<PAGE>
As filed with the Securities and Exchange Commission
on August 25, 1999
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. 38 [X]
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 39 [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
2 Avenue de Lafayette
Boston, MA 02111
(Name and Address of Agent for Service)
Copies to:
Terry H. Gardner Jane Kanter, Esq.
Munder Capital Management Dechert Price & Rhoads
480 Pierce Street 1775 Eye Street, NW
Birmingham, Michigan 48009 Washington, DC 20006
[X] It is proposed that this filing will become effective 60 days after filing
pursuant to paragraph (a)(1) of Rule 485
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for Munder Future Technology Fund
(Munder Future Technology Fund Class A, B and II Shares)
Part A
- ------
<TABLE>
<CAPTION>
Item Heading
---- -------
<S> <C> <C>
1. Cover Page Front and Back Cover Pages
2. Synopsis Risk/Return Summary
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Front and Back Pages; Risk/Return Summary;
More About the Funds; Management
5. Management of the Funds Management; Distributions; Federal Tax
Considerations
6. Capital Stock and Other Securities Management; Your Investment; Distribution
Arrangements; Pricing of Fund Shares;
Distributions; Federal Tax Considerations
7. Purchase of Securities Being Offered Your Investment; Distribution Arrangements;
Pricing of Fund Shares
8. Redemption or Repurchase Your Investment; Distribution Arrangements
9. Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Future Technology Fund
(Class Y Shares)
Part A
- ------
<TABLE>
<CAPTION>
Item Heading
---- -------
<S> <C> <C>
1. Cover Page Front and Back Cover Pages
2. Synopsis Risk/Return Summary
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Front and Back Pages; Risk/Return Summary;
More About the Funds; Management
5. Management of the Funds Management; Distributions; Federal Tax
Considerations
6. Capital Stock and Other Securities Management; Your Investment; Pricing of
Fund Shares; Distributions; Federal Tax
Considerations
7. Purchase of Securities Being Offered Your Investment; Pricing of Fund Shares
8. Redemption or Repurchase Your Investment
9. Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Statement of Additional Information
The Munder Future Technology Fund
Part B
- ------
<TABLE>
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History See Prospectus --"Management;" History and
General Information; Management of the Fund
13. Investment Objectives and Policies Fund Investments; Investment Limitations;
Portfolio Transactions
14. Management of the Funds Management of the Fund; Other Information
15. Control Persons and Principal Other Information; Control Persons and
Holders of Securities Principal Holders of Securities
16. Investment Advisory Services and Investment Advisory and Other Service
Other Services Arrangements; See Prospectus --"Management"
17. Brokerage Allocation and Other Portfolio Transactions
Practices
18. Capital Stock and Other Securities Additional Information Concerning Shares
19. Purchase, Redemption and Pricing of Additional Purchase and Redemption
Securities Being Offered Information; Net Asset Value; Additional
Information Concerning Shares
20. Tax Status Taxes
21. Underwriters Investment Advisory and Other Service
Arrangements
22. Calculation of Performance Data Performance Information
23. Financial Statements Not Applicable
</TABLE>
<PAGE>
CLASS A, B & II SHARES
[LOGO OF MUNDER FUNDS APPEARS HERE]
The Munder Funds
Investments
for all seasons
Prospectus
August 25, 1999
THE MUNDER FUTURE TECHNOLOGY FUND
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities nor passed upon the accuracy or
adequacy of this prospectus. It is a criminal offense to state otherwise.
<PAGE>
Table Of Contents
<TABLE>
<C> <S>
2 Risk/Return Summary
2 Goal
2 Principal Investment Strategies
2 Principal Risks
3 Who May Want To Invest
3 Performance
4 Fees and Expenses
5 More About The Fund
8 Your Investment
8 How To Reach The Fund
8 Purchasing Shares
9 Exchanging Shares
9 Redeeming Shares
10 Additional Policies For Purchases, Exchanges And Redemptions
11 Shareholder Privileges
12 Distribution Arrangements
12 Share Class Selection
12 Applicable Sales Charge
14 Cdsc
15 12B-1 Fees
15 Other Information
16 Pricing of Fund Shares
16 Distributions
17 Federal Tax Considerations
17 Taxes On Distributions
17 Taxes On Sales or Exchanges
17 Other Considerations
18 Management
18 Investment Advisor
18 Portfolio Management
</TABLE>
Back Cover For Additional Information
<PAGE>
Risk/Return Summary
- --------------------------------------------------------------------------------
This Risk/Return Summary briefly describes the goal and principal investment
strategies of the Munder Future Technology Fund and the principal risks of
investing in the Fund. For further information on these and the Fund's other
investment strategies and risks, please read the section entitled More About
The Fund.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency.
Goal
The Fund's goal is to provide capital appreciation.
Principal Investment Strategies
The Fund pursues its goal by investing at least 65% of its assets in common
stocks of technology-related companies. Technology-related companies are
companies that develop, manufacture, or distribute technology, communications
and Internet-related products and services. The Fund may also invest in the
stocks of companies that should benefit commercially from technological
advances. The Fund invests in both established companies and in new or
unseasoned companies, including companies making initial public offerings.
The products and services provided by technology-related companies may include:
computer hardware and software, communications hardware and software,
semiconductors, business services, media and information services and Internet-
related services.
In selecting stocks, the advisor will first identify attractive sectors within
the technology industry. The advisor will then focus on companies that it
believes are current industry leaders or leading companies in developing
sectors. Using fundamental analysis, the advisor will look for companies with:
. strong market share within their sector; and/or
.technologically superior products or services; and
. stable or improving revenue growth, earnings growth or order trends.
The Fund is "non-diversified" under the Investment Company Act of 1940, as
amended and may invest more of its assets in fewer issuers than a "diversified"
investment company.
Principal Risks
All investments carry some degree of risk which will affect the value of the
Fund's portfolio investments, its investment performance and the price of its
shares. As a result, you may lose money if you invest in the Fund.
The Fund is subject to the following principal investment risks:
. Stock Market Risk. The value of the securities in which the Fund invests may
decline in response to development affecting individual companies and/or
general economic conditions. Price changes may be temporary or last for
extended periods.
. Concentration Risk. The Fund will concentrate its investments in the
technology industry. Market or economic factors impacting that industry
sector could have a major effect on the value of the Fund's investments. The
value of stocks of technology companies is particularly vulnerable to rapid
changes in technology product cycles, government regulation and competition.
Technology stocks, especially those of smaller, less-seasoned companies, tend
to be more volatile than the overall market.
. Non-Diversified Risk. The Fund may invest more of its assets in fewer issuers
than many other funds do, may be more susceptible to adverse developments
affecting any single issuer, and may be more susceptible to greater losses
because of these developments.
. Smaller Company Stock Risk. The stocks of small or medium size companies may
be more susceptible to market downturns, and their prices may be more
volatile than those of larger companies. Small company stocks typically are
traded in lower volume, and their issuers are subject to greater degrees of
changes in their earnings and prospects.
2
<PAGE>
Who May Want To Invest
The Fund may be appropriate for investors:
. Looking to invest over the long term.
. Able to tolerate market swings.
. Looking to invest in a stock portfolio focused on a particular stock market
segment.
The Fund alone cannot provide a balanced investment program.
Performance
The Fund has not commenced operations as of the date of this prospectus and,
therefore, does not have annual returns for a full calendar year. For this
reason, a bar chart and performance table showing performance information and
information on the Fund's best and worst calendar quarters is not provided in
this prospectus.
3
<PAGE>
Fees and Expenses
The tables below describe the fees and expenses that you may pay if you buy and
hold shares of the Fund. Please note that the following information does not
include fees that institutions may charge for services they provide to you.
<TABLE>
<CAPTION>
Class A Class B Class II
Shareholder Fees (fees paid directly from your Shares Shares Shares
investment) ------- ------- --------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Pur-
chases......................................... 5.5%(a) None 1%
Sales Charge (Load) Imposed on Reinvested Divi-
dends.......................................... None None None
Maximum Deferred Sales Charge (Load)............ None(b) 5%(c) 1%(d)
Redemption Fees................................. None None None
Exchange Fees................................... None None None
</TABLE>
Annual Fund Operating Expenses (expenses that are paid from Fund assets)
<TABLE>
<CAPTION>
Annual Fund Operating Expenses Class A Class B Class II
as a % of net assets Shares Shares Shares
- ------------------------------ ------- ------- --------
<S> <C> <C> <C>
Management Fees........................................ 1.00% 1.00% 1.00%
Distribution and/or Service (12b-1) Fees............... .25% 1.00% 1.00%
Other Expenses(1)(2)................................... .50% .50% .50%
----- ----- -----
Total Fund Operating Expenses(2)....................... 1.75% 2.50% 2.50%
===== ===== =====
</TABLE>
- --------
(a) The sales charge declines as the amount invested increases.
(b) A contingent deferred sales charge (CDSC) is a one-time fee charged at the
time of redemption. A 1% CDSC applies to redemptions of Class A shares
within one year of investment that were purchased with no initial sales
charge as part of an investment of $1,000,000 or more.
(c) The CDSC payable upon redemption of Class B shares declines over time.
(d) The CDSC applies to redemptions of Class II shares within eighteen months
of purchase.
(1) Other Expenses are based on estimated amounts for the current fiscal year.
(2) The advisor has voluntarily agreed to reimburse certain operating expenses
to keep the Fund's Other Expenses at a specified level. As a result, it is
estimated that the Fund's annual operating expenses for the current fiscal
year will be:
<TABLE>
<CAPTION>
Class A Class B Class II
Shares Shares Shares
------- ------- --------
<S> <C> <C> <C>
Management Fees..................................... 1.00% 1.00% 1.00%
Distribution and/or Service (12b-1) Fees............ .25% 1.00% 1.00%
Other Expenses...................................... .35% .35% .35%
----- ----- -----
Total Annual Fund Operating Expenses................ 1.60% 2.35% 2.35%
===== ===== =====
</TABLE>
The advisor may eliminate all or part of the expense reimbursement at any time.
Example
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that your investment has a 5% return each year, that the Fund's
operating expenses remain the same as shown in the table above and that all
dividends and distributions are reinvested. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
Class A Class B Class B Class II Class II
Shares Shares* Shares** Shares* Shares**
------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
1 Year............................... $ 705 $ 752 $239 $438 $336
3 Years.............................. $1,029 $1,060 $735 $829 $829
</TABLE>
- --------
*Assumes you sold your shares at the end of the time period.
**Assumes you stayed in the Fund.
4
<PAGE>
More About The Fund
- --------------------------------------------------------------------------------
The Fund's principal investment strategies and risks are summarized above in
the section entitled Risk/Return Summary. This section provides a more complete
description of the Fund's investments and strategies and their associated
risks. The Fund may invest in other securities and is subject to further
restrictions and risks which are described in the Statement of Additional
Information.
Equity Securities. The Fund invests in equity securities which include common
stocks, preferred stocks and securities convertible into common stocks.
Securities considered for purchase by the Fund may be listed or unlisted. There
is no limit on the market capitalization of the companies in which the Fund may
invest, or in the length of operating history for the companies. The Fund may
invest without limit in initial public offerings.
Foreign Securities. Foreign securities include investments in non-U.S. dollar-
denominated securities traded outside of the United States and dollar-
denominated securities of foreign issuers traded in the United States. Foreign
securities also include American Depository Receipts ("ADRs") which are U.S.
dollar-denominated receipts representing shares of foreign-based corporations.
ADRs are issued by U.S. banks or trust companies, and entitle the holder to all
dividends and capital gains that are paid out on the underlying foreign shares.
Investment Strategy. The Fund may invest up to 25% of its total assets in
foreign securities.
Special Risks. Foreign securities involve special risks and costs.
Investment in foreign securities may involve higher costs than investment
in U.S. securities, including higher transaction and custody costs as well
as the imposition of taxes by foreign governments. Foreign investments may
also involve risks associated with the level of currency exchange rates,
less complete financial information about the issuers, less market
liquidity, more market volatility and political instability. Future
political and economic developments, the possible imposition of withholding
taxes on dividend income, the possible seizure or nationalization of
foreign holdings, the possible establishment of exchange controls or
freezes on the convertibility of currency, or the adoption of other
governmental restrictions might adversely affect an investment in foreign
securities. Additionally, foreign issuers may be subject to less stringent
regulation, and to different accounting, auditing and recordkeeping
requirements.
Currency Risks. Currency exchange rates may fluctuate significantly over
short periods of time causing the Fund's net asset value to fluctuate as
well. A decline in the value of a foreign currency relative to the U.S.
dollar will reduce the value of a foreign currency-denominated security. To
the extent that the Fund is invested in foreign securities while also
maintaining currency positions, it may be exposed to greater combined risk.
The Fund's foreign currency positions may expose it to risks independent of
its securities positions.
Euro Risk. A further risk of investing in foreign securities is the risk
that the Fund may be adversely affected by the conversion of certain
European currencies into the Euro. This conversion, which is under way, is
scheduled to be completed in the year 2002. However, problems with the
conversion process and delays could increase volatility in world capital
markets and affect European capital markets in particular.
Futures Contracts and Related Options. The Fund may enter into futures
contracts and options on future contracts, which are forms of derivatives.
Derivatives are financial contracts whose value is based on an underlying
security, a currency exchange, an interest rate or a market index. A futures
contract is a type of derivative instrument that obligates the holder to buy or
sell an asset in the future at an agreed upon price. When the Fund purchases an
option on a futures contract, it has the right to assume a position as a
purchaser or seller of a futures contract at a specified exercise price during
the option period. When the Fund sells an option on a futures contract, it
becomes obligated to purchase or sell a futures contract if the option is
exercised.
5
<PAGE>
Investment Strategy. The Fund may, but is not required to, use futures and
options on futures for hedging purposes or for the purpose of remaining
fully invested or maintaining liquidity to meet potential shareholder
redemptions, to invest cash balances or dividends, or to minimize trading
costs. The Fund will not use derivatives for speculative purposes.
The Fund will not purchase or sell a futures contract unless, after the
transaction, the sum of the aggregate amount of margin deposits on its
existing futures positions and the amount of premiums paid for related
options used for non-hedging purposes is 5% or less of the Fund's total
assets.
Special Risks. Futures contracts and related options present the following
risks: imperfect correlation between the change in market value of a Fund's
securities and the price of futures contracts and options; the possible
inability to close a futures contract when desired; losses due to
unanticipated market movements, which are potentially unlimited; and the
possible inability of the advisor to correctly predict the direction of
securities prices, interest rates, currency exchange rates and other
economic factors.
Securities Lending. In order to generate additional income, the Fund may lend
portfolio securities on a short-term basis to qualified institutions. By
reinvesting any cash collateral it receives in these transactions, the Fund
could realize additional gains or losses.
Investment Strategy. Securities lending may represent no more than 25% of
the value of the Fund's total assets (including the loan collateral).
Special Risks. The main risk when lending Fund securities is that if the
borrower fails to return the securities or the invested collateral has
declined in value, the Fund could lose money.
Borrowing and Reverse Repurchase Agreements. The Fund can borrow money from
banks and enter into reverse repurchase agreements with banks and other
financial institutions. Reverse repurchase agreements involve the sale of
securities held by the Fund subject to the Fund's agreement to repurchase them
at a mutually agreed upon date and price (including interest).
Investment Strategy. The Fund may borrow money in an amount up to 5% of its
assets for temporary emergency purposes and in an amount up to 33 1/3% of
its assets to meet redemptions. This is a fundamental policy which can be
changed only by shareholders.
Special Risks. Borrowings and reverse repurchase agreements by the Fund may
involve leveraging. If the securities held by the Fund decline in value
while these transactions are outstanding, the Fund's net asset value will
decline in value by proportionately more than the decline in value of the
securities. In addition, reverse repurchase agreements involve the risks
that the interest income earned by the Fund (from the investment of the
proceeds) will be less than the interest expense of the transaction, that
the market value of the securities sold by the Fund will decline below the
price the Fund is obligated to pay to repurchase the securities, and that
the securities may not be returned to the Fund.
Illiquid Securities. Illiquid securities include private placements or other
securities that are subject to legal or contractual restrictions on resale or
for which there is no readily available market.
Investment Strategy. The Fund may invest up to 15% of its net assets in
securities that are illiquid.
Special Risks. To the extent that the Fund invests in illiquid securities,
the Fund risks not being able to sell the securities at the time and the
price that it would like. The Fund may have to lower the price, sell
substitute securities or forego an investment opportunity, each of which
may cause a loss to the Fund.
6
<PAGE>
Short-Term Trading. The Fund may engage in short-term trading, including
initial public offerings. A high rate of portfolio turnover (100% or more)
could produce higher trading costs and taxable distributions, which could
detract from the Fund's performance.
Year 2000 Risk. Like other mutual funds, financial institutions, business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the advisor and the Fund's other
service providers do not properly process and calculate date-related
information and data from and after January 1, 2000. The advisor is taking
steps that it believes are reasonably designed to address year 2000 computer-
related problems with respect to the computer systems that it uses and to
obtain assurances that comparable steps are being taken by the Fund's other
major service providers. Although there can be no assurances, the advisor
believes that these steps will be sufficient to avoid any adverse impact on the
Fund. Similarly, there can be no assurances that year 2000 issues will not
affect the companies and other issuers in which the Fund invests or affect
worldwide markets and economies.
7
<PAGE>
Your Investment
- --------------------------------------------------------------------------------
This section describes how to do business with the Fund.
How to Reach the Fund
By telephone:
1-800-438-5789
Call for shareholder services.
By mail:
The Munder Funds
480 Pierce Street
Birmingham, MI 48009
Purchasing Shares
Purchase Price of Shares
Class A shares of the Fund are sold at the net asset value per share (NAV) next
determined after a purchase order is received in proper form plus any
applicable sales charge. Please see "Distribution Arrangements" below for
information about sales charges.
Class B and Class II shares of the Fund are sold at NAV next determined after a
purchase order is received in proper form.
Broker-dealers (other than the Fund's distributor) may charge you additional
fees for shares you purchase through them.
Policies for Purchasing Shares
Investment minimums
. Initial: $250
. Subsequent: $ 50
. Automatic Investment Plan: $ 50
Purchases over $250,000 must be for Class A or Class II shares.
Timing of orders
Purchase orders must be received by the Fund's distributor or the Fund's
transfer agent before the close of regular trading on the New York Stock
Exchange (normally, 4:00 p.m. Eastern time). Purchase orders received after
that time will be accepted as of the next business day.
Methods for Purchasing Shares
Investors may purchase shares:
. By Broker. Any broker authorized by the distributor can sell you shares of
the Fund. Please note that brokers may charge you fees for their services.
. By Mail. You may open an account by completing, signing and mailing the
attached account application form and a check or other negotiable bank draft
(payable to The Munder Funds) for $250 or more to: The Munder Funds, c/o
First Data Investor Services Group, P.O. Box 60428, King of Prussia,
Pennsylvania 19406-0428. Be sure to specify on your account application form
the class of shares being purchased. If the class is not specified, your
purchase will automatically be invested in Class A shares. For additional
investments, send a letter stating the Fund and share class you wish to
purchase, your name and your account number with a check for $50 or more to
the address listed above.
. By Wire. To open a new account, you should call the 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 Munder Funds, c/o First Data Investor Services
Group, P.O. Box 60428, King of Prussia, Pennsylvania 19406-0428. Wire
instructions must state the Fund name, share class, your registered name and
your account number. Your bank wire should be sent through the Federal
Reserve Bank Wire System to:
Boston Safe Deposit and Trust Company
Boston, MA
ABA# 011001234
DDA# 16-798-3
Account No.:
You may make additional investments at any time using the wire procedures
described above. Note that banks may charge fees for transmitting wires.
. You may purchase shares through the Automatic Investment Plan.
8
<PAGE>
. You may purchase shares through the Reinvestment Privilege.
Exchanging Shares
Policies for Exchanging Shares
. You may exchange Fund shares for shares of the same class of other Munder
Funds based on their relative net asset values.
. Class A shares of a Munder money market fund 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 Munder Funds for which a sales charge was paid, can be
exchanged for Class A shares of the Fund.
. 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 Munder Fund that you
purchase by exchange.
. If you are exchanging into shares of a Munder Fund with a higher sales
charge, you must pay the difference at the time of the exchange.
. 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 Munder Fund you
wish to purchase by exchange. You can obtain a prospectus for any Munder Fund
by contacting your broker or calling the Munder Funds at (800) 438-5789.
. Brokers may charge a fee for handling exchanges.
. We may change, suspend or terminate the exchange privilege at any time. You
will be given notice of any material modifications except where notice is not
required.
Methods for Exchanging Shares
. Exchanges By Telephone. You may give exchange instructions by telephone to
the Fund at (800) 438-5789. You may not exchange shares by telephone if you
hold share certificates. We reserve the right to reject any telephone
exchange request and to place restrictions on telephone exchanges.
. Exchanges By Mail. You may send exchange orders to your broker or to the
Fund's transfer agent at The Munder Funds, c/o First Data Investor Services
Group, P.O. Box 60428, King of Prussia, Pennsylvania 19406-0428.
Redeeming Shares
Redemption Price
We will redeem shares at the NAV next determined after we receive the
redemption request in proper form. We will reduce the amount you receive by the
amount of any applicable contingent deferred sales charge (CDSC).
Please see "Distribution Arrangements" below for information about CDSCs.
Policies for Redeeming Shares
. For your protection, 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 recordowner 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 Fund account with a different registration. You can obtain a signature
guarantee from a financial institution such as a commercial bank, trust
company, savings association or from a securities firm having membership on a
recognized securities exchange.
Methods for Redeeming Shares
You may redeem shares of the Fund in several ways:
. By Mail. You may mail your redemption request to: The Munder Funds, c/o First
Data Investor Services Group, P.O. Box 60428, King of Prussia, Pennsylvania
19406-0428. 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.
. By Telephone. You can redeem your shares by contacting your broker or calling
the Fund at (800) 438-5789. There is no minimum requirement for telephone
redemptions paid by check.
9
<PAGE>
If you are redeeming at least $1,000 of shares and you have authorized
expedited redemption on your account application form, simply call the Fund
prior to 4:00 p.m. (Eastern time), and request the redemption proceeds 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.
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.
. You may redeem shares through the Automatic Withdrawal Plan.
Additional Policies For Purchases, Exchanges And Redemptions
. We consider orders to be in "proper form" when all required documents are
properly completed, signed and received.
. The Fund reserves the right to reject any purchase order.
. At any time, the Fund may change any of its purchase or redemption
procedures, and may suspend the sale of its shares.
. The Fund may delay sending redemption proceeds for up to seven days, or
longer if permitted by the Securities and Exchange Commission.
. 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.
. To limit the Fund's expenses, we do not currently issue share certificates.
. The Fund may temporarily stop redeeming shares if:
Y the New York Stock Exchange is closed;
Y trading on the New York Stock Exchange is restricted;
Y an emergency exists and the Fund cannot sell its assets or accurately
determine the value of its assets; or
Y the Securities and Exchange Commission orders the Fund to suspend
redemptions.
. If accepted by the Fund, investors may purchase shares of the Fund with
securities which the Fund may hold. The advisor will determine if the
securities are consistent with the Fund's objectives and policies. If
accepted, the securities will be valued the same way the Fund values
portfolio securities it already owns. Call the Fund at (800) 438-5789 for
more information.
. The Fund reserves the right to make payment for redeemed shares wholly or in
part by giving the redeeming shareholder portfolio securities. The
shareholder will pay transaction costs to dispose of these securities.
. We record all telephone calls for your protection and take measures to
identify the caller. As long as the Fund's transfer agent takes reasonable
measures to authenticate telephone requests on an investor's account, neither
the Fund, the Fund's distributor nor the transfer agent will be held
responsible for any losses resulting from unauthorized transactions.
. We may redeem your account if its value falls below $250 as a result of
redemptions (but not as a result of a decline in NAV). You will be notified
in writing and allowed 60 days to increase the value of your account to the
minimum investment level.
. If you purchased shares directly from the Fund, the Fund's transfer agent
will send you confirmations of the opening of an account and of all
subsequent purchases, exchanges or redemptions in the account. If your
account has been set up by a broker or other investment professional, account
activity will be detailed in their statements to you.
. The exchange privilege is not intended as a vehicle for short-term trading.
Excessive exchange activity may interfere with portfolio management and have
an adverse effect on all shareholders. The Fund and its distributor reserve
the right to refuse any purchase or exchange request that could adversely
affect the Fund or its operations,
10
<PAGE>
including those from any individual or group who, in the Fund's view, is
likely to engage in excessive trading or any order considered market-timing
activity. If the Fund refuses a purchase or exchange request and the
shareholder deems it necessary to redeem their account, any CDSC as permitted
by the prospectus will be applicable.
Additionally, in no event will the Fund permit more than six exchanges into
or out of a Fund in any one-year period per account, tax identification
number, social security number or related investment group.
Shareholder Privileges
Automatic Investment Plan (AIP). Under the AIP you may arrange for periodic
investments in the Fund through automatic deductions from a checking or savings
account. To enroll in the AIP you should complete the AIP application form or
call the Fund at (800) 438-5789. The minimum pre-authorized investment amount
is $50. You may discontinue the AIP at any time. We may discontinue the AIP on
30 days' written notice to you.
Reinvestment Privilege. For 60 days after you sell shares of the Fund, you may
reinvest your redemption proceeds in shares of the same class of the Fund at
NAV. Any CDSC you paid on the amount you are reinvesting will be credited to
your account. You may use this privilege once in any given twelve-month period
with respect to your shares of the Fund. You or your broker must notify the
transfer agent in writing at the time of reinvestment in order to eliminate the
sales charge on your reinvestment.
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 CDSC when you redeem shares.
11
<PAGE>
Distribution Arrangements
- --------------------------------------------------------------------------------
Share Class Selection
The Fund offers Class A, Class B and Class II 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 sales
charge or CDSC in estimating the costs of investing in a particular class of
shares.
Class A shares
. Front end sales charge. There are several ways to reduce these sale charges.
. Lower annual expenses than Class B and Class II shares.
Class B shares
. No front end sales charge. All your money goes to work for you right away.
. Higher annual expenses than Class A shares.
. A CDSC on shares you sell within six years of purchase.
. Automatic conversion to Class A shares approximately six years after
issuance, thus reducing future annual expenses.
. CDSC is waived for certain redemptions.
Class II shares
. Front end sales charge. This sales charge may be waived for certain
shareholders.
. Shares do not convert to another class.
. Higher annual expenses than Class A shares.
The Fund also issues Class Y shares, which have 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.
Applicable Sales Charge
You can purchases Class A shares at the NAV plus an initial sales charge. The
current sales charge and commissions paid to selected dealers are as follows:
<TABLE>
<CAPTION>
Dealer
Sales Charge as Reallowance
a % of as a
---------------- Percentage
Net of the
Your Asset Offering
Investment Value 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.
Sales Charge Waivers--General
We will waive the initial sales charge on Class A shares for 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 service providers and immediate family members of such persons;
3. registered broker-dealers that have entered into selling agreements with the
distributor, for their own accounts or for retirement plans for their employees
or sold to registered representatives for full-time employees (and their
families) that certify to the distributor at the time of purchase that such
purchase is for their own account (or for the benefit of their families);
4. certain qualified employee benefit plans as described below;
12
<PAGE>
5. individuals who reinvest a distribution from a qualified retirement plan for
which the advisor serves as investment advisor;
6. individuals who reinvest the proceeds of redemptions from Class Y Shares of
another Munder Fund within 60 days of redemption;
7. banks and other financial institutions that have entered into agreements
with the Munder Funds to provide shareholder services for customers (including
customers of such banks and other financial institutions, and the immediate
family members of such customers);
8. fee-based financial planners or employee benefit plan consultants acting for
the accounts of their clients;
9. employer sponsored retirement plans which are administered by Universal
Pensions, Inc. (UPI Plans); and
10. employer sponsored 401(k) plans that are administered by Merrill Lynch
Group Employee Services (Merrill Lynch Plans) which meet the criteria described
below under "Sales Charge Waivers--Qualified Employer Sponsored Retirement
Plans."
We will waive the initial sales charge on purchases of Class II shares by
existing shareholders of any class of the Munder NetNet Fund. This waiver will
not apply to exchanges.
Sales Charge Waivers--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 Internal Revenue Code (each, a Qualified Employee Benefit
Plan) and that (1) invest $1,000,000 or more in Class A shares offered by The
Munder Funds or (2) have at least 75 eligible plan participants.
In addition, we will waive the CDSC of 1% charged on certain redemptions within
one year of purchase for Qualified Employee Benefit Plan purchases that meet
the above criteria. A 1% commission will be paid by the distributor to dealers
and other entities (as permitted by applicable Federal and state law) who
initiate and are responsible for Qualified Employee Benefit Plan purchases that
meet the above criteria. This sales charge waiver does not apply to Simplified
Employee Pension Plans (SEPs), Individual Retirement Accounts (IRAs), UPI Plans
and Merrill Lynch Plans.
UPI Plans. We also will waive (i) the initial sales charge on Class A shares
purchased by UPI Plans for employees participating in an employer-sponsored or
administered retirement program operating under Section 408A of the Internal
Revenue 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.
Merrill Lynch Plans. 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 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
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.
For further information on sales charge waivers, call (800) 438-5789.
13
<PAGE>
Sales Charge Reductions
You may qualify for reduced sales charges in the following cases:
. Letter of Intent. If you intend to purchase at least $25,000 of Class A
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 Munder Funds during the preceding 90-day period toward
fulfillment of the Letter of Intent (although there will be no refund of
sales charges you paid during the 90-day period). You should inform the
Fund's transfer agent that you have a Letter of Intent each time you make an
investment.
You are not obligated to purchase the amount specified in the Letter of
Intent. If you purchase less than the amount specified, however, you must pay
the difference between the sales charge paid and the sales charge applicable
to the purchases actually made. The custodian will hold such amount in
escrow. The custodian will pay the escrowed funds to your account at the end
of the 13 months unless you do not complete your intended investment.
. Quantity Discounts. You may combine purchases of Class A shares that are made
by you, your spouse, your children under age 21 and your IRA when calculating
the sales charge. You must notify your broker or the Fund's transfer agent to
qualify.
. Right of Accumulation. You may add the value of any shares of non-money
market Munder Funds you already own to the amount of your next Class A share
investment for purposes of calculating the sales charge at the time of the
current purchase. You must notify your broker or the transfer agent to
qualify.
Certain brokers may not offer these programs or may impose conditions or fees
to use these programs. You should consult with your broker prior to purchasing
the Fund's shares.
For further information on sales charge reductions, call the Fund at (800) 438-
5789.
Cdsc
You pay a CDSC when you redeem:
. Class A shares that were bought as part of an investment of at least $1
million within one year of buying them;
. Class B shares within six years of buying them;
. Class II shares within eighteen months of buying them.
These time periods include the time you held Class B shares of another Munder
Fund which you may have exchanged for Class B shares of the Fund.
The CDSC schedule for Class B shares is set forth below. Shares acquired in an
exchange of shares of another Munder Fund which you purchased on or before June
27, 1995 are subject to any CDSC applicable to those shares. Consult the
Statement of Additional Information for CDSC schedule for Class B 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.
<TABLE>
<CAPTION>
Years Since Purchase CDSC
- -------------------- -----
<S> <C>
First..................................................................... 5.00%
Second.................................................................... 4.00%
Third..................................................................... 3.00%
Fourth.................................................................... 3.00%
Fifth..................................................................... 2.00%
Sixth..................................................................... 1.00%
Seventh and thereafter.................................................... 0.00%
</TABLE>
At the time of purchase of Class B and Class II shares, the distributor pays
sales commissions of 4.00% and 2.00%, respectively, of the purchase price to
brokers that initiate and are responsible for purchases of such Class B and
Class II shares of the Fund.
You will not pay a CDSC to the extent that the value of the redeemed shares
represents:
. reinvestment of dividends or capital gains distributions; or
. capital appreciation of shares redeemed.
When you redeem shares, we will assume that you are redeeming first shares
representing reinvestment of dividends and capital gains distributions, then
any appreciation on shares redeemed, and then remaining shares held by you for
the longest period
14
<PAGE>
of time. We will calculate the holding period of Class B shares of a Fund
acquired through an exchange of Class B shares of the Munder Money Market Fund
(which are available only by exchange of Class B shares of a Munder Fund) from
the date that the Class B shares of the initial Munder Fund were purchased.
CDSC Waivers
We will waive the CDSC payable upon redemption of shares of the Fund for:
. redemptions made within one year after the death of a shareholder or
registered joint owner;
. minimum required distributions made from an IRA or other retirement plan
account after you reach age 70;
. involuntary redemptions made by the Fund;
. redemptions limited to 10% per year of an account's NAV. For example, if you
maintain an annual balance of $10,000 you can redeem up to $1,000 annually
free of charge;
. redemptions made from an IRA or other individual retirement plan account
established through Comerica Securities, Inc. after you reach age 59 1/2 and
after the eighteen month anniversary of the purchase of Fund shares.
Consult the Statement of Additional Information for CDSC waivers which apply
when you redeem shares acquired in an exchange of shares of another Munder Fund
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.
Rule 12b-1 Fees
The Fund has adopted Rule 12b-1 plans with respect to its Class A, Class B and
Class II shares that allow the Fund to pay distribution and other fees for the
sale of its shares and for services provided to shareholders. Under the plans,
the Fund may pay up to .25% of the daily net assets of Class A, Class B and
Class II shares to pay for certain shareholder services provided by
institutions that have agreements with the Fund's distributor to provide such
services. The Fund may also pay up to .75% of the daily net assets of the Class
B and Class II shares to finance activities relating to the distribution of its
shares.
Because the fees are paid out of the Fund's assets on an on-going basis, over
time these fees will increase the cost of an investment in the Fund and may
cost a shareholder more than paying other types of sales charges.
Other Information
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 its
shareholders, including sub-administration, sub-transfer agency and shareholder
servicing. The advisor may make such payments out of its own resources and
there are no additional costs to the Fund or its shareholders.
Please note that Comerica Bank, an affiliate of the advisor, receives a fee
from the Fund for providing shareholder services to its customers who own
shares of the Fund.
15
<PAGE>
Pricing Of Fund Shares
- --------------------------------------------------------------------------------
The Fund's NAV is calculated on each day the New York Stock Exchange is open.
NAV is the value of a single share of the Fund. The Fund calculates NAV
separately for each class. NAV is calculated by (1) taking the current value of
the Fund's total assets allocated to a particular class of shares, (2)
subtracting the liabilities and expenses charged to that class (3) dividing
that amount by the total number of shares of that class outstanding.
The Fund calculates NAV as of the close of business on the New York Stock
Exchange, normally 4:00 p.m. (Eastern time). If the New York Stock Exchange
closes early, the Fund will accelerate its calculation of NAV and transaction
deadlines to that time.
The NAV of the Fund is generally based on the market value of the securities
held in the Fund. If market values are not available, the fair value of
securities as determined in good faith by, or using procedures approved by, the
Board of Directors of the Fund.
Trading in foreign securities may be completed at times that vary from the
closing of the New York Stock Exchange. The Fund values foreign securities at
the latest closing price on the exchange on which they are traded immediately
prior to the closing of the New York Stock Exchange. Certain foreign currency
exchange rates may also be determined at the latest rate prior to the closing
of the New York Stock Exchange. Foreign securities quoted in foreign currencies
are translated into U.S. dollars at current rates. Occasionally, events that
affect these values and exchange rates may occur between the times at which
they are determined and the closing of the New York Stock Exchange. If the
advisor believes that such events materially affect the value of portfolio
securities, these securities may be valued at their fair market value as
determined in good faith by , or using procedures approved by,the Fund's Board
of Directors.
Foreign securities may trade in their primary markets on weekends or other days
when the Fund does not price its shares. Therefore, the value of the Fund's
portfolio may change on days when shareholders will not be able to buy or sell
their shares.
Distributions
- --------------------------------------------------------------------------------
As a shareholder, you are entitled to your share of the Fund's net income and
gains on its investments. The Fund passes substantially all of its earnings
along to its shareholders as distributions. When the Fund earns dividends from
stocks and interest from debt securities and distributes these earnings to
shareholders, it is called a dividend distribution. The Fund realizes capital
gains when it sells securities for a higher price than it paid. When these
gains are distributed to shareholders, it is called a capital gain
distribution.
The Fund pays dividends, if any, annually.
The Fund distributes its net realized capital gains, if any, at least annually.
The Fund normally will pay distributions in additional shares of the Fund. If
you wish to receive distributions in cash, either indicate this request on your
account application form or notify the Fund by calling (800) 438-5789.
16
<PAGE>
Federal Tax Considerations
- --------------------------------------------------------------------------------
Investments in the Fund will have tax consequences that you should consider.
This section briefly describes some of the more common federal tax
consequences. A more detailed discussion about the tax treatment of
distributions from the Fund and about other potential tax liabilities,
including backup withholding for certain taxpayers and about tax aspects of
dispositions of shares of the Fund, is contained in the Statement of Additional
Information. You should consult your tax adviser about your own particular
situation.
Taxes On Distributions
You will generally have to pay federal income tax on all Fund distributions.
Distributions will be taxed in the same manner whether you receive the
distributions in cash or in additional shares of the Fund. Shareholders not
subject to tax on their income generally will not be required to pay any tax on
distributions.
Distributions that are derived from net long-term capital gains generally will
be taxed as long-term capital gains. Dividend distributions and short-term
capital gains generally will be taxed as ordinary income. The tax you pay on a
given capital gains distribution generally depends on how long the Fund held
the portfolio securities it sold. It does not depend on how long you held the
Fund shares.
Distributions are generally taxable in the year in which they are paid, with
one exception: distributions declared in October, November or December, but not
paid until January of the following year, are taxed as though they were paid on
December 31 of the year in which they were declared.
If a Fund invests in certain passive foreign investment companies (PFICs), it
will be subject to Federal income tax (and possibly additional interest
charges) on a portion of any excess distribution or gain from the disposition
of such shares, even if it distributes such income to its shareholders. If a
Fund elects to treat PFIC as a qualified electing fund (QEF) and the PFIC
furnishes certain financial information in the required form to such Fund, the
Fund will instead be required to include in income each year its allocable
share of the ordinary earnings and net capital gains of the QEF, regardless of
whether received, and such amounts will be subject to the various distribution
requirements described above. The Funds may also elect to mitigate the tax
effects of owning PFIC stock by making an annual mark-to-market election with
respect to PFIC shares.
Shareholders generally are required to report all Fund distributions on their
federal income tax returns. Each year the Fund will send you information
detailing the amount of ordinary income and capital gains paid to you for the
previous year.
Taxes on Sales or Exchanges
If you sell shares of the Fund or exchange them for shares of another Munder
Fund, you generally will be subject to tax on any taxable gain. Taxable gain is
computed by subtracting your tax basis in the shares from the redemption
proceeds (in the case of a sale) or the value of the shares received (in the
case of an exchange). Because your tax basis depends on the original purchase
price and on the price at which any dividends may have been reinvested, you
should be sure to keep account statements so that you or your tax preparer will
be able to determine whether a sale will result in a taxable gain.
Other Considerations
If you buy shares of the Fund just before the Fund makes any distribution, you
will pay the full price for the shares and then receive back a portion of the
money you have just invested in the form of a taxable distribution.
By law, the Fund must withhold a portion of your distributions and redemption
proceeds to pay federal income taxes if you have not provided complete, correct
taxpayer information.
17
<PAGE>
Management
- --------------------------------------------------------------------------------
Investment Advisor
The Fund's investment advisor is Munder Capital Management, 480 Pierce Street,
Birmingham, Michigan 48009. As of July 31, 1999, the advisor and its affiliates
had approximately $55.1 billion in assets under management, of which $30.2
billion were invested in equity securities, $9.4 billion were invested in money
market or other short-term instruments, $9.0 billion were invested in other
fixed income securities, and $6.5 billion in non-discretionary assets.
The advisor provides overall investment management for the Fund, provides
research and credit analysis and is responsible for all purchases and sales of
portfolio securities.
The advisor is entitled to receive a fee equal to 1.00% annually of the average
daily net assets of the Fund.
Management
A committee of professional portfolio managers employed by the advisor makes
investment decisions for the Fund.
18
<PAGE>
FOR MORE INFORMATION
More information about the Fund is available free upon request, including the
following:
Statement of Additional Information
Provides more details about all of the funds and their policies. A current
Statement of Additional Information is on file with the Securities and Exchange
Commission and is incorporated by reference (is legally considered part of this
prospectus).
The Munder Funds, Inc.
SEC file number 811-7346
PROABIITECH899
Investment Advisor Munder Capital Management
Distributed by: Funds Distributor, Inc.
To Obtain Information:
By telephone
Call 1-800-438-5789
By mail Write to:
The Munder Funds
480 Pierce Street
Birmingham, MI 48009
On the Internet Text-only versions of fund documents can be viewed online or
downloaded from:
Securities and Exchange Commission
http://www.sec.gov
You can also obtain copies by visiting the Securities and Exchange Commission's
Public Reference Room in Washington, DC (phone 1-800-SEC-0330) or by sending
your request and a duplicating fee to the Securities and Exchange Commission's
Public Reference Section, Washington, DC 20549-6009.
You may also find more information about the Fund on the Internet at
http://www.munderfunds.com
<PAGE>
Application
FOR NEW ACCOUNTS
[LOGO OF THE MUNDER FUNDS APPEARS HERE]
PLEASE MAIL YOUR COMPLETE APPLICATION (printed or typed)
ALONG WITH YOUR CHECK TO:
The Munder Funds
c/o First Data Investor Services Group, Inc.
P.O. Box 60428
King of Prussia, PA 19406-0428
If you have any questions regarding this application, please telephone the
Transfer Agent at 1.800.438.5789
1. ACCOUNT REGISTRATION
________________________________________________________________________________
Name Social Security Number
________________________________________________________________________________
Joint Owner (if any) (If Joint Tenancy, use Social
Security Number of first joint owner)
OR
Uniform Transfer to Minor:
for:
- --------------------------------------------------------------------------------
Custodian Name (one custodian only) Minor's Name (one minor only)
________________________________________________________________________________
State (Custodian's State of Residence) Minor's Social Security Number
OR
[_] Trust [_] Corporation [_] Other (please specify)______________
________________________________________________________________________________
Trust/Corporation Name
________________________________________________________________________________
Trust Date Trust Identification Number
2. MAILING ADDRESS (address for reports, dividends, statements and
redemption proceeds)
________________________________________________________________________________
Street Apt.
________________________________________________________________________________
City State Zip Code Telephone Number
Non-Resident Alien: [_] Yes [_] No If Yes, Country of Residence____________
<PAGE>
3. INITIAL INVESTMENT
With as little as $250* you can invest in any Munder Fund. Please be sure to
read the prospectus carefully before investing or sending money. You may request
an additional prospectus by calling 1.800.438.5789.
<TABLE>
<CAPTION>
NAME OF FUND CLASS CLASS CLASS INVESTMENT
A B II AMOUNT
<S> <C> <C> <C> <C>
[_] Munder Future Technology Fund [_] [_] [_] $______________
Total Amount Invested $______________
</TABLE>
[_] By Check (Payable to The Munder Funds)
[_] By Wire. Account Number: _____________________________ (Account number
assigned by Bank from which assets were wired.)
_________________________
* $50 per Fund if the Automatic Investment Plan Option is being established at
this time (please complete section 5).
4. DISTRIBUTION OPTION (check one. If none, "A" will be assigned)
[_] A. Reinvest dividends and capital gains in additional Fund shares.
[_] B. Pay dividends in cash; reinvest capital gains in additional Fund
shares.
[_] C. Pay dividends and capital gains in cash.
[_] D. Please send my: [_] Dividends [_] Dividends & Capital Gains (choose
one) directly to my checking/savings account.
Fill out banking information in Section 9
5. AUTOMATIC INVESTMENT PLAN (optional)
YES, I (we) wish to participate in the Automatic Investment Plan (AIP). I (We)
authorize First Data Investor Services Group, Inc. (First Data), The Munder
Funds' transfer agent, to invest automatically $________ ($50 minimum) for me
(us) on a [_] Monthly OR [_] Quarterly basis (please choose either the [_] 5th
or the [_] 20th of the month) and draw a bank draft in payment of each of these
investments against my (our) [_] Checking OR [_] Savings account. For the
purpose of verifying my (our) bank account number, I (we) have enclosed a blank
check or deposit slip marked void and have signed the bank authorization below.
________________________________________________________________________________
Name of Fund Checking/Savings Account Number ABA Number (Banking Routing
Number)
Fill out banking information in Section 9
<PAGE>
6. AUTOMATIC WITHDRAWAL PLAN (optional)
The minimum account balance must be $2,500 or more.
Fill out banking information in Section 9
YES, I authorize the redemption of shares from my Munder Fund account to meet
withdrawal payments on the 20th of each month.
________________________________________________________________________________
Name of Fund That Shares Will Be Redeemed From Account Number (if applicable)
________________________________________________________________________________
Amount of Monthly Payment ($50 minimum per Fund) Start Date (Payment is to
begin on the next payment
period unless a later date
is indicated)
Payments will be made to: [_] Owner's address of record only OR [_] Other
listed below:
_________________________________________ [_] Checking OR [_] Savings Account
Name (if bank indicate account number)
________________________________________________________________________________
Address
For the purpose of verifying my (our) bank account number, I (we) have enclosed
a blank check or deposit slip marked void and have signed the bank authorization
below.
________________________________________________________________________________
Name of Fund Account Number ABA Number (Bank Routing Number)
7. REDUCED SALES CHARGE (optional)
[_] Rights of Accumulation:
Investors may qualify for reduced sales charges by aggregating the total
purchases of all Munder Class A Shares, excluding Money Market Funds, to
determine the applicable sales charge for current purchases. To determine the
aggregated amount of all non-money market funds, you will need to total the
current purchases as well as shares that are already beneficially owned by the
investor for which a sales charge has already been paid. Please see the
prospectus for additional information regarding Rights of Accumulation.
I apply for the Rights of Accumulation reduced sales charges based on the
following accounts in The Munder Funds.
________________________________________________________________________________
Name of Fund Account Number
________________________________________________________________________________
Name of Fund Account Number
________________________________________________________________________________
Name of Fund Account Number
[_] Letters of Intent:
You may qualify for reduced sales charges if you plan to make additional
investments in The Munder Funds within a 13 month period. By indicating a level
of anticipated investment and by signing this application, you agree to the
terms of the Letter of Intent as set forth in the Prospectus, and as follows:
"Although I am not obligated to do so, I intend to invest over a 13 month period
an aggregate amount of at least" (check one):
[_] $25,000 [_] $50,000 [_] $100,000
[_] $250,000 [_] $500,000 [_] $1,000,000
<PAGE>
8. TELEPHONE REDEMPTION & EXCHANGE AGREEMENT
Please check the box if you want this option.
[_] I (We) authorize First Data to act upon instructions received by telephone
from me (us) to redeem or to exchange shares of The Munder Funds.
1. I (We) relieve the Funds or First Data of any liability for the loss,
cost or expense for acting upon such instructions reasonably believed
to be from me (us).
2. I (We) assume responsibility for notifying the Funds within seven (7)
business days if a confirmation for the transaction is not received or
is incorrect.
3. If an exchange involves an initial investment into a Fund, the account
registration will carry the same registration as set forth above.
4. An exchange deemed to be the initial purchase of a Fund must meet the
minimum initial investment requirement of $250 per Fund unless the
shareholder is establishing an Automatic Investment Plan.
5. Redemption proceeds will be sent only to my account address of record.
________________________________________________________________________________
Name Name
9. BANKING INFORMATION
To be completed with Section 4 (Distribution Option)
I (We) authorize The Munder Funds to deposit distributions into the following
[_] Checking [_] Savings Account
________________________________________________________________________________
Bank Name Address
________________________________________________________________________________
ABA Number (Bank Routing Number) Account Number Banking Account Registration
________________________________________________________________________________
Wiring Instructions
To be completed with Section 5 (Automatic Investment Plan)
Please note that your bank will clear and process each bank draft and will
include it with your regular statements. However, acceptance of this
authorization is conditional upon approval of your authorization by your bank,
which will allow First Data, the transfer agent for The Munder Funds, to act as
your agent with regard to the Automatic Investment Plan (AIP). The AIP will
automatically terminate without notice if any bank draft is not paid upon
presentation by First Data, to your bank. The AIP may be modified or terminated
at any time, upon thirty (30)-days written notice.
________________________________________________________________________________
Signature of Depositor Date Signature of Joint Depositor (if any) Date
To be completed with Section 6 (Automatic Withdrawal Plan)
Please note that your bank will clear and process each bank deposit and will
include it with your regular statements. However, acceptance of this
authorization is conditional upon approval of your authorization by your bank,
which will allow the transfer agent for The Munder Funds to act as your Agent
with regard to the Automatic Withdrawal Plan (AWP). The AWP may be modified or
terminated at any time, upon thirty (30) days written notice.
________________________________________________________________________________
Signature of Depositor Date Signature of Joint Depositor (if any) Date
* Please Staple Void Check or Deposit Slip Here *
<PAGE>
10. AUTHORIZATIONS, CERTIFICATES AND SIGNATURES
By signing the application, I (we) hereby certify under the penalty of perjury
that the information on this application is true, complete and correct and that:
I (We) understand that this order is subject to acceptance by The Munder Funds.
I (We) agree that The Munder Funds, Funds Distributor, Inc., First Data, Munder
Capital Management or any of its affiliates, officers, directors or employees
will not be liable for any loss, expense or cost for acting upon instructions or
inquiries reasonably believed to be genuine. Shares of the Funds are not
insured or guaranteed by the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other agency. An investment in the Funds involves
investment risks, including the possible loss of principal.
I (We) represent that I am (we are) of legal age and capacity and have read the
Prospectus(es) for The Munder Funds selected, and agree to its (their) terms.
First Data, is hereby appointed agent to receive dividends and distributions for
automatic reinvestment unless otherwise directed in Section 4.
I (We) understand and acknowledge that a sales charge may be levied against the
dollar that I (we) invest in The Munder Funds. (See the Prospectus(es) for
reduced sales charge information.)
The Internal Revenue Service requires that all taxpayers provide their Taxpayer
Identification Numbers (Social Security Numbers) and sign in the space provided
below. Failure by non-exempt taxpayers to furnish us with the correct Taxpayer
Identification Number will result in withholding of 31% of all taxable dividends
paid and/or withholding on certain other payments (this is referred to as backup
withholding).
________________________________________________________________________________
Taxpayer Identification Number Name of Taxpayer Whose Number Appears Above
Taxpayer Identification:
I (the Investor) certify under penalties of perjury that:
(1) The Social Security Number or taxpayer identification number shown above is
correct and may be used for any custodial or trust account opened for me by
The Munder Funds, and
(2) I (the Investor) am not subject to backup withholding because:
(a) I am exempt from Backup Withholding
(b) I have not been notified by the Internal Revenue Service ("IRS") that
I am, as a result of failure to report all interest or dividends, or
(c) the IRS has notified me that I am no longer subject to backup
withholding.
The certification in this paragraph is required from all non-exempt persons to
prevent backup withholding of 31% of all taxable distributions and gross
redemptions proceeds under the Federal income tax law.
[_] Check here if you are subject to backup withholding or have not received a
notice from the IRS advising you that backup withholding has been
terminated.
Authorization:
____________________________________________________________________
Signature of Owner Date Name
____________________________________________________________________
Signature of Owner Date Name
<PAGE>
10. AUTHORIZATIONS, CERTIFICATES AND SIGNATURES
By signing the application, I (we) hereby certify under the penalty of perjury
that the information on this application is true, complete and correct and that:
I (We) understand that this order is subject to acceptance by The Munder Funds.
I (We) agree that The Munder Funds, Funds Distributor, Inc., First Data, Munder
Capital Management or any of its affiliates, officers, directors or employees
will not be liable for any loss, expense or cost for acting upon instructions or
inquiries reasonably believed to be genuine. Shares of the Funds are not
insured or guaranteed by the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other agency. An investment in the Funds involves
investment risks, including the possible loss of principal.
I (We) represent that I am (we are) of legal age and capacity and have read the
Prospectus(es) for The Munder Funds selected, and agree to its (their) terms.
First Data, is hereby appointed agent to receive dividends and distributions for
automatic reinvestment unless otherwise directed in Section 4.
I (We) understand and acknowledge that a sales charge may be levied against the
dollar that I (we) invest in The Munder Funds. (See the Prospectus(es) for
reduced sales charge information.)
The Internal Revenue Service requires that all taxpayers provide their Taxpayer
Identification Numbers (Social Security Numbers) and sign in the space provided
below. Failure by non-exempt taxpayers to furnish us with the correct Taxpayer
Identification Number will result in withholding of 31% of all taxable dividends
paid and/or withholding on certain other payments (this is referred to as backup
withholding).
________________________________________________________________________________
Taxpayer Identification Number Name of Taxpayer Whose Number Appears Above
Taxpayer Identification:
I (the Investor) certify under penalties of perjury that:
(1) The Social Security Number or taxpayer identification number shown above is
correct and may be used for any custodial or trust account opened for me by
The Munder Funds, and
(2) I (the Investor) am not subject to backup withholding because:
(a) I am exempt from Backup Withholding
(b) I have not been notified by the Internal Revenue Service ("IRS") that
I am, as a result of failure to report all interest or dividends, or
(c) the IRS has notified me that I am no longer subject to backup
withholding.
The certification in this paragraph is required from all non-exempt persons to
prevent backup withholding of 31% of all taxable distributions and gross
redemptions proceeds under the Federal income tax law.
[_] Check here if you are subject to backup withholding or have not received a
notice from the IRS advising you that backup withholding has been
terminated.
Authorization:
____________________________________________________________________
Signature of Owner Date Name
____________________________________________________________________
Signature of Owner Date Name
<PAGE>
- --------------------------------------------------------------------------------
Shares of The Munder Funds are not deposits or obligations of, or guaranteed or
endorsed by any bank, and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency. All
mutual fund shares involve certain investment risks, including the possible loss
of principal.
- --------------------------------------------------------------------------------
Distributor: Funds Distributor, Inc. APPTECH ABII99
<PAGE>
CLASS Y SHARES
[LOGO OF MUNDER FUNDS APPEARS HERE]
The Munder Funds
Investments for all seasons
Prospectus
August 25, 1999
T H E M U N D E R F U T U R E T E C H N O L O G Y F U N D
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities nor passed upon the accuracy or
adequacy of this prospectus. It is a criminal offense to state otherwise.
<PAGE>
Table Of Contents
<TABLE>
<C> <S>
2 Risk/Return Summary
2 Goal
2 Principal Investment Strategies
2 Principal Risks
3 Who May Want To Invest
3 Performance
4 Fees and Expenses
5 More About The Fund
8 Your Investment
8 How To Reach The Fund
8 Purchasing Shares
9 Exchanging Shares
9 Redeeming Shares
9 Additional Policies For Purchases, Exchanges And Redemptions
10 Shareholder Privileges
11 Pricing of Fund Shares
11 Distributions
12 Federal Tax Considerations
12 Taxes On Distributions
12 Taxes On Sales or Exchanges
12 Other Considerations
13 Management
13 Investment Advisor
13 Portfolio Management
Back Cover For Additional Information
</TABLE>
<PAGE>
Risk/Return Summary
- --------------------------------------------------------------------------------
This Risk/Return Summary briefly describes the goal and principal investment
strategies of the Munder Future Technology Fund and the principal risks of
investing in the Fund. For further information on these and the Fund's other
investment strategies and risks, please read the section entitled More About
The Fund.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency.
Goal
The Fund's goal is to provide capital appreciation.
Principal Investment Strategies
The Fund pursues its goal by investing at least 65% of its assets in common
stocks of technology-related companies. Technology-related companies are
companies that develop, manufacture, or distribute
technology, communications and Internet-related products and services. The Fund
may also invest in the stocks of companies that should benefit commercially
from technological advances. The Fund invests in both established companies and
in new or unseasoned companies, including companies making initial public
offerings.
The products and services provided by technology-related companies may include:
computer hardware and software, communications hardware and software,
semiconductors, business services, media and information services and Internet-
related services.
In selecting stocks, the advisor will first identify attractive sectors within
the technology industry. The advisor will then focus on companies that it
believes are current industry leaders or leading companies in developing
sectors. Using fundamental analysis, the advisor will look for companies with:
. strong market share within their sector; and/or
. technologically superior products or services; and
. stable or improving revenue growth, earnings growth or order trends.
The Fund is "non-diversified" under the Investment Company Act of 1940, as
amended and may invest more of its assets in fewer issuers than a "diversified"
investment company.
Principal Risks
All investments carry some degree of risk which will affect the value of the
Fund's portfolio investments, its investment performance and the price of its
shares. As a result, you may lose money if you invest in the Fund.
The Fund is subject to the following principal investment risks:
. Stock Market Risk. The value of the securities in which the Fund invests may
decline in response to development affecting individual companies and/or
general economic conditions. Price changes may be temporary or last for
extended periods.
. Concentration Risk. The Fund will concentrate its investments in the
technology industry. Market or economic factors impacting that industry could
have a major effect on the value of the Fund's investments. The value of
stocks of technology companies is particularly vulnerable to rapid changes in
technology product cycles, government regulation and competition. Technology
stocks, especially those of smaller, less-seasoned companies, tend to be more
volatile than the overall market.
. Non-Diversified Risk. The Fund may invest more of its assets in fewer issuers
than many other funds do, may be more susceptible to adverse developments
affecting any single issuer, and may be more susceptible to greater losses
because of these developments.
. Smaller Company Stock Risk. The stocks of small or medium size companies may
be more susceptible to market downturns, and their prices may be more
volatile than those of larger companies. Small company stocks typically are
traded in lower volume, and their issuers are subject to greater degrees of
changes in their earnings and prospects.
2
<PAGE>
Who May Want To Invest
The Fund may be appropriate for investors:
. Looking to invest over the long term.
. Able to tolerate market savings.
. Looking to invest in a stock portfolio focused on a particular stock market
segment.
The Fund alone cannot provide a balanced investment program.
Performance
The Fund has not commenced operations as of the date of this prospectus and,
therefore, does not have annual returns for a full calendar year. For this
reason, a bar chart and performance table showing performance information and
information on the Fund's best and worst calendar quarters is not provided in
this prospectus.
3
<PAGE>
Fees and Expenses
The tables below describes the fees and expenses that you may pay if you buy
and hold Class Y shares of the Fund. Please note that the following information
does not include fees that institutions may charge for services they provide to
you.
<TABLE>
<CAPTION>
Shareholder Fees (fees paid directly from your investment)
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases........................... None
Sales Charge (Load) Imposed on Reinvested Dividends........................ None
Maximum Deferred Sales Charge (Load)....................................... None
Redemption Fees............................................................ None
Exchange Fees.............................................................. None
</TABLE>
Annual
Fund
Operating
Expenses
(expenses
that are
paid from
Fund
assets)
<TABLE>
<CAPTION>
Annual Fund Operating Expenses
as a % of net assets
- ------------------------------
<S> <C>
Management Fees 1.00%
Other Expenses(1)(2) .50%
----
Total Annual Fund Operating Expenses(1) 1.50%
====
</TABLE>
- --------
(1) Other expenses based on estimated amounts for the current fiscal year.
(2) The advisor has voluntarily agreed to reimburse certain operating expenses
to keep the Fund's Other Expenses at a specified level. As a result, it is
estimated that the Fund's annual operating expenses for the current fiscal
year will be:
<TABLE>
<S> <C>
Management Fees 1.00%
Other Expenses .35%
----
Total Annual Fund Operating Expenses 1.35%
====
</TABLE>
The advisor may eliminate all or part of the reimbursement at any time.
Example
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated and then sell all of
your shares at the end of those periods. The example also assumes that your
investment has a 5% return each year that the Fund's operating expenses remain
the same as shown in the table above and that all dividends and distributions
are reinvested. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C>
$138 $429
</TABLE>
4
<PAGE>
More About The Fund
- --------------------------------------------------------------------------------
The Fund's principal investment strategies and risks are summarized above in
the section entitled Risk/Return Summary. This section provides a more complete
description of the Fund's investment strategies and their associated risks. The
Fund may invest in other securities and is subject to further restrictions and
risks which are described in the Statement of Additional Information.
Equity Securities. The Fund invests in equity securities which include common
stocks, preferred stocks and securities convertible into common stocks.
Securities considered for purchase by the Fund may be listed or unlisted. There
is no limit on the market capitalization of the companies in which the Fund may
invest, or in the length of operating history for the companies. The Fund may
invest without limit in initial public offerings.
Foreign Securities. Foreign securities include investments in non-U.S. dollar-
denominated securities traded outside of the United States and dollar-
denominated securities of foreign issuers traded in the United States. Foreign
securities also include American Depository Receipts ("ADRs") which are U.S.
dollar-denominated receipts representing shares of foreign corporations. ADRs
are issued by U.S. banks or trust companies, and entitle the holder to all
dividends and capital gains that are paid out on the underlying foreign shares.
Investment Strategy. The Fund may invest up to 25% of its total assets in
foreign securities.
Special Risks. Foreign securities involve special risks and costs.
Investment in foreign securities may involve higher costs than investment
in U.S. securities, including higher transaction and custody costs as well
as the imposition of taxes by foreign governments. Foreign investments may
also involve risks associated with changing currency exchange rates, less
complete financial information about the issuers, less market liquidity,
more market volatility and political instability. Future political and
economic developments, the possible imposition of withholding taxes on
dividend income, the possible seizure or nationalization of foreign
holdings, the possible establishment of exchange controls or freezes on the
convertibility of currency, or the adoption of other governmental
restrictions might adversely affect an investment in foreign securities.
Additionally, foreign issuers may be subject to less stringent regulation,
and to different accounting, auditing and recordkeeping requirements.
Currency Risks. Currency exchange rates may fluctuate significantly over
short periods of time causing the Fund's net asset value to fluctuate as
well. A decline in the value of a foreign currency relative to the U.S.
dollar will reduce the value of a foreign currency-denominated security. To
the extent that the Fund is invested in foreign securities while also
maintaining currency positions, it may be exposed to greater combined risk.
The Fund's foreign currency positions may expose it to risks independent of
its securities positions.
Euro Risk. A further risk of investing in foreign securities is the risk
that the Fund may be adversely affected by the conversion of certain
European currencies into the Euro. This conversion, which is under way, is
scheduled to be completed in the year 2002. However, problems with the
conversion process and delays could increase volatility in world capital
markets and affect European capital markets in particular.
Futures Contracts and Related Options. The Fund may enter into futures
contracts and options on future contracts, which are forms of derivatives.
Derivatives are financial contracts whose value is based on an underlying
security, a currency exchange rate, an interest rate or a market index. A
futures contract is a type of derivative instrument that obligates the holder
to buy or sell an asset in the future at an agreed upon price. When the Fund
purchases an option on a futures contract, it has the right to assume a
position as a purchaser or seller of a futures contract at a specified exercise
price during the option period. When the Fund sells an option on a futures
contract, it becomes obligated to purchase or sell a futures contract if the
option is exercised.
Investment Strategy. The Fund may, but is not required to, use futures and
options on futures for hedging purposes, for the purpose of
5
<PAGE>
remaining fully invested or maintaining liquidity to meet potential
shareholder redemptions, to invest cash balances or dividends, or to
minimize trading costs. The Fund will not use futures and options on
futures for speculative purposes.
The Fund will not purchase or sell a futures contract unless, after the
transaction, the sum of the aggregate amount of margin deposits on its
existing futures positions and the amount of premiums paid for related
options used for non-hedging purposes is 5% or less of the Fund's total
assets.
Special Risks. Futures contracts and related options present the following
risks: imperfect correlation between the change in market value of a Fund's
securities and the price of futures contracts and options; the possible
inability to close a futures contract when desired losses due to
unanticipated market movements, which are potentially unlimited; and the
possible inability of the advisor to correctly predict the direction of
securities prices, interest rates, currency exchange rates and other
economic factors.
Securities Lending. In order to generate additional income, the Fund may lend
portfolio securities on a short-term basis to qualified institutions. By
reinvesting any cash collateral it receives in these transactions, the Fund
could realize additional gains or losses.
Investment Strategy. Securities lending may represent no more than 25% of
the value of the Fund's total assets (including the loan collateral).
Special Risks. The main risk when lending Fund securities is that if the
borrower fails to return the securities or the invested collateral has
declined in value, the Fund could lose money.
Borrowing and Reverse Repurchase Agreements. The Fund can borrow money from
banks and enter into reverse repurchase agreements with banks and other
financial institutions. Reverse repurchase agreements involve the sale of
securities held by the Fund subject to the Fund's agreement to repurchase them
at a mutually agreed upon date and price (including interest).
Investment Strategy. The Fund may borrow money in an amount up to 5% of its
assets for temporary emergency purposes and in an amount up to 33 1/3% of
its assets to meet redemptions. This is a fundamental policy which can be
changed only by shareholders.
Special Risks. Borrowings and reverse repurchase agreements by the Fund may
involve leveraging. If the securities held by the Fund decline in value
while these transactions are outstanding, the Fund's net asset value will
decline in value by proportionately more than the decline in value of the
securities. In addition, reverse repurchase agreements involve the risks
that the interest income earned by the Fund (from the investment of the
proceeds) will be less than the interest expense of the transaction, that
the market value of the securities sold by the Fund will decline below the
price the Fund is obligated to pay to repurchase the securities, and that
the securities may not be returned to the Fund.
Illiquid Securities. Illiquid securities include private placements or other
securities that are subject to legal or contractual restrictions on resale or
for which there is no readily available market.
Investment Strategy. The Fund may invest up to 15% of its net assets in
securities that are illiquid.
Special Risks. To the extent that the Fund invests in illiquid securities,
the Fund risks not being able to sell the securities at the time and the
price that it would like. The Fund may have to lower the price, sell
substitute securities or forego an investment opportunity, each of which
may cause a loss to the Fund.
6
<PAGE>
Short-Term Trading. The Fund may engage in short-term trading, including
initial public offers. A high rate of portfolio turnover (100% or more) could
produce higher trading costs and taxable distributions, which could detract
from the Fund's performance.
Year 2000 Risk. Like other mutual funds, financial institutions, business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the advisor and the Fund's other
service providers do not properly process and calculate date-related
information and data from and after January 1, 2000. The advisor is taking
steps that it believes are reasonably designed to address year 2000 computer-
related problems with respect to the computer systems that it uses and to
obtain assurances that comparable steps are being taken by the Fund's other
major service providers. Although there can be no assurances, the advisor
believes that these steps will be sufficient to avoid any adverse impact on the
Fund. Similarly, there can be no assurances that year 2000 issues will not
affect the companies and other issuers in which the Fund invests or affect
worldwide markets and economies.
7
<PAGE>
Your Investment
- --------------------------------------------------------------------------------
This section describes how to do business with the Fund.
How To Reach The Funds
By telephone:
1-800-438-5789
Call for account information.
By mail: The Munder Funds
480 Pierce Street
Birmingham, MI 48009
Purchasing Shares
Who May Purchase Shares
The following persons may purchase shares of the Fund:
. fiduciary and discretionary accounts of institutions;
. institutional investors (including: banks, savings institutions, credit
unions and other financial institutions, pension and 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 their clients);
. directors, trustees, officers and employees of the Munder Funds, the advisor
and the distributor;
. the advisor's investment advisory clients;
. family members of employees of the advisor.
The Fund also issues other classes of shares, which have different sales
charges, expense levels and performance. Call (800) 438-5789 to obtain more
information concerning the Fund's other classes of shares.
Purchase Price of Shares
Class Y shares of the Fund are sold at the net asset value per share (NAV) next
determined after a purchase order is received in proper form.
Broker-dealers (other than the Fund's distributor) may charge a fee for shares
you purchase through them.
Policies for Purchasing Shares
Minimum initial investment
The minimum initial investment by fiduciary and discretionary accounts of
institutions and institutional investors is $500,000. Other investors are not
subject to any minimum.
There is no minimum for subsequent investments.
Timing of orders
Purchase orders must be received by the Fund's distributor or the transfer
agent before the close of regular trading on the New York Stock Exchange
(normally, 4:00 p.m. Eastern time). Purchase orders received after that time
will be accepted as of the next business day.
Methods for Purchasing Shares
You can purchase Class Y shares through the Fund's transfer agent, Fund's
distributor or through arrangements with a broker-dealer or financial
institution.
. Through a Financial Institution. You may purchase shares through a financial
institution through procedures established with that institution.
Confirmations of share purchases will be sent to the institution.
. By Mail. You may open an account directly through the Fund's transfer agent
by completing, signing and mailing an account application form and a check or
other negotiable bank draft (payable to The Munder Funds) to: The Munder
Funds, c/o First Data Investor Services Group, P.O. Box 60428, King of
Prussia, Pennsylvania 19406-0428. You can obtain an account application form
by calling (800) 438-5789. For additional investments, send a letter stating
the Fund and share class you wish to purchase, your name and your account
number with a check for $50 or more to the address listed above.
. By Wire. 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
8
<PAGE>
agent at The Munder Funds, c/o First Data Investor Services Group, P.O. Box
60428, King of Prussia, Pennsylvania 19406-0428. Wire instructions must state
the Fund name, share class, your registered name and your account number. Your
bank wire should be sent through the Federal Reserve Bank Wire System to:
Boston Safe Deposit and Trust Company
Boston, MA
ABA# 011001234
DDA# 16-798-3
Account No.:
You may make additional investments at any time using the wire procedures
described above. Note that banks may charge fees for transmitting wires.
. You may purchase shares through the Automatic Investment Plan.
Exchanging Shares
Policies for Exchanging Shares
. You may exchange your Fund shares for Class Y shares of another Munder Fund
based on their relative net asset values.
. You must meet the minimum purchase requirements for the Munder Fund that you
purchase by exchange.
. 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 Munder Fund you
wish to purchase by exchange. You can obtain a prospectus for any Munder Fund
by contacting your broker or calling the Munder Funds at (800) 438-5789.
. Brokers may charge a fee for handling exchanges.
. We may change, suspend or terminate the exchange privilege at any time. You
will be given notice of any material modifications except where notice is not
required.
Redeeming Shares
Redemption Price
We will redeem shares at the NAV next determined after we receive the
redemption request in proper form.
Methods for Redeeming Shares
. You may redeem shares of the Fund through your broker-dealer or financial
institution.
Policies for Redeeming Shares
. Shares held by an institution on behalf of its customers must be redeemed in
accordance with instructions and limitations pertaining to the account at
that institution.
. If we receive a redemption order for the Fund before 4:00 p.m. (Eastern
time), we will normally wire payment to the redeeming institution on the next
business day.
Additional Policies For Purchases, Exchanges And Redemptions
. We consider requests to be in "proper form" when all required documents are
properly completed, signed and received.
. The Fund reserves the right to reject any purchase order.
. At any time, the Fund may change any of purchase, redemption or exchange
practices, and may suspend the sale of its shares.
. The Fund may delay sending redemption proceeds for up to seven days, or
longer if permitted by the Securities and Exchange Commission.
. To limit the Fund's expenses, we do not currently issue share certificates.
. The Fund may temporarily stop redeeming shares if:
. the New York Stock Exchange is closed;
. trading on the New York Stock Exchange is restricted;
. an emergency exists and the Fund cannot sell its assets or accurately
determine the value of its asset; or
. the Securities and Exchange Commission orders the Fund to suspend
redemptions.
. 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.
9
<PAGE>
. If accepted by the Fund, investors may purchase shares of the Fund with
securities which the Fund may hold. The advisor will determine if the
securities are consistent with the Fund's objectives and policies. If
accepted, the securities will be valued the same way the Fund values
portfolio securities it already owns. Call the Fund at (800) 438-5789 for
more information.
. The Fund reserves the right to make payment for redeemed shares wholly or in
part by giving the redeeming shareholder portfolio securities. The
shareholder may pay transaction costs to dispose of these securities.
. We record all telephone calls for your protection and take measures to
identify the caller. As long as the Fund's transfer agent takes reasonable
measures to authenticate telephone requests on an investor's account, neither
the Fund, the Fund's distributor nor the transfer agent will be held
responsible for any losses resulting from unauthorized transactions.
. We may redeem your account if its value falls below $250 as a result of
redemptions (but not as a result of a decline in NAV). You will be notified
in writing and allowed 60 days to increase the value of your account to the
minimum investment level.
. If you purchased shares directly through the Fund's transfer agent, the
transfer agent will send you confirmations of the opening of an account and
of all subsequent purchases, exchanges or redemptions in the account.
Confirmations of transactions effected through an institution will be sent to
the institution.
. Financial institutions are responsible for transmitting orders and payments
for their customers on a timely basis.
Shareholder Privileges
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.
10
<PAGE>
Pricing Of Fund Shares
- --------------------------------------------------------------------------------
The Fund's NAV is calculated on each day the New York Stock Exchange is open.
NAV is the value of a single share of the Fund. NAV for Class Y shares is
calculated by (1) taking the current value of the Fund's total assets allocated
to a particular class of shares, (2) subtracting the liabilities and expenses
charged to that class (3) dividing that amount by the total number of shares of
that class outstanding.
The Fund calculates NAV as of the close of business on the New York Stock
Exchange, normally 4:00 p.m. (Eastern time). If the New York Stock Exchange
closes early, the Fund will accelerate its calculation of NAV and transaction
deadlines to that time.
The NAV of the Fund is generally based on the market value of the securities
held in the Fund. If market values are not available, the fair value of
securities is determined in good faith by, or using procedures approved by, the
Board of Directors of the Fund.
Trading in foreign securities may be completed at times that vary from the
closing of the New York Stock Exchange. The Fund values foreign securities at
the latest closing price on the exchange on which they are traded immediately
prior to the closing of the New York Stock Exchange. Certain foreign currency
exchange rates may also be determined at the latest rate prior to the closing
of the New York Stock Exchange. Foreign securities quoted in foreign currencies
are translated into U.S. dollars at current rates. Occasionally, events that
affect these values and exchange rates may occur between the times at which
they are determined and the closing of the New York Stock Exchange. If the
advisor believes that such events materially affect the value of portfolio
securities, these securities may be valued at their fair market value as
determined in good faith by, or using procedures approved by the Fund's Board
of Directors.
Foreign securities may trade in their primary markets on weekends or other days
when the Fund does not price its shares. Therefore, the value of the Fund's
portfolio may change on days when shareholders will not be able to buy or sell
their shares.
Distributions
- --------------------------------------------------------------------------------
As a shareholder, you are entitled to your share of the Fund's net income and
gains on its investments. The Fund passes substantially all of its earnings
along to its shareholders as distributions. When the Fund earns dividends from
stocks and interest from debt securities and distributes these earnings to
shareholders, it is called a dividend distribution. The Fund realizes capital
gains when it sells securities for a higher price than it paid. When these
gains are distributed to shareholders, it is called a capital gain
distribution.
The Fund pays dividends, if any, annually.
The Fund distributes its net realized capital gains, if any, annually.
The Fund normally will pay distributions in additional shares of the Fund. If
you wish to receive distributions in cash, (either indicate this request on
your account application form or notify the Fund by calling (800) 438-5789.
11
<PAGE>
Federal Tax Considerations
- --------------------------------------------------------------------------------
Investments in the Fund will have tax consequences that you should consider.
This section briefly describes some of the more common federal tax
consequences. A more detailed discussion about the tax treatment of
distributions from the Fund and about other potential tax liabilities,
including backup withholding for certain taxpayers and about tax aspects of
dispositions of shares of the Fund, is contained in the Statement of Additional
Information. You should consult your tax adviser about your own particular
situation.
Taxes On Distributions
You will generally have to pay federal income tax on all Fund distributions.
Distributions will be taxed in the same manner whether you receive the
distributions in cash or in additional shares of the Fund. Shareholders not
subject to tax on their income generally will not be required to pay any tax on
distributions.
Distributions that are derived from net long-term capital gains generally will
be taxed as long-term capital gains. Dividend distributions and short-term
capital gains generally will be taxed as ordinary income. The tax you pay on a
given capital gains distribution generally depends on how long the Fund held
the portfolio securities it sold. It does not depend on how long you held the
Fund shares.
Distributions are generally taxable in the year in which they are paid, with
one exception: distributions declared in October, November or December, but not
paid until January of the following year, are taxed as though they were paid on
December 31 of the year in which they were declared.
If a Fund invests in certain passive foreign investment companies (PFICs), it
will be subject to Federal income tax (and possibly additional interest
charges) on a portion of any excess distribution or gain from the disposition
of such shares, even if it distributes such income to its shareholders. If a
Fund elects to treat PFIC as a qualified electing fund (QEF) and the PFIC
furnishes certain financial information in the required form to such Fund, the
Fund will instead be required to include in income each year its allocable
share of the ordinary earnings and net capital gains of the QEF, regardless of
whether received, and such amounts will be subject to the various distribution
requirements described above. The Funds may also elect to mitigate the tax
effects of owning PFIC stock by making an annual mark-to-market election with
respect to PFIC shares.
Shareholders generally are required to report all Fund distributions on their
federal income tax returns. Each year the Fund will send you information
detailing the amount of ordinary income and capital gains paid to you for the
previous year.
Taxes On Sales Or Exchanges
If you sell shares of the Fund or exchange them for shares of another Munder
Fund, you generally will be subject to tax on any taxable gain. Taxable gain is
computed by subtracting your tax basis in the shares from the redemption
proceeds (in the case of a sale) or the value of the shares received (in the
case of an exchange). Because your tax basis depends on the original purchase
price and on the price at which any dividends may have been reinvested, you
should be sure to keep account statements so that you or your tax preparer will
be able to determine whether a sale will result in a taxable gain.
Other Considerations
If you buy shares of the Fund just before the Fund makes any distribution, you
will pay the full price for the shares and then receive back a portion of the
money you have just invested in the form of a taxable distribution.
By law, the Fund must withhold a portion of your distributions and redemption
proceeds to pay federal income taxes if you have not provided complete, correct
taxpayer information.
12
<PAGE>
Management
- --------------------------------------------------------------------------------
Investment Advisor
The Fund's investment advisor is Munder Capital Management, 480 Pierce Street,
Birmingham, Michigan 48009. As of July 31, 1999, the advisor and its affiliates
had approximately $55.1 billion in assets under management, of which $30.2
billion were invested in equity securities, $9.4 billion were invested in money
market or other short-term instruments, $9.0 billion were invested in other
fixed income securities, and $6.5 billion in non-discretionary assets.
The advisor provides overall investment management for the Fund, provides
research and credit analysis and is responsible for all purchases and sales of
portfolio securities.
The advisor is entitled to receive a fee equal to 1.00% annually of the average
daily net assets of the Fund.
The advisor may, from time to time, make payments to banks, broker-dealers or
other financial institutions for certain services to the Fund and/or its
shareholders, including sub-administration, sub-transfer agency and shareholder
servicing. The advisor may make such payments out of its own resources and
there are no additional costs to the Fund or its shareholders.
Portfolio Management
A committee of professional portfolio managers employed by the advisor makes
investment decisions for the Fund.
13
<PAGE>
For More Information
More information about the Fund is available free upon
request, including the following:
Statement of Additional Information
Provides more details about all of the funds and their policies. A current
Statement of Additional Information is on file with the Securities and Exchange
Commission and is incorporated by reference (is legally considered part of this
prospectus).
The Munder Funds, Inc.
SEC file number 811-7346
PROTECHY899
Investment Advisor Munder Capital Management
Distributed by: Funds Distributor, Inc.
To Obtain Information:
By telephone
Call 1-800-438-5789
By mail Write to:
The Munder Funds
480 Pierce Street
Birmingham, MI 48009
On the Internet Text-only versions of
fund documents can be viewed online
or downloaded from:
Securities and Exchange Commission
http://www.sec.gov
You can also obtain copies by visiting the Securities and Exchange Commission's
Public Reference Room in Washington, DC (phone 1-800-SEC-0330) or by sending
your request and a duplicating fee to the Securities and Exchange Commission's
Public Reference Section, Washington, DC 20549-6009.
You may also find more information about the Fund on the Internet at:
http://www.munderfunds.com
<PAGE>
Application
FOR NEW ACCOUNTS
[LOGO OF THE MUNDER FUNDS APPEARS HERE]
PLEASE MAIL YOUR COMPLETE APPLICATION (printed or typed)
ALONG WITH YOUR CHECK TO: Class Y Shares
The Munder Funds
c/o First Data Investor Services Group, Inc.
P.O. Box 60428
King of Prussia, PA 19406-0428
If you have any questions regarding this application, please telephone the
Transfer Agent at 1.800.438.5789
1. ACCOUNT REGISTRATION
________________________________________________________________________________
Name Social Security Number
________________________________________________________________________________
Joint Owner (if any) (If Joint Tenancy, use Social
Security Number of first joint owner)
OR
Uniform Transfer to Minor:
for:
- --------------------------------------------------------------------------------
Custodian Name (one custodian only) Minor's Name (one minor only)
________________________________________________________________________________
State (Custodian's State of Residence) Minor's Social Security Number
OR
[_] Trust [_] Corporation [_] Other (please specify)______________
________________________________________________________________________________
Trust/Corporation Name
________________________________________________________________________________
Trust Date Trust Identification Number
2. MAILING ADDRESS (address for reports, dividends, statements and
redemption proceeds)
________________________________________________________________________________
Street Apt.
________________________________________________________________________________
City State Zip Code Telephone Number
Non-Resident Alien: [_] Yes [_] No If Yes, Country of Residence____________
<PAGE>
3. INITIAL INVESTMENT
Minimum investment for class Y of $500,000. Please be sure to read the
prospectus carefully before investing or sending money. You may request an
additional prospectus by calling 1.800.438.5789.
Investment Amount
[_] Munder Future Technology Fund $______________
[_] By Check (Payable to The Munder Funds)
[_] By Wire. Account Number: _____________________________ (Account number
assigned by Bank from which assets were wired.)
4. DISTRIBUTION OPTION (check one. If none, "A" will be assigned)
[_] A. Reinvest dividends and capital gains in additional Fund shares.
[_] B. Pay dividends in cash; reinvest capital gains in additional Fund
shares.
[_] C. Pay dividends and capital gains in cash.
[_] D. Please send my: [_] Dividends [_] Dividends & Capital Gains (choose
one) directly to my checking/savings account.
Fill out banking information in Section 7
5. AUTOMATIC INVESTMENT PLAN (optional)
YES, I (we) wish to participate in the Automatic Investment Plan (AIP). I (We)
authorize First Data Investor Services Group, Inc. (First Data), The Munder
Funds' transfer agent, to invest automatically $________ ($50 minimum) for me
(us) on a [_] Monthly OR [_] Quarterly basis (please choose either the [_] 5th
or the [_] 20th of the month) and draw a bank draft in payment of each of these
investments against my (our) [_] Checking OR [_] Savings account. For the
purpose of verifying my (our) bank account number, I (we) have enclosed a blank
check or deposit slip marked void and have signed the bank authorization below.
________________________________________________________________________________
Name of Fund Checking/Savings Account Number ABA Number (Banking Routing
Number)
Fill out banking information in Section 7
6. TELEPHONE REDEMPTION & EXCHANGE AGREEMENT
Please check the box if you want this option.
[_] I (We) authorize First Data to act upon instructions received by telephone
from me (us) to redeem or to exchange shares of The Munder Funds.
1. I (We) relieve the Funds or First Data of any liability for the loss,
cost or expense for acting upon such instructions reasonably believed
to be from me (us).
2. I (We) assume responsibility for notifying the Funds within seven (7)
business days if a confirmation for the transaction is not received or
is incorrect.
3. If an exchange involves an initial investment into a Fund, the account
registration will carry the same registration as set forth above.
4. An exchange deemed to be the initial purchase of a Fund must meet the
minimum initial investment requirement of $500 per Fund unless the
shareholder is establishing an Automatic Investment Plan.
5. Redemption proceeds will be sent only to my account address of record.
________________________________________________________________________________
Name Name
<PAGE>
7. BANKING INFORMATION
To be completed with Section 4 (Distribution Option)
I(We) authorize The Munder Funds to deposit distributions into the following
[_] Checking [_] Savings Account
________________________________________________________________________________
Bank Name Address
________________________________________________________________________________
ABA Number (Bank Routing Number) Account Number Banking Account Registration
________________________________________________________________________________
Wiring Instructions
To be completed with Section 5 (Automatic Investment Plan)
Please note that your bank will clear and process each bank draft and will
include it with your regular statements. However, acceptance of this
authorization is conditional upon approval of your authorization by your bank,
which will allow First Data, the transfer agent for The Munder Funds, to act as
your agent with regard to the Automatic Investment Plan (AIP). The AIP will
automatically terminate without notice if any bank draft is not paid upon
presentation by First Data, to your bank. The AIP may be modified or terminated
at any time, upon thirty (30)-days written notice.
________________________________________________________________________________
Signature of Depositor Date Signature of Joint Depositor (if any) Date
. Please Staple Void Check or Deposit Slip Here .
8. AUTHORIZATIONS, CERTIFICATES AND SIGNATURES
By signing the application, I (we) hereby certify under the penalty of perjury
that the information on this application is true, complete and correct and that:
I (We) understand that this order is subject to acceptance by The Munder Funds.
I (We) agree that The Munder Funds, Funds Distributor, Inc., First Data, Munder
Capital Management or any of its affiliates, officers, directors or employees
will not be liable for any loss, expense or cost for acting upon instructions or
inquiries reasonably believed to be genuine. Shares of the Funds are not
insured or guaranteed by the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other agency. An investment in the Funds involves
investment risks, including the possible loss of principal.
I (We) represent that I am (we are) of legal age and capacity and have read the
Prospectus(es) for The Munder Funds selected, and agree to its (their) terms.
First Data, is hereby appointed agent to receive dividends and distributions for
automatic reinvestment unless otherwise directed in Section 4.
I (We) understand and acknowledge that a sales charge may be levied against the
dollar that I (we) invest in The Munder Funds. (See the Prospectus(es) for
reduced sales charge information.)
The Internal Revenue Service requires that all taxpayers provide their Taxpayer
Identification Numbers (Social Security Numbers) and sign in the space provided
below. Failure by non-exempt taxpayers to furnish us with the correct Taxpayer
Identification Number will result in withholding of 31% of all taxable dividends
paid and/or withholding on certain other payments (this is referred to as backup
withholding).
________________________________________________________________________________
Taxpayer Identification Number Name of Taxpayer Whose Number Appears Above
I also certify that this purchase is for personal investment purposes and the
shares acquired hereunder shall not be resold except through redemption by the
fund.
This purchase is being made for myself as outlined in the Fund's prospectus. I
agree to notify you in writing of any change in the foregoing and agree not to
purchase additional fund shares at net asset value unless I am entitled to do so
under the Fund's prospectus. I understand that the privilege to purchase fund
shares at a net asset value may be modified or terminated at any time.
I (we) understand that this order is subject to acceptance by The Munder Funds.
Please sign below exactly as the account is to be registered. Corporation, etc.
indicate titles:
________________________________________________________________________________
Signature of Owner Date Name (please print)
________________________________________________________________________________
Signature of Owner Date Name (please print)
________________________________________________________________________________
Munder Funds Approval (required) Date
<PAGE>
Taxpayer Identification:
I (the Investor) certify under penalties of perjury that:
(1) The Social Security Number or taxpayer identification number shown above is
correct and may be used for any custodial or trust account opened for me by
The Munder Funds, and
(2) I (the Investor) am not subject to backup withholding because:
(a) I am exempt from Backup Withholding
(b) I have not been notified by the Internal Revenue Service ("IRS") that
I am, as a result of failure to report all interest or dividends, or
(c) the IRS has notified me that I am no longer subject to backup
withholding.
The certification in this paragraph is required from all non-exempt persons to
prevent backup withholding of 31% of all taxable distributions and gross
redemptions proceeds under the Federal income tax law.
[_] Check here if you are subject to backup withholding or have not received a
notice from the IRS advising you that backup withholding has been
terminated.
I AM ELIGIBLE FOR CLASS Y SHARES BECAUSE I CERTIFY THAT I AM A/AN (must be
filled out):
[_] Investment Advisory client of Munder Capital Management __________________
Portfolio Manager
[_] Current director, trustee, officer or employee of Munder Capital Management,
the Fund or the Distribution; or
[_] A family member of the above _______________________________________________
Name of Munder Contact Relationship
[_] "Institutional inventor" as defined in the prospectus
[_] Customer of a financial institution that has entered into a shareholder
service agreement with the Munder Funds
____________________________________________________________________________
Institution Advisor's Name
[_] Other - please explain _____________________________________________________
I also certify that this purchase is for personal investment purposes and the
shares hereunder shall not be resold except through redemption by the fund.
This purchase is being made for myself as outlined in the Fund's prospectus. I
agree to notify you in writing of any change in the foregoing and agree not to
purchase additional fund shares at net asset value unless I am entitled to do so
under the Fund's prospectus. I understand that the privilege to purchase fund
shares at a net asset value may be modified or terminated at any time.
I (we) understand that this order is subject to acceptance by The Munder Funds.
Please sign below exactly as the account is to be registered. Corporation, etc.
indicate titles
________________________________________________________________________________
Signature of Owner Date Name (please print)
________________________________________________________________________________
Signature of Owner Date Name (please print)
________________________________________________________________________________
Munder Funds Approval (required) Date
<PAGE>
- --------------------------------------------------------------------------------
FOR DEALER USE ONLY
We hereby authorize First Data Investor Services Group, Inc., to act as our
agent in connection with transactions authorized by this Application and agree
to notify First Data Investor Services Group, Inc., of any purchase made under a
Letter of Intent or Right of Accumulation.
______________________________________________________________________________
Dealer's Name Main Office Address
______________________________________________________________________________
Representative's Name Branch # Rep #
______________________________________________________________________________
Branch Address Telephone #
______________________________________________________________________________
Authorized Signature of Dealer Title
- -------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Shares of The Munder Funds are not deposits or obligations of, or guaranteed or
endorsed by any bank, and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency. All
mutual fund shares involve certain investment risks, including the possible loss
of principal.
- --------------------------------------------------------------------------------
Distributor: Funds Distributor, Inc. APPTECHY 99
<PAGE>
MUNDER FUTURE TECHNOLOGY FUND
STATEMENT OF ADDITIONAL INFORMATION
AUGUST 25, 1999
The Munder Funds, Inc. currently offers a selection of fifteen investment
portfolios, one of which is The Munder Future Technology Fund (the "Fund") which
is discussed in this Statement of Additional Information (the "SAI"). The Fund's
investment advisor is Munder Capital Management.
This SAI, which has been filed with the Securities and Exchange Commission
(the "SEC"), provides supplementary information pertaining to all classes of
shares representing interests in the Fund. This SAI is not a prospectus, and
should be read only in conjunction with the Company's Prospectuses dated August
25, 1999. The contents of this SAI are incorporated by reference in the
Prospectuses in their entirety. A copy of each Prospectus may be obtained
through Funds Distributor, Inc. (the "Distributor"), or by calling
(800) 438-5789.
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other governmental agency.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
History and General Information............................................ 3
Fund Investments........................................................... 3
Investment Limitations..................................................... 10
Temporary Defensive Position............................................... 11
Management of the Fund..................................................... 12
Investment Advisory and Other Service Arrangements......................... 15
Portfolio Transactions..................................................... 17
Additional Purchase and Redemption Information............................. 18
Net Asset Value............................................................ 21
Performance Information.................................................... 21
Taxes...................................................................... 23
Additional Information Concerning Shares................................... 28
Other Information.......................................................... 29
Registration Statement..................................................... 29
Appendix A.................................................................A-1
</TABLE>
No person has been authorized to give any information or to make any
representations not contained in this SAI 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.
2
<PAGE>
HISTORY AND GENERAL INFORMATION
The Munder Funds, Inc. ("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. The Company was organized as a Maryland corporation on
November 18, 1992. The Fund is non-diversified.
The investment advisor of the Fund is Munder Capital Management (the
"Advisor"). The principal partners of the Advisor are Old MCM, Inc. ("Old MCM"),
Munder Group LLC, WAM Holdings, Inc. ("WAM") and WAM Holdings II, Inc. ("WAM
II"). Old MCM was founded in April 1985 as a Delaware corporation and was a
registered investment advisor. WAM and WAM II are indirect, wholly owned
subsidiaries of Comerica Incorporated which owns or controls approximately 88%
of the partnership interests in the Advisor.
Capitalized terms used in this SAI and not otherwise defined have the same
meanings as are given to them in each Prospectus.
FUND INVESTMENTS
The following supplements the information contained in each Prospectus
concerning the investment objectives and policies of the Fund.
Borrowing. The Fund is authorized to borrow money in an amount 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 their portfolio holdings
within three days to reduce the debt and restore the 300% asset coverage, even
though it may be disadvantageous from an investment standpoint to sell
securities at that time. Borrowed funds are subject to interest costs that may
or may not be offset by amounts earned on the borrowed funds. The Fund may also
be required to maintain minimum average balances in connection with such
borrowing or to pay a commitment or other fees to maintain a line of credit;
either of these requirements would increase the cost of borrowing over the
stated interest rate. 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 depositary receipts typically issued by a U.S.
bank or trust company which evidence ownership of underlying foreign securities
issued by a foreign corporation. Certain institutions issuing ADRs may not be
sponsored by the issuer. A non-sponsored depositary may not provide the same
shareholder information that a sponsored depositary is required to provide under
its contractual arrangements with the issuer.
Income and gains on such securities may be subject to foreign withholding
taxes. Investors should consider carefully the substantial risks involved in
securities of companies and governments of foreign nations, which are in
addition to the usual risks inherent in domestic investments. There may be less
publicly available information about foreign companies comparable to the reports
and ratings published about companies in the United States. Foreign companies
are not generally subject to uniform accounting, auditing and financial
reporting standards, and auditing practices and requirements may not be
comparable to those applicable to United States companies. Foreign markets have
substantially less trading 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 less regulation of stock exchanges, brokers, and
listed companies than in the United States. Such concerns are particularly
heightened for emerging markets and Eastern European countries.
3
<PAGE>
Investments in companies domiciled in developing countries may be subject
to potentially higher risks than investments in developed countries. These risks
include (i) less social, political and economic stability; (ii) the small
current size of the markets for such securities and the currently low or
nonexistent volume of trading, which result in a lack of liquidity and in
greater price volatility; (iii) certain national policies which may restrict a
Fund's investment opportunities, including restrictions on investment in issuers
or industries deemed sensitive to national interest; (iv) foreign taxation; (v)
the absence of developed legal structures governing private or foreign
investment or allowing for judicial redress for injury to private property; (vi)
the absence, until recently in certain Eastern European countries, of a capital
market structure or market-oriented economy; and (vii) the possibility that
recent favorable economic developments in Eastern Europe may be slowed or
reversed by unanticipated political or social events in such countries.
Investments in Eastern European countries may involve risks of
nationalization, expropriation and confiscatory taxation. The Communist
governments of a number of Eastern European countries expropriated large amounts
of private property in the past, in many cases without adequate compensation,
and there can be no assurance that such expropriation will not occur in the
future. In the event of such expropriation, the Fund could lose a substantial
portion of any investments it has made in the affected countries. Further, no
accounting standards exist in Eastern European countries. Finally, even though
certain Eastern European currencies may be convertible into United States
dollars, the conversion rates may be artificial rather than their actual market
values and they may be adverse to a 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.
Certain European currencies are being converted into the Euro. This conversion,
which is under way, is scheduled to be completed in the year 2002. However,
problems with the conversion process and delays could increase volatility in
world markets and affect European markets in particular. There is the
possibility of expropriation, nationalization or confiscatory taxation,
withholding and other foreign taxes on income or other amounts, foreign exchange
controls (which may include suspension of the ability to transfer currency from
a given country), default in foreign government securities, political or social
instability or diplomatic developments that could affect investments in
securities of issuers in foreign nations.
Foreign securities markets have different clearance and settlement
procedures, and in certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when assets of the Fund are uninvested and no return is earned
thereon. The inability of the Fund to make intended security purchases due to
settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of portfolio securities due to settlement
problems could result either in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the fund has entered into a contract to
sell the security, could result in possible liability to the purchaser.
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 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
4
<PAGE>
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 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, but not required, 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 currency 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
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.
Cash or liquid securities equal to the amount of the Fund's assets that
could be required to consummate forward contracts will be designated on the
records of the Fund's custodian except to the extent the contracts are
otherwise "covered." For the purpose of determining the adequacy of the
designated securities, the designated securities in the account will be valued
at market or fair value. If the market or fair value of such securities
declines, additional cash or securities will be designated daily so that the
value of the designated securities 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.
Futures Contracts and Related Options. The Fund may purchase and sell
futures contracts on interest-bearing securities or securities indices, and may
purchase and sell call and put options on futures contracts. For a detailed
description of futures contracts and related options, see Appendix B to this
SAI.
Illiquid Securities. The Fund may invest up to 15% of the value of its net
assets (determined at time of acquisition) in securities which are illiquid.
Illiquid securities would generally include securities for which there is a
limited trading market, repurchase agreements and time deposits with
notice/termination dates in excess of seven days, and certain securities which
are subject to trading restrictions because they are not registered under the
Securities Act of 1933, as amended (the "Act"). If, after the time of
acquisition, events cause this limit to be exceeded, the Fund will take steps to
reduce the aggregate amount of illiquid securities as soon as reasonably
practicable in accordance with the policies of the SEC.
5
<PAGE>
The Fund may invest in commercial obligations issued in reliance on the
"private placement" exemption from registration afforded by Section 4(2) of the
Act ("Section 4(2) paper"). The Fund may also purchase securities that are not
registered under the Act, but which can be sold to qualified institutional
buyers in accordance with Rule 144A under the Act, ("Rule 144A securities").
Section 4(2) paper is restricted as to disposition under the Federal securities
laws, and generally is sold to institutional investors who agree that they are
purchasing the paper for investment and not with a view to public distribution.
Any resale by the purchaser must be in an exempt transaction. Section 4(2) paper
normally is resold to other institutional investors through or with the
assistance of the issuer or investment dealers which make a market in the
Section 4(2) paper, thus providing liquidity. Rule 144A securities generally
must be sold only to other qualified institutional buyers. If a particular
investment in Section 4(2) paper or Rule 144A securities is not determined to be
liquid, that investment will be included within the Fund's limitation on
investment in illiquid securities. The Advisor will determine the liquidity of
such investments pursuant to guidelines established by the Company's Board of
Directors. It is possible that unregistered securities purchased by the Fund in
reliance upon Rule 144A could have the effect of increasing the level of the
Fund's illiquidity to the extent that qualified institutional buyers become, for
a period, uninterested in purchasing these securities.
Investment Company Securities. The Fund may invest in securities issued by
other investment companies. As a shareholder of another investment company, the
Fund would bear its pro rata portion of the other investment company's expenses,
including advisory fees. These expenses would be in addition to the expenses
each 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. 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 of purchase 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
6
<PAGE>
are determined by the Advisor at the time of purchase to be of comparable
quality to rated instruments that may be acquired by such Fund as previously
described.
The Fund may also purchase variable amount master demand notes which are
unsecured instruments that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate. Although the notes are
not normally traded and there may be no secondary market in the notes, the Fund
may demand payment of the principal of the instrument at any time. The notes are
not typically rated by credit rating agencies, but issuers of variable amount
master demand notes must satisfy the same criteria as set forth above for
issuers of commercial paper. If an issuer of a variable amount master demand
note defaulted on its payment obligation, the Fund might be unable to dispose of
the note because of the absence of a secondary market and might, for this or
other reasons, suffer a loss to the extent of the default. The Fund invests in
variable amount master notes only when the Advisor deems the investment to
involve minimal credit risk.
Non-Domestic Bank Obligations. Non-domestic bank obligations include
Eurodollar Certificates of Deposit ("ECDs"), which are U.S. dollar-denominated
certificates of deposit issued by offices of foreign and domestic banks located
outside the United States; Eurodollar Time Deposits ("ETDs"), which are U.S.
dollar-denominated deposits in a foreign branch of a U.S. bank or a foreign
bank; Canadian Time Deposits ("CTDs"), which are essentially the same as ETDs
except they are issued by Canadian offices of major Canadian banks; Schedule Bs,
which are obligations issued by Canadian branches of foreign or domestic banks;
Yankee Certificates of Deposit ("Yankee CDs"), which are U.S. dollar-denominated
certificates of deposit issued by a U.S. branch of a foreign bank and held in
the United States; and Yankee Bankers' Acceptances ("Yankee BAs"), which are
U.S. dollar denominated bankers' acceptances issued by a U.S. branch of a
foreign bank and held in the United States.
Options. The Fund may write covered call options, buy put options, buy call
options and write secured put options. For a detailed description of options,
see Appendix A of this SAI.
Repurchase Agreements. The Fund may agree to purchase securities from
financial institutions such as member banks of the Federal Reserve System, any
foreign bank or any domestic or foreign broker/dealer that is recognized as a
reporting government securities dealer, subject to the seller's agreement to
repurchase the securities 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 collateral 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 except with respect to
repurchase agreements secured by U.S. Government securities.
The repurchase price under repurchase agreements 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).
7
<PAGE>
Securities subject to repurchase agreements will be held, as applicable, by
the Company's custodian in the Federal Reserve/Treasury book-entry system or by
another authorized securities depository. 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 cash, U.S.
Government securities or other liquid securities designated on the books of the
Fund's custodian in an amount at least equal to the market value of the
securities, plus accrued interest, subject to the agreement.
Rights and Warrants. The Fund may purchase warrants, which are privileges
issued by corporations enabling the owners to subscribe to and purchase a
specified number of shares of the corporation at a specified price during a
specified period of time. Subscription rights normally have a short life span to
expiration. The purchase of warrants involves the risk that the Fund could lose
the purchase value of a warrant if the right to subscribe to additional shares
is not exercised prior to the warrant's expiration. Also, the purchase of
warrants involves the risk that the effective price paid for the warrant added
to the subscription price of the related security may exceed the value of the
subscribed security's market price such as when there is no movement in the
level of the underlying security.
Stock Index Futures, Options on Stock and Bond Indices and Options on Stock
and Bond Index Futures Contracts. The Fund may purchase and sell stock index
futures, options on stock and bond indices and options on stock and bond 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 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 index futures
contracts and may purchase and write call and put options on 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
8
<PAGE>
writing options directly on the underlying securities or indices. For example,
the Fund may purchase put options or write call options on stock and bond index
futures, rather than selling futures contracts, in anticipation of a decline in
general stock or bond market prices or purchase call options or write put
options on stock or bond index futures, rather than purchasing such futures, to
hedge against possible increases in the price of securities which the Fund
intends to purchase.
In connection with transactions in stock or bond index futures, stock or
bond index options and options on stock or bond index futures, the Fund will be
required to deposit as "initial margin" an amount of cash or short-term U.S.
Government securities equal to between 5% to 8% of the contract amount.
Thereafter, subsequent payments (referred to as "variation margin") are made to
and from the broker to reflect changes in the value of the option or futures
contract. 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. For a detailed description of futures contracts and related
options, see Appendix A of this SAI.
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 Government National Mortgage Association
("GNMA"), are supported by the full faith and credit of the U.S. Treasury.
Others, such as those of the Export-Import Bank of the United States, are
supported by the right of the issuer to borrow from the U.S. Treasury; and still
others, such as those of the Student Loan Marketing Association, are supported
only by the credit of the agency or instrumentality issuing the obligation. No
assurance can be given that the U.S. Government would provide financial support
to U.S. Government-sponsored instrumentalities if it is not obligated to do so
by law. Examples of the types of U.S. Government obligations that may be
acquired by the Funds include U.S. Treasury Bills, U.S. Treasury Notes and U.S.
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, GNMA, General Services
Administration, Student Loan Marketing Association, Central Bank for
Cooperatives, Federal Home Loan Mortgage Association, Federal Intermediate
Credit Banks and Maritime Administration.
Variable and Floating Rate Instruments. Debt instruments may be structured
to have variable or floating interest rates. Variable and floating rate
obligations purchased by the Fund may have stated maturities in excess of the
Fund's maturity limitation if the Fund can demand payment of the principal of
the instrument at least once during such period on not more than thirty days'
notice (this demand feature is not required if the instrument is guaranteed by
the U.S. Government or an agency thereof). These instruments may include
variable amount master demand notes that permit the indebtedness to vary in
addition to providing for periodic adjustments in the interest rates. The
Advisor will consider the earning power, cash flows and other liquidity ratios
of the issuers and guarantors of such instruments and, if the instrument is
subject to a demand feature, will continuously monitor their financial ability
to meet payment on demand. Where necessary to ensure that a variable or floating
rate instrument is equivalent to the quality standards applicable to the Fund,
the issuer's obligation to pay the principal of the instrument will be backed by
an unconditional bank letter or line of credit, guarantee or commitment to lend.
In determining average weighted portfolio maturity of the Fund, an
instrument will usually be deemed to have a maturity equal to the longer of the
period remaining until the next interest rate adjustment or the time the Fund
involved can recover payment of principal as specified in the instrument.
Variable rate U.S. Government obligations held by the Fund, however, will be
deemed to have maturities equal to the period remaining until the next interest
rate adjustment.
The absence of an active secondary market for certain variable and floating
rate notes could make it difficult to dispose of the instruments, and the Fund
could suffer a loss if the issuer defaulted or during periods that the Fund is
not entitled to exercise its demand rights.
Variable and floating rate instruments held by the Fund will be subject to
the Fund's limitation on illiquid investments when the Fund may not demand
payment of the principal amount within seven days absent a reliable trading
market.
9
<PAGE>
When-Issued Purchases and Forward Commitments (Delayed-Delivery
Transactions). When-issued purchases and forward commitments (known as 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 custodian will earmark cash or liquid portfolio securities
equal to the amount of the commitment. Normally, the custodian will earmark
portfolio securities to satisfy a purchase commitment, and in such a case the
Fund may be required subsequently to earmark additional assets in order to
ensure that the value of the account remains equal to the amount of the Fund's
commitments. It may be expected that the market value of the Fund's net assets
will fluctuate to a greater degree when it earmarks portfolio securities to
cover such purchase commitments than when it earmarks cash. Because the Fund's
liquidity and ability to manage its portfolio might be affected when it earmarks
cash or portfolio securities to cover such purchase commitments, the Advisor
expects that its commitments to purchase when-issued securities and forward
commitments will not exceed 25% of the value of the Fund's total assets absent
unusual market conditions.
The Fund will purchase securities on a when-issued or forward commitment
basis only with the intention of completing the transaction and actually
purchasing the securities. If deemed advisable as a matter of investment
strategy, however, the Fund may dispose of or renegotiate a commitment after it
is entered into, and may sell securities it has committed to purchase before
those securities are delivered to the Fund on the settlement date. In these
cases the Fund may realize a taxable capital gain or loss.
When the Fund engages in when-issued and forward commitment transactions,
it relies on the other party to consummate the trade. Failure of such party to
do so may result in the Fund's incurring a loss or missing an opportunity to
obtain a price considered to be advantageous.
The market value of the securities underlying a when-issued purchase or a
forward commitment to purchase securities, and any subsequent fluctuations in
their market value, are taken into account when determining the market value of
the Fund starting on the day the Fund agrees to purchase the securities. The
Fund does not earn interest on the securities it has committed to purchase until
they are paid for and delivered on the settlement date.
Yields and Ratings. The yields on certain obligations, including the money
market instruments in which the Fund may invest (such as commercial paper and
bank obligations), are dependent on a variety of factors, including general
money market conditions, conditions in the particular market for the obligation,
the financial condition of the issuer, the size of the offering, the maturity of
the obligation and the ratings of the issue. The ratings of S&P, Moody's, Duff &
Phelps Credit Rating Co., Thomson Bank Watch, Inc., Fitch IBCA, Inc. and other
nationally recognized statistical rating organizations represent their
respective opinions as to the quality of the obligations they undertake to rate.
Ratings, however, are general and are not absolute standards of quality.
Consequently, obligations with the same rating, maturity and interest rate may
have different market prices.
Subsequent to its purchase by the Fund, a rated security may cease to be
rated or its rating may be reduced below the minimum rating required for
purchase by the Fund. The Board of Directors or the Advisor, pursuant to
guidelines established by the Board, will consider such an event in determining
whether the Fund involved should continue to hold the security in accordance
with the interests of the Fund and applicable regulations of the SEC.
INVESTMENT LIMITATIONS
The Fund is subject to the investment limitations enumerated in this
section which may be changed with respect to the Fund 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:
10
<PAGE>
1. Invest more than 25% of its total assets in any one industry (i)
provided that securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities are not considered to represent
industries; (ii) except that the Fund will invest more than 25% of its
total assets in the technology industry;
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 borrowed under
clause (i)) not exceeding 33 1/3% of its total assets;
3. Pledge, mortgage or hypothecate its assets other than to secure
borrowings permitted by investment limitation 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;
or
9. Invest in commodities or commodity futures contracts, provided that
this limitation shall not prohibit the purchase or sale by the Fund of
forward currency contracts, financial futures contracts and options on
financial futures contracts, and options on securities and on
securities, foreign currencies and on securities indices, as permitted
by the Fund's prospectus.
Additional investment restrictions adopted by the Fund, which may be
changed by the Board of Directors, provide that the Fund may not:
1. Invest more than 15% of its net assets (taken at market value at the
time of purchase) in illiquid securities;
2. With respect to 50% of the Fund's assets, invest more than 5% of the
Fund's assets (taken at market value at the time of purchase) in the
outstanding voting securities of any single issuer or own more than
10% of the outstanding voting securities of any single issuer;
11
<PAGE>
3. Purchase or sell interests in oil, gas or other mineral exploration or
development plans or leases; or
4. Invest in other investment companies except as permitted under the
1940 Act.
If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in the value of
the Fund's investments will not constitute a violation of such limitation,
except that any borrowing by the Fund that exceeds the fundamental investment
limitations stated above must be reduced to meet such limitations within the
period required by the 1940 Act (currently three days). Otherwise, the Fund may
continue to hold a security even though it causes the Fund to exceed a
percentage limitation because of fluctuation in the value of the Fund's assets.
TEMPORARY DEFENSIVE POSITION
During periods of unusual economic or market conditions or for temporary
defensive purposes or liquidity, the Fund may invest without limit in cash and
in U.S. dollar-denominated high quality money market and other short-term
instruments. These investments may result in a lower yield than would be
available from investments with a lower quality or longer term.
MANAGEMENT OF THE FUND
The directors and executive officers of the Company, and their business
addresses and principal occupations during the past five years, are:
<TABLE>
<CAPTION>
Principal Occupation
Name, Address and Age Positions with Company+ During Past Five Years
- --------------------- ----------------------- ----------------------
<S> <C> <C>
Charles W. Elliott Director and Chairman of the Board Senior Advisor to the President,
1024 Essex Circle of Directors Western Michigan University (July
Kalamazoo, MI 49008 1995 through December 1998);
Age: 67 Executive Vice President,
Administration & Chief Financial
Officer, Kellogg Company (January
1987 through June 1995). Board of
Directors, Steelcase Financial
Corporation; Board of Directors,
Enesco Group.
John Rakolta, Jr. Director and Vice Chairman of the Chairman and Chief Executive
1876 Rathmor Board of Directors Officer, Walbridge Aldinger Company
Bloomfield Hills, MI 48304 (construction company).
Age: 52
Thomas B. Bender Director Partner, Financial & Investment
5033 Wood Ridge Road Management Group.
Glen Arbor, MI 49636
Age: 66
David J. Brophy Director Professor, University of Michigan.
1025 Martin Place Director, River Place Financial
Ann Arbor, MI 48104 Corporation.
Age: 63
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Dr. Joseph E. Champagne Director Dean, University Center, Macomb
319 East Snell Road College (since September 1997);
Rochester, MI 48306 Corporate and Executive Consultant
Age: 61 (since September 1993); Chancellor,
Lamar University (September 1994 to
September 1995). Chairman of Board
of Directors, Ross Controls of
Troy, Michigan.
Thomas D. Eckert Director President and Chief Executive
10726 Falls Pointe Drive Officer, Capital Automotive REIT
Great Falls, VA 22066 (real estate investment trust
Age: 51 specializing in retail automotive
properties) (since November 1997);
President and Chief Operating
Officer, Mid-Atlantic Region
Pulte Home Corporation (developer
of residential land and
construction of housing units)
(1983 to 1997); Director, Celotex
Corporation (building products
manufacturer).
Lee P. Munder* Director and President Chairman of the Advisor (since
1029 N. Ocean Blvd. February 1998); Chief Executive
Palm Beach, FL 33480 Officer of the Advisor (1995 to
Age: 54 1998); Chief Executive Officer,
World Asset Management (January
1995 to December 1997); Chief
Executive Officer, Old MCM
(predecessor of Advisor) (since
February 1985); Director, LPM
Investment Services, Inc.
("LPM"); Director, Capital
Automotive REIT.
Terry H. Gardner Vice President, Vice President and Chief Financial
480 Pierce Street Chief Financial Officer, Officer of the Advisor (since
Suite 300 Treasurer and Secretary 1993), Vice President and Chief
Birmingham, MI 48009 Financial Officer, Old MCM (since
Age: 38 1993); Secretary, LPM (since June
1993).
Paul Tobias Vice President Chief Executive Officer of the
480 Pierce Street Advisor (since February 1998);
Suite 300 Chief Operating Officer of the
Birmingham, MI 48009 Advisor (since April 1995);
Age: 48 Executive Vice President of the
Advisor (April 1995 to February
1998); Executive Vice President,
Comerica, Inc. (October 1990 to
April 1995).
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Gerald Seizert Vice President Chief Executive Officer of the
480 Pierce Street Advisor (since February 1998);
Suite 300 Chief Investment Officer/Equities
Birmingham, MI 48009 of the Advisor (since April 1995);
Age: 47 Executive Vice President of the
Advisor (April 1995 to February
1998); Managing Director (1991 to
1995), Director (1992 to 1995), and
Vice President (1984 to 1991) of
Loomis, Sayles and Company, L.P.
(investment counselor).
Elyse G. Essick Vice President Vice President and Director of
480 Pierce Street Communications and Client Services
Suite 300 Group of the Advisor (since
Birmingham, MI 48009 January 1995).
Age: 41
James C. Robinson Vice President Executive Vice President and Chief
480 Pierce Street Investment Officer/Fixed Income of the
Suite 300 Advisor (since January 1995).
Birmingham, MI 48009
Age: 38
Leonard J. Barr Vice President Vice President and Director of Core
480 Pierce Street Equity Research of the Advisor
Suite 300 (since January 1995); Director and
Birmingham, MI 48009 Senior Vice President, Old MCM (since
Age: 55 1988); Director of LPM (since June 1995).
Ann F. Putallaz Vice President Vice President and Director of
480 Pierce Street Retirement Services Group of the Advisor
Suite 300 (since January 1995).
Birmingham, MI 48009
Age: 54
Therese Hogan Assistant Secretary Director, State Regulation
101 Federal Street Department, First Data Investor
Boston, MA 02110 Services Group (since June 1994).
Age: 37
Libby Wilson Assistant Secretary Director of Mutual Fund Operations of the
480 Pierce Street Advisor (since July 1999); Global Portfolio Client
Suite 300 Associate of Invesco Global Asset Management
Birmingham, MI 48009 (investment advisor) (March 1999 to July 1999)
Age: 30 Mutual Funds Operations Manager of the Advisor;
(May 1996 to March 1999); Mutual Funds Operations
Administrator of the Advisor (March 1993 to May 1996).
Mary Ann Shumaker Assistant Secretary Associate General Counsel of the
480 Pierce Street Advisor (since July 1997);
Suite 300 Counsel, Miro Weiner & Kramer
Birmingham, MI 48009 (1991 to 1997).
Age: 34
</TABLE>
- --------------------
+ Individual holds same position with The Munder Funds Trust (the "Trust"),
Framlington Funds Trust ("Framlington") and St. Clair Funds, Inc.
("St. Clair") each a registered investment company.
* "Interested person" of the Company, as defined in the 1940 Act.
Directors who are not interested persons of the Company and St. Clair, and
Trustees who are not interested persons of the Trust and Framlington, receive an
aggregate fee from the Company, the Trust, St. Clair and Munder Framlington for
service on those organizations' respective Boards, comprised of an annual
retainer fee of $35,000 and a fee of $3,000 for each Board meeting attended; and
are reimbursed for all out-of-pocket expenses relating to attendance at such
meetings.
The following table summarizes the compensation paid by the Trust,
Framlington, the Company and St. Clair to their respective Trustees/Directors
for the year ended June 30, 1999.
14
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Charles W. Elliot John Rakolta, Jr. Thomas B. David J. Dr. Joseph E. Thomas D.
Chairman Vice Chairmanm Bender Brophy Champagne Eckert
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggregate Compensation
from the Company
(comprised of 16 funds) $ 8,908 $ 8,908 $ 8,908 $ 8,908 $ 8,908 $ 8,908
- --------------------------------------------------------------------------------------------------------------------------------
Aggregate Compensation
from the Trust
(comprised of 14 funds) $29,448 $29,448 $29,448 $29,448 $29,448 $29,448
- --------------------------------------------------------------------------------------------------------------------------------
Aggregate Compensation
from Munder Framlington
(comprised of 4 funds) $ 713 $ 713 $ 713 $ 713 $ 713 $ 713
- --------------------------------------------------------------------------------------------------------------------------------
Aggregate Compensation
from St. Clair
(comprised of 11 funds) $ 931 $ 931 $ 931 $ 931 $ 931 $ 931
- --------------------------------------------------------------------------------------------------------------------------------
Pension Retirement
Benefits Accrued as
Part of Fund Expenses None None None None None None
- --------------------------------------------------------------------------------------------------------------------------------
Estimated Annual
Benefits upon Retirement None None None None None None
- --------------------------------------------------------------------------------------------------------------------------------
Total from the Fund
Complex $40,000 $40,000 $40,000 $40,000 $40,000 $40,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
No officer, director or employee of the Advisor, Comerica Incorporated
("Comerica"), the Custodian, the Distributor, the Administrator or the Transfer
Agent currently receives any compensation from the Trust, Framlington or the
Company. As of August 1, 1999, the Directors and officers of the Company, as a
group, owned less than 1% of all classes of outstanding shares of the Fund.
INVESTMENT ADVISORY AND OTHER SERVICE ARRANGEMENTS
Investment Advisor. The Advisor is Munder Capital Management, a Delaware
general partnership. The general partners of the Advisor are WAM, WAM II, Old
MCM and Munder Group LLC. WAM and WAM II 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.
The Investment Advisory Agreement (the "Advisory Agreement") between the
Company on behalf of the Fund and the Advisor has been approved by the Board of
Directors and by the shareholders of the Fund.
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. 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.
The Advisory Agreement will continue in effect for a period of two years
from its effective date. If not sooner terminated, the Advisory Agreement will
continue in effect for successive one year periods thereafter, provided that
each continuance is specifically approved annually by (a) the vote of a majority
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 such approval, and (b) either (i) the vote
of a majority of the outstanding voting securities of the affected Fund, or (ii)
the vote of a majority of the Board of Directors. The Advisory Agreement is
terminable with respect to the Fund by vote of the Board of Directors, or by the
holders of a majority of the outstanding voting securities of the Fund, at any
time without penalty, on 60 days' written notice to the Advisor. The Advisor may
also terminate its advisory relationship with respect to the Fund without
penalty on 90 days' written notice to the Company, as applicable. The Advisory
Agreement terminates automatically in the event of its assignment (as defined in
the 1940 Act).
15
<PAGE>
For the advisory services provided and expenses assumed by with regard to
the Fund, the Advisor has agreed to a fee from the Fund computed daily and
payable monthly at the annual rate of 1.00% of the average daily net assets of
the Fund.
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,
Boston, Suite 1300, Massachusetts 02109.
Distribution Services Arrangements - Class A, Class B and Class II Shares.
The Fund has adopted a Service 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 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 Service and Distribution Plans with respect to its Class B and
Class II Shares, pursuant to which it uses its assets to finance activities
relating to the distribution of its shares to investors and provision of certain
shareholder services. Under the Service and Distribution Plans for Class B and
Class II Shares, the Distributor is paid an annual service fee of up to 0.25% of
the value of average daily net assets of the Class B and Class II Shares of the
Fund and an annual distribution fee at the rate of up to 0.75% of the value of
average daily net assets of the Class B and Class II Shares of the Fund.
Under the terms of the Service Plan and 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 Directors who are not interested persons of the
Company, as applicable, and who have no direct or indirect financial interest in
the operation of that Plan (the "Non-Interested Plan Directors"). The Plans may
not be amended to increase the amount to be spent for the services provided by
the Distributor without shareholder approval, and all amendments of the Plans
also must be approved by the Directors in the manner described above. Each Plan
may be terminated at any time, without penalty, by vote of a majority of the
Non-Interested Plan Directors or by a vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the relevant class of the Fund
on not more than 30 days' written notice to any other party to the Plan.
Pursuant to each Plan, the Distributor will provide the Board of Directors
periodic reports of amounts expended under the Plan and the purpose for which
such expenditures were made.
The Directors have determined that the Plans will benefit the Company and
its respective shareholders by (i) providing an incentive for broker or bank
personnel to provide continuous shareholder servicing after the time of sale;
(ii) retaining existing accounts; (iii) facilitating portfolio management
flexibility through continued cash flow into the Fund; and (iv) maintaining a
competitive sales structure in the mutual fund industry.
With respect to Class B and Class II Shares of the Fund, the Distributor
expects to pay sales commissions to dealers authorized to sell the Fund's Class
B and Class II 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 Plan. In addition, the Advisor may use its own resources to make
payments to the Distributor or dealers authorized to sell the Fund's shares to
support their sales efforts.
Administrator. State Street Bank and Trust Company ("State Street" or the
"Administrator") located at 225 Franklin Street, Boston, Massachusetts, 02110,
serves as administrator for the Company pursuant to an administration agreement
(the "Administration Agreement"). State Street has agreed to maintain office
facilities for the Company; oversee the computation of 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. 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.
16
<PAGE>
The Administration Agreement provides that the Administrator performing
services thereunder shall not be liable under the Agreement except for its bad
faith, negligence or willful misconduct in the performance of its duties and
obligations thereunder.
Custodian. State Street serves as the custodian (the "Custodian") to the
Fund pursuant to a custodian agreement (the "Custodian Contract") among the
Custodian and the Company. State Street is also the 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 located in
foreign countries with respect to the custody of such securities. Under the
Custodian Contract, State Street (i) maintains a separate account in the name of
each 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.
Transfer and Dividend Disbursing Agent. First Data Investor Services Group,
Inc. ("Investor Services Group" or the "Transfer Agent") located at 4400
Computer Drive, Westborough, Massachusetts 01581 serves as the transfer and
dividend disbursing agent for the Fund pursuant to 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 each Fund to
its record owners, including reports to shareholders, dividend and distribution
notices and proxy materials for its meetings of shareholders, (iii) maintains
shareholder accounts, (iv) responds to correspondence by shareholders of the
Fund and (v) makes periodic reports to the Board of Directors concerning the
operations of the Fund.
Other Information Pertaining to Administration, Custodian and Transfer
Agency Agreements. Except as noted in this SAI the Fund's service contractors
bear all expenses in connection with the performance of their services and the
Fund bears the expenses incurred in their operations. These expenses include,
but are not limited to, fees paid to the Advisor, Administrator, Custodian, and
Transfer Agent; fees and expenses of officers and Board of Directors; taxes;
interest; legal and auditing fees; brokerage fees and commissions; certain fees
and expenses in registering and qualifying 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; and the expense of using independent pricing services. 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 determines to be fair and equitable. The
Advisor, Administrator, Custodian and Transfer Agent may voluntarily waive all
or a portion of their respective fees from time to time.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board of Directors, the Advisor,
as the case may be, makes decisions with respect to and places orders for all
purchases and sales of portfolio securities for the Fund.
Transactions on U.S. stock exchanges involve the payment of negotiated
brokerage commissions. On exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers. Transactions on foreign
stock exchanges involve payment for brokerage commissions which are generally
fixed.
Over-the-counter issues, including corporate debt and government
securities, are normally traded through dealers on a "net" basis (i.e., without
commission), or directly with the issuer. With respect to over-the-counter
transactions, the Advisor, as the case may be, will normally deal directly with
dealers who make a market in the instruments 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.
17
<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, as the
case may be, 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,
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 any securities while the Advisor or any
affiliated person (as defined in the 1940 Act) is a member of any underwriting
or selling group for such securities except pursuant to procedures adopted by
the Company's Board of Directors in accordance with Rule 10f-3 under the 1940
Act.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Purchases. As described in the Prospectuses, shares of the Fund may be
purchased in a number of different ways. Such alternative sales arrangements
permit an investor to choose the method of purchasing shares that is most
beneficial depending on the amount of the purchase, the length of time the
investor expects to hold shares and other relevant circumstances. An investor
may place orders directly through the Transfer Agent or the Distributor or
through arrangements with his/her authorized broker.
Retirement Plans. Shares of the Fund may be purchased in connection with
various types of tax deferred retirement plans, including individual retirement
accounts ("IRAs"), qualified plans, deferred compensation for
18
<PAGE>
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. 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. The redemption price for Fund shares is the net asset value
next determined after receipt of the redemption request in proper order. The
redemption proceeds will be reduced by the amount of any applicable contingent
deferred sales charge ("CDSC").
Contingent Deferred Sales Charge - Class B Shares. Class B Shares redeemed
within six years of purchase are subject to a CDSC. The CDSC is based on the
original net asset value at the time of investment or the net asset value at the
time of redemption, whichever is lower.
The CDSC Schedule for Class B Shares of Funds of the Trust purchased before
June 27, 1995 is set forth below. The Prospectuses describe the CDSC Schedule
for Class B Shares of Funds of the Trust purchased after June 27, 1995.
Class B Shares of Funds of the Trust
Purchased on or before June 27, 1995
<TABLE>
<CAPTION>
Redemption During CDSC
- ------------------------------------------------------------------------------------
<S> <C>
1st Year Since Purchase........................................................4.00%
2nd Year Since Purchase........................................................4.00%
3rd Year Since Purchase........................................................3.00%
4th Year Since Purchase........................................................3.00%
5th Year Since Purchase........................................................2.00%
6th Year Since Purchase........................................................1.00%
</TABLE>
CDSC Waivers - Class B Shares of Funds of the Trust Purchased on or before
June 27, 1995. The CDSC will be waived with respect to Class B Shares of Funds
of the Trust 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 Funds of the Company 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 Funds of the Company 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;
19
<PAGE>
(2) redemptions by the officers, directors, and employees of the Advisor
or the Distributor and such persons' immediate families;
(3) dealers or brokers who have a sales agreement with the Distributor,
for their own accounts, or for retirement plans for their employees or
sold to registered representatives or full time employees (and their
families) that certify to the Distributor at the time of purchase that
such purchase is for their own account (or for the benefit of their
families);
(4) involuntary redemptions effected pursuant to the Fund's right to
liquidate shareholder accounts having an aggregate net asset value of
less than $250; and
(5) redemptions the proceeds of which are reinvested in the Fund within 90
days of the redemption.
Contingent Deferred Sales Charge - Class A Shares. Class A Shares of Funds
of the Trust 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 Funds of the Trust purchased on or before June 27, 1995 that
are redeemed will not be subject to the CDSC to the extent that the value of
such shares represents: (1) reinvestment of dividends or other distributions;
(2) Class A Shares redeemed more than two years after their purchase; (3) a
minimum required distribution made in connection with IRA or other retirement
plans following attainment of age 59 1/2; or (4) total or partial redemptions
made within one year following the death or disability of a shareholder or
registered joint owner.
No CDSC is imposed to the extent that the current net asset value of the
shares redeemed does not exceed (a) the current net asset value of shares
purchased through reinvestment of dividends or capital gain distributions plus
(b) the current net asset value of shares purchased more than one year prior to
the redemption, plus (c) increases in the net asset value of the shareholder's
shares above the purchase payments made during the preceding one year.
The holding period of Class A 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 Funds of the Company, the Funds of Framlington 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 Redemption Information. Redemption proceeds are normally paid in
cash; however, the Fund may pay the redemption price in whole or part by a
distribution in kind of securities from the portfolio of the Fund, in lieu of
cash, in conformity with applicable rules of the SEC. If shares are redeemed in
kind, the redeeming shareholder might incur transaction costs in converting the
assets into cash. The Fund is obligated to redeem shares solely in cash up to
the lesser of $250,000 or 1% of its net assets during any 90-day period for any
one shareholder.
The Fund reserves the right to suspend or postpone redemptions during any
period when: (i) trading on the New York Stock Exchange (the "NYSE") is
restricted by applicable rules and regulations of the SEC; (ii) the NYSE is
closed other than for customary weekend and holiday closings; (iii) the SEC has
by order permitted such suspension or postponement for the protection of the
shareholders; or (iv) an emergency, as determined by the SEC, exists, making
disposal of portfolio securities or valuation of net assets of 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 $250; provided that involuntary redemptions
will not result from fluctuations in the value of an investor's shares. A
20
<PAGE>
notice of redemption, sent by first-class mail to the investor's address of
record, will fix a date not less than 30 days after the mailing date, and shares
will be redeemed at the net asset value at the close of business on that date
unless sufficient additional shares are purchased to bring the aggregate account
value up to $250 or more. A check for the redemption proceeds payable to the
investor will be mailed to the investor at the address of record.
Exchanges. In addition to the method of exchanging shares described in the
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, Distributor and Transfer Agent reserve the right at any time to
suspend or terminate the expedited exchange procedure or to impose a fee for
this service. During periods of unusual economic or market changes, shareholders
may experience difficulties or delays in effecting telephone exchanges. Neither
the Fund 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
The net asset value per share of the Fund for the purpose of pricing
purchase and redemption orders is determined as of the close of regular trading
hours on the NYSE (currently 4:00 p.m., Eastern time) on each business day.
Securities traded on a national securities exchange or on NASDAQ for which there
were no sales on the date of valuation and securities traded on other over-the-
counter markets, including listed securities for which the primary market is
believed to be over-the-counter, are valued at the mean between the most
recently quoted bid and asked prices. Options will be valued at market value or
fair value if no market exists. Futures contracts will be valued in like manner,
except that open futures contract sales will be valued using the closing
settlement price or, in the absence of such a price, the most recently quoted
asked price. Restricted securities and securities and assets for which market
quotations are not readily available are valued at fair value by the Advisor
under the supervision of the Board of Directors. Debt securities with remaining
maturities of 60 days or less are valued at amortized cost, unless the Board of
Directors determines that such valuation does not constitute fair value at that
time. Under this method, such securities are valued initially at cost on the
date of purchase (or the 61st day before maturity).
In determining the approximate market value of portfolio investments, the
Company may employ outside organizations, which may use matrix or formula
methods that take into consideration market indices, matrices, yield curves and
other specific adjustments. This may result in the securities being valued at a
price different from the price that would have been determined had the matrix or
formula methods not been used. All cash, receivables and current payables are
carried on the Company's books at their face value. Other assets, if any, are
valued at fair value as determined in good faith under the supervision of the
Board members.
In-Kind Purchases. Payment for shares may, in the discretion of the
Advisor, be made in the form of securities that are permissible investments for
the Fund as described in the Prospectuses. For further information about this
form of payment please contact the Transfer Agent. In connection with an in-kind
securities payment, the Fund will require, among other things, that the
securities (a) meet the investment objectives and policies of the Fund; (b) are
acquired for investment and not for resale; (c) are liquid securities that are
not restricted as to transfer either by law or liquidity of markets; (d) have a
value that is readily ascertainable by a listing on a nationally recognized
securities exchange; and (e) are valued on the day of purchase in accordance
with the pricing methods used by the Fund and that the Fund receive satisfactory
assurances that (i) it will have good and marketable title to the securities
received by it; (ii) that the securities are in proper form for transfer to the
Fund; and (iii) adequate information will be provided concerning the basis and
other tax matters relating to the securities.
21
<PAGE>
PERFORMANCE INFORMATION
Yield. The Fund's 30-day (or one month) standard yield is calculated for
the Fund in accordance with the method prescribed by the SEC for mutual funds:
YIELD = 2 [( a-b + 1)/6/ - 1]
---
cd
Where:
a = dividends and interest earned by a Fund during the period;
b = expenses accrued for the period (net of reimbursements and waivers);
c = average daily number of shares outstanding during the period entitled
to receive dividends;
d = maximum offering price per share on the last day of the period.
For the purpose of determining interest earned on debt obligations
purchased by the Fund at a discount or premium (variable "a" in the formula),
the Fund computes the yield to maturity of such instrument based on the market
value of the obligation (including actual accrued interest) at the close of
business on the last business day of each month, or, with respect to obligations
purchased during the month, the purchase price (plus actual accrued interest).
Such yield is then divided by 360 and the quotient is multiplied by the market
value of the obligation (including actual accrued interest) in order to
determine the interest income on the obligation for each day of the subsequent
month that the obligation is in the portfolio. It is assumed in the above
calculation that each month contains 30 days. The maturity of a debt obligation
with a call provision is deemed to be the next call date on which the obligation
reasonably may be expected to be called or, if none, the maturity date. For the
purpose of computing yield on equity securities held by the Fund, dividend
income is recognized by accruing 1/360 of the stated dividend rate of the
security for each day that the security is held by the Fund.
Interest earned on tax-exempt obligations that are issued without original
issue discount and have a current market discount is calculated by using the
coupon rate of interest instead of the yield to maturity. In the case of tax-
exempt obligations that are issued with original issue discount but which have
discounts based on current market value that exceed the then-remaining portion
of the original issue discount (market discount), the yield to maturity is the
imputed rate based on the original issue discount calculation. On the other
hand, in the case of tax-exempt obligations that are issued with original issue
discount but which have the discounts based on current market value that are
less than the then-remaining portion of the original issue discount (market
premium), the yield to maturity is based on the market value.
With respect to mortgage or other receivables-backed debt obligations
purchased at a discount or premium, the formula generally calls for amortization
of the discount or premium. The amortization schedule will be adjusted monthly
to reflect changes in the market value of such debt obligations. Expenses
accrued for the period (variable "b" in the formula) include all recurring fees
charged by the Fund to all shareholder accounts in proportion to the length of
the base period and the Fund's mean (or median) account size. Undeclared earned
income will be subtracted from the offering price per share (variable "d" in the
formula). The Fund's maximum offering price per share for purposes of the
formula includes the maximum sales charge imposed -- currently 5.50% of the per
share offering price for Class A Shares of the Fund.
Total Return. The Fund that advertises its "average annual total return"
computes such return by determining the average annual compounded rate of return
during specified periods that equates the initial amount invested to the ending
redeemable value of such investment according to the following formula:
P (1 + T)/n/ = ERV
Where:
P = hypothetical initial payment of $1,000;
T = average annual total return;
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n = period covered by the computation, expressed in years; and
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the 1, 5 or 10 year (or other) periods at the end of the
applicable period (or a fractional portion thereof).
The Fund that advertises its "aggregate total return" computes such returns
by determining the aggregate compounded rates of return during specified periods
that likewise equate the initial amount invested to the ending redeemable value
of such investment. The formula for calculating aggregate total return is as
follows:
(ERV) - 1
-----
Aggregate Total Return = P
The calculations are made assuming that (1) all dividends and capital gain
distributions are reinvested on the reinvestment dates at the price per share
existing on the reinvestment date, (2) all recurring fees charged to all
shareholder accounts are included, and (3) for any account fees that vary with
the size of the account, a mean (or median) account size in the Fund during the
periods is reflected. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment after deduction of all non-recurring charges at the end of the
measuring period. The 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 currently 5.50% of the per share offering price for Class A Shares of the
Fund; and the Fund's load adjusted average annual total return and load adjusted
aggregate total return quotations for Class B Shares will reflect any applicable
CDSC; provided that the Fund may also advertise total return data without
reflecting any applicable CDSC sales charge imposed on the purchase of Class A
Shares or Class B Shares in accordance with the views of the SEC. Quotations
which do not reflect the sales charge will, of course, be higher than quotations
which do.
The performance of any investment is generally a function of portfolio
quality and maturity, type of investment and operating expenses.
From time to time, in advertisements or in reports to shareholders, a
Fund's yields or total returns may be quoted and compared to those of other
mutual funds with similar investment objectives or compared to stock or other
relevant indices.
TAXES
The following summarizes certain additional Federal and state income 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 Funds or their shareholders, and the
discussion here and in the applicable Prospectus is not intended as a substitute
for careful tax planning. This discussion is based upon present provisions of
the Internal Revenue Code of 1986, as amended (the "Internal Revenue 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 to be taxed separately as a
regulated investment company under SubChapter M of the Internal Revenue 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 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 Internal Revenue Code that are described
below. Distributions of investment company taxable income and net tax-exempt
interest income made during the taxable
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<PAGE>
year or, under specified circumstances, within twelve months after the close of
the taxable year will satisfy the Distribution Requirement.
In addition to satisfying the Distribution Requirement, the Fund must
derive with respect to a taxable year at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans and gains
from the sale or other disposition of stock or securities or foreign currencies,
or from other income derived with respect to its business of investing in such
stock, securities, or currencies (the "Income Requirement"). Interest (including
"original issue discount" and "accrued market discount") received by the Fund at
maturity or on disposition of a security held for less than three months will
not be treated (in contrast to other income which is attributable to realized
market appreciation) as gross income from the sale or other disposition of
securities held for less than three months for this purpose.
In addition to the foregoing requirements, at the close of each quarter of
its taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Fund has
not invested more than 5% of the value of its total assets in securities of such
issuer and as to which the Fund does not hold more than 10% of the outstanding
voting securities of such issuer) and no more than 25% of the value of the
Fund's total assets may be invested in the securities of any one issuer (other
than U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses.
Distributions of net investment income received by the Fund from
investments in debt securities and any net realized short-term capital gains
distributed by a Fund will be taxable to shareholders as ordinary income and
will not be eligible for the dividends-received deduction for corporations.
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 a shareholder has held his
or her 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 gain. 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 Internal Revenue
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
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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 made. To
prevent application of the excise tax, the Fund intends to make its
distributions in accordance with the calendar year distribution requirement.
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.
The Company will be required in certain cases to withhold and remit to the
United States Treasury 31% of taxable distributions, including gross proceeds
realized upon sale or other dispositions paid to any shareholder (i) who has
provided an incorrect tax identification number or no number at all, (ii) who is
subject to backup withholding by the Internal Revenue Service for failure to
report the receipt of taxable interest or dividend income properly, or (iii) who
has failed to certify that he is not subject to backup withholding or that he is
an "exempt recipient."
Disposition of Shares. Upon a redemption, sale or exchange of his or her
shares, a shareholder will realize a taxable gain or loss depending upon his or
her basis in the shares. Such gain or loss will be treated as capital gain or
loss if the shares are capital assets in the shareholder's hands and will be
long-term or short-term, generally, depending upon the shareholder's holding
period for the shares. Any loss realized on a redemption, sale or exchange will
be disallowed to the extent the shares disposed of are replaced (including
through reinvestment of dividends) within a period of 61 days beginning 30 days
before and ending 30 days after the shares are disposed of. In such a case, the
basis of the shares acquired will be adjusted to reflect the disallowed loss.
Any loss realized by a shareholder on the sale of Fund shares held by the
shareholder for six months or less will be treated as a long-term capital loss
to the extent of any distributions of net capital gains received or treated as
having been received by the shareholder with respect to such shares and treated
as long-term capital gains. Furthermore, a loss realized by a shareholder on the
redemption, sale or exchange of shares of the Fund with respect to which exempt-
interest dividends have been paid will, to the extent of such exempt-interest
dividends, be disallowed if such shares have been held by the shareholder for
six months or less.
In some cases, shareholders will not be permitted to take sales charges
into account for purposes of determining the amount of gain or loss realized on
the disposition of their stock. This prohibition generally applies where (1) the
shareholder incurs a sales charge in acquiring the stock of the Fund, (2) the
stock is disposed of before the 91st day after the date on which it was
acquired, and (3) the shareholder subsequently acquires the stock of the same or
another fund and the otherwise applicable sales charge is reduced under a
"reinvestment right" received upon the initial purchase of regulated investment
company shares. The term "reinvestment right" means any right to acquire stock
of one or more funds without the payment of a sales charge or with the payment
of a reduced sales charge. Sales charges affected by this rule are treated as if
they were incurred with respect to the stock acquired under the reinvestment
right. This provision may be applied to successive acquisitions of Fund shares.
Taxation of Certain Financial Instruments. Special rules govern the Federal
income tax treatment of financial instruments that may be held by some of the
Fund. These rules may 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, on the income or gain qualifying under the Income
Requirement, all described above.
Market Discount. If the 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
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<PAGE>
market discount for prior periods not previously taken into account) or (ii) the
amount of the principal payment with respect to such period. Generally, market
discount accrues on a daily basis for each day the debt security is held by the
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 the Fund, original issue discount that accrues on a debt security in
a given year generally is treated for federal income tax purposes as interest
and, therefore, such income would be subject to the distribution requirements
applicable to regulated investment companies.
Some debt securities may be purchased by the Fund, at a discount that
exceeds the original issue discount on such debt securities, if any. This
additional discount represents market discount for federal income tax purposes
(see above).
Hedging Transactions. The taxation of equity options and over-the-counter
options on debt securities is governed by Internal Revenue Code Section 1234.
Pursuant to Internal Revenue 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 and foreign currency 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 arising from certain Section
1256 contracts may be treated as ordinary income or loss. Also, Section, 1256
contracts held by the Fund at the end of each taxable year (and generally for
purposes of the 4% excise tax, on October 31 of each year) are "marked to
market" (that is, treated as sold at fair market value) with the result that
unrealized gains or losses are treated as though they were realized.
Generally, hedging transactions, if any, 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 such losses are
realized. Because only a few regulations implementing the straddle rules have
been promulgated, the tax consequences of hedging transactions to the Funds are
not entirely clear. The hedging transactions may increase the amount of short-
term capital gain realized by the Fund which is taxed as ordinary income when
distributed to shareholders.
The Fund may make one or more of the elections available under the Internal
Revenue 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
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<PAGE>
election 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 application of the straddle rules may affect the character of gains
or losses, and may defer losses and/or accelerate the recognition of gains or
losses from the affected straddle positions, the amount which must be
distributed to shareholders, and which will be taxed to shareholders as ordinary
income or long-term capital gain, may be more than or less than the distribution
of 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,
futures or forward 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 Internal Revenue Code.
Currency Fluctuations - "Section 988" Gains or Losses. Under the Internal
Revenue 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
and loss. Similarly, on disposition of debt securities denominated in a foreign
currency and on disposition of certain futures, forward contracts and options,
gains or losses attributable to fluctuations in the value of the foreign
currency between the date of acquisition of the security or contract and the
date of disposition also are treated as ordinary gain or loss. These gains or
losses, referred to under the Internal Revenue 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 Internal Revenue Code as
passive foreign investment companies ("PFICs"). In general, a foreign
corporation is classified as a PFIC if at least one-half of its assets
constitute investment-type assets, or 75% or more of its gross income
investment-type income. If the Fund receives a so-called "excess distribution"
with respect to PFIC shares, the Fund itself may be subject to a tax on a
portion of the excess distribution, whether or not the corresponding income is
distributed by the Fund to shareholders. In general, under the PFIC rules, an
excess distribution is treated as having been realized ratably over the period
during which the Fund held the PFIC shares. Each Fund will itself be subject to
tax on the portion, if any, of an excess distribution that is so allocated to
prior Fund taxable years and an interest factor will be added to the tax, as if
the tax had been payable in such prior taxable years. Certain distributions from
a PFIC as well as gain from the sale of PFIC shares are treated as excess
distributions. Excess distributions are characterized as ordinary income even
though, absent application of the PFIC rules, certain excess distributions might
have been classified as capital gain.
The 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 marked to market losses and any
loss from an actual disposition of Fund shares would be deductible as ordinary
losses to the extent of any net mark-to-market gains included in income in prior
years.
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Income received by the Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries.
Fund shareholders may be subject to state, local and foreign taxes on their
Fund distributions. In many states, Fund distributions which are derived from
interest on certain U.S. Government obligations are exempt from taxation. The
tax consequences to a foreign shareholder of an investment in the Fund may be
different from those described herein. Foreign shareholders are advised to
consult their own tax advisers with respect to the particular tax consequences
to them of an investment in the Fund. Shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them of an
investment in the Fund.
Other Taxation. The foregoing discussion relates only to U.S. federal
income tax law and certain state taxes as applicable to U.S. persons (i.e., U.S.
citizens and residents and domestic corporations, partnerships, trusts and
estates). Distributions by the Fund, and dispositions of Fund shares also may be
subject to other state and local taxes, and their treatment under state and
local income tax laws may differ from the U.S. federal income tax treatment.
Shareholders should consult their tax advisers with respect to particular
questions of U.S. federal, state and local taxation. Shareholders who are not
U.S. persons should consult their tax advisers regarding U.S. and foreign tax
consequences of ownership of shares of the Fund, including the likelihood that
distributions to them would be subject to withholding of U.S. federal income tax
at a rate of 30% (or at a lower rate under a tax treaty). Future legislative or
administrative changes or court decisions may significantly change the
conclusions expressed herein, and any such changes or decisions may have a
retroactive effect with respect to the transactions contemplated herein.
ADDITIONAL INFORMATION CONCERNING SHARES
The 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 fifteen series of
shares. The Fund is currently offered in four separate classes: Class A, Class
B, Class II and Class Y shares.
The Board of the Company has adopted plans pursuant to Rule 18f-3 under
the 1940 Act ("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 Company or 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
involved on liquidation, based on the number of shares of the Fund that are held
by each shareholder.
Holders of all outstanding shares of the Fund will vote together in the
aggregate and not by class on all matters, except that only Class A Shares of
the Fund will be entitled to vote on matters submitted to a vote of shareholders
pertaining to the Fund's Class A Plan, only Class B Shares will be entitled to
vote on matters submitted to a vote of shareholders pertaining to the Fund's
Class B Plan, only Class II Shares of the Fund will be entitled to vote on
matters submitted to a vote of shareholders pertaining to the Fund's Class II
Plan. Further, 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 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
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shares of the Fund affected by the matter. The Fund is affected by a matter, (i)
unless it is clear that the interests of the Fund in the matter are
substantially identical or (ii) that the matter does not affect any interest of
the Fund. Under the Rule, the approval of an investment advisory agreement 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 trustees may be effectively acted upon by
shareholders of the Company voting together in the aggregate without regard to
the 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.
Annual 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.
OTHER INFORMATION
Counsel. The law firm of Dechert Price & Rhoads, 1775 Eye Street, N.W.,
Washington, D.C. 20006, has passed upon certain legal matters in connection with
the shares offered by the Fund and serves as counsel to the Company.
Independent Accountants. Ernst & Young LLP, 200 Clarendon Street, Boston,
Massachusetts 02116, serves as the Company's independent accountants.
Banking Laws. Banking laws and regulations currently prohibit a bank
holding company registered under the Federal Bank Holding Company Act of 1956 or
any bank or non-bank affiliate thereof from sponsoring, organizing, controlling
or distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from underwriting securities, but such banking laws and regulations do not
prohibit such a holding company or affiliate or banks generally from acting as
investment advisor, administrator, transfer agent or custodian to such an
investment company, or from purchasing shares of such a company as agent for and
upon the order of customers. The Advisor and the Custodian are subject to such
banking laws and regulations.
The Advisor and the Custodian believe they may perform the services for the
Company contemplated by their respective agreements with each of them without
violation of applicable banking laws and regulations. It should be noted,
however, that there have been no cases deciding whether bank and non-bank
subsidiaries of a registered bank holding company may perform services
comparable to those that are to be performed by these companies, and future
changes in either Federal or state statutes and regulations relating to
permissible activities of banks and their subsidiaries or affiliates, as well as
future judicial or administrative decisions or interpretations of current and
future statutes and regulations, could prevent these companies from continuing
to perform certain services for the 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 of 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.
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<PAGE>
Shareholder Approvals. As used in this SAI and in each Prospectus, a
"majority of the outstanding shares" of the Fund or investment portfolio means
the lesser of (a) 67% of the shares of the Fund or portfolio represented at a
meeting at which the holders of more than 50% of the outstanding shares of the
Fund or portfolio are present in person or by proxy, or (b) more than 50% of the
outstanding shares of the Fund or portfolio.
REGISTRATION STATEMENT
This SAI 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. Text-only versions of fund
documents can be viewed online or downloaded from the SEC at http://www.sec.gov.
Statements contained herein and in the Fund's Prospectuses as to the
contents of any contract or 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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APPENDIX A
The Fund may enter into certain futures transactions and options for
hedging purposes. The Fund may also write covered call options, buy put options,
buy call options and write secured put options. Such transactions are described
in this Appendix.
I. Index Futures Contracts
-----------------------
General. A bond index assigns relative values of the bonds included in the
index and the index fluctuates with changes in the market values of the bonds
included. The Chicago Board of Trade has designed a futures contract based on
the Bond Buyer Municipal Bond Index. This Index is composed of 40 term revenue
and general obligation bonds and its composition is updated regularly as new
bonds meeting the criteria of the Index are issued and existing bonds mature.
The Index is intended to provide an accurate indicator of trends and changes in
the municipal bond market. Each bond in the Index is independently priced by six
dealer-to-dealer municipal bond brokers daily. The 40 prices then are averaged
and multiplied by a coefficient. The coefficient is used to maintain the
continuity of the Index when its composition changes.
A stock index assigns relative values to the stocks included in the index
and the index fluctuates with changes in the market values of the stocks
included. Some stock index futures contracts are based on broad market indices,
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
indices, such as the Standard & Poor's 100 or indices 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>
Anticipate buying $62,500 in Equity Securities -Day Hedge is Placed-
Buying 1 Index Futures at 125
Value of Futures = $62,500/Contract
Buy Equity Securities with Actual Cost = $65,000 Day Hedge is Lifted-
Increase in Purchase Price = $2,500 Sell 1 Index Futures at 130
Value of Futures = $65,000/Contract
Gain on Futures = $2,500
</TABLE>
A-1
<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
<TABLE>
<CAPTION>
Portfolio Futures
<S> <C>
Anticipate Selling $1,000,000 in Equity Securities - Day Hedge is Placed-
Sell 16 Index Futures at 125
Value of Futures = $1,000,000
Equity Securities - Own Stock Day Hedge is Lifted-
with Value = $960,000 Buy 16 Index Futures at 120
Loss in Portfolio Value = $40,000 Value of Futures = $960,000
Gain on Futures = $40,000
</TABLE>
II. Margin Payments
---------------
Unlike the purchase or sale 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 Fund's custodian in 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 securities
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 purchases 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.
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 futures and movements in the price of the instruments
which are the subject of the hedge. The price of futures may move more than or
less than the price of the instruments being hedged. If the price of futures
moves less than the price of the instruments which are the subject of the hedge,
the hedge will not be fully effective but, if the price of the instruments being
hedged has moved in an unfavorable direction, the Fund would be in a better
position than if it had not hedged at all. If the price of the instruments being
hedged has moved in a favorable direction, this advantage will be partially
offset by the loss on the futures. If the price of the futures moves more than
the price of the hedged instruments, the Fund involved will experience either a
loss or gain on the futures which will not be completely offset by movements in
the price of the instruments which are the subject of the hedge. To compensate
for the imperfect correlation of
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<PAGE>
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 sells
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
occurs, 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 securities 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 Fund's custodian
and/or in a margin account with a broker to collateralize the position and
thereby insure that the use of such futures is unleveraged.
In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the futures and the instruments
being hedged, the price of futures may not correlate perfectly with movement in
the cash market due to certain market distortions. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through off-setting transactions which could distort the normal relationship
between the cash and futures markets. Second, with respect to financial futures
contracts, the liquidity of the futures market depends on participants entering
into off-setting transactions rather than making or taking delivery. To the
extent participants decide to make or take delivery, liquidity in the futures
market could be reduced, thus producing distortions. Third, from the point of
view of speculators, the deposit requirements in the futures market are less
onerous than margin requirements in the securities market. Therefore, increased
participation by speculators in the futures market may also cause temporary
price distortions. Due to the possibility of price distortion in the futures
market, and because of the imperfect correlation between the movements in the
cash market and movements in the price of futures, a correct forecast of general
market trends or interest rate movements by the 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. When there is no liquid market, 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 commodities 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
A-3
<PAGE>
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.
V. 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 from (call) or sell to (put) 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.
Investments in futures options involve some of the same considerations that
are involved in connection with investments in future contracts (for example,
the existence of a liquid secondary market). In addition, the purchase or sale
of an option also entails the risk that changes in the value of the underlying
futures contract will not correspond to changes in the value of the option
purchased. Depending on the pricing of the option compared to either the futures
contract upon which it is based, or upon the price of the securities being
hedged, an option may or may not be less risky than ownership of the futures
contract or such securities. In general, the market prices of options can be
expected to be more volatile than the market prices on underlying futures
contract. Compared to the purchase or sale of futures contracts, however, the
purchase of call or put options on futures contracts may frequently involve less
potential risk to the Fund because the maximum amount at risk is the premium
paid for the options (plus transaction costs). The writing of an option on a
futures contract involves risks similar to those risks relating to the sale of
futures contracts.
VI. Currency Transactions
---------------------
The Fund may engage in currency transactions in order to hedge the value of
portfolio holdings denominated in particular currencies against fluctuations in
relative value. Currency transactions include forward currency contracts,
currency futures, options on currencies, and currency swaps. A forward currency
contract involves a privately negotiated obligation to purchase or sell (with
delivery generally required) a specific currency at a future date, which may be
any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. A currency swap is an
agreement to exchange cash flows based on the notional difference among two or
more currencies and operates similarly to an interest rate swap as described in
the SAI. The Fund may enter into currency transactions with counterparties which
have received (or the guarantors of the obligations which have received) a
credit rating of A-1 or P-1 by S&P or Moody's, respectively, or that have an
equivalent rating from a NRSRO or are determined to be of equivalent credit
quality by the Advisor.
A-4
<PAGE>
therefrom. Position hedging is entering into a currency transaction with respect
to portfolio security positions denominated or generally quoted in that
currency.
The Fund will not enter into a transaction to hedge currency exposure to an
extent greater after netting all transactions intended wholly or partially to
offset other transactions, than the aggregate market value (at the time of
entering into the transaction) of the securities held in its portfolio that are
denominated or generally quoted in or currently convertible into such currency,
other than with respect to proxy hedging as described below.
The Fund may also cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which the Fund has or in which the Fund expects
to have portfolio exposure.
To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, the Fund may also engage proxy
hedging. Proxy hedging is often used when the currency to which the Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging entails entering into a commitment or option to sell a currency whose
changes in value are generally considered to be correlated to a currency or
currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, in exchange for U.S. dollars. The amount of the
commitment or option would not exceed the value of the Fund's securities
denominated in correlated currencies. For example, if the Advisor considers that
the Austrian schilling is correlated to the German mark (the "D-mark"), the Fund
holds securities denominated in shillings and the Advisor believes that the
value of the schillings will decline against the U.S. dollar, the Advisor may
enter into a commitment or option to sell D-marks and buy dollars. Currency
hedging involves some of the same risks and considerations as other transactions
with similar instruments. Currency transactions can result in losses to the Fund
if the currency being hedged fluctuates in value to a degree or in a direction
that is not anticipated. Further, there is the risk that the perceived
correlation between various currencies may not be present or may not be present
during the particular time that the Fund is engaging in proxy hedging. If a Fund
enters into a currency hedging transaction, the Fund will earmark liquid, high
grade assets on the books of the Fund or the Fund's custodian to the extent the
Fund's obligations are not otherwise "covered" through ownership of the
underlying currency.
Currency transactions are subject to risks different from those of other
portfolio transactions. Because currency control is of great importance to the
issuing governments and influences economic planning and policy, purchases and
sales of currency and related instruments can be negatively affected by
government exchange controls, blockages, and manipulations or exchange
restrictions imposed by governments. These can result in losses to the Fund if
it is unable to deliver or receive currency or funds in settlement of
obligations and could also cause hedges it has entered into to be rendered
useless, resulting in full currency exposure as well as incurring transaction
costs. Buyers and sellers of currency futures are subject to the same risks that
apply to the use of futures generally. Further, settlement of a currency futures
contract for the purchase of most currencies must occur at a bank based in the
issuing nation. Trading options on currency futures is relatively new, and the
ability to establish and close to positions on such options is subject to the
maintenance of a liquid market which may not always be available. Currency
exchange rates may fluctuate based on factors extrinsic to that country's
economy.
VII. Options
-------
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. For risks associated with options on foreign currencies,
see above.
A call option for a particular security gives the purchaser of the option
the right to buy, and the writer of the option 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, and the writer of the option the obligation to buy,
the underlying security at the stated exercise price at any time prior to the
expiration date of the option, regardless of the market price of the security.
The writer of an option that wishes to terminate its obligation may effect
a "closing purchase transaction." This is accomplished by buying an option of
the same series as the option previously written. The effect of the purchase is
that the writer's position will be canceled by the clearing corporation.
However, a writer may not effect a closing purchase transaction after being
notified of the exercise of an option. Likewise, an investor who is the holder
of an option may liquidate its position by effecting a "closing sale
transaction." The cost of such a closing 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 in any
instance that either a closing purchase or a closing sale transaction can be
effected.
Effecting a closing transaction in the case of a written call option will
permit the Fund to write another call option on the underlying security with
either a different exercise price or expiration date or both, or in the case of
a written put option, will permit the Fund to write another put option to the
extent that the exercise price thereof is secured by deposited cash or short-
term securities. Also, effecting a closing transaction will permit the cash or
proceeds from the concurrent sale of any securities subject to the option to be
used for other Fund investments. If the Fund desires to sell a particular
security from its 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
maximum gain to the Fund will be the premium received by it for writing the
option, adjusted upwards or downwards by the difference between the Fund's
purchase price of the security and the exercise price. If the options are not
exercised and the price of the underlying security declines, the amount of such
decline will be offset in part, or entirely, by the premium received.
In the case of writing 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 liquid securities in
such amount as are earmarked on the books of the Fund or the Fund's 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 custodian cash or
liquid securities 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 in cash or liquid securities is earmarked on the
books of the Fund or the Fund's custodian. The Fund will limit its investment in
uncovered call options purchased or written by the Fund to 5% of the Fund's
total assets. The Fund will write put options only if they are "secured" by cash
or liquid securities earmarked on the books of the Fund or the Fund's custodian
in an amount not less than the exercise price of the option at all times during
the option period.
The writing of covered put options is similar in terms of risk/return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and the Fund's gain will be limited to the premium
received. If the market price of the underlying security declines or otherwise
is below the exercise price, the Fund may elect to close the position or take
delivery of the security at the exercise price and the Fund's return will be the
premium received from the put option minus the amount by which the market price
of the security is below the exercise price.
The Fund may purchase put options to hedge against a decline in the value
of their portfolios. 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 Funds may
purchase call options to hedge against an increase in the price of securities
that they anticipate 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 earmarked securities (in the case of a secured put
option) until the option expires or the optioned security is delivered upon
exercise with the result that the writer in such circumstances will be subject
to the risk of market decline or appreciation in the security during such
period.
There is no assurance that 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 (an "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 volume; or one or more Exchanges could, for economic
or other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that Exchange (or in that class or series of options)
would cease to exist, although outstanding options that had been issued by the
Options Clearing Corporation as a result of trades on that Exchange would
continue to be exercisable in accordance with their terms.
Currency transactions, including options on currencies and currency
futures, are subject to risks different from those of other portfolio
transactions. Because currency control is of great importance to the issuing
governments and influences economic planning and policy, purchases and sales of
currency and related instruments can be negatively affected by government
exchange controls, blockages, and manipulations or exchange restrictions imposed
by governments. These can result in losses to the Fund if it is unable to
deliver or receive currency or funds in settlement of obligations and could also
cause hedges it has entered into to be rendered useless, resulting in full
currency exposure as well as the incurring of transaction costs. Buyers and
sellers of currency futures are subject to the same risks that apply to the use
of futures generally. Further, settlement of a currency futures contract for the
purchase of most currencies must occur at a bank based in the issuing nation.
Trading options on currency futures is relatively new, and the ability to
establish and close out positions on such options is subject to the maintenance
of a liquid market which may not always be available. Currency exchange rates
may fluctuate based on factors extrinsic to the issuing country's economy.
VIII. Other Matters
-------------
Accounting for futures contracts will be in accordance with generally
accepted accounting principles.
A-5
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits
--------
(a) (1) Articles of Incorporation, dated November 18, 1992, are
incorporated herein by reference to Exihibit 1(a) to Post-
Effective Amendment No. 18 to Registrant's Registration Statement
on Form N-1A filed with the Commission on August 14, 1996.
(2) Articles of Amendment, dated February 12, 1993, are incorporated
herein by reference to Exhibit 1(b) to Post-Effective Amendment
No. 18 to Registrant's Registration Statement on Form N-1A filed
with the Commission on August 14, 1996.
(3) Articles Supplementary, dated July 20, 1993, August 9, 1994,
April 26, 1995, June 27, 1995 and May 6, 1996, are incorporated
herein by reference to Exhibit 1(c) Post-Effective Amendment No.
18 to Registrant's Registration Statement on Form N-1A filed with
the Commission on August 14, 1996.
(4) Articles Supplementary, dated August 6, 1996, are incorporated
herein by reference toe Exhibit 1(d) 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.
(5) Articles Supplementary, dated November 6, 1996, are incorporated
herein by reference to Exhibit 1(e) 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.
(6) Articles Supplementary, dated February 4, 1997, are incorporated
herein by reference toe Exhibit 1(f) 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.
(7) Articles Supplementary, dated March 12, 1997, are incorporated
herein by reference to Exhibit 1(i) 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.
(8) Articles Supplementary, dated May 6, 1997, are incorporated
herein by reference to Exhibit 1(h) 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.
(9) Articles Supplementary, dated February 24, 1998, are incorporated
herein by reference to Exhibit 1(j) to Post-Effective Amendment
No. 32 to Registrant's Registration Statement on Form N-1A filed
with the Commission on March 20, 1998 relating to the Munder
Growth Opportunities Fund.
<PAGE>
(10) Articles Supplementary, dated June 1, 1998, are incorporated
herein by reference to Exhibit 1(k) to Post-Effective Amendment
No. 35 to Registrant's Registration Statement on Form N-1A filed
with the Commission on August 28, 1998 relating to the Munder
Convertible Securities Fund, Munder NetNet Fund and the Munder
Short-Term Treasury Fund.
(11) Articles Supplementary, dated July 1, 1998, are incorporated
herein by reference to Exhibit 1(l) to Post-Effective Amendment
No. 35 to Registrant's Registration Statement on Form N-1A filed
with the Commission on August 28, 1998 relating to the name
changes of the Munder All-Season Maintenance Fund, the Munder
All-Season Development Fund and the Munder All-Season
Accumulation Fund to the Munder All-Season Conservative Fund, the
Munder All-Season Moderate Fund and the Munder All-Season
Aggressive Fund.
(12) Articles Supplementary, dated December 1, 1998, are incorporated
herein by reference to Exhibit (a)(12) to Post-Effective
Amendment No. 37 to Registrant's Registration Statement on Form
N-1A filed with the commission on June 11, 1999 relating to the
Munder Mid-Cap Growth Fund and Munder NetNet Fund.
(13) Articles Supplementary, dated April 16, 1999, are incorporated
herein by reference to Exhibit (a)(13) to Post-Effective
Amendment No. 37 to Registrant's Registration Statement on Form
N-1A filed with the Commission on June 11, 1999 relating to the
Munder NetNet Fund and Munder Money Market Fund.
(14) Articles Supplementary, dated August 17, 1999, relating to the
Munder Future Technology Fund are filed herein.
(b) By-Laws are incorporated herein by reference to Registrant's initial
Registration Statement on Form N-1A, filed on November 18, 1992.
(c) Not Applicable.
(d) (1) Investment Advisory Agreement, dated July 2, 1998, between
Registrant and Munder Capital Management with respect to the
Munder Equity Selection Fund, Munder Financial Services Fund,
Munder Micro-Cap Equity Fund, Munder Multi-Season Growth Fund,
Munder Growth Opportunities Fund, NetNet Fund, Munder Real Estate
Equity Investment Fund, Munder Small-Cap Value Fund, Munder Value
Fund, Munder International Bond Fund, Munder Short Term Treasury
Fund, Munder Money Market Fund, Munder All-Season Conservative
Fund, Munder All-Season Moderate Fund and Munder All-Season
Aggressive Fund is incorporated herein by reference to Exhibit
5(a) to Post-Effective Amendment No. 35 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
August 28, 1998.
(2) Notice, dated May 4, 1999, to Investment Advisory Agreement
between Registrant and Munder Capital Management with respect to
the Munder Future Technology Fund is filed herein.
(e) (1) Underwriting Agreement, dated January 13, 1995, between
Registrant and Funds Distributor, Inc. is incorporated herein by
reference to Exhibit 6(a) to Post-Effective Amendment No. 16 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on June 25, 1996.
2
<PAGE>
(2) Notice, dated August 6, 1996, to Underwriting Agreement between
Registrant and Funds Distributor, Inc. with respect to the Munder
Value Fund is incorporated herein by reference to Exhibit 6(b) to
Post-Effective Amendment No. 16 to Registrant's Registration
Statement on Form N-1A filed with the Commission on June 25,
1996.
(3) Notice, dated August 6, 1996, to Underwriting Agreement between
Registrant and Funds Distributor, Inc. with respect to the Munder
International Bond Fund is incorporated herein by reference to
Exhibit 6(c) to Post-Effective Amendment No. 16 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
June 25, 1996.
(4) Notice, dated August 6, 1996, 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 Exhibit 6(d) to Post-Effective Amendment
No. 18 to Registrant's Registration Statement on Form N-1A filed
with the Commission on August 14, 1996.
(5) Notice, dated November 7, 1996, to Underwriting Agreement,
between Registrant and Funds Distributor, Inc. with respect to
the Munder Short Term Treasury Fund is incorporated herein by
reference to Exhibit 6(e) to Post-Effective Amendment No. 36 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on October 27, 1998.
(6) Distribution Agreement, dated February 4, 1997, between
Registrant and Funds Distributor, Inc. with respect to the Munder
All-Season Conservative Fund, the Munder All-Season Moderate Fund
and the Munder All-Season Aggressive Fund is incorporated herein
by reference to Exhibit 6(f) to Post-Effective Amendment No. 35
to Registrant's Registration Statement on Form N-1A filed with
the Commission on August 28, 1998.
(7) Distribution Agreement, dated May 6, 1997, between Registrant and
Funds Distributor, Inc. with respect to the Munder Financial
Services Fund is incorporated herein by reference to Exhibit 6(g)
to Post-Effective Amendment No. 36 to Registrant's Registration
Statement on Form N-1A filed with the Commission on October 27,
1998.
(8) Distribution Agreement, dated February 24, 1998, between
Registrant and Funds Distributor, Inc. with respect to the Munder
Growth Opportunities Fund is incorporated herein by reference to
Exhibit 6(h) to Post-Effective Amendment No. 37 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
June 11, 1999.
(9) Distribution Agreement, dated May 4, 1999, between Registrant and
Funds Distributor, Inc. with respect to the Munder Future
Technology Fund is filed herein.
(f) Not Applicable.
(g) (1) Custodian Agreement, dated May 4, 1999, 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 Growth Opportunities
Fund, Munder International Bond Fund, Munder Micro-Cap Equity
Fund, Munder Money Market Fund, Munder Multi-Season Growth Fund,
Munder NetNet Fund, Munder Real Estate Equity Investment Fund,
Munder Small-Cap Value Fund, Munder Short Term Treasury Fund,
and Munder Value Fund is filed herein.
3
<PAGE>
(2) Notice, dated August 4, 1999, to Custodian Agreement between
Registrant and State Street Bank and Trust Company with respect
to the Munder Future Technology Fund is filed herein.
(h) (1) Administration Agreement, dated October 31, 1997, between
Registrant and State Street Bank and Trust Company with respect
to the Munder All-Season Aggressive Fund, Munder All-Season
Conservative Fund, Munder All-Season Moderate Fund, Munder
International Bond Fund, Munder Micro-Cap Equity Fund, Munder
Money Market Fund, Munder Multi-Season Growth Fund, Munder Real
Estate Equity Investment Fund, Munder Small-Cap Value Fund,
Munder Short Term Treasury Fund, Munder Value Fund and NetNet
Fund is incorporated herein by reference to Exhibit 9(n) to Post-
Effective Amendment No. 32 to Registrant's Registration Statement
on Form N-1A filed with the Commission on March 20, 1998.
(2) Notice, dated October 31, 1997, to Administration Agreement
between Registrant and State Street Bank and Trust Company with
respect to the Munder Equity Selection Fund is incorporated
herein by reference to Exhibit 9(p) to Post-Effective Amendment
No. 37 to Registrant's Registration Statement on Form N-1A filed
with the Commission on June 11, 1999.
(3) Notice, dated February 24, 1998, to Administration Agreement
between Registrant and State Street Bank and Trust Company with
respect to the Munder Growth Opportunities Fund is incorporated
herein by reference to Exhibit 9(o) to Post-Effective Amendment
No. 35 to Registrant's Registration Statement on Form N-1A filed
with the Commission on August 28, 1998.
(4) Notice, dated May 4, 1999, to Administration Agreement between
Registrant and State Street Bank and Trust Company with respect
to the Munder Tech Leadership Fund is filed herein.
(5) Transfer Agency and Registrar Agreement, dated June 19, 1995,
between Registrant and First Data Investor Services Group, Inc.
is incorporated herein by reference to Exhibit 9(a) to Post-
Effective Amendment No. 16 to Registrant's Registration Statement
on Form N-1A filed with the Commission on June 25, 1996.
(6) Notice, dated July 20, 1995, to Transfer Agency and Registrar
Agreement between Registrant and First Data Investor Services
Group, Inc. with respect to the Munder Value Fund is incorporated
herein by reference to Exhibit 9(b) to Post-Effective Amendment
No. 16 to Registrant's Registration Statement on Form N-1A filed
with the Commission on June 25, 1996.
(7) Notice, dated May 6, 1996, to Transfer Agency and Registrar
Agreement between Registrant and First Data Investor Services
Group, Inc. with respect to the Munder International Bond Fund is
incorporated herein by reference to Exhibit 9(c) to Post-
Effective Amendment No. 16 to Registrant's Registration Statement
on Form N-1A filed with the Commission on June 25, 1996.
(8) Notice, dated August 6, 1996, to Transfer Agency and Registrar
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
Exhibit 9(d) to Post-Effective Amendment No. 18 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
August 14, 1996.
4
<PAGE>
(9) Notice, dated August 6, 1996, to Transfer Agency and Registrar
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 Exhibit 9(e) to Post-
Effective Amendment No. 21 to Registrant's Registration Statement
on Form N-1A filed with the Commission on December 13, 1996.
(10) 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 Exhibit
9(f) to Post-Effective Amendment No. 23 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
February 18, 1997.
(11) 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 Exhibit 9(g) to Post-
Effective Amendment No. 28 to Registrant's Registration Statement
on Form N-1A filed with the Commission on July 28, 1997.
(12) 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 Exhibit 9(h) to Post-
Effective Amendment No. 28 to Registrant's Registration Statement
on Form N-1A filed with the Commission on July 28, 1997.
(13) Notice, dated February 24, 1998, to the Transfer Agency and
Registrar Agreement between Registrant and First Data Investor
Services Group, Inc. with respect to the Munder Growth
Opportunities Fund to be filed by amendment.
(14) Amendment, dated June 1, 1998, to the Transfer Agency and
Registrar Agreement between Registrant and First Data Investor
Services Group, Inc. is incorporated herein by reference to
Exhibit 9(k) to Post-Effective Amendment No. 35 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
August 28, 1998.
(15) Amendment, dated June 1, 1998, to the Transfer Agency and
Registrar Agreement between Registrant and First Data Investor
Services Group, Inc. is incorporated herein by reference to
Exhibit 9(l) to Post-Effective Amendment No. 35 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
August 28, 1998.
(16) Amendment, dated June 1, 1998, to the Transfer Agency and
Registrar Agreement between Registrant and First Data Investor
Services Group, Inc. is incorporated herein by reference to
Exhibit 9(m) to Post-Effective Amendment No. 35 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
August 28, 1998.
(17) Amendment, dated January 2, 1997, to the Transfer Agency and
Registrar Agreement between the Registrant and First Data
Investor Services Group, Inc. is incorporated herein by reference
to Exhibit 9(n) to Post-Effective Amendment No. 36 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on October 27, 1998.
(18) Amendment, dated March 16, 1999, to the Transfer Agency and
Registrar Agreement between the Registrant and First Data
Investor Services Group, Inc. is incorporated herein by reference
to Exhibit h(18) to Post-Effective Amendment No. 37 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on June 11, 1999.
5
<PAGE>
(19) Amendment, dated March 26, 1999, to the Transfer Agency and
Registrar Agreement between the Registrant and First Data
Investor Services Group, Inc. is incorporated herein by reference
to Exhibit h(19) to Post-Effective Amendment No. 37 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on June 11, 1999.
(20) Notice, dated May 4, 1999, to Transfer Agency and Registrar
Agreement between Registrant and First Data Investor Services
Group, Inc. with respect to the Munder Future Technology Fund is
filed herein.
(i) (1) 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.
(2) Opinion and Consent of Counsel with respect to the Munder Growth
Opportunities Fund is incorporated herein by reference to Exhibit
10(b) to Post-Effective Amendment No. 36 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
October 27, 1998.
(3) Opinion and Consent of Counsel with respect to the Munder Future
Technology Fund to be filed by amendment.
(j) (1) Consent of Arthur Andersen LLP is incorporated herein by
reference to Exhibit 11(b) to Post-Effective Amendment No. 12 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 29, 1995.
(2) Letter of Arthur Andersen LLP regarding change in independent
auditor required by Item 304 of Regulation S-K is incorporated
herein by reference to Exhibit 11(c) to Post-Effective Amendment
No. 12 to Registrant's Registration Statement on Form N-1A filed
with the Commission on August 29, 1995.
(3) Powers of Attorney, dated February 24, 1998, are incorporated
herein by reference to Exhibit 11(d) to Post-Effective Amendment
No. 32 to Registrant's Registration Statement on Form N-1A filed
with the Commission on March 20, 1998.
(4) Certified Resolution of Board, dated February 24, 1998,
authorizing signature on behalf of Registrant pursuant to power
of attorney is incorporated herein by reference to Exhibit 11(e)
to Post-Effective Amendment No. 32 to Registrant's Registration
Statement on Form N-1A filed with the Commission on March 20,
1998.
(k) Not Applicable.
(l) Initial Capital Agreement is incorporated herein by reference to
Exhibit 13 to Pre-Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
February 26, 1993.
(m) (1) Service Plan, dated January 13, 1995, for the Munder Multi-Season
Growth Fund Class A Shares is incorporated herein by reference to
Exhibit 15(a) to Post-Effective Amendment No. 8 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
February 28, 1995.
(2) Service and Distribution Plan, dated January 13, 1995, for the
Munder Multi-Season Growth Fund Class B Shares is incorporated
herein by reference to Exhibit 15(b) to Post-Effective Amendment
No. 8 to Registrant's Registration Statement on Form N-1A filed
with the Commission on February 28, 1995.
6
<PAGE>
(3) Amended and Restated Service and Distribution Plan, dated May 6,
1997, for the Munder Multi-Season Growth Fund Class C Shares is
incorporated herein by reference to Exhibit 15(c) to Post-
Effective Amendment No. 35 to Registrant's Registration Statement
on Form N-1A filed with the Commission on August 28, 1998.
(4) Service Plan, dated January 13, 1995, for the Munder Money Market
Fund Class A Shares is incorporated herein by reference to
Exhibit 15(d) to Post-Effective Amendment No. 8 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
February 28, 1995.
(5) Service and Distribution Plan, dated January 13, 1995, for the
Munder Money Market Fund Class B Shares is incorporated herein by
reference to Exhibit 15(e) to Post-Effective Amendment No. 8 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on February 28, 1995.
(6) Amended and Restated Service and Distribution Plan, dated May 6,
1997, for the Munder Money Market Fund Class C Shares is
incorporated herein by reference to Exhibit 15(f) to Post-
Effective Amendment No. 35 to Registrant's Registration Statement
on Form N-1A filed with the Commission on August 28, 1998.
(7) Service Plan, dated January 13, 1995, for the Munder Real Estate
Equity Investment Fund Class A Shares is incorporated herein by
reference to Exhibit 15(g) to Post-Effective Amendment No. 8 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on February 28, 1995.
(8) Service and Distribution Plan, dated January 13, 1995, for the
Munder Real Estate Equity Investment Fund Class B Shares is
incorporated herein by reference to Exhibit 15(h) to Post-
Effective Amendment No. 8 to Registrant's Registration Statement
on Form N-1A filed with the Commission on February 28, 1995.
(9) Amended and Restated Service and Distribution Plan, dated May 6,
1997, for the Munder Real Estate Equity Investment Fund Class C
Shares is incorporated herein by reference to Exhibit 15(i) to
Post-Effective Amendment No. 35 to Registrant's Registration
Statement on Form N-1A filed with the Commission on August 28,
1998.
(10) Service Plan, dated August 6, 1996, for the Munder Equity
Selection Fund Class A Shares is incorporated herein by reference
to Exhibit 15(j) to Post-Effective Amendment No. 35 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 28, 1998.
(11) Service and Distribution Plan, dated August 6, 1996, for the
Munder Equity Selection Fund Class B Shares is incorporated
herein by reference to Exhibit 15(k) to Post-Effective Amendment
No. 35 to Registrant's Registration Statement on Form N-1A filed
with the Commission on August 28, 1998.
(12) Service and Distribution Plan, dated August 6, 1996, for the
Munder Equity Selection Fund Class C Shares is incorporated
herein by reference to Exhibit 15(l) to Post-Effective Amendment
No. 35 to Registrant's Registration Statement on Form N-1A filed
with the Commission on August 28, 1998.
(13) Service Plan, dated May 6, 1996, for the Munder International
Bond Fund Class A Shares is incorporated herein by reference to
Exhibit 15(m) to Post-Effective Amendment No. 35 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
August 28, 1998.
7
<PAGE>
(14) Service and Distribution Plan, dated May 6, 1996, for the Munder
International Bond Fund Class B Shares is incorporated herein by
reference to Exhibit 15(n) to Post-Effective Amendment No. 35 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 28, 1998.
(15) Service and Distribution Plan, dated May 6, 1996, for the Munder
International Bond Fund Class C Shares is incorporated herein by
reference to Exhibit 15(o) to Post-Effective Amendment No. 35 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 28, 1998.
(16) Service Plan, dated August 6, 1996, for the Munder Micro-Cap
Equity Fund Class A Shares is incorporated herein by reference to
Exhibit 15(p) to Post-Effective Amendment No. 35 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
August 28, 1998.
(17) Service and Distribution Plan, dated August 6, 1996, for the
Munder Micro-Cap Equity Fund Class B Shares is incorporated
herein by reference to Exhibit 15(q) to Post-Effective Amendment
No. 35 to Registrant's Registration Statement on Form N-1A filed
with the Commission on August 28, 1998.
(18) Service and Distribution Plan, dated August 6, 1996, for the
Munder Micro-Cap Equity Fund Class C Shares is incorporated
herein by reference to Exhibit 15(r) to Post-Effective Amendment
No. 35 to Registrant's Registration Statement on Form N-1A filed
with the Commission on August 28, 1998.
(19) Service Plan, dated November 7, 1996, for the Munder Short Term
Treasury Fund Class A Shares is incorporated herein by reference
to Exhibit 15(s) to Post-Effective Amendment No. 35 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 28, 1998.
(20) Service and Distribution Plan, dated November 7, 1996, for the
Munder Short Term Treasury Fund Class B Shares is incorporated
herein by reference to Exhibit 15(t) to Post-Effective Amendment
No. 35 to Registrant's Registration Statement on Form N-1A filed
with the Commission on August 28, 1998.
(21) Service and Distribution Plan, dated November 7, 1996, for the
Munder Short Term Treasury Fund Class C Shares is incorporated
herein by reference to Exhibit 15(u) to Post-Effective Amendment
No. 35 to Registrant's Registration Statement on Form N-1A filed
with the Commission on August 28, 1998.
(22) Service and Distribution Plan, dated February 4, 1997, for the
Munder All-Season Aggressive Fund (formerly the Munder All-Season
Accumulation Fund) Class A Shares is incorporated herein by
reference to Exhibit 15(v) to Post-Effective Amendment No. 35 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 28, 1998.
(23) Service and Distribution Plan, dated February 4, 1997, for the
Munder All-Season Aggressive Fund (formerly the Munder All-Season
Accumulation Fund) Class B Shares is incorporated herein by
reference to Exhibit 15(w) to Post-Effective Amendment No. 35 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 28, 1998.
8
<PAGE>
(24) Service and Distribution Plan, dated February 4, 1997, for the
Munder All-Season Conservative Fund (formerly the Munder All-
Season Maintenance Fund) Class A Shares is incorporated herein by
reference to Exhibit 15(x) to Post-Effective Amendment No. 35 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 28, 1998.
(25) Service and Distribution Plan, dated February 4, 1997, for the
Munder All-Season Conservative Fund (formerly the Munder All-
Season Maintenance Fund) Class B Shares is incorporated herein by
reference to Exhibit 15(y) to Post-Effective Amendment No. 35 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 28, 1998.
(26) Service and Distribution Plan, dated February 4, 1997, for the
Munder All-Season Moderate Fund (formerly the Munder All-Season
Development Fund) Class A Shares is incorporated herein by
reference to Exhibit 15(z) to Post-Effective Amendment No. 35 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 28, 1998.
(27) Service and Distribution Plan, dated February 4, 1997, for the
Munder All-Season Moderate Fund (formerly the Munder All-Season
Development Fund) Class B Shares is incorporated herein by
reference to Exhibit 15(aa) to Post-Effective Amendment No. 35 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 28, 1998.
(28) Service Plan, dated August 6, 1996, for the Munder Small-Cap
Value Fund Class A Shares is incorporated herein by reference to
Exhibit 15(bb) to Post-Effective Amendment No. 35 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
August 28, 1998.
(29) Service and Distribution Plan, dated August 6, 1996, for the
Munder Small-Cap Value Fund Class B Shares is incorporated herein
by reference to Exhibit 15(cc) to Post-Effective Amendment No. 35
to Registrant's Registration Statement on Form N-1A filed with
the Commission on August 28, 1998.
(30) Service and Distribution Plan, dated August 6, 1996, for the
Munder Small-Cap Value Fund Class C Shares is incorporated herein
by reference to Exhibit 15(dd) to Post-Effective Amendment No.
35 to Registrant's Registration Statement on Form N-1A filed with
the Commission on August 28, 1998.
(31) Service and Distribution Plan dated August 6, 1996 for the NetNet
Fund is incorporated herein by reference to Exhibit 15(ii) to
Post-Effective Amendment No. 35 to Registrant's Registration
Statement on Form N-1A filed with the Commission on August 28,
1998.
(32) Service Plan, dated February 24, 1998, for the Munder Growth
Opportunities Fund Class A Shares is incorporated herein by
refere to Exhibit 15(jj) nce to Post-Effective Amendment No. 37
to Registrant's Registration Statement on Form N-1A filed with
the Commission on June 11, 1999.
(33) Service and Distribution Plan, dated February 24, 1998, for the
Munder Growth Opportunities Fund is incorporated herein by
reference to Exhibit 15(kk) to Post-Effective Amendment No. 37 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on June 11, 1999.
9
<PAGE>
(34) Service and Distribution Plan, dated February 24, 1998, for the
Munder Growth Opportunities Fund Class C Shares is incorporated
herein by reference to Exhibit 15(ll) to Post-Effective Amendment
No. 37 to Registrant's Registration Statement on Form N-1A filed
with the Commission on June 11, 1999.
(35) Service Plan for the Munder Growth Opportunities Fund Class K
Shares is incorporated herein by reference to Exhibit 15(mm) to
Post-Effective Amendment No. 35 to Registrant's Registration
Statement on Form N-1A filed with the Commission on August 28,
1998.
(36) Amendment to Service and Distribution Plan, dated May 4, 1998,
for the Munder NetNet Fund is incorporated herein by reference to
Exhibit m(36) to Post-Effective Amendment No. 37 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
June 11, 1999.
(37) Service and Distribution Plan, dated May 4, 1998, for the Munder
NetNet Fund Class B Shares is incorporated herein by reference to
Exhibit m(37) to Post-Effective Amendment No. 37 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
June 11, 1999.
(38) Service and Distribution Plan, dated May 4, 1998, for the Munder
NetNet Fund Class C Shares is incorporated herein by reference to
Exhibit m(38) to Post-Effective Amendment No. 37 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
June 11, 1999.
(39) Service Plan, dated July 31, 1995, for the Munder Value Fund
Class A Shares is incorporated herein by reference to Exhibit
15(qq) to Post-Effective Amendment No. 35 to Registrant's
Registration Statement on Form N-1A filed with the Commission on
August 28, 1998.
(40) Service and Distribution Plan, dated July 31, 1995, for the
Munder Value Fund Class B Shares is incorporated herein by
reference to Exhibit 15(rr) to Post-Effective Amendment No. 35 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 28, 1998.
(41) Service and Distribution Plan, dated July 31, 1995, for the
Munder Value Fund Class C Shares is incorporated herein by
reference to Exhibit 15(ss) to Post-Effective Amendment No. 35 to
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 28, 1998.
(42) Service Plan, dated May 4, 1999, for the Munder Future Technology
Fund Class A Shares is filed herein.
(43) Service and Distribution Plan, dated May 4, 1999, for the Munder
Future Technology Fund Class B Shares is filed herein.
(44) Service and Distribution Plan, dated May 4, 1999, for the Munder
Future Technology Fund Class II Shares is filed herein.
10
<PAGE>
(n) Not Applicable.
(o) Fourth Amended and Restated Multi-Class Plan with respect to the
Registrant is incorporated herein by reference to Post-Effective
Amendment No. 37 to Registrant's Registration Statement on Form N-1A
filed with the Commission on June 11, 1999.
Item 24. Persons Controlled by or under Common Control with Registrant.
--------------------------------------------------------------
Not Applicable.
Item 25. 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.
Item 26. Business and Other Connections of Investment Advisor
----------------------------------------------------
Munder Capital Management
<TABLE>
<CAPTION>
Name Position with Advisor
<S> <C>
Old MCM, Inc. Partner
Munder Group LLC Partner
WAM Holdings, Inc. Partner
WAM Holdings II, Inc. Partner
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Name Position with Advisor
<S> <C>
Lee P. Munder Chairman
Leonard J. Barr, II Senior Vice President and Director of Research
Clark Durant Vice President and Director of The Private Management Group
Terry H. Gardner Vice President and Chief Financial Officer
Elyse G. Essick Vice President and Director of Communications and 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 Senior Vice President of The Private Management Group
Ann F. Putallaz Vice President and Director of Retirement Services Group
Peter G. Root Vice President and Director of Government Securities Trading
James C. Robinson Executive Vice President and Chief Investment Officer/Fixed Income
Gerald L. Seizert Chief Investment Officer-Equities
Paul D. Tobias Chief Executive Officer
</TABLE>
For further information relating to the Investment Advisor's officers,
reference is made to Form ADV filed under the Investment Advisers Act of
1940 by Munder Capital Management. See File No. 801-48394.
Item 27. 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
registered with the Securities and Exchange Commission as a broker-
dealer and is a member of the National Association of Securities
Dealers. FDI acts as principal underwriter of the following investment
companies other than the Registrant:
American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
The Brinson Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Global Funds, Inc.
Dresdner RCM Investment Funds, Inc.
Founders Funds, Inc.
JP Morgan Institutional Funds
JP Morgan Funds
JPM Series Trust
JPM Series Trust II
Kobrick Investment Trust
LaSalle Partners Funds, Inc.
Merrimac Series
12
<PAGE>
Monetta Fund, Inc.
Monetta Trust
The Montgomery Funds I
The Montgomery Funds II
The Munder Framlington Funds Trust
The Munder Funds Trust
National Investors Cash Management Fund, Inc.
Nomura Pacific Basin Fund, Inc.
Orbitex Group of Funds
SG Cowen Funds, Inc.
SG Cowen Income & Growth Fund, Inc.
SG Cowen Standby Reserve Fund, Inc.
SG Cowen Standby Tax-Exempt Reserve Fund, Inc.
SG Cowen Series Fund, Inc.
SoGen Funds, Inc.
SoGen Variable Funds, Inc.
St. Clair Funds, Inc.
The Skyline Funds
Waterhouse Investors Family of Funds, Inc.
WEBS Index Fund, Inc.
(b) The following is a list of the executive officers, directors and
partners of Funds Distributor, Inc.
<TABLE>
<CAPTION>
<S> <C>
Director, President and Chief Executive Officer -Marie E. Connolly
Executive Vice President -George A. Rio
Executive Vice President -Donald R. Roberson
Executive Vice President -William S. Nichols
Senior Vice President, General Counsel, Chief Compliance -Margaret W. Chambers
Officer, Secretary and Clerk
Director, Senior Vice President, Treasurer and -Joseph F. Tower, III
Chief Financial Officer
Senior Vice President -Paula R. David
Senior Vice President -Gary S. MacDonald
Senior Vice President -Judith K. Benson
Chairman and Director -William J. Nutt
</TABLE>
<TABLE>
<CAPTION>
(c) Not Applicable.
<S> <C>
Item 28. Location of Accounts and Records
--------------------------------
</TABLE>
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., 100 Federal Street,
Boston, Massachusetts 02110 or 4400 Computer Drive, Westborough,
Massachusetts 01581 (records relating to its functions transfer
agent);
(3) State Street Bank and Trust Company, 225 Franklin Street, Boston,
MA 02110 (records relating to its function as administrator and
custodian); and
13
<PAGE>
(4) Funds Distributor, Inc., 60 State Street, Boston, Massachusetts
02109 (records relating to its function as distributor).
Item 29. Management Services
-------------------
None.
Item 30. Undertakings
---------------
Not Applicable.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended and
the Investment Company Act of 1940, as amended, the Registrant has duly caused
this Post-Effective Amendment No. 38 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Boston and The Commonwealth of Massachusetts, on the 25th day of August, 1999.
THE MUNDER FUNDS, INC.
By: *
---------------------------
Lee P. Munder, President
* By: /s/ Cynthia Surprise
----------------------------
Cynthia Surprise
as Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
<TABLE>
<CAPTION>
Signatures Title Date
- ---------------------- ------------ ---------------
<S> <C> <C>
* Director and August 25, 1999
-------------------- President
Lee P. Munder
* Director August 25, 1999
--------------------
Charles W. Elliott
* Director August 25, 1999
--------------------
Joseph E. Champagne
* Director August 25, 1999
--------------------
Thomas B. Bender
* Director August 25, 1999
--------------------
Thomas D. Eckert
* Director August 25, 1999
--------------------
John Rakolta, Jr.
* Director August 25, 1999
--------------------
David J. Brophy
</TABLE>
15
<PAGE>
* Vice President, August 25, 1999
------------------------- Treasurer, Secretary and
Terry H. Gardner Chief Financial Officer
*By: /s/ Cynthia Surprise
--------------------
Cynthia Surprise
as Attorney-in-Fact
16
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ---------- -----------
<C> <S>
99(a)(14) Articles Supplementary relating to the Munder Future Technology Fund
99(d)(2) Notice to Investment Advisory Agreement between Registrant and Munder Capital
Management with respect to the Munder Future Technology Fund
99(e)(9) Distribution Agreement between Registrant and Funds Distributor, Inc. with respect to
the Munder Future Technology Fund
99(g)(1) Custodian Agreement between Registrant and State Street Bank and Trust Company
99(g)(2) Notice to Custodian Agreement between Registrant and State Street Bank and Trust
Company with respect to the Munder Future Technology Fund
99(h)(4) Notice to Administration Agreement between Registrant and State Street Bank and Trust
Company with respect to the Munder Future Technology Fund
99(h)(20) Notice to Transfer Agency and Registrar Agreement between Registrant and First Data
Investor Services Group, Inc. with respect to the Munder Future Technology Fund
99(m)(42) Service Plan for the Munder Future Technology Fund Class A Shares
99(m)(43) Service and Distribution Plan for the Munder Future Technology Fund Class B Shares
99(m)(44) Service and Distribution Plan for the Munder Future Technology Fund Class II Shares
</TABLE>
17
<PAGE>
Exhibit 99(a)(14)
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 4,
1999 pursuant to Section 2-208 of Maryland General Corporate Law, duly
classified 90,000,000 shares of the unissued, authorized capital stock of the
Corporation into the following additional series, designated as follows:
<TABLE>
<CAPTION>
Name of Fund Number of Shares Allocated
- ------------ --------------------------
<S> <C>
Munder Future Technology Fund 90,000,000 shares
</TABLE>
; and further
SECOND: The shares of the Corporation authorized and classified pursuant to
Article First of these Articles Supplementary have been so authorized and
classified by the Board of Directors under the authority contained in the
Charter of the Corporation. The number of shares of capital stock of the various
classes that the Corporation has authority to issue has been established by the
Board of Directors in accordance with Section 2-105(c) of the Maryland General
Corporation Law.
THIRD: Immediately prior to the effectiveness of the Articles Supplementary
of the Corporation as hereinabove set forth, the Corporation had the authority
to issue three billion, three-hundred million (3,300,000,000) shares of Common
Stock of the par value of $0.01 per share and of the aggregate par value of
thirty three million dollars ($33,000,000), of which the Board of Directors had
designated two billion, five hundred and fifteen million (2,515,000,000) shares
into Series and classified the shares of each Series as follows:
Previously Classified Shares
----------------------------
<TABLE>
<CAPTION>
Authorized Shares
Name of Series (in millions)
- -------------- -------------
<S> <C>
Munder Financial Services Fund 50
</TABLE>
<TABLE>
<CAPTION>
Authorized
Shares by Class (in millions)
-----------------------------
A B Y C K
- - - - -
<S> <C> <C> <C> <C> <C>
Munder Multi-Season Growth Fund 10 60 50 10 50
Munder Money Market Fund 105 70 600 45 300
Munder Real Estate Equity Investment Fund 10 50 10 10 10
Munder Equity Selection Fund 10 20 40 20 10
Munder International Bond Fund 20 40 20 10 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Authorized
Shares by Class (in millions)
-----------------------------
A B Y C K
- - - - -
<S> <C> <C> <C> <C> <C>
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
Munder Convertible Securities Fund 5 5 30 0 10
Munder NetNet Fund 115 115 65 80 N/A
</TABLE>
<TABLE>
<CAPTION>
Authorized
Shares by Class (in millions)
-----------------------------
Michigan
Municipal League
A B Y C (formerly "K")
- - - - --------------
<S> <C> <C> <C> <C> <C>
Munder Short Term Treasury Fund 0 0 90 0 10
</TABLE>
As amended hereby, the Corporation's Articles of Incorporation authorize
the issuance of three billion, three hundred million (3,300,000,000) shares of
Common Stock of the par value of $0.01 per share and having an aggregate par
value of thirty three million dollars ($33,000,000), of which the Board of
Directors has designated two billion, six hundred and five million,
(2,605,000,000) (including 2,515,000,000 shares previously designated) shares
into Series and classified the shares of each Series as follows:
Current Classification of Shares
--------------------------------
<TABLE>
<CAPTION>
Authorized Shares
Name of Series (in millions)
- -------------- -------------
<S> <C>
Munder Financial Services Fund 50
</TABLE>
<TABLE>
<CAPTION>
Authorized
Shares by Class (in millions)
-----------------------------
A B Y C K
- - - - -
<S> <C> <C> <C> <C> <C>
Munder Multi-Season Growth Fund 10 60 50 10 50
Munder Money Market Fund 105 70 600 45 300
Munder Real Estate Equity Investment Fund 10 50 10 10 10
Munder Equity Selection Fund 10 20 40 20 10
Munder International Bond Fund 20 40 20 10 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 Growth Opportunities Fund 3.4 3.3 20 3.3 20
Munder Convertible Securities Fund 5 5 30 0 10
Munder NetNet Fund 115 115 65 80 N/A
Munder Future Technology Fund 25 25 25 15 N/A
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Authorized
Shares by Class (in millions)
-----------------------------
Michigan
Municipal League
A B Y C (formerly "K")
- - - - --------------
<S> <C> <C> <C> <C> <C>
Munder Short Term Treasury Fund 0 0 90 0 10
</TABLE>
FOURTH: The preferences, rights, voting powers, restrictions, limitations
as to dividends, qualifications and terms and conditions of redemption of the
various classes of shares shall be as set forth in the Corporation's Articles of
Incorporation and shall be subject to all provisions of the Articles of
Incorporation relating to shares of the Corporation generally, and those set
forth as follows:
(a) The assets of each Class of a Series shall be invested in the same
investment portfolio of the Corporation.
(b) The dividends and distributions of investment income and capital gains
with respect to each class of shares shall be in such amount as may be
declared from time to 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 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
3
<PAGE>
the holder thereof. The portion shall be determined by the ratio that the
shareholder's Class B shares of a Series converting to Class A shares bears
to the shareholder's total Class B shares of that Series not acquired
through dividends and distributions.
(3) The conversion of Class B shares to Class A shares is subject to
the continuing availability of an opinion of counsel or a ruling of the
Internal Revenue Service that payment of different dividends on Class A and
Class B shares does not result in the Corporation's dividends or
distributions constituting "preferential dividends" under the Internal
Revenue Code of 1986, as amended, and that the conversion of shares does
not constitute a taxable event under federal income tax law.
(4) The number of Class A shares of a Series into which a share of
Class B shares is converted pursuant to paragraphs (f)(1) and (f)(2) hereof
shall equal the number (including for this purpose fractions of shares)
obtained by dividing the net asset value per share of the Class B shares of
the Series (for purposes of sales and redemptions thereof on the Conversion
Date) by the net asset value per share of the Class A shares of the Series
(for purposes of sales and redemptions thereof on the Conversion Date).
(5) On the Conversion Date, the Class B shares of a Series converted
into Class A shares will cease to accrue dividends and will no longer be
deemed outstanding and the rights of the holders thereof (except the right
to receive (i) the number of Class A shares into which the Class B shares
have been converted and (ii) declared but unpaid dividends to the
Conversion Date) will cease. Certificates representing Class A shares
resulting from the conversion need not be issued until certificates
representing Class B shares converted, if issued, have been received by the
Corporation or its agent duly endorsed for transfer.
4
<PAGE>
IN WITNESS WHEREOF, The Munder Funds, Inc. has caused these Articles
Supplementary to be signed in its name on its behalf by its authorized officers
who acknowledge that these Articles Supplementary are the act of the
Corporation, that to the best of their knowledge, information and belief, all
matters and facts set forth herein relating to the authorization and approval of
these Articles Supplementary are true in all material respects and that this
statement is made under the penalties of perjury.
Date: August 17, 1999
THE MUNDER FUNDS, INC.
[CORPORATE SEAL]
By: /s/ Terry H. Gardner
----------------------------------
Name: Terry H. Gardner
----------------------------------
Title: Vice President
----------------------------------
Attest:
By: /s/ Libby E. Wilson
-----------------------
Name: Libby E. Wilson
-----------------------
Title: Secretary
-----------------------
5
<PAGE>
Exhibit 99(d)(2)
Munder Capital Management
480 Pierce Street
Birmingham, Michigan 48009
Ladies and Gentlemen:
Reference is made to the Investment Advisory Agreement between us dated as
of July 2, 1998 (the "Agreement").
This letter is to provide notice of the creation of an additional
investment portfolio of The Munder Funds, Inc., namely the Munder Future
Technology Fund (the "New Portfolio").
In accordance with the Additional Portfolios provision of Section 1(b) of
the Agreement, we request that you act as Investment Advisor under the Agreement
with respect to the New Portfolio.
Please indicate your acceptance of the foregoing by executing two copies of
this Agreement, returning one to the Fund and retaining one copy for your
records.
Very truly yours,
The Munder Funds, Inc.
By: /s/ Terry H. Gardner
--------------------
Accepted:
Munder Capital Management
By: /s/ Terry H. Gardner
--------------------
Date: May 4, 1999
<PAGE>
Exhibit 99(e)(9)
DISTRIBUTION AGREEMENT
----------------------
This Distribution Agreement is made as of this 4th day of May, 1999 by and
between THE MUNDER FUNDS, INC., a Maryland Corporation (the "Fund"), and FUNDS
DISTRIBUTOR, INC., a Massachusetts corporation ("Funds Distributor").
WHEREAS, the Fund is an open-end management investment company and is so
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Fund desires to retain Funds Distributor as Distributor for
the Fund's shares of common stock in Class A, Class B, Class II and Class Y
Shares representing interests in the Fund's portfolio, Munder Future Technology
Fund (the "Portfolio"), to provide for the sale and distribution of shares of
the Portfolio (the "Shares"), and Funds Distributor is willing to render such
services;
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein and intending to be legally bound hereby, the parties hereto agree
as follows:
I. DELIVERY OF DOCUMENTS
---------------------
The Fund has delivered to Funds Distributor copies of each of the following
documents and will deliver to it all future amendments and supplements thereto,
if any:
(a) Resolutions of the Fund's Board of Directors authorizing the execution
and delivery of this Agreement;
(b) The Fund's Articles of Incorporation as filed with the State of
Maryland - Department of Assessments and Taxation on November 18,
1992;
(c) The Fund's By-Laws;
(d) The Fund's Notification of Registration on Form N-8A under the 1940
Act as filed with the Securities and Exchange Commission ("SEC");
(e) The Fund's Registration Statement on Form N-1A (the "Registration
Statement") under the Securities Act of 1933 (the "1933 Act") and the
1940 Act, as filed with the SEC on November 18, 1992, and all
amendments thereto; and
(f) The Fund's most recent Prospectuses and Statement of Additional
Information and all amendments and supplements thereto (collectively,
the "Prospectuses").
II. DISTRIBUTION
------------
<PAGE>
1. Appointment of Distributor. The Fund hereby appoints Funds Distributor
as Distributor of the Portfolio's Shares and Funds Distributor hereby accepts
such appointment and agrees to render the services and duties set forth in this
Section II. In the event that the Fund establishes one or more additional
portfolios or classes of shares other than the Portfolio and the Shares with
respect to which it decides to retain Funds Distributor to act as distributor
hereunder, the Fund shall notify Funds Distributor in writing. If Funds
Distributor is willing to render such services, it shall so notify the Fund in
writing whereupon such portfolio and such shares shall become a Portfolio and
Shares hereunder and shall be subject to the provisions of this Agreement,
except to the extent that said provision is modified with respect to such
portfolio or shares in writing by the Fund and Funds Distributor at the time.
2. Services and Duties.
(a) The Fund agrees to sell through Funds Distributor, as agent, from time
to time during the term of this Agreement, Shares (whether authorized but
unissued or treasury shares, in the Fund's sole discretion) upon the terms and
at the current offering price as described in the applicable Prospectus. Funds
Distributor will act only in its own behalf as principal in making agreements
with selected dealers or others for the sale and redemption of Shares, and shall
sell Shares only at the offering price thereof as set forth in the applicable
Prospectus. Funds Distributor shall devote appropriate efforts to effect sales
of Shares of the Portfolio, but shall not be obligated to sell any certain
number of Shares.
(b) In all matters relating to the sale and redemption of Shares, Funds
Distributor will act in conformity with the Fund's Articles of Incorporation,
By-Laws and applicable Prospectuses and with the instructions and directions of
the Board of Directors of the Fund and will conform to and comply with the
requirements of the 1933 Act, the 1940 Act, the regulations of the National
Association of Securities Dealers, Inc. and all other applicable Federal or
state laws and regulations.
(c) Funds Distributor will bear the cost of printing and distributing any
Prospectus (including any supplement or amendment thereto), provided, however,
that Funds Distributor shall not be obligated to bear the expenses incurred by
the Fund in connection with (i) the preparation and printing of any supplement
or amendment to a Registration Statement or Prospectus necessary for the
continued effective registration of the Shares under the 1933 Act or state
securities laws; and (ii) the printing and distribution of any Prospectus,
supplement or amendment thereto for existing shareholders of the class ("Class")
of Shares described therein.
(d) All Shares of the Portfolio offered for sale by Funds Distributor
shall be offered for sale to the public at a price per share (the "offering
price") equal to (i) their net asset value (determined in the manner set forth
in the applicable Prospectuses) plus, except to those classes of persons set
forth in the applicable Prospectuses, (ii) a sales charge which shall be the
percentage of the offering price of such Shares as set forth in the applicable
Prospectuses. The offering price, if not an exact multiple of one cent, shall be
adjusted to the nearest cent. Concessions paid by Funds Distributor to broker-
dealers and other persons shall be set forth in either the selling agreements
between Funds Distributor and such broker-dealers and persons or,
2
<PAGE>
if such concessions are described in the applicable Prospectuses, shall be as so
set forth. No broker-dealer or other person who enters into a selling or
distribution and servicing agreement with Funds Distributor shall be authorized
to act as agent for the Fund in connection with the offering or sale of Shares
to the public or otherwise.
(e) If any shares sold by Funds Distributor under the terms of this
Agreement are redeemed or repurchased by the Fund or by Funds Distributor as
agent or are tendered for redemption within seven business days after the date
of confirmation of the original purchase of said Shares, Funds Distributor shall
forfeit the amount above the net asset value received by it with respect to such
Shares, provided that the portion, if any, of such amount re-allowed by Funds
Distributor to broker-dealers or other persons shall be repayable to the Fund
only to the extent recovered by Funds Distributor from the broker-dealer or
other persons concerned. Funds Distributor shall include in the form of
agreement with such broker-dealers and other persons a corresponding provision
for the forfeiture by them of their concession with respect to Shares sold by
them or their principals and redeemed or repurchased by the Fund or by Funds
Distributor as agent (or tendered for redemption) within seven business days
after the date of confirmation of such initial purchases.
(f) Funds Distributor may be reimbursed for all or a portion of the
expenses described above to the extent permitted by one or more distribution
plans adopted by the Fund on behalf of a Portfolio pursuant to Rule 12b-1 under
the 1940 Act. No provision of this Agreement may be deemed to prohibit any
payments by a Portfolio to Funds Distributor or by a Portfolio or Funds
Distributor to investment dealers, banks or other financial institutions through
whom shares of the Fund are sold where such payments are made under a
distribution plan adopted by the Fund on behalf of such Portfolio pursuant to
Rule 12b-1 under the Act (the "Plan"). The Fund agrees that it shall provide
notice to Funds Distributor at least 30 days prior to the effective date of the
elimination of or the decrease in the amount of expenses reimbursable under such
a distribution plan.
(g) With respect to such classes of shares, if any, that are sold with a
contingent deferred sales charge ("CDSC"), Funds Distributor shall impose a CDSC
in connection with the redemption of the Shares of such classes, not to exceed a
specified percentage of the original purchase price of the Shares, as from time
to time set forth in the applicable Prospectuses. Funds Distributor may retain
(or receive from the Fund, as the case may be) all of any CDSC. Funds
Distributor may pay to broker-dealers or other persons through whom such Shares
are sold a commission or other payment to the extent consistent with the current
Prospectuses and applicable rules and regulations.
3. Sales and Redemptions.
(a) The Fund shall pay all costs and expenses in connection with the
registration of the Shares under the 1933 Act, and all expenses in connection
with maintaining facilities for the issue and transfer of the Shares and for
supplying information, prices and other data to be furnished by the Fund
hereunder, and all expenses in connection with preparing, printing and
distributing the Prospectuses except as set forth in subsection 2(c) of Section
II hereof.
3
<PAGE>
(b) The Fund shall execute all documents, furnish all information and
otherwise take all actions which may be reasonably necessary in the discretion
of the Fund's officers in connection with the sale of the Shares in such states
as Funds Distributor may designate to the Fund and the Fund may approve, and the
Fund shall pay all filing fees which may be incurred in connection with such
sale. Funds Distributor shall pay all other expenses incurred by Funds
Distributor in connection with the sale of the Shares, except as otherwise
specifically provided in this Agreement.
(c) The Fund shall have the right to suspend the sale of Shares at any
time in response to conditions in the securities markets or otherwise, and to
suspend the redemption of Shares of any Portfolio at any time permitted by the
1940 Act or the rules of the SEC ("Rules").
(d) The Fund reserves the right to reject any order for Shares, but will
not do so arbitrarily or without reasonable cause.
III. LIMITATIONS OF LIABILITY
------------------------
Funds Distributor shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Fund or any Portfolio in connection with
the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
IV. CONFIDENTIALITY
---------------
Funds Distributor will treat confidentially and as proprietary information
of the Fund all records and other information relative to the Fund, to the
Fund's prior or current shareholders and to those persons or entities who
respond to Funds Distributor's inquiries concerning investment in the Fund, and,
except as provided below, will not use such records and information for any
purpose other than the performance of its responsibilities and duties hereunder.
Any other use by Funds Distributor of the information and records referred to
above may be made only after prior notification to and approval in writing by
the Fund. Such approval shall not be unreasonably withheld and may not be
withheld where: (i) Funds Distributor may be exposed to civil or criminal
contempt proceedings for failure to divulge such information; (ii) Funds
Distributor is requested to divulge such information by duly constituted
authorities; or (iii) Funds Distributor is so requested by the Fund.
V. INDEMNIFICATION
---------------
1. Fund Representation. The Fund represents and warrants to Funds
Distributor that at all times the Registration Statement and Prospectuses will
in all material respects conform to the applicable requirements of the 1933 Act
and the Rules thereunder and will not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are
4
<PAGE>
made, not misleading, except that no representation or warranty in this
subsection shall apply to statements or omissions made in reliance upon and in
conformity with written information furnished to the Fund by or on behalf of and
with respect to Funds Distributor expressly for use in the Registration
Statement or Prospectuses.
2. Funds Distributor Representation. Funds Distributor represents and
warrants to the Fund that it is duly organized as a Massachusetts corporation
and is and at all times will remain duly authorized and licensed to carry out
its services as contemplated herein.
3. Fund Indemnification. The Fund, on behalf of the Portfolio, agrees
that the Portfolio will indemnify, defend and hold harmless Funds Distributor,
its several officers and directors, and any person who controls Funds
Distributor within the meaning of Section 15 of the 1933 Act, from and against
any losses, claims, damages or liabilities, joint or several, to which any of
them may become subject under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
Prospectuses or in any application or other document executed by or on behalf of
a Portfolio, or arise out of or based upon, information furnished by or on
behalf of a Portfolio, filed in any state in order to sell the Shares under the
securities or blue sky laws thereof ("Blue Sky Application"), or arise out of,
or are based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse Funds Distributor, its several officers and
directors, and any person who controls Funds Distributor within the meaning of
Section 15 of the 1933 Act, for any legal or other expenses reasonably incurred
by any of them in investigating, defending or preparing to defend any such
action, proceeding or claim; provided, however, that neither the Fund nor any
Portfolio shall be liable in any case to the extent that such loss, claim,
damage or liability arises out of, or is based upon, any untrue statement,
alleged untrue statement, or omission or alleged omission made in the
Registration Statement, the Prospectuses, any Blue Sky Application or any
application or other document executed by or on behalf of the Fund in reliance
upon and in conformity with written information furnished to the Fund by or on
behalf of Funds Distributor specifically for inclusion therein.
A Portfolio shall not indemnify any person pursuant to this subsection 3
unless the court or other body before which the proceeding was brought has
rendered a final decision on the merits that such person was not liable by
reason of his willful misfeasance, bad faith or gross negligence in the
performance of his duties, or his reckless disregard of his obligations and
duties, under this Agreement ("disabling conduct") or, in the absence of such a
decision, a reasonable determination (based upon a review of the facts) that
such person was not liable by reason of disabling conduct has been made by the
vote of a majority of a quorum of Directors of the Fund who are neither
"interested parties" of the Fund (as defined in the 1940 Act) nor parties to the
proceeding, or by an independent legal counsel in a written opinion.
The Portfolio shall advance attorneys' fees and other expenses incurred by
any person in defending any claim, demand, action or suit which is the subject
of a claim for indemnification pursuant to this subsection 3, so long as: (i)
such person shall undertake to repay all such
5
<PAGE>
advances unless it is ultimately determined that he or she is entitled to
indemnification hereunder; and (ii) such person shall provide security for such
undertaking, or the Portfolio shall be insured against losses arising by reason
of any lawful advances, or a majority of a quorum of the disinterested, non-
party Directors of the Fund (or an independent legal counsel in written opinion)
shall determine based on a review of readily available facts (as opposed to a
full trial-type inquiry) that there is reason to believe that such person
ultimately will be found entitled to indemnification hereunder.
The obligations of the Portfolio under this subsection 3 shall be the
several (and not joint or joint and several) obligation of the Portfolio.
4. Funds Distributor Indemnification. Funds Distributor will indemnify,
defend and hold harmless the Fund, the Portfolio, the Fund's several officers
and Directors and any person who controls the Fund or the Portfolio within the
meaning of Section 15 of the 1933 Act, from and against any losses, claims,
damages or liabilities, joint or several, to which any of them may become
subject under the 1933 Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect hereof) arise out of, or
are based upon, any breach of its representations, warranties and agreements
herein, or which arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, the Prospectuses, any Blue Sky Application or any application or
other documents executed by or on behalf of the Fund or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, which statement or
omission was made in reliance upon and in conformity with information furnished
in writing to the Fund or any of its several officers and Directors by or on
behalf of Funds Distributor specifically for inclusion therein, and will
reimburse the Fund, the Portfolio, the Fund's several officers and trustees, and
any person who controls the Fund or the Portfolio within the meaning of Section
15 of the 1933 Act, for any legal or other expenses reasonably incurred by any
of them in investigating, defending or preparing to defend any such action,
proceeding or claim.
5. General Indemnity Provision. No indemnifying party shall be liable
under its indemnity agreement contained in subsection 3 or 4 hereof with respect
to any claim made against such indemnifying party unless the indemnified party
shall have notified the indemnifying party in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon the indemnified party (or after the
indemnified party shall have received notice of such service on any designated
agent), but failure to notify the indemnifying party of any such claim shall not
relieve it from any liability which it may otherwise have to the indemnified
party. The indemnifying party will be entitled to participate at its own expense
in the defense or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, and if the indemnifying party elects to assume the
defense, such defense shall be conducted by counsel chosen by it and reasonably
satisfactory to the indemnified party. In the event the indemnifying party
elects to assume the defense of any such suit and retain such counsel, the
indemnified party shall bear the fees and expenses of any additional counsel
retained by the indemnified party.
6
<PAGE>
VI. DURATION AND TERMINATION
------------------------
This Agreement shall become effective as of the date first above written,
and, unless sooner terminated as provided herein, shall continue until May 5,
2000. Thereafter, if not terminated, this Agreement shall continue automatically
for successive terms of one year, provided that such continuance is specifically
approved at least annually by a vote of the majority of the Board of Directors
of the Fund, including a majority of the Directors who are not "interested
persons" of the Fund and have no direct or indirect financial interest in the
operation of the Plan, this Agreement, or in any agreement relating to the Plan
(the "Plan Directors"), by vote cast in person at a meeting called for the
purpose of voting on such approval; provided, however, that this Agreement may
be terminated with respect to any Portfolio by the Fund at any time, without the
payment of any penalty, by vote of a majority of the Directors or by a vote of a
"majority of the outstanding voting securities" of such Portfolio on 60 days'
written notice to Funds Distributor, or by Funds Distributor at any time,
without the payment of any penalty, on 60 days' written notice to the Fund. This
Agreement will automatically and immediately terminate in the event of its
"assignment." (As used in this Agreement, the terms "majority of the outstanding
voting securities," "interested person" and "assignment" shall have the same
meanings as such terms have in the 1940 Act.)
VII. AMENDMENT OF THIS AGREEMENT
---------------------------
No provision of this Agreement may be changed, waived, discharged or
terminated except by an instrument in writing signed by the party against which
an enforcement of the change, waiver, discharge or termination is sought.
VIII. NOTICE
------
Notices of any kind to be given to the Fund hereunder by Funds Distributor
shall be in writing and shall be duly given if mailed or delivered to the Fund
at 480 Pierce Street, Suite 300, Birmingham, Michigan 48009, Attention: Lee
Munder, with a copy to Jane Kanter, Esq., Dechert Price & Rhoads, 1775 Eye
Street, Washington, D.C. 20006, or at such other address or to such individual
as shall be so specified by the Fund to Funds Distributor. Notices of any kind
to be given to Funds Distributor hereunder by the Fund shall be in writing and
shall be duly given if mailed or delivered to Funds Distributor at 60 State
Street, Suite 1300, Boston, Massachusetts 02109, Attention: Marie Connolly or at
such other address or to such individual as shall be so specified by Funds
Distributor to the Fund.
7
<PAGE>
IX. MISCELLANEOUS
-------------
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. Subject to the
provisions of Section VI hereof, this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
shall be governed by Maryland law; provided, however, that nothing herein shall
be construed in a manner inconsistent with the 1940 Act or any rule or
regulation of the SEC thereunder.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THE MUNDER FUNDS, INC.
By: /s/ Terry H. Gardner
-------------------------------
Name: Terry H. Gardner
-------------------------------
Title: Vice President and Treasurer
-------------------------------
Attest:
----------------------------
FUNDS DISTRIBUTOR, INC.
By: /s/ George A. Rio
-------------------------------
Name: George A. Rio
-------------------------------
Title: Executive Vice President
-------------------------------
Attest:
----------------------------
<PAGE>
Exhibit 99(g)(1)
CUSTODIAN CONTRACT
Between
THE MUNDER FUNDS, INC.
and
STATE STREET BANK AND TRUST COMPANY
Global/Series/Corp.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
1. Employment of Custodian and Property to be Held By
It.................................................................... 1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States................ 2
2.1 Holding Securities............................................... 2
2.2 Delivery of Securities........................................... 2
2.3 Registration of Securities....................................... 4
2.4 Bank Accounts.................................................... 4
2.5 Availability of Federal Funds.................................... 5
2.6 Collection of Income............................................. 5
2.7 Payment of Fund Monies........................................... 5
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased............................................. 6
2.9 Appointment of Agents............................................ 7
2.10 Deposit of Fund Assets in U.S. Securities System................. 7
2.11 Fund Assets Held in the Custodian's Direct
Paper System..................................................... 8
2.12 Segregated Account............................................... 9
2.13 Ownership Certificates for Tax Purposes.......................... 9
2.14 Proxies.......................................................... 10
2.15 Communications Relating to Portfolio
Securities....................................................... 10
3. The Custodian as Foreign Custody Manager.............................. 10
3.1 Definitions...................................................... 10
3.2 Delegation to the Custodian as Foreign Custody Manager........... 11
3.3 Countries Covered................................................ 11
3.4 Scope of Delegated Responsibilities.............................. 12
3.4.1. Selection of Eligible Foreign Custodians.................. 12
3.4.2. Contracts with Eligible Foreign Custodians................ 12
3.4.3. Monitoring................................................ 12
3.5 Guidelines for the Exercise of Delegated Authority............... 13
3.6 Standard of Care as Foreign Custody Manager of a Portfolio....... 13
3.7 Reporting Requirements........................................... 13
3.8 Representations with Respect to Rule 17f-5....................... 13
3.9 Effective Date and Termination of the Custodian as Foreign
Custody Manager.................................................. 13
4. Duties of the Custodian with Respect to Property of the Portfolios
Held Outside the United States........................................ 14
4.1 Definitions...................................................... 14
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
4.2 Holding Securities............................................... 14
4.3 Foreign Securities Systems....................................... 14
4.4 Transactions in Foreign Custody Account.......................... 14
4.4.1. Delivery of Foreign Securities............................ 14
4.4.2. Payment of Portfolio Monies............................... 16
4.4.3. Market Conditions; Market Information..................... 16
4.5 Registration of Foreign Securities............................... 17
4.6 Bank Accounts.................................................... 17
4.7 Collection of Income............................................. 17
4.8 Shareholder Rights............................................... 17
4.9 Communications Relating to Foreign Securities.................... 18
4.10 Liability of Foreign Sub-Custodians and Foreign Securities
Systems.......................................................... 18
4.11 Tax Law.......................................................... 18
4.12 Conflict......................................................... 18
5. Payments for Sales or Repurchases or Redemptions of Shares of the
Fund.................................................................. 19
6. Proper Instructions................................................... 19
7. Actions Permitted Without Express Authority........................... 19
8. Evidence of Authority................................................. 20
9. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income..................... 20
10. Records............................................................... 20
11. Opinion of Fund's Independent Accountants............................. 21
12. Reports to Fund by Independent Public Accountants..................... 21
13. Compensation of Custodian............................................. 21
14. Responsibility of Custodian........................................... 21
15. Effective Period, Termination and Amendment........................... 23
16. Successor Custodian................................................... 24
17. Interpretive and Additional Provisions................................ 24
18. Additional Funds...................................................... 25
19. Massachusetts Law to Apply............................................ 25
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
20. Prior Contracts....................................................... 25
21. Reproduction of Documents............................................. 25
22. Shareholder Communications Election................................... 25
</TABLE>
<PAGE>
CUSTODIAN CONTRACT
------------------
This Contract between The Munder Funds, Inc., a corporation organized and
existing under the laws of Maryland, having its principal place of business at
480 Pierce Street, Birmingham, Michigan 48009, hereinafter called the "Fund",
and State Street Bank and Trust Company, a Massachusetts trust company, having
its principal place of business at 225 Franklin Street, Boston, Massachusetts,
02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, the Fund has appointed the Custodian as custodian of its assets;
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund currently offers shares in fifteen series, Munder All-
Season Aggressive Fund, Munder All-Season Conservative Fund, Munder All-Season
Moderate Fund, Munder Equity Selection Fund, Munder Financial Services Fund,
Munder International Bond Fund, Munder Micro-Cap Equity Fund, Munder Growth
Opportunities 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 Munder NetNet Fund (such series
together with all other series subsequently established by the Fund and made
subject to this Contract in accordance with paragraph 18, being herein referred
to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the assets of the
Portfolios of the Fund, including securities which the Fund, on behalf of the
applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Articles of
Incorporation. The Fund on behalf of the Portfolio(s) agrees to deliver to the
Custodian all securities and cash of the Portfolios, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Portfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares of capital stock of
the Fund representing interests in the Portfolios, ("Shares") as may be issued
or sold from time to time. The Custodian shall not be responsible for any
property of a Portfolio held or received by the Portfolio and not delivered to
the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 6),
the Custodian shall on behalf of the applicable Portfolio(s) from time to time
employ one or more sub-custodians,
<PAGE>
located in the United States but only in accordance with an applicable vote by
the Board of Directors of the Fund on behalf of the applicable Portfolio(s), and
provided that the Custodian shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of any sub-
custodian so employed than any such sub-custodian has to the Custodian. The
Custodian may employ as sub-custodian for the Fund's foreign securities on
behalf of the applicable Portfolio(s) the foreign banking institutions and
foreign securities depositories designated in Schedules A and B hereto but only
in accordance with the applicable provisions of Articles 3 and 4.
2. Duties of the Custodian with Respect to Property of the Fund Held By the
Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of each Portfolio all non-cash property, to be held by it in
the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository or
in a book-entry system authorized by the U.S. Department of the Treasury
(each, a "U.S. Securities System") and (b) commercial paper of an issuer
for which State Street Bank and Trust Company acts as issuing and paying
agent ("Direct Paper") which is deposited and/or maintained in the Direct
Paper System of the Custodian (the "Direct Paper System") pursuant to
Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by a Portfolio held by the Custodian or in a U.S.
Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("Direct Paper System Account") only upon
receipt of Proper Instructions from the Fund on behalf of the applicable
Portfolio, which may be continuing instructions when deemed appropriate by
the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
2.
<PAGE>
6) To the issuer thereof, or its agent, for transfer into the name of
the Portfolio or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.9 or into the name or nominee name of any sub-
custodian appointed pursuant to Article 1; or for exchange for a
different number of bonds, certificates or other evidence representing
the same aggregate face amount or number of units; provide that, in
any such case, the new securities are to be delivered to the
Custodian;
7) Upon the sale of such securities for the account of the Portfolio, to
the broker or its clearing agent, against a receipt, for examination
in accordance with "street delivery" custom; provided that in any such
case, the 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 Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for
definitive securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the
Portfolio, but only against receipt of adequate collateral as agreed
upon from time to time by the Custodian and the Fund on behalf of the
Portfolio, which may be in the form of cash or obligations issued by
the United States government, its agencies or instrumentalities,
except that in connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the Custodian will
not be held liable or responsible for the delivery of securities owned
by the Portfolio prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by the
Fund on behalf of the Portfolio requiring a pledge of assets by the
Fund on behalf of the Portfolio, but only against receipt of amounts
borrowed;
12) For delivery in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the "Exchange
Act") and a member of The National Association of Securities Dealers,
Inc. ("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national
3.
<PAGE>
securities exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions
by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar organization or
organizations, regarding account deposits in connection with
transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may be
described from time to time in the currently effective prospectus and
statement of additional information of the Fund, related to the
Portfolio ("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution of the Board of
Directors or of the Executive Committee signed by an officer of the
Fund and certified by the Secretary or an Assistant Secretary,
specifying the securities of the Portfolio to be delivered, setting
forth the purpose for which such delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming the person
or persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, unless the Fund has authorized in
writing the appointment of a nominee to be used in common with other
registered investment companies having the same investment adviser as the
Portfolio, or in the name or nominee name of any agent appointed pursuant
to Section 2.9 or in the name or nominee name of any sub-custodian
appointed pursuant to Article 1. All securities accepted by the Custodian
on behalf of the Portfolio under the terms of this Contract shall be in
"street name" or other good delivery form. If, however, the Fund directs
the Custodian to maintain securities in "street name", the Custodian shall
utilize its best efforts only to timely collect income due the Fund on such
securities and to notify the Fund on a best efforts basis only of relevant
corporate actions including, without limitation, pendency of calls,
maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio of
the Fund, subject only to draft or order by the Custodian acting pursuant
to the terms of this Contract, and shall hold in
4.
<PAGE>
such account or accounts, subject to the provisions hereof, all cash
received by it from or for the account of the Portfolio, other than cash
maintained by the Portfolio in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act of 1940. Funds
held by the Custodian for a Portfolio may be deposited by it to its credit
as Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company shall
be qualified to act as a Custodian under the Investment Company Act of 1940
and that each such bank or trust company and the funds to be deposited with
each such bank or trust company shall on behalf of each applicable
Portfolio be approved by vote of a majority of the Board of Directors of
the Fund. Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund on
behalf of each applicable Portfolio and the Custodian, the Custodian shall,
upon the receipt of Proper Instructions from the Fund on behalf of a
Portfolio, make federal funds available to such Portfolio as of specified
times agreed upon from time to time by the Fund and the Custodian in the
amount of checks received in payment for Shares of such Portfolio which are
deposited into the Portfolio's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which each
Portfolio shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and
other payments with respect to bearer domestic securities if, on the date
of payment by the issuer, such securities are held by the Custodian or its
agent thereof and shall credit such income, as collected, to such
Portfolio's Custodian account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for payment all coupons
and other income items requiring presentation as and when they become due
and shall collect interest when due on securities held hereunder. Income
due each Portfolio on securities loaned pursuant to the provisions of
Section 2.2(10) shall be the responsibility of the Fund. The Custodian
will have no duty or responsibility in connection therewith, other than to
provide the Fund with such information or data as may be necessary to
assist the Fund in arranging for the timely delivery to the Custodian of
the income to which the Portfolio is properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from the Fund
on behalf of the applicable Portfolio, which may be continuing instructions
when deemed appropriate by the parties, the Custodian shall pay out monies
of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures contracts
or options on futures contracts for the account of the Portfolio but
only (a) against the delivery of such securities or evidence of title
to such options, futures contracts or options on futures contracts to
the Custodian (or any bank, banking firm or trust company doing
business in the United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a Custodian and
has been
5.
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designated by the Custodian as its agent for this purpose) registered
in the name of the Portfolio or in the name of a nominee of the
Custodian referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a U.S.
Securities System, in accordance with the conditions set forth in
Section 2.10 hereof; (c) in the case of a purchase involving the
Direct Paper System, in accordance with the conditions set forth in
Section 2.11; (d) in the case of repurchase agreements entered into
between the Fund on behalf of the Portfolio and the Custodian, or
another bank, or a broker-dealer which is a member of NASD, (i)
against delivery of the securities either in certificate form or
through an entry crediting the Custodian's account at the Federal
Reserve Bank with such securities or (ii) against delivery of the
receipt evidencing purchase by the Portfolio of securities owned by
the Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from the Portfolio or (e) for
transfer to a time deposit account of the Fund in any bank, whether
domestic or foreign; such transfer may be effected prior to receipt of
a confirmation from a broker and/or the applicable bank pursuant to
Proper Instructions from the Fund as defined in Article 6;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Portfolio as
set forth in Article 5 hereof;
4) For the payment of any expense or liability incurred by the Portfolio,
including but not limited to the following payments for the account of
the Portfolio: interest, taxes, management, accounting, transfer agent
and legal fees, and operating expenses of the Fund whether or not such
expenses are to be in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends on Shares of the Portfolio declared
pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in addition to
Proper Instructions from the Fund on behalf of the Portfolio, a
certified copy of a resolution of the Board of Directors or of the
Executive Committee of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary, specifying the
amount of such payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased. Except
as specifically stated otherwise in this Contract, in any and every case
where payment for purchase of
6.
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domestic securities for the account of a Portfolio is made by the Custodian
in advance of receipt of the securities purchased in the absence of
specific written instructions from the Fund on behalf of such Portfolio to
so pay in advance, the Custodian shall be absolutely liable to the Fund for
such securities to the same extent as if the securities had been received
by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of 1940,
as amended, to act as a Custodian, as its agent to carry out such of the
provisions of this Article 2 as the Custodian may from time to time direct;
provided, however, that the appointment of any agent shall not relieve the
Custodian of its responsibilities or liabilities hereunder.
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a clearing
agency registered with the Securities and Exchange Commission under Section
17A of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S. Department
of the Treasury and certain federal agencies, collectively referred to
herein as "U.S. Securities System" in accordance with applicable Federal
Reserve Board and Securities and Exchange Commission rules and regulations,
if any, and subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are represented in an
account ("Account") of the Custodian in the U.S. Securities System
which shall not include any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the account of
the Portfolio upon (i) receipt of advice from the U.S. Securities
System that such securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Custodian to reflect
such payment and transfer for the account of the Portfolio. The
Custodian shall transfer securities sold for the account of the
Portfolio upon (i) receipt of advice from the U.S. Securities System
that payment for such securities has been transferred to the Account,
and (ii) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the Portfolio.
Copies of all advices from the U.S. Securities System of transfers of
securities for the account of the Portfolio shall identify the
Portfolio, be maintained for the Portfolio by the Custodian and be
provided to the Fund at its request. Upon request, the Custodian shall
furnish the Fund on behalf of the Portfolio confirmation of each
transfer to or from the account of the Portfolio in the form of a
written advice or
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notice and shall furnish to the Fund on behalf of the Portfolio
copies of daily transaction sheets reflecting each day's transactions
in the U.S. Securities System for the account of the Portfolio;
4) The Custodian shall provide the Fund for the Portfolio with any report
obtained by the Custodian on the U.S. Securities System's accounting
system, internal accounting control and procedures for safeguarding
securities deposited in the U.S. Securities System;
5) The Custodian shall have received from the Fund on behalf of the
Portfolio the initial or annual certificate, as the case may be,
required by Article 15 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the Portfolio
for any loss or damage to the Portfolio resulting from use of the U.S.
Securities System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any of its or
their employees or from failure of the Custodian or any such agent to
enforce effectively such rights as it may have against the U.S.
Securities System; at the election of the Fund, it shall be entitled
to be subrogated to the rights of the Custodian with respect to any
claim against the U.S. Securities System or any other person which the
Custodian may have as a consequence of any such loss or damage if and
to the extent that the Portfolio has not been made whole for any such
loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian may
deposit and/or maintain securities owned by a Portfolio in the Direct Paper
System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions from the Fund on
behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the Direct Paper
System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the account of
the Portfolio upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to the
account of the Portfolio. The Custodian shall transfer securities sold
for the account of the Portfolio upon the making of an entry
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on the records of the Custodian to reflect such transfer and receipt
of payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the Portfolio,
in the form of a written advice or notice, of Direct Paper on the next
business day following such transfer and shall furnish to the Fund on
behalf of the Portfolio copies of daily transaction sheets reflecting
each day's transaction in the U.S. Securities System for the account
of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the Portfolio with
any report on its system of internal accounting control as the Fund
may reasonably request from time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper Instructions
from the Fund on behalf of each applicable Portfolio establish and maintain
a segregated account or accounts for and on behalf of each such Portfolio,
into which account or accounts may be transferred cash and/or securities,
including securities maintained in an account by the Custodian pursuant to
Section 2.10 hereof, (i) in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian and a broker-
dealer registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing Corporation
and of any registered national securities exchange (or the Commodity
Futures Trading Commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Portfolio, (ii) for
purposes of segregating cash or government securities in connection with
options purchased, sold or written by the Portfolio or commodity futures
contracts or options thereon purchased or sold by the Portfolio, (iii) for
the purposes of compliance by the Portfolio with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release or
releases of the Securities and Exchange Commission relating to the
maintenance of segregated accounts by registered investment companies and
(iv) for other proper corporate purposes, but only, in the case of clause
(iv), upon receipt of, in addition to Proper Instructions from the Fund on
behalf of the applicable Portfolio, a certified copy of a resolution of
the Board of Directors or of the Executive Committee signed by an officer
of the Fund and certified by the Secretary or an Assistant Secretary,
setting forth the purpose or purposes of such segregated account and
declaring such purposes to be proper corporate purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
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2.14 Proxies. The Custodian shall, with respect to the domestic securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Portfolio or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 Communications Relating to Portfolio Securities. Subject to the provisions
of Section 2.3, the Custodian shall transmit promptly to the Fund for each
Portfolio all written information (including, without limitation, pendency
of calls and maturities of domestic securities and expirations of rights in
connection therewith and notices of exercise of call and put options
written by the Fund on behalf of the Portfolio and the maturity of futures
contracts purchased or sold by the Portfolio) received by the Custodian
from issuers of the securities being held for the Portfolio. With respect
to tender or exchange offers, the Custodian shall transmit promptly to the
Portfolio all written information received by the Custodian from issuers of
the securities whose tender or exchange is sought and from the party (or
his agents) making the tender or exchange offer. If the Portfolio desires
to take action with respect to any tender offer, exchange offer or any
other similar transaction, the Portfolio shall notify the Custodian at
least three business days prior to the date on which the Custodian is to
take such action.
3. The 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
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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, on the Portfolio's behalf, 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 Custodian as Foreign Custody Manager. The Fund, by
resolution adopted by its Board of Directors, hereby delegates to the
Custodian, with respect to the Portfolios, subject to Section (b) of Rule
17f-5, the responsibilities set forth in this Article 3 with respect to
Foreign Assets of the Portfolios held outside the United States, and the
Custodian hereby accepts such delegation, as Foreign Custody Manager with
respect to the Portfolios.
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 the Portfolios 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 on behalf of the Portfolios
of the applicable account opening requirements for such country, the
Foreign Custody Manager shall be deemed to have been delegated by the Board
of Directors on behalf of the Portfolios 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 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 of Directors on behalf of
the Portfolios to the Custodian as Foreign Custody Manager for that
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country shall be deemed to have been withdrawn and the Custodian shall
immediately cease to be the Foreign Custody Manager of the Portfolios 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
Custodian shall have no further responsibility as Foreign Custody Manager
to the Fund with respect to the country as to which the 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 Portfolio's Foreign
Custody Manager may place and maintain the Foreign Assets in the care of
the Eligible Foreign Custodian selected by the 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
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arrangements with an Eligible Foreign Custodian it has selected are no
longer appropriate, the Foreign Custody Manager shall notify the Board of
Directors in accordance with Section 3.7 hereunder.
3.5. Guidelines for the Exercise of Delegated Authority. For purposes of this
Article 3, the Board of Directors 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 Custodian is
serving as Foreign Custody Manager of the Portfolios. The Fund, on behalf
of the Portfolios, and the Board of Directors shall be deemed to be
monitoring on a continuing basis such Country Risk to the extent that the
Board of Directors considers necessary or appropriate. The Fund and the
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.
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 of Directors 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 Directors 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 Custodian that the Board of Directors has
determined that it is reasonable for the Board of Directors to rely on the
Custodian to perform the responsibilities delegated pursuant to this
Contract to the Custodian as the Foreign Custody Manager of the Portfolios.
3.9. Effective Date and Termination of the Custodian as Foreign Custody Manager.
The Board of Directors's delegation to the Custodian as Foreign Custody
Manager of the Portfolios 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 (30) 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 Custodian as Foreign
Custody Manager of the Portfolios with respect to designated countries.
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4. Duties of the 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:
"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-Custodian" means a foreign banking institution serving as an
Eligible Foreign Custodian.
4.2. Holding Securities. The Custodian shall identify on its books as belonging
to the Portfolios the foreign securities held by each Foreign Sub-Custodian
or Foreign Securities System. The Custodian may hold foreign securities for
all of its customers, including the Portfolios, with any Foreign Sub-
Custodian in an account that is identified as belonging to the Custodian
for the benefit of its customers, provided however, that (i) the records of
the 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 Custodian shall require that
securities so held by the Foreign Sub-Custodian be held separately from any
assets of such Foreign Sub-Custodian or of other customers of such Foreign
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-Custodian in such country pursuant to the
terms of this Contract.
4.4. Transactions in Foreign Custody Account.
4.4.1. Delivery of Foreign Securities.
The Custodian or a Foreign Sub-Custodian shall release and deliver foreign
securities of the Portfolios held by such Foreign 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 foreign securities 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 Portfolios;
(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 Custodian (or the name of the respective Foreign Sub-Custodian
or of any nominee of the Custodian or such Foreign 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-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-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
Portfolios requiring a pledge of assets by the Portfolios;
(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 Proper
Instructions specifying the foreign securities to be delivered,
setting forth the purpose for which such delivery is to be made,
declaring such purpose to be a proper corporate purpose, and naming
the person or persons to whom delivery of such securities shall be
made.
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4.4.2. Payment of Portfolio Monies.
Upon receipt of Proper Instructions, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall pay out, or direct the
respective Foreign 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 Custodian or its Foreign Sub-Custodians;
(v) in connection with trading in options and futures contracts, including
delivery as original margin and variation margin;
(vi) for payment of part or all of the dividends received in respect of
securities sold short;
(vii) in connection with the borrowing or lending of foreign securities; and
(viii) for any other proper purpose, but only upon receipt of Proper
Instructions 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.
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 the Portfolios and
delivery of Foreign Assets maintained for the account of the Portfolios 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,
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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 Custodian shall provide to the Board of Directors the information with
respect to custody and settlement practices in countries in which the
Custodian employs a Foreign 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 Custodian may
revise Schedule C from time to time, provided that no such revision shall
result in the Board of Directors 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 Sub-Custodian (other than bearer securities) shall
be registered in the name of the applicable Portfolio or in the name of the
Custodian or in the name of any Foreign Sub-Custodian or in the name of any
nominee of the foregoing, and the Fund on behalf of such Portfolio agrees
to hold any such nominee harmless from any liability as a holder of record
of such foreign securities. The Custodian or a Foreign Sub-Custodian shall
not be obligated to accept securities on behalf of a 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 Custodian shall identify on its books as belonging to
the Fund cash (including cash denominated in foreign currencies) deposited
with the Custodian. Where the Custodian is unable to maintain, or market
practice does not facilitate the maintenance of, cash on the books of the
Custodian, a bank account or bank accounts opened and maintained outside
the United States on behalf of a Portfolio with a Foreign Sub-Custodian
shall be subject only to draft or order by the Custodian or such Foreign
Sub-Custodian, acting pursuant to the terms of this Contract to hold cash
received by or from or for the account of the Portfolio.
4.7. Collection of Income. The Custodian shall use reasonable commercial
efforts to collect all income and other payments with respect to the
Foreign Assets held hereunder to which the Portfolios shall be entitled and
shall credit such income, as collected, to the applicable Portfolio. In the
event that extraordinary measures are required to collect such income, the
Fund and the Custodian shall consult as to such measures and as to the
compensation and expenses of the Custodian relating to such measures.
4.8. Shareholder Rights. With respect to the foreign securities held pursuant to
this Article 4, the 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.
17.
<PAGE>
4.9. Communications Relating to Foreign Securities. The 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 Custodian
via the Foreign Sub-Custodians from issuers of the foreign securities
being held for the account of the Portfolios. With respect to tender or
exchange offers, the Custodian shall transmit promptly to the Fund written
information so received by the 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 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
Portfolios at any time held by it unless (i) the Custodian or the
respective Foreign Sub-Custodian is in actual possession of such foreign
securities or property and (ii) the 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
Custodian is to take action to exercise such right or power.
4.10. Liability of Foreign Sub-Custodians and Foreign Securities Systems. Each
agreement pursuant to which the Custodian employs a Foreign Sub-Custodian
shall, to the extent possible, require the Foreign Sub-Custodian to
exercise reasonable care in the performance of its duties and, to the
extent possible, to indemnify, and hold harmless, the Custodian from and
against any loss, damage, cost, expense, liability or claim arising out of
or in connection with the Foreign Sub-Custodian's performance of such
obligations. At the Fund's election, the Portfolios shall be entitled to
be subrogated to the rights of the Custodian with respect to any claims
against a Foreign Sub-Custodian as a consequence of any such loss, damage,
cost, expense, liability or claim if and to the extent that the Portfolios
have not been made whole for any such loss, damage, cost, expense,
liability or claim.
4.11. Tax Law. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund, the Portfolios or the
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 Custodian of the obligations
imposed on the Fund with respect to the Portfolios or the Custodian as
custodian of the 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 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 Conflict. If the Custodian is delegated the responsibilities of Foreign
Custody Manager pursuant to the terms of Section 3 hereof, in the event of
any conflict between the provisions of Sections 3 and 4 hereof, the
provisions of Section 3 shall prevail.
18.
<PAGE>
5. Payments for Sales or Repurchases or Redemptions of Shares of the Fund
The Custodian shall receive from the distributor for the Shares or from the
transfer agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the transfer agent
of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes of the
Board of Directors of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the transfer agent, make funds available for
payment to holders of Shares who have delivered to the transfer agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt
of instructions from the transfer agent to wire funds to or through a
commercial bank designated by the redeeming shareholders. In connection with the
redemption or repurchase of Shares of the Fund, the Custodian shall honor checks
drawn on the Custodian by a holder of Shares, which checks have been furnished
by the Fund to the holder of Shares, when presented to the Custodian in
accordance with such procedures and controls as are mutually agreed upon from
time to time between the Fund and the Custodian.
6. Proper Instructions
Proper Instructions as used throughout this Contract means a writing signed
or initialed by one or more person or persons as the Board of Directors shall
have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Directors of the
Fund accompanied by a detailed description of procedures approved by the Board
of Directors, Proper instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Directors and the Custodian are satisfied that such procedures afford adequate
safeguards for the Portfolios' assets. For purposes of this Section, Proper
Instructions shall include instructions received by the Custodian pursuant to
any three-party agreement which requires a segregated asset account in
accordance with Section 2.12.
7. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to the
Fund on behalf of the Portfolio;
19.
<PAGE>
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Portfolio, checks, drafts
and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Portfolio except as
otherwise directed by the Board of Directors of the Fund.
8. Evidence of Authority
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Directors of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Directors pursuant to the Articles of Incorporation as described
in such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
9. Duties of Custodian with Respect to the Books of Account and Calculation of
Net Asset Value and Net Income
The Custodian shall keep the books of account of each Portfolio and compute
the net asset value per share of the outstanding shares of each Portfolio. The
Custodian shall also calculate daily the net income of the Portfolio as
described in the Fund's currently effective prospectus related to such Portfolio
and shall advise the Fund and the transfer agent daily of the total amounts of
such net income and shall advise the transfer agent periodically of the division
of such net income among its various components. The calculations of the net
asset value per share and the daily income of each Portfolio shall be made at
the time or times described from time to time in the Fund's currently effective
prospectus related to such Portfolio.
10. Records
The Custodian shall with respect to each Portfolio create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the Investment Company Act
of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of the Fund and shall
at all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the Fund and
employees and agents of the Securities and Exchange Commission. The Custodian
shall, at the Fund's request, supply the Fund with a tabulation of securities
owned by each Portfolio and held by the Custodian and shall, when
20.
<PAGE>
requested to do so by the Fund and for such compensation as shall be agreed upon
between the Fund and the Custodian, include certificate numbers in such
tabulations.
11. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the SEC and with respect to any
other requirements thereof.
12. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each of the Portfolios
at such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this Contract;
such reports, shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, the reports shall so state.
13. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund on
behalf of each applicable Portfolio and the Custodian.
14. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by the Fund and shall be without liability to the Fund for any
action taken or omitted by it in good faith without negligence, willful
misconduct or reckless disregard of its duties and obligations under this
Contract. It shall be entitled to rely on and may act upon advice of counsel
(who may be counsel for the Fund) on all matters, and shall be without liability
for any action reasonably taken or omitted pursuant to such advice. The
Custodian shall be without liability to the Fund and the Portfolios for any
loss, liability, claim or expense resulting from or caused by anything which is
(A) part of Country Risk (as defined in Section 3 hereof), including without
limitation nationalization, expropriation, currency restriction, or acts of war,
revolution, riots or
21.
<PAGE>
terrorism, or (B) part of the "prevailing country risk" of 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 thereof.
Except as may arise from the Custodian's own bad faith, negligence,
willful misconduct or reckless disregard of its duties and obligations hereunder
or the bad faith, negligence or willful misconduct or reckless disregard of the
duties and obligations of a sub-custodian or agent, the Custodian shall be
without liability to the Fund for any loss, liability, claim or expense
resulting from or caused by; (i) events or circumstances beyond the reasonable
control of the Custodian or any sub-custodian or Securities System or any agent
or nominee of any of the foregoing, including, without limitation,
nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, acts
of war or terrorism, riots, revolutions, work stoppages, natural disasters or
other similar events or acts; (ii) errors by the Fund or the Investment Advisor
in their instructions to the Custodian provided such instructions have been in
accordance with this Contract; (iii) the insolvency of or acts or omissions by a
Securities System; (iv) any delay or failure of any broker, agent or
intermediary, central bank or other commercially prevalent payment or clearing
system to deliver to the Custodian's sub-custodian or agent securities
purchased or in the remittance or payment made in connection with securities
sold; (v) any delay or failure of any company, corporation, or other body in
charge of registering or transferring securities in the name of the Custodian,
the Fund, the Custodian's sub-custodians, nominees or agents or any
consequential losses arising out of such delay or failure to transfer such
securities including non-receipt of bonus, dividends and rights and other
accretions or benefits; (vi) delays or inability to perform its duties due to
any disorder in market infrastructure with respect to any particular security or
Securities System; and (vii) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or
any other country, or political subdivision thereof or of any court of competent
jurisdiction.
The Custodian shall be liable for the acts or omissions of a Foreign Sub-
Custodian to the same extent as set forth with respect to sub-custodians
generally in this Contract.
If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to the Fund or the Portfolio being liable for the payment
of money or incurring liability of some other form, the Fund on behalf of the
Portfolio, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) or in
the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent
22.
<PAGE>
action, negligent failure to act or willful misconduct, any property at any time
held for the account of the applicable Portfolio shall be security therefor to
the extent thereof, and should the Fund fail to repay the Custodian promptly,
the Custodian shall be entitled to utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain reimbursement.
The Custodian shall have no responsibility or liability for any acts or
omissions of any prior custodian, subcustodian, accounting agent or other
service provider to the Fund and shall be indemnified by the Fund against any
claims arising out of or attributable to the acts or omissions of any prior
custodian, subcustodian, accounting agent or other service provider. Without in
any way limiting the foregoing, the Custodian shall have no liability in respect
of any loss, damage or expense suffered by the Fund insofar as such loss, damage
or expense arises from the performance of the Custodian's duties hereunder in
reliance upon records that were maintained for the Fund by entities other than
the Custodian prior to the Custodian's appointment as custodian for the Fund.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
15. Effective Period, Termination and Amendment
-------------------------------------------
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
the Fund or the Custodian by an instrument in writing delivered or mailed,
postage prepaid to the other parties, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not with respect to a Portfolio act under
Section 2.10 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Directors of the Fund has
approved the initial use of a particular Securities System by such Portfolio, as
required by Rule 17f-4 under the Investment Company Act of 1940, as amended and
that the Custodian shall not with respect to a Portfolio act under Section 2.11
hereof in the absence of receipt of an initial certificate of the Secretary or
an Assistant Secretary that the Board of Directors has approved the initial use
of the Direct Paper System by such Portfolio; provided further, however, that
the Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Articles of
Incorporation, and further provided, that the Fund on behalf of one or more of
the Portfolios may at any time by action of its Board of Directors (i)
substitute another bank or trust company for the Custodian by giving notice as
described above to the Custodian, or (ii) immediately terminate this Contract in
the event of the appointment of a conservator or receiver for the Custodian by
the Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
23.
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16. Successor Custodian
-------------------
If a successor Custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Directors of the Fund, the Custodian shall,
upon termination, deliver to such successor Custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor Custodian all of the securities of each such Portfolio held in
a Securities System.
If no such successor Custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor Custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to transfer
to an account of such successor Custodian all of the securities of each such
Portfolio held in any Securities System. Thereafter, such bank or trust company
shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Directors to appoint a successor Custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
17. Interpretive and Additional Provisions
--------------------------------------
In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
Contract. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Articles of Incorporation of the Fund.
No interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Contract.
24.
<PAGE>
18. Additional Funds
----------------
In the event that the Fund establishes one or more series of Shares in
addition to Munder All-Season Aggressive Fund, Munder All-Season Conservative
Fund, Munder All-Season Moderate Fund, Munder International Bond Fund, Munder
Micro-Cap Equity Fund, Munder Growth Opportunities Fund, Munder Money Market
Fund, Munder Multi-Season Growth Fund, Munder Real Estate Equity Investment
Fund, Munder Small-Cap Value Fund, Munder Equity Selection Fund, Munder
Financial Services Fund, Munder Short Term Treasury Fund, Munder Value Fund and
Munder NetNet Fund with respect to which it desires to have the Custodian render
services as Custodian under the terms hereof, it shall so notify the Custodian
in writing, and if the Custodian agrees in writing to provide such services,
such series of Shares shall become a Portfolio hereunder.
19. Massachusetts Law to Apply
--------------------------
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
20. Prior Contracts
---------------
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the Custodian
relating to the custody of the Fund's assets.
21. Reproduction of Documents
-------------------------
This Contract and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm, micro-
card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
22. Shareholder Communications Election
-----------------------------------
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether it authorizes the
Custodian to provide the Fund's name, address, and share position to requesting
companies whose securities the Fund owns. If the Fund tells the Custodian "no",
the Custodian will not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or "no" below, the
Custodian is required by the rule to treat the Fund as consenting to disclosure
of this information
25.
<PAGE>
for all securities owned by the Fund or any funds or accounts established by
the Fund. For the Fund's protection, the Rule prohibits the requesting company
from using the Fund's name and address for any purpose other than corporate
communications. Please indicate below whether the Fund consents or objects by
checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's name, address, and
share positions.
NO [ ] The Custodian is not authorized to release the Fund's name, address,
and share positions.
26.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 3rd day of August, 1999.
ATTEST THE MUNDER FUNDS, INC.
By /s/ Terry H. Gardner
- ---------------------- ----------------------------
Name: Terry H. Gardner
Title: Vice President and
Chief Financial Officer
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ Marc L. Parsons By /s/ Ronald E. Logue
- ---------------------- ----------------------------
Marc L. Parsons Ronald E. Logue
Associate Counsel Vice Chairman
<PAGE>
Exhibit 99(g)(2)
State Street Bank and Trust Company
1776 Heritage Drive, AFB
North Quincy, MA 02171
Ladies and Gentlemen:
Reference is made to the Custodian Contract between us dated as of August
3, 1999 (the "Agreement").
Pursuant to the Agreement, this letter is to provide notice of the creation
of an additional investment portfolio of The Munder Funds, Inc., namely the
Munder Future Technology Fund (the "New Portfolio").
In accordance with the Additional Portfolios provision of Section 17 of the
Agreement, we request that you act as Custodian with respect to the New
Portfolio.
Please indicate your acceptance of the foregoing by executing two copies of
this Agreement, returning one to the Fund and retaining one copy for your
records.
Very truly yours,
The Munder Funds, Inc.
By: /s/ Terry H. Gardner
-----------------------
Accepted:
State Street Bank and Trust Company
By: /s/ Nick Bonos
-----------------------
Date: August 3, 1999
<PAGE>
Exhibit 99(h)(4)
State Street Bank and Trust Company
1776 Heritage Drive, AFB
North Quincy, MA 02171
Ladies and Gentlemen:
Reference is made to the Administration Agreement between us dated as of
October 31, 1997 (the "Agreement").
Pursuant to the Agreement, this letter is to provide notice of the creation
of an additional investment portfolio of The Munder Funds, Inc., namely the
Munder Future Technology Fund (the "New Portfolio").
In accordance with the Additional Portfolios provision of Section 1 of the
Agreement, we request that you act as Administrator with respect to the New
Portfolio.
Please indicate your acceptance of the foregoing by executing two copies of
this Agreement, returning one to the Fund and retaining one copy for your
records.
Very truly yours,
The Munder Funds, Inc.
By: /s/ Terry H. Gardner
--------------------------------
Accepted:
State Street Bank and Trust Company
By: /s/ William Beston
--------------------------------
Date: May 4, 1999
<PAGE>
Exhibit 99(h)(20)
First Data Investor Services Group, Inc.
One Exchange Place
Boston, MA 02109
Ladies and Gentlemen:
Reference is made to the Transfer Agent and Registrar Agreement between us
dated as of June 19, 1995, as amended (the "Agreement").
Pursuant to the Agreement, this letter is to provide notice of the creation
of an additional investment portfolio of The Munder Funds, Inc., namely the
Munder Future Technology Fund (the "New Portfolio").
We request that you act as Transfer Agent under the Agreement with respect
to the New Portfolio.
Please indicate your acceptance of the foregoing by executing two copies of
this Agreement, returning one to the Fund and retaining one copy for your
records.
Very truly yours,
The Munder Funds, Inc.
By: /s/ Terry H. Gardner
-------------------------------------
Accepted:
First Data Investor Services Group, Inc.
By: /s/ Debelee Goldberg
-------------------------------------
Date: May 4, 1999
<PAGE>
Exhibit 99(m)(42)
Service Plan
Class A Shares of
Munder Future Technology Fund
<PAGE>
SERVICE PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder Future Technology Fund
(the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class A;
WHEREAS, the Company employs Funds Distributor, Inc. (the "Distributor") as
distributor of the securities of which it is the issuer;
WHEREAS, the Company and the Distributor have entered into a Distribution
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company; and
WHEREAS, this Service Plan (the "Plan") was adopted and approved by the
Company on May 4, 1999;
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class A shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. The Fund shall pay to the Distributor, as the distributor of the Class
A shares of the Fund, a service fee at the rate of .25% on an annualized basis
of the average daily net assets of the Fund's Class A shares, provided that, at
any time such payments is made, whether or not this Plan continues in effect,
the making thereof will not cause the limitation upon such payments established
by this Plan to be exceeded. Such fee shall be calculated and accrued daily and
paid at such intervals as the Board of Directors shall determine, subject to any
applicable restriction imposed by rules of the National Association of
Securities Dealers, Inc.
2. The amount set forth in paragraph 1 of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. The Plan shall not take effect with respect to the Class A Shares of
the Fund until is has been approved by a vote of the then sole shareholder of
the Class A Shares of the Fund.
4. This Plan shall not take effect until it, with any related agreements,
has been approved by votes of a majority of both (a) the Directors of the
Company and (b) those Directors of the Company who are not "interested persons"
of the Company (as defined in the Act) and
1
<PAGE>
who have no direct or indirect financial interest in the operation of this Plan
or any agreements related to it (the "Rule 12b-1 Directors"), cast in person at
a meeting (or meetings) called for the purpose of voting on this Plan and such
related agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall
take effect. The Plan shall continue in full force and effect as to the Class A
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
7. This Plan may be terminated as to the Fund at any time, without
payment of any penalty, by vote of the Directors of the Company, by vote of a
majority of the Rule 12b-1 Directors, or by a vote of a majority of the
outstanding voting securities of Class A shares of the Fund on not more than 30
days' written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
service fee provided for in paragraph 1 hereof unless such amendment is approved
in the manner provided for initial approval in paragraph 3 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for approval and annual renewal in paragraph 4 hereof.
9. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Company
shall be committed to the discretion of the Directors who are not such
interested persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service Plan as of the 4th day of May, 1999.
THE MUNDER FUNDS, INC.
By: /s/ Terry H. Gardner
------------------------
FUNDS DISTRIBUTOR, INC.
By: /s/ George Rio
------------------------
2
<PAGE>
Exhibit 99(m)(43)
Service and Distribution Plan
Class B Shares of
Munder Future Technology Fund
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder Future Technology 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 4, 1999;
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class B shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. A. The Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
B shares, provided that, at any time such payments is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. In addition to the distribution fee distributed above, the Fund
shall pay to the Distributor, as the distributor of the Class B shares of the
Fund, a service fee at the rate of .25% on an annualized basis of the average
daily net asset of the Fund's Class B shares, provided that, at any time such
payment is made, whether or not this Plan continues in effect, the making
thereof will not cause the limitation upon such payments established by this
Plan to be exceeded. Such fee shall be calculated and accrued daily and paid at
such intervals as the Board of Directors shall determine, subject to any
applicable restriction imposed by rules of the National Securities Association
of Dealers, Inc.
1
<PAGE>
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Funds in
connection with any activities or expenses primarily intended to result in the
sale of the Class B shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations to obtain various distribution related and/or administrative
services for the Fund. These services include, among other things, processing
new shareholder account applications, preparing and transmitting to the Fund's
Transfer Agent computer processable tapes of all transactions by customers and
serving as the primary source of information to customers in answering questions
concerning the Fund and their transactions with the Fund. The Distributor is
also authorized to engage in advertising, the preparation and distribution of
sales literature and other promotional activities on behalf of the Fund. In
addition, this Plan hereby authorizes payment by the Fund of the cost of
preparing, printing and distributing the Fund's Prospectuses and Statements of
Additional Information to prospective investors and of implementing and
operating the Plan. Distribution expenses also include an allocation of overhead
of the Distributor and accruals for interest on the amount of distribution
expenses that exceed distribution fees and contingent deferred sales charges
received by the Distributor. Payments under the Plan are not tied exclusively to
actual distribution and service expenses, and the payments may exceed
distribution and service expenses actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect with respect to the Class B Shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class B Shares of the Fund.
4. This Plan shall not take effect until it, with any related agreements,
has been approved by votes of a majority of both (a) the Directors of the
Company and (b) those Directors of the Company who are not "interested persons"
of the Company (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan and such related agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class B
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
2
<PAGE>
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class B shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service and Distribution Plan as of the 4th day of May, 1999.
THE MUNDER FUNDS, INC.
By: /s/ Terry H. Gardner
------------------------
FUNDS DISTRIBUTOR, INC.
By: /s/ George Rio
------------------------
3
<PAGE>
Exhibit 99(m)(44)
Service and Distribution Plan
Class C Shares of
Munder Tech Leadership Fund
<PAGE>
Exhibit 99(m)(44)
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Funds, Inc. (the "Company") engages in business as an
open-end investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company are currently divided into
series of shares, one of which is designated as Munder Future Technology Fund
(the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class II;
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 4, 1999;
NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with
respect to its Class II 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 II 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
II shares, provided that, at any time such payments is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors shall determine, subject to any applicable restriction imposed by
rules of the National Association of Securities Dealers, Inc.
B. In addition to the distribution fee distributed above, the Fund
shall pay to the Distributor, as the distributor of the Class C shares of the
Fund, a service fee at the rate of .25% on an annualized basis of the average
daily net asset of the Fund's Class II shares, provided that, at any time such
payment is made, whether or not this Plan continues in effect, the making
thereof will not cause the limitation upon such payments established by this
Plan to be exceeded. Such fee shall be calculated and accrued daily and paid at
such intervals as the Board of Directors shall determine, subject to any
applicable restriction imposed by rules of the National Securities Association
of Dealers, Inc.
1
<PAGE>
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Funds in
connection with any activities or expenses primarily intended to result in the
sale of the Class II shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations to obtain various distribution related and/or administrative
services for the Fund. These services include, among other things, processing
new shareholder account applications, preparing and transmitting to the Fund's
Transfer Agent computer processable tapes of all transactions by customers and
serving as the primary source of information to customers in answering questions
concerning the Fund and their transactions with the Fund. The Distributor is
also authorized to engage in advertising, the preparation and distribution of
sales literature and other promotional activities on behalf of the Fund. In
addition, this Plan hereby authorizes payment by the Fund of the cost of
preparing, printing and distributing the Fund's Prospectuses and Statements of
Additional Information to prospective investors and of implementing and
operating the Plan. Distribution expenses also include an allocation of overhead
of the Distributor and accruals for interest on the amount of distribution
expenses that exceed distribution fees and contingent deferred sales charges
received by the Distributor. Payments under the Plan are not tied exclusively to
actual distribution and service expenses, and the payments may exceed
distribution and service expenses actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect with respect to the Class II Shares of
the Fund until it has been approved by a vote of the then sole shareholder of
the Class II Shares of the Fund.
4. This Plan shall not take effect until it, with any related agreements,
has been approved by votes of a majority of both (a) the Directors of the
Company and (b) those Directors of the Company who are not "interested persons"
of the Company (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan and such related agreements.
5. After approval as set forth in paragraphs 3 and 4, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class II
shares of the Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. The Distributor shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
2
<PAGE>
7. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of Class II shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
10. The Company shall preserve copies of this Plan and any related
agreements and all reports made to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, and the Distributor
have executed this Service and Distribution Plan as of the 4th day of May, 1999.
THE MUNDER FUNDS, INC.
By: /s/ Terry H. Gardner
----------------------
FUNDS DISTRIBUTOR, INC.
By: /s/ George Rio
----------------------
3
