SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[X] Preliminary Proxy
Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14 a-12
</Table>
MUNDER SERIES TRUST II
- ------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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(MUNDER FUNDS LOGO)
MUNDER SERIES TRUST II
MUNDER HEALTHCARE FUND
480 PIERCE STREET
BIRMINGHAM, MICHIGAN 48009
SEPTEMBER , 2006
Dear Shareholder:
A Special Meeting of Shareholders of the Munder Healthcare Fund will be
held at The Community House, 380 South Bates Street, Birmingham, Michigan 48009,
on Thursday, October 26, 2006, at 10:00 a.m., Eastern time to approve a new
investment advisory agreement for the Fund, to approve the amendment or
elimination of certain fundamental investment restrictions, and to approve a
transaction that will reorganize the Fund into a Delaware statutory trust.
The enclosed materials describe a proposed transaction whereby the
management of Munder Capital Management ("Advisor") will partner with Crestview
Capital Partners L.P. to acquire Comerica Incorporated's 89% ownership stake in
the Advisor.
I enthusiastically support this transaction as it will help the Advisor:
- Maintain its culture and rigorous, disciplined investment process;
- Attract and retain key investment professionals;
- Continue to provide quality services to the Fund; and
- Increase its vested interest in the performance and success of The Munder
Funds.
Following the transaction, the Advisor will continue to operate under its
present name and its senior management and portfolio managers will continue to
lead the firm and manage your Fund. None of the changes and agreements described
in these materials is intended to alter the way in which we manage the Fund or
result in the increase of any fees or expenses.
THE BOARD OF TRUSTEES OF THE FUND UNANIMOUSLY RECOMMENDS YOU VOTE IN FAVOR
OF EACH OF THE MATTERS TO BE VOTED ON AT THE MEETING.
PLEASE REVIEW THESE PROXY SOLICITATION MATERIALS AND COMPLETE AND RETURN
YOUR PROXY CARD AS SOON AS POSSIBLE. ALTERNATIVELY, YOU MAY VOTE BY TELEPHONE OR
VIA THE INTERNET. IT IS VERY IMPORTANT THAT YOU VOTE AND THAT YOUR VOTING
INSTRUCTIONS BE RECEIVED NO LATER THAN OCTOBER 25, 2006.
If you have any questions after considering the enclosed materials, please
call [number to be inserted].
Sincerely,
/s/ John S. Adams
John S. Adams
President and Principal Executive Officer
Munder Series Trust II
MUNDER SERIES TRUST II
MUNDER HEALTHCARE FUND
480 PIERCE STREET
BIRMINGHAM, MICHIGAN 48009
(800) 468-6337
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 26, 2006
To the Shareholders:
Munder Series Trust II, on behalf of its sole series, Munder Healthcare
Fund ("Fund"), will hold a Special Meeting of Shareholders ("Meeting") at The
Community House, 380 South Bates Street, Birmingham, Michigan 48009, on
Thursday, October 26, 2006 at 10:00 a.m., Eastern time, for the following
purposes:
1. To approve a new combined investment advisory agreement with Munder
Capital Management LLC;
2. To approve an agreement and plan of reorganization and redomiciliation,
pursuant to which the Fund would be reorganized as a separate series of
Munder Series Trust;
3. To approve the amendment or elimination of certain fundamental
investment restrictions; and
4. To transact such other business as may properly come before the Meeting
and any adjournments or postponements thereof.
You are entitled to vote at the Meeting and any adjournments or
postponements thereof if you owned shares of the Fund at the close of business
on September 1, 2006.
Whether or not you plan to attend the Meeting in person, please vote your
shares. In addition to voting by mail you may also vote by either telephone or
via the Internet, as follows:
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<Caption>
To vote by Telephone: To vote by Internet:
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(1) Read the Proxy Statement (1) Read the Proxy Statement
and have the enclosed and have the enclosed
proxy card at hand. proxy card at hand.
(2) Call the toll-free number (2) Go to the website that
that appears on the appears on the enclosed
enclosed proxy card. proxy card.
(3) Enter the control number (3) Enter the control number
set forth on the enclosed set forth on the enclosed
proxy card and follow the proxy card and follow the
simple instructions. simple instructions.
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</Table>
We encourage you to vote by telephone or via the Internet using the control
number that appears on your enclosed proxy card. Use of telephone or Internet
voting will reduce the time and costs associated with this proxy solicitation.
Whichever method you choose, please read the enclosed proxy statement carefully
before you vote.
PLEASE NOTE: YOU MAY RECEIVE MORE THAN ONE PROXY PACKAGE IF YOU HOLD
SHARES IN MORE THAN ONE ACCOUNT. YOU MUST RETURN SEPARATE PROXY CARDS FOR
SEPARATE HOLDINGS IF VOTING BY MAIL. WE HAVE PROVIDED POSTAGE-PAID RETURN
ENVELOPES FOR EACH, WHICH REQUIRE NO POSTAGE IF MAILED IN THE UNITED STATES.
PLEASE RESPOND -- WE ASK THAT YOU VOTE PROMPTLY IN ORDER TO AVOID THE ADDITIONAL
EXPENSE OF FURTHER SOLICITATION.
YOUR VOTE IS IMPORTANT.
BY ORDER OF THE TRUSTEES,
-s- Stephen J. Shenkenberg
Stephen J. Shenkenberg
Secretary
September , 2006
MUNDER SERIES TRUST II
MUNDER HEALTHCARE FUND
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 26, 2006
This Proxy Statement is being furnished to you in connection with the
solicitation of proxies by the Board of Trustees ("Board") of Munder Series
Trust II ("Trust"), on behalf of its sole series, Munder Healthcare Fund
("Fund"), to be voted at a Special Meeting of Shareholders to be held at The
Community House, 380 South Bates Street, Birmingham, Michigan 48009, on
Thursday, October 26, 2006, at 10:00 a.m., Eastern time ("Meeting"), for the
purposes set forth below and described in greater detail in this Proxy
Statement.
The following Proposals will be considered and acted upon at the Meeting:
1. To approve a new combined investment advisory agreement ("New Combined
Advisory Agreement") with Munder Capital Management, LLC ("Advisor"), a
form of which is set forth in Exhibit A;
2. To approve an agreement and plan of reorganization and redomiciliation
("Reorganization Agreement"), a form of which is set forth in Exhibit B,
pursuant to which the Fund would be reorganized as a separate series of
Munder Series Trust ("MST");
3. To approve the amendment or elimination of certain fundamental
investment restrictions; and
4. To transact such other business as may properly come before the Meeting
and any adjournments or postponements thereof.
You are entitled to vote at the Meeting (and any adjournments or
postponements thereof) if you owned shares of the Fund at the close of business
on September 1, 2006 ("Record Date"). The date of the first mailing of the proxy
cards and this Proxy Statement to shareholders will be on or about September 11,
2006. As of close of business on the Record Date, [ ] shares of the
Fund were outstanding and entitled to be voted.
Only shareholders of record at the close of business on the Record Date
will be entitled to notice of, and to vote at, the Meeting. Shares
represented by proxies, unless previously revoked, will be voted at the Meeting
in accordance with the instructions of the shareholders. If no instructions are
given by a shareholder on the proxy card but the proxy card is properly executed
and/or voted by the shareholder, such proxy will be voted "FOR" each Proposal
and "FOR" any other matters deemed appropriate. Alternatively, shareholders who
are named as the record owners of their shares may vote their shares in person
at the Meeting. Beneficial owners of shares held through brokers or nominees,
however, will not be able to vote in person at the Meeting.
Once a proxy has been submitted to the Fund, it may be revoked on or before
the Meeting: (1) by submitting to the Fund a subsequently dated proxy or (2) by
delivering to the Secretary of the Fund at the address on the cover of this
Proxy Statement a written notice of revocation or (3) if the shareholder is a
record owner, by attending the Meeting and casting a vote either in person or by
proxy. If a shareholder wishes to participate in the Meeting, but does not wish
to authorize the execution of a proxy by telephone or through the Internet, the
shareholder may still execute and submit the proxy form included with this Proxy
Statement or, if the shareholder is a record owner, attend the Meeting and vote
in person.
Unless revoked, all valid and executed proxies will be voted in accordance
with the specifications thereon or, in the absence of such specifications, "FOR"
approval of the Proposals contemplated thereby.
The Fund is registered as a series of an open-end management investment
company under the federal securities laws. The most recent annual report of the
Fund, including financial statements for the fiscal year ended June 30, 2006,
have been mailed previously to shareholders. If you would like to receive
additional copies of this shareholder report free of charge, or copies of any
subsequent shareholder report, please contact the Fund by writing to the
Secretary, Munder Funds, 480 Pierce Street, Birmingham, Michigan 48009 or by
calling (800) 468-6337. Requested shareholder reports will be sent by first
class mail within three business days of the receipt of the request.
PROPOSAL 1
APPROVAL OF A NEW COMBINED
ADVISORY AGREEMENT
Shareholders of the Fund are being asked to approve a New Combined Advisory
Agreement with the Advisor. If shareholders also approve the Reorganization
described in Proposal 2, the New Combined Advisory
2
Agreement will be entered into among Munder Capital Management, LLC, MST, on
behalf of each of its series, and The Munder @Vantage Fund ("@Vantage"). If
shareholders of the Fund do not approve the Reorganization, the Trust, on behalf
of the Fund, will also be a party to the New Combined Advisory Agreement.
Additional information about Munder Capital Management, LLC is found below under
the heading "Information About the Advisor" and in Exhibit C.
WHY ARE SHAREHOLDERS BEING ASKED TO APPROVE THE NEW COMBINED ADVISORY AGREEMENT?
On August 4, 2006, the management team of Munder Capital Management
("Advisor"), the investment advisor to the Fund, announced that it has partnered
with private equity firm Crestview Capital Partners, L.P. ("Crestview") to
acquire Comerica Incorporated's ("Comerica") approximately 89% stake in the
Advisor ("Transaction"). Grail Partners LLC ("Grail"), who advised the Advisor's
management team in connection with the Transaction, will also invest in the
acquisition. In general, the acquisition will be accomplished in two steps: (1)
the purchase of a portion of Comerica's stake in the Advisor by Munder Capital
Holdings, LLC ("Munder Holdings") and Munder Capital Holdings II, LLC ("Munder
Holdings II"), new entities formed by the Advisor's management team, Crestview
and Grail; and (2) the subsequent redemption by the Advisor of Comerica's
remaining stake. The Transaction will help assure that the Advisor maintains its
culture and rigorous, disciplined investment process, attracts and retains key
investment professionals, and continues to provide quality services to the Fund.
The Advisor will continue to operate under its present name and its senior
management and portfolio managers will continue to lead the firm and will
beneficially own a significant minority interest in the Advisor. Crestview,
through its affiliated funds, will beneficially own a majority interest in the
Advisor.
Shortly prior to the closing of the Transaction, Comerica's indirect,
wholly-owned subsidiary, WAM Holdings, Inc. ("WAM Holdings"), will purchase the
Advisor's passive index division, World Asset Management ("WAM division"), from
the Advisor and the Advisor will transfer and assign the assets and liabilities
of the WAM division to WAM Holdings. Following the Transaction, the WAM division
is expected to operate as a newly-organized investment advisor that will do
business as World Asset Management ("WAM").
Following the closing of the Transaction, Munder Capital Management, LLC,
the Delaware limited liability company that will be a party to
3
the New Combined Advisory Agreement, will be the successor to Munder Capital
Management, a Delaware general partnership and the entity that currently serves
as the investment advisor to the Fund. For ease of reference in this Proxy
Statement, the term "Advisor" is used to refer to Munder Capital Management, the
Delaware general partnership, for all periods prior to the closing of the
Transaction, as well as Munder Capital Management, LLC, the Delaware limited
liability company to be formed as part of the Transaction, for all periods after
the closing of the Transaction. Similarly, in this Proxy Statement, the term
"WAM" is used to refer to the WAM division for all periods prior to the closing
of the Transaction as well as the newly-created entity that will do business as
World Asset Management for all periods after the closing of the Transaction.
Under the Investment Company Act of 1940, as amended ("1940 Act"), the
Transaction will result in a change of control of the Advisor, which will result
in the automatic termination of the current combined investment advisory
agreement, dated June 13, 2003, as amended, applicable to the Fund ("Current
Advisory Agreement").
In order for the Advisor to be able to continue to provide investment
advisory services to the Fund following closing of the Transaction, shareholders
of the Fund must approve the New Combined Advisory Agreement.
WHAT IS THE PURCHASE PRICE OF COMERICA'S INTEREST IN THE ADVISOR?
In return for Comerica's approximately 89% fully diluted interest in the
Advisor and in accordance with the Purchase and Sale Agreement ("Purchase
Agreement"), Comerica is expected to receive $302 million, subject to certain
adjustments, and the transfer and assignment of the assets and liabilities
comprising the Advisor's WAM division. The $302 million will consist of a cash
payment of $232 million, payable upon closing of the Transaction, and an
additional payment in the form of an 8% interest-bearing, seven-year
subordinated note ("Note") with an initial principal amount of $70 million. The
$70 million principal amount would be realized if Comerica client-related
revenues received by the Advisor in the five years following the closing of the
Transaction remain consistent with current levels. The principal amount of the
Note may be increased to a maximum of $80 million or decreased depending on the
level of such revenues. Repayment of the Note's principal is scheduled to begin
after the sixth anniversary of the closing of the Transaction and to be paid off
within one year.
4
The $232 million cash payment payable upon closing of the Transaction will
be funded with a portion of the proceeds of (1) an aggregate $132 million cash
investment, subject to certain adjustments, by Crestview less any cash
contribution made by Grail or other investors acceptable to the Arranger (as
defined below) and (2) a senior secured term loan facility ("Term Facility") in
an aggregate principal amount of $110 million, subject to certain adjustments.
The Term Facility and a senior secured revolving credit facility in an aggregate
principal amount of up to $10 million will be made available to the Advisor
pursuant to a commitment letter arranged by Credit Suisse Securities (USA) LLC
("Arranger"). The Term Facility will mature six years after the closing of the
Transaction and will amortize in equal quarterly installments in an aggregate
annual amount equal to 1% of the original principal amount of the Term Facility
with the balance payable on the maturity date of the Term Facility.
WHAT CONDITIONS HAVE TO BE MET PRIOR TO THE CLOSING OF THE TRANSACTION?
The closing of the Transaction is subject to certain conditions, including,
among others:
- Obtaining certain required regulatory approvals and making certain
regulatory filings, including the Fund filing this Proxy Statement and
supplements to its registration statement;
- Advisory fees payable to the Advisor by all clients that have consented
to the assignment of their advisory agreements or approved a new advisory
agreement (including the Fund) not being less than 75% of the revenue
attributable to the Advisor's assets under management as of May 31, 2006
(subject to certain adjustments);
- Completion of the transfer and assignment of all the assets and
liabilities of the WAM division to WAM Holdings;
- Comerica and the Advisor having entered into certain revenue sharing and
sub-advisory agreements;
- Advisor employees that are also employees or appointees of Comerica
(other than the Advisor or its subsidiaries) having submitted their
resignation to the Advisor effective as of the closing; and
- The Advisor having a minimum amount of cash on hand.
If each of the Transaction's closing conditions is satisfied or waived, the
Transaction is expected to close on or about December 29, 2006. Although not
considered likely by the Advisor, it is possible that the conditions to closing
may be satisfied as early as the date of the Meeting
5
and as a result the closing of the Transaction may occur as early as October 31,
2006. There is no assurance, however, that the Transaction will close. If it
does not, the Current Advisory Agreement will remain in effect.
WHO WILL OWN THE ADVISOR AFTER THE CLOSING OF THE TRANSACTION?
Following the closing of the Transaction, it is anticipated that Munder
Holdings will own approximately 99.5% of the Advisor and Munder Holdings II will
own approximately 0.5%. Assuming all eligible employees of the Advisor (other
than employees of the WAM division) elect to roll over their units of beneficial
interest in the Advisor and receive equity interest in Munder Holdings, it is
anticipated that key members of the Advisor's management team and other eligible
Advisor employees will beneficially own approximately 36.1% of the Advisor and
that Crestview, Grail and other investors, if any, will beneficially own the
remaining approximately 63.9% of the Advisor based on the total number of
outstanding units. As of the date of this Proxy Statement, eight key members of
the Advisor's management team have committed to roll over their units of
beneficial interest in the Advisor. All other remaining eligible employees are
expected to be provided with the information necessary for them to make their
decision prior to the closing of the Transaction. If all remaining eligible
employees elect to receive cash, based on the total number of outstanding units,
employees of the Advisor will beneficially own approximately 27.3% of the
Advisor and Crestview, Grail and other investors, if any, will beneficially own
the remaining approximately 72.7% of the Advisor. As indicated above, it is
further anticipated that the Advisor will be reorganized as a limited liability
company under the name, Munder Capital Management, LLC, immediately following
the closing of the Transaction without the proportionate beneficial ownership of
the Advisor changing further.
HOW DOES PROPOSAL 1 AFFECT SHAREHOLDERS OF THE FUND?
The Transaction and the New Combined Advisory Agreement are not expected to
have any material effect on shareholders of the Fund, except that the investment
advisory agreements for @Vantage and all of the series of MST and the Trust
(collectively, "Munder Funds") will be combined into a single agreement and the
fees payable under the New Combined Advisory Agreement by the Fund will be
computed and accrued daily and paid daily (the same method currently used for
most other Munder Funds), instead of being computed and accrued daily and paid
monthly.
6
Importantly, no changes are proposed to the overall level of services the
Advisor currently provides to the Fund, and no changes are proposed to the level
of fees payable by the Fund for those services. The Advisor has informed the
Board that it does not anticipate any changes in the portfolio managers or the
portfolio management teams of the Fund as a result of the Transaction.
WHAT ARE THE TERMS OF THE NEW COMBINED ADVISORY AGREEMENT?
The form of New Combined Advisory Agreement is attached as Exhibit A. The
description of the terms of the New Combined Advisory Agreement that follows is
qualified in its entirety by reference to that Exhibit.
Except as described below, the New Combined Advisory Agreement will be
substantially similar in all material respects to the Current Advisory
Agreement. Under the New Combined Advisory Agreement, the Advisor will continue
to serve as investment advisor to the Fund, retain ultimate responsibility for
the management of the Fund and provide investment oversight and supervision of
the Fund. These investment management services will be substantially similar in
all material respects to the investment advisory services provided under the
Current Advisory Agreement and the Advisor's fee for these services will remain
unchanged under the New Combined Advisory Agreement.
To the same extent permitted under the Current Advisory Agreement, the New
Combined Advisory Agreement permits the Advisor to enter into sub-advisory
agreements for the benefit of the Fund, although the Advisor would continue to
have ultimate responsibility for all investment advisory services furnished
pursuant to any sub-advisory agreement. If the Advisor enters into investment
sub-advisory agreements for the Fund, the Advisor would bear the costs and
expenses payable to any sub-advisor, as well as all expenses in connection with
the performance of its advisory services for the Fund.
Under both the Current Advisory Agreement and the New Combined Advisory
Agreement, except to the extent the Advisor has delegated any advisory functions
to a sub-advisor as permitted under the Agreement, the Advisor will determine,
subject to the general supervision and oversight of the Board, and in accordance
with the Fund's investment objectives and policies, which securities are to be
purchased and sold by the Fund and which broker-dealers are eligible to execute
portfolio transactions. Except to the extent the Advisor has delegated any
advisory functions to a sub-advisor as permitted under the Agreement, allocation
of transactions to
7
broker-dealers is determined by the Advisor, in its best judgment and using its
best efforts to seek the best overall terms available. In selecting broker-
dealers to execute a particular transaction, and in evaluating the best overall
terms available, the Advisor is authorized to consider the brokerage and
research services provided to the Fund and/or other accounts over which the
Advisor or its affiliates exercise investment discretion. For the fiscal year
ended June 30, 2006, no commissions were paid by the Fund to any affiliated
brokers in connection with the purchase or sale of securities for the Fund.
Under both the Current Advisory Agreement and the New Combined Advisory
Agreement, the Fund bears certain other expenses incurred in its operation,
including: taxes; interest; brokerage fees and commissions; fees of the members
of its Board who are not officers, directors or employees of the Advisor or any
sub-advisor; Securities and Exchange Commission ("SEC") fees and state blue sky
fees; charges of custodians and transfer and dividend disbursing agents; the
Fund's proportionate share of insurance premiums; outside auditing and legal
expenses; costs of maintenance of the Fund's existence; costs attributable to
investor services, including, without limitation, telephone and personnel
expenses; charges of independent pricing services, costs of preparing and
printing prospectuses and statements of additional information for regulatory
purposes and for distribution to existing shareholders; costs of shareholders'
reports and meetings of the shareholders of the Fund and of its officers and
Trustees; and any extraordinary expenses.
Under both the Current Advisory Agreement and the New Combined Advisory
Agreement, the Advisor will exercise its best judgment in rendering the services
under the Agreement. The Advisor will be liable to the Fund or to its
shareholders only by reason of its willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of the Advisor's
reckless disregard of its obligations and duties under the Agreement.
The Current Advisory Agreement had an initial term of two years and could
be renewed annually thereafter by the approval of a majority of the Trustees,
including a majority of the Trustees that are not "interested persons" of the
Fund, as that term is defined in Section 2(a)(19) of the 1940 Act
("Non-Interested Trustees"). The current renewal term of the Current Advisory
Agreement ends on June 30, 2007. The New Combined Advisory Agreement will run
for an initial term also ending on June 30, 2007 and may be renewed annually
thereafter so long as it is approved by a majority of the Trustees, including a
majority of the Non-Interested
8
Trustees. Like the Current Advisory Agreement, the New Combined Advisory
Agreement (1) is terminable as to the Fund at any time without penalty on 60
days' written notice by the Board or by vote of a majority of the outstanding
shares of the Fund, or on 90 days' written notice by the Advisor and (2)
terminates automatically in the event of any assignment, as defined in the 1940
Act.
PRINCIPAL DIFFERENCES. Summarized below are the principal differences
between the Current Advisory Agreement and the New Combined Advisory Agreement
which impact the Fund:
- Combined Agreement for the Munder Funds. The Munder Funds are now
combined in a single advisory agreement. However, this should have no
practical effect for the Fund in terms of the operation of the New
Combined Advisory Agreement.
- Additional Services. While the services to be performed under the New
Combined Advisory Agreement are substantially similar to the services
provided under the Current Advisory Agreement, certain additional
categories of services have been added in order to reflect better the
services already performed by the Advisor for the benefit of the Fund,
including the responsibility to (1) vote (or cause a sub-advisor to vote)
all proxies solicited by issuers of securities in which the Fund is
invested, (2) assist in determining fair value for portfolio securities
when market quotations are not readily available and (3) make available,
without expense, the Advisor's directors, officers and employees to be
duly elected or appointed officers of the Fund.
- Engagement of Sub-Advisors. While the Current Advisory Agreement
applicable to the Fund authorizes the Advisor to engage a sub-advisor to
manage the day-to-day operations of the Fund, the New Combined Advisory
Agreement specifically provides that any sub-advisor so engaged must,
among other things, agree to (1) invest and reinvest assets by selecting
securities, instruments, repurchase agreements, financial futures
contracts, options and other investments and techniques, (2) cooperate
with and provide reasonable assistance to other service providers to the
extent reasonably requested by the Advisor or the officers of the Fund,
(3) make available copies of investment records and ledgers to assist the
Fund's Chief Compliance Officer ("CCO") with the Funds' compliance
program, and provide the Board with periodic or special reports,
standardized performance information, and other customary data, (4) make
available portfolio managers and other personnel to
9
review investment policies, performance and other matters relating to the
management of the Fund, (5) refrain from using or obtaining inside
information, and (6) notify the Fund if the sub-advisor fails to be
registered as an investment advisor, is served or otherwise receives
notice of any action, suit, proceeding, inquiry or investigation,
involving the affairs of the Fund, or if any member of a portfolio
management team changes or there is a change in control or management of
the sub-advisor.
The provision regarding the engagement of sub-advisors has also been
expanded to contemplate the ability of the Advisor to make alternative
sub-advisory arrangements, subject to Board approval, and, if required,
shareholder approval. Thus if the SEC adopts a rule with respect to the
ability of investment advisors to hire and fire sub-advisors without
shareholder approval, the New Combined Advisory Agreement would not
prohibit the Advisor and the Fund from relying on such a rule. To the
extent that the Advisor retains one or more sub-advisors under the New
Combined Advisory Agreement, the Advisor would be specifically
responsible for monitoring reasonably the use by each such sub-advisor of
brokers and dealers to execute trades in securities on behalf of the
Fund.
- Brokerage: Similar to provisions in the Current Advisory Agreement,
provisions in the New Combined Advisory Agreement would permit the
Advisor to enter into agreements with broker-dealers so long as the
Advisor uses its best efforts to seek the best overall terms. A new
provision has been added to the New Combined Advisory Agreement
specifically allowing the Advisor to aggregate or bunch orders for the
purchase or sale of securities. This new provision does not expand what
the Advisor is permitted to do; it merely memorializes what the Advisor
is otherwise permitted to do under the Current Advisory Agreement.
- Records: The proposed New Combined Advisory Agreement contains
provisions specifying that the Advisor will make any necessary filings
required under the federal securities laws concerning beneficial
ownership of public companies.
- Expenses: Similar to the Current Advisory Agreement, the Advisor will
bear all expenses in connection with the performance of its services
under the New Combined Advisory Agreement, including any amounts payable
to sub-advisors under any sub-advisory arrangements. In addition, the New
Combined Advisory Agreement contains a clause making the Advisor
responsible for all reasonable
10
expenses arising from an assignment or change in control of the Advisor,
including all reasonable costs associated with soliciting shareholders of
the Fund to approve a new advisory agreement with the Advisor. This
clause has been added to make the Advisor and not the Fund responsible
for any costs associated with obtaining a shareholder vote in the event
that the Advisor changes control again in the future.
- Compliance Matters: The New Combined Advisory Agreement contains a new
section dealing with compliance matters in order to assist the Fund, its
CCO and the Board in complying with the requirements of Rule 38a-1 under
the 1940 Act. The New Combined Advisory Agreement provides that the
Advisor will supply the Board with its applicable compliance policies and
procedures, as well as provide periodic reports discussing its compliance
program. In addition, the Advisor will cooperate with the Board and the
CCO with respect to any and all compliance-related matters and will
provide the Fund with any reasonably requested certifications.
- Confidential Information: The New Combined Advisory Agreement contains a
new section concerning the use of confidential information, including the
Munder Funds' portfolio holdings information. Both the Fund and the
Advisor will be obligated not to disclose confidential information to any
unaffiliated third party except that portfolio holdings information may
be disclosed in a manner consistent with the policies adopted by the
Munder Funds regarding its dissemination.
- Calculation of Advisory Fee. The Advisor's compensation with respect to
the Fund under the Current Advisory Agreement is computed and accrued
daily and payable monthly. However, with respect to most other Munder
Funds, the Advisor's compensation is computed and accrued daily and
payable daily. In order to promote uniformity across the Munder Funds
under the New Combined Advisory Agreement, the Advisor's compensation
would be computed and accrued daily and payable daily with respect to the
Fund. The effect of this modification to the Fund under the New Combined
Advisory Agreement would be to decrease the amount of available and
reinvestable cash on any given day, which in turn may cause a decrease in
the total return of the Fund. However, any such decrease is not expected
to be of a material amount.
11
The Fund's shareholders last approved the Current Advisory Agreement, in
accordance with the requirements of the 1940 Act, as of November 20, 1998.
HOW IS THE ADVISOR COMPENSATED FOR ITS SERVICES TO THE FUND?
The advisory fee rate under the Current Advisory Agreement with respect to
the Fund, which became effective on August 23, 2006, is 1.00% of the first $100
million of average daily net assets; 0.90% of the next $100 million; 0.85% of
the next $50 million; and 0.75% of average daily net assets in excess of $250
million. For the fiscal year ended June 30, 2006, the Fund paid aggregate
investment advisory fees to the Advisor in the amount of $1,979,799, which was
based on a fee schedule of 1.00% of the first $100 million of average daily net
assets; and 0.75% of average daily net assets in excess of $250 million. The
current advisory fee rate with respect to the Fund will not change under the New
Combined Advisory Agreement.
WHAT IF THE FUND'S SHAREHOLDERS DO NOT APPROVE THE NEW COMBINED ADVISORY
AGREEMENT?
Should the Fund's shareholders not approve the New Combined Advisory
Agreement, the Advisor will cease to serve as investment advisor to the Fund as
of the date of the closing of the Transaction. In the event that the New
Combined Advisory Agreement is not approved by the Fund's shareholders prior to
the closing of the Transaction, the Board will consider what other action is
necessary, appropriate and in the best interests of the Fund and its
shareholders under the circumstances, which may include approving an interim
investment advisory agreement with the Advisor in accordance with Rule 15a-4
under the 1940 Act pending a further shareholder vote on the New Combined
Advisory Agreement.
Rule 15a-4 permits an investment advisor to provide services to a mutual
fund for a temporary period of time without shareholder approval of the interim
agreement so long as the fund's board of trustees, including a majority of the
trustees who are not "interested persons" (as defined in Section 2(a)(19) of the
1940 Act) of the mutual fund, approves the interim agreement and the following
conditions, among others, are met:
- The interim agreement terminates within 150 days;
- Compensation to be received by the investment advisor under the interim
agreement is no greater than the compensation the advisor would have
received under the previous investment advisory agree-
12
ment, and subject to certain exceptions, the interim agreement contains
the same terms and conditions as the previous agreement;
- Compensation earned by the investment advisor under the interim agreement
is held in an interest-bearing escrow account pending shareholder
approval of a new investment advisory agreement with the advisor;
- If shareholders approve the new agreement within 150 days of the
effective date of the interim agreement, the amount held in the escrow
account, including interest, will be paid to the investment advisor; and
- If shareholders do not approve the new agreement within the above time
frame, the investment advisor will be paid the lesser of the costs
incurred performing its services under the interim agreement or the total
amount in the escrow account, including interest earned.
Importantly, approval of the New Combined Advisory Agreement by
shareholders of the Fund is not contingent upon approval by any other Munder
Fund's shareholders pursuant to a separate proxy statement.
DO ANY TRUSTEES, EXECUTIVE OFFICERS OR THEIR ASSOCIATES HAVE A SUBSTANTIAL
INTEREST IN APPROVAL OF THE NEW COMBINED ADVISORY AGREEMENT?
Certain employees the Advisor currently own a beneficial interest in the
Advisor through Management LLC. Those employees (other than those who are
employed by the WAM division) will be offered the opportunity to exchange their
equity interests in Management LLC for equity interests in Munder Holdings. As
discussed above under "Who will own the Advisor after the closing of the
Transaction?" Munder Holdings will own 99.5% of the Advisor following the
closing of the Transaction.
Employees of the WAM division who own a beneficial interest in the Advisor
through Management LLC are expected to receive a cash payout in exchange for
their equity interests in Management LLC.
WHO IS BEARING THE EXPENSES RELATED TO THIS PROPOSAL 1?
All mailing, printing, legal, proxy solicitation and tabulation expenses
associated with the expense of this Proposal 1 will be borne one-half by Munder
Holdings and one-half by Comerica.
13
WHAT DID THE BOARD CONSIDER WHEN APPROVING THE NEW COMBINED ADVISORY AGREEMENT?
On August 21-22, 2006, the Board held an in-person meeting at which it
reviewed information about the Transaction and its potential impact on the Fund
and considered the terms of the New Combined Advisory Agreement. The Board and
counsel to the Non-Interested Trustees had an opportunity to review the
information provided in advance of the meeting by the Advisor and counsel to the
Fund. This information included materials that provided detailed information
from the Advisor about the Transaction, including information about financial
terms of the Transaction, information provided in response to a detailed series
of questions submitted by counsel to the Fund in advance of the meeting,
information about Crestview and Grail (who are expected to have a significant
interest in Advisor following the closing of the Transaction) and memoranda
outlining the legal duties of the Board. The Board also discussed the structure
of Transaction with representatives of the Advisor, Crestview and Grail.
The Board considered this new information carefully in conjunction with the
detailed information provided to them by the Advisor with respect to the Board
meeting held on May 16, 2006 in connection with the Board's annual evaluation
and approval of the continuance of the Current Advisory Agreement. In evaluating
the New Combined Advisory Agreement, the Board conducted a review that was
specifically focused upon the approval of the Agreement, and relied upon the
Board's knowledge, resulting from its meetings throughout the year, of the
Advisor, its services and the Fund.
In approving the New Combined Advisory Agreement and determining to submit
it to shareholders for approval, the Trustees considered several factors
discussed below. The Board was advised by legal counsel to the Fund and legal
counsel to the Non-Interested Trustees with respect to their deliberations
regarding the approval of the New Combined Advisory Agreement. The discussion
below is not intended to be all-inclusive. The Board reviewed a variety of
factors and considered a significant amount of information. The approval
determinations were made on the basis of each Trustee's business judgment after
consideration of all the information presented. Individual Trustees may have
given different weights to certain factors and assigned various degrees of
materiality to information received in connection with the approval process.
(a) THE NATURE, EXTENT AND QUALITY OF THE SERVICES TO BE PROVIDED BY
THE ADVISOR: With respect to this factor, the Board considered information
it believed necessary to assess the stability of the Advisor
14
as a result of the Transaction and to assess the ongoing nature and quality
of services to be provided to the Fund by the Advisor following the closing
of the Transaction. The Trustees reviewed the details of the anticipated
equity structure of the Advisor following the closing of the Transaction
generally and with respect to the identity and business of the entities
that are expected to become direct or indirect equity owners of the Advisor
as a result of the Transaction, including the financial resources of those
entities and their ability to assist in growing the Advisor's business
and/or in servicing the Fund. In this regard, the Trustees considered
information about how the Advisor's management and operations would be
structured following the Transaction including in particular how the
Transaction might affect the Advisor's performance or its delivery of
services under the New Combined Advisory Agreement. In particular, the
Board noted that the Transaction would result in employees of the Advisor
owning a substantially larger percentage of the Advisor than they currently
own, which should align their long-term interests with the interests of the
Advisor. In addition, the Board observed that increased employee ownership
in the Advisor and increasing benefits to management from the growth of
assets under management should help the Advisor retain key management and
investment personnel, which is important when considering the stability of
the Advisor.
The Trustees considered information addressing the projected benefits
to the Advisor expected to result from the Transaction. They received
information describing how the Transaction is expected to affect the
Advisor's business, including the departure or hiring of key personnel, the
Advisor's continuing relationship with Comerica and/or new or changed
agreements with Comerica regarding the Advisor's personnel or services. The
Trustees reviewed the Advisor's actions to minimize the likelihood that the
Advisor would have any departures of key management and/or investment
personnel and whether compensation and other benefits expected to be
offered by the Advisor following the Transaction would be adequate to
attract and retain high-caliber investment and other relevant professional
employees. With respect to portfolio managers of the Fund, the Trustees
received information describing changes that the Advisor anticipated making
in the structure of, and the method used in determining, the compensation
and incentive programs (e.g., salary, bonus, deferred compensation, and
pension and retirement plans and arrangements) received by key investment
and management personnel and considered how these changes are expected to
better align the interests of key investment
15
and management personnel with those of the Fund's shareholders and to
promote the long-term performance of the Fund. The Board concluded that the
compensation and incentive programs were competitive and should help to
retain key personnel.
The Advisor addressed for the Board its efforts both initially and on
an ongoing basis to retain firm clients and to respond to questions from
clients and potential clients regarding the Transaction. In this regard,
the Trustees also considered information concerning Comerica's and the
Advisor's plans for the Advisor or its affiliates to continue to provide
investment management, research and trading services to Comerica and its
clients on terms substantially similar to those currently in place.
The Board also considered the general experience, business and
operations of the Advisor (as well as the experience of key personnel from
Crestview and Grail) and information as to the Advisor's projected
financial condition and resources following the closing of the Transaction
and in each of the next several years.
Based on these and other factors, the Board concluded that the facts
presented to and considered by the Board justified approval of the New
Combined Advisory Agreement. The Board placed particular significance in
this regard on the likelihood that the Advisor would continue to provide
the same type and quality of services to the Fund following the closing of
the Transaction as the Advisor has historically provided the Fund.
(b) THE INVESTMENT PERFORMANCE OF THE FUND AND THE ADVISOR: In
considering the investment performance of the Fund, the Board took note of
its comprehensive review of the Fund's performance during the Board's May
16, 2006 meeting at which the Board approved the continuance of the Current
Advisory Agreement pursuant to the requirements of Section 15(c) of the
1940 Act. In this regard, the Board considered the one-, three- and
five-year and since inception total investment performance, on both a gross
and net basis, of the Fund's Class Y shares as of December 31, 2005 and
compared this information to the performance of the Fund's benchmark, as
well as a more broad-based benchmark; and the median performance of the
Fund's "peer group" as categorized by Lipper, Inc. ("Lipper"). In addition,
the Board considered the Fund's one-, three- and five-year Lipper "ranking"
within the Fund's peer group on a numeric, percentile and quartile ranking
basis, as well as the three- and five-year and the overall "star" ratings
of the Fund by Morningstar, Inc. The Board
16
also considered the Fund's one-, three- and five-year total return for
Class A shares as of December 31, 2005 as compared to the performance of a
small group of funds deemed by the Advisor to be the most comparable to the
Fund. The Board also received performance data for the Fund updated through
June 30, 2006. Finally, the Board considered the impact the closing of the
Transaction may have on the Advisor's capabilities to achieve the same or
better performance results for the Fund in the future.
Based on these considerations and comparisons, the Board concluded
that the investment performance of the Fund supported approval of the New
Combined Advisory Agreement.
(c) THE COSTS OF THE SERVICES TO BE PROVIDED AND PROFITS TO BE
REALIZED BY THE ADVISOR AND ITS AFFILIATES FROM THE RELATIONSHIP WITH THE
FUND: With respect to this factor, the Board took note of its
comprehensive review of the Advisor's profitability during the Board's May
16, 2006 meeting at which the Board approved the continuance of the Current
Advisory Agreement pursuant to the requirements of Section 15(c) of the
1940 Act. The Board also reviewed information provided to them by the
Advisor that described the anticipated effect the Transaction would have on
current and future revenue sharing arrangements, including arrangements
with Comerica and its affiliates and the Advisor's profitability following
the closing of the Transaction. The Board observed that any projection
regarding the Advisor's profitability would depend on many assumptions as
to the Advisor's financial condition and operations following the closing
of the Transaction and would be, therefore, speculative. For these reasons,
the Board gave measured consideration to projections regarding the
Advisor's future profitability in determining whether to approve the New
Combined Advisory Agreement.
(d) THE EXTENT TO WHICH ECONOMIES OF SCALE MAY BE REALIZED AS THE FUND
GROWS AND WHETHER FEE LEVELS WOULD REFLECT ECONOMIES OF SCALE: In
considering economies of scale with respect to the Fund, the Board took
note of its comprehensive review of economies of scale during the Board's
May 16, 2006 meetings at which the Board approved the continuance of the
Current Advisory Agreement pursuant to the requirements of Section 15(c) of
the 1940 Act. In this regard, the Board considered the Advisor's
willingness in recent years and on an on-going basis to review the advisory
and other fees of all the Munder Funds for reasonableness and market rate
comparability, and, where appropriate, to renegotiate contracts on behalf
of the
17
Munder Funds and reduce fees (both directly and through the implementation
of contractual breakpoints in certain of the Munder Funds' advisory fees)
in an overall effort to reduce the Munder Funds' total operating expenses.
The Board considered the Advisor's representation that it will seek to
share economies of scale with the Fund's shareholders through appropriate
mechanisms in the future. The Board also considered the additional
contractual breakpoints to be implemented with respect to certain of the
Munder Funds that the Advisor proposed at the meeting held on August 21-22,
2006. Based on these facts, the Board concluded that the Advisor's efforts
in this regard supported approving the New Combined Advisory Agreement.
(e) A COMPARISON OF FEE LEVELS OF THE FUND WITH THOSE OF COMPARABLE
FUNDS: In considering the advisory fees applicable to the Fund compared to
those of comparable funds, the Board took note of its comprehensive review
of the Fund's fee levels, including comparative fee information for peer
funds, during the Board's May 16, 2006 meeting at which the Board approved
the continuance of the Current Advisory Agreement pursuant to the
requirements of Section 15(c) of the 1940 Act. In this regard, the Board
considered the Fund's advisory fees and total expenses as they compared to
those of comparable funds identified by Lipper in the case of the advisory
fee comparisons and to the funds included in the Fund's Lipper category in
the case of total expense comparisons. The Board also considered the Fund's
total operating expense ratio (and certain components of the total expense
ratio) of the Fund's Class A shares in comparison to those of Class A
shares of each comparable fund in the Fund's Lipper peer group and in
comparison to the average, median, high and low net effective advisory fees
of the funds in the Fund's Lipper peer group. The Board also received
separate information prepared by a third-party data mutual fund provider
that compared the Fund's advisory fees at varying asset levels to the fees
charged to the Fund's peers.
The Board also took into consideration the fact that the Advisor did
not propose nor anticipate proposing any changes in the current advisory
fees or other fees applicable to the Fund payable to it as a result of the
Transaction. Based on these facts, the Board concluded that the current
advisory fee and total fee levels of the Fund should not preclude approval
of the New Combined Advisory Agreement.
(f) BENEFITS DERIVED OR TO BE DERIVED BY THE ADVISOR FROM THE
RELATIONSHIP WITH THE FUND: In considering the benefits derived or to be
derived by the Advisor from the relationship with the Fund, the
18
Board took note of its comprehensive review of the Advisor's relationship
with the Munder Funds, during the Board's May 16, 2006 meeting at which the
Board approved the continuance of the Current Advisory Agreement pursuant
to the requirements of Section 15(c) of the 1940 Act. In this regard, the
Board considered the Advisor's representation that, beyond the fees earned
by the Advisor and its affiliates for providing services to the Munder
Fund, the Advisor may benefit from its relationship with the Munder Funds
in the sense that separately managed account clients may view the
additional assets under management resulting from managing the Munder Funds
as a positive attribute. In addition, the Board noted that the Advisor also
may obtain increased reputational prestige from managing a nationally
recognized mutual fund family that shares the Advisor's name. The Board
also considered the Advisor's representation that, although money managers
may benefit from the use of "soft dollars" obtained from broker-dealers
through payment of commissions on trades in client accounts, the Advisor
believes that soft dollars should be used for the benefit of clients to the
maximum extent possible. Based on these facts, the Board concluded that
these additional benefits should not preclude approval of the New Combined
Advisory Agreement.
Based upon its review and evaluation of the information requested and
provided and the factors addressed above, among others, and following discussion
and having reached certain conclusions as addressed above, the Board, including
by a separate vote of the Non-Interested Trustees, unanimously approved the New
Combined Advisory Agreement and unanimously voted to recommend the New Combined
Advisory Agreement to shareholders for approval.
INFORMATION ABOUT THE ADVISOR
Founded in 1985, the Advisor is currently a Delaware general partnership
that is registered as an investment advisor with the SEC and is located at 480
Pierce Street, Birmingham, Michigan 48009. The general partners of the Advisor
are currently Management LLC, WAM Holdings and WAM Holdings II, LLC ("WAM
Holdings II"). WAM Holdings and WAM Holdings II are indirect, wholly-owned
subsidiaries of Comerica Bank, N.A. ("Comerica Bank"), located at 500 Woodward
Avenue, 33rd Floor, Detroit, Michigan 48226. Comerica Bank is a wholly-owned
subsidiary of Comerica, a publicly-held bank holding company located at 500
Woodward Avenue, Detroit, Michigan 48226. As of August 3, 2006, Comerica owned
or controlled approximately 89% of the Advisor on a fully diluted basis.
19
Following the closing of the Transaction, it is anticipated that Munder
Holdings will own approximately 99.5% of the Advisor and Munder Holdings II will
own approximately 0.5%. Assuming all eligible employees of the Advisor (other
than employees of the WAM division) elect to roll over their units of beneficial
interest in the Advisor (held through Management LLC) and receive equity
interest in Munder Holdings, it is anticipated that key members of the Advisor's
management team and other eligible Advisor employees will beneficially own
approximately 36.1% of the Advisor and that Crestview, Grail and other
investors, if any, will beneficially own the remaining approximately 63.9% of
the Advisor based on the total number of outstanding units. As of the date of
this Proxy Statement, eight key members of the Advisor's management team have
committed to roll over their units of beneficial interest in the Advisor. All
other remaining eligible employees are expected to be provided with the
information necessary for them to make their decision prior to the closing of
the Transaction. If all remaining eligible employees elect to receive cash,
based on the total number of outstanding units, employees of the Advisor will
beneficially own approximately 27.3% of the Advisor and Crestview, Grail and
other investors, if any, will beneficially own the remaining approximately 72.7%
of the Advisor. It is further anticipated that the Advisor will be reorganized
as a limited liability company under the name, Munder Capital Management, LLC,
immediately following the closing of the Transaction without the proportionate
beneficial ownership of the Advisor changing further.
As of June 30, 2006, the Advisor had approximately $41 billion in assets
under management, including amounts advised by its WAM division. Excluding its
WAM division, the Advisor managed $25.1 billion in assets, made up of $9.1
billion in actively managed equity securities, $6.3 billion in fixed income
securities and $9.7 billion in cash management assets. As of June 30, 2006, the
WAM division had $15.9 billion in indexed assets under management.
Set forth in Exhibit C is certain information with respect to the executive
officers and general partners of the Advisor as of August 3, 2006, and
information with respect to executive officers and directors of the Advisor
expected to serve in those capacities following completion of the Transaction.
RELIANCE ON SECTION 15(f) OF THE 1940 ACT
The Board has been advised that, in connection with carrying out the
Transaction, parties to the Purchase Agreement intend to rely on Sec-
20
tion 15(f) of the 1940 Act which provides a non-exclusive safe harbor for an
investment advisor to an investment company, and any of the investment advisor's
affiliated persons (as that term is defined in the 1940 Act) to receive any
amount or benefit in connection with a change in control of the investment
advisor so long as two conditions are met.
First, for a period of three years after the closing of the Transaction, at
least 75% of the Board must be comprised of persons who are not "interested
persons" (as defined in Section 2(a)(19) of the 1940 Act) of the predecessor or
successor advisor. The Trust and MST intend to comply with this 75% requirement
with respect to the applicable Board of Trustees for the three year period
following the closing of the Transaction.
The second condition of Section 15(f) is that, for a period of two years
following the closing of the Transaction, there must not be imposed on the Fund
any "unfair burden" as a result of the Transaction or any express or implied
terms, conditions or understandings related to it. An "unfair burden" would
include any arrangement whereby an advisor, or any "interested person" of the
advisor, would receive or be entitled to receive any compensation, directly or
indirectly, from the Fund or its shareholders (other than fees for bona fide
investment advisory or other services) or from any person in connection with the
purchase or sale of securities or other property to, from or on behalf of the
Fund (other than bona fide ordinary compensation as principal underwriter for
the Fund).
Each party to the Purchase Agreement has agreed that it will not take or
recommend any act that would constitute an "unfair burden," as defined above, on
the Fund for a period of two years following the closing of the Transaction.
SHAREHOLDER APPROVAL
Approval of Proposal 1 requires the affirmative vote of a "majority of the
outstanding voting securities" entitled to vote on the Proposal, as defined in
the 1940 Act, with all classes of the Fund voting together and not by class.
Shareholders are entitled to one vote for each share. Fractional shares are
entitled to proportional voting rights.
A "majority of the outstanding voting securities" means the vote of (1) 67%
or more of the voting securities entitled to vote on the Proposal that are
present at the Meeting, if the holders of more than 50% of the outstanding
voting securities are present or represented by proxy, or (2) the vote of more
than 50% of the outstanding voting securities entitled to vote on the Proposal,
whichever is less.
21
YOUR BOARD OF TRUSTEES, INCLUDING THE NON-INTERESTED TRUSTEES, UNANIMOUSLY
RECOMMENDS A VOTE "FOR" APPROVAL OF THE NEW COMBINED ADVISORY AGREEMENT.
PROPOSAL 2
APPROVAL OF AN AGREEMENT AND PLAN OF
REORGANIZATION AND REDOMICILIATION
At a meeting of the Board held on August 21-22, 2006, the Board, on behalf
of the Fund, approved an Agreement and Plan of Reorganization and
Redomiciliation ("Reorganization Agreement") substantially in the form attached
to this Proxy Statement as Exhibit B. If shareholders approve the
Reorganization Agreement, the Trustees and officers of the Trust will execute
and implement the Reorganization Agreement on behalf of the Fund. If approved,
we expect the Reorganization to take effect on or about the close of business on
the first Friday that is a business day following approval of the Reorganization
Agreement ("Closing Date"), although that date may be adjusted in accordance
with the Reorganization Agreement.
WHAT ARE SHAREHOLDERS BEING ASKED TO APPROVE IN PROPOSAL 2?
Shareholders of the Fund are asked to consider the proposed Reorganization
Agreement, which contemplates:
- The transfer of all of the assets of the Fund to a newly-organized shell
series of MST ("New Fund"), in exchange for shares of the New Fund having
an aggregate value equal to the assets and liabilities of the Fund and
the assumption by the New Fund of all of the liabilities of the Fund;
- The distribution to each shareholder of each class of the Fund of the
same number of shares of the corresponding class of the New Fund having
an aggregate net asset value equal to the aggregate net asset value of
the shares of that class of the Fund held by that shareholder on the
Closing Date; and
- The subsequent complete liquidation of the Fund.
Following the Reorganization, the Trust will deregister as an investment
company and subsequently voluntarily dissolve pursuant to Massachusetts law.
22
For a more detailed discussion of the terms of the Reorganization
Agreement, please refer to "Summary of the Reorganization Agreement," below.
Prior to shares of the New Fund being distributed to the Fund's
shareholders, the Fund, as sole shareholder of the New Fund, will be asked to
vote on certain organizational issues regarding the New Fund. Thus, shareholders
of the Fund, in approving the proposed Reorganization, will also, in effect, be
approving the following matters:
- Approval of one or more investment advisory agreements with respect to
the New Fund, which will be the Current Advisory Agreement and/or the New
Combined Advisory Agreement (proposed for shareholder approval in
Proposal 1) depending on if and when the Transaction closes and
shareholders of the Fund approve the New Combined Advisory Agreement; and
- Approval of the Distribution and Service Plan with respect to the New
Fund and its classes.
Shareholders of the Fund are not being asked to vote separately on these
issues affecting the New Fund. More information on each of these items is
discussed below under "Matters on which the New Fund Will Vote."
WHY IS THE BOARD RECOMMENDING THE REORGANIZATION?
The primary purposes of the proposed Reorganization are to seek future
economies of scale and to eliminate certain costs associated with operating
three different business entities -- the Trust, MST and @Vantage -- in two
different states. In unanimously approving the Reorganization, the Board
determined that the proposed Reorganization would be in the best interests of
the Fund and that the interests of its shareholders would not be diluted as a
result of the Reorganization. We summarize below the key factors considered by
the Board:
- The Advisor has informed the Trustees that it believes that by
establishing the New Fund and reorganizing the Fund into MST, the New
Fund should be able to realize greater operating efficiencies.
- In recent years, many mutual funds have reorganized as Delaware statutory
trusts. The Advisor has also informed the Trustees that it believes that
the proposed Delaware statutory trust form provides the most flexible and
cost-efficient method of operating all of the series of MST and the Trust
for the benefit of all shareholders.
23
- The Trustees considered that the investment objective, policies and
restrictions of the Fund will be identical to those of the New Fund, and
the New Fund will be managed by the same personnel and in accordance with
the same investment strategies and techniques utilized in the management
of the Fund immediately prior to the Reorganization.
WHAT EFFECT WILL THE REORGANIZATION HAVE ON THE FUND AND ITS SHAREHOLDERS?
Immediately after the Reorganization, shareholders of the Fund will own
shares of the corresponding class of the New Fund that are equal in number and
in value to the shares of the Fund that were held by those shareholders
immediately prior to the closing of the Reorganization. For example, if you
currently own 100 Class A shares of the Fund, immediately after the closing of
the Reorganization, you would own 100 Class A shares of the New Fund having the
same net asset value as your original 100 shares of the Fund.
As a result of the Reorganization, shareholders of the Fund, the sole
series of a Massachusetts business trust, will become shareholders of the New
Fund, a series of a Delaware statutory trust. For a comparison of certain
attributes of these entities that affect shareholders of the Fund, please see "A
Comparison of MST and the Trust."
THE REORGANIZATION WILL NOT RESULT IN ANY CHANGE IN THE NAME, INVESTMENT
OBJECTIVE OR PRINCIPAL INVESTMENT STRATEGIES, INVESTMENT ADVISOR, PORTFOLIO
MANAGERS OR SERVICE PROVIDERS OF THE FUND. THE NEW FUND WILL OFFER THE SAME
SHAREHOLDER SERVICES AS THE FUND.
WILL THERE BE ANY SALES CHARGE, COMMISSION OR OTHER TRANSACTIONAL FEE IN
CONNECTION WITH THE REORGANIZATION?
No. The full value of your shares of the Fund will be exchanged for shares
of the same class of the New Fund without any sales charge, commission or other
transactional fee being imposed.
WHAT WILL BE THE FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION?
As a condition to the Fund's obligation to consummate the Reorganization,
MST and the Trust will receive an opinion from their legal counsel to the effect
that, on the basis of the existing provisions of the Internal Revenue Code of
1986, as amended ("Tax Code"), current administrative rules and court decisions,
the transactions contemplated by the Reorganiza-
24
tion Agreement constitute a tax-free reorganization for federal income tax
purposes.
WHO IS BEARING THE EXPENSES RELATED TO THIS PROPOSAL 2?
All mailing, printing, legal, proxy solicitation and tabulation expenses
associated with the expense of this Proposal 2 will be borne principally by
Munder Holdings, however, to the extent that obtaining shareholder approval of
the Reorganization requires proxy solicitation beyond the date of the Meeting
(or any adjournments or postponements thereof) at which shareholder approval of
the New Combined Advisory Agreement is obtained, the Fund will bear such
additional expenses.
SUMMARY OF THE REORGANIZATION AGREEMENT
We summarize below the important terms of the Reorganization Agreement.
This summary is qualified in its entirety by reference to the Reorganization
Agreement itself, which is set forth in Exhibit B to this Proxy Statement.
The Reorganization Agreement provides that the New Fund will acquire all of
the assets, subject to all of the liabilities, of the Fund in exchange for
shares of the New Fund. Subject to the satisfaction of the conditions described
below, such acquisition is scheduled to occur on the Closing Date, or such later
date as may be agreed upon by the parties. The number of full and fractional
shares of the New Fund you will receive in the Reorganization will be equal to
the number of full and fractional shares of the Fund you own on the Closing Date
and will be of the same class as the shares you own on the Closing Date.
As part of the closing of the Reorganization, the Fund will liquidate and
distribute pro rata to its shareholders of record as of the close of regularly
scheduled trading on the New York Stock Exchange on the Closing Date the shares
of the New Fund received by the Fund in the Reorganization. The Fund will
accomplish the liquidation and distribution with respect to each class of the
Fund's shares by the transfer of the New Fund shares then credited to the
account of the Fund on the books of the New Fund to newly-opened accounts on the
books of the New Fund in the name of the Fund shareholders. All issued and
outstanding shares of the Fund will be canceled on the books of the Fund. The
New Fund will not issue certificates representing the New Fund shares issued in
connection with such exchange.
25
After such distribution, the Trust will take all necessary steps under its
governing instruments, and federal and Massachusetts law to deregister the Trust
as an investment company and to effect a complete dissolution of the Fund and
the Trust. The Board has determined that the interests of shareholders of the
Fund will not be diluted as a result of the Reorganization and that
participation in the Reorganization is in the best interests of the Fund and its
shareholders.
The Reorganization Agreement may be terminated and the Reorganization
abandoned at any time prior to the consummation of the Reorganization, before or
after approval by the shareholders of the Fund, if circumstances should develop
that, in the Trust Board's or the MST Board of Trustees' opinion, make
proceeding with the Reorganization inadvisable with respect to the Fund or New
Fund, respectively. The Trust or MST may waive compliance with any of the
covenants or conditions made therein for the benefit of the Fund or the New
Fund, as applicable, other than the requirements that: (1) the Reorganization
Agreement be approved by shareholders of the Fund; and (2) the Trust receive an
opinion of counsel that the transactions contemplated by the Reorganization
Agreement will constitute a tax-free reorganization for federal income tax
purposes.
COMPARISON OF MST AND THE TRUST
MST is a Delaware statutory trust governed by its own Declaration of Trust,
By-Laws and a Board of Trustees. The Trust is a Massachusetts business trust
governed by its own Declaration of Trust, By-Laws and a Board of Trustees. The
operations of MST and the Trust are also governed by applicable state and
federal law.
Certain differences and similarities between these entities are summarized
below, although this is not a complete list of comparisons. Shareholders should
refer to the provisions of these governing documents and the relevant state law
directly for a more thorough comparison. Copies of these governing documents are
available to shareholders without charge upon written request.
GENERAL
Under the Declaration of Trust and By-Laws of MST, the Trustees of MST
generally have more flexibility than Trustees of the Trust and, subject to
applicable requirements of the 1940 Act and Delaware law, broader authority to
act, as further described below. The increased flexibility may
26
allow the Trustees of the MST to react more quickly to changes in competitive
and regulatory conditions and, as a consequence, may allow MST to operate in a
more efficient and economical manner. Delaware law also promotes ease of
administration by permitting the Board of Trustees of MST to take certain
actions, for example, establishing new investment series of MST, without filing
additional documentation with the state, which would otherwise require
additional time and costs.
Importantly, the Trustees of MST will have the same fiduciary obligations
to act with due care and in the interest of the New Fund and its shareholders as
do the Trustees of the Trust with respect to the Fund and its shareholders.
SHAREHOLDER LIABILITY
Generally, liability is limited for shareholders of MST. With respect to
the Trust, as further noted below, there is the potential, although only a
remote possibility, that shareholders of the Trust may be liable for the
obligations of such entity.
The Declaration of Trust of MST provides that shareholders are not
personally liable for the debts, liabilities, obligations and expenses incurred
by, contracted for, or otherwise existing with respect to MST, the New Fund or
any class of its shares. In addition, shareholders have the same limitation of
personal liability as is extended to shareholders of a Delaware for-profit
corporation.
Under Massachusetts law, shareholders of a Massachusetts business trust
could, under certain circumstances, be held personally liable for the
obligations of the trust. However, the Declaration of Trust for the Trust states
that shareholders will not be subject to any personal liability in connection
with the assets of the Trust for the acts or obligations of the Trust. The
Declaration of Trust both provide for indemnification out of the assets
belonging to the series with respect to which such shareholder's shares are
issued, for all losses and expenses of any shareholder held personally liable
for the obligations of the Trust solely by reason of his or her being or having
been a shareholder. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is considered remote since it is limited to
circumstances in which (1) a court determines that the Trust should be treated
as a partnership, rather than as a business trust, despite the terms of the
Declaration of Trust and (2)(a) a contractual disclaimer is found to be
inadequate, and (b) the Fund itself would be unable to meet its obligations.
27
LIQUIDATION AND DISSOLUTION
The Declarations of Trust of MST and the Trust each permit a majority of
their Trustees to liquidate any class or series of MST or the Trust, as
applicable, or dissolve MST or the Trust, as applicable, upon written notice to
shareholders, without submitting the matter for shareholder approval.
In the event of the liquidation of the Fund or the New Fund or the
dissolution of MST or the Trust, the shareholders are entitled to receive, when
and as declared by each Board of Trustees, the excess of the assets over the
liabilities belonging to their respective Munder Fund. The assets so distributed
to shareholders of the Fund/the New Fund would be distributed among the
shareholders in proportion to the number of shares of the Fund/the New Fund held
by them and recorded on the books of the Fund/the New Fund.
LIABILITY OF TRUSTEES
The Trustees of each of MST and the Trust are generally not liable to the
respective entity absent willful misfeasance, bad faith, gross negligence or
reckless disregard of a Trustee's duties. Furthermore, each entity's Declaration
of Trust permits indemnification of such Trustees to the fullest extent
permissible under applicable laws. MST's Declaration of Trust specifically
provides that indemnification includes any reasonable expenses incurred by a
Trustee in connection with the defense of any proceeding.
Absent willful misfeasance, bad faith, gross negligence or reckless
disregard of a Trustee's duties, an MST Trustee acting in such capacity shall
not be personally liable to any person other than MST or a beneficial owner for
any act, omission or obligation of MST or any Trustee. In addition, MST's
Declaration of Trust provides that any Trustee who has been designated a
financial expert in MST's registration statement will not be subject to any
greater duty of care in discharging such Trustee's duties and responsibilities
by virtue of such designation than a Trustee who has not been so designated. A
Trustee or officer of MST will be indemnified by MST to the fullest extent
permitted by law against liability and against all expenses reasonably incurred
or paid by him or in connection with the defense of any proceeding in which he
or she becomes involved by virtue of being or having been a Trustee or officer.
Absent willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of a Trustee of the Trust acting
in the capacity of such office, the Trust's Declaration of Trust
28
provides that no Trustee will be liable to the Trust, any shareholder, Trustee,
officer, employee or agent thereof for any action or failure to act. Its
Declaration of Trust further provides that the Trust will indemnify any Trustee
to the fullest extent possible under applicable law.
RIGHTS OF INSPECTION
Shareholders of the Trust generally have the right to inspect the records,
accounts and books of the Trust, as such right is permitted to shareholders of a
Massachusetts business trust under Massachusetts corporation law. Currently,
each shareholder of a Massachusetts corporation is permitted to inspect the
records, accounts and books of a corporation for any legitimate business purpose
relative to the affairs of the corporation. MST withholds such right of
inspection unless granted by law or provided for in a resolution of the Trustees
of the MST or approved by shareholders at a meeting. No such rights have to date
been conferred.
SHAREHOLDER MEETINGS
Neither MST nor the Trust is required to hold annual meetings of
shareholders, although each may hold special meetings for purposes of voting on
certain matters as required under the 1940 Act. In each case, on any matters
submitted to a vote of the shareholders, all shares entitled to vote are voted
in the aggregate, except when (1) required by the 1940 Act, shares are voted by
each affected series separately; (2) the matter involves any action that the
Trustees have determined will affect only the interests one or more series, then
only the shareholders of such series shall be entitled to vote thereon; or (3)
the matter involves any action that the Trustees have determined will affect
only the interests of one or more classes, then only the shareholders of such
class or classes shall be entitled to vote thereon.
MST and the Trust differ in the ability of shareholders to take action by
written consent. With MST, shareholders may take action by written consent if
signed by the holders of outstanding shares representing the minimum number of
votes that would be necessary to authorize or take that action at a meeting.
With the Trust, written shareholder consents are required to be signed by
shareholders representing a majority of the shares.
REORGANIZATION/COMBINATION TRANSACTIONS
Unlike the Trust, MST imposes no requirement for shareholder approval of a
proposed merger, reorganization, sale of assets, etc., of the
29
New Fund. Shareholder approval may be required, however, under the federal
securities laws.
Under the Declaration of Trust of MST and Delaware law, MST Trustees may
generally authorize mergers, consolidations, share exchanges and reorganizations
of the New Fund or MST with another trust, series or other business organization
without shareholder approval, although such approval may be separately required
under the federal securities laws and rules thereunder. For example, the 1940
Act and rules thereunder may require a shareholder vote of a proposed merger
involving affiliated funds under certain circumstances, such as when the merging
funds have materially different advisory contracts or fundamental investment
restrictions.
With respect to the Trust, a majority of the outstanding shares of the Fund
must approve a merger with another business organization, or the sale or
exchange of all or substantially all of the property of the Fund.
AMENDMENT OF CHARTER DOCUMENT
Trustees of the MST are granted the widest latitude to amend its governing
instruments without seeking shareholder approval. Generally, the Trustees of the
Trust may amend their charter documents without shareholder approval only where
such change would not materially alter shareholder rights.
MST Trustees may generally restate, amend or otherwise supplement MST's
governing instrument, which includes the Declaration of Trust and the By-Laws,
without the approval of shareholders, subject to limited exceptions (such as
amendments affecting shareholders' voting rights).
Generally, the Declaration of Trust of the Trust may only be amended by the
affirmative vote of the majority of shareholders. However, the Trust Trustees
may amend the Declaration of Trust without shareholder approval to: (1) conform
it to the requirements of applicable federal laws or regulations; (2) change the
name of the Trust; or (3) make any other changes which do not materially
adversely affect the rights of shareholders.
DERIVATIVE AND CLASS ACTIONS
Generally, shareholders of MST and the Trust are permitted to bring
derivative or class actions on behalf of their respective entity only after such
shareholders have first made a demand upon their Board of Trustees to bring the
action on behalf of the applicable entity. The requirements for shareholders of
the Trust are governed by state law. The Declaration of Trust of MST
specifically sets forth the procedural requirements a share-
30
holder would need to fulfill and additionally limits such actions to those
brought by at least 10% of MST's or the New Fund's shareholders.
Shareholders of MST or the New Fund may not bring a derivative action to
enforce the right of MST or the New Fund unless certain conditions are
satisfied. The conditions include, among others, that (1) the complaining
shareholder submit a written demand to the Board of Trustees and that demand
must be refused, and (2) at least 10% of the shareholders of MST or the New
Fund, as applicable, join in bringing the derivative action. A shareholder of
the New Fund is not entitled to participate in a derivative action on behalf of
a different series of MST.
Under the Declaration of Trust of the Trust, shareholders have the power to
vote to the same extent as the shareholders of a Massachusetts corporation as to
whether or not a court action, proceeding or claim should be brought or
maintained derivatively or as a class action on behalf of the Trust or its
shareholders. As a prerequisite for bringing a derivative action in
Massachusetts, a shareholder has to either make a demand on the Board to
prosecute the litigation or allege facts showing the futility of such a demand.
* * *
The foregoing is only a summary of certain characteristics of the
operations of MST's and the Trust's relevant corporate governance documents and
relevant state law. The foregoing is not a complete description of the documents
cited. Shareholders should refer to the provisions of such documents and the
laws of Delaware or Massachusetts, as applicable, for a more thorough
description.
MATTERS ON WHICH THE NEW FUND WILL VOTE
As noted above, in approving the Reorganization Agreement, shareholders of
the Fund will also be authorizing it to vote on various actions regarding the
New Fund and MST, including approval of one or more investment advisory
agreements and a distribution and service plan. The Fund shareholders are not
being asked to vote separately on these issues affecting the New Fund.
ADVISORY AGREEMENT
The Reorganization Agreement calls for the Fund, as the sole shareholder of
the New Fund, to approve the New Fund's investment advisory
31
agreement. Because of the timing of the Meeting (October 26), the scheduled
effective date of the Reorganization (the first Friday that is a business day
following approval of the Reorganization Agreement) and the scheduled effective
date of the Transaction (December 29), the Fund may need to approve two
investment advisory agreements: (1) the Current Advisory Agreement and (2) the
New Combined Advisory Agreement.
To the extent that the closing of the Reorganization occurs before the
scheduled closing of the Transaction described in Proposal 1, the Reorganization
Agreement requires the Fund, while it is the sole shareholder of the New Fund,
to approve the Current Advisory Agreement on behalf of the New Fund.
If Fund shareholders approve the New Combined Advisory Agreement described
in Proposal 1, the Reorganization Agreement requires the Fund, while it is the
sole shareholder of the New Fund, to approve the New Combined Advisory Agreement
on behalf of the New Fund. If the New Combined Advisory Agreement is approved,
it will take effect immediately following the closing of the Transaction, which
is expected to be on or about December 29, 2006. Although not considered likely
by the Advisor, it is possible that the conditions to closing may be satisfied
as early as the date of the Meeting and as a result the closing of the
Transaction may occur as early as October 31, 2006. Reference is made to the
description and other information relevant to shareholders' consideration of the
New Combined Advisory Agreement in Proposal 1. If for some reason the closing of
the Reorganization will not occur prior to the closing of the Transaction, the
Fund will be required to approve only the New Combined Advisory Agreement on
behalf of the New Fund.
If shareholders of the Fund do not approve the New Combined Advisory
Agreement discussed in Proposal 1, but the Reorganization is approved, the
Reorganization will be delayed until shareholders of the Fund approve a new
investment advisory agreement. Thus, in all events, the investment advisory
agreement applicable to the New Fund immediately following the closing of the
Reorganization will be identical to the investment advisory agreement then in
effect with respect to the Fund.
DISTRIBUTION AND SERVICE PLAN
The Reorganization Agreement also authorizes the Fund, while it is the sole
shareholder of the New Fund, to approve the Combined Distribution and Service
Plan dated June 13, 2003, as amended, for each applicable class of the New Fund,
that is the same such plan adopted by the Trust for each applicable class of the
Fund ("Current Plan"). Thus, the new plan
32
with respect to the New Fund and its classes is identical to the Current Plan
with respect to the Fund and its classes. Below is a discussion of the terms and
other relevant information concerning the Current Plan.
Under the Current Plan, applicable to Class A, Class B, Class C, Class R
and Class K shares, but adopted in accordance with Rule 12b-1 under the 1940 Act
with respect to the Class A, Class B, Class C and Class R shares of the Fund
only, the Fund may use its assets with respect to those classes of shares to
finance activities relating to the distribution of its shares and the provision
of certain shareholder services.
Under the Current Plan, Funds Distributor, Inc. ("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. Also, under the Current Plan, 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, Class C and Class R 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, Class C and Class R shares of the Fund. However,
under the Combined Distribution Agreement dated June 13, 2003, as amended, with
the Distributor, the fees payable with respect to the Class R shares are limited
to payments at an annual rate equal to 0.50% of the average daily net assets of
any series attributable to the Fund's Class R shares.
Under the terms of the Current Plan, the Current Plan continues from year
to year with respect to each class of shares, provided such continuance is
approved annually by vote of the Board, including a majority of the Trustees who
are not interested persons of the Fund and who have no direct or indirect
financial interest in the operation of that Current Plan ("Non-Interested Plan
Trustees"). All amendments of the Current Plan also must be approved by the
Trustees in the manner described above. The Current Plan may be terminated at
any time, without penalty, by vote of a majority of the Non-Interested Plan
Trustees 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. Pursuant to the
Current Plan, the Distributor will provide the Board quarterly reports of
amounts expended under the Current Plan and the purpose for which such
expenditures were made.
In the case of Class A, Class B, Class C and Class R shares, the Trustees
have determined that the Current Plan will benefit the Fund and its shareholders
by (1) providing an incentive for broker or bank personnel to provide continuous
shareholder servicing after the time of sale; (2) retaining existing accounts;
(3) facilitating portfolio management flexibility
33
through continued cash flow into the Fund; and (4) maintaining a competitive
sales structure in the mutual fund industry.
With respect to Class B, Class C and Class R shares of the Fund, the
Distributor expects to pay sales commissions to dealers authorized to sell the
Fund's Class B, Class C and Class R 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 Current Plan. In addition, the Advisor or Distributor, or
any of their affiliates, may from time to time pay for shareholder services or
distribution out of their own resources without additional cost to the Fund or
its shareholders.
The amount of fees paid to the Distributor pursuant to the Current Plan for
the Class A, Class B, Class C, Class R and Class K shares of the Fund for the
fiscal year ended June 30, 2006 and the percentage of average net assets each
such amount constituted during that period are set forth in the table below.
<Table>
<Caption>
CLASS K
CLASS A CLASS B CLASS C CLASS R SHARES
SHARES SHARES SHARES SHARES SERVICE
12B-1 FEES 12B-1 FEES 12B-1 FEES 12B-1 FEES FEES
---------- ---------- ---------- ---------- ----------
FEES PAID............. $194,663 $701,658 $384,303 $30 $246
PERCENTAGE OF AVERAGE
NET ASSETS............ [--]% [--]% [--]% [--]% [--]%
</Table>
Comerica Securities, Inc. ("Comerica Securities"), a wholly-owned
subsidiary of Comerica Bank, and Comerica Bank are service organizations
currently affiliated with the Advisor who may receive fees from the Fund under
the Current Plan. For the fiscal year ended June 30, 2006, the Fund paid $26 to
Comerica Securities and $105 to Comerica Bank for shareholder services provided
to Class A, Class B, Class C, Class R and Class K shareholders.
BOARD OF TRUSTEES
The Board of Trustees of the Trust and MST are identical. As a result, if
the Reorganization is approved, shareholders will continue to have the same
Board of Trustees.
* * *
SHAREHOLDER APPROVAL
Approval of Proposal 2 requires the affirmative vote of a majority of the
outstanding shares of the Fund, with all classes voting together and not
34
by class. Shareholders are entitled to one vote for each share of the Fund.
Fractional shares are entitled to proportional voting rights.
YOUR BOARD OF TRUSTEES, INCLUDING THE
NON-INTERESTED TRUSTEES, UNANIMOUSLY
RECOMMENDS A VOTE "FOR" APPROVAL OF
THE REORGANIZATION AGREEMENT.
PROPOSAL 3
AMENDMENT OR ELIMINATION OF CERTAIN
FUNDAMENTAL INVESTMENT RESTRICTIONS
WHAT ARE SHAREHOLDERS BEING ASKED TO APPROVE IN PROPOSAL 3?
The 1940 Act requires the Fund to adopt fundamental investment restrictions
with respect to several specific types of activities, including its ability to
(1) borrow money; (2) issue senior securities; (3) underwrite securities issued
by other persons; (4) purchase or sell real estate; (5) purchase or sell
commodities; (6) make loans to other persons; and (7) concentrate its
investments in any particular industry or group of industries. The 1940 Act also
requires the Fund to state whether it is a diversified or non-diversified fund,
as those terms are defined in the 1940 Act. In addition, the 1940 Act permits
the Fund to designate any other of its policies as fundamental policies, as it
deems necessary or desirable.
In order to modify or eliminate one of the Fund's fundamental investment
restrictions, including its classification as a diversified or non-diversified
fund, the 1940 Act requires that any such change be approved by a majority of
the Fund's outstanding voting securities. The Board is proposing that
shareholders approve revisions to certain of the Fund's fundamental investment
restrictions, as described more fully in this Proxy Statement, in an effort to
standardize its investment restrictions and permit the Fund the maximum
investment flexibility under current law. The current fundamental investment
restrictions of the Fund that are proposed to be revised at this Meeting are set
forth in Exhibit D to this Proxy Statement.
In early 2003, shareholders of the Fund were first asked to approve changes
to its fundamental investment restrictions substantially similar to those
changes described in this Proposal 3. However, because insufficient votes were
received to achieve a quorum for the Fund, shareholders of the Fund were unable
to vote on those proposals at that time. As a result,
35
shareholders of the Fund are being given another opportunity to consider similar
proposals in this Proxy Statement.
WHY ARE SHAREHOLDERS BEING ASKED TO APPROVE CHANGES TO THE FUND'S INVESTMENT
RESTRICTIONS?
The primary purposes of the proposed modification or elimination of certain
of the fundamental investment restrictions of the Fund are to increase the
Fund's latitude with respect to certain investment strategies and techniques,
eliminate certain investment restrictions that are no longer required by law,
and make the Fund's fundamental investment restrictions more uniform. Presently,
the Fund's fundamental investment restrictions limit investment strategies and
result in operating inefficiencies and costs. The Munder Funds were organized at
different times and under different state laws. As a result, the fundamental
investment restrictions differ among the Munder Funds, and many of the Fund's
investment restrictions are more prohibitive than the rules and regulations
under the 1940 Act and applicable SEC guidance otherwise require.
Some of the Fund's fundamental investment restrictions can be traced back
to federal or state securities law requirements that were in effect when the
Fund was organized. These restrictions have subsequently been made less
restrictive or are no longer in effect. For example, the National Securities
Markets Improvement Act of 1996 ("NSMIA") preempted many investment restrictions
formerly imposed by state securities laws and regulations, so those state
requirements are no longer in effect. As a result, these restrictions
unnecessarily limit the investment strategies available to the Advisor in
managing the Fund's assets. In addition, the lack of uniform standards by which
the Advisor may manage the Munder Funds leads to operating inefficiencies and
increases the costs of monitoring compliance.
Due to these and other factors, the Board recommends to Fund shareholders
the approval of certain changes to the Fund's fundamental investment
restrictions. The Fund's fundamental investment restrictions that are proposed
to be amended, the language of each proposed revised investment restriction, and
a discussion of the rationale for each suggested change is provided below.
In general, only those investment restrictions that the 1940 Act
specifically requires to be fundamental (i.e., those from which registered
investment companies cannot deviate without shareholder authorization) are
proposed to remain fundamental investment restrictions of the Fund. However,
shareholders are being asked to approve amendments to these fundamental
investment restrictions, as set forth in Proposals 3.A - 3.H.
36
Investment restrictions that are currently deemed fundamental by the Fund, but
which the 1940 Act does not require to be fundamental, are proposed to be
eliminated entirely. The fundamental investment restrictions that are proposed
to be eliminated entirely are addressed in Proposals 3.I - 3.L.
WHAT EFFECT WILL THE PROPOSED CHANGES TO THE FUND'S INVESTMENT RESTRICTIONS HAVE
ON THE FUND?
While Proposal 3 is intended to provide the Advisor with greater
flexibility in managing the Fund's portfolio, should shareholders approve the
Proposals, the Fund would continue to be managed subject to the limitations
imposed by the 1940 Act and the rules and interpretive guidance provided
thereunder, as well as the investment objectives, strategies, and policies
expressed in the Fund's registration statement. IMPORTANTLY, THE ADVISOR DOES
NOT PRESENTLY INTEND TO ALTER THE WAY IN WHICH IT MANAGES THE FUND, NOR DOES IT
BELIEVE THAT THE PROPOSED CHANGES WILL, EITHER INDIVIDUALLY OR IN THE AGGREGATE,
MATERIALLY AFFECT THE INVESTMENT RISK ASSOCIATED WITH THE FUND, ALTHOUGH WITH
RESPECT TO SECURITIES LENDING AND BORROWING, THE PROPOSED AMENDED INVESTMENT
RESTRICTIONS WOULD PERMIT THE FUND TO ENGAGE IN SUCH ACTIVITIES TO A GREATER
DEGREE.
In addition, the Fund's approval of changes to its fundamental investment
restrictions will not be dependent upon your vote on Proposal 2 regarding the
Reorganization. Therefore, if approved by shareholders, these changes will take
effect regardless of the vote with respect to the Reorganization. Should
shareholders of the Fund also approve the proposed Reorganization, the New Fund
will have as its fundamental investment restrictions those revised fundamental
investment restrictions approved by the Fund's shareholders.
Should the Fund's shareholders not approve a Proposal to amend or eliminate
a particular fundamental investment restriction, the Fund's current fundamental
investment restriction, as set forth in Exhibit D, would continue to apply
unchanged.
WHO IS BEARING THE EXPENSES RELATED TO THIS PROPOSAL 3?
All mailing, printing, legal, proxy solicitation and tabulation expenses
associated with the expense of this Proposal 3 will be borne by Munder Holdings.
37
MODIFICATION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTIONS
PROPOSAL 3.A -- DIVERSIFICATION
PROPOSED NEW FUNDAMENTAL INVESTMENT RESTRICTION: If the proposed amendment
is approved by shareholders, the Fund's sub-classification as a diversified or
non-diversified fund would read:
The Fund shall be a "diversified company" as that term is defined in
the 1940 Act, and as interpreted or modified by regulatory authority
having jurisdiction, from time to time.
DISCUSSION OF PROPOSED MODIFICATION
Section 8(b) of the 1940 Act requires each series of an investment company
to state whether it is "diversified" or "non-diversified," as those terms are
defined in the 1940 Act. As the term "diversified" is used in the 1940 Act, and
as reflected in the Fund's current fundamental investment restrictions, a
diversified fund may not, with respect to 75% of its total assets, (1) invest
more than 5% of its total assets in the securities of one issuer, or (2) hold
more than 10% of the outstanding securities of such issuer ("75% test"). Under
the 1940 Act, a "non-diversified" fund is any fund that is not considered
diversified and is not, therefore, constrained by the 75% test.
NO CHANGE IS BEING PROPOSED TO THE FUND'S DESIGNATION AS A DIVERSIFIED
FUND. Instead, the proposed change would modify the Fund's fundamental
investment restrictions regarding its sub-classification under the 1940 Act to
rely on the definitions of the terms diversified and non-diversified in the 1940
Act rather than stating the relevant percentage limitations expressed under
current law. Thus, this investment restriction will apply to the Fund the
requirements of the 1940 Act, as they may be amended from time to time, without
the Board or shareholders taking further action. This would be consistent with
the 1940 Act, which only requires the Fund to state whether it is diversified or
non-diversified.
It is not anticipated that this change would have any effect on the
operations of the Fund. The Fund would remain subject to the same limitations on
its investments under the definition of "diversified" as embodied in its current
fundamental policies, as well as to any additional restrictions on concentration
under the 1940 Act (as discussed in Proposal 3.G) or other investment
restrictions of the Fund. In addition, the Fund will remain subject to the
relevant diversification provisions of the Tax Code, which require that at the
end of each quarter of the Fund's taxable
38
year, with respect to 50% of the value of the Fund's total assets, the Fund has
invested no more than 5% of its total assets in any one issuer and holds no more
than 10% of such issuer's outstanding voting securities.
PROPOSAL 3.B -- BORROWING
PROPOSED NEW FUNDAMENTAL INVESTMENT RESTRICTION: If the proposed amendment
is approved by shareholders, the Fund's fundamental investment restriction
regarding borrowing would read:
The Fund may not borrow money, except as permitted under the 1940 Act,
and as interpreted or modified by regulatory authority having
jurisdiction, from time to time.
DISCUSSION OF PROPOSED MODIFICATION
Unless further restricted, all investment companies are limited in the
amount they may borrow by the 1940 Act. At the present time, the 1940 Act
permits the Fund to borrow from banks in an amount up to 33 1/3% of the Fund's
assets, including the amount borrowed. The Fund may also issue a note evidencing
a temporary loan (i.e., one that must be repaid within 60 days), as long as it
does not exceed 5% of the Fund's total assets. The proposed restriction would
permit the Fund to borrow to the full extent permitted by the 1940 Act.
Therefore, no further Board or shareholder action would be needed to conform the
borrowing restriction to future changes in the 1940 Act, and interpretations
thereunder, that govern borrowing by mutual funds.
The current fundamental investment restrictions on borrowing for the Fund
provide, consistent with the limits imposed under the 1940 Act, that the Fund
may borrow in an amount up to 5% of its total assets for temporary purposes and
in an amount up to 33 1/3% of its assets to meet redemptions. If the proposed
restriction is adopted, the effect will be to permit the Fund to borrow for
purposes other than for temporary purposes or to meet redemption requests, which
may subject the Fund to a greater degree to the risks associated with borrowing.
To the extent that any borrowing made by the Fund involves leveraging, the
Fund may be subject to the risk that 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. Thus, borrowing may exaggerate the effect on the Fund's net asset
value and may increase the volatility of the Fund. In addition, any
39
money borrowed will be subject to interest and other costs, which may exceed the
gain on securities purchased with borrowed funds.
PROPOSAL 3.C -- SENIOR SECURITIES
PROPOSED NEW FUNDAMENTAL INVESTMENT RESTRICTION: If the proposed amendment
is approved by shareholders, the Fund's fundamental investment restriction
regarding issuing senior securities would read:
The Fund may not issue any senior security, except as permitted under
the 1940 Act, and as interpreted or modified by regulatory authority
having jurisdiction, from time to time. Among other things, this would
permit the Fund to: (1) enter into commitments to purchase securities
in accordance with the Fund's investment program, including, without
limitation, reverse repurchase agreements, delayed delivery securities
and when-issued securities, to the extent permitted by its investment
program and other restrictions; (2) engage in short sales of
securities to the extent permitted in its investment program and other
restrictions; and (3) purchase or sell futures contracts and related
options to the extent permitted by its investment program and other
restrictions.
DISCUSSION OF PROPOSED MODIFICATION
The 1940 Act prohibits funds from issuing senior securities, except for
borrowings where certain conditions are met. In addition, under the 1940 Act
certain types of transactions entered into by a fund, including reverse
repurchase agreements, short sales, and when-issued and delayed delivery
transactions, may be considered forms of indebtedness and, therefore, senior
securities. Currently, these activities are permissible investments under the
1940 Act so long as certain collateral or coverage requirements designed to
protect shareholders are met.
Under the Fund's current fundamental investment restrictions, the Fund is
prohibited from issuing senior securities except for borrowings and other
transactions for which the proper level of asset coverage is maintained as
required by the 1940 Act or SEC interpretation. The proposed amended restriction
on issuing senior securities does not alter this, although it does identify some
of the types of activities in which the Fund may engage that may involve the
issuance of senior securities, but which are currently permissible under the
1940 Act and applicable related guidance. Thus, the proposed amended restriction
does not change the current restrictions for
40
the Fund because the Fund will continue to be subject to the limitation on
borrowing and may engage in such other activities only to the extent permitted
by applicable SEC interpretation. Furthermore, the Fund would not be able to
engage in such activities unless its investment policies and strategies so
permit.
PROPOSAL 3.D -- UNDERWRITING SECURITIES
PROPOSED NEW FUNDAMENTAL INVESTMENT RESTRICTION: If the proposed amendment
is approved by shareholders, the Fund's fundamental investment restriction
regarding underwriting securities would read:
The Fund may not act as an underwriter of securities within the
meaning of the Securities Act of 1933, as amended ("1933 Act"), except
as permitted under the 1933 Act, and as interpreted or modified by
regulatory authority having jurisdiction, from time to time. Among
other things, to the extent that the Fund may be deemed to be an
underwriter within the meaning of the 1933 Act, this would permit the
Fund to act as an underwriter of securities in connection with the
purchase and sale of its portfolio securities in the ordinary course
of pursuing its investment objective, investment policies and
investment program.
DISCUSSION OF PROPOSED MODIFICATION
The proposed restriction with respect to underwriting securities is
substantially similar to the current restriction for the Fund. However, it
clarifies the meaning of the current investment restriction and makes uniform
the exception from the prohibition for all Munder Funds.
PROPOSAL 3.E -- REAL ESTATE
PROPOSED NEW FUNDAMENTAL INVESTMENT RESTRICTION: If the proposed amendment
is approved by shareholders, the Fund's fundamental investment restriction
regarding investments in real estate would read:
The Fund may not purchase or sell real estate or any interests
therein, except as permitted under the 1940 Act, and as interpreted or
modified by regulatory authority having jurisdiction, from time to
time. Among other things, this would permit the Fund to: (1) acquire
or lease office space for its own use; (2) invest in securities of
issuers that invest in real estate or
41
interests therein; (3) invest in mortgage-related securities and other
securities that are secured by real estate or interests therein; or
(4) hold and sell real estate acquired by the Fund as a result of the
ownership of securities.
DISCUSSION OF PROPOSED MODIFICATION
The proposed change maintains the Fund's general restriction on buying or
selling real estate, but excepts certain real estate-related activities from the
restriction. The proposed restriction would permit the Fund to acquire or lease
office space for their own use, although it is not anticipated that the Fund
will do so. The proposed restriction would also permit the Fund to hold and sell
real estate acquired as a result of the ownership of securities (for example, as
the holder of a bond in a company that goes bankrupt). The Fund would also be
able to invest in mortgage-backed securities and securities of issuers that
invest in real estate interests, including real estate investment trusts, to the
extent consistent with its other investment policies and strategies.
PROPOSAL 3.F -- MAKING LOANS
PROPOSED NEW FUNDAMENTAL INVESTMENT RESTRICTION: If the proposed amendment
is approved by shareholders, the Fund's fundamental investment restriction
regarding making loans would read:
The Fund may not make loans, except as permitted under the 1940 Act,
and as interpreted or modified by regulatory authority having
jurisdiction, from time to time. Notwithstanding this limitation, the
Fund may, among other things: (1) enter into repurchase agreements,
(2) lend portfolio securities; and (3) acquire debt securities without
being deemed to be making a loan.
DISCUSSION OF PROPOSED MODIFICATION
The proposed change permits the Fund to engage in securities lending to the
extent permitted by the 1940 Act and by then-current SEC policy. The staff of
the SEC currently limits loans of the Fund's securities to one-third of the
Fund's assets, including any collateral received from the loan, provided that
loans are 100% collateralized by cash or cash equivalents. The Fund's current
restrictions are consistent with this limitation and, in some cases, are set
lower than the maximum allowed under the 1940 Act. Should the SEC staff modify
the requirements governing a fund's loan of
42
its securities in the future, under the proposed restriction, the Fund would be
able to take advantage of that increased flexibility without requiring further
shareholder action.
This Proposal would result in a change to the fundamental investment
restrictions of the Fund to increase the amount of its total assets available
for lending from 25% to 33 1/3%. In addition, the Fund has been subject to a
non-fundamental policy limiting securities lending to no more than 25% its
assets. In light of this amendment, the non-fundamental policy would be
eliminated, which would allow the Fund to loan up to 33 1/3% of its assets.
Therefore, the Fund could be subject to a greater extent to the risks associated
with securities lending. These risks include the possibility of loss to the Fund
due to (1) the inability of the borrower to return the securities; (2) a delay
in recovery of the securities; or (3) loss of rights in the collateral should
the borrower fail financially.
PROPOSAL 3.G -- CONCENTRATION OF INVESTMENTS
PROPOSED NEW FUNDAMENTAL INVESTMENT RESTRICTION: If the proposed amendment
is approved by shareholders, the Fund's fundamental investment restriction
regarding concentration of investments would read:
Except as noted below, the Fund may not "concentrate" its investments
in a particular industry, except as permitted under the 1940 Act, and
as interpreted or modified by regulatory authority having
jurisdiction, from time to time, provided that, without limiting the
generality of the foregoing: (1) this limitation will not apply to the
Fund's investments in: (a) securities of other investment companies;
(b) securities issued or guaranteed as to principal and/or interest by
the U.S. Government, its agencies or instrumentalities; or (c)
repurchase agreements (collateralized by the instruments described in
clause (b)); (2) wholly-owned finance companies will be considered to
be in the industries of their parents if their activities are
primarily related to the financing activities of the parents; and (3)
utilities will be divided according to their services, for example,
gas, gas transmission, electric and gas, electric and telephone will
each be considered a separate industry.
The Fund may concentrate its investments in securities of issuers
conducting their principal business activities in healthcare
industries.
43
DISCUSSION OF PROPOSED MODIFICATION
The Fund will continue to be permitted to concentrate its assets in
healthcare industries. While the 1940 Act does not define what constitutes
"concentration" in an industry, the SEC staff has taken the position that
investment of more than 25% of a fund's total assets in one or more issuers
conducting their principal business activities in the same industry (excluding
the U.S. Government, its agencies or instrumentalities) constitutes
concentration. The Fund's current fundamental restrictions are consistent with
this interpretation. Nevertheless, the proposed change would permit investment
in an industry up to the most recently prescribed limits under the 1940 Act and
accompanying SEC interpretations. The proposed change also provides a uniform
list of exceptions from the restrictions.
PROPOSAL 3.H -- COMMODITIES
PROPOSED NEW FUNDAMENTAL INVESTMENT RESTRICTION: If the proposed amendment
is approved by shareholders, the Fund's fundamental investment restriction
regarding investments in commodities would read:
The Fund may not purchase physical commodities or contracts relating
to physical commodities, except as permitted under the 1940 Act, and
as interpreted or modified by regulatory authority having
jurisdiction, from time to time.
DISCUSSION OF PROPOSED MODIFICATION
The current fundamental investment restrictions prohibit the Fund from
investing in commodities or commodity contracts, but except certain financial
instruments, such as futures contracts and options on futures contracts, which
under some interpretations may be deemed commodities. Consistent with the
requirement of the 1940 Act, the proposed restriction prohibits only the
purchase of physical commodities; it does not limit the Fund's purchase or sale
of derivatives that have a value tied to the value of a financial index,
financial instrument or other asset and allows investments for both hedging and
non-hedging purposes. These derivatives include, for example, options, futures
contracts and options on futures contracts. Other types of financial
instruments, such as forward commitments and swaps, might also be deemed to be
commodity contracts in the context of the proposed restriction. Such strategies
are generally accepted under modern portfolio management and are regularly used
by many mutual funds and other institutional investors. The proposed restriction
also permits the Fund
44
to enter into foreign currency transactions, in accordance with its investment
objective and strategies.
While the Fund may already invest in derivatives, the proposed restriction
may expand the types of derivatives in which the Fund may invest, if such
investments are otherwise in accordance with the Fund's investment objective and
strategies. To the extent the Fund invests in these derivative instruments, it
will be exposed to additional risks and transaction costs. Risks of derivative
instruments include: (1) the risk that interest rates, securities prices and
currency markets will not move in the direction that the Fund's portfolio
manager anticipates; (2) imperfect correlation between the price of derivative
instruments and movements in the prices of the securities, interest rates or
currencies being hedged; (3) the fact that skills needed to use these strategies
are different than those needed to select portfolio securities; (4) the possible
absence of a liquid secondary market for any particular instrument and possible
exchange-imposed price fluctuation limits, either of which may make it difficult
or impossible to close out a position when desired; (5) the risk that adverse
price movements in an instrument can result in a loss substantially greater than
the Fund's initial investment in that instrument (in some cases, the potential
loss is unlimited); (6) particularly in the case of privately-negotiated
instruments, the risk that the counterparty will not perform its obligations,
which could leave the Fund worse off than if it had not entered into the
position; and (7) the inability to close out certain hedged positions to avoid
adverse tax consequences.
However, notwithstanding the above, it is not currently proposed that the
Fund's investment policies be changed to permit additional derivatives
investments. Without such a change, the Fund will continue to be subject to the
limitations currently in effect in the Fund's prospectus or statement of
additional information.
ELIMINATION OF CERTAIN FUNDAMENTAL INVESTMENT
RESTRICTIONS OF THE FUND
PROPOSAL 3.I -- PLEDGING, MORTGAGING AND HYPOTHECATING FUND ASSETS
PROPOSAL
It is proposed that the fundamental investment restriction on pledging,
mortgaging and hypothecating the Fund's assets be eliminated in its entirety.
45
REASONS FOR THE ELIMINATION OF THE INVESTMENT RESTRICTION
The restriction on pledging, mortgaging and hypothecating a fund's assets
was based on the requirements formerly imposed by state "blue sky" regulators as
a condition to registration. As a result of NSMIA, this restriction is no longer
required and may be eliminated from the Fund's fundamental investment
restrictions. The Fund's current limits on pledging may conflict with its
ability to borrow money to meet redemption requests or for temporary purposes.
This conflict arises because banks may require borrowers such as the Fund to
pledge assets in order to collateralize the amount borrowed. These collateral
requirements are typically for amounts at least equal to, and often larger than,
the principal amount of the loan. the Fund's current restrictions, however,
could be read to prevent these types of collateral arrangements and could
therefore have the effect of reducing the amount that the Fund may borrow in
these situations. Although the Fund currently plans to engage only in pledging
in connection with borrowing money for redemptions or temporary purposes,
pledging assets could decrease the Fund's ability to liquidate assets. If the
Fund pledged a large portion of its assets, the ability to meet redemption
requests or other obligations could be delayed. In any event, the Fund's current
borrowing limits would remain consistent with limits prescribed under the 1940
Act, as more fully described in Proposal 3.B above.
PROPOSAL 3.J -- INVESTMENTS FOR CONTROL
PROPOSAL
It is proposed that the fundamental investment restriction on investments
made for purposes of exercising control over, or management of, the issuer be
eliminated in its entirety.
REASONS FOR THE ELIMINATION OF THE INVESTMENT RESTRICTION
The investment restriction on investing in a security for the purpose of
obtaining or exercising control over, or management of, the issuer was based on
the requirements formerly imposed by state "blue sky" regulators as a condition
to registration. As a result of NSMIA, this restriction is no longer required
and may be eliminated from the Fund's investment restrictions.
46
PROPOSAL 3.K -- MARGIN ACTIVITIES AND SHORT SELLING
PROPOSAL
It is proposed that the fundamental investment restriction on margin
activities and selling securities short be eliminated in its entirety.
REASONS FOR THE ELIMINATION OF THE INVESTMENT RESTRICTION
The fundamental investment restrictions on margin activities and selling
securities short were based on the requirements formerly imposed by state "blue
sky" regulators as a condition to registration. As a result of NSMIA, this
restriction is no longer required and may be eliminated from the Fund's
fundamental investment restrictions. There are no current expectations that the
Fund will engage in such activities, except that the Fund may still engage in
activities that are exceptions to its current fundamental investment
restrictions, such as the use of short-term credits necessary for the clearance
of purchases and sales of portfolio securities.
PROPOSAL 3.L -- REVERSE REPURCHASE AGREEMENTS
PROPOSAL
It is proposed that the fundamental investment restriction regarding
investment in reverse repurchase agreements be eliminated in its entirety.
REASONS FOR THE ELIMINATION OF THE INVESTMENT RESTRICTION
As proposed in Proposal 3.C regarding the fundamental investment
restriction on the Fund's issuance of senior securities, the Fund may enter into
reverse repurchase agreements so long as doing so otherwise comports with its
investment program and other investment restrictions. In order to remain
consistent with the change to the fundamental restriction on issuing senior
securities, this general fundamental policy should be eliminated in its
entirety.
To the extent the Fund enters into a reverse repurchase agreement, it will
incur the risks associated with that transaction, including the risk that the
market value of the securities sold by the Fund may decline below the repurchase
price. In addition, the Fund will pay interest on amounts obtained pursuant to a
reverse repurchase agreement.
* * *
47
SHAREHOLDER APPROVAL
Approval of Proposals 3.A through 3.L each require the affirmative vote of
a "majority of the outstanding voting securities" entitled to vote on the
Proposal, as defined in the 1940 Act, with all classes of the Fund voting
together and not by class. Shareholders are entitled to one vote for each share.
Fractional shares are entitled to proportional voting rights.
A "majority of the outstanding voting securities" means the vote of (1) 67%
or more of the voting securities entitled to vote on the Proposal that are
present at the Meeting, if the holders of more than 50% of the outstanding
voting securities are present or represented by proxy, or (2) the vote of more
than 50% of the outstanding voting securities entitled to vote on the Proposal,
whichever is less.
YOUR BOARD OF TRUSTEES, INCLUDING THE NON-
INTERESTED TRUSTEES, UNANIMOUSLY RECOMMENDS
A VOTE "FOR" APPROVAL OF THESE PROPOSALS.
GENERAL INFORMATION ABOUT THE TRUST
MANAGEMENT AND OTHER SERVICE PROVIDERS
Set forth below is a description of the current service providers of the
Fund. If the Reorganization proposed in Proposal 2 is approved by shareholders,
the New Fund will have the same service providers as the Fund. Except as
otherwise disclosed in the Proposals, there are no anticipated changes in the
fees payable to these service providers as a result of or in connection with any
of the Proposals or the closing of the Transaction.
ADVISOR
The Advisor (Munder Capital Management), located at 480 Pierce Street,
Birmingham, Michigan 48009, is the investment advisor of the Fund. As a result
of the expected change in control of the Advisor, in accordance with Proposal 1,
shareholders of the Fund are being asked to approve a New Combined Advisory
Agreement.
Set forth in Exhibit C is certain information with respect to the executive
officers and general partners of the Advisor as of August 3, 2006 and executive
officers and directors of the Advisor expected to serve in those capacities
following the closing of the Transaction.
48
ADMINISTRATOR, SUB-ADMINISTRATOR, DISTRIBUTOR, CUSTODIAN AND
TRANSFER AGENT
Munder Capital Management serves as the administrator to the Fund. Funds
Distributor, Inc., located at 100 Summer Street, 15th Floor, Boston,
Massachusetts, 02110 serves as the Fund's distributor. State Street Bank and
Trust Company, located at One Lincoln Street, Boston, Massachusetts, 02111
serves as the Fund's sub-administrator and custodian. PFPC Inc., located at 4400
Computer Drive, Westborough, Massachusetts, 01581 serves as the Fund's transfer
agent and dividend disbursing agent.
During the Fund's most recent fiscal year, the Fund paid the Advisor in its
capacity as administrator a fee of $287,777.
INDEPENDENT AUDITORS
Ernst & Young LLP, located at 200 Clarendon Street, Boston, MA 02116 serves
as independent registered public accounting firm for the Fund.
EXECUTIVE OFFICERS OF THE FUND
Officers of the Fund are elected annually by the Board to oversee the
day-to-day activities of the Fund. Information as of July 31, 2006 about the
executive officers of the Fund, including their principal occupations during the
past five years, is set forth in Exhibit E. Each of these officers is also an
officer and/or employee of the Advisor. None of these officers receives any
compensation from the Fund.
OTHER BUSINESS
The Board does not intend to present any other business at the Meeting. If,
however, any other matters are properly brought before the Meeting, the persons
named in the accompanying form of proxy will vote thereon in accordance with
their judgment.
SUBMISSION OF CERTAIN SHAREHOLDER PROPOSALS
The Trust does not hold annual shareholder meetings. Any shareholder
proposal intended to be presented at any future meeting of shareholders must be
received by the Trust at its principal office a reasonable time before the
solicitation of proxies for such meeting in order for such proposal to be
considered for inclusion in that proxy statement relating to such meeting or to
otherwise be considered for presentation at such
49
meeting. Shareholders wishing to submit proposals for inclusion in a proxy
statement for a subsequent shareholder meeting should send their written
proposals to the Secretary of the Fund at 480 Pierce Street, Birmingham,
Michigan 48009.
VOTING INFORMATION
This Proxy Statement is furnished in connection with a solicitation of
proxies by the Board to be used at the Meeting. This Proxy Statement, along with
a Notice of the Meeting and proxy card, is first being mailed to shareholders of
the Fund on or about September 11, 2006. Only shareholders of record as of the
close of business on the Record Date, September 1, 2006, will be entitled to
notice of, and to vote at, the Meeting. If the enclosed form of proxy card is
properly executed and returned in time to be voted at the Meeting, the proxies
named therein will vote the shares represented by the proxy in accordance with
the instructions marked thereon. If no instructions are given by a shareholder
on the proxy card but the proxy card is properly executed and/or voted by the
shareholder, such proxy will be voted "FOR" each Proposal and "FOR" any other
matters deemed appropriate. Alternatively, shareholders who are named as the
record owners of their shares may vote their shares in person at the Meeting.
Beneficial owners of shares held through brokers or nominees, however, will not
be able to vote in person at the Meeting.
Once a proxy has been submitted to the Fund, it may be revoked on or before
the Meeting: (1) by submitting to the Fund a subsequently dated proxy or (2) by
delivering to the Secretary of the Fund at the address on the cover of this
Proxy Statement a written notice of revocation or (3) if the shareholder is a
record owner, by attending the Meeting and casting a vote either in person or by
proxy. If a shareholder wishes to participate in the Meeting, but does not wish
to authorize the execution of a proxy by telephone or through the Internet, the
shareholder may still execute and submit the proxy form included with this Proxy
Statement or, if the shareholder is a record owner, attend the Meeting and vote
in person.
Unless revoked, all valid and executed proxies will be voted in accordance
with the specifications thereon or, in the absence of such specifications, "FOR"
approval of the Proposals contemplated thereby.
QUORUM
The presence in person or by proxy of the holders of record of a majority
of the total outstanding shares of the Fund will constitute a
50
quorum at the Meeting for purposes of each Proposal permitting action to be
taken on those Proposals.
VOTING REQUIREMENT
Proposals 1 and 3.A through 3.L, each require the affirmative vote of a
"majority of the outstanding voting securities" entitled to vote on the
Proposal, which for these purposes, is the vote of (1) 67% or more of the voting
securities entitled to vote on the Proposal that are present at the Meeting, if
the holders of more than 50% of the outstanding voting securities are present or
represented by proxy, or (2) more than 50% of the outstanding voting securities
entitled to vote on the Proposal, whichever is less. Proposal 2 requires the
affirmative vote of a majority of the outstanding shares of the Fund.
EFFECT OF ABSTENTIONS AND BROKER "NON-VOTES"
For purposes of determining the presence of a quorum for transacting
business at the Meeting, executed proxies marked as abstentions and broker
"non-votes" (that is, proxies from brokers or nominees indicating that such
persons have not received instructions from the beneficial owner or other
persons entitled to vote shares on a particular matter with respect to which the
brokers or nominees do not have discretionary power) will be treated as shares
that are present for quorum purposes but which have not been voted. Accordingly,
abstentions and broker non-votes will effectively be a vote against each
Proposal. However, broker non-votes will be excluded from any vote to adjourn
the Meeting with respect to each Proposal, in accordance with the By-laws of the
Trust, and accordingly, will not affect the outcome of an adjournment vote.
ADJOURNMENTS
In the event that sufficient votes to approve one or more of the Proposals
are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. The
persons named as proxies will vote in favor of such adjournment with respect to
any Proposal which they are entitled to vote in favor of that Proposal and will
vote against any such adjournment with respect to any Proposal which they are
required to vote against that Proposal. The vote required to adjourn the Meeting
with respect to each Proposal is a majority of the shares represented at the
Meeting, either in person or by proxy.
51
In determining whether to adjourn the Meeting with respect to a Proposal,
the following factors may be considered: the percentage of votes actually cast;
the percentage of negative votes actually cast; the nature of any further
solicitation; and the information to be provided to shareholders with respect to
the reasons for the solicitation.
PROXY SOLICITATION
Proxies are solicited by mail. Additional solicitations may be made by
telephone, e-mail, or other personal contact by officers or employees of the
Advisor and its affiliates or by proxy soliciting firms retained by the Fund.
The Fund has retained The Altman Group ("Altman") to provide proxy solicitation
services in connection with the Meeting at an estimated cost of $[ -- ]. In
addition, the Fund may reimburse persons holding shares in their names or names
of their nominees for expenses incurred in forwarding solicitation material to
their beneficial owners. The cost of the solicitation will be borne one-half by
the Advisor and one-half by Comerica.
As the meeting date approaches, shareholders of the Fund may receive a call
from a representative of the Advisor or Altman if the Fund has not yet received
their vote. Authorization to permit the Advisor or Altman to execute proxies may
be obtained by telephonic or electronically transmitted instructions from
shareholders. Proxies that are obtained telephonically will be recorded in
accordance with the procedures set forth below. Management of the Fund believes
that these procedures are reasonably designed to ensure that the identity of the
shareholder casting the vote is accurately determined and that the voting
instructions of the shareholder are accurately determined. In all cases where a
telephonic proxy is solicited, the Advisor or Altman representative is required
to ask the shareholder for the shareholder's full name, address, title (if the
person giving the proxy is authorized to act on behalf of an entity, such as a
corporation), and to confirm that the shareholder has received this Proxy
Statement in the mail.
If the shareholder information solicited agrees with the information
provided to the Advisor or Altman by the Fund, the Advisor or Altman
representative has the responsibility to explain the process, and ask for the
shareholder's instructions. The Advisor or Altman representative, although
permitted to answer questions about the process, is not permitted to recommend
to the shareholder how to vote, other than to read any recommendation set forth
in this Proxy Statement. The Advisor or Altman will record the shareholder's
instructions. Within 72 hours, the Advisor or Altman will send the shareholder a
letter that confirms the shareholder's
52
vote and asks the shareholder to call the Advisor or Altman immediately if the
shareholder's instructions are not correctly reflected in the confirmation.
FUND SHARES OWNED BY CERTAIN BENEFICIAL OWNERS
As of July 31, 2006, each of the Trustees and executive officers of the
Fund beneficially owned individually, and collectively as a group, less than 1%
of the outstanding shares of each class of the Fund.
For a list of persons or entities that, as of September 1, 2006, owned of
record or were known by the Fund to own beneficially 5% or more of any class of
the Fund's shares, please refer to Exhibit F.
[As of September 1, 2006, Comerica Bank held of record [less than 1%]
[approximately [ -- ]%] of the outstanding shares of the Fund as agent or
trustee for its customers. In addition, as of September 1, 2006, Comerica Bank
had investment and/or voting power on behalf of its customers with respect to
[less than 1%] [approximately [ -- ]%] of the outstanding shares of the Fund.
Comerica Bank's economic interest in such shares, which are [primarily held for
the benefit of its customers,] is [less than 1%] [approximately [ -- ]%]. The
Fund has been advised by Comerica Bank that it intends to exercise its
discretion to vote all shares over which it has voting power in a manner
consistent with its fiduciary responsibilities. Comerica Bank has also advised
the Fund that it intends to vote all shares over which it has voting power,
including as agent or trustee for its customers, in favor of each Proposal.]
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of MST in
connection with the Reorganization will be passed upon by Dechert LLP, 1775 I
Street, N.W., Washington, DC 20006.
53
EXHIBIT A
FORM OF NEW COMBINED ADVISORY AGREEMENT
AMONG
MUNDER CAPITAL MANAGEMENT, LLC,
MUNDER SERIES TRUST[,]
[MUNDER SERIES TRUST II]
AND
THE MUNDER @VANTAGE FUND
[NOTE: IF PROPOSAL 2 IS APPROVED BY SHAREHOLDERS OF THE FUND, REFERENCES TO
MUNDER SERIES TRUST II WILL BE REMOVED AND CONFORMING AMENDMENTS MADE.]
AGREEMENT, made this day of , 2006, among Munder Series
Trust ("MST"), on behalf of each of its series, [Munder Series Trust II ("MST
II"), on behalf of each of its series,] The Munder @Vantage Fund ("@Vantage"),
and Munder Capital Management, LLC ("Advisor"), a Delaware limited liability
company.
WHEREAS, MST is a Delaware statutory trust authorized to issue shares in
series[, MST II is a Massachusetts business trust authorized to issues shares in
series,] and @Vantage is a Delaware statutory trust and the series of MST set
forth in Schedule A, as may be amended from time to time, [the series of MST II
set forth in Schedule A, as may be amended from time to time,] and @Vantage are
each referred to herein as a "Fund" and, collectively, as the "Funds";
WHEREAS, MST [is/and MST II are each] registered as an open-end management
investment company under the Investment Company Act of 1940, as amended ("1940
Act");
WHEREAS, @Vantage is registered as a closed-end management investment
company under the 1940 Act;
WHEREAS, the Advisor is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ("Advisers Act");
WHEREAS, MST [and MST II] entered into a Combined Investment Advisory
Agreement with the Advisor dated June 13, 2003 ("2003 Agreement");
WHEREAS, @Vantage entered into an Investment Advisory Agreement with the
Advisor dated August , 2000 ("@Vantage Agreement");
WHEREAS, prior to the termination of the 2003 Agreement and the @Vantage
Agreement, the Boards of Trustees of MST[, MST II] and
A-1
@Vantage and shareholders of each Fund approved this Agreement to become
effective following the effectiveness of the change of control of the Advisor;
and
WHEREAS, the 2003 Agreement and the @Vantage Agreement terminated
automatically on , 2006 as a result of a change of control of the
Advisor;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed among MST, [MST II,] @Vantage and the Advisor as
follows:
1. APPOINTMENT
(a) MST[, MST II] and @Vantage hereby appoint the Advisor to act as
investment adviser to the Funds for the periods and on the terms set forth
herein. The Advisor accepts the appointment and agrees to furnish the services
set forth herein for the compensation provided in Schedule B hereto.
(b) In the event that MST[, MST II] or @Vantage establishes one or more
series other than the Funds listed on Schedule A attached hereto, with respect
to which it desires to retain the Advisor to act as investment adviser
hereunder, it shall notify the Advisor in writing. If the Advisor is willing to
render such services under this Agreement, it shall notify MST[, MST II] or
@Vantage, as applicable, in writing whereupon such series shall become a Fund
hereunder and shall be subject to the provisions of this Agreement to the same
extent as the Funds named herein except to the extent that said provisions
(including those relating to the compensation payable by the Fund to the
Advisor) are modified with respect to such Fund in writing by MST[, MST II] or
@Vantage, as applicable, and the Advisor at that time.
2. SERVICES AS INVESTMENT ADVISER
Subject to the general supervision and oversight of the Boards of Trustees
of MST[, MST II] and @Vantage (collectively, the "Board"), the Advisor:
(a) will have overall supervisory responsibility for the general
management and investment of each Fund's assets and will provide a program of
continuous investment management for each Fund in accordance with each Fund's
investment objective and policies as stated in each Fund's prospectus and
statement of additional information filed with the Securities
A-2
and Exchange Commission ("SEC"), as they may be amended from time to time (each
a "Prospectus" and, together, the "Prospectuses");
(b) subject to the approval of the Board, may enter into an agreement with
one or more sub-advisors (each a "Sub-Advisor") pursuant to which each
Sub-Advisor shall furnish the investment advisory services specified therein in
connection with the management of one or more of the Funds as specified therein
(each a "Sub-Advisory Agreement" and, collectively, the "Sub-Advisory
Agreements"); provided, that any Sub-Advisory Agreement with a Sub-Advisor shall
be in compliance with, and approved as required by, the 1940 Act or the rules or
regulations thereunder or in accordance with exemptive relief granted by the SEC
under the 1940 Act. The Advisor will continue to have ultimate responsibility
for all investment advisory services furnished pursuant to any Sub-Advisory
Agreement. The Advisor shall be solely responsible for compensating any
Sub-Advisor for performing any of the duties and obligations delegated to such
Sub-Advisor, provided that the Advisor may request that MST[, MST II] and
@Vantage directly pay to the Sub-Advisor the portion of the Advisor's
compensation that the Advisor is obligated to pay to the Sub-Advisor. If MST[,
MST II] and @Vantage agree to such request, the compensation MST[, MST II] and
@Vantage pay to the Advisor shall be reduced by amounts paid directly to any
Sub-Advisor. In the event that any Sub-Advisor appointed hereunder is
terminated, the Advisor may provide investment advisory services pursuant to
this Agreement through its own employees or through another Sub-Advisor as
approved by MST[, MST II] and @Vantage.
(c) will, or will cause the appropriate Sub-Advisor(s) to, invest and
reinvest the assets of the Funds by selecting the securities, instruments,
repurchase agreements, financial futures contracts, options and other
investments and techniques that the Funds may purchase, sell, enter into or use;
(d) will, or will cause the appropriate Sub-Advisor(s) to, determine the
portions of each Fund's portfolio to be invested in securities or other assets
and uninvested or in cash equivalents;
(e) will, or will cause the appropriate Sub-Advisor(s) to, oversee the
placement of purchase and sale orders on behalf of the Funds;
(f) will, or will cause the appropriate Sub-Advisor(s) to, employ
professional portfolio managers and securities analysts to provide research
services to the Funds;
A-3
(g) will, or will cause the appropriate Sub-Advisor(s) to, vote all
proxies solicited by or with respect to the issuers of securities in which
assets of the Funds may be invested in a manner that complies with the Funds'
proxy voting policies and procedures and, in the good faith judgment of the
Advisor, best serves the interests of each Fund's shareholders; maintain records
of all proxies voted on behalf of the Funds; and provide information to MST[,
MST II] or @Vantage or their designated agents in a manner that is sufficiently
complete and timely to ensure compliance by MST[, MST II] and @Vantage with
their filing obligations under Rule 30b1-4 of the 1940 Act;
(h) will, or will cause the appropriate Sub-Advisor(s) to, maintain books
and records with respect to each Fund's securities transactions;
(i) will, and will cause each Sub-Advisor to, provide periodic and special
reports to the Board, as requested; and
(j) to the extent reasonably requested by the officers of the Funds, will,
and will cause each Sub-Advisor to, cooperate with and provide reasonable
assistance to other service providers engaged by MST[, MST II] or @Vantage by:
(1) keeping them fully informed as to such matters that they may reasonably deem
necessary with respect to the performance of their obligations to the Funds, (2)
providing prompt responses to reasonable requests for information or assistance,
and (3) establishing appropriate processes to promote the efficient exchange of
information; and
(k) will monitor compliance of each Sub-Advisor with the investment
objectives, strategies, policies, limitations and restrictions of any Fund under
the management of such Sub-Advisor, and review and report to the applicable
Board on the performance of each such Sub-Advisor.
In providing those services, the Advisor will provide the Funds with
ongoing research, analysis, advice and judgments regarding individual
investments, general economic conditions and trends and long-range investment
policy. In addition, the Advisor will furnish the Funds with whatever
statistical information the Funds may reasonably request with respect to the
securities that the Funds may hold or contemplate purchasing.
The Advisor further agrees that, in performing its duties hereunder, it
will, and that any Sub-Advisory Agreements it enters into with any Sub-Advisor
shall require that the Sub-Advisor will:
(a) comply in all material respects with (1) the 1940 Act and the Advisers
Act and all rules and regulations thereunder, (2) the rules an
A-4
regulations of the Commodities Futures Trading Commission, (3) the Internal
Revenue Code of 1986, as amended ("Code"), (4) the investment objectives,
strategies, policies, limitations and restrictions of each Fund as described in
the Prospectuses, and (5) all other applicable federal and state law and
regulations, and with any applicable procedures adopted by the Board;
(b) use reasonable efforts to manage each Fund so that it will qualify,
and continue to qualify, as a regulated investment company under Subchapter M of
the Code and regulations issued thereunder;
(c) maintain books and records with respect to each Fund's securities
transactions, render to the Board such periodic and special reports as the Board
may reasonably request, and keep the Board informed of developments materially
affecting each Fund's portfolio;
(d) make available to the Board, Chief Compliance Officers of MST[, MST
II] and @Vantage (each the "CCO") and the Funds' administrator, promptly upon
their request, such copies of its investment records and ledgers with respect to
each Fund as may be required to assist in their compliance with applicable laws
and regulations. As reasonably requested by the Board, the Advisor will complete
periodic or special questionnaires and furnish to the Board such periodic and
special reports regarding each Fund and the Advisor. In addition, the Advisor
will furnish to the Board and, subject to compliance with the Funds' applicable
policies regarding disclosure of portfolio holdings, third-party data reporting
services all currently available standardized performance information and other
customary data;
(e) make available to the Board at reasonable times its portfolio managers
and other appropriate personnel, either in person or, at the mutual convenience
of the Board and the Advisor, by telephone, in order to review the investment
policies, performance and other matters relating to the management of the Funds;
(f) make available to the Funds' administrator and, as appropriate, MST[,
MST II] or @Vantage, promptly upon its request, such copies of its investment
records and ledgers with respect to the Funds as may be required to assist the
administrator and MST[, MST II] and @Vantage in their compliance with applicable
laws and regulations. The Advisor will furnish the Board with such periodic and
special reports regarding the Funds as it may reasonably request;
A-5
(g) use no inside information that may be in its possession or in the
possession of any of its affiliates, nor will the Advisor seek to obtain any
such information, in providing investment advice to each Fund;
(h) immediately notify MST, [MST II,] @Vantage and the Board in the event
that the Advisor or any of its affiliates becomes aware that the Advisor: (1) is
subject to a statutory disqualification that prevents the Advisor from serving
as investment adviser pursuant to this Agreement; (2) fail to be registered as
an investment adviser under the Advisers Act or under the laws of any
jurisdiction in which the Advisor is required to be registered as an investment
adviser in order to perform its obligations under this Agreement; (3) is the
subject of an administrative proceeding or enforcement action by the SEC or
other regulatory authority; or (4) is served or otherwise receives notice of any
action, suit, proceeding, inquiry or investigation, at law or in equity, before
or by any court, public board or body, or governmental authority, involving the
affairs of MST[, MST II] or @Vantage. The Advisor further agrees to notify MST[,
MST II] and @Vantage immediately of any material fact known to the Advisor
respecting or relating to the Advisor that is not contained in any Registration
Statement regarding the Funds, or any amendment or supplement thereto, but that
is required to be disclosed therein, and of any statement contained therein that
becomes untrue in any material respect. The Advisor will promptly notify MST,
[MST II,] @Vantage and the Board if its chief executive officer or any member of
the portfolio management team for any Fund changes or there is otherwise an
actual change in control or management of the Advisor;
(i) not disclose information regarding Fund characteristics, trading
history, portfolio holdings or any other related information to any third party,
except in compliance with the Funds' policies on disclosure of portfolio
holdings;
(j) provide MST, [MST II,] @Vantage or the Board with such information and
assurances (including certifications and sub-certifications) as MST, [MST II,]
@Vantage or the Board may reasonably request from time to time in order to
assist MST, [MST II,] @Vantage or the Board in complying with applicable laws,
rules and regulations, including requirements in connection with the preparation
and/or filing of the Funds' Form N-CSRs and Form N-Qs;
(k) assist as requested in determining the fair value of portfolio
securities when market quotations are not readily available (including making
knowledgeable personnel of the Advisor available for discussions with the Board
and/or any fair valuation committee appointed by the Board
A-6
upon reasonable request, obtaining bids and offers or quotes from broker-
dealers or market-makers with respect to securities held by the Funds and
providing information upon request on valuations the Advisor has determined of
securities also held by other clients of the Advisor), for the purpose of
calculating each Fund's net asset value in accordance with the procedures and
methods established by the Board; and
(l) meet with the Board to explain its activities at such times and places
as the Board may reasonably request.
The Advisor will also make available, without additional expense to the
Funds, the service of the Advisor's directors, officers and employees to be duly
elected or appointed officers of MST[, MST II] and @Vantage, subject to their
individual consent to serve and to any limitations imposed by laws, rules or
regulations.
3. DOCUMENTS
MST[, MST II] and @Vantage have each delivered properly certified or
authenticated copies of each of the following documents to the Advisor and will
deliver to it all future amendments and supplements thereto, if any:
(a) certified resolution of the Board authorizing the appointment of the
Advisor and approving the form of this Agreement; and
(b) the Prospectuses and any exhibits, powers of attorneys, certificates
and any and all other documents relating to or filed in connection with the
Prospectuses.
4. BROKERAGE
The Advisor may place orders pursuant to its investment determinations for
each of the Funds directly with the issuers of the securities, or with any
broker or dealer. The Advisor may open and maintain brokerage accounts of all
types on behalf of and in the name of the Funds. The Advisor may enter into
standard customer agreements with brokers and direct payments of cash, cash
equivalents and securities and other property into such brokerage accounts as
the Advisor deems desirable or appropriate. In selecting brokers or dealers to
execute transactions on behalf of the Funds, the Advisor will use its best
efforts to seek the best overall terms available. In assessing the best overall
terms available for any Fund transaction, the Advisor will consider all factors
it deems relevant, including, but not limited to, the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker or dealer and the reasonableness of the commission, if
any, for the
A-7
specific transaction and on a continuing basis. In selecting broker-dealers to
execute a particular transaction, and in evaluating the best overall terms
available, the Advisor is authorized to consider the brokerage and research
services (as those terms are defined in Section 28(e) of the Securities Exchange
Act of 1934, as amended (the "1934 Act")) provided to the Funds and/or other
accounts over which the Advisor or its affiliates exercise investment
discretion. The parties hereto acknowledge that it is desirable for MST[, MST
II] and @Vantage that the Advisor have access to supplemental investment and
market research and security and economic analysis provided by broker-dealers
who may execute brokerage transactions at a higher cost to the Funds than may
result when allocating brokerage to other brokers on the basis of seeking the
most favorable price and efficient execution. Therefore, the Advisor may cause
the Funds to pay a broker-dealer which furnishes brokerage and research services
a higher commission than that which might be charged by another broker-dealer
for effecting the same transaction, provided that the Advisor determines in good
faith that such commission is reasonable in relation to the value of the
brokerage and research services provided by such broker-dealer, viewed in terms
of either the particular transaction or the overall responsibilities of the
Advisor to the Funds. It is understood that the services provided by such
brokers may be useful to the Advisor in connection with the Advisor's services
to other clients. In accordance with Section 11(a) of the 1934 Act and Rule
11a2-2(T) thereunder and subject to any other applicable laws and regulations,
the Advisor and its affiliates are authorized to effect portfolio transactions
for the Funds and to retain brokerage commissions on such transactions. The
Advisor may, but shall not be obligated to, aggregate or bunch orders for the
purchase or sale of securities for the Funds with orders for its other clients
where: (1) such aggregation or bunching of order is not inconsistent with a
Fund's investment objectives, policies and procedures, (2) the allocation of the
securities so purchased or sold, as well as the expenses incurred in any such
transaction, shall be made by the Advisor in a manner that is fair and equitable
in the judgment of the Advisor, and (3) the Advisor shall be cognizant of its
fiduciary obligations to the Funds and each of its other clients and shall enter
into such transactions only where the rights of each client are considered and
protected. To the extent that the Advisor retains one or more Sub-Advisors, the
Advisor shall monitor reasonably the use by each such Sub-Advisor of brokers and
dealers to execute trades in securities on behalf of the Funds.
A-8
5. RECORDS
(a) The Advisor agrees to maintain and to preserve for the periods
prescribed under the 1940 Act any such records as are required to be maintained
by the Advisor with respect to the Funds by the 1940 Act. The Advisor further
agrees that all records which it maintains for the Funds are the property of the
Funds and it will promptly surrender any of such records upon request.
(b) The Advisor shall make all filings with the SEC required of it
pursuant to Section 13 of the 1934 Act with respect to its duties as are set
forth herein. The Advisor also shall make all required filings on Forms 13D and
13G (as well as other filings triggered by ownership in securities under other
applicable laws, rules and regulations) as may be required of the Funds due to
the activities of the Advisor. The Advisor shall coordinate with MST[, MST II]
and @Vantage, as appropriate, with respect to the making of such filings.
6. STANDARD OF CARE
The Advisor shall exercise its best judgment in rendering the services
under this Agreement. The Advisor shall not be liable for any error of judgment
or mistake of law or for any loss suffered by a Fund or the Funds' shareholders
in connection with the matters to which this Agreement relates, provided that
nothing herein shall be deemed to protect or purport to protect the Advisor
against any liability to a Fund or to its shareholders to which the Advisor
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or by reason of the
Advisor's reckless disregard of its obligations and duties under this Agreement.
As used in this Section 6, the term "Advisor" shall include any officers,
directors, employees, or other affiliates of the Advisor performing services
with respect to a Fund.
7. COMPENSATION
In consideration of the services rendered pursuant to this Agreement, each
Fund will pay the Advisor a fee as set forth on Schedule B attached hereto. The
fee shall be computed and accrued daily and payable daily. For purposes of
determining fees payable in this manner, the value of a Fund's daily net assets
shall be computed at the times and in the manner specified in the Fund's
Prospectuses.
A-9
8. EXPENSES
(a) The Advisor will bear all expenses in connection with the performance
of its services under this Agreement and will bear the costs and expenses
payable to Sub-Advisors under the Sub-Advisory Agreements.
(b) The Advisor shall bear all reasonable expenses of MST[, MST II] and
@Vantage, if any, arising out of an assignment or change in control of the
Advisor. In the event that there is a proposed change in control of the Advisor
that would act to terminate this Agreement, and if a vote of shareholders to
approve a new advisory agreement is at that time deemed by counsel to MST[, MST
II] and/or @Vantage to be required by the 1940 Act or any rule or regulation
thereunder, the Advisor agrees to assume all reasonable costs associated with
soliciting shareholders of the Funds to approve any such new advisory agreement
with the Advisor. Such expenses include the costs of preparation and mailing of
a proxy statement, and of soliciting proxies.
(c) Except to the extent expressly assumed by the Advisor or required
under applicable laws, rules and regulations to be paid, assumed or reimbursed
by the Advisor, each Fund will bear certain other expenses to be incurred in its
operation, including: taxes; interest; brokerage fees and commissions, if any;
fees of the members of its Board who are not officers, directors or employees of
the Advisor or any Sub-Advisor; SEC fees and state blue sky fees; charges of
custodians and transfer and dividend disbursing agents; the Fund's proportionate
share of insurance premiums; outside auditing and legal expenses; costs of
maintenance of the Fund's existence; costs attributable to investor services,
including, without limitation, telephone and personnel expenses; charges of
independent pricing services, costs of preparing and printing Prospectuses for
regulatory purposes and for distribution to existing shareholders; costs of
shareholders' reports and meetings of the shareholders of the Fund and of the
officers and the members of the Board; and any extraordinary expenses.
9. SERVICES TO OTHER COMPANIES OR ACCOUNTS
The investment advisory services of the Advisor to the Funds under this
Agreement are not to be deemed exclusive, and the Advisor, or any affiliate
thereof, shall be free to render similar services to other investment companies
and clients (whether or not their investment objective and policies are similar
those of a Fund) and to engage in activities so long as its services hereunder
are not impaired thereby. If the Advisor provides any advice to its clients
concerning investment in the shares of a Fund, the
A-10
Advisor shall act solely for such clients in that regard and not in any way on
behalf of MST, [MST II,] @Vantage or the Funds.
10. COMPLIANCE MATTERS
(a) The Advisor understands and agrees that it is a "service provider" to
MST[, MST II] and @Vantage as contemplated by Rule 38a-1 under the 1940 Act. As
such, the Advisor agrees to cooperate fully with MST[, MST II] and @Vantage and
their Trustees and officers, including the CCO, with respect to (1) any and all
compliance-related matters, and (2) the efforts of MST[, MST II] and @Vantage to
assure that each of their service providers adopt and maintain policies and
procedures that are reasonably designed to prevent violation of the "federal
securities laws", as that term is defined by Rule 38a-1, by MST, [MST II,]
@Vantage and the Advisor. In this regard, the Advisor shall:
(1) submit to the Board for its consideration and approval, prior to
the effective date of this Agreement, the Advisor's applicable compliance
policies and procedures;
(2) submit to the Board for its consideration and approval, annually
(and at such other times as MST[, MST II] and @Vantage may reasonably
request), a report ("Report") fully describing any material amendments to
the Advisor's applicable compliance policies and procedures since the most
recent Report;
(3) provide periodic reports discussing the Advisor's compliance
program and special reports in the event of material compliance matters;
(4) permit MST, [MST II,] @Vantage and their Trustees and officers to
become familiar with the Advisor's operations and understand those aspects
of the Advisor's operations that may expose MST[, MST II] and @Vantage to
compliance risks or lead to a violation by MST, [MST II,] @Vantage or the
Advisor of the federal securities laws;
(5) permit MST, [MST II,] @Vantage and their Trustees and officers to
maintain an active working relationship with the Advisor's compliance
personnel by, among other things, providing the CCO and other officers with
a specified individual within the Advisor's organization to discuss and
address compliance-related matters;
A-11
(6) provide MST, [MST II,] @Vantage and their Trustees and officers,
including the CCO, with such certifications as may be reasonably requested;
and
(7) reasonably cooperate with any independent registered public
accounting firm engaged by MST[, MST II] or @Vantage and shall take all
reasonable action in the performance of its obligations under this
Agreement to assure that access to all reasonably necessary information and
the appropriate personnel are made available to such independent registered
public accounting firm, to support the expression of the independent
registered public accounting firm's opinion and their review of the
appropriate internal controls and operations, as such may be required from
time to time.
(b) The Advisor represents, warrants and covenants that it has implemented
and shall maintain a compliance program that complies with the requirements of
Rule 206(4)-7 under the Advisers Act.
11. DURATION AND TERMINATION
(a) Current Funds. This Agreement shall be effective immediately
following the effective time on the effective date of the change of control of
the Advisor with respect to the Funds listed on Schedule A as of that date
("Current Funds"). For each Current Fund, this Agreement shall continue in
effect from the effective date hereof, unless sooner terminated, as provided
herein, through June 30, 2007 and shall continue year to year thereafter,
provided each continuance is specifically approved at least annually by (i) the
vote of a majority of the members of the relevant Board or (ii) a vote of a
"majority" (as defined in the 1940 Act) of the Current Fund's outstanding voting
securities, provided that in either event the continuance is also approved by a
majority of the members of the relevant Board who are not "interested persons"
(as defined in the 1940 Act) of any party to this Agreement, by vote cast in
person at a meeting called for the purpose of voting on such approval.
(b) New Funds. With respect to any Fund that is not a Current Fund ("New
Fund"), this Agreement shall become effective on such date as determined by the
relevant Board, provided that with respect to any New Fund, this Agreement shall
not take effect unless it has been approved (a) by a vote of a majority of the
members of the Board, including a majority of those Board members who are not
"interested persons" (as defined in the 1940 Act) of any party to this Agreement
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by vote of a majority of that New Fund's outstanding voting securities
and shall
A-12
continue in effect with respect to the New Fund, unless sooner terminated, as
provided herein, for two years from the initial approval date for each New Fund
and shall continue from year to year thereafter, provided each continuance is
specifically approved at least annually by (i) the vote of a majority of the
members of the relevant Board or (ii) a vote of a "majority" (as defined in the
1940 Act) of the New Fund's outstanding voting securities, provided that in
either event the continuance is also approved by a majority of the members of
the relevant Board who are not "interested persons" (as defined in the 1940 Act)
of any party to this Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval.
(c) Termination. This Agreement is terminable with respect to the Funds,
or any Fund, without penalty, on sixty (60) days' written notice by the relevant
Board or Boards or by vote of the holders of a "majority" (as defined in the
1940 Act) of the shares of the affected Funds or upon ninety (90) days' written
notice by the Advisor. Termination of this Agreement with respect to any given
Fund, shall in no way affect the continued validity of this Agreement or the
performance thereunder with respect to any other Fund. This Agreement will be
terminated automatically in the event of its "assignment" (as defined in the
1940 Act).
12. CONFIDENTIAL INFORMATION
Each party agrees that it will treat confidentially all information
provided by any other party regarding such other parties' businesses and
operations, including without limitation the investment activities or holdings
of each Fund. All confidential information provided by a party hereto shall not
be disclosed to any unaffiliated third party without the prior consent of the
providing party; however, a Fund's portfolio holdings information may be
disclosed in a manner consistent with the policies and procedures adopted by the
Board regarding its dissemination. The foregoing shall not apply to any
information that is public when provided or thereafter becomes public through no
wrongful act of the recipient or which is required to be disclosed by any
regulatory authority in the lawful and appropriate exercise of its jurisdiction
over a party, by any auditor of the parties hereto, by judicial or
administrative process or otherwise by applicable laws, rules or regulations.
A-13
13. AMENDMENT
No provision of this Agreement shall be changed, waived or discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and, except to the extent permitted by the 1940 Act or the rules or
regulations thereunder or pursuant to any exemptive relief granted by the SEC,
no material amendment of this Agreement with respect to any Fund shall be
effective until approved by an affirmative vote of (i) a majority of the
outstanding voting securities of that Fund (unless such approval is not required
by Section 15 of the 1940 Act as interpreted by the SEC or its staff), and (ii)
a majority of the members of the Board, including a majority of Board members
who are not "interested persons" (as defined in the 1940 Act) of any party to
this Agreement, cast in person at a meeting called for the purpose of voting on
such approval, if such approval is required by applicable law.
14. USE OF NAME
It is understood that the name of Munder Capital Management, LLC or any
derivative thereof or logo associated with that name is the valuable property of
the Advisor and its affiliates, and that MST, [MST II,] @Vantage and each Fund
have the right to use such name (or derivative or logo) only so long as this
Agreement shall continue with respect to a given Fund. Upon termination of this
Agreement or upon termination of this Agreement with respect to a given Fund,
MST, [MST II,] or @Vantage, as appropriate, and any affected Fund shall
forthwith cease to use such name (or derivative or logo) and MST, [MST II,] or
@Vantage, as appropriate, shall promptly amend its charter documents to change
the Fund name to comply herewith.
15. SEPARATE AGREEMENTS
The parties affirm and agree that this Agreement shall be enforced as a
separate agreement as between the Advisor and each of MST[, MST II] and
@Vantage. Nothing in this Agreement shall be interpreted to combine or
collectively enjoin any of MST[, MST II] or @Vantage. For all purposes, this
Agreement shall be considered and interpreted as individual agreements between
the Advisor and each of MST[, MST II] and @Vantage.
A-14
16. MISCELLANEOUS
(a) This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof.
(b) Titles or captions of sections in this Agreement are inserted only as
a matter of convenience and for reference, and in no way define, limit, extend
or describe the scope of this Agreement or the intent of any provisions thereof.
(c) This Agreement may be executed in several counterparts, all of which
together shall for all purposes constitute one Agreement, binding on all the
parties.
(d) This Agreement and the rights and obligations of the parties hereunder
shall be governed by, and interpreted, construed and enforced in accordance with
the laws of the State of Michigan.
(e) If any provisions of this Agreement or the application thereof to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder of this
Agreement or the application of such provision to such person or circumstance,
other than these as to which it so determined to be invalid or unenforceable,
shall not be affected thereby, and each provision hereof shall be valid and
shall be enforced to the fullest extent permitted by law.
(f) Notices of any kind to be given to the Advisor by MST[, MST II] or
@Vantage shall be in writing and shall be duly given if mailed or delivered to
the Advisor at 480 Pierce Street, Birmingham, Michigan 48009, or at such other
address or to such individual as shall be specified by the Advisor. Notices of
any kind to be given to MST[, MST II] or @Vantage by the Advisor shall be in
writing and shall be duly given if mailed or delivered to 480 Pierce Street,
Birmingham, Michigan 48009, or at such other address or to such individual as
shall be specified by MST[, MST II] and @Vantage.
[(g) With respect to MST II, the words "Munder Series Trust II" and
"Trustees" or "Board of Trustees" used or implied herein refer respectively to
the trust created and the Trustees, as trustees of MST II, but not individually
or personally acting from time to time under the Declaration of Trust, which is
hereby referred to and a copy of each is on file at the office of the Secretary
of The Commonwealth of Massachusetts and at the principal office of MST II.]
A-15
[(h) With respect to MST II, the obligations of "Munder Series Trust II"
entered into in the name or on behalf thereof by any of the Trustees, officers,
representatives or agents of MST II are made not individually, but in such
capacities, and are not binding upon any of the Trustees, shareholders,
officers, representatives or agents of MST II personally, but bind only the
trust's property, and all persons dealing with any series or class of shares of
MST II must look solely to MST II property belonging to such series or class for
the enforcement of any claims against the MST II.]
A-16
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the date first set forth
above.
MUNDER SERIES TRUST
[MUNDER SERIES TRUST II]
THE MUNDER @VANTAGE FUND
By:
-------------------------------------------------------------------------
Name:
Title:
MUNDER CAPITAL
MANAGEMENT, LLC
By:
-------------------------------------------------------------------------
Name:
Title:
A-17
SCHEDULE A
AS OF , 2006
<Table>
MUNDER SERIES TRUST
Institutional Money Market Fund
Liquidity Money Market Fund
Munder Asset Allocation -- Balanced Fund
Munder Bond Fund
Munder Cash Investment Fund
Munder Energy Fund
[Munder Healthcare Fund]*
Munder Index 500 Fund
Munder Intermediate Bond Fund
Munder International Bond Fund
Munder International Equity Fund
Munder Internet Fund
Munder Large-Cap Core Growth Fund
Munder Large-Cap Value Fund
Munder Micro-Cap Equity Fund
Munder Mid-Cap Core Growth Fund
Munder Real Estate Equity Investment Fund
Munder S&P MidCap Index Equity Fund
Munder S&P SmallCap Index Equity Fund
Munder Small-Cap Value Fund
Munder Small-Mid Cap Fund
Munder Tax-Free Money Market Fund
Munder Tax-Free Short & Intermediate Bond Fund
Munder Technology Fund
[MUNDER SERIES TRUST II]*
[Munder Healthcare Fund]*
THE MUNDER @VANTAGE FUND
</Table>
- ------------------------------------
* Munder Series Trust II, on behalf of its series, Munder Healthcare Fund, is
currently seeking the approval shareholders of that Fund with respect to an
Agreement and Plan of Reorganization and Redomiciliation ("Agreement and
Plan") that contemplates the reorganization and redomiciliation of that Fund
as a series of Munder Series Trust. If that Agreement and Plan is approved and
the transaction closes prior to the effective date of this Agreement, then all
references to "Munder Series Trust II" and "MST II" will be removed from this
Agreement.
A-18
SCHEDULE B
AS OF , 2006
<Table>
<Caption>
ANNUAL FEES (AS A PERCENTAGE OF DAILY NET ASSETS)
-------------------------------------------------
Institutional Money Market Fund 0.20%
Liquidity Money Market Fund 0.20%
Munder Balanced Fund 0.65%
Munder Bond Fund 0.50% of the first $1 billion of average daily
net assets; and 0.45% of average daily net assets
in excess of $1 billion
Munder Cash Investment Fund 0.35%
Munder Energy Fund 0.75%
Munder Healthcare Fund 1.00% of to the first $100 million of average
daily net assets; 0.90% of the next $100 million;
0.85% of the next $50 million; and 0.75% of
average daily net assets in excess of $250
million
Munder Index 500 Fund 0.20% of the first $250 million of average daily
net assets; 0.12% of the next $250 million; and
0.07% of average daily net assets in excess of
$500 million
Munder Intermediate Bond Fund 0.50% of the first $1 billion of average daily
net assets; and 0.45% of average daily net assets
in excess of $1 billion
Munder International Bond Fund 0.50%
Munder International Equity 0.75%
Fund
Munder Internet Fund 1.00% of the first $1 billion of average daily
net assets; and 0.85% of average daily net assets
in excess of $1 billion
Munder Large-Cap Core Growth 0.75% of the first $1 billion of average daily
Fund net assets; 0.725% of the next $1 billion; and
0.70% of average daily net assets in excess of $2
billion
</Table>
A-19
<Table>
<Caption>
ANNUAL FEES (AS A PERCENTAGE OF DAILY NET ASSETS)
-------------------------------------------------
Munder Large-Cap Value Fund 0.75% of the first $100 million of average daily
net assets; and 0.70% of average daily net assets
in excess of $100 million
Munder Micro-Cap Equity Fund 1.00%
Munder Mid-Cap Core Growth Fund 0.75%
Munder Real Estate Equity 0.74%
Investment Fund
Munder S&P MidCap Index Equity 0.15%
Fund
Munder S&P SmallCap Index 0.15%
Equity Fund
Munder Small-Cap Value Fund 0.75%
Munder Small-Mid Cap Fund 0.75%
Munder Tax-Free Money Market 0.35%
Fund
Munder Tax-Free Short & 0.50% of the first $200 million of average daily
Intermediate Bond Fund net assets; and 0.40%
of average daily net assets in excess of $200
million
Munder Technology Fund 1.00% of the first $300 million of average daily
net assets; 0.90% in the next $700 million; and
0.80% of average daily net assets in excess of $1
billion
The Munder @Vantage Fund 2.00%
</Table>
A-20
EXHIBIT B
FORM OF AGREEMENT AND PLAN OF
REORGANIZATION AND REDOMICILIATION
[BETWEEN] [AMONG]
MUNDER SERIES TRUST[,]
[AND]
MUNDER SERIES TRUST II
[AND]
MUNDER CAPITAL MANAGEMENT[, LLC]
THIS AGREEMENT AND PLAN OF REORGANIZATION AND REDOMICILIATION ("Agreement")
is made as of this day of , 2006, by and among Munder Series
Trust, a Delaware statutory trust ("MST"), with its principal place of business
at 480 Pierce Street, Birmingham, Michigan 48009, on behalf of its separate
series, Munder Healthcare Fund ("Acquiring Fund"), Munder Series Trust II, a
Massachusetts business trust ("MST II"), with its principal place of business at
480 Pierce Street, Birmingham, Michigan 48009, on behalf of its separate series,
Munder Healthcare Fund ("Acquired Fund") and, solely for purposes of paragraph
10.2 hereof, Munder Capital Management[, LLC].
WHEREAS, the Acquired Fund and Acquiring Fund are each series of separate
open-end, management investment companies registered pursuant to the Investment
Company Act of 1940, as amended ("1940 Act");
WHEREAS, the Acquiring Fund has been organized to hold the assets of the
corresponding Acquired Fund and the Acquiring Fund has had no assets and has
carried on no business activities prior to the date first shown above and will
have had no assets and will have carried on no business activities prior to the
consummation of the transaction described herein;
WHEREAS, the following chart shows the Acquiring Fund and its classes of
shares of beneficial interest ("Acquiring Fund Shares") and the
B-1
corresponding Acquired Fund with its classes of shares of beneficial interest
($0.001 par value per share) ("Acquired Fund Shares"):
<Table>
- -------------------------------------------------------------------
Acquiring Fund, Acquired Fund,
a series of Munder Series a series of Munder Series
Trust Trust II
(a Delaware statutory trust) (a Massachusetts business
trust)
- -------------------------------------------------------------------
Munder Healthcare Fund Munder Healthcare Fund
Class A, B, C, K, R & Y shares Class A, B, C, K, R & Y shares
- -------------------------------------------------------------------
</Table>
WHEREAS, throughout this Agreement, the term Acquiring Fund Shares should
be read to include each class of shares of the Acquiring Fund and each reference
to Acquiring Fund Shares in connection with the Acquired Fund should be read to
include each class of the particular Acquiring Fund that corresponds to the
Acquired Fund; and
WHEREAS, this Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1) of the
United States Internal Revenue Code of 1986, as amended ("Code");
WHEREAS, the reorganization, redomiciliation and liquidation will consist
of (1) the sale, assignment, conveyance, transfer and delivery of all of the
assets of the Acquired Fund to the Acquiring Fund in exchange solely for the
Acquiring Fund Shares, (2) the assumption by the Acquiring Fund of all
liabilities of the Acquired Fund, and (3) the distribution of the Acquiring Fund
Shares to the shareholders of the Acquired Fund in complete liquidation of the
Acquired Fund, as provided herein ("Reorganization"), all upon the terms and
conditions hereinafter set forth in this Agreement;
WHEREAS, following the Reorganization, MST II will deregister as an
investment company in accordance with the rules and regulations of the
Securities and Exchange Commission ("Commission");
WHEREAS, following the effective date of its deregistration, MST II shall
voluntarily dissolve in accordance with Massachusetts law and the terms of its
Declaration of Trust;
WHEREAS, the Board of Trustees of MST ("MST Board") has determined, with
respect to the Acquiring Fund, that the sale, assignment, conveyance, transfer
and delivery of all of the property and assets of the Acquired Fund for
Acquiring Fund Shares and the assumption of all liabilities of the Acquired Fund
by the Acquiring Fund is in the best interests of the Acquiring Fund and its
shareholders; and
B-2
WHEREAS, the Board of Trustees of MST II ("MST II Board") has determined,
with respect to the Acquired Fund, that the sale, assignment, conveyance,
transfer and delivery of all of the property and assets of the Acquired Fund for
Acquiring Fund Shares and the assumption of all liabilities of the Acquired Fund
by the Acquiring Fund is in the best interests of the Acquired Fund and its
shareholders and that the interests of the existing shareholders of the Acquired
Fund would not be diluted as a result of the Reorganization;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING FUND IN EXCHANGE
FOR ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL ACQUIRED FUND LIABILITIES
AND THE LIQUIDATION OF THE ACQUIRED FUND
1.1 Subject to the requisite approval of the Acquired Fund's shareholders
and the other terms and conditions herein set forth and on the basis of the
representations and warranties contained herein, MST II, on behalf of the
Acquired Fund, agrees to sell, assign, convey, transfer and deliver all of its
property and assets, as set forth in paragraph 1.2, to the Acquiring Fund, and
MST, on behalf of the Acquiring Fund, agrees in exchange therefor: (a) to
deliver to the Acquired Fund the number of full and fractional Acquiring Fund
Shares corresponding to each class of the Acquired Fund as of the time and date
set forth in paragraph 3.1; and (b) to assume all liabilities of the Acquired
Fund, as set forth in paragraph 1.2. Such transactions shall take place on the
date of the closing provided for in paragraph 3.1 ("Closing Date").
1.2 The property and assets of MST II, attributable to the Acquired Fund,
to be sold, assigned, conveyed, transferred and delivered to and acquired by
MST, on behalf of the Acquiring Fund, shall consist of all assets and property
of every kind and nature of the Acquired Fund, including, without limitation,
all rights, receivables (including dividend, interest and other receivables),
cash, cash equivalents, claims (whether absolute or contingent, known or
unknown), securities, commodities and futures interests, goodwill and other
intangible property, any deferred or prepaid expenses and all interests, rights,
privileges and powers (collectively, the "Assets"). MST, on behalf of the
Acquiring Fund, shall assume all of the liabilities and obligations of the
Acquired Fund, whether accrued
B-3
or contingent, known or unknown, existing at the Valuation Date (as defined in
paragraph 2.1) (collectively "Liabilities"). The Acquired Fund will sell,
assign, convey, transfer and deliver to MST, on behalf of the Acquiring Fund,
any rights, stock dividends, or other securities received by the Acquired Fund
after the Closing Date as stock dividends or other distributions on or with
respect to the property and assets transferred, which rights, stock dividends,
and other securities shall be deemed included in the property and assets
transferred to MST, on behalf of the Acquiring Fund, at the Closing Date and
shall not be separately valued, in which case any such distribution that remains
unpaid as of the Closing Date shall be included in the determination of the
value of the assets of the Acquired Fund, acquired by MST, on behalf of the
Acquiring Fund.
1.3 Immediately upon delivery to the Acquired Fund of the Acquiring Fund
Shares, MST II, on behalf of the Acquired Fund, as the then sole shareholder of
the Acquiring Fund, shall approve (a) the advisory agreement previously approved
by the Acquired Fund Shareholders (as defined in paragraph 1.4), at the meeting
described in paragraph 5.2, (b) the distribution and service plan pursuant to
Rule 12b-1 under the 1940 Act, with respect to each class of shares of the
Acquiring Fund, previously approved by the Acquired Fund Shareholders (as
defined in paragraph 1.4), at the meeting described in paragraph 5.2, and (c)
any other matter for which shareholder approval is required.
1.4 Immediately following the actions contemplated by paragraph 1.3, MST
II, on behalf of the Acquired Fund, will (a) distribute to its shareholders of
record with respect to each class of Acquired Fund Shares as of the Closing as
defined in paragraph 3.1 ("Acquired Fund Shareholders"), on a pro rata basis
within that class, the Acquiring Fund Shares of the corresponding class received
by MST II, on behalf of the Acquired Fund, pursuant to paragraph 1.1 and (b)
completely liquidate and dissolve in accordance with applicable Massachusetts
law. Such distribution and liquidation will be accomplished, with respect to
each class of Acquired Fund Shares, by the transfer of the corresponding
Acquiring Fund Shares then credited to the account of the Acquired Fund on the
books of the Acquiring Fund to open accounts on the share records of the
Acquiring Fund in the names of the Acquired Fund Shareholders. The aggregate net
asset value of each class of Acquiring Fund Shares to be so credited to each
corresponding class of Acquired Fund Shareholders shall, with respect to each
class, be equal to the aggregate net asset value of the Acquired Fund Shares of
the corresponding class owned by Acquired Fund Shareholders on the Closing Date.
All issued and outstanding Acquired Fund Shares will be canceled on the books of
the Acquired Fund.
B-4
The Acquiring Fund shall not issue certificates representing any class of
Acquiring Fund Shares in connection with such exchange.
1.5 Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's Transfer Agent, as defined in paragraph 3.3.
1.6 Any regulatory reporting responsibility of the Acquired Fund,
including, but not limited to, the responsibility for filing regulatory reports,
or other documents with the Commission, any state securities commission or any
other relevant regulatory authority (but excluding the filing of any tax
returns), is and shall remain the responsibility of MST II, on behalf of the
Acquired Fund.
1.7 As promptly as practicable following the Reorganization of the
Acquired Fund, MST II will take all necessary action to effect its
deregistration as an investment company in accordance with the rules and
regulations of the Commission and shall subsequently voluntarily dissolve in
accordance with the requirements of Massachusetts law.
2. VALUATION
2.1 The value of the Assets and the amount of the Liabilities of the
Acquired Fund shall be determined as of the time for calculation of its net
asset value as set forth in the then-current prospectus for the Acquired Fund,
and after the declaration of any dividends by the Acquired Fund on the Closing
Date (such time and date being hereinafter called the "Valuation Date"),
computed using the valuation procedures established by the MST II Board.
2.2 All computations of value shall be made by the fund accountant for the
Acquired Fund.
3. CLOSING AND CLOSING DATE
3.1 Subject to the terms and conditions set forth herein, the Closing Date
shall be December 15, 2006, or such other date as the parties may agree. All
acts taking place at the closing of the transactions provided for in this
Agreement ("Closing") shall be deemed to take place simultaneously as of the
"close of business" on the Closing Date unless otherwise agreed to by the
parties. The "close of business" on the Closing Date shall be as of 4:00 p.m.,
Eastern Time or such later time on the date as the Acquired Fund's net asset
value is calculated in accordance with paragraph 2.1 and after the declaration
of any dividends. The Closing shall be held at the offices of MST II or at such
other time and/or place as the parties may agree.
B-5
3.2 MST II shall direct State Street Bank and Trust Company ("Custodian")
to transfer ownership of the Assets from the accounts of the Acquired Fund that
the Custodian maintains as custodian for the Acquired Fund to the accounts of
the Acquiring Fund that the Custodian maintains as custodian for the Acquiring
Fund and to deliver to MST, at the Closing, a certificate of an authorized
officer stating that (a) the Assets of the Acquired Fund have been so
transferred to the Acquiring Fund as of the Closing Date, and (b) all necessary
taxes in connection with the delivery of the Assets of the Acquired Fund,
including all applicable Federal and state stock transfer stamps, if any, have
been paid or provision for payment has been made.
3.3 MST II shall direct PFPC, Inc., in its capacity as transfer agent for
the Acquired Fund ("Transfer Agent"), to deliver to MST at the Closing a
certificate of an authorized officer stating that its records contain the names
and addresses of the Acquired Fund Shareholders and the number and percentage
ownership of each outstanding class of Acquired Fund Shares owned by each such
shareholder immediately prior to the Closing. The Acquiring Fund shall deliver
to the Secretary of the Acquired Fund a confirmation evidencing that (a) the
appropriate number of Acquiring Fund Shares have been credited to the Acquired
Fund's account on the books of the Acquiring Fund pursuant to paragraph 1.1
prior to the actions contemplated by paragraph 1.3 and (b) the appropriate
number of Acquiring Fund Shares have been credited to the accounts of the
Acquired Fund Shareholders on the books of the Acquiring Fund pursuant to
paragraph 1.4. At the Closing, each party shall deliver to the other party such
bills of sale, checks, assignments, share certificates, if any, receipts or
other documents as the other party or its counsel may reasonably request.
3.4 In the event that on the Valuation Date (a) the New York Stock
Exchange or another primary trading market for portfolio securities of the
Acquiring Fund or the Acquired Fund (each, an "Exchange") shall be closed to
trading or trading thereupon shall be restricted, or (b) trading or the
reporting of trading on such Exchange or elsewhere shall be disrupted so that,
in the judgment of either the MST Board or the MST II Board, accurate appraisal
of the value of the net assets of the Acquired Fund is impracticable (in the
judgment of the MST II Board with respect to the Acquired Fund), the Closing
Date shall be postponed until the first Friday (that is also a business day)
after the day when trading shall have been fully resumed and reporting shall
have been restored.
B-6
4. REPRESENTATIONS AND WARRANTIES
4.1 Except as has been fully disclosed to MST in Schedule 4.1 of this
Agreement, MST II, on behalf of the Acquired Fund, represents and warrants to
MST and the Acquiring Fund as follows:
(a) The Acquired Fund is duly organized as a series of MST II, which
is a business trust duly established, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts, with power under MST II's
Declaration of Trust, as amended ("MST II Charter"), to own all of its Assets
and to carry on its business as it is being conducted as of the date hereof.
(b) MST II is a registered open-end management investment company,
and its registration with the Commission as an investment company under the 1940
Act, and the registration of the Acquired Fund each class of Acquired Fund
Shares under the Securities Act of 1933, as amended ("1933 Act"), is in full
force and effect.
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquired Fund of
the transactions contemplated herein, except such as may be required under the
1933 Act, the Securities Exchange Act of 1934, as amended ("1934 Act"), the 1940
Act and state securities laws.
(d) The current prospectus and statement of additional information of
the Acquired Fund and each prospectus and statement of additional information of
the Acquired Fund used during the three years prior to the date of this
Agreement conforms or conformed at the time of its use in all material respects
to the applicable requirements of the 1933 Act and the 1940 Act and the rules
and regulations of the Commission thereunder and does not or did not at the time
of its use 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 were made, not
materially misleading.
(e) On the Valuation Date, MST II, on behalf of the Acquired Fund,
will have good and marketable title to the Assets of the Acquired Fund and full
right, power, and authority to sell, assign, convey, transfer and deliver such
Assets hereunder free of any liens or other encumbrances, and upon delivery and
payment for such Assets, MST, on behalf of the Acquiring Fund, will acquire good
and marketable title thereto, subject to no restrictions on the full transfer
thereof, excluding such restrictions as might arise under the 1933 Act.
B-7
(f) The Acquired Fund is not engaged currently, and the execution,
delivery and performance of this Agreement by MST II, on behalf of the Acquired
Fund, will not result, in (i) any material violation of Massachusetts law, the
MST II Charter, MST II's by-laws or any agreement, indenture, instrument,
contract, lease or other undertaking to which MST II, on behalf of the Acquired
Fund, is a party or by which it is bound, or (ii) the acceleration of any
material obligation, or the imposition of any material penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree to which
MST II, on behalf of the Acquired Fund, is a party or by which it is bound.
(g) All material contracts or other commitments of the Acquired Fund
(other than this Agreement, contracts listed on Schedule 4.1 and certain
investment contracts, including options, futures, swaps and forward contracts
will terminate without liability to the Acquired Fund on or prior to the Closing
Date. Each contract listed in Schedule 4.1 is a valid, binding and enforceable
obligation of the Acquired Fund and, to the Acquired Fund's knowledge, the other
party thereto (assuming due authorization, execution and delivery by the other
parties thereto) and the assignment by the Acquired Fund to the Acquiring Fund
of each such contract will not result in the termination of such contract, any
breach or default thereunder by the Acquired Fund or the imposition of any
penalty thereunder.
(h) No litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or, to MST II's
knowledge, threatened against MST II, with respect to the Acquired Fund or any
of its properties or assets, that, if adversely determined, would materially and
adversely affect its financial condition or the conduct of the Acquired Fund's
business. MST II, on behalf of the Acquired Fund, is not a party to or subject
to the provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects the Acquired Fund's business or MST
II's ability to consummate the transactions herein contemplated on behalf of the
Acquired Fund.
(i) The Statement of Assets and Liabilities, Statements of Operations
and Changes in Net Assets, and Schedule of Investments of the Acquired Fund at
June 30, 2006 have been audited by Ernst & Young LLP, independent registered
public accounting firm, and are in accordance with accounting principles
generally accepted in the United States of America ("GAAP") consistently
applied, and such statements (copies of which have been furnished to the
Acquiring Fund) present fairly, in all material respects, the financial
condition of the Acquired Fund as of such
B-8
date in accordance with GAAP, and there are no known contingent, accrued or
other liabilities of the Acquired Fund required to be reflected on a balance
sheet (including the notes thereto) in accordance with GAAP as of such date that
are not disclosed therein.
(j) Since June 30, 2006, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of business, or
any incurrence by the Acquired Fund of indebtedness for money borrowed maturing
more than one year from the date such indebtedness was incurred. For the
purposes of this subparagraph (j), a decline in net asset value per share of
Acquired Fund Shares due to declines in market values of securities held by the
Acquired Fund, the discharge of the Acquired Fund's liabilities, or the
redemption of Acquired Fund Shares by shareholders of the Acquired Fund shall
not constitute a material adverse change.
(k) The Acquired Fund is a separate fund of MST II within the meaning
of Section 851(g) of the Code.
(l) On the Closing Date, all Federal and other tax returns, dividend
reporting forms, and other tax-related reports of the Acquired Fund required by
law to have been filed by such date (including any extensions) shall have been
filed and are or will be correct in all material respects, and all taxes
required to be paid by the Acquired Fund (whether or not shown or required to be
shown as due on any return) shall have been paid or provision shall have been
made for the payment thereof and, to the best of the Acquired Fund's knowledge,
no such return shall be under audit and no additional assessment of any tax
shall have been proposed or asserted by any governmental authority with respect
to the Acquired Fund.
(m) For each taxable year of its operation (including the taxable year
ending on the Closing Date), the Acquired Fund has met (or will meet) the
requirements of Subchapter M of the Code for qualification and treatment as a
regulated investment company, has been (or will be) eligible to and has computed
(or will compute) its Federal income tax under Section 852 of the Code, and will
have distributed all of its investment company taxable income and net capital
gain (as defined in the Code) that has accrued through the Closing Date, and
before the Closing Date will have declared dividends sufficient to distribute
all of its investment company taxable income and net capital gain for the period
ending on the Closing Date.
B-9
(n) All issued and outstanding Acquired Fund Shares are, and on the
Closing Date will be, duly authorized and validly and legally issued and
outstanding, fully paid and non-assessable by MST II and have been offered and
sold in any state, territory or the District of Columbia in compliance in all
material respects with applicable registration requirements of all applicable
Federal and state securities laws. All of the issued and outstanding Acquired
Fund Shares will, at the time of Closing, be held by the persons and in the
amounts set forth in the records of the Transfer Agent, on behalf of the
Acquired Fund, as provided in paragraph 3.3. The Acquired Fund does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any of the Acquired Fund Shares, nor is there outstanding any security
convertible into any of the Acquired Fund Shares.
(o) The execution, delivery and performance of this Agreement and
transaction contemplated herein has been duly authorized by all necessary
action, if any, on the part of the MST II Board, on behalf of the Acquired Fund,
and this Agreement constitutes a valid and binding obligation of MST II, on
behalf of the Acquired Fund, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights and to general equity
principles.
(p) The information to be furnished by the Acquired Fund for use in
registration statements, proxy materials and other documents filed or to be
filed with any Federal, state or local regulatory authority (including the
National Association of Securities Dealers, Inc.), which may be necessary in
connection with the transactions contemplated hereby, shall be accurate and
complete in all material respects and shall comply in all material respects with
Federal securities and other laws and regulations thereunder applicable thereto.
(q) The provisions of the Proxy Statement (as defined in paragraph
5.2) insofar as it relates to the Acquired Fund, will, on the effective date of
the Proxy Statement and at all times prior to the conclusion of the shareholder
meeting to which the Proxy Statement relates, will (i) not contain any statement
which, at the time and in the light of the circumstances under which it is made,
is false or misleading with respect to any material fact, or which omits to
state any material fact necessary in order to make the statements therein not
false or misleading, (provided that this representation and warranty shall not
apply to statements in or omissions from the Proxy Statement made in reliance
upon and in conformity with information that was furnished by the Acquiring Fund
for use therein), and
B-10
(ii) comply in all material respects with the provisions of the 1934 Act and the
1940 Act and the rules and regulations thereunder.
4.2 Except as has been fully disclosed to MST II in Schedule 4.2 to this
Agreement, MST, on behalf of the Acquiring Fund, represents and warrants to MST
II and the Acquired Fund as follows:
(a) The Acquiring Fund is duly established as a series of MST, which
is a statutory trust duly organized, validly existing, and in good standing
under the laws of the State of Delaware with the power under MST's Declaration
of Trust ("MST Charter") to own all of the Assets of the Acquired Fund and to
carry on its business as contemplated by this Agreement.
(b) MST is a registered open-end management investment company and
its registration with the Commission as an investment company under the 1940 Act
and the registration of the Acquiring Fund and each class of Acquiring Fund
Shares under the 1933 Act will be in full force and effect as of the Closing
Date.
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquiring Fund of
the transactions contemplated herein, except such as may be required under the
1933 Act, the 1934 Act, the 1940 Act and state securities laws.
(d) The current prospectus and statement of additional information of
the Acquiring Fund conforms in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Commission thereunder and does 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 were made, not materially misleading.
(e) The Acquiring Fund is not engaged currently, and the execution,
delivery and performance of this Agreement by MST, on behalf of the Acquiring
Fund, will not result, in (i) any material violation of Delaware law, MST
Charter, MST's by-laws or any agreement, indenture, instrument, contract, lease
or other undertaking to which MST, on behalf of the Acquiring Fund, is a party
or by which it is bound, or (ii) the acceleration of any material obligation, or
the imposition of any material penalty, under any agreement, indenture,
instrument, contract, lease, judgment or decree to which MST, on behalf of the
Acquiring Fund, is a party or by which it is bound.
B-11
(f) No litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or, to MST's
knowledge, threatened against MST, with respect to the Acquiring Fund or any of
the Acquiring Fund's properties or assets, that, if adversely determined, would
materially and adversely affect the Acquiring Fund's financial condition or the
conduct of the Acquiring Fund's business. MST, on behalf of the Acquiring Fund,
is not a party to or subject to the provisions of any order, decree or judgment
of any court or governmental body which materially and adversely affects the
Acquiring Fund's business or MST's ability to consummate the transactions herein
contemplated on behalf of the Acquiring Fund.
(g) To the best knowledge of the Acquiring Fund, the Acquiring Fund
will meet the requirements of Subchapter M of the Code for qualification as a
regulated investment company from and including the taxable year that includes
the Closing Date and will be eligible to, and will, compute its Federal income
tax under Section 852 of the Code.
(h) Upon consummation of the Reorganization, all issued and
outstanding Acquiring Fund Shares will be duly and validly issued and
outstanding, fully paid and non-assessable by MST and will have been offered and
sold in every state, territory and the District of Columbia in compliance in all
material respects with applicable registration requirements of all applicable
Federal and state securities laws. The Acquiring Fund does not have outstanding
any options, warrants or other rights to subscribe for or purchase any Acquiring
Fund Shares, nor is there outstanding any security convertible into any
Acquiring Fund Shares.
(i) The execution, delivery and performance of this Agreement and the
transactions contemplated herein has been duly authorized by all necessary
action, if any, on the part of the MST Board, on behalf of the Acquiring Fund,
and this Agreement constitutes a valid and binding obligation of MST, on behalf
of the Acquiring Fund, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights and to general equity
principles.
(j) The information to be furnished by MST, on behalf of the
Acquiring Fund, for use in the registration statements, proxy materials and
other documents that may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete in all material respects and
shall comply in all material respects with Federal securities and other laws and
regulations applicable thereto.
B-12
(k) As of the date first shown above and prior to the Closing Date,
the Acquiring Fund will have carried on no business activity and will have had
no assets or liabilities.
(l) The Acquiring Fund is a separate fund of MST within the meaning
of Section 851(g) of the Code.
5. COVENANTS
5.1 The Acquired Fund will operate its business in the ordinary course and
shall comply in all material respects with all applicable laws, rules and
regulations between the date hereof and the Closing Date, it being understood
that such ordinary course of business will include the declaration and payment
of customary dividends and distributions, and any other distribution that may be
advisable.
5.2 MST II will call a meeting of the shareholders of the Acquired Fund to
consider and act upon this Agreement and to take all other action necessary to
obtain approval of the transactions contemplated herein. MST II will, on behalf
of the Acquired Fund, prepare, file with the Commission, and deliver to the
Acquired Fund Shareholders in connection with such meeting, a proxy statement on
Schedule 14A ("Proxy Statement") in compliance in all material respects with the
provisions of the 1934 Act and the 1940 Act and the rules and regulations
thereunder.
5.3 The Acquiring Fund Shares to be acquired by the Acquired Fund
hereunder are not being acquired for the purpose of making any distribution
thereof, other than in accordance with the terms of this Agreement.
5.4 MST II, on behalf of the Acquired Fund, will assist the Acquiring Fund
in obtaining such information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of the Acquired Fund shares.
5.5. Subject to the provisions of this Agreement, MST, on behalf of the
Acquiring Fund, and MST II, on behalf of the Acquired Fund, will each take, or
cause to be taken, all action, and do or cause to be done, all things reasonably
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement.
5.6. MST, on behalf of the Acquiring Fund, will provide the Acquired Fund
with information reasonably necessary for the preparation of the Proxy Statement
in compliance with the 1934 Act and 1940 Act and the rules and regulations
thereunder.
B-13
5.7 Each of MST, on behalf of the Acquiring Fund, and MST II, on behalf of
the Acquired Fund, will use its reasonable best efforts to fulfill or obtain the
fulfillment of the conditions precedent to effect the transactions contemplated
by this Agreement as promptly as practicable.
5.8 MST II, on behalf of the Acquired Fund, will, from time to time, as
and when reasonably requested by MST, on behalf of the Acquiring Fund, execute
and deliver or cause to be executed and delivered all such assignments and other
instruments, and will take or cause to be taken such further action as MST, on
behalf of the Acquiring Fund, may reasonably deem necessary or desirable in
order to vest in and confirm (a) MST II's title to and possession of the
Acquiring Fund Shares to be delivered hereunder and (b) MST's, title to and
possession of all the Assets and otherwise to carry out the intent and purpose
of this Agreement.
5.9 MST, on behalf of the Acquiring Fund, will use all reasonable efforts
to obtain the approvals and authorizations required by the 1933 Act, the 1940
Act and such of the state blue sky or securities laws as may be necessary in
order to operate after the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of MST II, on behalf of the Acquired Fund, to consummate
the transactions provided for herein shall be subject, at MST II's election, to
the performance by MST, on behalf of the Acquiring Fund, of all the obligations
to be performed by it hereunder on or before the Closing Date, and, in addition
thereto, the following further conditions with respect to the Acquired Fund:
6.1. All representations and warranties of MST, on behalf of the Acquiring
Fund, contained in this Agreement shall be true and correct in all material
respects as of the date hereof and, except as they may be affected by the
transactions contemplated by this Agreement, as of the Closing Date, with the
same force and effect as if made on and as of the Closing Date.
6.2. MST, on behalf of the Acquiring Fund, shall have performed all of the
covenants and complied with all of the provisions required by this Agreement to
be performed or complied with by MST, on behalf of the Acquiring Fund, on or
before the Closing Date.
6.3. MST, on behalf of the Acquiring Fund, shall have delivered to the
Acquired Fund a certificate executed in the name of MST, on behalf of the
Acquiring Fund, by MST's President or Vice President and its
B-14
Treasurer or Assistant Treasurer, in a form reasonably satisfactory to MST II
and dated as of the Closing Date, as to the matters set forth in paragraphs 6.1
and 6.2, and as to such other matters as MST II shall reasonably request.
6.4. MST II, on behalf of the Acquired Fund, and MST, on behalf of the
Acquiring Fund, shall have agreed on the number of full and fractional Acquiring
Fund Shares to be issued in connection with the Reorganization after such number
has been calculated in accordance with paragraph 1.1.
6.5. MST, on behalf of the Acquiring Fund, shall have executed and
delivered an assumption of the Liabilities of the Acquired Fund and all such
other agreements and instruments as MST II may reasonably deem necessary or
desirable in order to vest in and confirm (a) such Acquired Fund's title to and
possession of the Acquiring Fund Shares to be delivered hereunder and (b) MST's
assumption of all of the Liabilities and to otherwise to carry out the intent
and purpose of this Agreement.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of MST, on behalf of the Acquiring Fund, to consummate the
transactions provided for herein shall be subject, at MST's election, to the
performance by MST II, on behalf of the Acquired Fund, of all of the obligations
to be performed by it hereunder on or before the Closing Date and, in addition
thereto, the following conditions with respect to the Acquiring Fund:
7.1. All representations and warranties of MST II, on behalf of the
Acquired Fund, contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date.
7.2. MST II, on behalf of the Acquired Fund, shall have performed all of
the covenants and complied with all of the provisions required by this Agreement
to be performed or complied with by MST II, on behalf of the Acquired Fund, on
or before the Closing Date.
7.3. MST II shall have delivered to the Acquiring Fund a statement of the
Acquired Fund's Assets and Liabilities, as of the Closing Date, certified by the
Treasurer of MST II.
7.4. MST II, on behalf of the Acquired Fund, shall have delivered to the
Acquiring Fund a certificate executed in the name of MST II, on
B-15
behalf of the Acquired Fund, by MST II's President or Vice President and its
Treasurer or Assistant Treasurer, in a form reasonably satisfactory to MST and
dated as of the Closing Date, as to the matters set forth in paragraphs 7.1 and
7.2, and as to such other matters as MST shall reasonably request.
7.5 MST II, on behalf of the Acquired Fund, and MST, on behalf of the
Acquiring Fund, shall have agreed on the number of full and fractional Acquiring
Fund Shares to be issued in connection with the Reorganization after such number
has been calculated in accordance with paragraph 1.1.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
If any of the conditions set forth below have not been satisfied on or
before the Closing Date with respect to MST II, on behalf of the Acquired Fund,
or MST, on behalf of the Acquiring Fund, the other party to this Agreement shall
be entitled, at its option, to refuse to consummate the transactions
contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Fund in accordance with the provisions of the MST II Charter, MST
II's by-laws, applicable Massachusetts law and the 1940 Act, and certified
copies of the resolutions evidencing such approval shall have been delivered to
MST. Notwithstanding anything herein to the contrary, neither MST nor MST II may
waive the conditions set forth in this paragraph 8.1.
8.2 On the Closing Date, no court or governmental agency of competent
jurisdiction shall have issued any order that remains in effect and that
retrains or enjoins MST II, with respect to the Acquired Fund, or MST, with
respect to the Acquiring Fund, from completing the transactions contemplated by
this Agreement.
8.3 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
MST or MST II to permit consummation, in all material respects, of the
transactions contemplated with respect to the Acquiring Fund or the Acquired
Fund hereby shall have been obtained, except where failure to obtain any such
consent, order or permit would not involve a risk of a material adverse effect
on the assets or properties of the Acquiring Fund or the Acquired Fund, provided
that either party hereto may for itself waive any of such conditions.
B-16
8.4 The registration statement with respect to the Acquiring Fund Shares
shall have become effective under the 1933 Act and no stop orders suspending the
effectiveness thereof shall have been issued and, to the best knowledge of the
parties hereto, no investigation or proceeding for that purpose shall have been
instituted or be pending.
8.5 The parties shall have received the opinion of counsel to MST II
substantially to the effect that, based upon certain facts, assumptions, and
representations, the transaction contemplated by this Agreement shall constitute
a tax-free reorganization for Federal income tax purposes. The delivery of such
opinion is conditioned upon receipt by counsel to MST II of representations it
shall request of MST and MST II. Notwithstanding anything herein to the
contrary, neither MST nor MST II may waive the condition set forth in this
paragraph 8.5.
9. INDEMNIFICATION
9.1. MST, out of the Acquiring Fund's assets and property (including any
amounts paid to the Acquiring Fund pursuant to any applicable liability
insurance policies or indemnification agreements), agrees to indemnify and hold
harmless MST II and its Trustees and officers from and against any and all
losses, claims, damages, liabilities or expenses (including, without limitation,
the payment of reasonable legal fees and reasonable costs of investigation) to
which the Acquired Fund may become subject, insofar as such loss, claim, damage,
liability or expense (or actions with respect thereto) arises out of or is based
on (a) any breach by MST, on behalf of the Acquiring Fund, of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or (b) any act, error, omission, neglect, misstatement, materially misleading
statement, breach of duty or other act wrongfully done or attempted to be
committed by MST or its Trustees or officers prior to the Closing Date, provided
that such indemnification by MST is not (i) in violation of applicable law or
(ii) otherwise prohibited as a result of any applicable order or decree issued
by any governing regulatory authority or court of competent jurisdiction.
9.2 MST II, out of the Acquired Fund's assets and property (including any
amounts paid to the Acquiring Fund pursuant to any applicable liability
insurance policies or indemnification agreements), agrees to indemnify and hold
harmless MST and its Trustees and officers from and against any and all losses,
claims, damages, liabilities or expenses (including, without limitation, the
payment of reasonable legal fees and reasonable costs of investigation) to which
the Acquiring Fund may become subject, insofar as such loss, claim, damage,
liability or expense (or actions with respect thereto) arises out of or is based
on (a) any breach by MST II, on
B-17
behalf the Acquired Fund, of any of its representations, warranties, covenants
or agreements set forth in this Agreement or (b) any act, error, omission,
neglect, misstatement, materially misleading statement, breach of duty or other
act wrongfully done or attempted to be committed by MST II or its Trustees or
officers prior to the Closing Date, provided that such indemnification by MST II
is not (i) in violation of applicable law or (ii) otherwise prohibited as a
result of any applicable order or decree issued by any governing regulatory
authority or court of competent jurisdiction.
10. BROKERAGE FEES AND EXPENSES
10.1 MST, on behalf of the Acquiring Fund, and MST II, on behalf of the
Acquired Fund, represent and warrant to each other that there are no brokers or
finders entitled to receive any payments in connection with the transactions
provided for herein.
10.2 The expenses relating to the Reorganization will be principally paid
by, or caused to be paid by, Munder Capital Management[, LLC], however to the
extent that obtaining shareholder approval of the Reorganization at meeting of
the shareholders of the Acquired Fund contemplated by Section 5.2 requires proxy
solicitation beyond the date of such meeting (or any adjournments or
postponements thereof) at which shareholder approval of a new combined advisory
agreement with Munder Capital Management, LLC is obtained, the Acquired Fund
will bear such additional expenses. The costs of the Reorganization shall
include, but not be limited to, costs associated with obtaining any necessary
order of exemption from the 1940 Act, if any, preparation of the Proxy
Statement, printing and distributing the Proxy Statement, legal fees, accounting
fees, and expenses of holding shareholders' meetings. Notwithstanding any of the
foregoing, expenses will in any event be paid by the party directly incurring
such expenses if and to the extent that the payment by another person of such
expenses would result in the disqualification of such party as a "regulated
investment company" within the meaning of Section 851 of the Code or would
prevent the Reorganization from qualifying as a tax-free reorganization.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1 MST and MST II agree that neither party has made any representation,
warranty or covenant, on behalf of either the Acquiring Fund or the Acquired
Fund, respectively, not set forth herein and that this Agreement constitutes the
entire agreement between the parties.
11.2 The covenants to be performed after the Closing by both MST and MST
II, and the obligations of MST, on behalf of the Acquiring Fund,
B-18
in Section 9, shall survive the Closing. All other representations, warranties
and covenants contained in this Agreement or in any document delivered pursuant
hereto or in connection herewith shall not survive the consummation of the
transactions contemplated hereunder and shall terminate on the Closing.
12. TERMINATION
This Agreement may be terminated and the transactions contemplated hereby
may be abandoned by resolution of the either the Board of Trustees of MST or the
Board of Trustees of MST II, at any time prior to the Closing Date, if
circumstances should develop that, in the opinion of that Board, make proceeding
with the Agreement inadvisable with respect to the Acquiring Fund or the
Acquired Fund, respectively.
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be deemed necessary or advisable by the authorized officers of MST and MST
II ; provided, however, that following the meeting of the shareholders of the
Acquired Fund called by MST II pursuant to paragraph 5.2 of this Agreement, no
such amendment may have the effect of changing the provisions for determining
the number of Acquiring Fund Shares to be issued to each corresponding class of
Acquired Fund Shareholders, under this Agreement to the detriment of such
shareholders without their further approval.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by
facsimile, electronic delivery (i.e., e-mail) personal service or prepaid or
certified mail addressed to MST and MST II, 480 Pierce Street, Birmingham, MI
48009, attn: Stephen J. Shenkenberg, in each case with a copy to Dechert LLP,
1775 I Street, N.W., Washington, DC 20006, attn: Jane A. Kanter.
15. HEADINGS; GOVERNING LAW; SEVERABILITY; ASSIGNMENT; LIMITATION OF LIABILITY
15.1 The Article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
B-19
15.2 This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to its principles of conflicts
of laws.
15.3 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other parties. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
15.4 The obligations of MST II with respect to the Acquired Fund entered
into in the name or on behalf MST II by any of its Trustees, officers, employees
or agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, officers, employees, agents or shareholders of MST II
personally, but bind only the assets of MST II belonging to the Acquired Fund,
and all persons dealing with any series or funds of MST II must look solely to
the assets of MST II belonging to such series or fund for the enforcement of any
claims against MST II.
B-20
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by an authorized officer.
MUNDER SERIES TRUST, ON BEHALF OF ITS SERIES, MUNDER HEALTHCARE FUND
BY:
- ---------------------------------
NAME:
TITLE:
MUNDER SERIES TRUST II, ON BEHALF OF ITS SERIES, MUNDER HEALTHCARE FUND
BY:
- ---------------------------------
NAME:
TITLE:
MUNDER CAPITAL MANAGEMENT, [LLC,] SOLELY WITH RESPECT TO PARAGRAPH 10.2
BY:
- ---------------------------------
NAME:
TITLE:
B-21
EXHIBIT C
MANAGEMENT OF THE ADVISOR
The following table sets forth the executive officers and general partners
of the Advisor, their business addresses and their principal occupation or
business as of August 3, 2006.
<Table>
<Caption>
NAME AND BUSINESS ADDRESS* PRINCIPAL OCCUPATION/BUSINESS
- -------------------------- -------------------------------------
GENERAL PARTNERS
Munder Group LLC General partner of the Advisor;
Entity through which the Advisor's
employees hold their beneficial
interest in the Advisor
WAM Holdings, Inc. General partner of the Advisor;
c/o Comerica Incorporated Holding company through which
500 Woodward Avenue, 33rd Floor Comerica indirectly holds its
Detroit, MI 48226 beneficial interest in the Advisor
WAM Holdings II, Inc. General partner of the Advisor;
c/o Comerica Incorporated Holding company through which
500 Woodward Avenue, 33rd Floor Comerica indirectly holds its
Detroit, MI 48226 beneficial interest in the Advisor
EXECUTIVE OFFICERS
Dennis J. Mooradian Chief Executive Officer of the
Advisor; Executive Vice President,
Wealth & Institutional Management of
Comerica
John S. Adams President and Chief Investment
Officer of the Advisor; President and
Principal Executive Officer of the
Trust, MST and @Vantage
Peter K. Hoglund Managing Director and Chief
Administrative Officer of the
Advisor; Vice President and Principal
Financial Officer of the Trust, MST
and @Vantage
Todd B. Johnson Managing Director and Chief
Investment Officer -- Passive
Investments of the Advisor
Peter G. Root Managing Director and Chief
Investment Officer -- Fixed Income of
the Advisor; Registered
Representative for Funds Distributor,
Inc., an affiliate of The BISYS
Group, Inc.
</Table>
C-1
<Table>
<Caption>
NAME AND BUSINESS ADDRESS* PRINCIPAL OCCUPATION/BUSINESS
- -------------------------- -------------------------------------
Stephen J. Shenkenberg Managing Director, General Counsel,
Chief Compliance Officer and
Secretary, of the Advisor; Vice
President, Secretary, Chief Legal
Officer and Chief Compliance Officer
of the Trust, MST and @Vantage
Tony Y. Dong Managing Director, Mid-Cap Equities
of the Advisor
Sharon E. Fayolle Managing Director, Cash Management of
the Advisor; Registered
Representative for Funds Distributor,
Inc., an affiliate of The BISYS
Group, Inc.
James V. FitzGerald Managing Director, Retail Marketing
of the Advisor; Registered
Representative for Funds Distributor,
Inc., an affiliate of The BISYS
Group, Inc.
Anne K. Kennedy Managing Director, Institutional
Investment Services of the Advisor;
Registered Representative for Funds
Distributor, Inc., an affiliate of
The BISYS Group, Inc.
Beth A. Obear Managing Director, Human Resources of
the Advisor
</Table>
- ------------------------------------
* Unless otherwise specified, the business address for each officer and general
partner is 480 Pierce Street, Birmingham, Michigan 48009.
The following table sets forth information on four of the proposed
directors of the Advisor following completion of the Transaction and the
Advisor's reorganization into a limited liability company under the name, Munder
Capital Management, LLC. In addition, the Advisor anticipates having three
independent directors. Candidates for such positions have not yet been
identified. With the exception of John S. Adams replacing Dennis J. Mooradian as
Chief Executive Officer, and both Mr. Mooradian and
C-2
Todd B. Johnson resigning their positions with the Advisor, the same executive
officers will serve the Advisor in their current positions.
<Table>
<Caption>
NAME AND BUSINESS ADDRESS* PRINCIPAL OCCUPATION
- -------------------------- -------------------------------------
DIRECTORS
John S. Adams President and Chief Investment
Officer of the Advisor; President and
Principal Executive Officer of the
Trust, MST and @Vantage
Tony Y. Dong Managing Director, Mid-Cap Equities
of the Advisor
Richard DeMartini Managing Director, Crestview
Donald Putnam Managing Director, Grail
</Table>
- ------------------------------------
* The business address for each director and executive officer is anticipated to
be 480 Pierce Street, Birmingham, Michigan 48009.
C-3
EXHIBIT D
FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUND TO BE AMENDED OR ELIMINATED
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUND:
The Fund may not:
1. Purchase securities (except U.S. Government securities) if more than
5% of its total assets will be invested in the securities of any one issuer,
except that up to 25% of the assets of the Fund may be invested without regard
to this 5% limitation. (Proposal 3.A).
2. Borrow money or enter into reverse repurchase agreements except that a
Fund may (a) borrow money or enter into reverse repurchase agreements for
temporary purposes in amounts not exceeding 5% of its total assets and (b)
borrow money for the purpose of meeting redemption requests, in amounts (when
aggregated with amounts borrowed under clause (a)) not exceeding 33 1/3% of its
total assets. (Proposal 3.B & 3.L).
3. Issue senior securities except as permitted by the 1940 Act. (Proposal
3.C).
4. Underwrite securities of other issuers, except insofar as the Fund may
be deemed an underwriter under the 1933 Act in selling portfolio securities.
(Proposal 3.D).
5. 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. (Proposal 3.E).
6. 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. (Proposal 3.F).
7. Invest 25% or more of its total assets in securities issued by one or
more issuers conducting their principal business activities in the same industry
(except that the Fund will invest more than 25% of its total assets in
securities of issuers conducting their principal business activities in
healthcare industries). (Proposal 3.G).
8. Invest in commodities or commodity futures contracts, provided that
this limitation shall not prohibit the purchase or sale by the Fund of forward
foreign currency exchange contracts, financial futures contracts
D-1
and options on financial futures contracts, foreign currency futures contracts,
and options on securities, foreign currencies and securities indices, as
permitted by the Fund's prospectus. (Proposal 3.H).
9. Pledge, mortgage or hypothecate its assets other than to secure
borrowings permitted by its fundamental investment limitation on borrowing
(collateral arrangements with respect to margin requirements for options and
futures transactions are not deemed to be pledges or hypothecations for this
purpose). (Proposal 3.I).
10. Make investments for the purpose of exercising control or management.
(Proposal 3.J).
11. 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 of futures.
(Proposal 3.K).
D-2
EXHIBIT E
CURRENT EXECUTIVE OFFICERS OF THE FUND
<Table>
<Caption>
TERM OF OFFICE(1)
POSITION(S) WITH AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING
NAME, ADDRESS AND AGE THE TRUST TIME SERVED(2) PAST 5 YEARS
- --------------------- ------------------- ----------------- -------------------------------
John S. Adams President & Through 2/07; President and Chief Investment
480 Pierce Street Principal Executive since 4/06 Officer of the Advisor (since
Suite 300 Officer 3/06); President and Chief
Birmingham, MI 48009 Investment Officer of Pierce
Age 48 Street Advisors, LLC
(investment advisor) (since
3/06); Managing Director and
Chief Investment Officer,
Equities of the Advisor (12/04
to 3/06); Senior Portfolio
Manager of the Advisor (6/87 to
12/04).
Peter K. Hoglund Vice President and Through 2/07; Managing Director and Chief
480 Pierce Street Principal Financial since 2/01 Administrative Officer of the
Suite 300 Officer Advisor (since 2/05); Chief
Birmingham, MI 48009 Administrative Officer of
Age 40 Pierce Street Advisors, LLC
(investment advisor) (since
5/05); Chief Administrative
Officer of the Advisor (5/00 to
2/05).
Stephen J. Vice President, Through 2/07; Managing Director, General
Shenkenberg Secretary, Chief since 8/00 Counsel, Chief Compliance
480 Pierce Street Legal Officer and Officer and Secretary of the
Suite 300 Chief Compliance Advisor (since 2/05); General
Birmingham, MI 48009 Officer Counsel and Chief Compliance
Age 48 Officer of Pierce Street
Advisors, LLC (investment
advisor) (since 5/05);
Executive Vice President and
General Counsel of the Advisor
(7/00 to 2/05); Director of
Diversified Strategy Hedge
Fund, Ltd. (since 1/06).
Cherie N. Ugorowski Treasurer and Through 2/07; Controller of the Advisor
480 Pierce Street Principal since 8/01 (since 6/01).
Suite 300 Accounting Officer
Birmingham, MI 48009
Age 37
</Table>
- ------------------------------------
(1) The officers are elected annually by the Board.
(2) Length of time served is measured from the earliest date of service as an
officer of the Fund or its predecessors.
E-1
EXHIBIT F
PRINCIPAL SHAREHOLDERS OF THE FUND
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES. As of September 1,
2006 the following person(s) owned of record or were known by the Fund to own
beneficially 5% or more of any class of the Fund's shares.
<Table>
<Caption>
AMOUNT AND NATURE OF PERCENTAGE OF CLASS
NAME OF CLASS NAME AND ADDRESS BENEFICIAL OWNERSHIP OUTSTANDING (%)
- ------------- ---------------- -------------------- -------------------
[Insert Class]
</Table>
F-1
1.VOTING ON THE INTERNET
- - Read the Proxy Statement and have this card at hand
- - Log on to WWW.XXXXXX.COM
- - Enter the CONTROL NUMBER shown to the left and follow the on-screen
instructions
- - Do not return this paper ballot
2.VOTING BY PHONE
- - Read the Proxy Statement and have this card at hand
- - Call toll-free 1-XXX-XXX-XXXX
- - Enter the CONTROL NUMBER shown to the left and follow the on-screen
instructions
- - Do not return this paper ballot
FORM OF
PROXY CARD
Munder Series Trust II
SPECIAL MEETING OF SHAREHOLDERS OCTOBER 26, 2006
Munder Healthcare Fund
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
THE UNDERSIGNED REVOKE(S) ALL PREVIOUS PROXIES AND APPOINT(S) STEPHEN J.
SHENKENBERG, MELANIE MAYO WEST OR AMY D. EISENBEIS OR ANY ONE OF THEM,
ATTORNEYS, WITH FULL POWER OF SUBSTITUTION TO VOTE ALL SHARES OF THE MUNDER
HEALTHCARE FUND (FUND) OF MUNDER SERIES TRUST II THAT THE UNDERSIGNED IS
ENTITLED TO VOTE AT THE SPECIAL MEETING OF SHAREHOLDERS OF THE FUND TO BE HELD
AT THE COMMUNITY HOUSE, 380 SOUTH BATES STREET, BIRMINGHAM, MICHIGAN 48009, ON
THURSDAY, OCTOBER 26, 2006 AT 10:00 A.M., EASTERN TIME ("MEETING"), AND AT ANY
ADJOURNMENTS OR POSTPONEMENTS THEREOF.
RECEIPT OF THE NOTICE OF THE MEETING AND THE ACCOMPANYING PROXY STATEMENT IS
HEREBY ACKNOWLEDGED.
PLEASE VOTE ON THE REVERSE SIDE, SIGN AND DATE THIS PROXY AND RETURN PROMPTLY IN
THE POSTAGE-PAID ENVELOPE PROVIDED.
Dated _______________________
Signature
NOTE: Please sign your name exactly as
it appears in the registration. If
shares are held in the name of two or
more persons, in whatever capacity, only
ONE need sign. When signing in a
fiduciary capacity, such as executor or
attorney, please so indicate. When
signing on behalf of a partnership or
corporation, please indicate title.
Munder XXXX
[ ]
Please fill in box(es) as shown using black or blue ink or number 2 pencil. X
PLEASE DO NOT USE FINE POINT PENS.
IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSAL. AS TO
ANY OTHER MATTER, SAID ATTORNEYS WILL VOTE IN ACCORDANCE WITH THEIR BEST
JUDGMENT. THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE PROPOSAL.
FOR AGAINST ABSTAIN
1. To approve a new combined investment advisory
agreement with Munder Capital Management, LLC [ ] [ ] [ ]
2. To approve an agreement and plan of
reorganization and redomiciliation, pursuant
to which the Fund would be reorganized as a
separate series of Munder Series Trust [ ] [ ] [ ]
3. To approve the amendment or elimination of
the following fundamental investment
restrictions of the Munder Healthcare Fund: [ ] [ ] [ ]
a. Diversification [ ] [ ] [ ]
b. Borrowing [ ] [ ] [ ]
c. Issuing Senior Securities [ ] [ ] [ ]
d. Underwriting Securities [ ] [ ] [ ]
e. Investments in Real Estate [ ] [ ] [ ]
f. Making Loans [ ] [ ] [ ]
g. Concentration of Investments [ ] [ ] [ ]
h. Investments in Commodities [ ] [ ] [ ]
i. Pledging, Mortgaging, and Hypothecating Assets [ ] [ ] [ ]
j. Investments for Control Over Issuer [ ] [ ] [ ]
k. Margin Activities and Short Selling [ ] [ ] [ ]
l. Investments in Reverse Repurchase Agreements [ ] [ ] [ ]
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN PROMPTLY IN THE POSTAGE-PAID
ENVELOPE PROVIDED.
TWO SIMPLE WAYS TO VOTE YOUR MUNDER FUNDS
PROXY. IT WILL ONLY TAKE A FEW MOMENTS!
Voting your proxy is important since there are hundreds of thousands of
investors like you. The Munder Funds have made it easy for you to vote at your
convenience - 24 hours a day. By voting your shares today, you will help ensure
that each Munder Fund has sufficient shares in attendance in order to hold the
Meeting as scheduled.
To vote, have your proxy card in hand and use one of these two convenient
options:
Vote By Phone: 1-800-XXX-XXXX
Vote By Internet: WWW.MYPROXYONLINE.COM
Once you have voted over the Internet or by phone you do NOT need to mail your
proxy card.
PLEASE VOTE TODAY. YOUR VOTE IS EXTREMELY IMPORTANT NO MATTER
HOW MANY SHARES YOU OWN.
Thank you for your assistance.
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