<PAGE>
As filed with the Securities and Exchange Commission
on May 22, 1998
Registration Nos. 33-54748
811-7346
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933[ X ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 33 [ X ]
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940[ X ]
Amendment No. 35 [ X ]
(Check appropriate box or boxes)
The Munder Funds, Inc.
(Exact Name of Registrant as Specified in Charter)
480 Pierce Street, Birmingham, Michigan 48009
(Address of Principal Executive Offices) (Zip code)
Registrant's Telephone Number: (248) 647-9200
Cynthia Surprise
Vice President and Associate Counsel
State Street Bank and Trust Company
1776 Heritage Drive, AFB
North Quincy, MA 02171
(Name and Address of Agent for Service)
Copies to:
Lisa Anne Rosen, Esq. Paul R. Roye, Esq.
Munder Capital Management Dechert Price & Rhoads
480 Pierce Street 1775 Eye Street, NW
Birmingham, Michigan 48009 Washington, DC 20006
[X] It is proposed that this filing will become effective June 1, 1998
pursuant to paragraph (b) of Rule 485
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(The NetNet Fund Class A and B Shares)
Part A
- ------
Item Heading
---- -------
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial
Information
3. Condensed Financial Information Not applicable
4. General Description of Registrant Cover Page; Fund Highlights;
Structure and Management of Fund
5. Management of the Fund Structure and Management of
Fund; Dividends, Distributions
and Taxes; Performance
6. Capital Stock and Other Securities Structure and Management of
Fund; Purchases and Exchanges
of Shares; Redemption of
Shares; Dividends,
Distributions and Taxes
7. Purchase of Securities Being Offered Purchases and Exchanges of
Shares
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
(The NetNet 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 Registrant Cover Page; Fund Highlights;
Structure and Management of Fund
5. Management of the Fund Structure and Management of
Fund; Dividends, Distributions
and Taxes; Performance
6. Capital Stock and Other Securities Structure and Management of
Fund; Purchases and Exchanges
of Shares; Redemption of
Shares; Dividends,
Distributions and Taxes
7. Purchase of Securities Being Offered Purchases and Exchanges of
Shares
8. Redemption or Repurchase Redemptions of Shares
9. Pending Legal Proceedings Not Applicable
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Statement of Additional Information
(The NetNet Fund)
Part B
- ------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History See Prospectus --"Structure and
Management of the Fund;" General;
Directors and Officers
13. Investment Objectives and Policies Fund Investments; Investment
Limitations; Portfolio
Transactions
14. Management of the Fund See Prospectus --"Structure and
Management of the Fund;" Directors
and Officers; Miscellaneous
15. Control Persons and Principal See Prospectus --Holders of
Securities "Structure and
Management of the Fund;"
Miscellaneous
16. Investment Advisory Services and Other Investment Advisory Services and
Other Service Arrangements; See
Prospectus --"Structure and
Management of the Fund"
17. Brokerage Allocation and Other Portfolio Transactions
18. Capital Stock and Other Securities See Prospectus --"Structure and
Management of the Fund;"
Additional Information Concerning
Shares
19. Purchase, Redemption and 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 Data Performance Information
23. Financial Statements Financial Statements
<PAGE>
THE MUNDER FUNDS, INC.
The purpose of this Post-Effective Amendment filing to the Company's
Registration Statement is to add two new classes of shares to the NetNet Fund,
specifically, Class B and Class Y Shares. On May 18, 1998, the Commission
granted the Company's request, pursuant to Rule 485(b)(vii) of the Securities
Act of 1933, to file this Post-Effective Amendment under paragraph (b) of Rule
485.
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, and Munder Value Fund are
not included in this filing.
<PAGE>
PROSPECTUS
Class A and Class B Shares
The NetNet Fund (the "Fund") is a mutual fund portfolio that seeks to
provide shareholders long-term capital appreciation. The Fund invests primarily
in equity securities of companies engaged in research, design, development,
manufacturing or distribution of products, processes or services for use with
Internet and Intranet related businesses. The Fund is a portfolio of The Munder
Funds, Inc. (the "Company"), an open-end investment company.
Munder Capital Management (the "Advisor") serves as investment advisor of
the Fund.
This Prospectus explains the objective, policies, risks and fees of the
Fund. You should read this Prospectus carefully before investing and retain it
for future reference. A Statement of Additional Information ("SAI") describing
the Fund has been filed with the Securities and Exchange Commission (the "SEC")
and is incorporated by reference into this Prospectus. You can obtain the SAI
free of charge by calling the Fund at (800) 438-5789. In addition, the SEC
maintains a web site (http://www.sec.gov) that contains the SAI and other
information regarding the Fund.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and are not insured or guaranteed by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency. An
investment in the Fund involves investment risks, including the possible loss of
the principal amount invested.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Call Toll-Free for Shareholder Services:
(800) 438-5789
The date of this Prospectus is June 1, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
Fund Highlights...........................................................3
What are the key facts regarding the Fund?..........................3
Financial Information.....................................................4
Fund Information..........................................................7
What are the Fund's goal and principal investments?.................7
Who may want to invest in the Fund?.................................7
What are the Fund's investments and investment practices?...........7
What are the risks of investing in the Fund?........................9
Performance..............................................................10
How is the Fund's performance calculated?..........................10
Where can I obtain performance data?...............................10
Purchases and Exchange of Shares.........................................11
Which share class should I choose for my investment?...............11
What price do I pay for shares?....................................11
When can I purchase shares?........................................14
What is the minimum required investment?...........................14
How can I purchase shares?.........................................14
How can I exchange shares?.........................................15
Redemptions of Shares....................................................16
What price do I receive for redeemed shares?.......................16
When can I redeem shares?..........................................17
How can I redeem shares?...........................................17
When will I receive redemption amounts?............................18
Structure and Management of the Fund.....................................18
How is the Fund structured?........................................18
Who manages and services the Fund?.................................18
What are my rights as a shareholder?...............................20
Dividends, Distributions and Taxes.......................................20
When will I receive distributions from the Fund?...................20
How will distributions be made?....................................20
Are there tax implications of my investments in the Fund?..........20
Additional Information...................................................21
2
<PAGE>
FUND HIGHLIGHTS
What Are the Key Facts Regarding the Fund?
Q: What is the Fund's goal?
A: The NetNet Fund seeks to provide long-term capital appreciation.
Q: What is the Fund's strategy?
A: The Fund invests primarily in equity securities of companies engaged in
research, design, development, manufacturing or engaged to a significant extent
in the business of distributing products, processes or services for use with
Internet or Intranet related businesses.
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 stocks of particular companies and perceptions
about particular industries. The Fund concentrates its investments in the
Internet industry. Because the Fund concentrates its investments in one
industry, it may pose greater risks and experience larger fluctuations in value
than portfolios invested in a broader range of industries. Additionally, the
Fund may invest in emerging growth companies which may involve greater price
volatility and risk than more established companies. You should note that you
could lose a portion of the amount you invest in the Fund.
Q: What are the options for investment in the Fund?
A: The Fund has registered three classes of shares: Class A, Class B and Class
Y. Class Y Shares, which are only offered to institutional and other qualified
investors, is offered in a separate prospectus.
Maximum Front Maximum
Class Rule 12b-1 Fees* End Sales Load** CDSC***
----- ---------------- ---------------- -------
Class A 0.25% 5.5% None+
Class B 1% None 5%
- ----------
* An annual fee for distributing shares and servicing shareholder accounts
based on the Fund's average daily net assets.
** A one-time fee charged at the time of purchase of shares. The fee declines
based on the amount you invest.
*** A contingent deferred sales charge ("CDSC") is a one-time fee charged at
the time of redemption. The fee declines based on the length of time you
hold 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 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?
A: Class A Shares Class B Shares
-------------- --------------
Automatic Investment Plan Automatic Investment Plan
Automatic Withdrawal Plan Automatic Withdrawal Plan
Retirement Plans Retirement Plans
Telephone Exchanges Telephone Exchanges
Rights of Accumulation Reinvestment Privilege
Letter of Intent
Quantity Discounts
Reinvestment Privilege
Q: When and how are distributions made?
A: Dividend distributions are made from the dividends and interest earned on
investments after expenses. Dividends are paid at least annually. The Fund
distributes capital gains at least annually. Unless you elect to receive
distributions in cash, all dividends and capital gains distributions of the Fund
will be automatically used to purchase additional shares of the Fund.
Q: Who manages the Fund's assets?
A: Munder Capital Management is the Fund's investment advisor. The Advisor is
responsible for all purchases and sales of the securities held by the Fund.
FINANCIAL INFORMATION
SHAREHOLDER TRANSACTION EXPENSES (1)
The purpose of this table is to assist you in understanding the expenses a
shareholder in the Fund will bear directly.
<TABLE>
<CAPTION>
Class A Class B
Shares Shares
------ ------
<S> <C> <C>
Maximum Sales Charge on Purchase (as a % of Offering Price) .. 5.5%(2) None
Sales Charge Imposed on Reinvested Dividends ................. None None
Maximum Deferred Sales Charge ................................ None(3) 5%(4)
Redemption Fees (5) .......................................... None None
Exchange Fees ................................................ None None
</TABLE>
- ----------
Notes:
(1) Does not include fees which institutions may charge for services they
provide to you.
(2) The sales charge declines as the amount invested increases.
(3) A 1% CDSC applies to 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) The Transfer Agent may charge a fee of $7.50 for wire redemptions under
$5,000.
4
<PAGE>
FUND OPERATING EXPENSES
The purpose of this table is to assist you in understanding the expenses
charged directly to 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 based on fees
in the Fund's past fiscal year and have been restated to reflect the
discontinuation of the voluntary 12b-1 fee waiver for Class A Shares of the Fund
effective as of the date of this Prospectus. 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.
Annual Fund Operating Expenses
(as a % of average net assets)
Class A Class B
Shares Shares
------ ------
Advisory Fees .................................. 1.00% 1.00%
12b-1 Fees ..................................... .25% 1.00%
Other Expenses+ ................................ .28%++ .28%++
---- ----
Total Fund Operating Expenses+ ................. 1.53%++ 2.28%++
- ----------
+ After expense reimbursements.
++ The Advisor has voluntarily reimbursed the Fund for certain operating
expenses. Without the expense reimbursements, other expenses and total fund
operating expenses would be 1.09% and 2.34%, respectively, for the Class A
Shares and 1.09% and 3.09%, respectively, for the Class B Shares.
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.
Class A Class B
Shares Shares
------ ------
1 Year
o Redemption ............................... $70 $89
o No Redemption ............................ $70 $38
3 Years
o Redemption ............................... $101 $103
o No Redemption ............................ $101 $71
As noted above, the Advisor expects to reimburse expenses with respect to
the Fund during the current fiscal year. The Advisor may discontinue the expense
reimbursement at any time in its sole discretion.
5
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights for the fiscal year ended June 30, 1997
have been audited by Ernst & Young LLP, independent auditors. This information
is part of the Fund's audited financial statements which are included in the
Fund's Annual Report, which is incorporated by reference into the SAI. The
information for the six months ended December 31, 1997 is part of the Fund's
unaudited financial statements which are included in the Fund's most recent
Semi-Annual Report, which has also been incorporated by reference into the SAI.
This information should be read in conjunction with the financial statements and
notes thereto. You may obtain the Annual Report or Semi-Annual Report without
charge by calling (800) 438-5789.
<TABLE>
<CAPTION>
Class A
Six Months Ended
12/31/97 Period Ended
(Unaudited) 6/30/97(a)
----------- ----------
<S> <C> <C>
Net asset value, beginning of period .................... $12.79 $10.00
------ ------
Income from investment operations:
Net investment loss ..................................... (0.03) (0.04)
Net realized and unrealized gain on investments ......... 3.65 3.15
------ ------
Total from investment operations ........................ 3.62 3.11
------ ------
Less distributions:
Distributions from net realized gains ................... (2.20) (0.32)
------ ------
Total distributions ..................................... (2.20) (0.32)
------ ------
Net asset value, end of period .......................... $14.21 $12.79
====== ======
Total return (b) ........................................ 28.90% 31.14%
====== ======
Ratio to average net assets/supplemental data:
Net assets, end of period (in 000's) .................... $4,702 $1,459
Ratio of operating expenses to average net assets ....... 1.25%(c) 1.48%(c)
Ratio of net investment loss to average net assets ...... (0.50)%(c) (0.48)%(c)
Portfolio turnover rate ................................. 82% 195%
Ratio of operating expenses to average net assets
without waivers and expenses reimbursed ............. 2.31%(c) 4.57%(c)
Average commission rate (d) ............................. $0.0600 $0.0468
</TABLE>
- ---------------------
(a) NetNet Fund commenced operations on August 16, 1996.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
6
<PAGE>
FUND INFORMATION
What are the Fund's goals and principal investments?
This Prospectus describes Class A and Class B 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 primary goal is to provide
long-term capital appreciation. Under normal conditions, the Fund will invest at
least 65% of its assets in the Equity Securities.
In choosing which companies' stock the Fund should purchase, the Advisor
will invest in those companies listed on U.S. securities exchange or NASDAQ
which are engaged in the research, design, development or manufacturing, or
engaged to a significant extent in the business of distributing products,
processes or services for use with Internet or Intranet related businesses. The
Internet is a world-wide network of computers designed to permit users to share
information and transfer data quickly and easily. The World Wide Web ("WWW"),
which is a means of graphically interfacing with the Internet, is a hyper-text
based publishing medium containing text, graphics, interactive feedback
mechanisms and links within WWW documents and to other WWW documents. An
Intranet is the application of WWW tools and concepts to a company's internal
documents and databases.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
Who May Want to Invest in the Fund?
The Fund is designed for investors who seek long-term capital
appreciation.
What are the Fund's Investments and Investment Practices?
The Fund will invest primarily in Equity Securities which includes common
stocks, preferred stocks, warrants and other securities convertible into common
stocks, including convertible bonds and convertible preferred stock. 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. Although the Fund may acquire convertible
securities that are rated below investment grade by Standard & Poor's Rating
Service, a division of McGraw-Hill Companies (S&P), or Moody's Investors
Service, Inc. ("Moody's"), it is expected that lower-rated convertible
securities will not exceed 5% of the value of the total assets of the Fund at
the time of purchase.
The Fund may invest in Foreign Securities. These securities present more
risk than those issued by U.S. companies. 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 ("NASDAQ") or foreign securities listed directly on a
domestic securities exchange or included in NASDAQ. ADRs are receipts typically
issued by a United States bank or trust company evidencing ownership of the
underlying foreign securities.
The Fund may also purchase Global Depositary Receipts ("GDRs"), which are
receipts issued by European financial institutions evidencing ownership of the
underlying foreign securities.
7
<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 limit gains from currency exchanges.
The Fund may invest in Futures Contracts and Options. Futures 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. Futures
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 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 or individual
securities. 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 the time the price is paid. When
the Fund purchases securities for future delivery, the Company's custodian will
set aside cash or liquid securities to "cover" the Fund's position. These
purchases are not expected to exceed 25% of the value of the Fund's total assets
absent unusual market conditions. The Fund does not intend to purchase
securities for future delivery for speculative purposes.
The Fund may invest in Money Market Instruments, which are high-quality,
short-term 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.
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 declares bankruptcy.
The Fund may invest in securities issued by 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.
8
<PAGE>
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. Under normal market conditions,
the Fund will not invest to a significant extent, or on a routine basis, in U.S.
Government Securities.
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.
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.
What are the Risks of Investing in the Fund?
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.
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.
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.
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
9
<PAGE>
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 Fund will invest primarily in companies engaged in Internet and
Intranet related activities. The value of such companies is particularly
vulnerable to rapidly changing technology, extensive government regulation and
relatively high risks of obsolescence caused by scientific and technological
advances. The value of the Fund's shares may fluctuate more than shares of a
fund investing in a broader range of industries.
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 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 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 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 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 indices such as the S&P 500 and other broad-based indices. These
indices show the value of selected portfolios of securities (assuming
reinvestment of interest and dividends) which are not managed by a portfolio
manager. The 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
10
<PAGE>
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 and Class B Shares. Each Class has its own cost
structure, allowing you to choose the one that best meets your requirements
given the amount of your purchase and the intended length of your investment.
You should consider both ongoing annual expenses and initial or contingent
deferred sales charges in estimating the costs of investing in a particular
class of shares.
Class A Class B
------- -------
o Front end sales charge. o No front end sales charge. All your
There are several ways to money goes to work for you right away.
reduce these sales charges.
o Higher annual expenses than Class A
Shares.
o Lower annual expenses than
Class B Shares. o A CDSC on shares you sell within six
years of purchase.
o Automatic conversion to Class A Shares
approximately six years after issuance,
thus reducing future annual expenses.
o CDSC is waived for certain redemptions.
The Fund also issues Class Y Shares, which has different sales charges,
expense levels and performance. Class Y Shares are available to limited types of
investors. Call (800) 438-5789 to obtain more information concerning Class Y
Shares.
What Price Do I Pay For Shares?
Class A Shares are sold at the "net asset value next determined" by the
Fund plus any "applicable sales charge" and Class B 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:
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<PAGE>
<TABLE>
<CAPTION>
Sales Charge
as a Percentage of Dealer 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;
(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 any 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");
(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";
(11) individuals who were shareholders of the Fund prior to June 1,
1998; and
(12) individuals who reinvest the proceeds of redemptions from Class A,
Class B or Class C Shares of the Short Term Treasury Fund provided,
such individuals were shareholders of the Short Term Treasury Fund
on May__, 1998.
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<PAGE>
Qualified Employer Sponsored Retirement Plans
We will waive the initial sales charge on purchases of Class A Shares by
employer sponsored retirement plans that are qualified under Section 401(a) or
Section 403(b) of the Code (each, a "Qualified Employee Benefit Plan") and that
(1) invest $1,000,000 or more in Class A Shares of investment portfolios offered
by the 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 for employees participating in an employer-sponsored or
administered retirement program operating under Section 408A of the Code and
(ii) the CDSC of 1% imposed on certain redemptions within one year of purchase
for these accounts. The Distributor will pay a 1% commission to dealers and
others (as permitted by applicable Federal and state law) who initiate and are
responsible for UPI Plan purchases.
We will waive the initial sales charge for all investments by Merrill
Lynch Plans if (i) the Plan is recordkept on a daily valuation basis by Merrill
Lynch Group Employee Services ("Merrill Lynch") and, on the date 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:
o Letter of Intent. If you intend to purchase at least $25,000 of
Class A and Class B 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 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.
o Quantity Discounts. You may combine purchases of Class A Shares that
are made by you, your spouse, your children under age 21 and your
IRA when calculating the sales charge. You must notify your broker
or the Transfer Agent to qualify.
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<PAGE>
o Right of Accumulation. You may add the value of any shares of
non-money market funds of the Company, the Trust 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 and Class B 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 Shares.
How Can I Purchase Shares?
You can purchase Class A and Class B Shares in a number of different ways.
You may place orders directly through the Distributor or the Transfer Agent or
through arrangements with your authorized broker.
o 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.
o By Mail. You may open an account by mailing a completed and signed
Account Application Form and a check or other negotiable bank draft
(payable to The Munder Funds) for $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.
o 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.
14
<PAGE>
o 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.
o Reinvestment Privilege. Once a year you may reinvest redemption
proceeds from Class A and B Shares of the Fund (or Class A and B
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. 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 either 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 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
or Framlington by contacting your broker or the Fund at (800) 438-5789. Brokers
may charge a fee for handling exchanges.
o Exchanges by Telephone. You may give exchange instructions by
telephone to the 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.
o 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.
15
<PAGE>
REDEMPTIONS OF SHARES
What Price Do I Receive for Redeemed Shares?
The redemption price is the net asset value next determined after we
receive the redemption request in proper order. We will reduce the amount 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:
o Class A Shares that are part of an investment of at least $1 million
within one year of buying them
o Class B Shares within six years of buying them
The CDSC schedule for Class B Shares purchased after June 27, 1995 is set
forth below. Shares acquired in an exchange of shares of another Fund of the
Company, the Trust or Framlington that were purchased on or before June 27, 1995
are subject to any CDSC applicable to those shares. See the SAI for the CDSC
Schedule for shares purchased on or before June 27, 1995. The CDSC is based on
the original net asset value at the time of your investment or the net asset
value at the time of redemption, whichever is lower.
Class B Shares
Years Since Purchase CDSC
- -------------------- ----
First............................................................. 5.00%
Second............................................................ 4.00%
Third............................................................. 3.00%
Fourth............................................................ 3.00%
Fifth............................................................. 2.00%
Sixth............................................................. 1.00%
Seventh and thereafter............................................ 0.00%
The Distributor pays sales commissions of 4.00% of the purchase price of
Class B Shares of the 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:
o reinvestment of dividends or capital gain distributions
o capital appreciation of shares redeemed
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:
o redemptions made within one year after the death of a shareholder or
registered joint owner
o minimum required distributions made from an IRA or other retirement
plan account after you reach age 70 1/2
o involuntary redemptions made by the Fund
16
<PAGE>
Consult the SAI for Class B Share CDSC waivers which apply when you redeem
shares acquired in an exchange of shares of another Fund of the Company, the
Trust or Framlington that were purchased on or before June 27, 1995.
We will waive the CDSC for Class B Shares for all redemptions by Merrill
Lynch Plans if: (i) the Plan is recordkept on a daily valuation basis by Merrill
Lynch; or (ii) the Plan is recordkept on a daily valuation basis by an
independent recordkeeper whose services are provided through a contract or
alliance arrangement with Merrill Lynch; or (iii) the Plan has less than 500
eligible employees, as determined by the Merrill Lynch plan conversion manager,
on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service
Agreement.
When Can I Redeem Shares?
You can redeem shares on any Business Day, provided all required documents
have been received by the Transfer Agent. 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:
o 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.
o By Telephone. You can redeem your shares by calling your broker or
the Fund at (800) 438-5789. There is no minimum requirement for
telephone redemptions paid by check. The Transfer Agent may deduct a
wire fee (currently $7.50) for wire redemptions under $5,000.
If you are redeeming at least $1,000 of shares and you have
authorized expedited redemption on your Account Application Form,
simply call the Fund prior to 4:00 p.m. (Eastern time), and request
the funds be mailed to the commercial bank or registered
broker-dealer you designated on your Account Application Form. We
will send your redemption amount to you on the next Business Day. We
reserve the right at any time to change or impose fees for this
expedited redemption procedure.
We record all telephone calls for your protection and take
measures to identify the caller. If the Transfer Agent properly acts
on telephone instructions and follows reasonable procedures to
ensure against unauthorized transactions, neither the Company, the
Trust, 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.
17
<PAGE>
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.
o 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 any applicable CDSCs when you redeem shares.
o Involuntary Redemption. We may redeem your account if its value
falls below $500 as a result of redemptions (but not as a result of
a decline in net asset value). You will be notified in writing and
allowed 60 days to increase the value of your account to the minimum
investment level.
When Will I Receive Redemption Amounts?
We will typically send redemption amounts to you within seven Business
Days after you redeem shares. We may hold redemption amounts from the sale of
shares you purchased by check until the purchase check has cleared, which may be
as long as 15 days.
STRUCTURE AND MANAGEMENT OF THE 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, Woodbridge and WAM Holdings, Inc.
("WAM"). MCM was founded in February 1985 as a Delaware corporation and was a
registered investment advisor. Woodbridge and WAM are indirect, wholly-owned
subsidiaries of Comerica Incorporated. Mr. Lee P. Munder, the Advisor's
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. During the fiscal year ended June 30, 1997, the Advisor
was paid an advisory fee at an annual rate of 1.00% based on 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
18
<PAGE>
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 is also entitled to reimbursement for out-of-pocket
expenses.
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 and Sub-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. Comerica receives a fee of 0.01% of the
aggregate average daily net assets of the Fund beneficially owned by Comerica
and its customers for certain shareholder services provided by Comerica to the
Fund. State Street serves as 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 a Service and Distribution Plan with respect
to its Class B 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 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 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.
19
<PAGE>
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.
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. Dividends from net income of
the Fund, if any, are paid at least annually. The Fund distributes its 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.
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
20
<PAGE>
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 the Fund's 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.
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<PAGE>
PROSPECTUS
Class Y Shares
The NetNet Fund (the "Fund") is a mutual fund portfolio that seeks to
provide shareholders long-term capital appreciation. The Fund invests primarily
in equity securities of companies engaged in research, design, development,
manufacturing or distribution of products, processes or services for use with
Internet and Intranet related businesses. The Fund is a portfolio of The Munder
Funds, Inc. (the "Company"), an open-end investment company.
Munder Capital Management (the "Advisor") serves as investment advisor of
the Fund.
This Prospectus explains the objective, policies, risks and fees of the
Fund. You should read this Prospectus carefully before investing and retain it
for future reference. A Statement of Additional Information ("SAI") describing
the Fund has been filed with the Securities and Exchange Commission (the "SEC")
and is incorporated by reference into this Prospectus. You can obtain the SAI
free of charge by calling the Fund at (800) 438-5789. In addition, the SEC
maintains a web site (http://www.sec.gov) that contains the SAI and other
information regarding the Fund.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and are not insured or guaranteed by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency. An
investment in the Fund involves investment risks, including the possible loss of
the principal amount invested.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Call Toll-Free for Shareholder Services:
(800) 438-5789
The date of this Prospectus is June 1, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
Fund Highlights...........................................................3
What are the key facts regarding the Fund?..........................3
Fund Information..........................................................5
What are the Fund's goal and principal investments?.................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?..........................................9
How can I exchange shares?.........................................10
Redemptions 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?.................................11
What are my rights as a shareholder?...............................12
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 NetNet Fund seeks to provide long-term capital appreciation.
Q: What is the Fund's strategy?
A: The Fund invests primarily in equity securities of companies engaged in
research, design, development, manufacturing or engaged to a significant extent
in the business of distributing products, processes or services for use with
Internet or Intranet related businesses.
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 stocks of particular companies and perceptions
about particular industries. The Fund concentrates its investments in the
Internet industry. Because the Fund concentrates its investments in one
industry, it may pose greater risks and experience larger fluctuations in value
than portfolios invested in a broader range of industries. Additionally, the
Fund may invest in emerging growth companies which may involve greater price
volatility and risk than more established companies. You should note that you
could lose a portion of the amount you invest in the Fund.
Q: What are the options for investment in the Fund?
A: The Fund has registered three classes of shares: Class A, Class B and Class
Y. Class A and B Shares are described in a separate prospectus.
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 (sold back to the Fund) 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?
o Automatic Investment Plan
o Automatic Withdrawal Plan
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Q: When and how are distributions made?
A: Dividend distributions are made from the dividends and interest earned on
investments after expenses. Dividends are paid at least annually. The Fund
distributes capital gains at least annually. Unless you elect to receive
distributions in cash, all dividends and capital gains distributions of the Fund
will be automatically used to purchase additional shares of the Fund.
Q: Who manages the Fund's assets?
A: Munder Capital Management is the Fund's investment advisor. The Advisor is
responsible for all purchases and sales of the securities held by the Fund.
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.
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
- ----------
Notes:
(1) Does not include fees which institutions may charge for services they
provide to you.
(2) The Transfer agent may charge a fee of $7.50 for wire redemptions under
$5,000.
FUND OPERATING EXPENSES
The purpose of this table is to assist you in understanding the expenses
charged directly to the Fund, which investors in the Fund will bear indirectly.
Such expenses include payments to Directors, auditors, legal counsel and service
providers (such as the Advisor) and registration fees. The fees shown below are
based on fees in the Fund's past fiscal year.
Annual Fund Operating Expenses
(as a % of average net assets)
- ---------------------------------------
Advisory Fees....................................................... 1.00%
Other Expenses+..................................................... .28%++
---
Total Fund Operating Expenses+...................................... 1.28%++
====
- ----------
+ After expense reimbursements.
++ The Advisor has voluntarily reimbursed the Fund for certain operating
expenses which are described below. Without the expense reimbursements, other
expenses and total fund operating expenses would be 1.09% and 2.09%,
respectively.
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EXAMPLE
This example shows the amount of expenses you would pay (directly or
indirectly) on a $1,000 investment in the Fund assuming (1) a 5% annual return
and (2) redemption at the end of the following time periods. This example is not
a representation of past or future performance or operating expenses; actual
performance or operating expenses may be larger or smaller than those shown.
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$13 $41 $71 $155
As noted above, the Advisor expects to reimburse expenses with respect to
the Fund during the current fiscal year. The Advisor may discontinue this
expense reimbursement at any time in its sole discretion.
FUND INFORMATION
What are the Fund's goals and principal investments?
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 primary goal is to provide
long-term capital appreciation. Under normal conditions, the Fund will invest at
least 65% of its assets in the Equity Securities.
In choosing which companies' stock the Fund should purchase, the Advisor
will invest in those companies listed on U.S. securities exchange or NASDAQ
which are engaged in the research, design, development or manufacturing, or
engaged to a significant extent in the business of distributing products,
processes or services for use with Internet or Intranet related businesses. The
Internet is a world-wide network of computers designed to permit users to share
information and transfer data quickly and easily. The World Wide Web ("WWW"),
which is a means of graphically interfacing with the Internet, is a hyper-text
based publishing medium containing text, graphics, interactive feedback
mechanisms and links within WWW documents and to other WWW documents. An
Intranet is the application of WWW tools and concepts to a company's internal
documents and databases.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
Who May Want to Invest in the Fund?
The Fund is designed for investors who seek long-term capital
appreciation.
What are the Fund's Investments and Investment Practices?
The Fund will invest primarily in Equity Securities which includes common
stocks, preferred stocks, warrants and other securities convertible into common
stocks, including convertible bonds and convertible preferred stock. 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. Although the Fund may acquire convertible
securities that are
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<PAGE>
rated below investment grade by Standard & Poor's Rating Service, a division of
McGraw-Hill Companies (S&P), or Moody's Investors Service, Inc. ("Moody's"), it
is expected that lower-rated convertible securities will not exceed 5% of the
value of the total assets of the Fund at the time of purchase.
The Fund may invest in Foreign Securities. These securities present more
risk than those issued by U.S. companies. 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 ("NASDAQ") or foreign securities listed directly on a
domestic securities exchange or included in NASDAQ. ADRs are receipts typically
issued by a United States bank or trust company evidencing ownership of the
underlying foreign securities.
The Fund may also purchase Global Depositary Receipts ("GDRs"), which are
receipts issued by European financial institutions evidencing ownership of the
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 limit gains from currency exchanges.
The Fund may invest in Futures Contracts and Options. Futures 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. Futures
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 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 or individual
securities. 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 the time the price is paid. When
the Fund purchases securities for future delivery, the Company's custodian will
set aside cash or liquid securities to "cover" the Fund's position. These
purchases are not expected to exceed 25% of the value of the Fund's total assets
absent unusual market conditions. The Fund does not intend to purchase
securities for future delivery for speculative purposes.
The Fund may invest in Money Market Instruments, which are high-quality,
short-term 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.
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.
6
<PAGE>
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 declares bankruptcy.
The Fund may invest in securities issued by 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 purchase U.S. Government Securities, which are securities
issued by, or guaranteed by, the U.S. Government or its agencies or
instrumentalities. Such securities include U.S. Treasury bills, which have
initial maturities of less than one year, U.S. Treasury notes, which have
initial maturities of one to ten years, U.S. Treasury bonds, which generally
have initial maturities of greater than ten years, and obligations of the
Federal Home Loan Mortgage Corporation, Federal National Mortgage Association
and Government National Mortgage Association. Under normal market conditions,
the Fund will not invest to a significant extent, or on a routine basis, in U.S.
Government Securities.
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.
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.
What are the Risks of Investing in the Fund?
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.
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.
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
7
<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.
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 Fund will invest primarily in companies engaged in Internet and
Intranet related activities. The value of such companies is particularly
vulnerable to rapidly changing technology, extensive government regulation and
relatively high risks of obsolescence caused by scientific and technological
advances. The value of the Fund's shares may fluctuate more than shares of a
fund investing in a broader range of industries.
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. The Fund may also
publish its current yield. Yield is the net investment income generated by a
share of the Fund during a 30-day period divided by the maximum offering price
per share on the 30th day.
You should be aware that (i) past performance does not indicate how the
Fund will perform in the future; and (ii) the Fund's return and net asset value
will fluctuate, so you cannot use the Fund's performance data to compare it to
investments in certificates of deposit, savings accounts or other investments
that provide a fixed or guaranteed yield.
The Fund may compare its performance to that of other mutual funds, such
as the performance of similar funds reported by Lipper Analytical Services, Inc.
or information reported in national financial publications (such as Morningstar,
Inc., Money Magazine, Forbes, Barron's, The Wall Street Journal and The New York
Times) or in local or regional publications. The Fund may also compare its total
return to indices such as the S&P 500 and other broad-based indices. These
indices show the value of selected portfolios of securities (assuming
reinvestment of interest and dividends) which are not managed by a portfolio
manager. The Fund may report how they are performing in comparison to the
Consumer Price Index, an indication of inflation reported by the U.S.
Government.
8
<PAGE>
Where Can I Obtain Performance Data?
The Wall Street Journal and certain local newspapers report information on
the performance of mutual funds. In addition, performance information is
contained in the 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:
o fiduciary and discretionary accounts of institutions
o institutional investors (including: banks, savings institutions,
credit unions and other financial institutions, pension, profit
sharing and employee benefit plans and trusts, insurance companies,
investment companies, investment advisors and broker-dealers acting
for their own accounts or for the accounts of institutional
investors)
o directors, trustees, officers and employees of the Company, the
Trust, Framlington, the Advisor and the Distributor
o the Advisor's investment advisory clients
o family members of employees of the Advisor
The Fund also has registered Class A and B 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.
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.
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o Through a Financial Institution. You may purchase shares through a
financial institution through procedures established with that
institution. Confirmations of share purchases will be sent to the
institution.
o By Mail. You may open an account by mailing a completed and signed
Account Application Form and a check or other negotiable bank draft
(payable to The Munder Funds) to: The Munder Funds, c/o 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.
o 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.
o 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.
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.
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.
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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.
o Involuntary Redemption. We may redeem your account if its value
falls below $500 as a result of redemptions (but not as a result of
a decline in net asset value). You will be notified in writing and
allowed 60 days to increase the value of your account to the minimum
investment level.
o 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.
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, Woodbridge and WAM Holdings, Inc.
("WAM"). MCM was founded in February 1985 as a Delaware corporation and was a
registered investment advisor. Woodbridge and WAM are indirect, wholly-owned
subsidiaries of Comerica Incorporated. Mr. Lee P. Munder, the
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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. During the fiscal year ended June 30, 1997, the Advisor
was paid an advisory fee at an annual rate of 1.00% based on 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 is also entitled to reimbursement for out-of-pocket
expenses.
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 and Sub-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. Comerica receives a fee of 0.01% of the
aggregate average daily net assets of the Fund beneficially owned by Comerica
and its customers for certain shareholder services provided by Comerica to the
Fund. State Street serves as 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
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when the Directors determine that the matter to be voted on affects only the
interests of the holders of a particular class of shares. The Company will not
hold annual shareholder meetings, but special meetings may be held at the
written request of shareholders owning more than 10% of outstanding shares for
the purpose of removing a Director. The SAI contains more information regarding
voting rights.
DIVIDENDS, DISTRIBUTIONS AND TAXES
When Will I Receive Distributions from the Fund?
As a shareholder, you are entitled to your share of net income and capital
gains, if any, on the Fund's investments. The Fund passes its earnings along to
its investors in the form of dividends. Dividend distributions are the dividends
or interest earned on investments after expenses. The Fund pays dividends at
least annually. The Fund distributes its net realized capital gains (including
net short-term capital gains), if any, 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.
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.
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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 or 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.
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NETNET FUND
STATEMENT OF ADDITIONAL INFORMATION
The NetNet 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 1, 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 1, 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 1, 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 Fund involves investment risks, including the possible loss of
principal.
<PAGE>
TABLE OF CONTENTS
Page
General......................................................................3
Fund Investments.............................................................3
Investment Limitations......................................................12
Directors and Officers......................................................14
Investment Advisory and Other Service Arrangements..........................18
Portfolio Transactions......................................................21
Additional Purchase and Redemption Information..............................23
Net Asset Value.............................................................26
Performance Information.....................................................27
Taxes.......................................................................28
Additional Information Concerning Shares....................................33
Miscellaneous...............................................................34
Registration Statement......................................................35
Financial Statements........................................................36
Appendix ...................................................................37
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.
<PAGE>
GENERAL
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, Woodbridge Capital Management, Inc.
("Woodbridge") 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.
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 in securities of foreign issuers.
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"), which are
receipts issued by European financial institutions evidencing ownership of the
underlying foreign securities.
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
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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.
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, 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
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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 securities or securities indices, and
may purchase and sell call and put options on futures contracts. For a detailed
description of futures contracts and related options, see the Appendix to this
Statement of Additional Information.
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 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.
Money Market Instruments. As described in its Prospectuses, 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
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.
6
<PAGE>
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 will invest
in variable amount master notes only when the Advisor deems the investment to
involve minimal credit risk.
Non-Domestic Bank Obligations. Non-domestic bank obligations include
Eurodollar Certificates of Deposit ("ECDs"), which are U.S. dollar-denominated
certificates of deposit issued by offices of foreign and domestic banks located
outside the United States: Eurodollar Time Deposits ("ETDs"), which are U.S.
dollar-denominated deposits in a foreign branch of a U.S. bank or a foreign
bank; Canadian Time Deposits ("CTDs"), which are essentially the same as ETDs
except they are issued by Canadian offices of major Canadian banks; Schedule
B's, which are obligations issued by Canadian branches of foreign or domestic
banks; Yankee Certificates of Deposit ("Yankee CDs"), which are U.S.
dollar-denominated certificates of deposit issued by a U.S. branch of a foreign
bank and held in the United States; and Yankee Bankers' Acceptances ("Yankee
BAs"), which are U.S. dollar-denominated bankers' acceptances issued by a U.S.
branch of a foreign bank and held in the United States.
Options. The Fund may write covered call options, buy put options, buy
call options and write secured put options. Such options may relate to
particular securities and may or may not be listed on a national securities
exchange and issued by the Options Clearing Corporation. Options trading is a
highly specialized activity which entails greater than ordinary investment risk.
Options on particular securities may be more volatile than the underlying
securities, and therefore, on a percentage basis, an investment in options may
be subject to greater fluctuation than an investment in the underlying
securities themselves.
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.
7
<PAGE>
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 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 sub-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 sub-custodian. The Fund may also
write call options that are not covered for cross-hedging purposes. 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.
8
<PAGE>
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) 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.
9
<PAGE>
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.
Repurchase Agreements. The Fund may agree to purchase securities from
financial institutions members 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).
10
<PAGE>
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.
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.
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
11
<PAGE>
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
Cooperatives, Federal Home Loan Mortgage Corporation, Federal Intermediate
Credit Banks and Maritime Administration.
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. With respect to 75% of the Fund's assets, invest more than 5% of the
Fund's assets (taken at a market value at the time of purchase) in
the outstanding securities of any single issuer or own more than 10%
of the outstanding voting securities of any one issuer, in each case
other than securities issued or guaranteed by the United States
Government, its agencies or instrumentalities;
2. 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
12
<PAGE>
borrowed under clause (i)) not exceeding 33 1/3% of its total assets
including the amount borrowed;
3. Pledge, mortgage or hypothecate its assets other than to secure
borrowings permitted by restriction 2 above (collateral arrangements
with respect to margin requirements for options and futures
transactions are not deemed to be pledges or hypothecations for this
purpose);
4. 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;
5. 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;
6. 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;
7. 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;
8. Make investments for the purpose of exercising control or
management;
9. Invest in commodities or commodity futures contracts, provided that
this limitation shall not prohibit the purchase or sale by the Fund
of forward foreign currency exchange contracts, financial futures
contracts and options on financial futures contracts, foreign
currency futures contracts and options on securities, foreign
currencies and securities indices, as permitted by the Fund's
prospectuses; or
10. Invest more than 25% of its total assets in securities of issuers
conducting their principal business in any one industry (securities
issued or guaranteed by the United States Government, its agencies
or instrumentalities are not considered to represent industries),
except that the Fund will invest more than 25% of its total assets
in securities of companies engaged in the research, design,
development, manufacturing or distribution of products, processes or
services for use with Internet or Intranet related businesses.
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 in illiquid securities;
2. Own more than 10% (taken at market value at the time of purchase) of
the outstanding voting securities of any single issuer;
3. Purchase or sell interests in oil, gas or other mineral exploration
or development plans or leases;
13
<PAGE>
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). In addition, if the
Fund's holdings of illiquid securities exceeds 15% because of changes in the
value of the Fund's investments, the Fund will take action to reduce its
holdings of illiquid securities within a time frame deemed to be in the best
interest of the Fund. 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.
In order to permit the sale of shares in certain states, the Company may
make commitments more restrictive than the investment policies and limitations
described above.
DIRECTORS AND OFFICERS
The directors and executive officers of the Company, and their business
addresses and principal occupations during the past five years, are:
Principal Occupation
Name, Address and Age Position with Company During Past Five Years
- --------------------- --------------------- ----------------------
Charles W. Elliott Chairman of the Board of Senior Advisor to the
1024 Essex Circle Directors President - Western
Kalamazoo, MI 49008 Michigan University
Age: 65 since July 1995;
Executive Vice 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
1876 Rathmor Chairman of the Board of Executive Officer,
Bloomfield Hills, MI 48304 Directors Walbridge Aldinger
Age: 50 Company (construction
company).
Thomas B. Bender Director Investment Advisor,
7 Wood Ridge Road Financial & Investment
Glen Arbor, MI 49636 Management Group (since
Age: 64 April, 1991); Vice
President Institutional
Sales, Kidder, Peabody &
Co. (Retired April,
1991); Trustee, Vining
Real Estate Investment
Trust.
14
<PAGE>
Principal Occupation
Name, Address and Age Position with Company During Past Five Years
- --------------------- --------------------- ----------------------
David J. Brophy Director Professor, University of
1025 Martin Place Michigan; Director,
Ann Arbor, MI 48104 River Place Financial
Age: 61 Corp.
Dr. Joseph E. Champagne Director Dean, University Center,
319 East Snell Road Macomb College since
Rochester, MI 48306 September 1997;
Age: 59 Corporate and 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
10726 Falls Pointe Drive Executive Officer,
Great Falls, VA 22066 Capital Automotive REIT
Age: 50 from November 1997 to
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.
15
<PAGE>
Principal Occupation
Name, Address and Age Position with Company During Past Five Years
- --------------------- --------------------- ----------------------
Lee P. Munder* Director and President Chairman of the Advisor
480 Pierce Street since February 1998;
Suite 300 Chief Executive Officer
Birmingham, MI 48009 of World Asset
Age: 52 Management since January
1995; 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
Suite 300 Treasurer Advisor, and Chief
Birmingham, MI 48009 Financial Officer of Old
Age: 37 MCM (February 1993 to
present); Secretary of
LPM.
Paul Tobias Vice President Chief Executive Officer
480 Pierce Street of the Advisor (since
Birmingham, MI 48009 February 1998); Chief
Suite 300 Operating Officer of the
Age: 46 Advisor; Executive Vice
President (April
1995-February 1998); and
Executive Vice President
of Comerica, Inc.
Gerald Seizert Vice President Chief Executive Officer
480 Pierce Street of the Advisor (since
Suite 300 February 1998); Chief
Birmingham, MI 48009 Investment
Age: 45 Officer/Equities of the
Advisor; 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
480 Pierce Street Director of Marketing
Suite 300 for the Advisor; Vice
Birmingham, MI 48009 President and Director
Age: 40 of Client Services of
Old MCM(August 1988 to
December 1994).
16
<PAGE>
Principal Occupation
Name, Address and Age Position with Company During Past Five Years
- --------------------- --------------------- ----------------------
James C. Robinson Vice President Vice President and Chief
480 Pierce Street Investment Officer/Fixed
Suite 300 Income for the Advisor;
Birmingham, MI 48009 Vice President and
Age: 36 Director of Fixed Income
of Old MCM (1987-1994).
Leonard J. Barr, II Vice President Vice President and
480 Pierce Street Director of Core Equity
Suite 300 Research of the Advisor;
Birmingham, MI 48009 Director and Senior Vice
Age: 53 President of Old MCM
(since 1988); Director
of LPM.
Ann F. Putallaz Vice President Vice President and
480 Pierce Street Director of Fiduciary
Suite 300 Services of the Advisor
Birmingham, MI 48009 (since January 1995);
Age: 52 Director of Client and
Marketing Services of
Woodbridge.
Lisa A. Rosen Secretary, Assistant General Counsel of the
480 Pierce Street Treasurer Advisor (since May
Suite 300 1996); formerly Counsel,
Birmingham, MI 48009 First Data Investor
Age: 30 Services Group, Inc.;
Assistant Vice President
and Counsel with The
Boston Company Advisors,
Inc.; Associate with
Hutchins, Wheeler &
Dittmar.
Therese Hogan Assistant Secretary Director, State
53 State Street Regulation Department,
Boston, MA 02109 First Data Investor
Age: 36 Services Group (June
1994-present); formerly
Senior Legal Assistant,
Palmer & Dodge (October
1993-June 1994); Blue Sky
Paralegal, Robinson & Cole
(February 1984-October
1993).
* "Interested Person" of the Company, as defined in the 1940 Act.
Directors of the Company receive an aggregate fee from the Company, St.
Clair Funds, Inc. ("St. Clair"), The Munder Funds Trust (the "Trust") and The
Munder Framlington Funds Trust ("Framlington") 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 Company, the
Trust, St. Clair and Framlington and their respective Directors/Trustees for the
year ended June 30, 1997.
17
<PAGE>
Aggregate Pension
Compensation Retirement
from the Benefits Estimated
Company, the Accrued Annual
Name of Trust, as Part of Benefits Total from
Person Framlington and Fund upon the Fund
and Position St. Clair Expenses Retirement Complex
------------ --------- -------- ---------- -------
Charles W. Elliott $20,000 None None $20,000
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
No officer, director or employee of the Advisor, Comerica, the
Sub-Custodian, the Distributor, the Administrator or the Transfer Agent
currently receives any compensation from the Company. As of May 1, 1998, the
Directors and Officers of the Company, as a group, owned less than 1% of
outstanding shares of the Fund.
Terry H. Gardner, Paul Tobias and Gerald Seizert are administrators of a
pension plan for employees of Munder Capital Management, which as of May 1,
1998, owned 11,896.44 shares of the Fund which represented 2.2% of the Fund.
As of May 1, 1998, Munder Capital Management and affiliates of Munder
Capital Management through common ownership, owned beneficially 201,176.12
shares of the Fund which represented 37.8% 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
Woodbridge, WAM, Old MCM, and Munder Group, LLC. Woodbridge and WAM are
wholly-owned subsidiaries of Comerica Bank -- Ann Arbor, which, in turn is a
wholly-owned subsidiary of Comerica Incorporated, a publicly-held bank holding
company.
18
<PAGE>
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 1.00% of the average daily net assets of the Fund.
For the period ended June 30, 1997, the Advisor received fees of $9,873 from the
Fund. In addition for the period ended June 30, 1997, the Advisor reimbursed
$29,976 in expenses payable by the Fund.
The Fund's 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 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 and Class B 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 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 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 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 Shares of the Fund. For the period ended
June 30, 1997 the Distributor waived $539 in distribution fees pursuant to the
Service and Distribution Plan with respect to the Class A Shares.
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,
19
<PAGE>
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. For the period ended June 30, 1997, the Fund made
payments in the amount of $1,929 pursuant to the Service and Distribution Plan
with respect to the Class A Shares and waived $539 in distribution fees.
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 Shares of the Fund, the Distributor expects to pay
sales commissions to dealers authorized to sell the Fund's Class B Shares at the
time of sale. The Distributor will use its own funds (which may be borrowed) to
pay such commissions pending reimbursement 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.
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; provide accounting and bookkeeping services for the
Fund, oversee the computation of the 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 Fund.
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.
Prior to November 1, 1997, First Data Investor Services Group, Inc.
("Investor Service Group") located at 53 State Street, Boston, Massachusetts
served as administrator to the Fund. For the period ended June 30, 1997,
administration fees of Investor Services Group accrued in the amount of $1,114.
Custodian, Sub-Custodian and Transfer Agency Agreements. Comerica Bank
(the "Custodian"), whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, MI 48226, is the custodian of the Fund pursuant to a
custodian agreement ("Custody Agreement") with the Company. For the period ended
June 30, 1997, the Custodian earned $4,233 for its services to the Fund. The
Custodian receives no compensation for such services. State Street serves as the
sub-custodian (the "Sub-Custodian") to the Fund pursuant to a sub-custodian
agreement (the "Sub-Custodian
20
<PAGE>
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.
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.
For the period ended June 30, 1997, the Fund paid $674 in brokerage
commissions.
Over-the-counter issues, including corporate debt and government
securities, are normally traded on a "net" basis (i.e., without commission)
through dealers, or otherwise involve transactions directly with the issuer of
an instrument. With respect to over-the-counter transactions, the Advisor will
normally deal directly with dealers who make a market in the instruments
involved except in those circumstances where more favorable prices and execution
are available elsewhere. The cost of 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.
21
<PAGE>
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.
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.
The Fund is required to identify the securities of its regular brokers or
dealers (as defined in Rule 10b-1 under the 1940 Act) or their parent companies
held by them as of the close of the most recent
22
<PAGE>
fiscal year and state the value of such holdings. As of June 30, 1997, the Fund
held shares of Lehman Brothers valued at $266,000.
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 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. In addition to the methods of purchasing shares described in
the Prospectuses, the Fund also offers a pre-authorized checking plan by which
investors may accumulate shares of the Fund regularly each month by means of
automatic debits to their checking accounts. There is a $50 minimum on each
automatic debit. Shareholders may choose this option by checking the appropriate
part of the application form or by calling the Fund at (800) 438-5789. Such a
plan is voluntary and may be discontinued by the shareholder at any time or by
the Company on 30 days' written notice to the shareholder.
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:
o By Mail
o By Telephone
o Automatic Withdrawal Plan
23
<PAGE>
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.
Class B Shares of the Trust Funds
Purchased on or before June 27, 1995
Redemption During CDSC
- ----------------- ----
1st Year Since Purchase......................................4.00%
2nd Year Since Purchase......................................4.00%
3rd Year Since Purchase......................................3.00%
4th Year Since Purchase......................................3.00%
5th Year Since Purchase......................................2.00%
6th Year Since Purchase......................................1.00%
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;
24
<PAGE>
(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 Shares. The Prospectuses
describes the CDSC for Class A Shares of the Funds of the Trust, the Company and
Framlington purchased after June 27, 1995.
Class A Shares of the Trust Funds purchased on or before June 27, 1995
without a sales charge by reason of a purchase of $500,000 or more are subject
to a CDSC of 1.00% of the lower of the original purchase price or the net asset
value at the time of redemption if such shares are redeemed within two years of
the date of purchase. Class A Shares of the Trust Funds purchased on or before
June 27, 1995 that are redeemed will not be subject to the CDSC to the extent
that the value of such shares represents: (1) reinvestment of dividends or other
distributions; (2) Class A Shares redeemed more than two years after their
purchase; (3) a minimum required distribution made in connection with IRA or
other retirement plans following attainment of age 59 1/2; or (4) total or
partial redemptions made within one year following the death or disability of a
shareholder or registered joint owner.
No CDSC is imposed to the extent that the current 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 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 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 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.
25
<PAGE>
The Fund reserves 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 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 of Directors.
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 Fund; (b) are acquired for investment
and not for resale; (c) are liquid securities that
26
<PAGE>
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:
P (1 + T)^n = ERV
Where: T = average annual total return;
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5, or 10
year (or other) periods at the end of the
applicable period and of any CDSC deduction (or a
fractional portion thereof);
P = hypothetical initial payment of $1,000;
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:
Aggregate Total Return = (ERV)/P - 1
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.
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<PAGE>
Based on the foregoing calculation, the aggregate total returns for the
Fund for the period from commencement of operations through June 30, 1997 and
six months ended December 31, 1997 were 31.14% and 28.90%, respectively.
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 are not intended as a substitute for careful tax planning. This
discussion is based upon present provisions of the Internal Revenue Code of
1986, as amended (the "Code"), the regulations promulgated thereunder, and
judicial and administrative ruling authorities, all of which are subject to
change, which change may be retroactive. Prospective investors should consult
their own tax advisors with regard to the federal tax consequences of the
purchase, ownership and disposition of Fund shares, as well as the tax
consequences arising under the laws of any state, foreign country, or other
taxing jurisdiction.
General. 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.
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"); until June 30,
1998, the Fund must derive less than 30% of its gross income from the sale or
other disposition of securities and certain other investments held for less than
three months (the "Short-Short Test"). 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.
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<PAGE>
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, receivables, 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.
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 deduction to the
extent of the gross amount of "qualifying dividends" received by such Fund for
the year and if certain holding period requirements are met. Generally, a
dividend will be treated as a "qualifying dividend" if it has been received from
a domestic corporation.
If for any taxable year 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.
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.
29
<PAGE>
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.
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.
Taxation of Certain Financial Instruments. Special rules govern the
Federal income tax treatment of financial instruments that may be held by the
Fund. These rules have a particular impact on the amount of income or gain that
the Fund must distribute to their respective shareholders to comply with the
Distribution Requirement and on the income or gain qualifying under the Income
Requirement, all described above.
Market Discount. If a Fund purchases a debt security at a price lower than
the stated redemption price of such debt security, the excess of the stated
redemption price over the purchase price is "market discount". If the amount of
market discount is more than a de minimis amount, a portion of such market
discount must be included as ordinary income (not capital gain) by the Fund in
each taxable year in which the Fund owns an interest in such debt security and
receives a principal payment on it. In particular, the Fund will be required to
allocate that principal payment first to the portion of the market discount on
the debt security that has accrued but has not previously been includable in
income. In general, the amount of market discount that must be included for each
period is equal to the lesser of (i) the amount of market discount accruing
during such period (plus any accrued market discount for prior periods not
previously taken into account) or (ii) the amount of the principal payment with
respect to such period. Generally, market discount accrues on a daily basis for
each day the debt security is held by a Fund at a constant rate over the time
remaining to the debt security's maturity or, at the election of the Fund, at a
constant yield to maturity which takes into account the semi-annual compounding
of interest. Gain realized on the disposition of a market discount obligations
must be recognized as ordinary interest income (not capital gain) to the extent
of the "accrued market discount."
Original Issue Discount. Certain debt securities acquired by the Fund may
be treated as debt securities that were originally issued at a discount. Very
generally, original issue discount is defined as the difference between the
price at which a security was issued and its stated redemption price at
maturity. Although no cash income on account of such discount is actually
received by a Fund, original issue discount that accrues on a debt security in a
given year generally is treated for federal income tax
30
<PAGE>
purposes as interest and, therefore, such income would be subject to the
distribution requirements applicable to regulated investment companies.
Some debt securities may be purchased by the Fund, at a discount that
exceeds the original issue discount on such debt securities, if any. This
additional discount represents market discount for federal income tax purposes
(see above).
Hedging Transactions. The taxation of equity options and over-the-counter
options on debt securities is governed by Code section 1234. Pursuant to Code
section 1234, the premium received by the Fund for selling a put or call option
is not included in income at the time of receipt. If the option expires, the
premium is short-term capital gain to the Fund. If the Fund enters into a
closing transaction, the difference between the amount paid to close out its
position and the premium received is short-term capital gain or loss. If a call
option written by 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
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<PAGE>
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 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 is 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
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<PAGE>
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 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. Distributions may be subject to additional state, local
and foreign taxes, depending on each shareholder's particular situation.
Non-U.S. shareholders and certain types of U.S. shareholders subject to special
treatment under the U.S. federal income tax was (e.g., banks and life insurance
companies) may be subject to U.S. tax rules that differ significantly from those
summarized above.
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 three separate classes: Class A, Class
B and Class Y Shares.
At a meeting on May 5, 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.
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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. 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-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.
Banking Laws. Banking laws and regulations currently prohibit a bank
holding company registered under the Federal Bank Holding Company Act of 1956 or
any bank or non-bank affiliate thereof from sponsoring, organizing, controlling
or distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from underwriting securities, but such banking laws and regulations do not
prohibit such a holding company or affiliate or banks generally from acting as
investment advisor, administrator, transfer agent or custodian to such an
investment company, or from purchasing shares of such a company as agent for
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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 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.
Control Persons and Principal Holders of Securities. As of May 1, 1998,
the following persons were beneficial owners of 5% or more of the outstanding
shares of any class of the Fund because they possessed voting or investment
power with respect to such shares. Munder Capital Management, 480 Pierce Street,
Birmingham, MI 48009 held 7.36% of the outstanding Class A Shares of the Fund.
The Munder All-Season Aggressive Fund held 17.77% of the outstanding Class A
Shares of the Fund.
Shareholder Approvals. As used in this Statement of Additional Information
and in the Prospectuses, 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.
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FINANCIAL STATEMENTS
The financial statements for the NetNet Fund, including the notes thereto,
dated June 30,1997 have been audited by Ernst & Young LLP and are incorporated
by reference into this Statement of Additional Information from the Annual
Report of the Fund dated June 30, 1997. Such financial statements are
incorporated by reference herein in reliance upon Ernst & Young LLP's report
given upon the authority of such firm as experts in accounting and auditing. The
financial information for the six months ended December 31, 1997 is part of the
Fund's unaudited financial statements which are incorporated by reference into
this Statement of Additional Information from the Semi-Annual Report of the Fund
dated December 31, 1997.
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APPENDIX
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
<TABLE>
<CAPTION>
Portfolio Futures
--------- -------
<S> <C>
-Day Hedge is Placed-
Anticipate buying $62,500 in Equity Buying 1 Index Futures at 125
Securities Value of Futures = $62,500/Contract
-Day Hedge is Lifted-
Buy Equity Securities with Actual Cost = $65,000 Sell 1 Index Futures at 130
Increase in Purchase Price = $2,500 Value of Futures = $65,000/Contract
Gain on Futures = $2,500
</TABLE>
37
<PAGE>
HEDGING A STOCK PORTFOLIO: Sell the Future
Hedge Objective: Protect Against Declining
Value of the Portfolio
Factors:
Value of Stock Portfolio = $1,000,000
Value of Futures Contract - 125 X $500 = $62,500
Portfolio Beta Relative to the Index = 1.0
Portfolio Futures
--------- -------
-Day Hedge is Placed-
Anticipate Selling $1,000,000 in Sell 16 Index Futures at 125
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.
38
<PAGE>
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
39
<PAGE>
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.
40
<PAGE>
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.
41
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Included in Part A:
Financial Highlights
Included in Part B:
The Registrant's Annual Report for the fiscal year ended June 30,
1997 and the Report of the Independent Auditors dated August 15,
1997 are incorporated by reference to the Definitive 30b-2 filed
(EDGAR Form N-30D) on September 10, 1997 as Accession No.
0000927405-97-000361; and
The Registrant's Semi-Annual Report for the six months ended
December 31, 1997 is incorporated by reference to the Definitive
30b-2 filed (EDGAR Form N-30D) filed on March 11, 1998 as Accession
No. 00089697-98-000104.
(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.
<PAGE>
(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.
(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) Form of Articles Supplementary for the Registrant 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.
2
<PAGE>
(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.
(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 NetNet 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.
3
<PAGE>
(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.
(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 Growth
Opportunities Fund (formerly Munder Emerging Growth Fund) is
incorporated herein by reference to Post-Effective Amendment
No. 32 to Registrant's Registration Statement filed with the
Commission on March 20, 1998.
(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.
4
<PAGE>
(d) Notice to Underwriting Agreement between Registrant and Funds
Distributor, Inc. with respect to the Munder Small-Cap Value
Fund, the Munder Equity Selection Fund, the Munder Micro-Cap
Equity Fund, and the NetNet Fund is incorporated herein by
reference to Post-Effective Amendment No. 18 to Registrant's
Registration Statement on Form N-1A filed with the Commission
on August 14, 1996.
(e) Form of Notice to Underwriting Agreement between Registrant
and Funds Distributor, Inc. with respect to the Munder Short
Term Treasury Fund is incorporated herein by reference to
Post-Effective Amendment No. 21 to Registrant's Registration
Statement on Form N-1A filed with the Commission on December
13, 1996.
(f) 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.
(h) Form of Distribution Agreement between Registrant and Funds
Distributor, Inc. with respect to the Munder Growth
Opportunities Fund (formerly Munder Emerging Growth Fund) is
incorporated herein by reference to Post-Effective Amendment
No. 32 to Registrant's Registration Statement filed with the
Commission on March 20, 1998.
(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.
5
<PAGE>
(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 NetNet Fund is incorporated herein by reference to
Post-Effective Amendment No. 18 to Registrant's Registration
Statement on Form N-1A filed with the Commission on August 14,
1996.
(e) Form of Notice to 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.
(h) Form of Notice to the Custodian Agreement between Registrant
and Comerica Bank with respect to the Munder Growth
Opportunities Fund (formerly Munder Emerging Growth Fund) is
incorporated herein by reference to Post-Effective Amendment
No. 32 to Registrant's Registration Statement filed with the
Commission on March 20, 1998.
(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 incorporated herein
by reference to Post-Effective Amendment No. 32 to
Registrant's Registration Statement filed with the Commission
on March 20, 1998.
(j) Form of Notice to Sub-Custodian Agreement among Registrant,
Comerica Bank and State Street Bank and Trust Company with
respect to the Munder Growth Opportunities Fund (formerly
Munder Emerging Growth Fund) is incorporated herein by
reference to Post-Effective Amendment No. 32 to Registrant's
Registration Statement filed with the Commission on March 20,
1998.
6
<PAGE>
(k) Form of Amendment to Sub-Custodian Agreement among Registrant,
Comerica Bank and State Street Bank and Trust Company 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
NetNet Fund is incorporated herein by reference to
Post-Effective Amendment No. 18 to Registrant's Registration
Statement on Form N-1A filed with the Commission on August 14,
1996.
(e) Notice to Transfer Agency and Service Agreement between
Registrant and First Data Investor Services Group, Inc. with
respect to the Munder Short Term Treasury Fund is incorporated
herein by reference to Post-Effective Amendment No. 21 to
Registrant's Registration Statement on Form N-1A filed with
the Commission on December 13, 1996.
(f) Form of Amendment to the Transfer Agency and Registrar
Agreement between Registrant and First Data Investor Services
Group, Inc. with respect to the Munder All-Season Conservative
Fund, the Munder All-Season Moderate Fund and the Munder
All-Season Aggressive Fund is incorporated herein by reference
to Post-Effective Amendment No. 23 to Registrant's
Registration Statement on Form N-1A filed with the Commission
on February 18, 1997.
(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.
7
<PAGE>
(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
incorporated herein by reference to Post-Effective Amendment
No. 32 to Registrant's Registration Statement filed with the
Commission on March 20, 1998.
(j) Form of Amendment to the Transfer Agency and Registrar
Agreement between Registrant and First Data Investor Services
Group, Inc. with respect to the Munder Growth Opportunities
Fund (formerly Munder Emerging Growth Fund) is incorporated
herein by reference to Post-Effective Amendment No. 32 to
Registrant's Registration Statement filed with the Commission
on March 20, 1998.
(k) Form of Amendment to the Transfer Agency Agreement between
Registrant and First Data Investor Services Group, Inc. is
filed herein.
(l) Form of Amendment to the Transfer Agency and Registrar
Agreement between Registrant and First Data Investor Services
Group, Inc. is filed herein.
(m) 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 incorporated herein by reference
to Post-Effective Amendment No. 32 to Registrant's
Registration Statement filed with the Commission on March 20,
1998.
(n) Form of Notice to Administration Agreement between Registrant
and State Street Bank and Trust Company with respect to the
Munder Emerging Growth Fund is incorporated herein by
reference to Post-Effective Amendment No. 32 to Registrant's
Registration Statement filed with the Commission on March 20,
1998.
(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.
8
<PAGE>
(11) (a) Consent of Ernst & Young LLP is filed herein.
(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 is incorporated herein by reference to
Post-Effective Amendment No. 32 to Registrant's Registration
Statement filed with the Commission on March 20, 1998.
(e) Certified Resolution of Board authorizing signature on behalf
of Registrant pursuant to power of attorney is incorporated
herein by reference to Post-Effective Amendment No. 32 to
Registrant's Registration Statement filed with the Commission
on March 20, 1998.
(12) Not Applicable
(13) Initial Capital Agreement is incorporated herein by reference to
Pre-Effective Amendment No. 2 to Registrant's Registration Statement
on Form N-1A filed with the Commission on February 26, 1993.
(14) Not Applicable
(15) (a) Service Plan 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.
9
<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.
10
<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 NetNet 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 Growth Opportunities Fund (formerly 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 Growth Opportunities Fund (formerly
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.
(u) Form of Amendment to Service and Distribution Plan with
respect to the NetNet Fund is filed herein.
(v) Form of Service and Distribution Plan for Class B Shares with
respect to the NetNet Fund is filed herein.
11
<PAGE>
(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) Financial Data Schedule is filed herein.
(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 Amendment No. 23 to Registrant's Registration
Statement on Form N-1A filed with the Commission on February
18, 1997.
(c) Form of Second Amended and Restated Multi-Class Plan with
respect to The Munder Funds, Inc. is filed herein.
Item 25. Persons Controlled by or Under Common Control with Registrant.
Not Applicable.
Item 26. Number of Holders of Securities.
As of 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:
Class A Class B Class C Class K Class Y
Munder Multi-Season Growth Fund 623 1876 75 130 173
Munder Money Market Fund 16 16 18 -- 10
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
12
<PAGE>
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.
Munder Growth Opportunities Fund (formerly Munder Emerging Growth Fund).- As of
the date of this filing, the Fund had not commenced operations.
Item 27. Indemnification.
Article VII, Section 7.6 of the Registrant's Articles of
Incorporation ("Section 7.6") provides that the Registrant,
including its successors and assigns, shall indemnify its directors
and officers and make advance payment of related expenses to the
fullest extent permitted, and in accordance with the procedures
required, by the General Laws of the State of Maryland and the
Investment Company Act of 1940. Such indemnification shall be in
addition to any other right or claim to which any director, officer,
employee or agent may otherwise be entitled. In addition, Article VI
of the Registrant's By-laws provides that the Registrant shall
indemnify its employees and/or agents in any manner as shall be
authorized by the Board of Directors and within such limits as
permitted by applicable law. The Board of Directors may take such
action as is necessary to carry out these indemnification provisions
and is expressly empowered to adopt, approve and amend from time to
time such resolutions or contracts implementing such provisions or
such further indemnification arrangements as permitted by law. The
Registrant may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the
Registrant or is serving at the request of the Registrant as a
director, officer, partner, trustee, employee or agent of another
foreign or domestic corporation, partnership, joint venture, trust
or other enterprise or employee benefit plan, against any liability
asserted against and incurred by such person in any such capacity or
arising out of such person's position, whether or not the Registrant
would have had the power to indemnify against such liability. The
rights provided by Section 7.6 shall be enforceable against the
Registrant by such person who shall be presumed to have relied upon
such rights in serving or continuing to serve in the capacities
indicated therein.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors,
officers and controlling persons of the Registrant by the Registrant
pursuant to the Fund's Articles of Incorporation, its By-Laws or
otherwise, the Registrant is aware that in the opinion of the
Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Act and, therefore, is
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of
expenses incurred or paid by directors, officers or controlling
persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such directors,
officers or controlling persons in connection with shares being
registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issues.
13
<PAGE>
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
Woodbridge Capital
Management, Inc. Partner
Lee P. Munder President and Chairman
Leonard J. Barr, II Senior Vice President and
Director of Research
Clark Durant Vice President and Co-Director of
The Private Management Group
Terry H. Gardner Vice President and Chief
Financial Officer
Elyse G. Essick Vice President and Director of
Client Services
Sharon E. Fayolle Vice President and Director of
Money Market Trading
Otto G. Hinzmann Vice President and Director of
Equity Portfolio Management
Anne K. Kennedy Vice President and Director of
Corporate Bond Trading
Richard R. Mullaney Vice President and Director of
The Private Management Group
Ann F. Putallaz Vice President and Director of
Fiduciary Services
Peter G. Root Vice President and Director of
Government Securities Trading
14
<PAGE>
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:
<TABLE>
<S> <C>
American Century California Tax-Free and Municipal Funds Founders Funds, Inc.
American Century Capital Portfolios, Inc. Harris Insight Funds Trust
American Century Government Income Trust HT Insight Funds, Inc.
d/b/a Harris Insight Funds
American Century International Bond Funds JP Morgan Institutional Funds
American Century Investment Trust JP Morgan Funds
American Century Municipal Trust JPM Series Trust
American Century Mutual Funds, Inc. JPM Series Trust II
American Century Premium Reserves, Inc. LaSalle Partners Funds, Inc.
American Century Quantitative Equity Funds Monetta Fund, Inc.
American Century Strategic Asset Allocations, Inc. Monetta Trust
American Century Target Maturities Trust The Montgomery Funds
The Montgomery Funds II
American Century Variable Portfolios, Inc. The Munder Framlington Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.
American Century World Mutual Funds, Inc. Orbitex Group of Funds
BJB Investment Funds St. Clair Funds, Inc.
The Brinson Funds The Skyline Funds
Dresdner RCM Capital Funds, Inc. Waterhouse Investor Family of
Dresdner RCM Equity Funds, Inc. Funds, Inc.
WEBS Index Fund, Inc.
</TABLE>
(b) The following is a list of the executive officers, directors and
partners of Funds Distributor, Inc.
15
<PAGE>
Director, President and Chief Executive
Officer -Marie E. Connolly
Executive Vice President -Richard W. Ingram
Executive Vice President -Donald R. Roberson
Executive Vice President -William S. Nichols
Senior Vice President -Michael S. Petrucelli
Director, Senior Vice President, Treasurer
and Chief Financial Officer -Joseph F. Tower, III
Senior Vice President -Paula R. David
Senior Vice President -Bernard A. Whalen
Senior Vice President -Allen B. Closser
Director -William J. Nutt
(c) Not Applicable.
Item 30. Location of Accounts and Records
The account books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act
of 1940 and the Rules thereunder will be maintained at the offices
of:
(1) Munder Capital Management, 480 Pierce Street or 255 East Brown
Street, Birmingham, Michigan 48009 (records relating to its
function as investment advisor);
(2) First Data Investor Services Group, Inc., 53 State Street,
Exchange Place, Boston, Massachusetts 02109 or 4400 Computer
Drive, Westborough, Massachusetts 01581 (records relating to
its functions transfer agent);
(3) State Street Bank and Trust Company, 150 Newport Avenue, North
Quincy, Massachusetts 02171 (records relating to its function
as administrator and subcustodian);
(4) Funds Distributor, Inc., 60 State Street, Boston,
Massachusetts 02109 (records relating to its function as
distributor); and
(5) Comerica Bank, 1 Detroit Center, 500 Woodward Avenue, Detroit,
Michigan 48226 (records relating to its function as
custodian).
Item 31. Management Services.
Not Applicable
Item 32. Undertakings.
(a) Not Applicable.
16
<PAGE>
(b) Not Applicable.
(c) Registrant undertakes to call a meeting of Shareholders for
the purpose of voting upon the question of removal of a
Director or Directors when requested to do so by the holders
of at least 10% of the Registrant's outstanding shares of
common stock and in connection with such meeting to comply
with the shareholders' communications provisions of Section
16(c) of the Investment Company Act of 1940.
(d) Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest
annual report to shareholders upon request and without charge.
17
<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. 33 to the Registration Statement meets the
requirements for effectiveness pursuant to Rule 485(b) of the Securities Act of
1933, as amended, and the Registrant has duly caused this Post-Effective
Amendment No. 33 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Quincy and The Commonwealth of Massachusetts, on the
22nd day of May 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 May 22, 1998
- -------------------- President
Lee P. Munder
* Director May 22, 1998
-------------------
Charles W. Elliott
* Director May 22, 1998
-------------------
Joseph E. Champagne
* Director May 22, 1998
-------------------
Thomas B. Bender
* Director May 22, 1998
-------------------
Thomas D. Eckert
* Director May 22, 1998
-------------------
John Rakolta, Jr.
* Director May 22, 1998
-------------------
David J. Brophy
18
<PAGE>
* Vice President, May 22, 1998
------------------- Treasurer and
Terry H. Gardner Chief Financial Officer
*By: /s/ Cynthia Surprise
--------------------
Cynthia Surprise
as Attorney-in-Fact
19
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
1(k) Form of Articles Supplementary for the Registrant
8(k) Form of Amendment to Sub-Custodian Agreement among Registrant,
Comerica Bank and State Street Bank and Trust Company
9(k) Form of Amendment to Transfer Agency Agreement among
Registrant and First Data Investor Services Group, Inc.
9(l) Form of Amendment to Transfer Agency and Registrar Agreement
among Registrant and First Data Investor Services Group, Inc.
11(a) Consent of Ernst & Young LLP
15(u) Form of Amendment to Service and Distribution Plan with
respect to the NetNet Fund
15(v) Form of Service and Distribution Plan for Class B Shares with
respect to the NetNet Fund
17 Financial Data Schedule
18(c) Form of Second Amended and Restated Multi-Class Plan with
respect to the Registrant
20
<PAGE>
Exhibit 1(k)
THE MUNDER FUNDS, INC.
ARTICLES SUPPLEMENTARY
THE MUNDER FUNDS, INC., a Maryland corporation registered as an open-end
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and having its principal office in the State of Maryland in
Baltimore City, Maryland (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: In accordance with procedures established in the Corporation's
Charter, the Board of Directors of the Corporation, by resolution dated May
5, 1998 pursuant to Section 2-208 of Maryland General Corporate Law, duly (i)
designated fifty million (50,000,000) shares of the unissued, authorized
capital stock of the Corporation into the following additional series, and
classified the shares of such series as follows:
<TABLE>
<CAPTION>
Name of Series Number of Shares Allocated by Class (in millions)
- -------------- -------------------------------------------------
A B Y C K
<S> <C> <C> <C> <C> <C>
Munder Convertible Securities Fund 5 5 30 N/A 10
</TABLE>
; (ii) reclassified, effective ____, 1998, twenty million (20,000,000) shares of
authorized capital stock previously classified as Class A shares, forty million
(40,000,000) shares previously classified as Class B shares, ten million
(10,000,000) shares previously classified as Class C shares, ten million
(10,000,000) shares previously classified as Class K shares and twenty million
(20,000,000) shares previously classified as Class Y shares of the Munder Short
Term Treasury Fund as follows:
<TABLE>
<CAPTION>
Name of Series Reclassified Shares Allocated by Class (in millions)
- -------------- ----------------------------------------------------
A B Y C K
<S> <C> <C> <C> <C> <C>
Munder Short Term Treasury Fund 0 0 90 0 10
</TABLE>
<PAGE>
; (iii) reclassified, effective ________________, 1998, all Class K shares of
the Munder Short Term Treasury Fund as "Michigan Municipal League" shares; and
(iv) classified the fifty million (50,000,000) shares previously designated as
"NetNet Fund" shares as follows:
Name of Series Reclassified Shares Allocated by Class (in millions)
- -------------- ----------------------------------------------------
A B Y
NetNet Fund 15 20 15
SECOND: The shares of the Corporation classified or reclassified pursuant
to Article First of these Articles Supplementary have been so classified or
reclassified by the Board of Directors under the authority contained in the
Charter of the Corporation. The number of shares of capital stock of the various
classes that the Corporation has authority to issue has been established by the
Board of Directors in accordance with Section 2-105(c) of the Maryland General
Corporation Law.
THIRD: Immediately prior to the effectiveness of the Articles
Supplementary of the Corporation as hereinabove set forth, the Corporation had
the authority to issue two billion, three-hundred million (2,300,000,000) shares
of Common Stock of the par value of $0.01 per share and of the aggregate par
value of twenty-three million dollars ($23,000,000), of which the Board of
Directors had designated one billion, eight hundred and fifty-five million
(1,855,000,000) shares into Series and classified the shares of each Series as
follows:
Previously Classified Shares
----------------------------
Authorized Shares
Name of Series (in millions)
- -------------- -------------
NetNet Fund 50
Munder Financial Services Fund 50
2
<PAGE>
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 Growth Opportunities Fund 3.4 3.3 20 3.3 20
As amended hereby, the Corporation's Articles of Incorporation authorize
the issuance of two billion, three-hundred million (2,300,000,000) shares of
Common Stock of the par value of $0.01 per share and having an aggregate par
value of twenty-three million dollars ($23,000,000), of which the Board of
Directors has designated one billion, nine hundred five million, (1,905,000,000)
(including the 1,855,000,000 shares previously designated) shares into Series
and classified the shares of each Series as follows:
Current Classification of Shares
--------------------------------
Authorized Shares
Name of Series (in millions)
- -------------- -------------
Munder Financial Services Fund 50
3
<PAGE>
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 All-Season Conservative Fund 12.5 12.5 25 N/A N/A
Munder All-Season Moderate Fund 12.5 12.5 25 N/A N/A
Munder All-Season Aggressive Fund 12.5 12.5 25 N/A N/A
Munder Emerging Growth Fund 3.4 3.3 20 3.3 20
Munder Convertible Securities Fund 5 5 30 0 10
NetNet Fund 15 20 15 N/A N/A
Authorized
Shares by Class (in millions)
-----------------------------
A B Y C Michigan
Municipal
League
(formerly "K")
Munder Short Term Treasury Fund 0 0 90 0 10
FOURTH: The preferences, rights, voting powers, restrictions, limitations
as to dividends, qualifications and terms and conditions of redemption of the
various classes of shares shall be as set forth in the Corporation's Articles of
Incorporation and shall be subject to all provisions of the Articles of
Incorporation relating to shares of the Corporation generally, and those set
forth as follows:
(a) The assets of each Class of a Series shall be invested in the same
investment portfolio of the Corporation.
(b) The dividends and distributions of investment income and capital gains
with respect to each class of shares shall be in such amount as may be
declared from time to
4
<PAGE>
time by the Board of Directors, and the dividends and distributions of
each class of shares may vary from the dividends and distributions of the
other classes of shares to reflect differing allocations of the expenses
of the Corporation among the holders of each class and any resultant
differences between the net asset value per share of each class, to such
extent and for such purposes as the Board of Directors may deem
appropriate. The allocation of investment income or capital gains and
expenses and liabilities of the Corporation among the classes shall be
determined by the Board of Directors in a manner it deems appropriate.
(c) Class A shares of each Series (including fractional shares) may be
subject to an initial sales charge pursuant to the terms of the issuance
of such shares.
(d) The proceeds of the redemption of Class B shares of each Series
(including fractional shares) may be reduced by the amount of any
contingent deferred sales charge payable on such redemption pursuant to
the terms of the issuance of such shares.
(e) The holders of Class A shares, Class B shares and Class Y shares of
each Series shall have (i) exclusive voting rights with respect to
provisions of any service plan or service and distribution plan adopted by
the Corporation pursuant to Rule 12b-1 under the Investment Company Act of
1940 (a "Plan") applicable to the respective class of the respective
Series and (ii) no voting rights with respect to the provisions of any
Plan applicable to any other class or Series of shares or with regard to
any other matter submitted to a vote of shareholders which does not affect
holders of that respective class of the respective Series of shares.
(f)(1) Each Class B share of each Series, other than a share purchased
through the automatic reinvestment of a dividend or a distribution with
respect to Class B shares, shall be converted automatically, and without
any action or choice on the part of the holder thereof, into Class A
shares of that Series on the date that is the first business day of the
month in which the sixth anniversary of the issuance of the Class B shares
occurs (the "Conversion Date"). With respect to Class B shares issued in
an exchange or series of exchanges for shares of capital stock of another
investment company or class or series thereof registered under the
Investment Company Act of 1940 pursuant to an exchange privilege granted
by the Corporation, the date of issuance of the Class B shares for
5
<PAGE>
purposes of the immediately preceding sentence shall be the date of
issuance of the original shares of capital stock.
(2) Each Class B share of a Series purchased through the automatic
reinvestment of a dividend or a distribution with respect to Class B
shares shall be segregated in a separate sub-account. Each time any Class
B shares in a shareholder's Fund account (other than those in the
sub-account) convert to Class A shares, an equal pro rata portion of the
Class B shares then in the sub-account shall also convert automatically to
Class A shares without any action or choice on the part of the holder
thereof. The portion shall be determined by the ratio that the
shareholder's Class B shares of a Series converting to Class A shares
bears to the shareholder's total Class B shares of that Series not
acquired through dividends and distributions.
(3) The conversion of Class B shares to Class A shares is subject to
the continuing availability of an opinion of counsel or a ruling of the
Internal Revenue Service that payment of different dividends on Class A
and Class B shares does not result in the Corporation's dividends or
distributions constituting "preferential dividends" under the Internal
Revenue Code of 1986, as amended, and that the conversion of shares does
not constitute a taxable event under federal income tax law.
(4) The number of Class A shares of a Series into which a share of
Class B shares is converted pursuant to paragraphs (f)(1) and (f)(2)
hereof shall equal the number (including for this purpose fractions of
shares) obtained by dividing the net asset value per share of the Class B
shares of the Series (for purposes of sales and redemptions thereof on the
Conversion Date) by the net asset value per share of the Class A shares of
the Series (for purposes of sales and redemptions thereof on the
Conversion Date).
(5) On the Conversion Date, the Class B shares of a Series converted
into Class A shares will cease to accrue dividends and will no longer be
deemed outstanding and the rights of the holders thereof (except the right
to receive (i) the number of Class A shares into which the Class B shares
have been converted and (ii) declared but unpaid dividends to the
Conversion Date) will cease. Certificates representing Class A shares
resulting from the conversion need not be issued until certificates
representing Class B
6
<PAGE>
shares converted, if issued, have been received by the Corporation or its
agent duly endorsed for transfer.
IN WITNESS WHEREOF, The Munder Funds, Inc. has caused these Articles
Supplementary to be signed in its name on its behalf by its authorized officers
who acknowledge that these Articles Supplementary are the act of the
Corporation, that to the best of their knowledge, information and belief, all
matters and facts set forth herein relating to the authorization and approval of
these Articles Supplementary are true in all material respects and that this
statement is made under the penalties of perjury.
Date: __________________, 1998
THE MUNDER FUNDS, INC.
[CORPORATE SEAL]
By: _____________________
Attest:
____________________________
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Exhibit 8(k)
AMENDMENT TO SUB-CUSTODIAN CONTRACT
This Amendment to the Sub-Custodian Contract is made as of *[date] by and
between The Munder Funds, Inc. (the "Fund"), Comerica Bank (the "Custodian") and
State Street Bank and Trust Company (the "Sub-Custodian"). Capitalized terms
used in this Amendment without definition shall have the respective meanings
given to such terms in the Sub-Custodian Contract referred to below.
WHEREAS, the Fund, the Custodian and the Sub-Custodian entered into a
Sub-Custodian Contract dated as of October 1, 1997 (as amended and in effect
from time to time, the "Contract"); and
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 the Fund has made 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 subject to the Contract (each
such series, together with all other series subsequently established by the Fund
and made subject to the Contract in accordance with the terms thereof, shall be
referred to as a "Portfolio", and, collectively, the "Portfolios"); and
WHEREAS, the Fund, the Custodian and the Sub-Custodian desire to amend
certain provisions of the Contract to reflect revisions to Rule 17f-5 ("Rule
17f-5") promulgated under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Fund, the Custodian and the Sub-Custodian desire to amend and
restate certain other provisions of the Contract relating to the custody of
assets of each of the Portfolios held outside of the United States.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter contained, the parties hereby agree to amend the
Contract, pursuant to the terms thereof, as follows:
I. Article 3 of the Contract is hereby deleted, and Articles 4 through 22 of
the Contract are hereby renumbered, as of the effective date of this
Amendment, as Articles 5 through 23, respectively.
II. New Articles 3 and 4 of the Contract are hereby added, as of the effective
date of this Amendment, as set forth below.
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3. The Sub-Custodian as Foreign Custody Manager.
3.1. Definitions.
Capitalized terms in this Article 3 shall have the following meanings:
"Country Risk" means all factors reasonably related to the systemic risk of
holding Foreign Assets in a particular country including, but not limited to,
such country's political environment; economic and financial infrastructure
(including any Mandatory Securities Depositories operating in the country);
prevailing or developing custody and settlement practices; and laws and
regulations applicable to the safekeeping and recovery of Foreign Assets held in
custody in that country.
"Eligible Foreign Custodian" has the meaning set forth in section (a)(1) of Rule
17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as
defined in Rule 17f-5), a bank holding company meeting the requirements of an
Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate
action of the U.S. Securities and Exchange Commission (the "SEC")), or a foreign
branch of a Bank (as defined in Section 2(a)(5) of the 1940 Act) meeting the
requirements of a custodian under Section 17(f) of the 1940 Act, except that the
term does not include Mandatory Securities Depositories.
"Foreign Assets" means any of the Portfolios' investments (including foreign
currencies) for which the primary market is outside the United States and such
cash and cash equivalents as are reasonably necessary to effect the Portfolios'
transactions in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(2) of Rule
17f-5.
"Mandatory Securities Depository" means a foreign securities depository or
clearing agency that, either as a legal or practical matter, must be used if the
Fund determines to place Foreign Assets in a country outside the United States
(i) because required by law or regulation; (ii) because securities cannot be
withdrawn from such foreign securities depository or clearing agency; or (iii)
because maintaining or effecting trades in securities outside the foreign
securities depository or clearing agency is not consistent with prevailing or
developing custodial or market practices.
3.2. Delegation to the Sub-Custodian as Foreign Custody Manager.
The Fund, by resolution adopted by its Board of Directors (the "Board"), hereby
delegates to the Sub-Custodian, subject to Section (b) of Rule 17f-5, the
responsibilities set forth in this Article 3 with respect to Foreign Assets held
outside the United States, and the Sub-Custodian hereby accepts such delegation,
as Foreign Custody Manager of each Portfolio.
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3.3. Countries Covered.
The Foreign Custody Manager shall be responsible for performing the delegated
responsibilities defined below only with respect to the countries and custody
arrangements for each such country listed on Schedule A to this Contract, which
list of countries may be amended from time to time by the Fund with the
agreement of the Foreign Custody Manager. The Foreign Custody Manager shall list
on Schedule A the Eligible Foreign Custodians selected by the Foreign Custody
Manager to maintain the assets of each Portfolio, which list of Eligible Foreign
Custodians may be amended from time to time in the sole discretion of the
Foreign Custody Manager. Mandatory Securities Depositories are listed on
Schedule B to this Contract, which Schedule B may be amended from time to time
by the Foreign Custody Manager. The Foreign Custody Manager will provide amended
versions of Schedules A and B in accordance with Section 3.7 of this Article 3.
Upon the receipt by the Foreign Custody Manager of Proper Instructions to open
an account, or to place or maintain Foreign Assets, in a country listed on
Schedule A, and the fulfillment by the Fund of the applicable account opening
requirements for such country, the Foreign Custody Manager shall be deemed to
have been delegated by the Board responsibility as Foreign Custody Manager with
respect to that country and to have accepted such delegation. Execution of this
Amendment by the Fund shall be deemed to be a Proper Instruction to open an
account, or to place or maintain Foreign Assets, in each country listed on
Schedule A in which the Sub-Custodian has previously placed or currently
maintains Foreign Assets pursuant to the terms of the Contract. Following the
receipt of Proper Instructions directing the Foreign Custody Manager to close
the account of a Portfolio with the Eligible Foreign Custodian selected by the
Foreign Custody Manager in a designated country, the delegation by the Board to
the Sub-Custodian as Foreign Custody Manager for that country shall be deemed to
have been withdrawn and the Sub-Custodian shall immediately cease to be the
Foreign Custody Manager of the Portfolio with respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated
responsibilities with respect to a designated country upon written notice to the
Fund. Thirty days (or such longer period as to which the parties agree in
writing) after receipt of any such notice by the Fund, the Sub-Custodian shall
have no further responsibility as Foreign Custody Manager to a Portfolio with
respect to the country as to which the Sub-Custodian's acceptance of delegation
is withdrawn.
3.4. Scope of Delegated Responsibilities.
3.4.1. Selection of Eligible Foreign Custodians.
Subject to the provisions of this Article 3, the Foreign Custody Manager may
place and maintain the Foreign Assets in the care of the Eligible Foreign
Custodian selected by the
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Foreign Custody Manager in each country listed on Schedule A, as amended from
time to time.
In performing its delegated responsibilities as Foreign Custody Manager to place
or maintain Foreign Assets with an Eligible Foreign Custodian, the Foreign
Custody Manager shall determine that the Foreign Assets will be subject to
reasonable care, based on the standards applicable to custodians in the country
in which the Foreign Assets will be held by that Eligible Foreign Custodian,
after considering all factors relevant to the safekeeping of such assets,
including, without limitation the factors specified in Rule 17f-5(c)(1).
3.4.2. Contracts With Eligible Foreign Custodians.
The Foreign Custody Manager shall determine that the contract (or the rules or
established practices or procedures in the case of an Eligible Foreign Custodian
that is a foreign securities depository or clearing agency) governing the
foreign custody arrangements with each Eligible Foreign Custodian selected by
the Foreign Custody Manager will satisfy the requirements of Rule 17f-5(c)(2).
3.4.3. Monitoring.
In each case in which the Foreign Custody Manager maintains Foreign Assets with
an Eligible Foreign Custodian selected by the Foreign Custody Manager, the
Foreign Custody Manager shall establish a system to monitor (i) the
appropriateness of maintaining the Foreign Assets with such Eligible Foreign
Custodian and (ii) the contract governing the custody arrangements established
by the Foreign Custody Manager with the Eligible Foreign Custodian (or the rules
or established practices and procedures in the case of an Eligible Foreign
Custodian selected by the Foreign Custody Manager which is a foreign securities
depository or clearing agency that is not a Mandatory Securities Depository). In
the event the Foreign Custody Manager determines that the custody arrangements
with an Eligible Foreign Custodian it has selected are no longer appropriate,
the Foreign Custody Manager shall notify the Board in accordance with Section
3.7 hereunder.
3.5. Guidelines for the Exercise of Delegated Authority.
For purposes of this Article 3, the Board shall be deemed to have considered and
determined to accept such Country Risk as is incurred by placing and maintaining
the Foreign Assets in each country for which the Sub-Custodian is serving as
Foreign Custody Manager of a Portfolio, and the Board shall be deemed to be
monitoring on a continuing basis such Country Risk to the extent that the Board
considers necessary or appropriate. The Fund, on behalf of the Portfolios, and
the Sub-Custodian each expressly acknowledge that the Foreign Custody Manager
shall not be delegated any responsibilities under this Article 3 with respect to
Mandatory Securities Depositories.
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3.6. Standard of Care as Foreign Custody Manager of a Portfolio.
In performing the responsibilities delegated to it, the Foreign Custody Manager
agrees to exercise reasonable care, prudence and diligence such as a person
having responsibility for the safekeeping of assets of management investment
companies registered under the 1940 Act would exercise.
3.7. Reporting Requirements.
The Foreign Custody Manager shall report the withdrawal of the Foreign Assets
from an Eligible Foreign Custodian and the placement of such Foreign Assets with
another Eligible Foreign Custodian by providing to the Board amended Schedules A
or B at the end of the calendar quarter in which an amendment to either Schedule
has occurred. The Foreign Custody Manager shall make written reports notifying
the Board of any other material change in the foreign custody arrangements of
the Portfolios described in this Article 3 after the occurrence of the material
change.
3.8. Representations with Respect to Rule 17f-5.
The Foreign Custody Manager represents to the Fund that it is a U.S. Bank as
defined in section (a)(7) of Rule 17f-5.
The Fund represents to the Sub-Custodian that the Board has determined that it
is reasonable for the Board to rely on the Sub-Custodian to perform the
responsibilities delegated pursuant to this Contract to the Sub-Custodian as the
Foreign Custody Manager of each Portfolio.
3.9. Effective Date and Termination of the Sub-Custodian as Foreign Custody
Manager.
The Board's delegation to the Sub-Custodian as Foreign Custody Manager of a
Portfolio shall be effective as of the date hereof and shall remain in effect
until terminated at any time, without penalty, by written notice from the
terminating party to the non-terminating party. Termination will become
effective thirty days after receipt by the non-terminating party of such notice.
The provisions of Section 3.3 hereof shall govern the delegation to and
termination of the Sub-Custodian as Foreign Custody Manager of the Fund with
respect to designated countries.
4. Duties of the Sub-Custodian with Respect to Property of the Portfolios Held
Outside the United States.
4.1 Definitions.
Capitalized terms in this Article 4 shall have the following meanings:
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"Foreign Securities System" means either a clearing agency or a securities
depository listed on Schedule A hereto or a Mandatory Securities Depository
listed on Schedule B hereto.
"Foreign Sub-Sub-Custodian" means a foreign banking institution serving as an
Eligible Foreign Custodian.
4.2. Holding Securities.
The Sub-Custodian shall identify on its books as belonging to the Portfolios the
foreign securities held by each Foreign Sub-Sub-Custodian or Foreign Securities
System. The Sub-Custodian may hold foreign securities for all of its customers,
including the Portfolios, with any Foreign Sub-Sub-Custodian in an 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 foreign securities of the Portfolios which are maintained in such
account shall identify those securities as belonging to the Portfolios and (ii),
to the extent permitted and customary in the market in which the account is
maintained, the Sub-Custodian shall require that securities so held by the
Foreign Sub-Sub-Custodian be held separately from any assets of such Foreign
Sub-Sub-Custodian or of other customers of such Foreign Sub-Sub-Custodian.
4.3. Foreign Securities Systems.
Foreign securities shall be maintained in a Foreign Securities System in a
designated country only through arrangements implemented by the Foreign
Sub-Sub-Custodian in such country pursuant to the terms of this Contract.
4.4. Transactions in Foreign Custody Account.
4.4.1. Delivery of Foreign Assets.
The Sub-Custodian or a Foreign Sub-Sub-Custodian shall release and deliver
foreign securities of a Portfolio held by such Foreign Sub-Sub-Custodian, or in
a Foreign Securities System account, only upon receipt of Proper Instructions,
which may be continuing instructions when deemed appropriate by the parties, and
only in the following cases:
(i) upon the sale of such foreign securities for the Portfolio in
accordance with commercially reasonable market practice in the
country where such Assets are held or traded, including, without
limitation: (A) delivery against expectation of receiving later
payment; or (B) in the case of a sale effected through a Foreign
Securities System, in accordance with the rules governing the
operation of the Foreign Securities System;
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(ii) in connection with any repurchase agreement related to foreign
securities;
(iii) to the depository agent in connection with tender or other similar
offers for foreign securities of the Portfolio;
(iv) to the issuer thereof or its agent when such foreign securities are
called, redeemed, retired or otherwise become payable;
(v) to the issuer thereof, or its agent, for transfer into the name of
the Sub-Custodian (or the name of the respective Foreign
Sub-Sub-Custodian or of any nominee of the Sub-Custodian or such
Foreign Sub-Sub-Custodian) or for exchange for a different number
of bonds, certificates or other evidence representing the same
aggregate face amount or number of units;
(vi) to brokers, clearing banks or other clearing agents for examination
or trade execution in accordance with market custom; provided that
in any such case the Foreign Sub-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 Foreign Sub-Sub-Custodian's own
negligence or willful misconduct;
(vii) 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;
(viii) in the case of warrants, rights or similar foreign 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;
(ix) for delivery as security in connection with any borrowing by the
Fund requiring a pledge of assets by the Portfolio;
(x) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(xi) in connection with the lending of foreign securities; and
(xii) for any other proper purpose, but only upon receipt of, in addition
to Proper Instructions, a copy of a resolution of the Board or of
an Executive Committee of the Board so authorized by the Board,
signed by an officer of the Fund and certified by its Secretary or
an Assistant Secretary that the resolution was duly adopted and is
in full force and effect (a "Certified Resolution"), specifying the
Foreign Assets to be delivered, setting forth
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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 Assets shall be made.
4.4.2. Payment of Portfolio Monies.
Upon receipt of Proper Instructions, which may be continuing instructions when
deemed appropriate by the parties, the Sub-Custodian shall pay out, or direct
the respective Foreign Sub-Sub-Custodian or the respective Foreign Securities
System to pay out, monies of a Portfolio in the following cases only:
(i) upon the purchase of foreign securities for the Portfolio, unless
otherwise directed by Proper Instructions, by (A) delivering money
to the seller thereof or to a dealer therefor (or an agent for such
seller or dealer) against expectation of receiving later delivery
of such foreign securities; or (B) in the case of a purchase
effected through a Foreign Securities System, in accordance with
the rules governing the operation of such Foreign Securities
System;
(ii) in connection with the conversion, exchange or surrender of foreign
securities of the Portfolio;
(iii) for the payment of any expense or liability of the Portfolio
including but not limited to the following payments: interest,
taxes, investment advisory fees, transfer agency fees, fees under
this Contract, legal fees, accounting fees, and other operating
expenses;
(iv) for the purchase or sale of foreign exchange or foreign exchange
contracts for the Portfolio, including transactions executed with
or through the Sub-Custodian or its Foreign Sub-Sub-Custodians;
(v) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(vii) in connection with the borrowing or lending of foreign securities;
and
(viii) for any other proper purpose, but only upon receipt of, in addition
to Proper Instructions, a Certified Resolution 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
corporate purpose, and naming the person or persons to whom such
payment is to be made.
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4.4.3. Market Conditions; Market Information.
Notwithstanding any provision of this Contract to the contrary, settlement and
payment for Foreign Assets received for the account of a Portfolio and delivery
of Foreign Assets maintained for the account of a Portfolio may be effected in
accordance with the customary established securities trading or processing
practices and procedures in the country or market in which the transaction
occurs, including, without limitation, delivering Foreign Assets to the
purchaser thereof or to a dealer therefor (or an agent for such purchaser or
dealer) with the expectation of receiving later payment for such Foreign Assets
from such purchaser or dealer.
The Sub-Custodian shall provide to the Board the information with respect to
custody and settlement practices in countries in which the Sub-Custodian employs
a Foreign Sub-Sub-Custodian, including without limitation information relating
to Foreign Securities Systems, described on Schedule C hereto at the time or
times set forth on such Schedule. The Sub-Custodian may revise Schedule C from
time to time, provided that no such revision shall result in the Board being
provided with substantively less information than had been previously provided
hereunder.
4.5. Registration of Foreign Securities.
The foreign securities maintained in the custody of a Foreign Custodian (other
than bearer securities) shall be registered in the name of the Fund (on behalf
of the applicable Portfolio) or in the name of the Sub-Custodian or in the name
of any Foreign Sub-Sub-Custodian or in the name of any nominee of the foregoing,
and the Fund agrees to hold any such nominee harmless from any liability as a
holder of record of such foreign securities. The Sub-Custodian or a Foreign
Sub-Sub-Custodian shall not be obligated to accept securities on behalf of the
Fund (on behalf of the applicable Portfolio) under the terms of this Contract
unless the form of such securities and the manner in which they are delivered
are in accordance with reasonable market practice.
4.6. Bank Accounts.
The Sub-Custodian shall identify on its books as belonging to a Portfolio cash
(including cash denominated in foreign currencies) deposited with the
Sub-Custodian. Where the Sub-Custodian is unable to maintain, or market practice
does not facilitate the maintenance of, cash on the books of the Sub-Custodian,
a bank account or bank accounts opened and maintained outside the United States
on behalf of a Portfolio with a Foreign Sub-Sub-Custodian shall be subject only
to draft or order by the Sub-Custodian or such Foreign Sub-Sub-Custodian, acting
pursuant to the terms of this Contract to hold cash received by or from or for
the account of the Portfolio.
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4.7. Collection of Income.
The Sub-Custodian shall use reasonable commercial efforts to collect all income
and other payments with respect to the Foreign Assets held hereunder to which a
Portfolio shall be entitled and shall credit such income, as collected, to the
Portfolio. In the event that extraordinary measures are required to collect such
income, the Fund and the Sub-Custodian shall consult as to such measures and as
to the compensation and expenses of the Sub-Custodian relating to such measures.
4.8. Shareholder Rights.
With respect to the foreign securities held under this Article 4, the
Sub-Custodian will use reasonable commercial efforts to facilitate the exercise
of voting and other shareholder rights, subject always to the laws, regulations
and practical constraints that may exist in the country where such securities
are issued. The Fund acknowledges that local conditions, including lack of
regulation, onerous procedural obligations, lack of notice and other factors may
have the effect of severely limiting the ability of the Fund to exercise
shareholder rights.
4.9. Communications Relating to Foreign Securities.
The Sub-Custodian shall transmit promptly to the Fund written information
(including, without limitation, pendency of calls and maturities of foreign
securities and expirations of rights in connection therewith) received by the
Sub-Custodian via the Foreign Sub-Sub-Custodians from issuers of the foreign
securities being held for the account of a Portfolio. With respect to tender or
exchange offers, the Sub-Custodian shall transmit promptly to the Fund written
information so received by the Sub-Custodian from issuers of the foreign
securities whose tender or exchange is sought or from the party (or its agents)
making the tender or exchange offer. The Sub-Custodian shall not be liable for
any untimely exercise of any tender, exchange or other right or power in
connection with foreign securities or other property of the Portfolio at any
time held by it unless (i) the Sub-Custodian or the respective Foreign
Sub-Sub-Custodian is in actual possession of such foreign securities or property
and (ii) the Sub-Custodian receives Proper Instructions with regard to the
exercise of any such right or power, and both (i) and (ii) occur at least three
business days prior to the date on which the Sub-Custodian is to take action to
exercise such right or power.
4.10. Liability of Foreign Sub-Sub-Custodians and Foreign Securities Systems.
Each agreement pursuant to which the Sub-Custodian employs a Foreign
Sub-Sub-Custodian shall, to the extent possible, require the Foreign
Sub-Sub-Custodian to exercise reasonable care in the performance of its duties
and, to the extent possible, to indemnify, and hold harmless, the Sub-Custodian
from and against any loss, damage, cost, expense, liability or claim arising out
of or in connection with such Foreign Sub-Sub-Custodian's
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performance of such obligations. At the election of the Fund, the Fund shall be
entitled to be subrogated to the rights of the Sub-Custodian with respect to any
claims against a Foreign Sub-Sub-Custodian as a consequence of any such loss,
damage, cost, expense, liability or claim if and to the extent that the Fund and
any applicable Portfolio has not been made whole for any such loss, damage,
cost, expense, liability or claim.
4.11. 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 custodian of the
Portfolios by the tax law of the United States or of 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 with respect to the
Portfolios or the Sub-Custodian as custodian of such Portfolios by the tax law
of countries 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 countries for which the Fund has provided such
information.
4.12. Liability of Sub-Custodian.
Except as may arise from the Sub-Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a Sub-Sub-Custodian, the
Sub-Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by anything which is (A) part of
Country Risk or (B) part of the "prevailing country risk" of the Fund and the
Portfolios, as such term is used in SEC Release Nos. IC-22658; IS-1080 (May 12,
1997) or as such term or other similar terms are now or in the future
interpreted by the SEC or by the staff of the Division of Investment Management
of the SEC.
The Sub-Custodian shall be liable for the acts or omissions of a Foreign
Sub-Sub-Custodian to the same extent as set forth with respect to
sub-sub-custodians generally in the Contract and, regardless of whether assets
are maintained in the custody of a Foreign Sub-Sub-Custodian or a Foreign
Securities Depository, 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 other
loss where the Sub-Sub-Custodian has otherwise acted with reasonable care.
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III. Except as specifically superseded or modified herein, the terms and
provisions of the Contract shall continue to apply with full force and
effect. In the event of any conflict between the terms of the Contract
prior to this Amendment and this Amendment, the terms of this Amendment
shall prevail. If the Sub-Custodian is delegated the responsibilities of
Foreign Custody Manager pursuant to the terms of Article 3 hereof, in the
event of any conflict between the provisions of Articles 3 and 4 hereof,
the provisions of Article 3 shall prevail.
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IN WITNESS WHEREOF, each of the parties has caused this Amendment to be
executed in its name and behalf by its duly authorized representative as of the
date first above written.
WITNESSED BY: STATE STREET BANK AND TRUST COMPANY
*[name] By: _________________________
[title] Name: Ronald E. Logue
Title: Executive Vice President
WITNESSED BY: THE MUNDER FUNDS, INC.
*[name] By: __________________________
[title] Name:
Title:
WITNESSED BY: COMERICA BANK
*[name] By: __________________________
[title] Name:
Title:
<PAGE>
Exhibit 9(k)
AMENDMENT TO THE TRANSFER AGENCY AGREEMENT
This Amendment dated as of __________day of ________, 1998 (the
"Amendment") is made to the Transfer Agency and Registrar Agreement(s) (the
"Agreement(s)") between each of the Funds executing this Amendment and listed on
Exhibit 1 of this Amendment attached hereto and incorporated herein (hereinafter
individually and collectively referred to as the "Fund") and First Data Investor
Services Group, Inc. ("Investor Services Group").
WITNESSTH
WHEREAS, the Fund desires to enable the shareholders of the Funds and
their respective Portfolios of the Fund as applicable set forth in Exhibit 1, to
access certain Fund information maintained by Investor Services Group on behalf
of the Fund through use of the Internet (as hereinafter defined) and Investor
Services Group desires to allow such access and provide certain services as more
fully described below in connection therewith;
NOW THEREFORE, the Fund and Investor Services Group agree that as of the
date first referenced above, Investor Services Group Agreement shall be amended
as follows:
1. The following definitions are hereby incorporated into Agreement:
(a) "Investor Services Group Secure Net Gateway" shall mean the system
of computer hardware and software and network established by
Investor Services Group to provide access between Investor Services
Group recordkeeping system and the Internet;
(b) "Investor Services Group Web Transaction Engine" shall mean the
system of computer hardware and software created and established by
Investor Services Group in order to enable Shareholders of the Fund
to perform the transactions contemplated hereunder.
(c) "Internet" shall mean the communications network comprised of
multiple communications networks linking education, government,
industrial and private computer network.
(d) "Fund Home Page" shall mean the Fund's proprietary web site on the
Internet used by the Fund to provide information to its shareholders
and potential shareholders.
2. In addition to the services rendered by Investor Services Group as set forth
in the Agreement, Investor Services Group agrees to provide the following
services for the fees set forth in the Schedule of IMPRESSNet Fees attached
hereto as Schedule A of this Amendment:
<PAGE>
(a) in accordance with the written procedures established between the
fund and Investor Services Group, enable the Fund and its
Shareholders utilize the Internet in order to access Fund
information maintained by Investor Services Group through the use of
the Investor Services Group Web Transaction Engine and Secure Net
Gateway;
(b) allow the Shareholders to perform account inquiries and
transactions;
(c) maintenance of the Investor Services Group Secure Net Gateway and
the Investor Services Group Web Transaction Engine.
3. Responsibility of the Fund. In connection with the services provided by
Investor Services Group hereunder, the Fund shall be responsible for the
following:
(a) establishment and maintenance of the Fund Home Page on the Internet;
(b) services and relationships between the Fund and any third party
on-line service providers to enable the Shareholders to access the
Fund Home Page;
(c) provide Investor Services Group with access to and information
regarding the Fund Home Page in order to enable Investor Services
Group to provide the services contemplated hereunder;
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment 2 to be
executed by their duly authorized officers, as of the day and year first above
written.
THE MUNDER FUNDS, INC. THE MUNDER FUNDS TRUST
___________________________ ___________________________
By:________________________ By:________________________
Title:_____________________ Title:_____________________
ST. CLAIR FUNDS, INC. THE MUNDER FRAMLINGTON
FUNDS TRUST
___________________________ ___________________________
By:________________________ By:________________________
Title:_____________________ Title:_____________________
FIRST DATA INVESTOR SERVICES
GROUP, INC.
___________________________
By:________________________
Title:_____________________
<PAGE>
Exhibit 1
LIST OF FUNDS AND PORTFOLIOS
The Munder Funds Trust
Munder Accelerating Growth Fund
Munder Balanced Fund
Munder Bond Fund
Munder Cash Investment Fund
Munder Growth & Income Fund
Munder Index 500 Fund
Munder Intermediate Bond Fund
Munder International Equity Fund
Munder Michigan Triple Tax-Free Bond Fund
Munder Small Company Growth Fund
Munder Tax-Free Bond Fund
Munder Tax-Free Intermediate Bond Fund
Munder Tax-Free Money Market Fund
Munder U.S. Government Income Fund
Munder U.S. Treasury Money Market Fund
The Munder Funds, Inc.
Munder Multi-Season Growth Fund
Munder Money Market Fund
Munder Real Estate Equity Investment Fund
Munder Value Fund
Munder Mid-Cap Growth Fund
St. Clair Funds, Inc.
Liquidity Plus Money Market Fund
Munder S&P 500 Index Equity Fund
Munder S&P MidCap Index Equity Fund
Munder S&P SmallCap Index Equity Fund
Munder Foreign Equity Fund
Munder Aggregate Bond Index Fund
Munder Framlington Funds Trust
Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund
Munder Framlington International Growth Fund
<PAGE>
Schedule A
IMPRESSNet Fees
Web Transaction Engine
Transaction Cost:
o Account Inquiry $.10 per inquiry
o Financial Transactions $.50 per transaction
*Hardware Maintenance Fee Including Hardware and Software: $50,000 per annum
o Does not include client hardware and software requirements. That is an
out-of-pocket expense for the client
o Installation of hardware is billed as time and materials
o Does not include third party hardware and software maintenance agreements
o Does not includehardware upgrades
*Customized Development: $150 Per hour
Call Center Services for Registration (one-time): $2.50 per call
*Network Fee (one-time): $2,100
Per Pin Assignment (one-time): $2.50
*Cumulative charge with respect to all Funds executing this Amendment and such
other Funds advised by Munder Asset Management services by Investor Services
Group.
Investor Services Group will provide an invoice as soon as practicable after the
end of each calendar month. The Fund agrees to pay to Investor Services Group
the amounts so billed by Federal Funds Wire within fifteen (15) business days
after the Fund's receipt of invoice. In addition, with respect to all fees,
Investor Services Group may charge a service fee equal to the lesser of (i) one
and one half percent (1-1/2%) per month or (ii) the highest rate legally
permitted on any past due invoiced amounts.
<PAGE>
Exhibit 9(l)
AMENDMENT TO THE TRANSFER AGENCY AND REGISTRAR AGREEMENT
This Amendment dated as of June 1, 1998 is made to the Transfer Agency
Agreement(s) (the "Agreement(s)") between each of the Funds executing this
Amendment and listed on Exhibit 1 of this Amendment attached hereto and
incorporated herein (hereinafter individually and collectively referred to as
the "Fund") and First Data Investor Services Group, Inc. ("Investor Services
Group").
1. Modify Paragraph "(a)" of Section 15 "Term and Termination" by deleting
the contents of this paragraph in its entirety and inserting the following
new paragraph in its place:
"(a) Except as otherwise set forth herein, this Agreement shall be
effective as of the dates first written above and shall continue until
June 1, 20000 (the "Initial Term"). Upon the expiration of the Initial
Term, this Agreement shall automatically renew for successive terms of one
(1) year ("Renewal Terms") each, unless the Trust or the Transfer Agent
provides written notice to the other of its intent not to renew. Such
notice must be received not less than ninety(90) days and not more than
one-hundred eighty (180) days prior to the expiration of the Initial Term
or the then current Renewal Term."
2. Modify Schedule A "Transfer Agent Fees" by deleting this Schedule in its
entirety and insert the attached new Schedule A in its place.
3. Modify Schedule B "Out-of-Pocket Expenses" by deleting this Schedule in
its entirety and insert the attached new Schedule B in its place.
4. Modify Exhibit 1 to Schedule C insert the following additional bullet:
o Identify area responsible for gain/loss purposes due to "as/of"
processing and daily reconciliation of processing to identify gains
and/or losses which impact the Fund. Any gain or loss will be netted
out on a quarterly basis. The Transfer Agent will compensate the
Fund for any Losses attributable to Transfer Agent processing
errors.
<PAGE>
This Amendment contains the entire understanding among the parties with respect
to the transactions contemplated hereby. To the extent that any provision of
this Amendment modifies or is otherwise inconsistent with any provisions of the
prior agreements and related agreements, this Amendment shall control, but the
prior agreements and all related documents shall otherwise remain in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers, as of the day and year first above
written.
THE MUNDER FUNDS, INC. THE MUNDER FUNDS TRUST
___________________________ ___________________________
By:________________________ By:________________________
Title:_____________________ Title:_____________________
ST. CLAIR FUNDS, INC. THE MUNDER FRAMLINGTON
FUNDS TRUST
___________________________ ___________________________
By:________________________ By:________________________
Title:_____________________ Title:_____________________
FIRST DATA INVESTOR SERVICES
GROUP, INC.
___________________________
By:________________________
Title:_____________________
<PAGE>
SCHEDULE A
TRANSFER AGENT'S FEES
1. Fund Complex Minimum* $90,000 per month
2. Asset Based Fees 2.00 Basis Points for assets < 5 billion
1.50 Basis Points for assets 5 billion-9 billion
1.00 Basis Points for assets > 9 billion
3. Other Fees: IRA accounts will be charged $10.00 per global
account per annum (excluding Consumer's Energy
Group)
NSCC Transaction Charge is $.15 per financial
transaction
Client defined system enhancements will be
agreed upon by Transfer Agent and Munder Capital
and billed at a rate of $150.00 per hour
* The Fund Complex minimum will apply to all existing and any future funds
offered by Munder Capital Management which are serviced by the Transfer
Agent. The fees specified herein may be adjusted at any time upon written
agreement between the parties. After March 1, 2000 the parties agree to
review the fees charged for services under this Agreement.
<PAGE>
SCHEDULE B
OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:
o Microfiche/microfilm production
o Magnetic media tapes and freight
o Printing costs, including certificates, envelopes, checks and
stationery
o Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct pass
through to the Fund
o Due diligence mailings
o Telephone and telecommunication costs, including all lease,
maintenance and line costs
o Ad hoc reports
o Proxy solicitations, mailings and tabulations
o Daily & Distribution advice mailings
o Shipping, Certified and Overnight mail and insurance
o Year-end form production and mailings
o Terminals, communication lines, printers and other equipment
specifically required by the Fund
o Duplicating services
o Courier services
o Incoming and outgoing wire charges
o Overtime, as approved by the Fund
o Temporary staff, as approved by the Fund
o Travel and entertainment, as approved by the Fund
o Federal Reserve changes for check clearance
o Record retention, retrieval and destruction costs
o Third party audit reviews
o Insurance
o Such other miscellaneous expenses reasonably incurred by the
Transfer Agent in performing its duties and responsibilities under
this Agreement as approved the Fund
The Company agrees that postage and mailing expenses will be paid on the
day of or price to mailing as agreed with the Transfer Agent. In addition, the
Company will promptly reimburse the Transfer Agent for any other unscheduled
expenses incurred by the Transfer Agent whenever the Company and the Transfer
Agent mutually agree that such expenses are not otherwise properly borne by the
Transfer Agent as part of its duties and obligations under the Agreement.
<PAGE>
Exhibit 1
LIST OF FUNDS AND PORTFOLIOS
The Munder Funds Trust
Munder Accelerating Growth Fund
Munder Balanced Fund
Munder Bond Fund
Munder Cash Investment Fund
Munder Growth & Income Fund
Munder Index 500 Fund
Munder Intermediate Bond Fund
Munder International Equity Fund
Munder Michigan Triple Tax-Free Bond Fund
Munder Small Company Growth Fund
Munder Tax-Free Bond Fund
Munder Tax-Free Intermediate Bond Fund
Munder Tax-Free Money Market Fund
Munder U.S. Government Income Fund
Munder U.S. Treasury Money Market Fund
The Munder Funds, Inc.
Munder Multi-Season Growth Fund
Munder Money Market Fund
Munder Real Estate Equity Investment Fund
Munder Value Fund
Munder Mid-Cap Growth Fund
St. Clair Funds, Inc.
Liquidity Plus Money Market Fund
Munder S&P 500 Index Equity Fund
Munder S&P MidCap Index Equity Fund
Munder S&P SmallCap Index Equity Fund
Munder Foreign Equity Fund
Munder Aggregate Bond Index Fund
Munder Framlington Funds Trust
Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund
Munder Framlington International Growth Fund
<PAGE>
Exhibit 11(a)
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectus; and "Miscellaneous" and "Financial Statements" in
the NetNet Fund Statement of Additional Information included in Post-Effective
Amendment No. 33 to the Registration Statement (Form N-1A, No. 33-54748) of The
Munder Funds, Inc.
We also consent to the incorporation by reference into the NetNet Fund Statement
of Additional Information of our report dated August 15, 1997 with respect to
the financial statements and financial highlights of the NetNet Fund, one of the
portfolios constituting The Munder Funds, Inc.
/s/ Ernst & Young LLP
---------------------
ERNST & YOUNG LLP
May 22, 1998
Boston, Massachusetts
<PAGE>
Exhibit 15(u)
AMENDMENT TO SERVICE AND DISTRIBUTION PLAN
OF
THE NET NET FUND
The Service and Distribution Plan of the NetNet Fund is hereby amended as
follows:
The second "WHEREAS" clause is amended to read in its entirety: WHEREAS, shares
of common stock of the Company are currently divided into series of shares, one
of which is designated as the Net Net Fund (the "Fund"); and shares of the Fund
are divided into classes of shares, one of which is designated Class A shares.
The fifth paragraph is amended to read in its entirety: NOW, THEREFORE, the
Company hereby adopts on behalf of the Class A shares of the Fund and the
Distributor hereby agrees to the terms of, the Plan, in accordance with Rule
12b-1 under the Act on the following terms and conditions.
Paragraph 1 is amended to read in its entirety: l. The Fund shall pay to the
Distributor, as the distributor of the Class A shares of the Fund a service and
distribution fee at the rate of .25% on an annualized basis of the average daily
net assets of the Fund's Class A shares, provided that, at any time such payment
is made, whether or not this Plan continues in effect, the making thereof will
not cause the limitation upon such payments established by this Plan to be
exceeded. Such fee shall be calculated and accrued daily and paid at such
intervals as the Board of Directors shall determine, subject to any applicable
restriction imposed by rules of the National Association of Securities Dealers,
Inc.
The first sentence of Paragraph 2 is amended to read in its entirety: The amount
set forth in paragraph 1 of this Plan shall be paid for the Distributor's
services as distributor of the shares of the Fund in connection with any
activities or expenses primarily intended to result in the sale of the Class A
shares of the Fund, including, but not limited to, payment of compensation,
including incentive compensation, to securities dealers (which may include the
Distributor itself) and other financial institutions and organizations
(collectively, the "Service Organizations") to obtain various distribution
related and/or administrative services for the Fund and for servicing
shareholder account, including a continuing fee which may accrue immediately
after the sale of shares.
Paragraph 5 is amended to read in its entirety: After approval as set forth in
paragraphs 3 and 4, this Plan shall take effect. The Plan of Distribution shall
continue in full force and effect as to the Class A shares of the Fund for so
long as such continuance is specifically approved at least annually in the
manner provided for approval of this Plan in paragraph 4.
<PAGE>
Paragraph 7 is amended by deleting the words "Class B shares of the Fund" and
substituting the words "Class A shares of the Fund" in lieu thereof.
Except as set forth above, the Amendment does not alter or amend the Plan, which
remains in full force and effect. The Amendment is not intended to, and does
not, amend to increase materially the amounts to be paid by the Class A shares
of the Fund under the Plan as originally adopted.
IN WITNESS WHEREOF, the Company on behalf of the Fund, and the Distributor
have executed this Amendment to Service and Distribution Plan of the NetNet Fund
as of the ______day of ____________, 1998.
THE MUNDER FUNDS, INC.
By:_______________________
FUNDS DISTRIBUTOR, INC.
By:_______________________
<PAGE>
Exhibit 15(v)
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as
an open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as the NetNet Fund (the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class B;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor")
as distributor of the securities of which it is the issuer;
WHEREAS, the Company and the Distributor have entered into a Distribution
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company; and
WHEREAS, this Service and Distribution Plan (the "Plan") was adopted and
approved by the Company on May 5, 1998;
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class B shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
B shares, provided that, at any time such payments is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. In addition to the distribution fee distributed above, the Fund
shall pay to the Distributor, as the distributor of the Class B shares of the
Fund, a service fee of .25% on an annualized basis of the average daily net
asset of the Fund's Class B shares, provided that, at any time such payment is
made, whether or not this Plan continues in effect, the making thereof will not
cause the limitation upon such payments established by this Plan to be exceeded.
Such fee shall be calculated and accrued daily and paid at such intervals as the
Board of Directors shall determine, subject to any applicable restriction
imposed by rules of the National Securities Association of Dealers, Inc.
<PAGE>
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Funds in
connection with any activities or expenses primarily intended to result in the
sale of the Class B shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations (collectively, the "Service Organizations") to obtain various
distribution related and/or administrative services for the Fund. These services
include, among other things, processing new shareholder account applications,
preparing and transmitting to the Fund's Transfer Agent computer processable
tapes of all transactions by customers and serving as the primary source of
information to customers in answering questions concerning the Fund and their
transactions with the Fund. The Distributor is also authorized to engage in
advertising, the preparation and distribution of sales literature and other
promotional activities on behalf of the Fund. In addition, this Plan hereby
authorizes payment by the Fund of the cost of preparing, printing and
distributing the Fund's Prospectuses and Statements of Additional Information to
prospective investors and of implementing and operating the Plan. Distribution
expenses also include an allocation of overhead of the Distributor and accruals
for interest on the amount of distribution expenses that exceed distribution
fees and contingent deferred sales charges received by the Distributor. Payments
under the Plan are not tied exclusively to actual distribution and service
expenses, and the payments may exceed distribution and service expenses actually
incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect until it, with any related agreements,
has been approved by votes of a majority of both (a) the Directors of the
Company and (b) those Directors of the Company who are not "interested persons"
of the Company (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan and such related agreements.
4. After approval as set forth in paragraph 3, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class B
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 3.
5. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
<PAGE>
6. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class B shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
7. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless amendment is approved by the shareholders of the relevant Fund in a
manner provided in the Act, and no material amendment to the Plan shall be made
unless approved in the manner provided for approval and annual renewal in
paragraph 3 hereof.
8. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
9. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 5 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the
Distributor have executed this Service and Distribution Plan as of the ________
day of ___________.
THE MUNDER FUNDS, INC.
By:_______________________
FUNDS DISTRIBUTOR, INC.
By:_______________________
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 4,616,935
<INVESTMENTS-AT-VALUE> 4,678,182
<RECEIVABLES> 12,400
<ASSETS-OTHER> 26,743
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,717,325
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 15,198
<TOTAL-LIABILITIES> 15,198
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,494,745
<SHARES-COMMON-STOCK> 330,983
<SHARES-COMMON-PRIOR> 114,107
<ACCUMULATED-NII-CURRENT> (9,480)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 155,615
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 61,247
<NET-ASSETS> 4,702,127
<DIVIDEND-INCOME> 2,279
<INTEREST-INCOME> 12,085
<OTHER-INCOME> 0
<EXPENSES-NET> (24,079)
<NET-INVESTMENT-INCOME> (9,715)
<REALIZED-GAINS-CURRENT> 639,864
<APPREC-INCREASE-CURRENT> 52,233
<NET-CHANGE-FROM-OPS> 682,382
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (625,956)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 176,926
<NUMBER-OF-SHARES-REDEEMED> (4,866)
<SHARES-REINVESTED> 44,816
<NET-CHANGE-IN-ASSETS> 3,242,851
<ACCUMULATED-NII-PRIOR> 235
<ACCUMULATED-GAINS-PRIOR> 141,707
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 19,261
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 44,449
<AVERAGE-NET-ASSETS> 3,820,705
<PER-SHARE-NAV-BEGIN> 12.79
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> 3.65
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (2.20)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.21
<EXPENSE-RATIO> 2.31
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
Exhibit 18(c)
THE MUNDER FUNDS, INC.
Second Amended and Restated Multi-Class Plan
Introduction
The purpose of this Plan is to specify the attributes of the classes of
shares offered by The Munder Funds, Inc. (the "Company"), including the sales
loads, expense allocations, conversion features and exchange features of each
class, as required by Rule 18f-3 under the Investment Company Act of 1940, as
amended (the "1940 Act").
Each of the Company's investment portfolios (each, a "Fund"), other than
the Munder All-Season Conservative Fund, the Munder All-Season Moderate Fund and
the Munder All-Season Aggressive Fund (together, the "Lifestyle Funds"), the
Money Market Fund, the Munder Short Term Treasury Fund, the NetNet Fund and the
Munder Convertible Securities Fund, issues its shares of common stock in five
classes: "Class A" Shares, "Class B" Shares, "Class C" Shares, "Class K" Shares
and "Class Y" Shares. The Munder Short Term Treasury Fund issues its share of
common stock in five classes: "Class A" Shares, "Class B" Shares, "Class C"
Shares, "Class Y" Shares and "Michigan Municipal League" Shares. The Money
Market Fund issues its shares of common stock in four classes: "Class A" Shares,
"Class B" Shares, "Class C" Shares and "Class Y" Shares. Each of the Lifestyle
Funds and the NetNet Fund issues its shares of common stock in three classes:
"Class A" Shares, "Class B" Shares and "Class Y" Shares. The Munder Convertible
Securities Fund issues its shares of common stock in four classes: "Class A"
Shares, "Class B" Shares, "Class K" Shares and "Class Y" Shares. Shares of each
Class of a Fund shall represent an equal pro rata interest in such Fund, and
generally, shall have identical voting, dividend, liquidation and other rights,
preferences, powers, restrictions, limitations, qualifications, and terms and
conditions, except that: (a) each Class shall have a different designation; (b)
each Class may have a different sales charge structure; (c) each Class of shares
shall bear any Class Expenses, as defined below; (d) each Class shall have
exclusive voting rights on any matter submitted to shareholders that relates
solely to its arrangement and each Class shall have separate voting rights on
any matter submitted to shareholders in which the interests of one Class differ
from the interests of any other Class; and (e) each Class may have different
exchange and/or conversion features as described below.
Allocation of Expenses
To the extent practicable, certain expenses (other than Class Expenses as
defined below which shall be allocated more specifically), shall be subtracted
from the gross income allocated to each Class of a Fund on the basis of net
assets of each Class of the Fund. These expenses include:
(1) Expenses incurred by the Company (for example, fees of Directors,
auditors, and legal counsel) not attributable to a particular Fund or to a
particular Class of shares of a Fund ("Company Level Expenses"); and
(2) Expenses incurred by a Fund not attributable to any particular Class
of the Fund's shares (for example, advisory fees, custodial fees, or other
expenses relating to the management of the Fund's assets) ("Fund Expenses").
<PAGE>
Expenses attributable to a particular Class ("Class Expenses") shall be
limited to: (i) payments made pursuant to a Service Plan, Service and
Distribution Plan or Shareholder Servicing Plan; (ii) transfer agent fees
attributable to a specific Class; (iii) printing and postage expenses related to
preparing and distributing materials such as shareholder reports, prospectuses
and proxies to current shareholders of a specific Class; (iv) Blue Sky fees
incurred by a Class; (v) Securities and Exchange Commission registration fees
incurred by a Class; (vi) the expense of administrative personnel and services
to support the shareholders of a specific Class; (vii) litigation or other legal
expenses relating solely to one Class; and (viii) Directors' fees incurred as a
result of issues relating solely to one Class. Expenses in category (i) above
must be allocated to the Class for which such expenses are incurred. For all
other "Class Expenses" listed in categories (ii) - (viii) above, the President
and Chief Financial Officer shall determine, subject to Board approval or
ratification, which such categories of expenses will be treated as Class
Expenses, consistent with applicable legal principles under the Act and the
Internal Revenue Code of 1986, as amended, any private letter ruling with
respect to the Company issued by the Internal Revenue Service.
Therefore, expenses of a Fund shall be apportioned to each Class of shares
depending upon the nature of the expense item. Company Level Expenses and Fund
Expenses will be allocated among the Classes of shares based on their relative
net asset values. Approved Class Expenses shall be allocated to the particular
Class to which they are attributable. In addition, certain expenses may be
allocated differently if their method of imposition changes. Thus, if a Class
Expense can no longer be attributed to a Class, it shall be charged to a Fund
for allocation among Classes, as may be appropriate; however, any additional
Class Expenses not specifically identified above which are subsequently
identified and determined to be properly allocated to one Class of shares shall
not be so allocated until approved by the Board of Directors of the Company in
light of the requirements of the Act and the Internal Revenue Code of 1986, as
amended.
Class A Shares
Class A Shares of a Fund are offered at net asset value plus, for Funds
other than the Money Market Fund, an initial sales charge as set forth in the
then-current prospectus of the Fund. The initial sales charge may be waived or
reduced on certain types of purchases as set forth in a Fund's then-current
prospectus. A contingent deferred sales charge may apply to certain redemptions
made within a specified period as set forth in the Fund's then-current
prospectus. Class A Shares of a Fund may be exchanged for Class A Shares of
another fund of the Company, The Munder Framlington Funds Trust or The Munder
Funds Trust subject to any sales charge differential.
Class A Shares of the Funds pay a Rule 12b-1 service fee of up to 0.25%
(annualized) of the average daily net assets of a Fund's Class A Shares.
Distribution and support services provided by brokers, dealers and other
institutions may include forwarding sales literature and advertising materials
provided by the Company's distributor; processing purchase, exchange and
redemption requests from customers placing orders with the Company's transfer
agent; processing dividend and distribution payments from the Funds of the
Company on behalf of customers; providing information periodically to customers
showing their positions in Class A Shares; providing sub-accounting with respect
to Class A Shares beneficially owned by customers or the information necessary
for sub-accounting; responding to inquiries from customers concerning their
investments in Class A Shares; arranging for bank wires; and providing such
other similar services as may reasonably be requested.
<PAGE>
Class B Shares
Class B Shares of the Funds are offered without an initial sales charge
but are subject to a contingent deferred sales charge payable upon certain
redemptions as set forth in the Fund's then-current prospectus. Class B Shares
of a Fund may be exchanged for Class B Shares of another fund of the Company,
The Munder Framlington Funds Trust or The Munder Funds Trust subject to any
sales charge differential.
Class B Shares of a Fund will automatically convert to Class A Shares of
the Fund on the first business day of the month on which the sixth anniversary
of the issuance of the Class B Shares occurs. The conversion will be effected at
the relative net asset values per share of the two classes.
Class B Shares pay a Rule 12b-1 service fee of up to 0.25% (annualized)
and a distribution fee of up to 0.75% (annualized) of the average daily net
assets of a Fund's Class B Shares. Brokers, dealers and other institutions may
maintain Class B shareholder accounts and provide personal service to Class B
shareholders. Services relating to the sale of Class B Shares may include, but
not be limited to, preparation, printing and distribution of prospectuses, sales
literature and advertising materials by the Company's distributor, or, as
applicable, brokers, dealer or other institutions; commissions, incentive
compensation or other compensation to, and expenses of, account executives or
other employees of the Company's distributor or brokers, dealers and other
institutions; overhead and other office expenses of the Company's distributor
attributable to distribution or sales support activities; and opportunity costs
related to the foregoing (which may be calculated as a carrying charge on the
Company's distributor unreimbursed expenses) incurred in connection with
distribution or sales support activities. The overhead and other office expenses
referenced above may include, without limitation, (a) the expenses of operating
the Company's distributor's offices in connection with the sale of the Class B
Shares of the Funds, including lease costs, the salaries and employee benefit
costs of administrative, operations and support personnel, utility costs,
communication costs and the costs of stationery and supplies, (b) the costs of
client sales seminars and travel related to distribution and sales support
activities, and (c) other expenses relating to distribution and sales support
activities.
Class C Shares
Class C Shares of the Funds are offered at net asset value. A contingent
deferred sales charge may apply to certain redemptions made within the first
year of investing as set forth in the relevant Fund's then-current prospectus.
Class C Shares of a Fund may be exchanged for Class C Shares of another fund of
the Company, The Munder Framlington Funds Trust and The Munder Funds Trust
subject to any sales charge differential.
Class C Shares pay a Rule 12b-1 service fee up to 0.25% (annualized) and a
distribution fee of up to 0.75% (annualized) of the average daily net assets of
a Fund's Class C Shares. Brokers, dealers and other institutions may maintain
Class C shareholder accounts and provide personal services to Class C
shareholders. Services relating to the sale of Class C Shares may include, but
not be limited to, preparation, printing and distribution of prospectuses, sales
literature and advertising materials by the Company's distributor, or, as
applicable, brokers, dealers or other institutions; commissions, incentive
compensation or other compensation to, and expenses of, account executives or
other employees of the Company's distributor or brokers, dealers and other
institutions; overhead and other office expenses of the Company's distributor
attributable to distribution or sales support activities; and opportunity costs
related to the foregoing (which may be calculated as a carrying charge on the
Company's distributor
2
<PAGE>
unreimbursed expenses) incurred in connection with distribution or sales support
activities. The overhead and other office expenses referenced above may include,
without limitation, (a) the expenses of operating the Company's distributor's
offices in connection with the sale of the Class C Shares of the Funds,
including lease costs, the salaries and employee benefit costs of
administrative, operations and support personnel, utility costs, communication
costs and costs of stationery and supplies; (b) the costs of client sales
seminars and travel related to distribution and sales support activities, and
(c) other expenses relating to distribution and sales support activities.
Class Y Shares
Class Y Shares of a Fund are offered at net asset value. Class Y Shares of
a Fund may be exchanged for Class Y Shares of another fund of the Company, The
Munder Framlington Funds Trust or The Munder Funds Trust without the imposition
of a sales charge.
Class K Shares
Class K Shares of a Fund are offered at net asset value. Class K Shares of
a Fund may be exchanged for Class K Shares of another fund of the Company, The
Munder Framlington Funds Trust or The Munder Funds Trust without the imposition
of a sales charge.
Class K Shares pay a service fee of up to 0.25% (annualized) of the
average daily net assets of a Fund's Class K Shares. Services provided by
brokers, dealers and other institutions for such service fees include:
processing purchase, exchange and redemption requests from customers and placing
orders with the Company's transfer agent; processing dividend and distribution
payments from the Funds on behalf of customers; providing information
periodically to customers showing their positions in Class K Shares; providing
sub-accounting with respect to Class K Shares beneficially owned by customers or
the information necessary for sub-accounting; responding to inquiries from
customers concerning their investment in Class K Shares; arranging for bank
wires; and providing such other similar services as may reasonably be requested.
Michigan Municipal League Shares
Michigan Municipal League Shares of the Short Term Treasury Fund are
offered at net asset value.
3
