset
value will fluctuate, so you
9
<PAGE>
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 mutual 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 AND EXCHANGES OF SHARES
WHICH SHARE CLASS SHOULD I CHOOSE FOR MY INVESTMENT?
The Fund 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.
CLASS A CLASS B CLASS C
------- ------- -------
- Front end sales - No front end - No front end
charge. There sales charge. sales charge or
are several All your money CDSC, except
ways to reduce goes to work for a CDSC for
these sales for you right redemptions
charges. away. made within the
first year
- Lower annual - Higher annual after
expenses than expenses than investing. All
Class B and Class A Shares. your money goes
Class C Shares. to work for you
- A CDSC on right away.
shares you sell
within six - Shares do not
years of convert to
purchase. another class.
- Automatic - Higher annual
conversion to expenses than
Class A Shares Class A Shares.
approximately
six years after
issuance, thus
reducing future
annual
expenses.
- CDSC is waived
for certain
redemptions.
The 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.
10
<PAGE>
WHAT PRICE DO I PAY FOR SHARES?
Class A Shares are sold at the "net asset value next determined" by the
Fund plus any "applicable sales charge" and Class B and Class C Shares are sold
at the "net asset value next determined" by the Fund. These terms are explained
below. You should be aware that broker-dealers (other than the Fund's
Distributor) may charge investors additional fees if shares are purchased
through them.
NET ASSET VALUE. Except in certain limited circumstances, the Fund
determines its net asset value ("NAV") on each day the New York Stock Exchange
("NYSE") is open for trading (a "Business Day") at the close of such trading
(normally 4:00 p.m. Eastern time). The Fund calculates NAV separately for each
class of shares. The "net asset value next determined" is the NAV calculated at
4:00 p.m. on the day the purchase order for shares is received, if the purchase
order is received prior to or at 4:00 p.m., and is the net asset value
calculated at 4:00 p.m. on the next Business Day, if the purchase order is
received after 4:00 p.m. 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 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
AS A PERCENTAGE OF REALLOWANCE
------------------ AS A PERCENTAGE
OF THE
YOUR INVESTMENT NET ASSET VALUE 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.
** The Distributor will pay a 1% commission 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 Fund's services 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 the 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;
11
<PAGE>
(5) individuals who reinvest a distribution from a qualified retirement
plan for which the Advisor serves as an investment advisor;
(6) individuals who reinvest the proceeds of redemptions from Class Y
Shares of the Fund of the Company, the Trust or Framlington, within
60 days of redemption;
(7) banks and other financial institutions that have entered into
agreements with the Company, the Trust or Framlington to provide
shareholder services for customers ("Customers") (including
Customers of such banks and other financial institutions, and the
immediate family members of such Customers);
(8) 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"); and
(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 Plan".
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") that (1)
invest $1,000,000 or more in Class A Shares of investment portfolios offered by
the Company, the Trust or Framlington or (2) have at least 75 eligible plan
participants. In addition, we will waive the CDSC 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 will also waive (i) the initial sales charge on Class A Shares on
purchases by UPI Plans or 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 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
Fund's 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 Fund 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
12
<PAGE>
during the preceding 90-day period toward fulfillment of the Letter
of Intent (although there will be no refund of sales charge 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 Shares 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 Fund's shares.
For further information on the sales charge waivers and reductions call the
Fund at (800) 438-5789.
WHEN CAN I PURCHASE SHARES?
Shares of the 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
the 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 Distributor or the
Transfer Agent or through arrangements with your authorized broker.
- BY BROKER. Any broker authorized by the Distributor can sell you
shares of the Fund. Please note that brokers may charge you fees
for their services.
- 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 $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.
13
<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.
- AUTOMATIC INVESTMENT PLAN ("AIP"). Under the AIP, you may arrange
for periodic investments in the 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 Fund 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 the Fund (or Class A, B and
C Shares of another non-money market fund of the Company, the Trust
or Framlington) in shares of the same class of the 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 confirmations of the opening of an account and
of all subsequent purchases, exchanges or redemptions in the account. If your
account has been set up by a broker or other investment professional, account
activity will be detailed in their statements to you. You will not be issued a
share certificate, unless you request one in writing. We reserve the right to
(i) reject any purchase order if, in our opinion, it is in the Fund's 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 Fund's
shares.
HOW CAN I EXCHANGE SHARES?
You may exchange shares of the Fund for shares of other funds of the
Company, the Trust or Framlington based on their relative net asset values.
Class A Shares of a money market fund of the Company or the Trust that were (1)
acquired through the use of the exchange privilege and (2) can be traced back to
a purchase of shares in one or more investment portfolios of the Company or the
Trust for which a sales charge was paid, can be exchanged for Class A Shares of
a fund of the Company, the Trust 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
Company, the Trust 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 Company, the Trust
and Framlington by contacting your broker or the Fund at (800) 438-5789.
Brokers may charge a fee for handling exchanges.
14
<PAGE>
- EXCHANGES BY TELEPHONE. You may give exchange instructions by
telephone to the Fund 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 net asset value next determined after we
receive the redemption request in proper order. We will reduce 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
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.
CLASS B SHARES
<TABLE>
<CAPTION>
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>
The Distributor pays sales commissions of 4.00% of the purchase price of
Class B Shares of the Fund to brokers at the time of sale that initiate and are
responsible for purchases of Class B Shares of the Fund.
You will not pay a CDSC to the extent that the value of the redeemed shares
represents:
- reinvestment of dividends or capital gain distributions
- capital appreciation of shares redeemed
15
<PAGE>
When you redeem shares, we will assume you are redeeming first shares
representing investment of dividends and capital gain 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 the
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
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 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. 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. 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) 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 bank, trust company, savings
association or from a securities firm having membership on a
recognized stock 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.
16
<PAGE>
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, 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 the 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 an any applicable
CDSCs when you redeem shares.
- INVOLUNTARY REDEMPTION. We may redeem your account if its value falls
below $500 as a result of redemptions (but not as a result of a
decline in net asset value). You will be notified in writing and
allowed 60 days to increase the value of your account to the minimum
investment level.
WHEN WILL I RECEIVE REDEMPTION AMOUNTS?
We will typically send redemption amounts to you within seven Business Days
after you redeem shares. We may hold redemption amounts from the sale of shares
you purchased by check until the purchase check has cleared, which may be as
long as 15 days.
STRUCTURE AND MANAGEMENT OF THE 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 February 1985 as a Delaware corporation and was a
registered investment advisor. WAM is an indirect, wholly-owned subsidiary of
Comerica Incorporated. Mr. Lee P. Munder, the Advisor's chairman,
17
<PAGE>
indirectly owns or controls approximately 45% and Comerica Incorporated owns or
controls approximately 44% of the partnership interests in the Advisor. As of
December 31, 1997, the Advisor and its affiliates had approximately $45 billion
in assets under management, of which $22.2 billion were invested in equity
securities, $9 billion were invested in money market or other short-term
instruments, $9.3 billion were invested in other fixed income securities, and
$4.5 billion in non-discretionary assets.
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 0.75%
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 their shareholders.
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.
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. 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.
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.
CUSTODIAN. Comerica Bank (the "Custodian") whose principal business
address is One Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226,
provides custodial services to the Fund. No compensation is paid to the
Custodian for such services. State Street also serves as Sub-Custodian to the
Fund.
DISTRIBUTOR. Funds Distributor, Inc. is the distributor of the Fund's
shares and is located at 60 State Street, Suite 1300, Boston, Massachusetts
02109. It markets and sells the Fund's shares.
For 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 Fund has adopted a Service Plan with
respect to its Class A Shares and Service and Distribution Plans with respect to
its Class B and Class C Shares. Under the Plans, the Fund uses its assets to
finance activities relating to the distribution of 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 the
18
<PAGE>
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
Fund's 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 Fund. 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 Fund.
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 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.
As of the date of this Prospectus, Funds Distributor, Inc. currently has
the right to vote a majority of the outstanding shares of the Fund and therefore
it is considered to be a controlling person of the Company.
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 from net income, if any, at least annually. 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 Fund's 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 Fund's 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.
19
<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 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, 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.
Dividends and certain interest income earned from foreign securities by the
Fund may be subject to foreign withholding or other taxes. The 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 the 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 the 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 Fund 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.
More information about the tax treatment of distributions from the Fund and
about other potential tax liabilities, including backup withholding for certain
taxpayers and information about tax aspects of dispositions of shares of the
Fund, is contained in the SAI. You should consult your tax advisor regarding
the impact of owning Fund shares on your own personal tax situation, including
the applicability of any state and local taxes.
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.
20
<PAGE>
[LOGO]
THE
APPLICATION FOR NEW ACCOUNTS MUNDER
FUNDS
PLEASE MAIL YOUR COMPLETE APPLICATION (printed or typed) ALONG WITH YOUR CHECK
TO:
THE MUNDER FUNDS
c/o First Data Investor Services Group, Inc.
P.O. Box 5130
Westborough, MA 01581-5130
If you have any questions regarding this application, please telephone the
Transfer Agent at 1.800.438.5789
1. ACCOUNT REGISTRATION
- --------------------------------------------------------------------------------
Name Social Security Number
- --------------------------------------------------------------------------------
Joint Owner (if any) (If Joint Tenancy, use Social
Security Number of first joint owner)
OR
Uniform Transfer to Minor:
for:
- --------------------------------------------------------------------------------
Custodian Name (one custodian only) Minor's Name (one minor only)
- --------------------------------------------------------------------------------
State (Custodian's State of Residence) Minor's Social Security Number
OR
/ / Trust / / Corporation / / Other (please specify)
--------------
- --------------------------------------------------------------------------------
Trust/Corporation Name
- --------------------------------------------------------------------------------
Trust Date Trust Identification Number
<PAGE>
2. MAILING ADDRESS (address for reports, dividends, statements and
redemption proceeds)
- --------------------------------------------------------------------------------
Street Apt.
- --------------------------------------------------------------------------------
City State Zip Code Telephone Number
Non-Resident Alien: / / Yes / / No If Yes, Country of Residence
-----
3. INITIAL INVESTMENT
With as little as $250 you can invest in any Munder Fund. Please be sure to
read the prospectus carefully before investing or sending money. You may request
an additional prospectus by calling 1.800.438.5789.
<TABLE>
<CAPTION>
CLASS CLASS CLASS
NAME OF FUND A B C INVESTMENT AMOUNT
<S> <C> <C> <C> <C>
/ / Munder Accelerating Growth Fund // / / / / $______________
/ / Munder All-Season Aggressive Fund // / / / / $______________
/ / Munder All-Season Moderate Fund // / / / / $______________
/ / Munder All-Season Conservative Fund // / / / / $______________
/ / Munder Balanced Fund // / / / / $______________
/ / Munder Growth & Income Fund // / / / / $______________
/ / Munder Index 500 Fund // / / / / $______________
/ / Munder International Equity Fund // / / / / $______________
/ / Munder Micro-Cap Equity Fund // / / / / $______________
/ / Munder Mid-Cap Growth Fund // / / / / $______________
/ / Munder Multi-Season Growth Fund // / / / / $______________
/ / Munder Real Estate Equity Investment Fund // / / / / $______________
/ / Munder Small-Cap Value Fund // / / / / $______________
/ / Munder Small Company Growth Fund // / / / / $______________
/ / Munder Value Fund // / / / / $______________
/ / Munder Framlington Emerging Markets Fund // / / / / $______________
/ / Munder Framlington Healthcare Fund // / / / / $______________
/ / Munder Framlington International Growth Fund // / / / / $______________
/ / Munder Bond Fund // / / / / $______________
/ / Munder Intermediate Bond Fund // / / / / $______________
/ / Munder International Bond Fund // / / / / $______________
/ / Munder Short Term Treasury Fund // / / / / $______________
/ / Munder Michigan Triple Tax-Free Bond Fund // / / / / $______________
/ / Munder Tax-Free Bond Fund // / / / / $______________
/ / Munder Tax-Free Intermediate Bond Fund // / / / / $______________
/ / Munder U.S. Government Income Fund // / / / / $______________
/ / Munder Cash Investment Fund // N/A N/A $______________
/ / Munder Money Market Fund // N/A N/A $______________
/ / Munder Tax-Free Money Market Fund // N/A N/A $______________
/ / Munder U.S. Treasury Money Market Fund // N/A N/A $______________
/ / Munder Emerging Growth Fund // / / / / $______________
Total Amount Invested $______________
</TABLE>
/ / By Check (Payable to The Munder Funds)
- ------------------------
* $50 per Fund if the Automatic Investment Plan Option is being established at
this time (please complete section 5).
<PAGE>
/ / By Wire. Account Number:_________(Account number assigned by Bank from which
assets were wired)
4. DISTRIBUTION OPTION (check one. If none, "A" will be assigned)
/ / A. Reinvest dividends and capital gains in additional Fund shares.
/ / B. Pay dividends in cash; reinvest capital gains in additional Fund shares.
/ / C. Pay dividends and capital gains in cash.
/ / D. Please send my: / / Dividends / / Dividends & Capital Gains(choose one)
directly to my checking/savings account.
FILL OUT BANKING INFORMATION IN SECTION 10
5. AUTOMATIC INVESTMENT PLAN (optional)
YES, I (we) wish to participate in the Automatic Investment Plan (AIP). I (We)
authorize First Data Investor Services Group, Inc. (First Data), The Munder
Funds' transfer agent, to invest automatically $ ________($50 minimum) for me
(us) on a / / MONTHLY OR / / QUARTERLY basis (please choose either the / /
5th or the / / 20th of the month) and draw a bank draft in payment of each of
these investments against my (our) / / CHECKING OR / / SAVINGS account.
For the purpose of verifying my (our) bank account number, I (we) have
enclosed a blank check or deposit slip marked void and have signed the bank
authorization below.
- --------------------------------------------------------------------------------
Name of Fund Checking/Savings Account Number ABA Number (Banking Routing
Number)
FILL OUT BANKING INFORMATION IN SECTION 10
6. CHECK WRITING PRIVILEGES (optional)
Income & Money Market Class A shares only
If you are opening an account for any of The Munder Income and/or Money
Market Funds (Class A Shares only), you are entitled to the checkwriting
option. Redemption checks may be written for amounts of $500 or more. To
obtain checks, please complete the signature card below. All persons named in
the Account Registration in Section 1 must sign the signature card. For
Corporate, Trust or Partnership accounts, only authorized signers must sign.
By signing this signature card, you agree to be subject to the customary
rules and regulations governing checking accounts, as well as instructions
and rules of the Fund now in effect, and as amended from time to time, that
pertain to the use of redemption checks.
Please fill out the following Signature Card to be eligible for Checkwriting and
indicate the Fund(s) for which you are requesting this service:
- --------------------------------------------------------------------------------
Fund(s)
- --------------------------------------------------------------------------------
Fund(s)
Authorized Signatures (exactly as it appears if Part 1 of the Application):
- --------------------------------------------------------------------------------
Print Name Signature
- --------------------------------------------------------------------------------
<PAGE>
Print Name Signature
- --------------------------------------------------------------------------------
Print Name Signature
Check here if more than one signature is required per check:
/ / 2 / / 3 / / Other:
7. AUTOMATIC WITHDRAWAL PLAN (optional)
The minimum account balance must be $2,500 or more.
FILL OUT BANKING INFORMATION IN SECTION 10
YES, I authorize the redemption of shares from my Munder Fund account to meet
withdrawal payments on the 20th of each month.
- --------------------------------------------------------------------------------
Name of Fund That Shares Will Be Redeemed From Account Number (if applicable)
- --------------------------------------------------------------------------------
Amount of Monthly Payment ($50 minimum per Fund) Start Date (Payment is to
begin on the next payment
period unless a later date is
indicated)
Payments will be made to: / / Owner's address of record only OR
/ / Other listed below:
- ------------------------------------- / / Checking OR / / Savings Account
Name (if bank indicate account number)
- --------------------------------------------------------------------------------
Address
For the purpose of verifying my (our) bank account number, I (we) have enclosed
a blank check or deposit slip marked void and have signed the bank authorization
below.
- --------------------------------------------------------------------------------
Name of Fund Account Number ARA Number (Bank Routing Number)
8. REDUCED SALES CHARGE (optional)
/ / Rights of Accumulation:
Investors may qualify for reduced sales charges by aggregating the total
purchases of all Munder Class A Shares, excluding Money Market Funds, to
determine the applicable sales charge for current purchases. To determine the
aggregated amount of all non-money market funds, you will need to total the
current purchases as well as shares that are already beneficially owned by
the investor for which a sales charge has already been paid. Please see the
prospectus for additional information regarding Rights of Accumulation.
I apply for the Rights of Accumulation reduced sales charges based on the
following accounts in The Munder Funds.
- --------------------------------------------------------------------------------
Name of Fund Account Number
- --------------------------------------------------------------------------------
Name of Fund Account Number
- --------------------------------------------------------------------------------
<PAGE>
Name of Fund Account Number
/ / Letters of Intent:
You may qualify for reduced sales charges if you plan to make additional
investments in The Munder Funds within a 13 month period. By indicating a level
of anticipated investment and by signing this application, you agree to the
terms of the Letter of Intent as set forth in the Prospectus, and as follows:
"Although I am not obligated to do so, I intend to invest over a 13 month period
an aggregate amount of at least" (check one):
/ / $25,000 / / $50,000 / / $100,000
/ / $250,000 / / $500,000 / / $1,000,000
9. TELEPHONE REDEMPTION & EXCHANGE AGREEMENT
Please check the box if you want this option.
/ / I (We) authorize First Data to act upon instructions received by telephone
from me (us) to redeem or to exchange shares of The Munder Funds.
1. I (We) relieve the Funds or First Data of any liability for the loss,
cost or expense for acting upon such instructions reasonably believed
to be from me (us).
2. I (We) assume responsibility for notifying the Funds within seven (7)
business days if a confirmation for the transaction is not received or
is incorrect.
3. If an exchange involves an initial investment into a Fund, the account
registration will carry the same registration as set forth above.
4. An exchange deemed to be the initial purchase of a Fund must meet the
minimum initial investment requirement of $2.50 per Fund unless the
shareholder is establishing an Automatic Investment Plan.
5. Redemption proceeds will be sent only to my account address of record.
- --------------------------------------------------------------------------------
Name Name
10. BANKING INFORMATION
TO BE COMPLETED WITH SECTION 4 (DISTRIBUTION OPTION)
I (We) authorize The Munder Funds to deposit distributions into the following
/ / Checking / / Savings Account
- --------------------------------------------------------------------------------
Bank Name Address
- --------------------------------------------------------------------------------
ABA Number (Bank Routing Number) Account Number Banking Account Registration
- --------------------------------------------------------------------------------
Wiring Instructions
TO BE COMPLETED WITH SECTION 5 (AUTOMATIC INVESTMENT PLAN)
Please note that your bank will clear and process each bank draft and will
include it with your regular statements. However, acceptance of this
authorization is conditional upon approval of your authorization by your bank,
which
<PAGE>
will allow First Data, the transfer agent for The Munder Funds, to act as your
agent with regard to the Automatic Investment Plan (AIP). The AIP will
automatically terminate without notice if any bank draft is not paid upon
presentation by First Data, to your bank. The AIP may be modified or terminated
at any time, upon thirty (30)-days written notice.
- --------------------------------------------------------------------------------
Signature of Depositor Date Signature of Joint Depositor (if any) Date
TO BE COMPLETED WITH SECTION 7 (AUTOMATIC WITHDRAWAL PLAN)
Please note that your bank will clear and process each bank deposit and will
include it with your regular statements. However, acceptance of this
authorization is conditional upon approval of your authorization by your
bank, which will allow the transfer agent for The Munder Funds to act as your
Agent with regard to the Automatic Withdrawal Plan (AWP). The AWP may be
modified or terminated at any time, upon thirty (30) days written notice.
- --------------------------------------------------------------------------------
Signature of Depositor Date Signature of Joint Depositor (if any) Date
* PLEASE STAPLE VOID CHECK OR DEPOSIT SLIP HERE *
11. AUTHORIZATIONS, CERTIFICATES AND SIGNATURES
By signing the application, I (we) hereby certify under the penalty of perjury
that the information on this application is true, complete and correct and that:
I (We) understand that this order is subject to acceptance by The Munder Funds.
I (We) agree that The Munder Funds, Funds Distributor, Inc., First Data,
Munder Capital Management or any of its affiliates, officers, directors or
employees will not be liable for any loss, expense or cost for acting upon
instructions or inquiries reasonably believed to be genuine. Shares of the
Funds 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.
I (We) represent that I am (we are) of legal age and capacity and have read
the Prospectus(es) for The Munder Funds selected, and agree to its (their)
terms. First Data, is hereby appointed agent to receive dividends and
distributions for automatic reinvestment unless otherwise directed in Section 4.
I (We) understand and acknowledge that a sales charge may be levied against the
dollar that I (we) invest in The Munder Funds. (See the Prospectus(es) for
reduced sales charge information.)
The Internal Revenue Service requires that all taxpayers provide their
Taxpayer Identification Numbers (Social Security Numbers) and sign in the
space provided below. Failure by non-exempt taxpayers to furnish us with the
correct Taxpayer Identification Number will result in withholding of 31% of
all taxable dividends paid and/or withholding on certain other payments (this
is referred to as backup withholding).
- --------------------------------------------------------------------------------
Taxpayer Identification Number Name of Taxpayer Whose Number Appears Above
TAXPAYER IDENTIFICATION:
I (the Investor) certify under penalties of perjury that:
(1) The Social Security Number or taxpayer identification number shown above is
correct and may be used for any custodial or trust account opened for me by
The Munder Funds, and
<PAGE>
(2) I (the Investor) am not subject to backup withholding because:
(a) I am exempt from Backup Withholding
(b) I have not been notified by the Internal Revenue Service ("IRS") that
I am, as a result of failure to report all interest or dividends, or
(c) the IRS has notified me that I am no longer subject to backup
withholding.
THE CERTIFICATION IN THIS PARAGRAPH IS REQUIRED FROM ALL NON-EXEMPT PERSONS TO
PREVENT BACKUP WITHHOLDING OF 31% OF ALL TAXABLE DISTRIBUTIONS AND GROSS
REDEMPTIONS PROCEEDS UNDER THE FEDERAL INCOME TAX LAW.
/ / Check here if you are subject to backup withholding or have not received a
notice from the IRS advising you that backup withholding has been
terminated.
AUTHORIZATION:
- --------------------------------------------------------------------------------
Signature of Owner Date Name
- --------------------------------------------------------------------------------
Signature of Owner Date Name
<PAGE>
FOR DEALER USE ONLY
We hereby authorize First Data Investor Services Group, Inc., to act as our
agent in connection with transactions authorized by this Application and agree
to notify First Data Investor Services Group, Inc., of any purchase made under a
Letter of Intent or Right of Accumulation.
- --------------------------------------------------------------------------------
Dealer's Name Main Office Address
- --------------------------------------------------------------------------------
Representative's Name Branch # Rep #
- --------------------------------------------------------------------------------
Branch Address Telephone #
- --------------------------------------------------------------------------------
Authorized Signature of Dealer Title
<PAGE>
PROSPECTUS
CLASS K SHARES
The Munder Emerging Growth Fund (the "Fund") is a mutual fund that seeks to
provide long-term capital appreciation. The Fund invests primarily in equity
securities. 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 to read this Prospectus carefully before investing and
retain it for future reference. A Statement of Additional Information
("SAI") has been filed with the Securities and Exchange Commission (the
"SEC") and is incorporated by reference into this Prospectus. The SAI may be
obtained free of charge by calling the Company 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
PRINCIPAL.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES:
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS JUNE___, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
----
Fund Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
What are the key facts regarding the Fund?. . . . . . . . . . . . . .3
Fund Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Who may want to invest in the Fund? . . . . . . . . . . . . . . . . .5
What are the Fund's investments and investment practices? . . . . . .5
What are the risks of investing in the Fund?. . . . . . . . . . . . .7
Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
How is the Fund's performance calculated? . . . . . . . . . . . . . .8
Where can I obtain performance data?. . . . . . . . . . . . . . . . .9
Purchases of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
What price do I pay for shares? . . . . . . . . . . . . . . . . . . .9
When can I purchase shares? . . . . . . . . . . . . . . . . . . . . .9
How can I purchase shares?. . . . . . . . . . . . . . . . . . . . . .9
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 10
What price do I receive for redeemed shares?. . . . . . . . . . . . 10
When can I redeem shares? . . . . . . . . . . . . . . . . . . . . . 10
How can I redeem shares?. . . . . . . . . . . . . . . . . . . . . . 10
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?. . . . . . . . . . . . . . . . 12
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
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 long-term capital appreciation.
Q: WHAT IS THE FUND'S STRATEGY?
A: The Fund invests primarily in equity 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 stock market
in general, perceptions about the stock of particular companies and perceptions
about particular industries. You should note that you could lose a portion of
the amount you invest in the Fund. As a result of large investments in
mid-capitalization, small-capitalization and/or emerging growth companies, the
Fund is riskier than a large-capitalization fund since such companies typically
have greater earning fluctuations, and greater reliance on a few key customers
than larger companies.
Q: WHAT ARE THE OPTIONS FOR INVESTMENT IN THE FUND?
A: The Fund has registered five classes of shares: Class A, B, C, K and Y.
Class A, B, C and Y Shares are described in other prospectuses.
Q: HOW DO I BUY AND SELL SHARES OF THE FUND?
A: Class K Shares of the Fund are available to customers ("Customers") of
banks and other institutions, and the immediate family 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 financial
institution.
Q: WHEN AND HOW ARE DISTRIBUTIONS MADE?
A: Dividend distributions are made from the dividends and interest earned on
investments. The Fund pays dividends at least annually and distributes capital
gains at least annually. Unless you elect to receive distributions in cash, all
dividends and capital gains distributions 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>
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 estimated for the Fund's current
fiscal year and reflects anticipated voluntary expense reimbursements.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<S> <C>
Advisory Fees. . . . . . . . . . . . . . . . . . . . . . . . . . .75%
Shareholder Servicing Fees . . . . . . . . . . . . . . . . . . . .25%
Other Expenses+. . . . . . . . . . . . . . . . . . . . . . . . . []%++
---
Total Fund Operating Expenses+ . . . . . . . . . . . . . . . . . []%++
----
----
</TABLE>
- ----------
+ After expense reimbursements, if any.
++ The Advisor expects to voluntarily reimburse the Fund for certain operating
expenses. In the absence of expense reimbursements, the total fund operating
expenses would be ____% of the Fund's average net assets.
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
------ -------
$[] $[]
4
<PAGE>
FUND INFORMATION
This Prospectus describes Class K 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.
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.
WHO MAY WANT TO INVEST IN THE FUND?
The Fund is 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 Company.
WHAT ARE THE FUND'S INVESTMENTS AND INVESTMENT PRACTICES?
The Fund will invest in EQUITY SECURITIES which includes common stocks,
preferred stocks, warrants and other securities convertible into common stocks.
Many of the common stocks the 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
the 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.
The Fund may invest up to 25% of its assets in FOREIGN SECURITIES. Foreign
Securities are securities issued by non-U.S. companies and governments.
Investments in Foreign Securities are riskier than investments in U.S. companies
because (i) foreign companies may be subject to different accounting, auditing
and financial reporting standards than U.S. companies, (ii) there is generally
less public information available about foreign companies, (iii) there may be
less governmental regulation and supervision of foreign stock exchanges,
securities markets and companies and (iv) foreign securities may be less liquid
and more volatile than U.S. securities markets.
The Fund may purchase AMERICAN DEPOSITARY RECEIPTS ("ADRS"), EUROPEAN
DEPOSITARY RECEIPTS ("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.
5
<PAGE>
The Fund may invest in FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS, which
are obligations of the Fund to purchase or sell a specific currency at a future
date at a set price. These contracts may decrease the Fund's loss due to a
change in currency value, but also limits gains from currency changes.
The Fund may invest in FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS.
Future contracts are contracts in which the Fund agrees, at maturity, to make
delivery of or receive securities, the cash value of an index or foreign
currency. Future contracts and options on futures contracts are used for
hedging purposes or to maintain liquidity. The Fund may not purchase or sell a
futures contract unless immediately after any such transaction the sum of the
aggregate amount of margin deposits on its existing futures positions and the
amount of premiums paid for related options is 5% or less of its total assets.
The Fund will set aside cash or other liquid securities to "cover" the Fund's
position in futures.
The Fund may purchase or sell OPTIONS. The Fund may buy options giving it
the right to require a buyer to buy a security held by the Fund (put options),
buy options giving it the right to require a seller to sell securities to the
Fund (call options), sell (write) options giving a buyer the right to require
the Fund to buy securities from the buyer or write options giving a buyer the
right to require the Fund to sell securities to the buyer during a set time at a
set price. Options may relate to stock indices, individual securities, foreign
currencies or futures contracts. See the SAI for more details and additional
limitations.
The Fund may purchase securities on a "WHEN-ISSUED" basis and may purchase
or sell 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 enter into REPURCHASE AGREEMENTS. Under a repurchase
agreement, the 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 Fund may invest in REVERSE REPURCHASE AGREEMENTS. Under a reverse
repurchase agreement, the Fund sells securities and agrees to buy them back
later at an agreed upon time and price. Reverse repurchase agreements are used
to borrow money for temporary 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 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 25% 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 buy shares of registered MONEY MARKET FUNDS. The Fund 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 the Fund's own
expenses. The 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.
6
<PAGE>
The 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 the
Fund is investing defensively, it may not be pursuing its investment objective.
The 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.
The Fund may invest up to 5% of its total assets in LOWER-RATED DEBT
SECURITIES. Lower-Rated Debt Securities are securities that are rated below
investment grade by Standard & Poor's Rating Service, Moody's Investors Service,
Inc. or other nationally recognized rating agency. Such securities are also
known as "junk bonds" and are considered riskier than investment grade
securities.
The 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.
The Fund may invest up to 15% of the value of its net assets in ILLIQUID
SECURITIES. Illiquid Securities are securities for which there is no ready
market, which inhibits the ability to sell them and obtain their full market
value, or which are legal restricted as to their resale by the Fund.
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 only can be changed by shareholders.
The Fund is classified as a "diversified fund" which means that with
respect to 75% of it's 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, the Fund does not constitute a balanced
investment program and there is no guarantee that the Fund will achieve its
investment objectives since there is uncertainty in every investment.
Investing in the Fund 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 Fund
invests 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
Fund, can affect the Fund's performance. Your investment in the Fund is not
guaranteed. The net asset value of the Fund will change daily and you might not
recoup the amount you invest in the Fund.
7
<PAGE>
A fund's risk is mostly dependent on the types of securities it purchases
and its investment techniques. The 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 the 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); and (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.
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 Standard &
Poor's 500 Composite Stock Price Index ("S&P 500").
To the extent that the 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.
There are certain risks and costs involved in investing in securities of
companies and governments of foreign nations, which are in addition to the usual
risks inherent in U.S. investments. These considerations include the
possibility of political instability (including revolution), future political
and economic developments and dependence on foreign economic assistance.
Investments in companies domiciled in foreign countries, therefore, may be
subject to potentially higher risks than investments in the United States.
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.
8
<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 mutual 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
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. The 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 Fund's other classes of shares.
WHAT PRICE DO I PAY FOR SHARES?
Class K Shares are sold at the "net asset value next determined" by the
Fund without any initial sales charge. Except in certain limited circumstances,
the Fund determines its net asset value ("NAV") on each day the New York Stock
Exchange ("NYSE") is open for trading (a "Business Day") at the close of such
trading (normally 4:00 p.m. Eastern time). The 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?
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 holders of record
of the Fund shares acting on behalf of their Customers, and will reflect their
Customer's beneficial ownership of shares in the account statements provided by
them to their Customers.
9
<PAGE>
You will not be issued a share certificate, unless you request one in
writing. We reserve the right to (i) reject any purchase order if, in our
opinion, it is in the Fund's 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 the Fund with securities which the Fund is
allowed to hold, subject to approval by the Advisor.
REDEMPTIONS OF SHARES
WHAT PRICE DO I RECEIVE FOR REDEEMED SHARES?
The redemption price is the net asset value next determined after we
receive the redemption request in proper order.
WHEN CAN I REDEEM SHARES?
You can redeem shares on any Business Day, provided all required documents
have been received by First Data Investor Services Group, Inc. (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?
Redemption orders are effected at the net asset value per share next
determined after receipt of the order by the Transfer Agent. Shares held by an
institution on behalf of its Customers must be redeemed in accordance with
instructions and limitations pertaining to the account at that institution.
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 February 1985 as a Delaware corporation and was
a registered investment advisor. WAM is an indirect, wholly-owned subsidiary
of Comerica Incorporated. Mr. Lee P. Munder, the Advisor's chairman,
indirectly owns or controls approximately 45% and Comerica Incorporated owns
or controls approximately 44% of the partnership interests in the Advisor.
As of December 31, 1997, the Advisor and its affiliates had approximately $45
billion in assets under management, of which $22.2 billion were invested in
equity securities, $9 billion were
10
<PAGE>
invested in money market or other short-term instruments, $9.3 billion were
invested in other fixed income securities, and $4.5 billion in non-discretionary
assets.
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 0.75%
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 their shareholders.
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.
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. 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.
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.
CUSTODIAN. Comerica Bank (the "Custodian") whose principal business
address is One Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226,
provides custodial services to the Fund. No compensation is paid to the
Custodian for such services. State Street also serves as Sub-Custodian to the
Fund.
DISTRIBUTOR. Funds Distributor, Inc. is the distributor of the Fund's
shares and is located at 60 State Street, Suite 1300, Boston, Massachusetts
02109. It markets and sells the Fund's shares.
The Fund has 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 Fund. 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 the
Fund at a rate not exceeding 0.25% (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 Fund on behalf of the Customers; providing information periodically to
Customers
11
<PAGE>
showing their positions in Class K Shares; providing sub-accounting with respect
to Class K Shares beneficially owned by the 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 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.
As of the date of this Prospectus, Funds Distributor, Inc. currently has
the right to vote a majority of the outstanding shares of the Fund and therefore
it is considered to be a controlling person of the Company.
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 at least annually.
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?
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.
12
<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 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, 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.
Dividends and certain interest income earned from foreign securities by the
Fund may be subject to foreign withholding or other taxes. The 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 the 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 the 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 Fund 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.
More information about the tax treatment of distributions from the Fund and
about other potential tax liabilities, including backup withholding for certain
taxpayers and information about tax aspects of dispositions of shares of the
Fund, is contained in the SAI.
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.
13
<PAGE>
PROSPECTUS
CLASS Y SHARES
The Munder Emerging Growth Fund (the "Fund") is a mutual fund that seeks to
provide long-term capital appreciation. The Fund invests primarily in equity
securities. 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") has
been filed with the Securities and Exchange Commission (the "SEC") and is
incorporated by reference into this Prospectus. The SAI may be obtained free
of charge by calling the Company 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
PRINCIPAL.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES:
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS JUNE___, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
----
Fund Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
What are the key facts regarding the Fund?. . . . . . . . . . . . . .3
Fund Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Who may want to invest in the Fund? . . . . . . . . . . . . . . . . .5
What are the Fund's investments and investment practices? . . . . . .5
What are the risks of investing in the Fund?. . . . . . . . . . . . .7
Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
How is the Fund's performance calculated? . . . . . . . . . . . . . .8
Where can I obtain performance data?. . . . . . . . . . . . . . . . .9
Purchases and Exchange of Shares . . . . . . . . . . . . . . . . . . . . .9
What price do I pay for shares? . . . . . . . . . . . . . . . . . . .9
When can I purchase shares? . . . . . . . . . . . . . . . . . . . . .9
What is the minimum required investment?. . . . . . . . . . . . . . .9
How can I purchase shares?. . . . . . . . . . . . . . . . . . . . . 10
How can I exchange shares?. . . . . . . . . . . . . . . . . . . . . 10
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 11
What price do I receive for redeemed shares?. . . . . . . . . . . . 11
When can I redeem shares? . . . . . . . . . . . . . . . . . . . . . 11
How can I redeem shares?. . . . . . . . . . . . . . . . . . . . . . 11
When will I receive redemption amounts? . . . . . . . . . . . . . . 11
Structure and Management of the Fund . . . . . . . . . . . . . . . . . . 11
How is the Fund structured? . . . . . . . . . . . . . . . . . . . . 11
Who manages and services the Fund?. . . . . . . . . . . . . . . . . 12
What are my rights as a shareholder?. . . . . . . . . . . . . . . . 13
Dividends, Distributions and Taxes . . . . . . . . . . . . . . . . . . . 13
When will I receive distributions from the Fund?. . . . . . . . . . 13
How will distributions be made? . . . . . . . . . . . . . . . . . . 13
Are there tax implications of my investments in the Fund? . . . . . 13
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . 14
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 long-term capital appreciation.
Q: WHAT IS THE FUND'S STRATEGY?
A: The Fund invests primarily in equity 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 stock market
in general, perceptions about the stock of particular companies and perceptions
about particular industries. You should note that you could lose a portion of
the amount you invest in the Fund. As a result of large investments in
mid-capitalization, small-capitalization and/or emerging growth companies, the
Fund is riskier than a large-capitalization fund since such companies typically
have greater earning fluctuations, and greater reliance on a few key customers
than larger companies.
Q: WHAT ARE THE OPTIONS FOR INVESTMENT IN THE FUND?
A: The Fund has registered five classes of shares: Class A, B, C, K and Y.
Class A, B, C and K Shares are described in other prospectuses.
Q: HOW DO I BUY AND SELL SHARES OF THE FUND?
A: Funds Distributor, Inc. (the "Distributor") sells shares of the Fund. You
may purchase shares from the Distributor through broker-dealers or other
financial institutions or 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. Fiduciary and discretionary accounts
of institutions and institutional investors must invest at least $500,000
initially. Other types of investors are not subject to any minimum required
investment.
Shares may be redeemed through your bank or financial institution.
You may also acquire the Fund's shares by exchanging shares of the same
class of other funds of the Company, The Munder Funds Trust (the "Trust") and
The Munder Framlington Funds Trust ("Framlington"), and exchange Fund shares for
shares of the same class of other funds of the Company, the Trust and
Framlington.
Q: WHAT SHAREHOLDER PRIVILEGES DOES THE FUND OFFER?
- Automatic Investment Plan
- Automatic Withdrawal Plan
Q: WHEN AND HOW ARE DISTRIBUTIONS MADE?
A: Dividend distributions are made from the dividends and interest earned on
investments. The Fund pays dividends at least annually and distributes capital
gains at least annually. Unless you elect to receive distributions in cash, all
dividends and capital gains distributions will be automatically used to purchase
additional shares of the Fund.
3
<PAGE>
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.
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 estimated for the Fund's current
fiscal year and reflects anticipated voluntary expense reimbursements.
<TABLE>
<CAPTION>
<S> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Advisory Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75%
Other Expenses+. . . . . . . . . . . . . . . . . . . . . . . . . . . . []%++
----
Total Fund Operating Expenses+ . . . . . . . . . . . . . . . . . . . . []%++
----
----
</TABLE>
- ----------
+ After expense reimbursements, if any.
++ The Advisor expects to voluntarily reimburse the Fund for certain operating
expenses. In the absence of expense reimbursements, the total fund operating
expenses would be ____% of the Fund's average net assets.
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
------ -------
$[] $[]
4
<PAGE>
FUND INFORMATION
This Prospectus describes Class Y 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.
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.
WHO MAY WANT TO INVEST IN THE FUND?
The Fund is 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 Company.
WHAT ARE THE FUND'S INVESTMENTS AND INVESTMENT PRACTICES?
The Fund will invest in EQUITY SECURITIES which includes common stocks,
preferred stocks, warrants and other securities convertible into common stocks.
Many of the common stocks the 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
the 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.
The Fund may invest up to 25% of its assets in FOREIGN SECURITIES. Foreign
Securities are securities issued by non-U.S. companies and governments.
Investments in Foreign Securities are riskier than investments in U.S. companies
because (i) foreign companies may be subject to different accounting, auditing
and financial reporting standards than U.S. companies, (ii) there is generally
less public information available about foreign companies, (iii) there may be
less governmental regulation and supervision of foreign stock exchanges,
securities markets and companies and (iv) foreign securities may be less liquid
and more volatile than U.S. securities markets.
The Fund may purchase AMERICAN DEPOSITARY RECEIPTS ("ADRS"), EUROPEAN
DEPOSITARY RECEIPTS ("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.
5
<PAGE>
The Fund may invest in FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS, which
are obligations of the Fund to purchase or sell a specific currency at a future
date at a set price. These contracts may decrease the Fund's loss due to a
change in currency value, but also limits gains from currency changes.
The Fund may invest in FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS.
Future contracts are contracts in which the Fund agrees, at maturity, to make
delivery of or receive securities, the cash value of an index or foreign
currency. Future contracts and options on futures contracts are used for
hedging purposes or to maintain liquidity. The Fund may not purchase or sell a
futures contract unless immediately after any such transaction the sum of the
aggregate amount of margin deposits on its existing futures positions and the
amount of premiums paid for related options is 5% or less of its total assets.
The Fund will set aside cash or other liquid securities to "cover" the Fund's
position in futures.
The Fund may purchase or sell OPTIONS. The Fund may buy options giving it
the right to require a buyer to buy a security held by the Fund (put options),
buy options giving it the right to require a seller to sell securities to the
Fund (call options), sell (write) options giving a buyer the right to require
the Fund to buy securities from the buyer or write options giving a buyer the
right to require the Fund to sell securities to the buyer during a set time at a
set price. Options may relate to stock indices, individual securities, foreign
currencies or futures contracts. See the SAI for more details and additional
limitations.
The Fund may purchase securities on a "WHEN-ISSUED" basis and may purchase
or sell 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 enter into REPURCHASE AGREEMENTS. Under a repurchase
agreement, the 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 Fund may invest in REVERSE REPURCHASE AGREEMENTS. Under a reverse
repurchase agreement, the Fund sells securities and agrees to buy them back
later at an agreed upon time and price. Reverse repurchase agreements are used
to borrow money for temporary 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 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 25% 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 buy shares of registered MONEY MARKET FUNDS. The Fund 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 the Fund's own
expenses. The 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.
6
<PAGE>
The 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 the
Fund is investing defensively, it may not be pursuing its investment objective.
The 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.
The Fund may invest up to 5% of its total assets in LOWER-RATED DEBT
SECURITIES. Lower-Rated Debt Securities are securities that are rated below
investment grade by Standard & Poor's Rating Service, Moody's Investors Service,
Inc. or other nationally recognized rating agency. Such securities are also
known as "junk bonds" and are considered riskier than investment grade
securities.
The 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.
The Fund may invest up to 15% of the value of its net assets in ILLIQUID
SECURITIES. Illiquid Securities are securities for which there is no ready
market, which inhibits the ability to sell them and obtain their full market
value, or which are legal restricted as to their resale by the Fund.
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 only can be changed by shareholders.
The Fund is classified as a "diversified fund" which means that with
respect to 75% of it's 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, the Fund does not constitute a balanced
investment program and there is no guarantee that the Fund will achieve its
investment objectives since there is uncertainty in every investment.
Investing in the Fund 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 Fund
invests 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
Fund, can affect the Fund's performance. Your investment in the Fund is not
guaranteed. The net asset value of the Fund will change daily and you might not
recoup the amount you invest in the Fund.
7
<PAGE>
A fund's risk is mostly dependent on the types of securities it purchases
and its investment techniques. The 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 the 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); and (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.
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 Standard &
Poor's 500 Composite Stock Price Index ("S&P 500").
To the extent that the 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.
There are certain risks and costs involved in investing in securities of
companies and governments of foreign nations, which are in addition to the usual
risks inherent in U.S. investments. These considerations include the
possibility of political instability (including revolution), future political
and economic developments and dependence on foreign economic assistance.
Investments in companies domiciled in foreign countries, therefore, may be
subject to potentially higher risks than investments in the United States.
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.
8
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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 mutual 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 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; corporations,
foundations, partnerships, pension and profit sharing and employee
benefit plans and trusts and insurance companies, investment
companies, investment advisors and broker-dealers acting for their own
accounts or for the accounts of institutional investors)
- directors, trustees, officers and employees of the Company, the Trust,
Framlington, the Advisor and the Distributor
- the Advisor's investment advisory clients
- family members of employees of the Advisor
The Fund also has registered Class A, B, C and K Shares, which have
different sales charges, expense levels and performance. Call (800) 438-5789 to
obtain more information concerning the Fund's other classes of shares.
WHAT PRICE DO I PAY FOR SHARES?
Class Y Shares are sold at the "net asset value next determined" by the
Fund without any initial sales charge. You should be aware that broker-dealers
(other than Fund's Distributor) may charge investors additional fees if shares
are purchased through them.
Except in certain limited circumstances, the Fund determines its net asset
value ("NAV") on each day the New York Stock Exchange ("NYSE") is open for
trading (a "Business Day") at the close of such trading (normally 4:00 p.m.
Eastern time). The 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 that
class outstanding.
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WHEN CAN I PURCHASE SHARES?
Shares of the 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 Fund 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 Distributor or the Transfer
Agent 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 mailing a completed and signed
Account Application Form and a check or other negotiable bank draft
(payable to The Munder Funds) to: THE MUNDER FUNDS, C/O 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 for $50 or more to the address listed above.
- BY WIRE. You may make additional investments in the Fund 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 the 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 Fund 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.
You will not be issued a share certificate, unless you request one in
writing. We reserve the right to (i) reject any purchase order if, in our
opinion, it is in the Fund's 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 the Fund with securities which the Fund is allowed to hold.
See the SAI for further information regarding purchases of the Fund's
shares.
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HOW CAN I EXCHANGE SHARES?
You may exchange Class Y Shares of the Fund for Class Y Shares of other
funds of the Company, the Trust or Framlington based on their relative net asset
values.
You must meet the minimum purchase requirements for the fund of the
Company, the Trust or Framlington that you purchase by exchange. You must pay
any difference in sales charge 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 Company, the Trust and Framlington by contacting your broker or the Fund
at (800) 438-5789. Brokers may charge a fee for handling exchanges.
We may modify or terminate the exchange privilege at any time. You will be
given notice of any material modifications except where notice is not required.
REDEMPTIONS OF SHARES
WHAT PRICE DO I RECEIVE FOR REDEEMED SHARES?
The redemption price is the net asset value next determined after we
receive the redemption request in proper order.
WHEN CAN I REDEEM SHARES?
You can redeem shares on any Business Day, provided all required documents
have been received by the Transfer Agent. 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?
Redemption orders are effected at the net asset value per share next
determined after receipt of the order by the Transfer Agent. Shares held by an
institution on behalf of its Customers must be redeemed in accordance with
instructions and limitations pertaining to the account at that institution.
- INVOLUNTARY REDEMPTION. We may redeem your account if its value falls
below $500 as a result of redemptions (but not as a result of a
decline in net asset value). You will be notified in writing and
allowed 60 days to increase the value of your account to the minimum
investment level.
- AUTOMATIC WITHDRAWAL PLAN ("AWP"). If you have an account value of
$2,500 or more in the 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.
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.
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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 February 1985 as a Delaware corporation and was a
registered investment advisor. WAM is an indirect, wholly-owned subsidiary of
Comerica Incorporated. Mr. Lee P. Munder, the Advisor's chairman, indirectly
owns or controls approximately 45% and Comerica Incorporated owns or controls
approximately 44% of the partnership interests in the Advisor. As of
December 31, 1997, the Advisor and its affiliates had approximately $45 billion
in assets under management, of which $22.2 billion were invested in equity
securities, $9 billion were invested in money market or other short-term
instruments, $9.3 billion were invested in other fixed income securities, and
$4.5 billion in non-discretionary assets.
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 0.75%
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 their shareholders.
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.
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. 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.
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.
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<PAGE>
CUSTODIAN. Comerica Bank (the "Custodian") whose principal business
address is One Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226,
provides custodial services to the Fund. No compensation is paid to the
Custodian for such services. State Street also serves as Sub-Custodian to the
Fund.
DISTRIBUTOR. Funds Distributor, Inc. is the distributor of the Fund's
shares and is located at 60 State Street, Suite 1300, 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
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.
As of the date of this Prospectus, Funds Distributor, Inc. currently has
the right to vote a majority of the outstanding shares of the Fund and therefore
it is considered to be a controlling person of the Company.
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 at least annually.
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?
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.
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<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 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, 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.
Dividends and certain interest income earned from foreign securities by the
Fund may be subject to foreign withholding or other taxes. The 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 the 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 the 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 Fund 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.
More information about the tax treatment of distributions from the Fund and
about other potential tax liabilities, including backup withholding for certain
taxpayers and information about tax aspects of dispositions of shares of the
Fund, is contained in the SAI.
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.
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MUNDER EMERGING GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
The Munder Emerging Growth Fund (the "Fund") is currently one of fourteen
series of shares of The Munder Funds, Inc. (the "Company"), an open-end
management investment company. The Fund's investment advisor is Munder Capital
Management (the "Advisor").
This Statement of Additional Information is intended to supplement the
information provided to investors in the Fund's Prospectuses dated June___, 1998
and has been filed with the Securities and Exchange Commission (the "SEC") as
part of the Company's Registration Statement. This Statement of Additional
Information is not a prospectus, and should be read only in conjunction with the
Fund's Prospectuses dated June ___, 1998 (the "Prospectus"). The contents of
this Statement of Additional Information are incorporated by reference in the
Prospectuses in its entirety. 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 June____, 1998.
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 FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
<PAGE>
TABLE OF CONTENTS
Page
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Fund Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Investment Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Investment Advisory and Other Service Arrangements . . . . . . . . . . . . . 19
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Additional Purchase and Redemption Information . . . . . . . . . . . . . . . 25
Net Asset Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Performance Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Additional Information Concerning Shares . . . . . . . . . . . . . . . . . . 34
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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 Fund or the Distributor. The Prospectuses do not
constitute an offering by the Fund or by the Distributor in any jurisdiction in
which such offering may not lawfully be made.
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GENERAL
The Munder Emerging Growth Fund is described in this Statement of
Additional Information. The Company was organized as a Maryland corporation on
November 18, 1992.
As stated in each Prospectus, the investment advisor of the Fund is Munder
Capital Management (the "Advisor"). The principal partners of the Advisor are
Old MCM, Inc., Munder Group LLC, and WAM Holdings, Inc. ("WAM"). Mr. Lee P.
Munder, the Advisor's chairman, indirectly owns or controls approximately 45%
and Comerica Incorporated owns or controls approximately 44% of the partnership
interests of the Advisor. Capitalized terms used herein and not otherwise
defined have the same meanings as are given to them in the Prospectuses.
FUND INVESTMENTS
The following supplements the information contained in the Prospectuses
concerning the investment objective and policies of the Fund. The 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.
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 the Fund's outstanding shares.
There can be no assurance that the Fund will achieve its objective. A
description of applicable credit ratings is set forth in Appendix A hereto.
BORROWING. The Fund is authorized to borrow money in amounts up to 5% of
the value of its total assets at the time of such borrowings for temporary
purposes, and is 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 Fund 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 Fund may be required to sell some of its
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 Fund may also be required to maintain minimum average balance 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 Fund may, in connection with
permissible borrowings, transfer as collateral, securities owned by the Fund.
FOREIGN SECURITIES. The Fund may invest up to 25% of its assets in foreign
securities. The Fund typically will only purchase foreign securities which are
represented by American Depositary Receipts ("ADRs") listed on a domestic
securities exchange or included in the NASDAQ National Market System, or foreign
securities listed directly on a domestic securities exchange or included in the
NASDAQ National Market System. ADRs are receipts typically issued by a United
States bank or trust company evidencing ownership of the underlying foreign
securities. Certain such institutions issuing ADRs may not be sponsored by the
issuer. A non-sponsored depositary may not provide the same shareholder
information that a sponsored depositary is required to provide under its
contractual arrangements with the issuer.
The Fund 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.
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Income and gains on such securities may be subject to foreign withholding
taxes. Investors should consider carefully the substantial risks involved in
securities of companies and governments of foreign nations, which are in
addition to the usual risks inherent in domestic investments.
There may be less publicly available information about foreign companies
comparable to the reports and ratings published about companies in the United
States. Foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards, and auditing practices and
requirements may not be comparable to those applicable to United States
companies. Foreign markets have substantially less volume than the New York
Stock Exchange and securities of some foreign companies are less liquid and more
volatile than securities of comparable United States companies. Commission
rates in foreign countries, which are generally fixed rather than subject to
negotiation as in the United States, are likely to be higher. In many foreign
countries there is less government supervision and regulation of stock
exchanges, brokers, and listed companies than in the United States. Such
concerns are particularly heightened for emerging markets and Eastern European
countries.
Investments in companies domiciled in developing countries may be subject
to potentially higher risks than investments in developed countries. These
risks include (i) less social, political and economic stability; (ii) the small
current size of the markets for such securities and the currently low or
nonexistent volume of trading, which result in a lack of liquidity and in
greater price volatility; (iii) certain national policies which may restrict the
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 East 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 the Fund.
The Advisor endeavors to buy and sell foreign currencies on as favorable a
basis as practicable. Some price spread on currency exchange (to cover service
charges) may be incurred, particularly when 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.
The 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 the 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,
4
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if any, to be distributed to shareholders by the Fund. The rate of exchange
between the U.S. dollar and other currencies is determined by the forces of
supply and demand in the foreign exchange markets. These forces are affected by
the international balance of payments and other economic and financial
conditions, government intervention, speculation and other factors. The Advisor
will attempt to avoid unfavorable consequences and to take advantage of
favorable developments in particular nations where, from time to time, it places
the 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 Fund is 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 the Fund to
establish a rate of exchange for a future point in time.
When entering into a contract for the purchase or sale of a security, the
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 anticipates that a particular foreign currency may decline
substantially relative to the U.S. dollar or other leading currencies, in order
to reduce risk, the Fund may enter into a forward contract to sell, for a fixed
amount, the amount of foreign currency approximating the value of some or all of
the Fund's securities denominated in such foreign currency. Similarly, when the
obligations held by the Fund create a short position in a foreign currency, the
Fund may enter into a forward contract to buy, for a fixed amount, an amount of
foreign currency approximating the short position. With respect to any forward
foreign currency contract, it will not generally be possible to match precisely
the amount covered by that contract and the value of the securities involved due
to the changes in the values of such securities resulting from market movements
between the date the forward contract is entered into and the date it matures.
In addition, while forward contracts may offer protection from losses resulting
from declines or appreciation in the value of a particular foreign currency,
they also limit potential gains which might result from changes in the value of
such currency. The Fund will also incur costs in connection with forward
currency contracts and conversions of foreign currencies and U.S. dollars.
A separate account consisting of cash or liquid securities equal to the
amount of the Fund's assets that could be required to consummate forward
contracts will be established with the 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
Fund. A forward contract to sell a foreign currency is "covered" if the 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 the 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.
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FUTURES CONTRACTS AND RELATED OPTIONS. The Fund currently expects that it
may purchase and sell futures contracts on interest-bearing securities or
securities or bond indices, and may purchase and sell call and put options on
futures contracts. For a detailed description of futures contracts and related
options, see Appendix B to this Statement of Additional Information.
ILLIQUID SECURITIES. The Fund may invest up to 15% of the value of its net
assets (determined at time of acquisition) in securities which 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 which
are subject to trading restrictions because they are not registered under the
Securities Act of 1933, as amended (the "Act"). If, after the time of
acquisition, events cause this limit to be exceeded, 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.
The 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"). The 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 Company's Board of
Directors. 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.
INVESTMENT COMPANY SECURITIES. The Fund may invest in securities issued by
other investment companies. As a shareholder of another investment company, the
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
the Fund bears directly in connection with its own operations. The 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,
the Fund may lend securities in its portfolio (subject to a limit of 25% of the
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 Fund
will receive any interest or dividends paid on the loaned securities. In
addition, it is anticipated that the 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
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Fund will lend securities, the Advisor will consider all relevant facts and
circumstances. The Fund will only enter into loan arrangements with broker-
dealers, banks or other institutions which the Advisor has determined are
creditworthy under guidelines established by the Board of Directors.
LOWER-RATED DEBT SECURITIES. It is expected that the Fund will invest not
more than 5% of its total assets in securities that are rated below investment
grade by Standard & Poor's or Moody's. 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 the Fund's portfolio, with a commensurate effect on the value
of the Fund's shares. Therefore, an investment in the Fund 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
Fund may incur additional expenses to the extent that it is required to seek
recovery upon a default in the payment of principal or interest on its portfolio
holdings. The existence of limited markets for lower-rated debt and comparable
unrated securities may diminish 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 Fund may have to replace the security
with a lower yielding security, thus resulting in a decreased return to the
Fund.
MONEY MARKET INSTRUMENTS. The Fund 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 Fund will invest in obligations of foreign
banks or foreign branches of U.S. banks only where the Advisor deems the
instrument to present minimal credit risks, such investments may nevertheless
entail risks that are different from those of investments in domestic
obligations of U.S. banks due to differences in political, regulatory and
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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 the Fund in commercial paper will consist of issues rated at
the time A-1 and/or P-1 by Standard & Poor's Rating Service, a division of
McGraw-Hill Companies, Inc. ("S&P") or Moody's Investor Services, Inc.
("Moody's"). In addition, the Fund may acquire unrated commercial paper and
corporate bonds that are determined by the Advisor at the time of purchase to be
of comparable quality to rated instruments that may be acquired by the Fund as
previously described.
The Fund 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, the 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, the 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 Fund invests in
variable amount master notes only when the Advisor deems the investment to
involve minimal credit risk.
OPTIONS. The Fund may write covered call options, buy put options, buy
call options and write secured put options in an amount not exceeding 5% of its
net assets. Such options may relate to particular securities and may or may not
be listed on a national securities exchange and issued by the Options Clearing
Corporation. Options trading is a highly specialized activity which entails
greater than ordinary investment risk. Options on particular securities may be
more volatile than the underlying securities, and therefore, on a percentage
basis, an investment in options may be subject to greater fluctuation than an
investment in the underlying securities themselves. For risks associated with
options on foreign currencies, see Appendix B to this Statement of Additional
Information.
A call option for a particular security gives the purchaser of the option
the right to buy, and a writer the obligation to sell, the underlying security
at the stated exercise price at any time prior to the expiration of the option,
regardless of the market price of the security. The premium paid to the writer
is in consideration for undertaking the obligations under the option contract.
A put option for a particular security gives the purchaser the right to sell the
underlying security at the stated exercise price at any time prior to the
expiration date of the option, regardless of the market price of the security.
The writer of an option that wished to terminate its obligation may effect
a "closing purchase transaction." This is accomplished by buying an option of
the same series as the option previously written. The effect of the purchase is
that the writer's position will be canceled by the clearing corporation.
However, a writer may not effect a closing purchase transaction after being
notified of the exercise of an option. Likewise, an investor who is the holder
of an option may liquidate its position by effecting a "closing sale
transaction." The cost of such a closing purchase plus transaction costs may be
greater than the premium received upon the original option, in which event the
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 Fund 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 Fund 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 the Fund desires to sell a
particular security from its
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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 Fund may write options in connection with buy-and-write transactions;
that is, the Fund may purchase a security and then write a call option against
that security. The exercise price of the call the Fund determines 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 Fund's maximum gain 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 the
Fund owns the security underlying the call or has an absolute and immediate
right to acquire that security without additional cash consideration (or, if
additional cash consideration is required, cash or cash equivalents in such
amount as are held in a segregated account by its custodian) upon conversion or
exchange of other securities held by it. For a call option on an index, the
option is covered if the Fund maintains with its Sub-Custodian cash or cash
equivalents equal to the contract value. A call option is also covered if the
Fund holds a call on the same security or index as the call written where the
exercise price of the call held is (i) equal to or less than the exercise price
of the call written, or (ii) greater than the exercise price of the call written
provided the difference is maintained by the portfolio in cash or cash
equivalents in a segregated account with its custodian. The Fund 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 Fund will write put options only if they are
"secured" by cash or liquid securities maintained in a segregated account by 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 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.
The Fund may purchase put options to hedge against a decline in the value
of its portfolio. By using put options in this way, the 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. The Fund 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 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 the 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)
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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 segregated account (in the case of a secured put
option) until the option expires or the optioned security is delivered upon
exercise with the result that the writer in such circumstances will be subject
to the risk of market decline or appreciation in the security during such
period.
There is no assurance that the 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
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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.
REPURCHASE AGREEMENTS. The Fund 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 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 the Fund
to possible loss because of adverse market action or delays in connection with
the disposition of underlying obligations.
The repurchase price under the repurchase agreements described in the
Prospectuses generally equals the price paid by the Fund plus interest
negotiated on the basis of current short-term rates (which may be more or less
than the rate on the securities underlying the repurchase agreement).
Securities subject to repurchase agreements will be held by the 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 the Fund under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS. The 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 the
Fund may decline below the repurchase price. The Fund will pay interest on
amounts obtained pursuant to a reverse repurchase agreement. While reverse
repurchase agreements are outstanding, the Fund will maintain in a segregated
account, cash, U.S. Government securities or other liquid high-grade securities
of an amount at least equal to the market value of the securities, plus accrued
interest, subject to the agreement.
RIGHTS AND WARRANTS. As stated in its Prospectuses, the 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 the 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.
STOCK INDEX FUTURES, OPTIONS ON STOCK AND BOND INDICES AND OPTIONS ON STOCK
AND BOND INDEX FUTURE CONTRACTS. The 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.
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.
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Options on stock and bond indices are similar to options on specific
securities, described above, except that, rather than the right to take or make
delivery of the specific security at a specific price, an option on a stock or
bond index gives the holder the right to receive, upon exercise of the option,
an amount of cash if the closing level of that stock or bond index is greater
than, in the case of a call option, or less than, in the case of a put option,
the exercise price of the option. This amount of cash is equal to such
difference between the closing price of the index and the exercise price of the
option expressed in dollars times a specified multiple. The writer of the
option is obligated, in return for the premium received, to make delivery of
this amount. Unlike options on specific securities, all settlements of options
on stock or bond indices are in cash, and gain or loss depends on general
movements in the stocks included in the index rather than price movements in
particular stocks.
If the Advisor expects general stock or bond market prices to rise, it
might purchase a stock index futures contract, or a call option on that index,
as a hedge against an increase in prices of particular securities it ultimately
wants to buy. If in fact the index does rise, the price of the particular
securities intended to be purchased may also increase, but that increase would
be offset in part by the increase in the value of the Fund's futures contract or
index option resulting from the increase in the index. If, on the other hand,
the Advisor expects general stock or bond market prices to decline, it might
sell a futures contract, or purchase a put option, on the index. If that index
does in fact decline, the value of some or all of the securities in the Fund's
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 Fund may purchase and write call and put options on stock or bond index
futures contracts. The 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, the Fund may purchase put options or write
call options on stock and bond index futures, 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 the Fund intends to purchase.
In connection with transactions in stock or bond index futures, stock or
bond index options and options on stock index or bond futures, the Fund will be
required to deposit as "initial margin" an amount of cash and short-term U.S.
Government securities equal to from 5% to 8% of the contract amount. Thereafter,
subsequent payments (referred to as "variation margin") are made to and from the
broker to reflect changes in the value of the option or futures contract. The
Fund may not 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.
U.S. GOVERNMENT OBLIGATIONS. The Fund may purchase obligations issued or
guaranteed by the U.S. Government and U.S. Government agencies and
instrumentalities. Obligations of certain agencies and instrumentalities of the
U.S. Government, such as those of the Government National Mortgage Association,
are supported by the full faith and credit of the U.S. Treasury. Others, such
as those of the Export-Import Bank of the United States, are supported by the
right of the issuer to borrow from the U.S. Treasury; and still others, such as
those of the Student Loan Marketing Association, are supported only by the
credit of the agency or instrumentality issuing the obligation. No assurance
can be given that the U.S. Government would provide financial support to U.S.
government-sponsored instrumentalities if it is not obligated to do so by law.
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, Federal
National Mortgage Association, Government National Mortgage Association, General
Services Administration, Student Loan Marketing Association, Central Bank for
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Cooperatives, Federal Home Loan Mortgage Corporation, Federal Intermediate
Credit Banks and Maritime Administration.
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS (DELAYED-DELIVERY
TRANSACTIONS). When-issued purchases and forward commitments (delayed-delivery
transactions) are commitments by the 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 the Fund agrees to purchase securities on a when-issued or forward
commitment basis, the Sub-Custodian will set aside cash or liquid portfolio
securities equal to the amount of the commitment in a separate account.
Normally, the Sub-Custodian will set aside portfolio securities to satisfy a
purchase commitment, and in such a case the Fund may be required subsequently to
place additional assets in the separate account in order to ensure that the
value of the account remains equal to the amount of the Fund's commitments. It
may be expected that the market value of the Fund's net assets will fluctuate to
a greater degree when it sets aside portfolio securities to cover such purchase
commitments than when it sets aside cash. Because the Fund's liquidity and
ability to manage its portfolio might be affected when it sets aside cash or
portfolio securities to cover such purchase commitments, the Advisor expects
that its commitments to purchase when-issued securities and forward commitments
will not exceed 25% of the value of the Fund's total assets absent unusual
market conditions.
The 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, the 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 the 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
the 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 the Fund may invest (such as commercial paper and
bank obligations), are dependent on a variety of factors, including general
money market conditions, conditions in the particular market for the obligation,
the financial condition of the issuer, the size of the offering, the maturity of
the obligation and the ratings of the issue. The ratings of S&P, Moody's, Duff
& Phelps Credit Rating Co., Thomson Bank Watch, Inc., and other nationally
recognized statistical NRSROs represent their respective opinions as to the
quality of the obligations they undertake to rate. Ratings, however, are general
and are not absolute standards of quality. Consequently, obligations with the
same rating, maturity and interest rate may have different market prices.
OTHER. Subsequent to its purchase by the 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 Board of Directors or the Advisor, pursuant to
guidelines established by the Board, will consider such an event in determining
whether the Fund should continue to hold the security in accordance with the
interests of the Fund and applicable regulations of the SEC.
13
<PAGE>
INVESTMENT LIMITATIONS
The Fund is subject to the investment limitations enumerated in this
section which may be changed only by a vote of the holders of a majority of the
Fund's outstanding shares (as defined under "Miscellaneous - Shareholder
Approvals").
The Fund may not:
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);
2. With respect to 75% of it's assets, invest more than 5% of it's assets
(taken at a market value at the time of purchase) in the outstanding
securities of any single issuer or own more than 10% of the
outstanding voting securities of any one issuer, in each case other
than securities issued or guaranteed by the United States Government,
its agencies or instrumentalities;
3. Borrow money or issue senior securities (as defined in the 1940 Act)
except that the Fund may borrow (i) for temporary purposes in amounts
not exceeding 5% of its total assets and (ii) to meet redemption
requests, in amounts (when aggregated with amounts borrowed under
clause (i)) not exceeding 33 1/3% of its total assets;
4. Pledge, mortgage or hypothecate its assets other than to secure
borrowings permitted by restriction 3 above (collateral arrangements
with respect to margin requirements for options and futures
transactions are not deemed to be pledges or hypothecations for this
purpose);
5. Make loans of securities to other persons in excess of 25% of 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 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 on futures;
9. Make investments for the purpose of exercising control or management;
or
10. Invest in commodities or commodity futures contracts, provided that
this limitation shall not prohibit the purchase or sale by the Fund 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 the Fund's prospectuses.
14
<PAGE>
Additional investment restrictions adopted by the Fund, which may be
changed by the Board of Directors, provide that the Fund may not:
1. 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;
2. Own more than 10% (taken at market value at the time of purchase) of
the outstanding voting securities of any single issuer;
3. Purchase or sell interests in oil, gas or other mineral exploration or
development plans or leases;
4. Invest in other investment companies except as permitted under the
1940 Act.
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
the Fund's investments will not constitute a violation of such limitation,
except that any borrowing by the 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, the 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>
PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE POSITION WITH COMPANY PAST FIVE YEARS
- --------------------- --------------------- ---------------
<S> <C> <C>
Charles W. Elliott Chairman of the Board Senior Advisor to the President -
3338 Bronson Boulevard of Directors Western Michigan University
Kalamazoo, MI 49008 since July 1995; Executive Vice
Age: 65 President - Administration &
Chief Financial Officer, Kellogg
Company from January 1987 through
June 1995; before that Price
Waterhouse. Board of Directors,
Steelcase Financial Corporation.
John Rakolta, Jr. Director and Vice Chairman and Chief Executive
1876 Rathmor Chairman of the Officer, Walbridge Aldinger
Bloomfield Hills, MI 48304 Board of Directors Company (construction company).
Age: 50
15
<PAGE>
<CAPTION>
PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE POSITION WITH COMPANY PAST FIVE YEARS
- --------------------- --------------------- ---------------
<S> <C> <C>
Thomas B. Bender Director Investment Advisor, Financial &
7 Wood Ridge Road Investment Management Group
Glen Arbor, MI 49636 (since April, 1991); Vice
Age: 64 President Institutional Sales,
Kidder, Peabody & Co. (Retired
April, 1991); Trustee, Vining
Real Estate Investment Trust.
David J. Brophy Director Professor, University of
1025 Martin Place Michigan; Director, River Place
Ann Arbor, MI 48104 Financial Corp.
Age: 61
Dr. Joseph E. Champagne Director Dean, University Center,
319 East Snell Road Macomb College since
Rochester, MI 48306 September 1997; Corporate and
Age: 59 Executive Consultant 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
Controls of Troy, MI.
Thomas D. Eckert Director President and Chief Executive
10726 Falls Pointe Drive Officer, Capital Automotive
Great Falls, VA 22066 REIT from November 1997 to
Age: 50 present (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.
16
<PAGE>
<CAPTION>
PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE POSITION WITH COMPANY PAST FIVE YEARS
- --------------------- --------------------- ---------------
<S> <C> <C>
Lee P. Munder* Director and President Chairman of the Advisor since
480 Pierce Street February 1998; Chief Executive
Suite 300 Officer of World Asset
Birmingham, MI 48009 Management since January 1995;
Age: 52 Chief Executive Officer of Old
MCM (predecessor of Advisor)
since 1985; and Director, LPM
Investment Services, Inc.
("LPM").
Terry H. Gardner Vice President, Chief Vice President and Chief
480 Pierce Street Financial Officer and Financial Officer of the Advisor,
Suite 300 Treasurer and Chief Financial Officer of
Birmingham, MI 48009 Old MCM (February 1993 to
Age: 37 present); Secretary of LPM.
Paul Tobias Vice President Chief Executive Officer of the
480 Pierce Street Advisor (since February 1998);
Birmingham, MI 48009 Chief Operating Officer of the
Suite 300 Advisor; Executive Vice
Age: 45 President (April 1995-February
1998); and Executive Vice
President of Comerica, Inc.
Gerald Seizert Vice President Chief Executive Officer of the
480 Pierce Street Advisor (since February 1998);
Suite 300 Chief Investment
Birmingham, MI 48009 Officer/Equities of the Advisor;
Age: 45 Executive Vice President (April
1995-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
Age: 38 1988 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: 35 Old MCM (1987-1994).
17
<PAGE>
<CAPTION>
PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE POSITION WITH COMPANY PAST FIVE YEARS
- --------------------- --------------------- ---------------
<S> <C> <C>
Leonard J. Barr, II Vice President Vice President and Director of
480 Pierce Street Core Equity Research of the
Suite 300 Advisor; Director and Senior
Birmingham, MI 48009 Vice President of Old MCM
Age: 52 (since 1988); Director of LPM.
Lisa A. Rosen Secretary, Assistant General Counsel of the Advisor
480 Pierce Street Treasurer (since May 1996); formerly
Suite 300 Counsel, First Data Investor
Birmingham, MI 48009 Services Group, Inc.; Assistant
Age: 30 Vice President and Counsel with
The Boston Company Advisors, Inc.;
Associate with Hutchins, Wheeler &
Dittmar.
Ann F. Putallaz Vice President Vice President and Director of
480 Pierce Street Fiduciary Services of the
Suite 300 Advisor (since January 1995);
Birmingham, MI 48009 Director of Client and Marketing
Age: 51 Services of Woodbridge.
Therese Hogan Assistant Secretary Director, State Regulation
53 State Street Department, First Data Investor
Boston, MA 02109 Services Group (June 1994-
Age: 36 present); formerly Senior Legal
Assistant, Palmer & Dodge
(October 1993-June 1994); Blue
Sky Paralegal, Robinson & Cole
(February 1984-October 1993).
</TABLE>
* "Interested Person" of the Company, as defined in the 1940 Act.
Trustees of The Munder Funds Trust (the "Trust") and The Munder Framlington
Funds Trust ("Framlington") and the Directors of the Company and St. Clair
Funds, Inc. ("St. Clair") receive an aggregate fee from the Company, the Trust,
Framlington and St. Clair for services on those organizations' respective Boards
comprised of an annual retainer fee of $20,000 and a fee of $1,500 for each
Board meeting attended, and are reimbursed for all out-of-pocket expenses
relating to attendance at meetings.
The following table summarizes the compensation paid by the Trust, the
Company, Framlington and St. Clair, and their respective Trustees/Directors for
the year ended June 30, 1997.
18
<PAGE>
<TABLE>
<CAPTION>
PENSION
AGGREGATE RETIREMENT
COMPENSATION BENEFITS ESTIMATED
FROM THE COMPANY, ACCRUED ANNUAL
NAME OF THE TRUST, ST. CLAIR AS PART OF BENEFITS TOTAL FROM
PERSON AND FUND UPON THE FUND
AND POSITION FRAMLINGTON EXPENSES RETIREMENT COMPLEX
- ------------ ----------- -------- ---------- -------
<S> <C> <C> <C> <C>
Charles W. $20,000 None None $20,000
Elliott
Chairman
John Rakolta, Jr. $18,500 None None $18,500
Vice Chairman
Thomas B. Bender $20,000 None None $20,000
Trustee and
Director
David J. Brophy $20,000 None None $20,000
Trustee and
Director
Dr. Joseph E. $20,000 None None $20,000
Champagne
Trustee and
Director
Thomas D. Eckert $20,000 None None $20,000
Trustee and
Director
</TABLE>
No officer, director or employee of the Advisor, Comerica Incorporated
("Comerica"), the Sub-Custodian, the Distributor, the Administrator or the
Transfer Agent currently receives any compensation from the Company, the Trust,
St. Clair or Framlington. As of March 20, 1998, the Directors and Officers of
the Company, as a group, owned less than 1% of outstanding shares of the Fund.
INVESTMENT ADVISORY AND OTHER SERVICE ARRANGEMENTS
INVESTMENT ADVISOR. The Advisor of the Fund is Munder Capital Management,
a Delaware general partnership. The general partners of the Advisor are WAM,
Old 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.
The Investment Advisory Agreement between the Advisor and the Company with
respect to the Fund (the "Advisory Agreement") was approved by the Company's
Board of Directors on February 24, 1998 and by shareholders on February 24,
1998. Under the terms of the Advisory Agreement, the Advisor furnishes
continuing investment supervision to the Fund and is responsible for the
management of the Fund's portfolio. 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 and expenses assumed with regard to the
Fund, the Advisor has agreed to a fee from the Fund, computed daily and payable
monthly, at an annual rate of 0.75% of the average daily net assets of the Fund.
The Advisory Agreement 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
19
<PAGE>
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 Fund, or (ii) the vote of a
majority of the Board of Directors. The Advisory Agreement is terminable 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, upon 60
days' written notice to the Advisor. The Advisor may also terminate its advisory
relationship with the Fund without penalty upon 90 days' written notice to the
Company. The Advisory Agreement terminates automatically in the event of its
assignment (as defined in the 1940 Act).
DISTRIBUTION AGREEMENT. The Company has entered into a distribution
agreement, under which the Distributor, as agent, sells shares of the Fund on a
continuous basis. The Distributor has agreed to use appropriate efforts to
solicit orders for the purchase of shares of the 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
fund shares (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,
Suite 1300, Boston, Massachusetts 02109.
DISTRIBUTION SERVICES ARRANGEMENTS - CLASS A, CLASS B AND CLASS C SHARES.
The 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 Plan 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 the Fund. The 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 the 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 the Fund.
Under the terms of the Service and Distribution Plans (collectively, the
"Plans"), each Plan continues from year to year, provided such continuance is
approved annually by vote of the Board of Directors, including a majority of the
Board of Directors who are not interested persons of the Company, 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 by a vote of a majority of the outstanding voting securities of the
relevant class of the 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 Board of Directors periodic reports of amounts
expended under the Plan and the purpose for which such expenditures were made.
The Directors have determined that the Plans will benefit 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 Fund; and (iv) maintaining a
competitive sales structure in the mutual fund industry.
With respect to Class B and Class C Shares of the Fund, the Distributor
expects to pay sales commissions to dealers authorized to sell the 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
20
<PAGE>
reimbursement by the relevant Service and Distribution Plan. In addition, the
Advisor may use its own resources to make payments to the Distributor or dealers
authorized to sell the Funds' shares to support their sales efforts.
SHAREHOLDER SERVICING ARRANGEMENTS - CLASS K SHARES. As stated in the
Fund's Prospectus for Class K Shares, Class K Shares are sold to investors
through institutions which enter into Shareholder Servicing Agreements with the
Company to provide support services to their Customers who beneficially own
Class K Shares in consideration of the Fund's payment of not more than .25% (on
an annualized basis) of the average daily net asset value of the Class K Shares
beneficially owned by the Customers.
Services provided by institutions under their service agreements may
include: (i) aggregating and processing purchase and redemption requests for
Class K Shares from Customers and placing net purchase and redemption orders
with the Distributor; (ii) providing Customers with a service that invests the
assets of their accounts in Class K Shares pursuant to specific or pre-
authorized instructions; (iii) processing dividend payments on behalf of
Customers; (iv) providing information periodically to Customers showing their
positions in Class K Shares; (v) arranging for bank wires; (vi) responding to
Customer inquiries relating to the services performed by the institutions; (vii)
providing subaccounting with respect to Class K Shares beneficially owned by
Customers or the information necessary for subaccounting; (viii) if required by
law, forwarding shareholder communications from the 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 Company's
arrangements with institutions; and (x) providing such other similar services as
the Company may reasonably request to the extent the institutions are permitted
to do so under applicable statutes, rules and regulations.
Pursuant to the Company's agreements with such institutions, the Board of
Directors will review, at least quarterly, a written report of the amounts
expended under 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 Board of Directors,
including a majority of the Directors who are not "interested persons" as
defined in the 1940 Act, and have no direct or indirect financial interest in
such arrangements.
The Board of 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 Fund and their
shareholders by affording the Fund greater flexibility in connection with the
servicing of the accounts of the beneficial owners of its shares in an efficient
manner.
ADMINISTRATION AGREEMENT. State Street Bank and Trust Company ("State
Street") located at 225 Franklin Street, Boston, Massachusetts 02110, serves as
administrator for the Company pursuant to an administration agreement (the
"Administration Agreement"). State Street has agreed to maintain office
facilities for the Company; oversee the computation of each Fund's net asset
value, net income and realized capital gains, if any; furnish statistical and
research data, clerical services, and stationery and office supplies; prepare
and file various reports with the appropriate regulatory agencies; and prepare
various materials required by the SEC or any state securities commission having
jurisdiction over the Company. State Street may enter into an agreement with
one or more third parties pursuant to which such third parties will provide
administrative services on behalf of the Funds.
The Administration Agreement provides that the Administrator performing
services thereunder shall not be liable under the Agreement except for its
willful misfeasance, bad faith or negligence in the performance of its duties or
from the reckless disregard by it of its duties and obligations thereunder.
21
<PAGE>
CUSTODIAN, SUB-CUSTODIAN AND TRANSFER AGENCY AGREEMENTS. Comerica Bank,
whose principal business address is One Detroit Center, 500 Woodward Avenue,
Detroit, MI 48226, is the custodian of the 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
Fund pursuant to a sub-custodian agreement (the "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
Fund. 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 the Fund, (ii)
holds and transfers portfolio securities on account of the Fund, (iii) accepts
receipts and makes disbursements of money on behalf of the Fund, (iv) collects
and receives all income and other payments and distributions on account of the
Fund's securities and (v) makes periodic reports to the Board of Directors
concerning the Fund's operations.
First Data Investor Services Group, Inc. ("Investor Services Group") serves
as the transfer and dividend disbursing agent for the Fund pursuant to a
transfer agency agreement (the "Transfer Agency Agreement") with the Company,
under which Investor Services Group (i) issues and redeems shares of the Fund,
(ii) addresses and mails all communications by the 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 Fund and (v)
makes periodic reports to the Board of Directors concerning the operations of
the Fund.
OTHER INFORMATION PERTAINING TO ADMINISTRATION AND TRANSFER AGENCY
AGREEMENTS. As stated in the Prospectuses, the Administrator, the Transfer
Agent and the Sub-Custodian each receives a separate fee for its services. In
approving the Administration Agreement and Transfer Agency Agreement, the Board
of Directors did consider the services that are to be provided under their
respective agreements, the experience and qualifications of the respective
service contractors, the reasonableness of the fees payable by the Company in
comparison to the charges of competing vendors, the impact of the fees on the
estimated total ordinary operating expense ratio of the Fund and the fact that
neither the Administrator, the Sub-Custodian nor the Transfer Agent is
affiliated with the Company or the Advisor. The Board also considered its
responsibilities under federal and state law in approving these agreements.
COMERICA. As stated in the Fund's Class K Shares Prospectus, Class K
Shares of the Fund are sold to customers of banks and other institutions. Such
banks and institutions may include Comerica Incorporated (a publicly-held bank
holding company), its affiliates and subsidiaries ("Comerica") and other
institutions that have entered into agreements with the Company 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
Company contemplated by its respective agreements with the Company 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
22
<PAGE>
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 Fund.
Should future legislative, judicial or administrative action prohibit or
restrict the activities of such companies in connection with the provision of
services on behalf the Company, 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
Fund's method of operations would affect the net asset value per share of the
Fund or result in a financial loss to any shareholder of the Fund.
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 Fund.
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 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 Fund's method of operations would affect the net asset value per share of
the Fund or result in a financial loss to any holder of Class K shares of the
Fund.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board of Directors, the Advisor
makes decisions with respect to and places orders for all purchases and sales of
portfolio securities for the Fund.
Transactions on U.S. stock exchanges involve the payment of negotiated
brokerage commissions. On exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers. Transactions on foreign
stock exchanges involve payment for brokerage commissions which are generally
fixed.
Over-the-counter issues, including corporate debt and government
securities, are normally traded on a "net" basis (i.e., without commission)
through dealers, or otherwise involve transactions directly with the issuer of
an instrument. With respect to over-the-counter transactions, the Advisor will
normally deal directly with dealers who make a market in the instruments
involved except in those circumstances where more favorable prices and execution
are available elsewhere. The cost of foreign and domestic securities purchased
from underwriters includes an underwriting commission or concession, and the
prices at which securities are purchased from and sold to dealers include a
dealer's mark-up or mark-down.
The Fund 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 Fund will engage in this practice, however, only when the Advisor believes
such practice to be in the Fund's interests.
The portfolio turnover rate of the Fund is calculated by dividing the
lesser of the Fund's annual sales or purchases of portfolio securities by the
monthly average value of the securities held by the Fund
23
<PAGE>
during the year. Each Fund may engage in short-term trading to achieve its
investment objective. Portfolio turnover may vary greatly from year to year as
well as within a particular year.
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 Board of Directors, to 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 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 Fund. 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 Fund. 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, the 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 the Fund and for other investment accounts managed
by the Advisor are made independently of each other in the light of differing
conditions. However, the same investment decision may be made for two or more
of such accounts. In such cases, simultaneous transactions are inevitable.
Purchases or sales are then averaged as to price and allocated as to amount in a
manner deemed equitable to each such account. While in some cases this practice
could have a detrimental effect on the price or value of the security as far as
the Fund is concerned, in other cases it is believed to be beneficial to the
Fund. To the extent permitted by law, the Advisor may aggregate the securities
to be sold or purchased for the Fund with those to be sold or purchased for
other investment companies or accounts in executing transactions.
The 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.
Except as noted in the Prospectuses and this Statement of Additional
Information the Fund's service contractors bear all expenses in connection with
the performance of their services and the Fund bears the expenses incurred in
its operations. These expenses include, but are not limited to, fees paid to
the Advisor, Administrator, Sub-Custodian and Transfer Agent; fees and expenses
of officers and Directors; taxes; interest; legal and auditing fees; brokerage
fees and commissions; certain fees and expenses in registering and qualifying
the Fund and its shares for distribution under Federal and state securities
laws; expenses of preparing prospectuses and statements of additional
information and of
24
<PAGE>
printing and distributing prospectuses and statements of additional information
to existing shareholders; the expense of reports to shareholders, shareholders'
meetings and proxy solicitations; fidelity bond and directors' and officers'
liability insurance premiums; the expense of using independent pricing services;
and other expenses which are not assumed by the Administrator. Any general
expenses of the Company that are not readily identifiable as belonging to a
particular investment portfolio of the Company are allocated among all
investment portfolios of the Company by or under the direction of the Board of
Directors in a manner that the Board of Directors determines to be fair and
equitable, taking into consideration whether it is appropriate for expenses to
be borne by the Fund in addition to the Company's other funds. The Advisor,
Administrator, 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 Fund's prospectuses and such
information is incorporated herein by reference.
PURCHASES. As described in the Prospectuses, shares of the Fund 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 the Fund 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 Fund
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 Prospectus for Class B Shares describes the CDSC Schedule for Class B
Shares of the Fund.
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.
25
<PAGE>
CLASS B SHARES OF THE TRUST FUNDS
PURCHASED ON OR BEFORE JUNE 27, 1995
<TABLE>
<CAPTION>
REDEMPTION DURING CDSC
- ----------------- ----
<S> <C>
1st Year Since Purchase . . . . . . . . . . . . . . . 4.00%
2nd Year Since Purchase . . . . . . . . . . . . . . . 4.00%
3rd Year Since Purchase . . . . . . . . . . . . . . . 3.00%
4th Year Since Purchase . . . . . . . . . . . . . . . 3.00%
5th Year Since Purchase . . . . . . . . . . . . . . . 2.00%
6th Year Since Purchase . . . . . . . . . . . . . . . 1.00%
</TABLE>
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 $500; and
(5) redemptions the proceeds of which are reinvested in the Fund within 90
days of the redemption.
CONTINGENT DEFERRED SALES CHARGE - CLASS A AND CLASS C SHARES. 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
26
<PAGE>
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 market 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.
OTHER INFORMATION. Redemption proceeds are normally paid in cash; however,
the Fund may pay the redemption price in whole or part by a distribution in kind
of securities from the portfolio of the 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 Fund is 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 Fund reserve the right to suspend or postpone redemptions during any
period when: (i) trading on the New York Stock Exchange (the "Stock Exchange")
is restricted by applicable rules and regulations of the SEC; (ii) the Stock
Exchange 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 exists as determined by the
SEC making disposal of portfolio securities or valuation of net assets of the
Fund not reasonably practicable.
The Fund may involuntarily redeem an investor's shares if the net asset
value of such shares is less than $500; provided that involuntary redemptions
will not result from fluctuations in the value of an investor's shares. A
notice of redemption, sent by first-class mail to the investor's address of
record, will fix a date not less than 30 days after the mailing date, and shares
will be redeemed at the net asset value at the close of business on that date
unless sufficient additional shares are purchased to bring the aggregate account
value up to $500 or more. A check for the redemption proceeds payable to the
investor will be mailed to the investor at the address of record.
EXCHANGES. In addition to the method of exchanging shares described in the
Fund's 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 Fund at (800) 438-5789. Telephone exchange
instructions must be received by the Transfer Agent by 4:00 p.m., Eastern time.
The Fund, the
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<PAGE>
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.
IN-KIND PURCHASES
Payment for shares may, in the discretion of the Advisor, be made in the
form of securities that are permissible investments for the Fund as described in
the Prospectuses. For further information about this form of payment please
contact the Transfer Agent. In connection with an in-kind securities payment,
the 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
The Fund, in advertising its "average annual total return" computes its
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:
n
P (1 + T) = 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 and of any CDSC deduction (or a
fractional portion thereof);
P = hypothetical initial payment of $1,000;
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<PAGE>
n = number of years and portion of a year
The Fund, in advertising its "aggregate total return" computes its return
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 Fund's 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; and the Fund's 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 Fund 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.
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, the
Fund's total returns may be quoted and compared to those of other mutual funds
with similar investment objectives and to stock or other relevant indices.
TAXES
The following summarizes certain additional tax considerations generally
affecting the Fund and its shareholders that are not described in the Fund's
Prospectuses. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussion here and in the
Prospectuses is not intended as a substitute for careful tax planning.
Potential investors should consult their tax advisors with specific reference to
their own tax situations.
GENERAL. The Fund intends to elect and qualify annually to be taxed
separately as a regulated investment company under Subchapter M, of the Internal
Revenue Code of 1986, as amended (the "Code"). As a regulated investment
company, the Fund generally is exempt from Federal income tax on its net
investment income and realized capital gains which it distributes to its
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.
29
<PAGE>
In addition to satisfaction of the Distribution Requirement, the 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
the 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 the 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 the Fund has
not invested more than 5% of the value of its total assets in securities of such
issuer and as to which the Fund does not hold more than 10% of the outstanding
voting securities of such issuer) and no more than 25% of the value of the
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 the Fund controls and which are
engaged in the same or similar trades or businesses.
Certain debt instruments acquired by the Fund may include "original issue
discount" or "market discount". As a result, the Fund may be deemed under tax
law rules to have earned discount income in taxable periods in which it does not
actually receive any payments on the particular debt instruments involved. This
income, however, will be subject to the Distribution Requirements and must also
be distributed in accordance with the excise tax distribution rules discussed
below, which may cause the Fund to have to borrow or liquidate securities to
generate cash in order to timely meet these requirements (even though such
borrowing or liquidating securities at that time may be detrimental from the
standpoint of optimal portfolio management). Gain from the sale of a debt
instrument having market discount may be treated for tax purposes as ordinary
income to the extent that market discount accrued during the Fund's ownership of
that instrument.
Distributions of net investment income received by the Fund and any net
realized short-term capital gains distributed by the Fund will be taxable to
shareholders as ordinary income and will be eligible for the dividends received
deduction for corporations.
The 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 the shareholder
has held the Fund shares, and regardless of whether the distribution is paid in
cash or reinvested in shares. The Fund expects that capital gain dividends will
be taxable to shareholders as long-term gains. Capital gain dividends are not
eligible for the dividends received deduction.
In the case of corporate shareholders, distributions of the Fund for any
taxable year generally qualify for the dividends received deductions 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 the 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 the Fund's
current and accumulated earnings and profits.
30
<PAGE>
Shareholders will be advised annually as to the Federal income tax
consequences of distributions made by the Fund 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, the 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 the Fund in October, November or
December with a record date in such a month and paid by the 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, the Fund intends to make its
distributions in accordance with the calendar year distribution requirement.
DISPOSITION OF SHARES. Upon the redemption, sale or exchange of shares of
the Fund, a shareholder may realize a capital 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
shares acquired pursuant to a dividend reinvestment plan) within a period of 61
days beginning 30 days before and ending 30 days after disposition of the
shares. 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 a
disposition 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 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 the 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 charge 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 the 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 on the same or
another fund and the otherwise applicable sales charge is reduced under a
"reinvestment right" received upon the initial purchase of the regulated
investment company shares. The term "reinvestment right" means any right to
acquire stock of one or more funds without the payment of a sale 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 the 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, the Fund may be subject
to the tax laws of such states or localities.
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 the Fund for selling a put or call option
is not included in income at the time of receipt. If the option
31
<PAGE>
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 the 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 the
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 contracts and certain options (namely, nonequity
options and dealer equity options) in which the Fund may invest are "section
1256 contracts." Gains or losses on section 1256 contracts generally are
considered 60% long-term and 40% short-term capital gains or losses; however,
foreign currency gains or losses (as discussed below) arising from certain
section 1256 contracts may be treated as ordinary income or loss. Also, section
1256 contracts held by a Portfolio 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" (that is, treated as sold at fair market value), resulting in
unrealized gains or losses being treated as though they were realized.
Generally, the hedging transactions undertaken by the 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 Fund. In addition, losses
realized by the 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 the losses are realized.
Because only a few regulations implementing the straddle rules have been
promulgated, the tax consequences to the Fund of engaging in hedging
transactions are not entirely clear. Hedging transactions may increase the
amount of short-term capital gain realized by the Fund which is taxed as
ordinary income when distributed to shareholders.
The Fund may make one or more of the elections available under the Code
which are applicable to straddles. If the Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections
may operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Because 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 may be distributed to
shareholders, and which will be taxed to them as ordinary income or long-term
capital gain, may be increased or decreased as compared to a fund that did not
engage in such hedging transactions.
The diversification requirements applicable to the Fund's assets may limit
the extent to which the Fund will be able to engage in transactions in options
and futures contracts.
CONSTRUCTIVE SALES. Recently enacted rules may affect the timing and
character of gain if the 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
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<PAGE>
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 the 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 or ordinary
loss. Similarly, on disposition of debt securities denominated in a foreign
currency and on disposition of certain options and futures contracts, gains or
losses attributable to fluctuations in the value of 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 the Fund's investment company taxable income to be distributed to its
shareholders as ordinary income.
PASSIVE FOREIGN INVESTMENT COMPANIES. The Fund 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 one-half of its assets constitute investment-type assets,
or 75% or more of its gross income investment-type income. If the Fund receives
a so-called "excess distribution" with respect to PFIC stock, the Fund itself
may be subject to a tax on a portion of the excess distribution, whether or not
the corresponding income is distributed by the Fund to shareholders. In
general, under the PFIC rules, an excess distribution is treated as having been
realized ratably over the period during which the Fund held the PFIC shares.
The Fund 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 Fund may be eligible to elect alternative tax treatment with respect to
PFIC shares. Under an election that currently is available in some
circumstances, the 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 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 the Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries.
The Company will be required in certain cases to withhold and remit to the
United States Treasury 31% of taxable distributions paid to any shareholder (i)
who has provided either 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 to the Company that he is not
subject to backup withholding or that he is an "exempt recipient."
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
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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 general discussion of Federal income tax consequences is
based on the Code and the regulations issued thereunder as in effect on the date
of this Statement of Additional Information. 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 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
fourteen series of shares. The Fund is currently offered in five separate
classes: Class A, Class B, Class C, Class K and Class Y Shares.
At a meeting on February 24, 1998, the Company adopted a Multi-Class Plan
("Multi-Class Plan") on behalf of the Fund. The Multi-Class Plan provides that
shares of each class of the 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 the Company or the Fund,
shareholders of the Fund would be entitled to receive the assets available for
distribution belonging to the Fund, and a proportionate distribution, based upon
the relative net asset values of the Fund, of any general assets not belonging
to the Fund which are available for distribution. Shareholders of the Fund are
entitled to participate in the net distributable assets of the Fund on
liquidation, based on the number of shares of the Fund that are held by each
shareholder.
Shareholders of the Fund, as well as those of any other investment
portfolio now or hereafter offered by the Company, will vote together in the
aggregate and not by class on all matters, except that only Class A Shares of
the 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 the 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 the Fund will be entitled to vote on matters
submitted to a vote of shareholders pertaining to the Class K Plan. Further,
shareholders of the Fund, as well as those of any other investment portfolio now
or hereafter offered 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 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 the Fund affected by such matter. The
Fund is affected by such a matter, unless (i) it is clear that the interests of
the Fund in the matter are substantially identical, or (ii) the matter does not
affect any interest of the Fund. Under the Rule, the approval of an investment
advisory agreement, sub-
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advisory agreement or any change in a fundamental investment policy would be
effectively acted upon with respect to the Fund only if approved by a majority
of the outstanding shares of the 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 directors may be
effectively acted upon by shareholders of the Company voting together in the
aggregate without regard to a particular fund.
Shares of the Company have noncumulative voting rights and, accordingly,
the holders of more than 50% 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 applicable Prospectus,
shares will be fully paid and non-assessable by the Company.
Shareholder meetings to elect directors will not be held unless and until
such time as required by law. At that time, the directors then in office will
call a shareholders' meeting to elect directors. Except as set forth above, the
directors will continue to hold office and may appoint successor directors.
Meetings of the shareholders of the Company shall be called by the directors
upon the written request of shareholders owning at least 10% of the outstanding
shares entitled to vote.
MISCELLANEOUS
COUNSEL. The law firm of Dechert Price & Rhoads, 1775 Eye Street, N.W.,
Washington, DC 20006, has passed upon certain legal matters in connection with
the shares offered by the Fund and serves as counsel to the Company.
INDEPENDENT AUDITORS. Ernst & Young LLP, 200 Clarendon Street, Boston,
Massachusetts 02116, serves as the Company's independent auditors.
SHAREHOLDER APPROVALS. As used in this Statement of Additional Information
and in the Prospectus, a "majority of the outstanding shares" of the Fund means
the lesser of (a) 67% of the shares of the Fund represented at a meeting at
which the holders of more than 50% of the outstanding shares of such Fund are
present in person or by proxy, or (b) more than 50% of the outstanding shares of
such Fund.
REGISTRATION STATEMENT
This Statement of Additional Information and 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 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.
35
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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.
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.
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"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."
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APPENDIX A
- RATED INVESTMENTS -
COMMERCIAL PAPER
Rated commercial paper purchased by the 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 Board of 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+".
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APPENDIX B
As stated in the Prospectuses, the Fund may enter into certain futures
transactions and options for hedging purposes. Such transactions are described
in this Appendix.
I. INDEX FUTURES CONTRACTS
GENERAL. 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.
The 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. The Fund will purchase index futures contracts in anticipation
of purchases of securities. In a substantial majority of these transactions,
the 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, the Fund may utilize index futures contracts in anticipation
of changes in the composition of its portfolio holdings. For example, in the
event that the 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. The 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
--------- -------
-Day Hedge is Placed-
Anticipate buying $62,500 Buying 1 Index Futures at 125
in Equity Securities Value of Futures = $62,500/Contract
-Day Hedge is Lifted-
Buy Equity Securities with Sell 1 Index Futures at 130
Actual Cost = $65,000
Increase in Purchase Price = $2,500 Value of Futures = $65,000/Contract
Gain on Futures = $2,500
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HEDGING A STOCK PORTFOLIO: Sell the Future
Hedge Objective: Protect Against Declining
Value of the Portfolio
Factors:
Value of Stock Portfolio = $1,000,000
Value of Futures Contract - 125 X $500 = $62,500
Portfolio Beta Relative to the Index = 1.0
PORTFOLIO FUTURES
--------- -------
-Day Hedge is Placed-
Anticipate Selling $1,000,000 Sell 16 Index Futures at 125
in Equity Securities Value of Futures = $1,000,000
-Day Hedge is Lifted-
Equity Securities - Own Stock Buy 16 Index Futures at 120
with Value = $960,000 Value of Futures = $960,000
Loss in Portfolio Value = $40,000 Gain on Futures = $40,000
II. MARGIN PAYMENTS
Unlike purchase or sales of portfolio securities, no price is paid or
received by the 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 the 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
Advisor 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.
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III. RISKS OF TRANSACTIONS IN FUTURES CONTRACTS
There are several risks in connection with the use of futures by the Fund
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 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 Advisor. Conversely, the Fund 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
Advisor. 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 the 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 Fund
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 Fund, 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 Sub-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
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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 Advisor 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 Fund
intends 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 Fund would continue to be required to make daily cash payments of
variation margin. However, in the event futures contracts have been used to
hedge portfolio securities, such securities will not be sold until the futures
contract can be terminated. In such circumstances, an increase in the price of
the securities, if any, may partially or completely offset losses on the futures
contract. However, as described above, there is no guarantee that the price of
the securities will in fact correlate with the price movements in the futures
contract and thus provide an offset on a futures contract.
Further, it should be noted that the liquidity of a secondary market in a
futures contract may be adversely affected by "daily price fluctuation limits"
established by commodity exchanges which limit the amount of fluctuation in a
futures contract price during a single trading day. Once the daily limit has
been reached in the contract, no trades may be entered into at a price beyond
the limit, thus preventing the liquidation of open futures positions. The
trading of futures contracts is also subject to the risk of trading halts,
suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal activity, which could at times make it difficult or
impossible to liquidate existing positions or to recover excess variation margin
payments.
Successful use of futures by the Fund is also subject to the Advisor's
ability to predict correctly movements in the direction of the market. For
example, if the 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 Fund may have to sell
securities at a time when it may be disadvantageous to do so.
IV. OPTIONS ON FUTURES CONTRACTS
The Fund 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. The 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.
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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.
V. OTHER MATTERS
Accounting for futures contracts will be in accordance with generally
accepted accounting principles.
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PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
---------------------------------
(a) Included in Part A: None
Included in Part B: None
(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 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 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 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 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 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.
(g) Articles Supplementary 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.
<PAGE>
(h) Articles Supplementary 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 are incorporated herein by reference to
Post-Effective Amendment No. 31 to Registrant's Registration
Statement on Form N-1A filed with the Commission on October 28,
1997 with respect to the name changes of the Munder All-Season
Conservative Fund, the Munder All-Season Moderate Fund and the
Munder All-Season Aggressive Fund to the Munder All-Season
Maintenance Fund, the Munder All-Season Development Fund and the
Munder All-Season Accumulation Fund.
(j) Articles Supplementary relating to the Munder Emerging Growth
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) Form of Investment Advisory Agreement between Registrant and
Munder Capital Management with respect to the Munder Multi-Season
Growth Fund 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) Form of Investment Advisory Agreement between Registrant and
Munder Capital Management with respect to the Munder Money Market
Fund 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) Form of Investment Advisory Agreement between Registrant and
Munder Capital Management with respect to the Munder Real Estate
Equity Investment Fund 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.
(d) Investment Advisory Agreement between Registrant and Munder
Capital Management with respect to for 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.
2
<PAGE>
(e) Investment Advisory Agreement between Registrant and Munder
Capital Management with respect to the Munder Mid-Cap Growth 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.
(f) Form of Investment Advisory Agreement between Registrant and
Munder Capital Management with respect to the Munder
International Bond 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.
(g) Form of Investment Advisory Agreement between Registrant and
Munder Capital Management with respect to the Net Net Fund is
incorporated herein by reference to Post-Effective Amendment No.
17 to Registrant's Registration Statement on Form N-1A filed with
the Commission on August 9, 1996.
(h) Form of Investment Advisory Agreement between Registrant and
Munder Capital Management with respect to the Munder Small-Cap
Value 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.
(i) Form of Investment Advisory Agreement between Registrant and
Munder Capital Management with respect to the Munder Micro-Cap
Equity 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.
(j) Form of Investment Advisory Agreement between Registrant and
Munder Capital Management with respect to the Munder Equity
Selection 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.
(k) Form of Investment Advisory Agreement between Registrant and
Munder Capital Management 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.
(l) Form of Investment Advisory Agreement between Registrant and
Munder Capital Management 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.
3
<PAGE>
(m) Form of Investment Advisory Agreement between Registrant and
Munder Capital Management 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.
(n) Form of Investment Advisory Agreement between Registrant and
Munder Capital Management with respect to the Munder Emerging
Growth Fund is filed herein.
(6) (a) Underwriting Agreement 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 and the
Munder Mid-Cap Growth 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 Net Net 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) Form of Distribution Agreement 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 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.
(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 .
4
<PAGE>
(h) Form of Distribution Agreement between Registrant and Funds
Distributor, Inc. with respect to the Munder Emerging Growth Fund
is filed herein.
(7) Not Applicable
(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 between Registrant and Comerica Bank
with respect to the Munder Value Fund and the Munder Mid-Cap
Growth 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 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 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
Net Net 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 the Custodian Contract between Registrant and
Comerica Bank 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 Notice to the Custody Agreement 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 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.
(g) Form of Notice to the Custodian Agreement between Registrant and
Comerica Bank with respect to the Munder Financial Services
Agreement 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.
5
<PAGE>
(h) Form of Notice to the Custodian Agreement between Registrant and
Comerica Bank with respect to the Munder Emerging Growth 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 Mid-Cap Growth 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 filed herein.
(j) Form of Notice to Sub-Custodian Agreement among Registrant,
Comerica Bank and State Street Bank and Trust Company with
respect to the Munder Emerging Growth Fund is filed herein.
(9) (a) Transfer Agency and Service Agreement 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 between
Registrant and First Data Investor Services Group, Inc. with
respect to the Munder Value Fund and the Munder Mid-Cap Growth
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 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 Net Net
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.
6
<PAGE>
(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.
(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 Emerging Growth Fund is filed herein.
(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 Emerging Growth Fund is filed herein.
(k) Administration Agreement 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 Mid-Cap Growth 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 filed
herein.
(l) Form of Notice to Administration Agreement between Registrant and
State Street Bank and Trust Company with respect to the Munder
Emerging Growth Fund is filed herein.
(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
Emerging Growth Fund to be filed by amendment.
7
<PAGE>
(11) (a) Consent of Ernst & Young 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.
(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 are filed herein.
(e) Certified Resolution of Board authorizing signature on behalf of
Registrant pursuant to power of attorney is filed herein.
(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 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 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) Service and Distribution Plan for the Munder Multi-Season Growth
Fund Class D 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.
(d) Service Plan for the Munder Money Market 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.
8
<PAGE>
(e) Service and Distribution Plan 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) Service and Distribution Plan for the Munder Money Market Fund
Class D 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.
(g) Service Plan 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 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) Service and Distribution Plan for the Munder Real Estate Equity
Investment Fund Class D 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.
(j) Form of Service Plan for the Munder Multi-Season Growth Fund
Investor Shares is incorporated herein by reference to
Post-Effective Amendment No. 9 to Registrant's Registration
Statement on Form N-1A filed with the Commission on April 13,
1995.
(k) 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.
(l) 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.
(m) 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.
9
<PAGE>
(n) 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.
(o) Form of Distribution and Service Plan for the Net Net Fund is
incorporated herein by reference to Post-Effective Amendment No.
17 to Registrant's Registration Statement on Form N-1A filed with
the Commission on August 9, 1996.
(p) Form of Service Plan for Class A Shares with respect to the
Munder Emerging Growth Fund is incorporated herein by reference;
material provisions of this exhibit are substantially similar to
those of the corresponding exhibit to Post-Effective Amendment
No. 18 to Registrant's Registration Statement on Form N-1A filed
with the Commission on August 14, 1996.
(q) Form of Distribution and Service Plan for Class B Shares with
respect to the Munder Emerging Growth Fund is incorporated herein
by reference; material provisions of this exhibit are
substantially similar to those of the corresponding exhibit to
Post-Effective Amendment No. 18 to Registrant's Registration
Statement on Form N-1A filed with the Commission on August 14,
1996.
(r) Form of Distribution and Service Plan for Class C Shares with
respect to the Munder Emerging Growth Fund is incorporated herein
by reference; material provisions of this exhibit are
substantially similar to those of the corresponding exhibit to
Post-Effective Amendment No. 18 to Registrant's Registration
Statement on Form N-1A filed with the Commission on August 14,
1996.
(s) 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.
(t) Amended and Restated Service Plan for Class K Shares with respect
to the Munder Emerging Growth Fund is incorporated herein by
reference; material provisions of this exhibit are substantially
similar to those of the corresponding exhibit to Post-Effective
Amendment No. 29 to Registrant's Registration Statement on Form
N-1A filed with the Commission on August 29, 1997.
(16) Schedule for Computation of Performance Quotations is incorporated
herein by reference to Post-Effective Amendment No. 31 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
October 28, 1997.
(17) Not applicable.
(18) (a) Form of Amended and Restated Multi-Class Plan 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.
(b) Form of Amended and Restated Multi-Class Plan with respect to
the Munder Emerging Growth Fund is incorporated herein by
reference; material provisions of this exhibit are
substantially similar to those of the corresponding exhibit
to Post-Effective Amendement No. 31 to Registrant's
Registration Statement on Form N-1A filed with the Commission
on October 28, 1997.
10
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant.
--------------------------------------------------------------
Not Applicable.
Item 26. Number of Holders of Securities.
--------------------------------
As of March 13, 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
<S> <C> <C> <C> <C> <C>
Munder Multi-Season Growth Fund 623 1,876 75 130 173
Munder Money Market Fund 16 16 18 -- 70
Munder Real Estate Equity
Investment Fund 91 124 51 2 75
Munder Mid-Cap Growth Fund 22 14 6 1 16
Munder Value Fund 112 52 34 2 83
Munder International Bond Fund 4 3 1 2 9
Munder Small-Cap Value Fund 172 102 70 12 103
Munder Micro-Cap Equity Fund 614 694 379 14 96
Munder Short Term Treasury Fund 3 4 3 2 7
Munder All-Season Conservative
Fund 1 1 1 1 1
Munder All-Season Moderate Fund 1 1 1 1 1
Munder All-Season Aggressive Fund 1 1 1 1 1
</TABLE>
NetNet Fund- as of March 13, 1998, the NetNet Fund had 226 accounts open.
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,
11
<PAGE>
officer, employee or agent of the Registrant or is serving at the
request of the Registrant as a director, officer, partner, trustee,
employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise or employee
benefit plan, against any liability asserted against and incurred by
such person in any such capacity or arising out of such person's
position, whether or not the Registrant would have had the power to
indemnify against such liability. The rights provided by Section 7.6
shall be enforceable against the Registrant by such person who shall
be presumed to have relied upon such rights in serving or continuing
to serve in the capacities indicated therein.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors,
officers and controlling persons of the Registrant by the Registrant
pursuant to the Fund's Articles of Incorporation, its By-Laws or
otherwise, the Registrant is aware that in the opinion of the
Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Act and, therefore, is
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by directors, officers or controlling persons of the
Registrant in connection with the successful defense of any act, suit
or proceeding) is asserted by such directors, officers or controlling
persons in connection with shares being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by
the final adjudication of such issues.
Item 28. Business and Other Connections of Investment Advisor.
-----------------------------------------------------
Munder Capital Management
-------------------------
Name Position with Advisor
---- ---------------------
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
12
<PAGE>
`
Elyse G. Essick Vice President and Director of Client
Services
Sharon E. Fayolle Vice President and Director of Money
Market Trading
Otto G. Hinzmann Vice President and Director of Equity
Portfolio Management
Anne K. Kennedy Vice President and Director of
Corporate Bond Trading
Richard R. Mullaney Vice President and Director of The
Private Management Group
Ann F. Putallaz Vice President and Director of
Fiduciary Services
Peter G. Root Vice President and Director of
Government Securities Trading
Lisa A. Rosen General Counsel and Director of Mutual
Fund Operations
James C. Robinson 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
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. FDI acts as principal underwriter of the following
investment companies other than the Registrant:
13
<PAGE>
Harris Insight Funds Trust RCM Capital Funds, Inc.
The Munder Funds Trust Monetta Fund, Inc.
St. Clair Funds, Inc. Monetta Trust
The Munder Framlington Funds Trust The JPM Series Trust
BJB Investment Funds The JPM Series Trust II
The PanAgora Institutional Funds HT Insight Funds, Inc.
RCM Equity Funds, Inc. d/b/a Harris Insight Funds
Waterhouse Investors Family of Funds, The Brinson Funds
Inc.
J.P. Morgan Funds WEBS Index Fund, Inc.
The J.P. Morgan Institutional Funds The Montgomery Funds
The Skyline Funds The Montgomery Funds II
Orbitex Group of Funds
(b) The following is a list of the executive officers, directors and
partners of Funds Distributor, Inc.
Director, President and Chief Executive -Marie E. Connolly
Officer
Executive Vice President -Richard W. Ingram
Executive Vice President -Donald R. Roberson
Senior Vice President -Michael S. Petrucelli
Director, Senior Vice President, Treasurer -Joseph F. Tower, III
and Chief Financial Officer
Senior Vice President -Paula R. David
Senior Vice President -Bernard A. Whalen
Director -William J. Nutt
Senior Vice President -A. Bayard Closser
Executive Vice President -William S. Nichols
(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);
14
<PAGE>
(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.
-------------
(a) Not Applicable.
(b) Registrant undertakes to file a Post-Effective Amendment relating
to the Munder Emerging Growth Fund, using reasonably current
financial statements which need not be certified, within four to
six months from the effective date of the Registration Statement
describing the Fund.
(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.
15
<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. 32 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. 32 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Quincy and The Commonwealth of Massachusetts, on the
20th day of March 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:
SIGNATURES TITLE DATE
- ---------- ----- ----
* Director and March 20, 1998
- ----------------------- President
Lee P. Munder
* Director March 20, 1998
- -----------------------
Charles W. Elliott
* Director March 20, 1998
- -----------------------
Joseph E. Champagne
* Director March 20, 1998
- -----------------------
Thomas B. Bender
* Director March 20, 1998
- -----------------------
Thomas D. Eckert
* Director March 20, 1998
- -----------------------
John Rakolta, Jr.
* Director March 20, 1998
- -----------------------
David J. Brophy
16
<PAGE>
* Vice President, March 20, 1998
- ----------------------- Treasurer and
Terry H. Gardner Chief Financial Officer
*By: /s/ CYNTHIA SURPRISE
-------------------------
Cynthia Surprise
as Attorney-in-Fact
*Powers of attorney are filed herein.
17
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
1(j) Articles Supplementary for the Munder Emerging Growth Fund
5(n) Form of Investment Advisory Agreement for the Munder Emerging Growth
Fund
6(h) Form of Distribution Agreement with respect to the Munder Emerging
Growth Fund
8(h) Form of Notice to Custodian Agreement with respect the Munder Emerging
Growth Fund
8(i) Sub-Custodian Agreement with respect to The Munder Funds, Inc.
8(j) Form of Notice to Sub-Custodian Agreement with respect the Munder
Emerging Growth Fund
9(i) Form of Notice to Transfer Agency and Registrar Agreement with respect
the Munder Emerging Growth Fund
9(j) Form of Amendment to Transfer Agency and Registrar Agreement with
respect the Munder Emerging Growth Fund
9(k) Administration Agreement with respect to The Munder Funds, Inc.
9(l) Form of Notice to Administration Agreement with respect the Munder
Emerging Growth Fund
11(d) Powers of Attorney
11(e) Certified Resolution of Board authorizing signature on behalf of
Registrant pursuant to power of attorney
18
<PAGE>
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 February
24, 1998 pursuant to Section 2-208 of Maryland General Corporate Law, duly
classified 50,000,000 shares of the unissued, authorized capital stock of the
Corporation into the following additional series, designated as follows:
NAME OF SERIES NUMBER OF SHARES ALLOCATED
Munder Emerging Growth Fund 50,000,000
SECOND: The shares of the Corporation classified pursuant to Article First
of these Articles Supplementary have been so classified by the Board of
Directors under the authority contained in the Charter of the Corporation. The
number of shares of capital stock of the various classes that the Corporation
has authority to issue has been established by the Board of Directors in
accordance with Section 2-105(c) of the Maryland General Corporation Law.
THIRD: Immediately prior to the effectiveness of the Articles
Supplementary of the Corporation as hereinabove set forth, the Corporation had
the authority to issue two billion, three-hundred million (2,300,000,000) shares
of Common Stock of the par value of $0.01 per share and of the aggregate par
value of twenty-three million dollars ($23,000,000), of which the Board of
Directors had designated one billion, eight hundred and five million
(1,805,000,000) shares into Series and classified the shares of each Series as
follows:
<PAGE>
PREVIOUSLY CLASSIFIED SHARES
AUTHORIZED SHARES
NAME OF SERIES (IN MILLIONS)
- -------------- -------------
NetNet Fund 50
Munder Financial Services Fund 50
AUTHORIZED
SHARES BY CLASS (IN MILLIONS)
-----------------------------
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
(previously known as Munder
All-Season Maintenance Fund) 12.5 12.5 25 N/A N/A
Munder All-Season Moderate Fund
(previously known as Munder
All-Season Development Fund) 12.5 12.5 25 N/A N/A
Munder All-Season Aggressive Fund
(previously known as Munder
All-Season Accumulation Fund) 12.5 12.5 25 N/A N/A
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, eight hundred and fifty five million,
(1,855,000,000) (including the 1,805,000,000 shares previously designated)
shares into Series and classified the shares of each Series as follows:
2
<PAGE>
CURRENT CLASSIFICATION OF SHARES
AUTHORIZED SHARES
NAME OF SERIES (IN MILLIONS)
- -------------- -------------
NetNet Fund 50
Munder Financial Services Fund 50
AUTHORIZED
SHARES BY CLASS (IN MILLIONS)
-----------------------------
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 Emerging Growth Fund 3.4 3.3 20 3.3 20
FOURTH: The preferences, rights, voting powers, restrictions, limitations
as to dividends, qualifications and terms and conditions of redemption of the
various classes of shares shall be as set forth in the Corporation's Articles of
Incorporation and shall be subject to all provisions of the Articles of
Incorporation relating to shares of the Corporation generally, and those set
forth as follows:
(a) The assets of each Class of a Series shall be invested in the same
investment portfolio of the Corporation.
(b) The dividends and distributions of investment income and capital gains
with respect to each class of shares shall be in such amount as may be
declared from time to time by the Board of Directors, and the dividends and
distributions of each class of shares may vary from the dividends and
distributions of the other classes of shares to reflect
3
<PAGE>
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 purposes of
the immediately preceding sentence shall be the date of issuance of the
original shares of capital stock.
4
<PAGE>
(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 shares converted, if issued, have been received by the
Corporation or its agent duly endorsed for transfer.
5
<PAGE>
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: February 24, 1998
THE MUNDER FUNDS, INC.
[CORPORATE SEAL]
By: /s/ Terry H. Gardner
--------------------
Terry H. Gardner
Vice President
Attest:
/s/ Lisa A. Rosen
- -----------------
Lisa Anne Rosen
Secretary
6
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made this day of , 1998, between The Munder
Funds, Inc. (the "Company") on behalf of the Munder Emerging Growth Fund (the
"Fund") 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 the 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 Fund, and the Advisor is willing to furnish such
services to the Fund;
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
The Company hereby appoints the Advisor to act as investment advisor to the
Fund 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.
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 Fund in accordance with the
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 Fund; (c) place purchase and sale orders on behalf of the
Fund; and (d) employ professional portfolio managers and securities analysts to
provide research services to the Fund. In providing those services, the Advisor
will provide the Fund with ongoing research, analysis, advice and judgments
regarding individual investments, general economic conditions and trends and
long-range investment policy. In addition, the Advisor will furnish the Fund
with whatever statistical information the Fund may reasonably request with
respect to the securities that the Fund may hold or contemplate purchasing.
The Advisor further agrees that, in performing its duties hereunder, it
will:
<PAGE>
(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 the 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 the 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 the Fund's portfolio;
(d) make available to the Fund's administrator and the Company, promptly
upon their request, such copies of its investment records and ledgers with
respect to the Fund 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
Fund 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 Fund, 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.
2
<PAGE>
4. BROKERAGE
In selecting brokers or dealers to execute transactions on behalf of the
Fund, 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 Fund and/or other
accounts over which the Advisor or its affiliates exercise investment
discretion. 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 Fund
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 Fund by the 1940 Act. The Advisor further agrees
that all records which it maintains for the Fund is the property of the Fund 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 the Fund or the Fund's
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 the 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 the Fund.
7. COMPENSATION
In consideration of the services rendered pursuant to this Agreement, the
Fund will pay the Advisor a fee at an annual rate equal to 0.75% of the average
daily net assets of the Fund. This fee shall be computed and accrued daily and
payable monthly. For the purpose of
3
<PAGE>
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. The 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 Fund 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 the clients (whether or not their investment objective and policies are
similar to the Fund) and to engage in activities so long as it services
hereunder are not impaired thereby.
10. DURATION AND TERMINATION
This Agreement shall become effective on the date of this Agreement 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 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 Fund's shares or
upon ninety (90) days' written notice by the Advisor. 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 the Fund shall be
effective until approved by an affirmative vote of (i) a majority of the
outstanding voting securities of the 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 the Fund has the right
to use such name (or derivable or logo) only so long as this Agreement shall
continue with respect to the Fund. Upon termination of this Agreement, the
Company and the Fund 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.
5
<PAGE>
(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.
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:
----------------------
MUNDER CAPITAL MANAGEMENT
By:
-----------------------
6
<PAGE>
DISTRIBUTION AGREEMENT
This Distribution Agreement is made as of this ___ of ______, 1998 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 the Munder Emerging Growth Fund (the
"Portfolio"), to provide for the sale and distribution of shares of the
Portfolio (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-A 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
(f) The Fund's most recent Prospectus and Statements of Additional
Information and all amendments and supplements thereto
(collectively, the "Prospectus").
<PAGE>
II. DISTRIBUTION
1. APPOINTMENT OF DISTRIBUTOR. The Fund hereby appoints Funds
Distributor as Distributor of the Portfolio's 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 Portfolio 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 terms 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 Prospectuses.
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 the Portfolio, 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 relating to the Portfolio (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 Portfolio.
(d) All Shares of the Portfolio 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
2
<PAGE>
offering price 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.
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 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.
3
<PAGE>
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 confidentiality 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 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; and (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 the Portfolio, agrees
that the 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
4
<PAGE>
upon, any untrue statements 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 base 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 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 an 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.
The 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 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 the Portfolio under this subsection 3 shall be the
several (and not joint or joint and not several) obligation of the Portfolio.
4. FUNDS DISTRIBUTOR INDEMNIFICATION. Funds Distributor will indemnify,
defend and hold harmless the Fund, the Portfolio, the Fund's several officers
and Directors and any person who controls the Fund or the 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
5
<PAGE>
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 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 Directors by or on
behalf of Funds Distributor specifically for inclusion therein, and will
reimburse the Fund, the Portfolio, the Fund's several officers and trustees, and
any person who controls the Fund or the 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 PROVISIONS. 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 reasonably 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 May 6,
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 case 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
6
<PAGE>
the outstanding voting securities," "interested person" and "assignment" shall
have the same meanings as such terms have in the 1940 Act.)
II. AMENDMENT OF THIS AGREEMENT
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. NOTICE
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
insure 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.
7
<PAGE>
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:
----------------------
Name:
--------------------
Title:
-------------------
Attest:
--------------------
FUNDS DISTRIBUTOR, INC.
By:
----------------------
Name:
--------------------
Title:
-------------------
Attest:
---------------------
8
<PAGE>
Comerica Bank
One Detroit Center
500 Woodward Avenue
Detroit, Michigan 48226
Ladies and 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.,
namely the Munder Emerging Growth Fund (the "New Portfolio").
We request that you act as Custodian under the Agreement 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:
-----------------------
Accepted:
Comerica Bank
By:
-----------------------
Date:
---------------
<PAGE>
SUB-CUSTODIAN CONTRACT
Among
THE MUNDER FUNDS, INC.,
COMERICA BANK
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
PAGE
1. Employment of Sub-Custodian and Property to be Held By
It. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Duties of the Sub-Custodian with Respect to Property
of the Fund Held by the Sub-Custodian in the United States. . . . . . . 2
2.1 Holding Securities . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Delivery of Securities . . . . . . . . . . . . . . . . . . . . . 2
2.3 Registration of Securities . . . . . . . . . . . . . . . . . . . 4
2.4 Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Availability of Federal Funds. . . . . . . . . . . . . . . . . . 5
2.6 Collection of Income . . . . . . . . . . . . . . . . . . . . . . 5
2.7 Payment of Fund Monies . . . . . . . . . . . . . . . . . . . . . 5
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased . . . . . . . . . . . . . . . . . . . . . . 6
2.9 Appointment of Agents. . . . . . . . . . . . . . . . . . . . . . 7
2.10 Deposit of Fund Assets in U.S. Securities System . . . . . . . . 7
2.11 Fund Assets Held in the Sub-Custodian's Direct
Paper System . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.12 Segregated Account . . . . . . . . . . . . . . . . . . . . . . . 9
2.13 Ownership Certificates for Tax Purposes. . . . . . . . . . . . . 9
2.14 Proxies. . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
2.15 Communications Relating to Portfolio
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . .10
3. Duties of the Sub-Custodian with Respect to Property of
the Fund Held Outside of the United States. . . . . . . . . . . . . . .10
3.1 Appointment of Foreign Sub-Sub-Custodians. . . . . . . . . . . .10
3.2 Assets to be Held. . . . . . . . . . . . . . . . . . . . . . . .10
3.3 Foreign Securities Systems . . . . . . . . . . . . . . . . . . .10
3.4 Holding Securities . . . . . . . . . . . . . . . . . . . . . . .11
3.5 Agreements with Foreign Banking Institutions . . . . . . . . . .11
3.6 Access of Independent Accountants of the Fund. . . . . . . . . .11
3.7 Reports by Sub-Sub-Custodian . . . . . . . . . . . . . . . . . .11
3.8 Transactions in Foreign Custody Account. . . . . . . . . . . . .11
3.9 Liability of Foreign Sub-Sub-Custodians. . . . . . . . . . . . .12
3.10 Liability of Sub-Custodian . . . . . . . . . . . . . . . . . . .12
3.11 Reimbursement for Advances . . . . . . . . . . . . . . . . . . .12
3.12 Monitoring Responsibilities. . . . . . . . . . . . . . . . . . .13
3.13 Branches of U.S. Banks . . . . . . . . . . . . . . . . . . . . .13
3.14 Tax Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
<PAGE>
4. Payments for Sales or Repurchases or Redemptions
of Shares of the Fund . . . . . . . . . . . . . . . . . . . . . . . . .13
5. Proper Instructions . . . . . . . . . . . . . . . . . . . . . . . . . .14
6. Actions Permitted Without Express Authority . . . . . . . . . . . . . .14
7. Evidence of Authority . . . . . . . . . . . . . . . . . . . . . . . . .15
8. Duties of Sub-Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income . . . . . . . . . . .15
9. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
10. Opinion of Fund's Independent Accountants . . . . . . . . . . . . . . .15
11. Reports to Fund by Independent Public Accountants . . . . . . . . . . .16
12. Compensation of Sub-Custodian . . . . . . . . . . . . . . . . . . . . .16
13. Responsibility of Sub-Custodian . . . . . . . . . . . . . . . . . . . .16
14. Effective Period, Termination and Amendment . . . . . . . . . . . . . .18
15. Successor Sub-Custodian . . . . . . . . . . . . . . . . . . . . . . . .18
16. Interpretive and Additional Provisions. . . . . . . . . . . . . . . . .19
17. Additional Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . .19
18. Massachusetts Law to Apply. . . . . . . . . . . . . . . . . . . . . . .19
19. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
20. Reproduction of Documents . . . . . . . . . . . . . . . . . . . . . . .20
21. Shareholder Communications Election . . . . . . . . . . . . . . . . . .20
22. Use of Fund's Name. . . . . . . . . . . . . . . . . . . . . . . . . . .20
<PAGE>
SUB-CUSTODIAN CONTRACT
This Contract among The Munder Funds, Inc., a corporation organized and
existing under the laws of Maryland, having its principal place of business at
480 Pierce Street, Birmingham, Michigan 48009, hereinafter called the "Fund",
Comerica Bank, a Michigan banking corporation having a principal place of
business at 411 West Lafayette, Detroit, Michigan 48226, hereinafter called the
"Custodian" and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Sub-Custodian",
WITNESSETH:
WHEREAS, the Fund has appointed the Custodian as custodian of its assets;
WHEREAS, the Custodian and the Fund desire to appoint the Sub-Custodian to
act as sub-custodian of the assets of the Fund;
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund currently offers shares in thirteen series, 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 Mid-Cap Growth 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 (such series together with all other series subsequently established
by the Fund and made subject to this Contract in accordance with paragraph 17,
being herein referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT OF SUB-CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Custodian and the Fund hereby employ the Sub-Custodian as the
Sub-Custodian of the assets of the Portfolios of the Fund, including securities
which the Fund, on behalf of the applicable Portfolio desires to be held in
places within the United States ("domestic securities") and securities it
desires to be held outside the United States ("foreign securities") pursuant to
the provisions of the Articles of Incorporation. The Fund on behalf of the
Portfolio(s) agrees to deliver to the Sub-Custodian all securities and cash of
the Portfolios, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the
Portfolio(s) from time to time, and the cash consideration received by it for
such new or treasury shares of capital stock of the Fund representing interests
in the Portfolios, ("Shares") as may be
<PAGE>
issued or sold from time to time. The Sub-Custodian shall not be responsible for
any property of a Portfolio held or received by the Portfolio and not delivered
to the Sub-Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Sub-Custodian shall on behalf of the applicable Portfolio(s) from time to
time employ one or more sub-sub-custodians, located in the United States but
only in accordance with an applicable vote by the Board of Directors of the Fund
on behalf of the applicable Portfolio(s), and provided that the Sub-Custodian
shall have no more or less responsibility or liability to the Fund on account of
any actions or omissions of any sub-sub-custodian so employed than any such
sub-sub-custodian has to the Sub-Custodian. The Sub-Custodian may employ as
sub-sub-custodian for the Fund's foreign securities on behalf of the applicable
Portfolio(s) the foreign banking institutions and foreign securities
depositories designated in Schedule A hereto but only in accordance with the
provisions of Article 3.
2. DUTIES OF THE SUB-CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY
THE SUB-CUSTODIAN IN THE UNITED STATES
2.1 HOLDING SECURITIES. The Sub-Custodian shall hold and physically segregate
for the account of each Portfolio all non-cash property, to be held by it
in the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository or
in a book-entry system authorized by the U.S. Department of the Treasury
(each, a U.S. Securities System") and (b) commercial paper of an issuer for
which State Street Bank and Trust Company acts as issuing and paying agent
("Direct Paper") which is deposited and/or maintained in the Direct Paper
System of the Sub-Custodian (the "Direct Paper System") pursuant to Section
2.11.
2.2 DELIVERY OF SECURITIES. The Sub-Custodian shall release and deliver
domestic securities owned by a Portfolio held by the Sub-Custodian or in a
U.S. Securities System account of the Sub-Custodian or in the
Sub-Custodian's Direct Paper book entry system account ("Direct Paper
System Account") only upon receipt of Proper Instructions from the Fund on
behalf of the applicable Portfolio, which may be continuing instructions
when deemed appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;
2
<PAGE>
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Sub-Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of the
Portfolio or into the name of any nominee or nominees of the
Sub-Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.9 or into the name or nominee name of any
sub-sub-custodian appointed pursuant to Article 1; or for exchange for
a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
PROVIDED that, in any such case, the new securities are to be
delivered to the Sub-Custodian;
7) Upon the sale of such securities for the account of the Portfolio, to
the broker or its clearing agent, against a receipt, for examination
in accordance with "street delivery" custom; provided that in any such
case, the Sub-Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise from the
Sub-Custodian's own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Sub-Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for
definitive securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Sub-Custodian;
10) For delivery in connection with any loans of securities made by the
Portfolio, BUT ONLY against receipt of adequate collateral as agreed
upon from time to time by the Sub-Custodian and the Fund on behalf of
the Portfolio, which may be in the form of cash or obligations issued
by the United States government, its agencies or instrumentalities,
except that in connection with any loans for which collateral is to be
credited to the Sub-Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the Sub-Custodian
will not be held liable or responsible for the delivery of securities
owned by the Portfolio prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by the Fund
on behalf of the Portfolio requiring a pledge of assets by the Fund on
behalf of the Portfolio, BUT ONLY against receipt of amounts borrowed;
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12) For delivery in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Sub-Custodian and a
broker-dealer registered under the Securities Exchange Act of 1934
(the "Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Sub-Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar organization or
organizations, regarding account deposits in connection with
transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may be
described from time to time in the currently effective prospectus and
statement of additional information of the Fund, related to the
Portfolio ("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other proper corporate purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution of the Board of
Directors or of the Executive Committee signed by an officer of the
Fund and certified by the Secretary or an Assistant Secretary,
specifying the securities of the Portfolio to be delivered, setting
forth the purpose for which such delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming the person
or persons to whom delivery of such securities shall be made.
2.3 REGISTRATION OF SECURITIES. Domestic securities held by the Sub-Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Sub-Custodian which nominee shall be
assigned exclusively to the Portfolio, UNLESS the Fund has authorized in
writing the appointment of a nominee to be used in common with other
registered investment companies having the same investment adviser as the
Portfolio, or in the name or nominee name of any agent appointed pursuant
to Section 2.9 or in the name or nominee name of any sub-sub-custodian
appointed pursuant to Article 1. All securities accepted by the
Sub-Custodian on behalf of the Portfolio under the terms of this Contract
shall be in "street name" or other good delivery form. If, however, the
Fund directs the Sub-Custodian to maintain securities in "street name", the
Sub-Custodian shall utilize its best efforts only to timely collect income
due the Fund on such securities and to notify the
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Fund on a best efforts basis only of relevant corporate actions including,
without limitation, pendency of calls, maturities, tender or exchange
offers.
2.4 BANK ACCOUNTS. The Sub-Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio of
the Fund, subject only to draft or order by the Sub-Custodian acting
pursuant to the terms of this Contract, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it from or
for the account of the Portfolio, other than cash maintained by the
Portfolio in a bank account established and used in accordance with Rule
17f-3 under the Investment Company Act of 1940. Funds held by the
Sub-Custodian for a Portfolio may be deposited by it to its credit as
Sub-Custodian in the Banking Department of the Sub-Custodian or in such
other banks or trust companies as it may in its discretion deem necessary
or desirable; PROVIDED, however, that every such bank or trust company
shall be qualified to act as a Sub-Custodian under the Investment Company
Act of 1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall on behalf of each
applicable Portfolio be approved by vote of a majority of the Board of
Directors of the Fund. Such funds shall be deposited by the Sub-Custodian
in its capacity as Sub-Custodian and shall be withdrawable by the
Sub-Custodian only in that capacity.
2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the Fund on
behalf of each applicable Portfolio and the Sub-Custodian, the
Sub-Custodian shall, upon the receipt of Proper Instructions from the Fund
on behalf of a Portfolio, make federal funds available to such Portfolio as
of specified times agreed upon from time to time by the Fund and the
Sub-Custodian in the amount of checks received in payment for Shares of
such Portfolio which are deposited into the Portfolio's account.
2.6 COLLECTION OF INCOME. Subject to the provisions of Section 2.3, the
Sub-Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which each
Portfolio shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and
other payments with respect to bearer domestic securities if, on the date
of payment by the issuer, such securities are held by the Sub-Custodian or
its agent thereof and shall credit such income, as collected, to such
Portfolio's Sub-Custodian account. Without limiting the generality of the
foregoing, the Sub-Custodian shall detach and present for payment all
coupons and other income items requiring presentation as and when they
become due and shall collect interest when due on securities held
hereunder. Income due each Portfolio on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of the Fund.
The Sub-Custodian will have no duty or responsibility in connection
therewith, other than to provide the Fund with such information or data as
may be necessary to assist the Fund in arranging for the timely delivery to
the Sub-Custodian of the income to which the Portfolio is properly
entitled.
2.7 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions from the Fund
on behalf of the applicable Portfolio, which may be continuing instructions
when deemed appropriate by
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the parties, the Sub-Custodian shall pay out monies of a Portfolio in the
following cases only:
1) Upon the purchase of domestic securities, options, futures contracts
or options on futures contracts for the account of the Portfolio but
only (a) against the delivery of such securities or evidence of title
to such options, futures contracts or options on futures contracts to
the Sub-Custodian (or any bank, banking firm or trust company doing
business in the United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a Sub-Custodian
and has been designated by the Sub-Custodian as its agent for this
purpose) registered in the name of the Portfolio or in the name of a
nominee of the Sub-Custodian referred to in Section 2.3 hereof or in
proper form for transfer; (b) in the case of a purchase effected
through a U.S. Securities System, in accordance with the conditions
set forth in Section 2.10 hereof; (c) in the case of a purchase
involving the Direct Paper System, in accordance with the conditions
set forth in Section 2.11; (d) in the case of repurchase agreements
entered into between the Fund on behalf of the Portfolio and the
Sub-Custodian, or another bank, or a broker-dealer which is a member
of NASD, (i) against delivery of the securities either in certificate
form or through an entry crediting the Sub-Custodian's account at the
Federal Reserve Bank with such securities or (ii) against delivery of
the receipt evidencing purchase by the Portfolio of securities owned
by the Sub-Custodian along with written evidence of the agreement by
the Sub-Custodian to repurchase such securities from the Portfolio or
(e) for transfer to a time deposit account of the Fund in any bank,
whether domestic or foreign; such transfer may be effected prior to
receipt of a confirmation from a broker and/or the applicable bank
pursuant to Proper Instructions from the Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Portfolio as
set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the Portfolio,
including but not limited to the following payments for the account of
the Portfolio: interest, taxes, management, accounting, transfer
agent and legal fees, and operating expenses of the Fund whether or
not such expenses are to be in whole or part capitalized or treated as
deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio declared
pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
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7) For any other proper purpose, BUT ONLY upon receipt of, in addition to
Proper Instructions from the Fund on behalf of the Portfolio, a
certified copy of a resolution of the Board of Directors or of the
Executive Committee of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary, specifying the
amount of such payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom such payment is to be made.
2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
Except as specifically stated otherwise in this Contract, in any and every
case where payment for purchase of domestic securities for the account of a
Portfolio is made by the Sub-Custodian in advance of receipt of the
securities purchased in the absence of specific written instructions from
the Fund on behalf of such Portfolio to so pay in advance, the
Sub-Custodian shall be absolutely liable to the Fund for such securities to
the same extent as if the securities had been received by the
Sub-Custodian.
2.9 APPOINTMENT OF AGENTS. The Sub-Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of 1940,
as amended, to act as a Sub-Custodian, as its agent to carry out such of
the provisions of this Article 2 as the Sub-Custodian may from time to time
direct; PROVIDED, however, that the appointment of any agent shall not
relieve the Sub-Custodian of its responsibilities or liabilities hereunder.
2.10 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. The Sub-Custodian may
deposit and/or maintain securities owned by a Portfolio in a clearing
agency registered with the Securities and Exchange Commission under Section
17A of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S. Department
of the Treasury and certain federal agencies, collectively referred to
herein as "U.S. Securities System" in accordance with applicable Federal
Reserve Board and Securities and Exchange Commission rules and regulations,
if any, and subject to the following provisions:
1) The Sub-Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are represented in an
account ("Account") of the Sub-Custodian in the U.S. Securities System
which shall not include any assets of the Sub-Custodian other than
assets held as a fiduciary, Custodian or otherwise for customers;
2) The records of the Sub-Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Portfolio;
3) The Sub-Custodian shall pay for securities purchased for the account
of the Portfolio upon (i) receipt of advice from the U.S. Securities
System that such securities have been transferred to the Account, and
(ii) the making of an entry on
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the records of the Sub-Custodian to reflect such payment and transfer
for the account of the Portfolio. The Sub-Custodian shall transfer
securities sold for the account of the Portfolio upon (i) receipt of
advice from the U.S. Securities System that payment for such
securities has been transferred to the Account, and (ii) the making of
an entry on the records of the Sub-Custodian to reflect such transfer
and payment for the account of the Portfolio. Copies of all advices
from the U.S. Securities System of transfers of securities for the
account of the Portfolio shall identify the Portfolio, be maintained
for the Portfolio by the Sub-Custodian and be provided to the Fund at
its request. Upon request, the Sub-Custodian shall furnish the Fund
on behalf of the Portfolio confirmation of each transfer to or from
the account of the Portfolio in the form of a written advice or notice
and shall furnish to the Fund on behalf of the Portfolio copies of
daily transaction sheets reflecting each day's transactions in the
U.S. Securities System for the account of the Portfolio;
4) The Sub-Custodian shall provide the Fund for the Portfolio with any
report obtained by the Sub-Custodian on the U.S. Securities System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the U.S. Securities System;
5) The Sub-Custodian shall have received from the Fund on behalf of the
Portfolio the initial or annual certificate, as the case may be,
required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Sub-Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting from use
of the U.S. Securities System by reason of any negligence, misfeasance
or misconduct of the Sub-Custodian or any of its agents or of any of
its or their employees or from failure of the Sub-Custodian or any
such agent to enforce effectively such rights as it may have against
the U.S. Securities System; at the election of the Fund, it shall be
entitled to be subrogated to the rights of the Sub-Custodian with
respect to any claim against the U.S. Securities System or any other
person which the Sub-Custodian may have as a consequence of any such
loss or damage if and to the extent that the Portfolio has not been
made whole for any such loss or damage.
2.11 FUND ASSETS HELD IN THE SUB-CUSTODIAN'S DIRECT PAPER SYSTEM. The
Sub-Custodian may deposit and/or maintain securities owned by a Portfolio
in the Direct Paper System of the Sub-Custodian subject to the following
provisions:
1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions from the Fund on
behalf of the Portfolio;
2) The Sub-Custodian may keep securities of the Portfolio in the Direct
Paper System only if such securities are represented in an account
("Account") of the Sub-Custodian in the Direct Paper System which
shall not include any assets of the Sub-
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Custodian other than assets held as a fiduciary, Custodian or
otherwise for customers;
3) The records of the Sub-Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Portfolio;
4) The Sub-Custodian shall pay for securities purchased for the account
of the Portfolio upon the making of an entry on the records of the
Sub-Custodian to reflect such payment and transfer of securities to
the account of the Portfolio. The Sub-Custodian shall transfer
securities sold for the account of the Portfolio upon the making of an
entry on the records of the Sub-Custodian to reflect such transfer and
receipt of payment for the account of the Portfolio;
5) The Sub-Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the Portfolio,
in the form of a written advice or notice, of Direct Paper on the next
business day following such transfer and shall furnish to the Fund on
behalf of the Portfolio copies of daily transaction sheets reflecting
each day's transaction in the U.S. Securities System for the account
of the Portfolio;
6) The Sub-Custodian shall provide the Fund on behalf of the Portfolio
with any report on its system of internal accounting control as the
Fund may reasonably request from time to time.
2.12 SEGREGATED ACCOUNT. The Sub-Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio establish
and maintain a segregated account or accounts for and on behalf of each
such Portfolio, into which account or accounts may be transferred cash
and/or securities, including securities maintained in an account by the
Sub-Custodian pursuant to Section 2.10 hereof, (i) in accordance with the
provisions of any agreement among the Fund on behalf of the Portfolio, the
Sub-Custodian and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national securities
exchange (or the Commodity Futures Trading Commission or any registered
contract market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions by
the Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by the
Portfolio or commodity futures contracts or options thereon purchased or
sold by the Portfolio, (iii) for the purposes of compliance by the
Portfolio with the procedures required by Investment Company Act Release
No. 10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate
purposes, BUT ONLY, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the applicable
Portfolio, a
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certified copy of a resolution of the Board of Directors or of the
Executive Committee signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, setting forth the purpose or purposes
of such segregated account and declaring such purposes to be proper
corporate purposes.
2.13 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Sub-Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
2.14 PROXIES. The Sub-Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in the
name of the Portfolio or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject to the provisions
of Section 2.3, the Sub-Custodian shall transmit promptly to the Fund for
each Portfolio all written information (including, without limitation,
pendency of calls and maturities of domestic securities and expirations of
rights in connection therewith and notices of exercise of call and put
options written by the Fund on behalf of the Portfolio and the maturity of
futures contracts purchased or sold by the Portfolio) received by the
Sub-Custodian from issuers of the securities being held for the Portfolio.
With respect to tender or exchange offers, the Sub-Custodian shall transmit
promptly to the Portfolio all written information received by the
Sub-Custodian from issuers of the securities whose tender or exchange is
sought and from the party (or his agents) making the tender or exchange
offer. If the Portfolio desires to take action with respect to any tender
offer, exchange offer or any other similar transaction, the Portfolio shall
notify the Sub-Custodian at least three business days prior to the date on
which the Sub-Custodian is to take such action.
3. DUTIES OF THE SUB-CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD
OUTSIDE OF THE UNITED STATES
3.1 APPOINTMENT OF FOREIGN SUB-SUB-CUSTODIANS. The Fund hereby authorizes and
instructs the Sub-Custodian to employ as sub-sub-custodians for the
Portfolio's securities and other assets maintained outside the United
States the foreign banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign sub-sub-custodians"). Upon
receipt of "Proper Instructions", as defined in Section 5 of this Contract,
together with a certified resolution of the Fund's Board of Directors, the
Sub-Custodian and the Fund may agree to amend Schedule A hereto from time
to time to designate additional foreign banking institutions and foreign
securities depositories to act as sub-sub-custodian. Upon receipt of
Proper Instructions, the Fund may instruct the Sub-Custodian to cease the
employment of any one or more such sub-sub-custodians for maintaining
custody of the Portfolio's assets.
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3.2 ASSETS TO BE HELD. The Sub-Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-Sub-Custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents in
such amounts as the Sub-Custodian or the Fund may determine to be
reasonably necessary to effect the Portfolio's foreign securities
transactions. The Sub-Custodian shall identify on its books as belonging
to the Fund, the foreign securities of the Fund held by each foreign
sub-sub-custodian.
3.3 FOREIGN SECURITIES SYSTEMS. Except as may otherwise be agreed upon in
writing by the Sub-Custodian and the Fund, assets of the Portfolios shall
be maintained in a clearing agency which acts as a securities depository or
in a book-entry system for the central handling of securities located
outside the United States (each a "Foreign Securities System") only through
arrangements implemented by the foreign banking institutions serving as
sub-sub-custodians pursuant to the terms hereof (Foreign Securities Systems
and U.S. Securities Systems are collectively referred to herein as the
"Securities Systems"). Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 3.5
hereof.
3.4 HOLDING SECURITIES. The Sub-Custodian may hold securities and other
non-cash property for all of its customers, including the Fund, with a
foreign sub-sub-custodian in a single account that is identified as
belonging to the Sub-Custodian for the benefit of its customers, PROVIDED
HOWEVER, that (i) the records of the Sub-Custodian with respect to
securities and other non-cash property of the Fund which are maintained in
such account shall identify by book-entry those securities and other
non-cash property belonging to the Fund and (ii) the Sub-Custodian shall
require that securities and other non-cash property so held by the foreign
sub-sub-custodian be held separately from any assets of the foreign
sub-sub-custodian or of others.
3.5 AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each agreement with a
foreign banking institution shall provide that: (a) the assets of each
Portfolio will not be subject to any right, charge, security interest, lien
or claim of any kind in favor of the foreign banking institution or its
creditors or agent, except a claim of payment for their safe custody or
administration; (b) beneficial ownership for the assets of each Portfolio
will be freely transferable without the payment of money or value other
than for custody or administration; (c) adequate records will be maintained
identifying the assets as belonging to each applicable Portfolio; (d)
officers of or auditors employed by, or other representatives of the
Sub-Custodian, including to the extent permitted under applicable law the
independent public accountants for the Fund, will be given access to the
books and records of the foreign banking institution relating to its
actions under its agreement with the Sub-Custodian; and (e) assets of the
Portfolios held by the foreign sub-sub-custodian will be subject only to
the instructions of the Sub-Custodian or its agents.
3.6 ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon request of the Fund,
the Sub-Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of
any foreign banking institution employed as
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a foreign sub-Sub-Custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement with
the Sub-Custodian.
3.7 REPORTS BY SUB-CUSTODIAN. The Sub-Custodian will supply to the Fund from
time to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Portfolio(s) held by foreign
sub-sub-custodians, including but not limited to an identification of
entities having possession of the Portfolio(s) securities and other assets
and advices or notifications of any transfers of securities to or from each
custodial account maintained by a foreign banking institution for the
Sub-Custodian on behalf of each applicable Portfolio indicating, as to
securities acquired for a Portfolio, the identity of the entity having
physical possession of such securities.
3.8 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. (a) Except as otherwise provided
in paragraph (b) of this Section 3.8, the provision of Sections 2.2 and 2.7
of this Contract shall apply, MUTATIS MUTANDIS to the foreign securities of
the Fund held outside the United States by foreign sub-sub-custodians.
(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of each
applicable Portfolio and delivery of securities maintained for the account
of each applicable Portfolio may be effected in accordance with the
customary established securities trading or securities processing practices
and procedures in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivering securities to the
purchaser thereof or to a dealer therefor (or an agent for such purchaser
or dealer) against a receipt with the expectation of receiving later
payment for such securities from such purchaser or dealer.
(c) Securities maintained in the custody of a foreign sub-sub-custodian may
be maintained in the name of such entity's nominee to the same extent as
set forth in Section 2.3 of this Contract, and the Fund agrees to hold any
such nominee harmless from any liability as a holder of record of such
securities.
3.9 LIABILITY OF FOREIGN SUB-SUB-CUSTODIANS. Each agreement pursuant to which
the Sub-Custodian employs a foreign banking institution as a foreign
sub-sub-custodian shall require the institution to exercise reasonable care
in the performance of its duties and to indemnify, and hold harmless, the
Sub-Custodian and the Fund from and against any loss, damage, cost,
expense, liability or claim arising out of or in connection with the
institution's performance of such obligations. At the election of the
Fund, it shall be entitled to be subrogated to the rights of the
Sub-Custodian with respect to any claims against a foreign banking
institution as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Fund has not been made
whole for any such loss, damage, cost, expense, liability or claim.
3.10 LIABILITY OF SUB-CUSTODIAN. The Sub-Custodian shall be liable for the acts
or omissions of a foreign banking institution to the same extent as set
forth with respect to sub-sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of
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a foreign banking institution, a foreign securities depository or a branch
of a U.S. bank as contemplated by paragraph 3.13 hereof, the Sub-Custodian
shall not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions, or
acts of war or terrorism or any loss where the sub-sub-custodian has
otherwise exercised reasonable care. Notwithstanding the foregoing
provisions of this paragraph 3.10, in delegating custody duties to State
Street London Ltd., the Sub-Custodian shall not be relieved of any
responsibility to the Fund for any loss due to such delegation, except such
loss as may result from (a) political risk (including, but not limited to,
exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or (b)
other losses (excluding a bankruptcy or insolvency of State Street London
Ltd. not caused by political risk) due to Acts of God, nuclear incident or
other losses under circumstances where the Sub-Custodian and State Street
London Ltd. have exercised reasonable care.
3.11 REIMBURSEMENT FOR ADVANCES. If the Fund requires the Sub-Custodian to
advance cash or securities for any purpose for the benefit of a Portfolio
including the purchase or sale of foreign exchange or of contracts for
foreign exchange, or in the event that the Sub-Custodian or its nominee
shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this Contract,
except such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time
held for the account of the applicable Portfolio shall be security therefor
to the extent thereof, and should the Fund fail to repay the Sub-Custodian
promptly, the Sub-Custodian shall be entitled to utilize available cash and
to dispose of such Portfolio's assets to the extent necessary to obtain
reimbursement.
3.12 MONITORING RESPONSIBILITIES. The Sub-Custodian shall furnish annually to
the Fund, during the month of June, information concerning the foreign
sub-sub-custodians employed by the Sub-Custodian. Such information shall
be similar in kind and scope to that furnished to the Fund in connection
with the initial approval of this Contract. In addition, the Sub-Custodian
will promptly inform the Fund in the event that the Sub-Custodian learns of
a material adverse change in the financial condition of a foreign
sub-sub-custodian or any material loss of the assets of the Fund or in the
case of any foreign sub-sub-custodian not the subject of an exemptive order
from the Securities and Exchange Commission is notified by such foreign
sub-sub-custodian that there appears to be a substantial likelihood that
its shareholders' equity will decline below $200 million (U.S. dollars or
the equivalent thereof) or that its shareholders' equity has declined below
$200 million (in each case computed in accordance with generally accepted
U.S. accounting principles).
3.13 BRANCHES OF U.S. BANKS. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of the
Portfolios assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a
sub-sub-custodian shall be governed by paragraph 1 of this Contract.
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<PAGE>
(b) Cash held for each Portfolio of the Fund in the United Kingdom shall be
maintained in an interest bearing account established for the Fund with the
Sub-Custodian's London branch, which account shall be subject to the
direction of the Sub-Custodian, State Street London Ltd. or both.
3.14 TAX LAW. The Sub-Custodian shall have no responsibility or liability for
any obligations now or hereafter imposed on the Fund or the Sub-Custodian
as Sub-Custodian of the Fund by the tax law of the United States of America
or any state or political subdivision thereof. It shall be the
responsibility of the Fund to notify the Sub-Custodian of the obligations
imposed on the Fund or the Sub-Custodian as Sub-Custodian of the Fund by
the tax law of jurisdictions other than those mentioned in the above
sentence, including responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and governmental
reporting. The sole responsibility of the Sub-Custodian with regard to
such tax law shall be to use reasonable efforts to assist the Fund with
respect to any claim for exemption or refund under the tax law of
jurisdictions for which the Fund has provided such information.
4. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES OF THE FUND
The Sub-Custodian shall receive from the distributor for the Shares or from
the transfer agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by the Fund. The Sub-Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the transfer agent
of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes of the
Board of Directors of the Fund pursuant thereto, the Sub-Custodian shall, upon
receipt of instructions from the transfer agent, make funds available for
payment to holders of Shares who have delivered to the transfer agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares of a Portfolio, the Sub-Custodian is authorized upon
receipt of instructions from the transfer agent to wire funds to or through a
commercial bank designated by the redeeming shareholders. In connection with
the redemption or repurchase of Shares of the Fund, the Sub-Custodian shall
honor checks drawn on the Sub-Custodian by a holder of Shares, which checks have
been furnished by the Fund to the holder of Shares, when presented to the
Sub-Custodian in accordance with such procedures and controls as are mutually
agreed upon from time to time between the Fund and the Sub-Custodian.
5. PROPER INSTRUCTIONS
Proper Instructions as used throughout this Contract means a writing signed
or initialed by one or more person or persons as the Board of Directors shall
have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Sub-Custodian reasonably believes
them to have been given
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<PAGE>
by a person authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be confirmed in
writing. Upon receipt of a certificate of the Secretary or an Assistant
Secretary as to the authorization by the Board of Directors of the Fund
accompanied by a detailed description of procedures approved by the Board of
Directors, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Directors and the Sub-Custodian are satisfied that such procedures afford
adequate safeguards for the Portfolios' assets. For purposes of this Section,
Proper Instructions shall include instructions received by the Sub-Custodian
pursuant to any three-party agreement which requires a segregated asset
account in accordance with Section 2.12.
6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Sub-Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, PROVIDED that all such payments shall be accounted for to
the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Portfolio, checks, drafts
and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Portfolio except as
otherwise directed by the Board of Directors of the Fund.
7. EVIDENCE OF AUTHORITY
The Sub-Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the Fund.
The Sub-Custodian may receive and accept a certified copy of a vote of the Board
of Directors of the Fund as conclusive evidence (a) of the authority of any
person to act in accordance with such vote or (b) of any determination or of any
action by the Board of Directors pursuant to the Articles of Incorporation as
described in such vote, and such vote may be considered as in full force and
effect until receipt by the Sub-Custodian of written notice to the contrary.
8. DUTIES OF SUB-CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE AND NET INCOME
The Sub-Custodian shall keep the books of account of each Portfolio and
compute the net asset value per share of the outstanding shares of each
Portfolio. The Sub-Custodian shall also
15
<PAGE>
calculate daily the net income of the Portfolio as described in the Fund's
currently effective prospectus related to such Portfolio and shall advise the
Fund and the transfer agent daily of the total amounts of such net income and
shall advise the transfer agent periodically of the division of such net income
among its various components. The calculations of the net asset value per share
and the daily income of each Portfolio shall be made at the time or times
described from time to time in the Fund's currently effective prospectus related
to such Portfolio.
9. RECORDS
The Sub-Custodian shall with respect to each Portfolio create and maintain
all records relating to its activities and obligations under this Contract in
such manner as will meet the obligations of the Fund under the Investment
Company Act of 1940, with particular attention to Section 31 thereof and Rules
31a-1 and 31a-2 thereunder. All such records shall be the property of the Fund
and shall at all times during the regular business hours of the Sub-Custodian be
open for inspection by duly authorized officers, employees or agents of the Fund
and employees and agents of the Securities and Exchange Commission. The
Sub-Custodian shall, at the Fund's request, supply the Fund with a tabulation of
securities owned by each Portfolio and held by the Sub-Custodian and shall, when
requested to do so by the Fund and for such compensation as shall be agreed upon
between the Fund and the Sub-Custodian, include certificate numbers in such
tabulations.
10. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
The Sub-Custodian shall take all reasonable action, as the Fund on behalf
of each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Fund's independent accountants with respect
to its activities hereunder in connection with the preparation of the Fund's
Form N-1A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
11. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Sub-Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a Securities System, relating to the services provided by the Sub-Custodian
under this Contract; such reports, shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall so state.
12. COMPENSATION OF SUB-CUSTODIAN
The Sub-Custodian shall be entitled to reasonable compensation for its
services and expenses as Sub-Custodian, as agreed upon from time to time between
the Fund on behalf of each applicable Portfolio and the Sub-Custodian.
16
<PAGE>
13. RESPONSIBILITY OF SUB-CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable care,
the Sub-Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Sub-Custodian shall be held to
the exercise of reasonable care in carrying out the provisions of this Contract,
but shall be kept indemnified by the Fund and shall be without liability to the
Fund or to the Custodian for any action taken or omitted by it in good faith
without negligence, willful misconduct or reckless disregard of its duties and
obligations under this Contract. It shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on all matters, and
shall be without liability for any action reasonably taken or omitted pursuant
to such advice.
Except as may arise from the Sub-Custodian's own bad faith, negligence,
willful misconduct or reckless disregard of its duties and obligations hereunder
or the bad faith, negligence or willful misconduct or reckless disregard of the
duties and obligations of a sub-sub-custodian or agent, the Sub-Custodian shall
be without liability to the Fund or to the Custodian for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Sub-Custodian or any sub-sub-custodian or
Securities System or any agent or nominee of any of the foregoing, including,
without limitation, nationalization or expropriation, imposition of currency
controls or restrictions, the interruption, suspension or restriction of trading
on or the closure of any securities market, power or other mechanical or
technological failures or interruptions, computer viruses or communications
disruptions, acts of war or terrorism, riots, revolutions, work stoppages,
natural disasters or other similar events or acts; (ii) errors by the Fund or
the Investment Advisor in their instructions to the Sub-Custodian provided such
instructions have been in accordance with this Contract; (iii) the insolvency of
or acts or omissions by a Securities System; (iv) any delay or failure of any
broker, agent or intermediary, central bank or other commercially prevalent
payment or clearing system to deliver to the Sub-Custodian's sub-sub-custodian
or agent securities purchased or in the remittance or payment made in connection
with securities sold; (v) any delay or failure of any company, corporation, or
other body in charge of registering or transferring securities in the name of
the Sub-Custodian, the Fund, the Sub-Custodian's sub-sub-custodians, nominees or
agents or any consequential losses arising out of such delay or failure to
transfer such securities including non-receipt of bonus, dividends and rights
and other accretions or benefits; (vi) delays or inability to perform its duties
due to any disorder in market infrastructure with respect to any particular
security or Securities System; and (vii) any provision of any present or future
law or regulation or order of the United States of America, or any state
thereof, or any other country, or political subdivision thereof or of any court
of competent jurisdiction.
The Sub-Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to
sub-sub-custodians generally in this Contract.
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<PAGE>
If the Fund on behalf of a Portfolio requires the Sub-Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the Sub-Custodian, result in the
Sub-Custodian or its nominee assigned to the Fund or the Portfolio being liable
for the payment of money or incurring liability of some other form, the Fund on
behalf of the Portfolio, as a prerequisite to requiring the Sub-Custodian to
take such action, shall provide indemnity to the Sub-Custodian in an amount and
form satisfactory to it.
If the Fund requires the Sub-Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlement) or
in the event that the Sub-Custodian or its nominee shall incur or be assessed
any taxes, charges, expenses, assessments, claims or liabilities in connection
with the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable Portfolio shall
be security therefor to the extent thereof, and should the Fund fail to repay
the Sub-Custodian promptly, the Sub-Custodian shall be entitled to utilize
available cash and to dispose of such Portfolio's assets to the extent necessary
to obtain reimbursement.
The Sub-Custodian shall have no responsibility or liability for any acts or
omissions of any prior custodian, subcustodian, accounting agent or other
service provider to the Fund and shall be indemnified by the Fund against any
claims arising out of or attributable to the acts or omissions of any prior
custodian, subcustodian, accounting agent or other service provider. Without in
any way limiting the foregoing, the Subcustodian shall have no liability in
respect of any loss, damage or expense suffered by the Fund insofar as such
loss, damage or expense arises from the performance of the Subcustodian's duties
hereunder in reliance upon records that were maintained for the Fund by entities
other than the Subcustodian prior to the Subcustodian's appointment as
subcustodian for the Fund.
In no event shall the Sub-Custodian be liable for indirect, special or
consequential damages.
14. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
the Fund, the Custodian or the Sub-Custodian by an instrument in writing
delivered or mailed, postage prepaid to the other parties, such termination to
take effect not sooner than thirty (30) days after the date of such delivery or
mailing; PROVIDED, however that the Sub-Custodian shall not with respect to a
Portfolio act under Section 2.10 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board of
Directors of the Fund has approved the initial use of a particular Securities
System by such Portfolio, as required by Rule 17f-4 under the Investment Company
Act of 1940, as amended and that the Sub-Custodian shall not with respect to a
Portfolio act under Section 2.11 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board of
Directors has approved the initial use of the Direct Paper System by such
Portfolio ; PROVIDED FURTHER, however, that the Fund shall not amend or
terminate this Contract in contravention of any
18
<PAGE>
applicable federal or state regulations, or any provision of the Articles of
Incorporation, and further provided, that the Fund on behalf of one or more of
the Portfolios may at any time by action of its Board of Directors (i)
substitute another bank or trust company for the Sub-Custodian by giving notice
as described above to the Sub-Custodian, or (ii) immediately terminate this
Contract in the event of the appointment of a conservator or receiver for the
Sub-Custodian by the Comptroller of the Currency or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Sub-Custodian such compensation as may be due as of
the date of such termination and shall likewise reimburse the Sub-Custodian for
its costs, expenses and disbursements.
15. SUCCESSOR SUB-CUSTODIAN
If a successor Sub-Custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Directors of the Fund, the Sub-Custodian
shall, upon termination, deliver to such successor Sub-Custodian at the office
of the Sub-Custodian, duly endorsed and in the form for transfer, all securities
of each applicable Portfolio then held by it hereunder and shall transfer to an
account of the successor Sub-Custodian all of the securities of each such
Portfolio held in a Securities System.
If no such successor Sub-Custodian shall be appointed, the Sub-Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the Board
of Directors of the Fund, deliver at the office of the Sub-Custodian and
transfer such securities, funds and other properties in accordance with such
vote.
In the event that no written order designating a successor Sub-Custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Sub-Custodian on or before the date when such termination shall become
effective, then the Sub-Custodian shall have the right to deliver to a bank or
trust company, which is a "bank" as defined in the Investment Company Act of
1940, doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Sub-Custodian on behalf of each applicable Portfolio and
all instruments held by the Sub-Custodian relative thereto and all other
property held by it under this Contract on behalf of each applicable Portfolio
and to transfer to an account of such successor Sub-Custodian all of the
securities of each such Portfolio held in any Securities System. Thereafter,
such bank or trust company shall be the successor of the Sub-Custodian under
this Contract.
In the event that securities, funds and other properties remain in the
possession of the Sub-Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Directors to appoint a successor Sub-Custodian, the Sub-Custodian
shall be entitled to fair compensation for its services during such period as
the Sub-Custodian retains possession of such securities, funds and other
properties and the provisions of this
19
<PAGE>
Contract relating to the duties and obligations of the Sub-Custodian shall
remain in full force and effect.
16. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Contract, the Sub-Custodian and
the Fund on behalf of each of the Portfolios, may from time to time agree on
such provisions interpretive of or in addition to the provisions of this
Contract as may in their joint opinion be consistent with the general tenor of
this Contract. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, PROVIDED that no
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Articles of Incorporation
of the Fund. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Contract.
17. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares in
addition to 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 Mid-Cap Growth 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 with respect to which it desires to have the Sub-Custodian
render services as Sub-Custodian under the terms hereof, it shall so notify the
Sub-Custodian in writing, and if the Sub-Custodian agrees in writing to provide
such services, such series of Shares shall become a Portfolio hereunder.
18. MASSACHUSETTS LAW TO APPLY
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
19. PRIOR CONTRACTS
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the
Sub-Custodian relating to the custody of the Fund's assets.
20. REPRODUCTION OF DOCUMENTS
This Contract and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the
20
<PAGE>
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
21. SHAREHOLDER COMMUNICATIONS ELECTION
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Sub-Custodian needs the Fund to indicate whether it authorizes the
Sub-Custodian to provide the Fund's name, address, and share position to
requesting companies whose securities the Fund owns. If the Fund tells the
Sub-Custodian "no", the Sub-Custodian will not provide this information to
requesting companies. If the Fund tells the Sub-Custodian "yes" or does not
check either "yes" or "no" below, the Sub-Custodian is required by the rule to
treat the Fund as consenting to disclosure of this information for all
securities owned by the Fund or any funds or accounts established by the Fund.
For the Fund's protection, the Rule prohibits the requesting company from using
the Fund's name and address for any purpose other than corporate communications.
Please indicate below whether the Fund consents or objects by checking one of
the alternatives below.
YES [ ] The Sub-Custodian is authorized to release the Fund's name,
address, and share positions.
NO [ ] The Sub-Custodian is not authorized to release the Fund's name,
address, and share positions.
22. USE OF FUND'S NAME
The Sub-Custodian shall not, without the written consent of the Custodian
and the Fund, identify the Fund, or any Portfolio, as a custodial client of the
Sub-Custodian in any promotional materials, proposals to or other communications
with clients or prospective clients.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 1st day of October, 1997.
ATTEST THE MUNDER FUNDS, INC.
By
- ------------------------- ------------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
By
- ------------------------- ------------------------------
Senior Vice President
ATTEST COMERICA BANK
By
- ------------------------- ------------------------------
22
<PAGE>
SCHEDULE A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Directors of Munder Funds, Inc.
for use as sub-sub-custodians for the Fund's securities and other assets:
(Insert banks and securities depositories)
Certified:
- ----------------------------
Fund's Authorized Officer
Date:
-----------------------
23
<PAGE>
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 Emerging Growth 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:
--------------------------------
Accepted:
State Street Bank and Trust Company
By:
--------------------------------
Date:
-------------
<PAGE>
First Data Investor Services Group, Inc.
One Exchange Place
Boston, MA 02109
Ladies and Gentlemen:
Reference is made to the Transfer Agent and Registrar Agreement between us
dated as of June 19, 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., namely the
Munder Emerging Growth Fund (the "New Portfolio").
We request that you act as Transfer Agent under the Agreement 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:
-----------------------------------
Accepted:
First Data Investor Services Group, Inc.
By:
-----------------------------------
Date:
---------------
<PAGE>
AMENDMENT TO TRANSFER AGENCY AND REGISTRAR AGREEMENT
This Amendment dated as of __________, 1998 (the "Amendment") is made to
the Transfer Agency and Registrar Agreement, dated as of the 19th day of June,
1995 (the "Agreement") between The Munder Funds, Inc. (the "Company") and First
Data Investor Services Group, Inc. ("FDISG") (then known as The Shareholder
Services Group, Inc.).
The Company and FDISG agree that the Agreement shall, as of the date first
written above, be amended as follows:
1. Schedule A, "Fee Schedule," of the Agreement shall be deleted in its
entirety and the Schedule A attached hereto shall be substituted in
its place; and
2. Exhibit 1 to the Agreement shall be deleted in its entirety and
Exhibit 1 attached hereto shall be substituted in its place.
In all other respects, the Agreement shall 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 written
above.
THE MUNDER FUNDS, INC.
By:
---------------------------
Title:
------------------------
FIRST DATA INVESTOR SERVICES GROUP, INC.
By:
---------------------------
Title:
------------------------
<PAGE>
SCHEDULE A
TRANSFER AGENT FEES
ALL FUNDS EXCEPT THE MUNDER ALL-SEASON AGGRESSIVE FUND, MUNDER ALL-SEASON
MODERATE FUND, MUNDER ALL-SEASON CONSERVATIVE FUND
1) Asset Based Charge: Based on the total net assets of the Companies ( as
defined below*)
First $2.8 billion of aggregate net assets @ 2.0 basis
points
Next $2.2 billion of aggregate net assets @ 1.5 basis
points
Over $5 billion of aggregate net assets @ 1.0 basis
points
Other Fees: Each IRA account will be charged $10.00 per annum NSCC
Transaction Charge is $.15 per financial transaction
2) System Development: Client defined system enhancements will be agreed upon
by Transfer Agent and Munder Capital and billed at a
rate of $100.00 per hour
*Companies shall include The Munder Funds Trust, The Munder Funds, Inc. (other
than the Munder All-Season Aggressive Fund, Munder All-Season Moderate Fund,
Munder All-Season Conservative Fund), Liquidity Plus Money Market Fund of St.
Clair Funds, Inc. and The Munder Framlington Funds Trust
MUNDER ALL-SEASON AGGRESSIVE FUND, MUNDER ALL-SEASON MODERATE FUND, MUNDER
ALL-SEASON CONSERVATIVE FUND
$36,000 per Fund, assuming no more than three classes of shares per Fund,
for a total annual fee of $108,000
<PAGE>
EXHIBIT 1
LIST OF PORTFOLIOS
dated , 1998
The Munder Funds, Inc.
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 Mid-Cap Growth 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
NetNet Fund
Munder Emerging Growth Fund
<PAGE>
ADMINISTRATION AGREEMENT
Agreement dated as of October 31, 1997 by and between State Street
Bank and Trust Company, a Massachusetts trust company (the "Administrator"), and
The Munder Funds, Inc. (the "Fund").
WHEREAS, the Fund is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund desires to retain the Administrator to furnish
certain administrative services to the Fund, and the Administrator is willing to
furnish such services, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF ADMINISTRATOR
The Fund hereby appoints the Administrator to act as administrator
with respect to the Fund for purposes of providing certain administrative
services for the period and on the terms set forth in this Agreement. The
Administrator accepts such appointment and agrees to render the services stated
herein.
The Fund will initially consist of the portfolio(s) and/or class(es)
of shares (each an "Investment Fund") listed in Schedule A to this Agreement.
In the event that the Fund establishes one or more additional Investment Funds
with respect to which it wishes to retain the Administrator to act as
administrator hereunder, the Fund shall notify the Administrator in writing.
Upon written acceptance by the Administrator, such Investment Fund shall become
subject to the provisions of this Agreement to the same extent as the existing
Investment Funds, except to the extent that such provisions (including those
relating to the compensation and expenses payable by the Fund and its Investment
Funds) may be modified with respect to each additional Investment Fund in
writing by the Fund and the Administrator at the time of the addition of the
Investment Fund.
2. DELIVERY OF DOCUMENTS
The Fund will promptly deliver to the Administrator copies of each of
the following documents and all future amendments and supplements, if any:
a. The Fund's charter document and by-laws;
b. The Fund's currently effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and the 1940
Act and the Fund's Prospectus(es) and Statement(s) of Additional
Information relating to all Investment Funds and all amendments
and supplements thereto as in effect from time to time;
c. Certified copies of the resolutions of the Board of Directors of
the Fund (the "Board") authorizing (1) the Fund to enter into
this Agreement and (2) certain
<PAGE>
individuals on behalf of the Fund to (a) give instructions to the
Administrator pursuant to this Agreement and (b) sign checks and
pay expenses;
d. A copy of the investment advisory agreement between the Fund and
its investment adviser; and
e. Such other certificates, documents or opinions which the
Administrator may, in its reasonable discretion, deem necessary
or appropriate in the proper performance of its duties.
3. REPRESENTATION AND WARRANTIES OF THE ADMINISTRATOR
The Administrator represents and warrants to the Fund that:
a. It is a Massachusetts trust company, duly organized, existing and
in good standing under the laws of The Commonwealth of
Massachusetts;
b. It has the corporate power and authority to carry on its business
in The Commonwealth of Massachusetts;
c. All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement;
d. No legal or administrative proceedings have been instituted or
threatened which would impair the Administrator's ability to
perform its duties and obligations under this Agreement; and
e. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of the Administrator or any law or regulation
applicable to it.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Administrator that:
a. It is a corporation, duly organized and existing and in good
standing under the laws of Maryland;
b. It has the corporate power and authority under applicable laws
and by its charter and by-laws to enter into and perform this
Agreement;
c. All requisite proceedings have been taken to authorize it to
enter into and perform this Agreement;
d. It is an investment company properly registered under the 1940
Act;
e. A registration statement under the 1933 Act and the 1940 Act has
been filed and will be effective and remain effective during the
term of this Agreement. The Fund also warrants to the
Administrator that as of the effective date of this
2
<PAGE>
Agreement, all necessary filings under the securities laws of the
states in which the Fund offers or sells its shares have been
made;
f. No legal or administrative proceedings have been instituted or
threatened which would impair the Fund's ability to perform its
duties and obligations under this Agreement;
g. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of the Fund or any law or regulation applicable to it;
and
h. As of the close of business on the date of this Agreement, the
Fund is authorized to issue an unlimited amount of shares of
beneficial interest.
5. ADMINISTRATION SERVICES
The Administrator shall provide the following services, in each case,
subject to the control, supervision and direction of the Fund and the review and
comment by the Fund's auditors and legal counsel and in accordance with
procedures which may be established from time to time between the Fund and the
Administrator:
a. Oversee the determination and publication of the Fund's net asset
value in accordance with the Fund's policy as adopted from time
to time by the Board;
b. Oversee the maintenance by the Fund's custodian of certain books
and records of the Fund as required under Rule 31a-1(b) of the
1940 Act;
c. Prepare the Fund's federal, state and local income tax returns
for review by the Fund's independent accountants and filing by
the Fund's treasurer;
d. Review calculation, submit for approval by officers of the Fund
and arrange for payment of the Fund's expenses;
e. Prepare for review and approval by officers of the Fund financial
information for the Fund's semi-annual and annual reports, proxy
statements and other communications required or otherwise to be
sent to Fund shareholders, and arrange for the printing and
dissemination of such reports and communications to shareholders;
f. Prepare for review by an officer of and legal counsel for the
Fund the Fund's periodic financial reports required to be filed
with the Securities and Exchange Commission ("SEC") on Form N-SAR
and financial information required by Form N-1A and such other
reports, forms or filings as may be mutually agreed upon;
g. Prepare reports relating to the business and affairs of the Fund
as may be mutually agreed upon and not otherwise prepared by the
Fund's investment adviser, custodian, legal counsel or
independent accountants;
3
<PAGE>
h. Make such reports and recommendations to the Board concerning the
performance of the independent accountants as the Board may
reasonably request;
i. Make such reports and recommendations to the Board concerning the
performance and fees of the Fund's custodian and transfer and
dividend disbursing agent ("Transfer Agent") as the Board may
reasonably request or deems appropriate;
j. Calculate, submit for review by officers of the Fund, and arrange
for the payment of fees to the Fund's investment adviser,
custodian, sub-administrator and Transfer Agent;
k. Consult with the Fund's officers, independent accountants, legal
counsel, custodian and Transfer Agent in establishing the
accounting policies of the Fund;
l. Review implementation of any dividend reinvestment programs
authorized by the Board;
m. Respond to, or refer to the Fund's officers or Transfer Agent,
shareholder inquiries relating to the Fund;
n. Provide periodic testing of portfolios to assist the Fund's
investment adviser in complying with Internal Revenue Code
mandatory qualification requirements, the requirements of the
1940 Act and Fund prospectus limitations as may be mutually
agreed upon;
o. Maintain general corporate calendar, and with respect to each
Investment Fund create and maintain all records required by
Section 31 of the 1940 Act and Rule 31a-1 and 31a-2 thereunder,
except those records that are maintained by the Fund's custodian,
transfer agent, adviser or sub-administrator;
p. Maintain copies of the Fund's charter and by-laws;
q. File annual and semi-annual shareholder reports with the
appropriate regulatory agencies; review text of "President's
letters" to shareholders and "Management's Discussion of Fund
Performance" (which shall also be subject to review by the Fund's
legal counsel);
r. Prepare and furnish the Fund (at the Fund's request) with
performance information (including yield and total return
information) calculated in accordance with applicable U.S.
securities laws and report to external databases such information
as may reasonably be requested.
s. Organize, attend and prepare minutes of shareholder meetings;
t. Provide consultation on regulatory matters relating to portfolio
management, Fund operations and any potential changes in the
Fund's investment policies,
4
<PAGE>
operations or structure; act as liaison to legal counsel to the
Fund and, where applicable, to legal counsel to the Fund's
independent Board members;
u. Maintain continuing awareness of significant emerging regulatory
and legislative developments which may affect the Fund, update
the Board and the investment adviser on those developments and
provide related planning assistance where requested or
appropriate;
v. Develop or assist in developing guidelines and procedures to
improve overall compliance by the Fund and its various agents;
w. Counsel and assist the Fund in the handling of routine regulatory
examinations and work closely with the Fund's legal counsel in
response to any non-routine regulatory matters.
Subject to review and comment by the Fund's legal counsel:
x. Prepare and file with the SEC amendments to the Fund's
registration statement, including updating the Prospectus and
Statement of Additional Information, where applicable;
y. Prepare and file with the SEC proxy statements; provide
consultation on proxy solicitation matters;
z. Prepare agenda and background materials for Board meetings, make
presentations where appropriate, prepare minutes and follow-up on
matters raised at Board meetings;
aa. Prepare and file with the SEC Form N-SAR and Rule 24f-2 notices;
bb. Review and provide assistance on Fund advertisements, sales
literature and shareholder communications; and
cc. Prepare and file state notice filings of the Fund's securities
pursuant to the specific instructions of the Fund and as detailed
in Schedule C to this Agreement.
The Administrator shall provide the office facilities and the personnel required
by it to perform the services contemplated herein. In performing its duties
hereunder, the Administrator shall act in accordance with the charter, bylaws
and prospectus of the Fund and with instructions of the Board of Directors of
the Fund and will conform to and comply with the requirements of the 1940 Act
and all other applicable federal and state laws and regulations, and will
consult with legal counsel to the Fund, as necessary and appropriate.
6. FEES; EXPENSES; EXPENSE REIMBURSEMENT
The Administrator shall receive from the Fund such compensation for
the Administrator's services provided pursuant to this Agreement as may be
agreed to from time to time in a written fee schedule approved by the parties
and initially set forth in Schedule B to this Agreement. The fees are
5
<PAGE>
accrued daily and billed monthly and shall be due and payable upon receipt of
the invoice. Upon the termination of this Agreement before the end of any month,
the fee for the part of the month before such termination shall be prorated
according to the proportion which such part bears to the full monthly period and
shall be payable upon the date of termination of this Agreement. In addition,
the Fund shall reimburse the Administrator for its out-of-pocket costs incurred
in connection with this Agreement.
The Fund agrees promptly to reimburse the Administrator for any
equipment and supplies specially ordered by or for the Fund through the
Administrator and for any other expenses not contemplated by this Agreement that
the Administrator may incur on the Fund's behalf at the Fund's request or with
the Fund's consent.
The Fund will bear all expenses that are incurred in its operation and
not specifically assumed by the Administrator. Expenses to be borne by the
Fund, include, but are not limited to: organizational expenses; cost of
services of independent accountants and outside legal and tax counsel (including
such counsel's review of the Fund's registration statement, proxy materials,
federal and state tax qualification as a regulated investment company and other
reports and materials prepared by the Administrator under this Agreement); cost
of any services contracted for by the Fund directly from parties other than the
Administrator; cost of trading operations and brokerage fees, commissions and
transfer taxes in connection with the purchase and sale of securities for the
Fund; investment advisory fees; taxes, insurance premiums and other fees and
expenses applicable to its operation; costs incidental to any meetings of
shareholders including, but not limited to, legal and accounting fees, proxy
filing fees and the costs of preparation (excluding preparation as provided in
Section 5y), printing and mailing of any proxy materials; costs incidental to
Board meetings other than the costs of preparation of the agenda and background
materials, including fees and expenses of Board members; the salary and expenses
of any officer, director\trustee or employee of the Fund; costs incidental to
the preparation (excluding preparation as provided in Section 5x), printing and
distribution of the Fund's registration statements and any amendments thereto
and shareholder reports; cost of typesetting and printing of prospectuses; cost
of preparation (excluding preparation as provided in Section 5x) and filing of
the Fund's tax returns, Form N-1A and Form N-SAR, and all notices, registrations
and amendments associated with applicable federal and state tax and securities
laws; all applicable registration fees and filing fees required under federal
and state securities laws; fidelity bond and directors' and officers' liability
insurance; and cost of independent pricing services used in computing the Fund's
net asset value.
The Administrator is authorized to and may employ or associate with such
person or persons as the Administrator may deem desirable to assist it in
performing its duties under this Agreement; provided, however, that the
compensation of such person or persons shall be paid by the Administrator and
that the Administrator shall be as fully responsible to the Fund for the acts
and omissions of any such person or persons as it is for its own acts and
omissions.
7. INSTRUCTIONS AND ADVICE
At any time, the Administrator may apply to any officer of the Fund
for instructions and may consult with outside counsel for the Fund or with the
independent accountants for the Fund at the expense of the Fund, or with its own
legal counsel at its own expense, with respect to any matter arising in
connection with the services to be performed by the Administrator under this
Agreement. The Administrator shall not be liable, and shall be indemnified by
the Fund, for any action taken or omitted by it in good faith in reliance upon
any such instructions or advice or upon any paper or document believed by it to
be genuine and to have been signed by the proper person or persons. The
Administrator shall not be held to have notice of any change of authority of any
person until receipt of written notice thereof from
6
<PAGE>
the Fund. Nothing in this paragraph shall be construed as imposing upon the
Administrator any obligation to seek such instructions or advice, or to act in
accordance with such advice when received.
8. LIMITATION OF LIABILITY AND INDEMNIFICATION
The Administrator shall be responsible for the performance of only
such duties as are set forth in this Agreement and, except as otherwise provided
under Section 6, shall have no responsibility for the actions or activities of
any other party, including other service providers. The Administrator shall
have no liability in respect of any loss, damage or expense suffered by the Fund
insofar as such loss, damage or expense arises from the performance of the
Administrator's duties hereunder in reliance upon records that were maintained
for the Fund by entities other than the Administrator prior to the
Administrator's appointment as administrator for the Fund. The Administrator
shall have no liability for any error of judgment or mistake of law or for any
loss or damage resulting from the performance or nonperformance of its duties
under this Agreement unless solely caused by or resulting from the bad faith,
negligence, willful misconduct or reckless disregard of the duties and
obligations under this Agreement of the Administrator, its officers or
employees. The Administrator shall not be liable for any special, indirect or
consequential damages of any kind whatsoever (including, without limitation,
attorneys' fees) under any provision of this Agreement or for any such damages
arising out of any act or failure to act hereunder. In any event, for any
liability or loss suffered by the Fund including, but not limited to, any
liability relating to qualification of the Fund as a regulated investment
company or any liability relating to the Fund's compliance with any federal or
state tax or securities statute, regulation or ruling, the Administrator's
liability under this Agreement shall be limited to such amount as may be agreed
upon from time to time between the parties hereto.
Except as may arise from the Administrator's bad faith, negligence,
willful misconduct or reckless disregard of its duties and obligations under
this Agreement, the Administrator shall not be responsible or liable for any
failure or delay in performance of its obligations under this Agreement arising
out of or caused, directly or indirectly, by circumstances beyond its control,
including without limitation, work stoppage, power or other mechanical failure,
computer virus, natural disaster, governmental action or communication
disruption, nor shall any such failure or delay give the Fund the right to
terminate this Agreement.
The Fund shall indemnify and hold the Administrator harmless from all
loss, cost, damage and expense, including reasonable fees and expenses for
counsel, incurred by the Administrator resulting from any claim, demand, action
or suit in connection with the Administrator's acceptance of this Agreement, any
action or omission by it in the performance of its duties hereunder, or as a
result of acting upon any instructions reasonably believed by it to have been
duly authorized by the Fund, provided that this indemnification shall not apply
to actions or omissions of the Administrator, its officers or employees in cases
of its or their own bad faith, negligence, willful misconduct or reckless
disregard of its duties and obligations under this Agreement.
The Fund 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 liability subject to the indemnification provided above. In the
event the Fund elects to assume the defense of any such suit and retain counsel,
the Administrator or any of its affiliated persons, named as defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) the Fund shall have specifically
authorized the retaining of such counsel or (ii) the Administrator shall have
determined in good faith that the retention of such counsel is required as a
result of a conflict of interest.
7
<PAGE>
The indemnification contained herein shall survive the termination of
this Agreement.
9. CONFIDENTIALITY
The Administrator agrees that, except as otherwise required by law or
in connection with any required disclosure to a banking or other regulatory
authority, it will keep confidential all records and information in its
possession relating to the Fund or its shareholders or shareholder accounts and
will not disclose the same to any person except at the request or with the
written consent of the Fund.
10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS; RECORDS
The Fund assumes full responsibility for complying with all
securities, tax, commodities and other laws, rules and regulations applicable to
it.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Administrator agrees that all records which it maintains for the Fund shall
at all times remain the property of the Fund, shall be readily accessible during
normal business hours, and shall be promptly surrendered upon the termination of
the Agreement or otherwise on written request. The Administrator further agrees
that all records which it maintains for the Fund pursuant to Rule 31a-1 under
the 1940 Act will be preserved for the periods prescribed by Rule 31a-2 under
the 1940 Act unless any such records are earlier surrendered as provided above.
Records shall be surrendered in usable machine-readable form.
11. SERVICES NOT EXCLUSIVE
The services of the Administrator to the Fund are not to be deemed
exclusive, and the Administrator shall be free to render similar services to
others. The Administrator shall be deemed to be an independent contractor and
shall, unless otherwise expressly provided herein or authorized by the Fund from
time to time, have no authority to act or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
12. TERM, TERMINATION AND AMENDMENT
This Agreement shall become effective as of the date first above
written. The Agreement shall remain in effect with respect to the Fund unless
terminated by either party on sixty (60) days' prior written notice.
Termination of this Agreement with respect to any given Investment Fund shall in
no way affect the continued validity of this Agreement with respect to any other
Investment Fund. Upon termination of this Agreement, the Fund shall pay to the
Administrator such compensation and any reimbursable expenses as may be due
under the terms hereof as of the date of such termination, including reasonable
out-of-pocket expenses associated with such termination. This Agreement may be
modified or amended from time to time by mutual written agreement of the parties
hereto.
13. NOTICES
Any notice or other communication authorized or required by this
Agreement to be given to either party shall be in writing and deemed to have
been given when delivered in person or by confirmed facsimile, or posted by
certified mail, return receipt requested, to the following address (or such
other address as a party may specify by written notice to the other): if to the
Fund:___________________________, Attn:___________________,
fax:_______________; if to the Administrator: State Street Bank and Trust
8
<PAGE>
Company, 1776 Heritage Drive, North Quincy, Massachusetts 02171, Attn: Mutual
Funds Legal Division, fax: (617) 985-2497.
14. NON-ASSIGNABILITY
This Agreement shall not be assigned by either party hereto without
the prior consent in writing of the other party.
15. SUCCESSORS
This Agreement shall be binding on and shall inure to the benefit of
the Fund and the Administrator and their respective successors and permitted
assigns.
16. ENTIRE AGREEMENT
This Agreement together with any written agreement of the parties
entered into from time to time pursuant to Section 8 contain the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersede all previous representations, warranties or commitments
regarding the services to be performed hereunder whether oral or in writing.
17. WAIVER
The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver nor shall it
deprive such party of the right thereafter to insist upon strict adherence to
that term or any term of this Agreement. Any waiver must be in writing signed
by the waiving party.
18. SEVERABILITY
If any provision of this Agreement is invalid or unenforceable, the
balance of the Agreement shall remain in effect, and if any provision is
inapplicable to any person or circumstance it shall nevertheless remain
applicable to all other persons and circumstances.
19. GOVERNING LAW
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
9
<PAGE>
20. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written above.
THE MUNDER FUNDS, INC.
By: /s/ Lisa A. Rosen
--------------------------
Name: Lisa A. Rosen
-------------------------
Title:
------------------------
STATE STREET BANK AND TRUST COMPANY
By: /s/ Kathleen C. Cuocolo
--------------------------
Name: Kathleen C. Cuocolo
-------------------------
Title: Senior Vice President
------------------------
11
<PAGE>
ADMINISTRATION AGREEMENT
THE MUNDER FUNDS, INC.
SCHEDULE A
LISTING OF INVESTMENT FUNDS
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 Mid-Cap Growth 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
NetNet Fund
12
<PAGE>
ADMINISTRATION AGREEMENT
THE MUNDER FUNDS, INC.
SCHEDULE C
Notice Filing with
State Securities Administrators
AT THE SPECIFIC DIRECTION OF THE FUND, THE ADMINISTRATOR WILL PREPARE REQUIRED
DOCUMENTATION AND MAKE NOTICE FILINGS IN ACCORDANCE WITH THE SECURITIES LAWS OF
EACH JURISDICTION IN WHICH FUND SHARES ARE TO BE OFFERED OR SOLD PURSUANT TO
INSTRUCTIONS GIVEN TO THE ADMINISTRATOR BY THE FUND.
THE FUND SHALL BE SOLELY RESPONSIBLE FOR THE DETERMINATION (i) OF THOSE
JURISDICTIONS IN WHICH NOTICE FILINGS ARE TO BE SUBMITTED AND (ii) THE NUMBER OF
FUND SHARES TO BE PERMITTED TO BE SOLD IN EACH SUCH JURISDICTION. IN THE EVENT
THAT THE ADMINISTRATOR BECOMES AWARE OF (a) THE SALE OF FUND SHARES IN A
JURISDICTION IN WHICH NO NOTICE FILING HAS BEEN MADE OR (b) THE SALE OF FUND
SHARES IN EXCESS OF THE NUMBER OF FUND SHARES PERMITTED TO BE SOLD IN SUCH
JURISDICTION, THE ADMINISTRATOR SHALL REPORT SUCH INFORMATION TO THE FUND, AND
IT SHALL BE THE FUND'S RESPONSIBILITY TO DETERMINE APPROPRIATE CORRECTIVE ACTION
AND INSTRUCT THE ADMINISTRATOR WITH RESPECT THERETO.
The Blue Sky services shall consist of the following:
1. Filing of Fund's Initial Notice Filings, as directed by the Fund;
2. Filing of Fund's renewals and amendments as required;
3. Filing of amendments to the Fund's registration statement where
required;
4. Filing Fund sales reports where required;
5. Payment at the expense of the Fund of all Fund Notice Filing fees;
6. Filing the Prospectuses and Statements of Additional Information and
any amendments or supplements thereto where required;
7. Filing of annual reports and proxy statements where required; and
8. The performance of such additional services as the Administrator and
the Fund may agree upon in writing.
Unless otherwise specified in writing by the Administrator, Blue Sky services by
the Administrator shall not include determining the availability of exemptions
under a jurisdiction's blue sky law. Any such determination shall be made by
the Fund or its legal counsel. In connection with the services described
herein, the Fund shall issue in favor of the Administrator a power of attorney
to submit Notice Filings on behalf of the Fund, which power of attorney shall be
substantially in the form of Exhibit I attached hereto.
14
<PAGE>
EXHIBIT I
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, as of October 31, 1997 that the undersigned THE
MUNDER FUNDS, INC. with principal offices at 480 Pierce Street, Birmingham,
Michigan 48009 (individually the "Fund") makes, constitutes, and appoints STATE
STREET BANK AND TRUST COMPANY (the "Administrator") with principal offices at
225 Franklin Street, Boston, Massachusetts its lawful attorney-in-fact for it to
do as if it were itself acting, the following:
1. REGISTRATION OF FUND SHARES. The power to register shares of the Fund in
each jurisdiction in which Fund shares are offered or sold and in
connection therewith the power to prepare, execute, and deliver and file
any and all Fund applications, including without limitation, applications
to register shares, consents, including consents to service of process,
reports, including without limitation, all periodic reports, claims for
exemption, or other documents and instruments now or hereafter required or
appropriate in the judgment of the Administrator in connection with the
registration of Fund shares.
2. AUTHORIZED SIGNERS. Pursuant to this Limited Power of Attorney, individuals
holding the titles of Officer, Blue Sky Manager, or Senior Blue Sky
Administrator at the Administrator shall have authority to act on behalf of
the Fund with respect to item 1 above.
The execution of this limited power of attorney shall be deemed coupled with an
interest and shall be revocable only upon receipt by the Administrator of such
termination of authority. Nothing herein shall be construed to constitute the
appointment of the Administrator as or otherwise authorize the Administrator to
act as an officer, director or employee of the Fund.
IN WITNESS WHEREOF, the Fund has caused this Agreement to be executed in its
name and on its behalf by and through its duly authorized officer, as of the
date first written above.
THE MUNDER FUNDS, INC.
By:
----------------------
Name:
--------------------
Title:
-------------------
15
<PAGE>
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 Emerging Growth 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:
-------------------------------
Accepted:
State Street Bank and Trust Company
By:
-------------------------------
Date:
--------------
<PAGE>
THE MUNDER FUNDS, INC.
POWER OF ATTORNEY
The undersigned, Lee P. Munder, whose signature appears below, does hereby
constitute and appoint Lisa Anne Rosen, Cynthia Surprise and Paul F. Roye his
true and lawful attorneys and agents to execute in his name, place and stead, in
his capacity as director or officer, or both, of The Munder Funds, Inc. (the
"Company"), the Registration Statement of the Company on Form N-1A, any
amendments thereto, and all instruments necessary or incidental in connection
therewith, and to file the same with the Securities and Exchange Commission; and
such attorneys shall have the full power of substitution and re-substitution;
and such attorneys shall have full power and authority to do and perform in the
name and on the behalf of the undersigned director and/or officer of the
Company, in any and all capacities, every act whatsoever requisite or necessary
to be done in the premises, as fully and to all intents and purposes as the
undersigned director and/or officer of the Company might or could do in person,
such acts of such attorneys being hereby ratified and approved.
/s/ Lee P. Munder
-------------------------
Lee P. Munder
Dated: February 24, 1998
<PAGE>
THE MUNDER FUNDS, INC.
POWER OF ATTORNEY
The undersigned, Charles W. Elliot, whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Cynthia Surprise and Paul F. Roye
his true and lawful attorneys and agents to execute in his name, place and
stead, in his capacity as director or officer, or both, of The Munder Funds,
Inc. (the"Company "), the Registration Statement of the Company on Form N-1A,
any amendments thereto, and all instruments necessary or incidental in
connection therewith, and to file the same with the Securities and Exchange
Commission; and such attorneys shall have the full power of substitution and
re-substitution; and such attorneys shall have full power and authority to do
and perform in the name and on the behalf of the undersigned director and/or
officer of the Company, in any and all capacities, every act whatsoever
requisite or necessary to be done in the premises, as fully and to all intents
and purposes as the undersigned director and/or officer of the Company might or
could do in person, such acts of such attorneys being hereby ratified and
approved.
/s/ Charles W. Elliott
-------------------------
Charles W. Elliott
Dated: February 24, 1998
<PAGE>
THE MUNDER FUNDS, INC.
POWER OF ATTORNEY
The undersigned, Joseph E. Champagne, whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Cynthia Surprise and Paul F. Roye
his true and lawful attorneys and agents to execute in his name, place and
stead, in his capacity as director or officer, or both, of The Munder Funds,
Inc. (the "Company"), the Registration Statement of the Company on Form N-1A,
any amendments thereto, and all instruments necessary or incidental in
connection therewith, and to file the same with the Securities and Exchange
Commission; and such attorneys shall have the full power of substitution and
re-substitution; and such attorneys shall have full power and authority to do
and perform in the name and on the behalf of the undersigned director and/or
officer of the Company, in any and all capacities, every act whatsoever
requisite or necessary to be done in the premises, as fully and to all intents
and purposes as the undersigned director and/or officer of the Company might or
could do in person, such acts of such attorneys being hereby ratified and
approved.
/s/ Joseph E. Champagne
-------------------------
Joseph E. Champagne
Dated: February 24, 1998
<PAGE>
THE MUNDER FUNDS, INC.
POWER OF ATTORNEY
The undersigned, Thomas B. Bender, whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Cynthia Surprise and Paul F. Roye
his true and lawful attorneys and agents to execute in his name, place and
stead, in his capacity as director or officer, or both, of The Munder Funds,
Inc. (the "Company"), the Registration Statement of the Company on Form N-1A,
any amendments thereto, and all instruments necessary or incidental in
connection therewith, and to file the same with the Securities and Exchange
Commission; and such attorneys shall have the full power of substitution and
re-substitution; and such attorneys shall have full power and authority to do
and perform in the name and on the behalf of the undersigned director and/or
officer of the Company, in any and all capacities, every act whatsoever
requisite or necessary to be done in the premises, as fully and to all intents
and purposes as the undersigned director and/or officer of the Company might or
could do in person, such acts of such attorneys being hereby ratified and
approved.
/s/ Thomas B. Bender
-------------------------
Thomas B. Bender
Dated: February 24, 1998
<PAGE>
THE MUNDER FUNDS, INC.
POWER OF ATTORNEY
The undersigned, Thomas D. Eckert, whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Cynthia Surprise and Paul F. Roye
his true and lawful attorneys and agents to execute in his name, place and
stead, in his capacity as director or officer, or both, of The Munder Funds,
Inc. (the "Company"), the Registration Statement of the Company on Form N-1A,
any amendments thereto, and all instruments necessary or incidental in
connection therewith, and to file the same with the Securities and Exchange
Commission; and such attorneys shall have the full power of substitution and
re-substitution; and such attorneys shall have full power and authority to do
and perform in the name and on the behalf of the undersigned director and/or
officer of the Company, in any and all capacities, every act whatsoever
requisite or necessary to be done in the premises, as fully and to all intents
and purposes as the undersigned director and/or officer of the Company might or
could do in person, such acts of such attorneys being hereby ratified and
approved.
/s/ Thomas D. Eckert
-------------------------
Thomas D. Eckert
Dated: February 24, 1998
<PAGE>
THE MUNDER FUNDS, INC.
POWER OF ATTORNEY
The undersigned, John Rakolta, Jr., whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Cynthia Surprise and Paul F. Roye
his true and lawful attorneys and agents to execute in his name, place and
stead, in his capacity as director or officer, or both, of The Munder Funds,
Inc. (the "Company"), the Registration Statement of the Company on Form N-1A,
any amendments thereto, and all instruments necessary or incidental in
connection therewith, and to file the same with the Securities and Exchange
Commission; and such attorneys shall have the full power of substitution and
re-substitution; and such attorneys shall have full power and authority to do
and perform in the name and on the behalf of the undersigned director and/or
officer of the Company, in any and all capacities, every act whatsoever
requisite or necessary to be done in the premises, as fully and to all intents
and purposes as the undersigned director and/or officer of the Company might or
could do in person, such acts of such attorneys being hereby ratified and
approved.
/s/ John Rakolta, Jr.
-------------------------
John Rakolta, Jr.
Dated: February 24, 1998
<PAGE>
THE MUNDER FUNDS, INC.
POWER OF ATTORNEY
The undersigned, David J. Brophy, whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Cynthia Surprise and Paul F. Roye
his true and lawful attorneys and agents to execute in his name, place and
stead, in his capacity as director or officer, or both, of The Munder Funds,
Inc. ( the "Company"), the Registration Statement of the Company on Form N-1A,
any amendments thereto, and all instruments necessary or incidental in
connection therewith, and to file the same with the Securities and Exchange
Commission; and such attorneys shall have the full power of substitution and
re-substitution; and such attorneys shall have full power and authority to do
and perform in the name and on the behalf of the undersigned director and/or
officer of the Company, in any and all capacities, every act whatsoever
requisite or necessary to be done in the premises, as fully and to all intents
and purposes as the undersigned director and/or officer of the Company might or
could do in person, such acts of such attorneys being hereby ratified and
approved.
/s/ David J. Brophy
-------------------------
David J. Brophy
Dated: February 24, 1998
<PAGE>
THE MUNDER FUNDS, INC.
POWER OF ATTORNEY
The undersigned, Terry H. Gardner, whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Cynthia Surprise and Paul F. Roye
his true and lawful attorneys and agents to execute in his name, place and
stead, in his capacity as director or officer, or both, of The Munder Funds,
Inc. (the "Company"), the Registration Statement of the Company on Form N-1A,
any amendments thereto, and all instruments necessary or incidental in
connection therewith, and to file the same with the Securities and Exchange
Commission; and such attorneys shall have the full power of substitution and
re-substitution; and such attorneys shall have full power and authority to do
and perform in the name and on the behalf of the undersigned director and/or
officer of the Company, in any and all capacities, every act whatsoever
requisite or necessary to be done in the premises, as fully and to all intents
and purposes as the undersigned director and/or officer of the Company might or
could do in person, such acts of such attorneys being hereby ratified and
approved.
/s/ Terry H. Gardner
-------------------------
Terry H. Gardner
Dated: February 24, 1998
<PAGE>
SECRETARY'S CERTIFICATE
I, Lisa A. Rosen, Secretary of The Munder Funds, Inc. ("Company"), hereby
certify that the following resolution authorizing Paul Roye, Lisa A. Rosen and
Cynthia Surprise to sign the Company's Registration Statement on behalf of Lee
Munder, President of the Company, has been adopted, at a meeting of the Board of
Directors duly called and held on February 24, 1998, at which a quorum was
present and acting throughout:
RESOLVED, that Paul Roye, Lisa A. Rosen and Cynthia Surprise be, and hereby
are authorized to execute and sign on behalf of Lee Munder, President of
Company, all amendments and supplements to the Company's Registration Statements
on Form N-1A pursuant to a power of attorney from Lee Munder and hereby ratifies
the execution of such Registration Statements by such persons.
Dated: March 20, 1998 /S/ LISA A. ROSEN
------------------------------
Lisa A. Rosen, Secretary
The Munder Funds, Inc.
