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:
[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 240.14a-12
THE MUNDER FRAMLINGTON FUNDS TRUST
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(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:
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(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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(4) Date Filed:
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[PRELIMINARY PROXY -- FOR SEC USE ONLY]
ST. CLAIR FUNDS, INC.
THE MUNDER FRAMLINGTON FUNDS TRUST
THE MUNDER FUNDS, INC.
THE MUNDER FUNDS TRUST
480 PIERCE STREET
BIRMINGHAM, MICHIGAN 48009
(800) 468-6337
February __, 2003
Dear Shareholder:
Please take note that a Special Meeting of Shareholders of certain of the
separate investment series of St. Clair Funds, Inc. ("St. Clair"), The Munder
Framlington Funds Trust ("Framlington"), The Munder Funds, Inc. ("Company"), and
The Munder Funds Trust ("Trust"), will be held on April ___, 2003, at [location]
at 10:00 a.m., Eastern time ("Meeting").
The purpose of the meeting is to ask shareholders to consider the following
proposals:
1. To approve the election of Directors/Trustees for St. Clair,
Framlington, the Company and the Trust;
2. To approve a proposed Agreement and Plan of Reorganization and
Redomiciliation ("Reorganization Agreement"), pursuant to which each
series of St. Clair, each series of Framlington, each series of the
Company named in the attached Notice of Special Meeting of
Shareholders (other than Munder Fund of Funds) and each series of
the Trust (each a "Fund" and collectively, the "Funds") would be
reorganized as separate series of Munder Series Trust, a
newly-created Delaware statutory trust ("New Trust");
3. To approve the elimination or amendment of certain of the Funds'
fundamental investment restrictions in order to modernize such
Funds' investment restrictions and to increase their investment
flexibility;
4. To approve the reclassification of certain Funds' fundamental
investment objectives as non-fundamental; and
5. To transact such other business as may properly come before the
Meeting and any adjournments or postponements thereof.
The Boards of Directors of St. Clair and the Company and the Boards of Trustees
of Framlington and the Trust (referred to herein together as the "Board") have
determined that shareholders of each applicable series will benefit from each of
the proposals.
If shareholders each Fund approve the Reorganization Agreement described in the
accompanying materials, all of the assets of such Fund will be exchanged for a
number of shares of a corresponding series of the New Trust ("New Fund")
representing the same aggregate net asset value on or about April __, 2003
("Reorganization"). Shares of each class of such New Fund will then be
transferred to the shareholders of the corresponding class of the Fund in
complete liquidation of the Fund. No sales charges will be imposed as a result
of the Reorganization. The closing of the Reorganization will be conditioned
upon, among other things, receiving an
opinion of counsel to the effect that the proposed Reorganization will qualify
as a tax-free reorganization for Federal income tax purposes. As a result, it is
anticipated that shareholders will not recognize any gain or loss in connection
with the proposed Reorganization.
In addition to the Reorganization, shareholders of each Fund (except Munder Fund
of Funds) are also asked to approve the modification, reclassification or
elimination of such Fund's fundamental investment restrictions. Shareholders of
Munder Multi-Season Growth Fund and Munder Real Estate Equity Investment Fund
are also asked to reclassify the fundamental investment objectives of those
Funds as non-fundamental. These changes are intended to streamline and make
uniform the restrictions applicable to all Funds in order to promote ease of
administration of the investment program of each Fund and to modernize the
investment limitations currently applicable to such Fund. The Funds' investment
advisor, Munder Capital Management, does not presently intend to alter the way
in which it manages any of the Funds, nor does it believe that the proposed
changes will, either individually or in the aggregate, materially affect the
investment risk associated with any Fund.
We strongly invite your participation by asking you to review these materials
and complete and return your proxy card as soon as possible.
Detailed information about each of the proposals is contained in the enclosed
materials. Please exercise your right to vote by completing, dating and signing
the enclosed proxy card. A self-addressed, postage-paid envelope has been
enclosed for your convenience. It is very important that you vote and that your
voting instructions be received no later than April __, 2003.
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. We
have provided postage-paid return envelopes for each, which require no postage
if mailed in the United States.
If you have any questions after considering the enclosed materials, please call
1-800-468-6337.
Sincerely,
James C. Robinson
President
St. Clair Funds, Inc.
The Munder Framlington Funds Trust
The Munder Funds, Inc.
The Munder Funds Trust
St. Clair Funds, Inc.
Liquidity Plus Money Market Fund
Munder Institutional Government Money Market Fund
Munder Institutional Money Market Fund
Munder Institutional S&P MidCap Index Equity Fund
Munder Institutional S&P SmallCap Index Equity Fund
The Munder Framlington Funds Trust
Munder Emerging Markets Fund
Munder Healthcare Fund
Munder International Growth Fund
The Munder Funds, Inc.
Munder Fund of Funds
Munder Future Technology Fund
Munder International Bond Fund
Munder Micro-Cap Equity Fund
Munder MidCap Select Fund
Munder Multi-Season Growth Fund
Munder NetNet Fund
Munder Power Plus Fund
Munder Real Estate Equity Investment Fund
Munder Small-Cap Value Fund
The Munder Funds Trust
Munder Balanced Fund
Munder Bond Fund
Munder Cash Investment Fund
Munder Index 500 Fund
Munder Intermediate Bond Fund
Munder International Equity Fund
Munder Large-Cap Value Fund
Munder Michigan Tax-Free Bond Fund
Munder Small Company Growth Fund
Munder Tax-Free Bond Fund
Munder Tax-Free Money Market Fund
Munder Tax-Free Short-Intermediate Bond Fund
Munder U.S. Government Income Fund
Munder U.S. Treasury Money Market Fund
480 PIERCE STREET
BIRMINGHAM, MICHIGAN 48009
(800) 468-6337
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL ___, 2003
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To the Shareholders:
St. Clair Funds, Inc. ("St. Clair"), The Munder Framlington Funds Trust
("Framlington"), The Munder Funds, Inc. ("Company"), and The Munder Funds Trust
("Trust"), on behalf of each of their series named above, will hold a special
meeting of their shareholders ("Meeting") at [location], on April ___, 2003 at
10:00 a.m., Eastern Time, for the following purposes:
1. To approve the election of Directors/Trustees of St. Clair,
Framlington, the Company and the Trust;
2. To approve an Agreement and Plan of Reorganization and
Redomiciliation providing for (i) the acquisition of all of the assets of
each series of St. Clair, each series of Framlington, each series of the
Company named above (other than Munder Fund of Funds) and each series of
the Trust (each a "Fund" and collectively, the "Funds") by a corresponding
series ("New Fund") of the Munder Series Trust, a new Delaware statutory
trust ("New Trust"), in exchange for shares of the New Fund and the
assumption of all liabilities of each Fund by the corresponding New Fund
and (ii) the subsequent liquidation of each Fund;
3. To approve the amendment or elimination of certain of the
Funds' fundamental investment restrictions in order to modernize their
investment restrictions and increase their investment flexibility;
4. To approve the reclassification of certain Funds'
fundamental investment objectives as non-fundamental; and
(5.) To consider and act upon any other business as may properly
come before the Meeting and any adjournments thereof.
You are entitled to vote at the Meeting and any adjournment(s) or
postponement(s) thereof if you owned shares of any series of St. Clair,
Framlington, the Company or the Trust listed above at the close of business on
February ___, 2003.
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:
To vote by Telephone: To vote by Internet:
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(1) Read the Proxy Statement and have your Proxy card at (1) Read the Proxy Statement and have your Proxy card at
hand. hand.
(2) Call the toll-free 1-888 number that appears on your (2) Go to the website, www.proxyweb.com
Proxy card.
(3) Enter the control number set forth on the Proxy card and (3) Enter the control number set forth on the Proxy card
follow the simple instructions. and follow the simple instructions.
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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 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 Boards of Directors/Trustees,
Stephen J. Shenkenberg
February __, 2003 Secretary
St. Clair Funds, Inc.
Liquidity Plus Money Market Fund ("Liquidity Plus")
Munder Institutional Government Money Market Fund
("Government Money Market")
Munder Institutional Money Market Fund
("Institutional Money Market")
Munder Institutional S&P MidCap Index Equity Fund
("S&P MidCap Index")
Munder Institutional S&P SmallCap Index Equity Fund
("S&P SmallCap Index")
The Munder Framlington Funds Trust
Munder Emerging Markets Fund ("Emerging Markets")
Munder Healthcare Fund ("Healthcare")
Munder International Growth Fund
("International Growth")
The Munder Funds, Inc.
Munder Fund of Funds ("Fund of Funds")
Munder Future Technology Fund ("Future Technology")
Munder International Bond Fund ("International Bond")
Munder Micro-Cap Equity Fund ("Micro-Cap Equity")
Munder MidCap Select Fund ("MidCap Select")
Munder Multi-Season Growth Fund
("Multi-Season Growth")
Munder NetNet Fund ("NetNet")
Munder Power Plus Fund ("Power Plus")
Munder Real Estate Equity Investment Fund ("Real Estate")
Munder Small-Cap Value Fund ("Small-Cap Value")
The Munder Funds Trust
Munder Balanced Fund ("Balanced")
Munder Bond Fund ("Bond")
Munder Cash Investment Fund ("Cash Investment")
Munder Index 500 Fund ("Index 500")
Munder Intermediate Bond Fund ("Intermediate Bond")
Munder International Equity Fund ("International Equity")
Munder Large-Cap Value Fund ("Large-Cap Value")
Munder Michigan Tax-Free Bond Fund
("Michigan Tax-Free")
Munder Small Company Growth Fund
("Small Company Growth")
Munder Tax-Free Bond Fund ("Tax-Free Bond")
Munder Tax-Free Money Market Fund
("Tax-Free Money Market")
Munder Tax-Free Short-Intermediate Bond Fund
("Tax-Free Short-Intermediate Bond")
Munder U.S. Government Income Fund
("U.S. Government Income")
Munder U.S. Treasury Money Market Fund
("U.S. Treasury Money Market")
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Proxy Statement
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Special Meeting of Shareholders
to be held on April ___, 2003
This Proxy Statement is being furnished to you in connection with the
solicitation of proxies by the Boards of Directors/Trustees ("Board") of St.
Clair Funds, Inc. ("St. Clair"), The Munder Framlington Funds Trust
("Framlington"), The Munder Funds, Inc. ("Company"), and The Munder Funds Trust
("Trust"), on behalf of each of their series named above, to be voted at a
Special Meeting of Shareholders to be held on April ___, 2003, at [location], at
10:00 a.m., Eastern time ("Meeting"), for the purposes set forth below and
described in greater detail in this Proxy Statement.
For purposes of this Proxy Statement, each series of St. Clair, each series of
Framlington, each series of the Company (other than Fund of Funds) and each
series of the Trust listed above may be referred to as a "Fund" or collectively
as the "Funds." Fund of Funds will be identified separately to the extent
applicable.
The following Proposals will be considered and acted upon at the Meeting:
Proposal Fund(s) Affected Page
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1. To approve the election of Directors/Trustees All Funds and Fund of Funds [_]
2. To approve an Agreement and Plan of Reorganization and All Funds [_]
Redomiciliation, a form of which is set forth in Exhibit A,
providing for the acquisition of all of the assets of each Fund
by a corresponding series ("New Fund") of the Munder Series Trust, a
Proposal Fund(s) Affected Page
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new Delaware statutory trust ("New Trust"), in exchange for
shares of the New Fund, the assumption of all liabilities of
each Fund by the corresponding New Fund, and the subsequent
liquidation of each Fund
3. To approve the amendment or elimination of the fundamental [_]
investment restrictions regarding:
3.A Diversification All Funds
3.B Borrowing All Funds
3.C Senior Securities All Funds
3.D Underwriting Securities All Funds
3.E Real Estate All Funds
3.F Making Loans All Funds
3.G Concentration of Investments All Funds
3.H Commodities All Funds
3.I Pledging, Mortgaging and Hypothecating Fund Assets All Funds
3.J Illiquid Securities Liquidity Plus
3.K Investments for Control All Funds except Liquidity Plus
3.L Investments in Other Investment Companies Balanced, Bond, Cash Investment, Index 500,
International Equity, Intermediate Bond,
Large-Cap Value, Michigan Tax-Free, Small
Company Growth, Tax-Free Bond, Tax-Free Money
Market, Tax-Free Short-Intermediate Bond, U.S.
Government Income, U.S. Treasury Money Market
3.M Writing and Selling Options Balanced, Bond, Cash Investment, Index 500,
International Equity, Intermediate Bond,
Large-Cap Value, Michigan Tax-Free Bond, Small
Company Growth, Tax-Free Bond, Tax-Free Money
Market, Tax-Free Short-Intermediate Bond, U.S.
Government Income, U.S. Treasury Money Market
3.N Interests in Oil, Gas, Etc. Balanced, Bond, Cash Investment, Index 500,
International Equity, Intermediate Bond,
Large-Cap Value, Michigan Tax-Free Bond, Small
Company Growth, Tax-Free Bond, Tax-Free Money
Market, Tax-Free Short-Intermediate Bond, U.S.
Government Income, U.S. Treasury Money Market
3.O Margin Activities and Short Selling All Funds except Government Money Market,
Institutional Money Market, S&P MidCap Index
Equity and S&P SmallCap Index Equity
3.P Reverse Repurchase Agreements Emerging Markets, Government Money Market,
Healthcare, Institutional Money Market,
International Growth, S&P MidCap Index, S&P
SmallCap Index
2
Proposal Fund(s) Affected Page
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3.Q Joint Accounts Tax-Free Short-Intermediate Bond
3.R Investments in which Director/Officer is Invested Tax-Free Short-Intermediate Bond
3.S Unseasoned Companies Tax-Free Short-Intermediate Bond
4. To approve the reclassification of the Fund's fundamental Multi-Season Growth and Real Estate [_]
investment objective as non-fundamental
You are entitled to vote at the Meeting and any adjournment(s) or
postponement(s) if you owned shares of any Fund or the shares of the Fund of
Funds at the close of business on February ___, 2003 ("Record Date"). The date
of the first mailing of the proxy cards and this Proxy Statement to shareholders
will be on or about February __, 2003.
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, the
proxies will be voted in favor of the proposals. To revoke a proxy, the
shareholder giving such proxy must either (1) submit to the Funds (or the Fund
of Funds, as applicable) a subsequently dated proxy, (2) deliver to the Funds
(or the Fund of Funds, as applicable) a written notice of revocation, or (3)
otherwise give notice of revocation in open meeting, in all cases prior to the
exercise of the authority granted in the proxy.
The presence in person or by proxy of the holders of record of one-third of the
total outstanding shares of the Company, and a majority of the total outstanding
shares of St. Clair, Framlington, or the Trust shall constitute a quorum at the
Meeting for purposes of Proposal 1, permitting action to be taken for the
election of the Boards of Directors/Trustees. The presence in person or by proxy
of the holders of record of one-third of the outstanding shares of each Fund
that is a series of the Company, and a majority of the outstanding shares of
each Fund that is a series of St. Clair, Framlington, or the Trust shall
constitute a quorum at the Meeting for purposes of Proposals 2, 3 and 4
permitting action to be taken with respect to that Fund.
In the event that the necessary quorum to transact business or the vote required
to approve or reject any proposal is not obtained by the date of the Meeting, a
person named as proxy may propose one or more adjournments of the Meeting for a
reasonable period or periods to permit further solicitation of proxies. The
persons named as proxies will vote in favor of such adjournment with respect to
any proposal those proxies which they are entitled to vote in favor of that
proposal and will vote against any such adjournment with respect to any proposal
those proxies required to be voted against that proposal.
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 submit the proxy form included with this Proxy Statement
or attend the Meeting in person.
The most recent annual report of St. Clair, Framlington, the Company and the
Trust, including financial statements, for the fiscal year ended June 30, 2002
(December 31, 2001 in the case of St. Clair), and the most recent semi-annual
report of St. Clair for the semi-annual period ended June 30, 2002, have been
mailed previously to shareholders. If you would like to receive additional
copies of these shareholder reports free of charge, or copies of any subsequent
shareholder report, please contact St. Clair, Framlington, the Company or the
Trust by writing to the address set forth on the first page of this proxy
statement 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.
3
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Proposal 1 -- All Funds
ELECTION OF THE DIRECTORS/TRUSTEES
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What are shareholders being asked to approve in Proposal 1?
The purpose of this proposal is to elect a Board of Directors for St. Clair and
the Company and a Board of Trustees for Framlington and the Trust. It is
intended that the enclosed proxy will be voted for the election as Directors of
St. Clair and the Company and Trustees of Framlington and the Trust of the eight
nominees listed below ("Nominees"). All Nominees named below except [insert name
of nominee] are currently Directors of St. Clair and the Company and Trustees of
Framlington and the Trust and each has served in that capacity since originally
elected or appointed.
Who are the Nominees to the Board?
Information about the Nominees, including their business addresses, ages and
principal occupations during the past five years, and other current
directorships of publicly traded companies or funds, are set forth in the table
below. A Nominee is deemed to be "independent" to the extent the
Director/Trustee is not an "interested person" of St. Clair, Framlington, the
Company and the Trust, as that term is defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended ("1940 Act"). For purposes of this
Proxy Statement, "Fund Complex" means the series of St. Clair, Framlington, the
Company, the Trust and The Munder @Vantage Fund ("@Vantage").
Position(s) Number of
with St. Portfolios
Clair, in Fund
Framlington, Term of Office and Principal Occupation(s) Complex*
the Company, Length of Time During Overseen Other Directorships
Name, Address and Age and the Trust Served Past 5 Years by Nominee Held by Nominee
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Independent Nominees
Charles W. Elliott Director/Trustee Indefinite** Consultant, self-employed 35 None
c/o The Munder Funds and Chairman Company since 2/95 (since July 1995); Trustee,
480 Pierce Street St. Clair since @Vantage (since August 2000).
Suite 300 2/94
Birmingham, MI 48009 Trust since 11/89
Age: 71 Framlington since
11/96
John Rakolta, Jr. Director/Trustee Indefinite** Chairman and Chief Executive 35 None
c/o The Munder Funds and Vice Company since 2/93 Officer, Walbridge Aldinger
480 Pierce Street Chairman St. Clair since Company (construction company)
Suite 300 4/95 (since 1991); Trustee,
Birmingham, MI 48009 Trust since 4/95 @Vantage (since August 2000)
Age: 55 Framlington since and Munder Series Trust (since
11/96 February 2003).
4
Position(s) Number of
with St. Portfolios
Clair, in Fund
Framlington, Term of Office and Principal Occupation(s) Complex*
the Company, Length of Time During Overseen Other Directorships
Name, Address and Age and the Trust Served Past 5 Years by Nominee Held by Nominee
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David J. Brophy Director/Trustee Indefinite** Professor of Finance, 35 DirectPlacement,
c/o The Munder Funds Company since 5/93 University of Inc. (financial
480 Pierce Street St. Clair since Michigan-Business School technology company)
Suite 300 4/95 (since August 1966); Trustee, (since February
Birmingham, MI 48009 Trust since 4/95 @Vantage (since August 2000) 2002).
Age: 66 Framlington since and Munder Series Trust (since
11/96 February 2003).
Dr. Joseph E. Champagne Director/Trustee Indefinite** Vice President, Macomb College 35 None
c/o The Munder Funds Company since 2/95 (since 2001); Dean, Macomb
480 Pierce Street St. Clair since College (since September
Suite 300 2/94 1997); Trustee, @Vantage
Birmingham, MI 48009 Trust since 11/89 (since August 2000) and Munder
Age: 64 Framlington since Series Trust (since February
11/96 2003).
Thomas D. Eckert Director/Trustee Indefinite** Director, President and Chief 35 None
c/o The Munder Funds Company since 2/93 Executive Officer, Capital
480 Pierce Street St. Clair since 4/95 Automotive REIT (real estate
Suite 300 Trust since 4/95 investment trust specializing
Birmingham, MI 48009 Framlington since in retail automotive
Age: 55 11/96 properties) (since October
1997); Trustee, @Vantage
(since August 2000) and Munder
Series Trust (since
February 2003).
Dr. Arthur T. Porter Director/Trustee Indefinite** President and Chief Executive 35 None
3990 John R. Company since 2/01 Officer of the Detroit Medical
Detroit, MI 48201 St. Clair since 2/01 Center (since March 1999);
Age: 46 Trust since 2/01 Professor with Tenure and
Framlington since Chairman of Radiation Oncology
2/01 of Wayne State University
School of Medicine (March 1991
to March 1999); Trustee,
@Vantage (since August 2000)
and Munder Series Trust (since
February 2003).
[insert name of nominee] N/A N/A [To be added.] 35 [To be added]
c/o The Munder Funds
480 Pierce Street
Suite 300
Birmingham, MI 48009
Age: ___
5
Position(s) Number of
with St. Portfolios
Clair, in Fund
Framlington, Term of Office and Principal Occupation(s) Complex*
the Company, Length of Time During Overseen Other Directorships
Name, Address and Age and the Trust Served Past 5 Years by Nominee Held by Nominee
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Interested Nominees
Michael T. Monahan+ Director/Trustee Indefinite** President of Monahan 35 CMS Energy
3707 West Maple Rd. Company since 8/00 Enterprises, LLC (consulting Corporation (energy
Suite 102 St. Clair since company) (since June 1999); company) (since
Bloomington Hills, MI 8/00 Chairman of Munder Capital December 2002);
48301 Trust since 8/00 Management (investment Guilford Mills,
Age: 64 Framlington since advisor) (October 1999 to Inc. (supplier of
8/00 December 2000); Chairman and automotive textile
Chief Executive Officer of products) (since
Munder Capital Management October 2002).
(October 1999 to December
1999); President of Comerica
Incorporated (bank holding
company) (June 1992 to June
1999); Trustee, @Vantage
(since August 2000) and Munder
Series Trust (since February
2003).
- ----------
* The New Trust consists of 31 "shell" series of the date of this proxy
statement. The New Trust was formed solely for the purposes of completing
the Reorganization of the Funds, as described in Proposal 2. As a result,
the series of the New Trust have not been included in the totals in this
column.
** The Director/Trustee may serve until his death, resignation, removal or
retirement. Pursuant to the respective By-Laws of St. Clair, Framlington,
the Company and the Trust, any Director/Trustee shall retire as
Director/Trustee at the end of the calendar year in which he or she attains
the age of 72 years.
+ Mr. Monahan is an "interested nominee" as defined in the 1940 Act. Mr.
Monahan owns stock in Comerica, Inc., the indirect parent company of MCM,
the investment advisor to each series of St. Clair, Framlington, the
company and the Trust.
Executive Officers
Officers of St. Clair, Framlington, the Company and the Trust are elected
annually by the Boards of Directors/Trustees to oversee the day to day
activities of each series of St. Clair, Framlington, the Company and the Trust,
respectively. The Boards of Directors/Trustees have elected officers for St.
Clair, Framlington, the Company and the Trust. Information about the executive
officers of St. Clair, Framlington, the Company and the Trust, including their
principal occupations during the past five years, are set forth in the Exhibit
B. Each of these officers are also officers and/or employees of MCM.
Share Ownership
As of the Record Date, the Nominees, Directors, Trustees and officers of St.
Clair, Framlington, the Company and the Trust beneficially owned as a group less
than 1% of the outstanding shares of each series of St. Clair, Framlington, the
Company and the Trust, respectively, except as follows:
6
Name Amount and Nature of
of Beneficial Owner/Fund Record or Beneficial Ownership Percent of Series/Class
------------------------------------------------------------------------------------------------
[Insert executive officer,
directors, nominees as needed]
The following table sets forth the aggregate dollar range of equity securities
owned by each Nominee of the series of St. Clair, Framlington, the Company and
the Trust and of all funds in the Fund Complex as of December 31, 2002. The
information as to beneficial ownership is based on statements furnished by each
Nominee.
Aggregate Dollar Range of Equity
Securities in All Registered Investment
Dollar Range of Equity Companies Overseen by Director in
Securities in the Series Family of Investment Companies
--------------------------------------------------------------------------------------------------------------
Independent Nominees
Charles W. Elliott Over $100,000
Cash Investment Fund Over $100,000
Future Technology Fund $10,001-$50,000
NetNet Fund $10,001-$50,000
All other Funds None
John Rakolta, Jr. Over $100,000
Future Technology Fund $10,001-$50,000
Index 500 Fund Over $100,000
NetNet Fund $10,001-$50,000
All other Funds None
David J. Brophy $10,001-$50,000
NetNet Fund $10,001-$50,000
All other Funds None
Joseph E. Champagne $10,001-$50,000
Balanced Fund $1-$10,000
Future Technology Fund $1-$10,000
Micro-Cap Equity Fund $1-$10,000
NetNet Fund $1-$10,000
U.S. Government Income Fund $10,001-$50,000
All other Funds None
Thomas D. Eckert $50,001-$100,000
Healthcare Fund $10,001-$50,000
Real Estate $10,001-$50,000
Small-Cap Value Fund $10,001-$50,000
All other Funds None
Arthur T. Porter None None
[Additional Nominee] [_] [_]
Interested Nominee
Michael T. Monahan Over $100,000
Cash Investment Fund $1-$10,000
Multi-Season Growth Fund $10,001-$50,000
Small Company Growth Fund $10,001-$50,000
Small-Cap Value Fund $50,001-$100,000
Tax-Free Money Market Fund Over $100,000
All other Funds None
7
During the fiscal year ended June 30, 2002, the Boards of Directors/Trustees of
Framlington, the Company and the Trust, each of which is currently composed of
one interested Director/Trustee and six Independent Directors/Trustees, met five
times. During the fiscal year ended December 31, 2002, the Board of Directors of
St. Clair, which is currently composed of one interested Director/Trustee and
six Independent Directors/Trustees, also met five times. It is expected that
each Board of Directors/Trustees will meet at least quarterly at regularly
scheduled meetings.
Material Relationships of Non-Interested Directors/Trustees
Mr. Eckert is Director, President and Chief Executive Officer of Capital
Automotive REIT ("CARS"), a publicly-held real estate investment trust
specializing in retail automotive properties. During the calendar years 2001 and
2002, CARS had multiple secured lines of credit with leading commercial banks or
lending facilities, including one with Comerica Bank, a wholly-owned subsidiary
of Comerica Incorporated. Mr. Rakolta is Chairman and Chief Executive Officer,
Walbridge Aldinger Company ("Walbridge"), a privately-owned construction
company. During the calendar years 2001 and 2002, Walbridge had a stand-by line
of credit with Comerica Bank, a wholly-owned subsidiary of Comerica
Incorporated. In both cases, these lines of credit are standard agreements that
were negotiated at arm's-length and contain customary terms, conditions and
interest rates.
Compensation
Trustees of Framlington and the Trust who are not employees of Munder Capital
Management ("MCM"), the investment advisor to each series of St. Clair,
Framlington, the Company and the Trust, or any of its affiliates and Directors
of St. Clair and the Company who are not employees of MCM or any of its
affiliates receive an aggregate annual retainer from St. Clair, Framlington, the
Company and the Trust for service on those organizations' respective Boards of
$68,000 ($90,000 for the Chairman). A Board member who is Chairman of
a committee (Audit Committee, Board Process and Compliance Oversight Committee,
and/or Nominating Committee) also receives an annual retainer of $3,000 for such
service. Trustees and Directors are reimbursed for all out-of-pocket expenses
relating to attendance at such meetings.
The following table summarizes the compensation paid to the Directors/Trustees
of St. Clair, Framlington, the Company and the Trust, including committee fees,
for the twelve-month period ended December 31, 2002.
- -----------------------------------------------------------------------------------------------------------------------------------
Pension or Total
Aggregate Aggregate Aggregate Retirement Compensation
Compensation Compensation Compensation Aggregate Benefits Estimated from Fund
from the from the from Compensation Accrued as Annual Complex Paid
Name of Company Trust Framlington from St. Clair Part of Fund Benefits upon to Directors/
Director/Trustee (12 funds) (1) (14 funds)(1) (3 funds) (1) (5 funds) (1) Expenses Retirement Trustees
- ------------------------------------------------------------------------------------------------------------------------------------
Charles W. Elliott $ 31,213 $ 41,015 $ 5,596 $ 12,176 None None $ 94,000
- ------------------------------------------------------------------------------------------------------------------------------------
John Rakolta, Jr. $ 24,624 $ 32,356 $ 4,415 $ 9,605 None None $ 75,000
- ------------------------------------------------------------------------------------------------------------------------------------
David J. Brophy $ 23,583 $ 30,989 $ 4,228 $ 9,200 None None $ 72,000
- ------------------------------------------------------------------------------------------------------------------------------------
Joseph E. Champagne $ 24,624 $ 32,356 $ 4,415 $ 9,605 None None $ 75,000
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas D. Eckert $ 24,624 $ 32,356 $ 4,415 $ 9,605 None None $ 75,000
- ------------------------------------------------------------------------------------------------------------------------------------
Michael T. Monahan $ 23,583 $ 30,989 $ 4,228 $ 9,200 None None $ 72,000
- ------------------------------------------------------------------------------------------------------------------------------------
Arthur T. Porter $ 23,583 $ 30,989 $ 4,228 $ 9,200 None None $ 72,000
- ------------------------------------------------------------------------------------------------------------------------------------
- ---------------
(1) For the twelve month period ended December 31, 2002, Mr. Elliott, Mr.
Eckert and Dr. Porter each deferred a portion of his compensation pursuant
to the deferred compensation plan described below. The total compensation
from St. Clair, Framlington, the Company, and the Trust deferred by the
Directors/Trustees was $94,000 for Mr. Elliott, $75,000 for Mr. Eckert and
$72,000 for Dr. Porter.
The Boards of Directors/Trustees of St. Clair, Framlington, the Company, the
Trust and @Vantage adopted a deferred compensation plan ("Plan") on August 14,
2001. The Plan permits each director/trustee who receives
8
compensation from the series of St. Clair, Framlington, the Company, the Trust
and @Vantage to defer, for a specified period of time, the receipt of all or
some portion of the fees earned for Board service. Following the Plan's
adoption, each Director/Trustee had 30 days to elect to defer fees earned from
the series of St. Clair, Framlington, the Company, the Trust and @Vantage for
the remainder of the calendar year 2001. For the calendar years after 2001,
deferral elections must be made prior to January 1 of the calendar year for
which fees are to be deferred. Previous deferral elections will automatically
remain in effect for subsequent years unless the Director/Trustee makes an
alternative election prior to January 1 of the calendar year for which fees are
to be deferred. Amounts deferred will be valued as if they were invested in one
or more of the series of St. Clair, Framlington, the Company, the Trust and
@Vantage selected by the deferring Director/Trustee. These amounts will not,
however, actually be invested in shares of the series of St. Clair, Framlington,
the Company, the Trust and @Vantage and the obligations of St. Clair,
Framlington, the Company, the Trust and @Vantage to make payments under the Plan
will be unsecured general obligations of the series of St. Clair, Framlington,
the Company, the Trust and @Vantage, payable out of the general assets and
property of the series of St. Clair, Framlington, the Company, the Trust and
@Vantage. A Director/Trustee may elect to have the amounts earned under the Plan
distributed (1) on a specified date, (2) upon termination of Board service, or
(3) the earlier of choice (1) or (2). Payment of amounts earned under the Plan
may be made in a lump sum or in annual installments over the number of years
specified by the Director/Trustee (up to 10 years). If a Director/Trustee dies,
the balance of the amounts earned will be paid to his or her designated
beneficiary in a lump sum. It is expected that the deferred fee arrangements
under the Plan will survive the Reorganization. The New Trust has adopted a
deferred compensation plan that is substantially similar to the Plan in all
material respects and that will be effective at the time of the Reorganization.
Standing Committees
St. Clair, Framlington, the Company and the Trust each have a standing Audit
Committee presently consisting of Messrs. Eckert, Brophy, Porter and Rakolta.
All are members of the Board and are not considered to be "interested persons"
of St. Clair, Framlington, the Company or the Trust, as that term is defined in
the 1940 Act ("Independent Directors/Trustees"). The principal functions of each
Audit Committee is to recommend to the Board the appointment of the independent
auditors, to review with the auditors the scope and anticipated costs of their
audit and to receive and consider a report from the auditors concerning their
conduct of the audit, including any comments or recommendations they might want
to make in that connection. Each Board has adopted a written charter for the
Audit Committee. During the most recent fiscal year of each of St. Clair,
Framlington, the Company and the Trust, the Audit Committee met two times.
St. Clair, Framlington, the Company and the Trust each have a Nominating
Committee presently consisting of Messrs. Brophy, Champagne, Eckert and Rakolta.
The function of each Nominating Committee is to recommend candidates for
election to the Board as independent board members. A Committee will not
consider nominees recommended by shareholders. During the most recent fiscal
year of each of St. Clair, Framlington, the Company and the Trust, the
Nominating Committee did not meet.
St. Clair, Framlington, the Company and the Trust each have a Board Process and
Compliance Oversight Committee presently consisting of Messrs. Champagne,
Monahan and Porter. The function of each Board Process and Compliance Oversight
Committee is to review and assess the adequacy of the Board's ongoing adherence
to industry corporate governance best practices and make recommendations as to
any appropriate changes; review and make recommendations to the Board regarding
director compensation and expense reimbursement policies; undertake periodically
to coordinate and facilitate evaluations of the Board and recommend
improvements, as appropriate; and meet with management to review the ongoing
adherence by St. Clair, Framlington, the Company and the Trust, respectively, to
its applicable compliance guidelines and review reports and other information
concerning the status of its compliance with applicable regulatory requirements
and valuation procedures. During the most recent fiscal year of each of St.
Clair, Framlington, the Company and the Trust, the Board Process and Compliance
Oversight Committee met four times.
9
Shareholder Approval: Election of the Nominees for Directors/Trustees must be
approved by a plurality of the votes cast in person or by proxy at the Meeting
at which a quorum exists. The votes of each series of St. Clair, each series of
Framlington, each series of the Company and each series of the Trust will be
counted together with respect to the election of the Nominees for St. Clair,
Framlington, the Company and the Trust, respectively. For the purposes of
determining the votes of the Company cast for this Proposal, the votes cast at a
separate meeting by shareholders of two additional series of the Company that
are not included in this Proxy Statement will also be counted.
THE BOARDS OF DIRECTORS/TRUSTEES RECOMMENDS A VOTE "FOR" APPROVAL OF THE
ELECTION OF EACH OF THE NOMINEES TO THE BOARDS OF DIRECTORS/TRUSTEES.
---------------------------
Proposal 2 -- All Funds
APPROVAL OF AN AGREEMENT AND PLAN OF
REORGANIZATION AND REDOMICILIATION
---------------------------
At a meeting of the Board held on February ___, 2003, the Board approved on
behalf of each of St. Clair, Framlington, the Company and the Trust and their
respective Funds an Agreement and Plan of Reorganization and Redomiciliation
("Reorganization Agreement") substantially in the form attached to this Proxy
Statement as Exhibit A. Fund shareholders are now being asked to approve the
Reorganization Agreement. If shareholders of each Fund approve the proposal, the
Directors/Trustees and officers of St. Clair, Framlington, the Company and the
Trust will execute and implement the Reorganization Agreement on behalf of such
Fund. If approved, we expect the Reorganization to take effect on or about April
___, 2003 ("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 each Fund are asked to consider the proposed Reorganization
Agreement, which contemplates:
. the transfer of all of the assets of each Fund to the corresponding
New Fund in exchange for shares of the corresponding 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 each Fund of the
same number of shares of the corresponding class of the corresponding
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.
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 Funds being distributed to the Funds' shareholders,
the Funds, as sole shareholders of the New Trust, will be asked to vote on
certain issues regarding the organization of the New Trust. A Fund will vote in
favor of such matters regarding the organization of the New Trust only to the
extent that the shareholders of that Fund have voted in favor of the proposed
Reorganization. Thus, shareholders of the Funds, in approving the proposed
Reorganization, will also, in effect, be approving the following matters with
respect to the New Trust:
. Election of the Trustees;
10
. Approval of investment advisory agreements and, if applicable,
approval of a sub-advisory agreement, all of which will be
substantially similar to the agreements currently in place with
respect to the Funds, except as noted below;
. Approval of the Distribution and Service Plan with respect to each
applicable New Fund and its classes; and
. Approval of the liquidation and dissolution of St. Clair, Framlington,
the Company and the Trust, to the extent such approval is required.
Shareholders of the Funds are not being asked to separately vote on these
issues. More information on each of these items is discussed below under
"Matters On Which the New Funds 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 five different
business entities--St. Clair, Framlington, the Company, the Trust and
@Vantage--in three different states. In unanimously approving the
Reorganization, the Directors/Trustees of St. Clair, Framlington, the Company
and the Trust determined that the proposed Reorganization would be in the best
interests of each Fund and that the interests of each Fund's shareholders would
not be diluted as a result of the Reorganization. We summarize below the key
factors considered by the Directors/Trustees:
. The Funds' investment advisor, MCM, has informed the
Directors/Trustees that it believes that by establishing the New Trust
and reorganizing each Fund into that single entity, the New Funds
should be able to realize greater operating efficiencies.
. In recent years, many mutual funds have reorganized as Delaware
statutory trusts. MCM has also informed the Directors/Trustees that it
believes that the proposed Delaware statutory trust form provides the
most flexible and cost efficient method of operating the Funds for the
benefit of Fund shareholders.
. The Directors/Trustees considered, with a few exceptions that are
discussed below, that the investment objective, policies and
restrictions of each Fund will be identical to those of the
corresponding New Fund, and the Funds will be managed by the same
personnel and in accordance with the same investment strategies and
techniques utilized in the management of each Fund immediately prior
to the Reorganization.
What effect will the Reorganization have on the Funds and their shareholders?
Immediately after the Reorganization, shareholders of the Funds will own shares
of the corresponding class of each corresponding New Fund that are equal in
number and in value to the shares of each 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 a Fund, immediately after
the closing of the Reorganization, you would own 100 Class A shares of the
corresponding New Fund having the same net asset value as your original 100
shares of the Fund.
As a result of the Reorganization, shareholders of those Funds that are series
of St. Clair or the Company, each of which is a Maryland corporation, and
Framlington and the Trust, each of which is a Massachusetts business trust, will
become shareholders of the New Funds, each of which is a series of a Delaware
statutory trust. For a comparison of certain attributes of these entities that
may affect shareholders of the Funds, please see "A Comparison of the New Trust
and St. Clair, Framlington, the Company and the Trust."
11
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 any of the Funds. Each New Fund will offer the
same shareholder services as its corresponding Fund.
Will there be any sales load, commission or other transactional fee in
connection with the Reorganization?
No. The full value of your shares of a Fund will be exchanged for shares of the
same class of the corresponding New Fund without any sales load, commission or
other transactional fee being imposed.
What will be the federal income tax consequences of the Reorganization?
As a condition to each Fund's obligation to consummate the Reorganization, St.
Clair, Framlington, the Company, the Trust and New Trust will receive an opinion
from legal counsel to the Funds 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 Reorganization Agreement constitute a tax-free reorganization for federal
income tax purposes.
Who is bearing the expenses related to the Reorganization?
The Funds will bear all expenses associated with the Reorganization, including
expenses associated with the solicitation of proxies.
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 A to this Proxy Statement.
The Reorganization Agreement provides that each New Fund will acquire all of the
assets, subject to all of the liabilities, of the corresponding 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, each 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 a New Fund received by the corresponding Fund in the Reorganization. We 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 corresponding New Fund to newly-opened
accounts on the books of that New Fund in the names of the Fund shareholders.
All issued and outstanding shares of the Fund will simultaneously 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.
After such distribution, St. Clair, Framlington, the Company and the Trust will
take all necessary steps under applicable state law, their respective governing
instruments, and any other applicable law to effect a complete dissolution of
the Funds and St. Clair, Framlington, the Company and the Trust. The Board has
determined, with respect to each Fund, that the interests of shareholders of
each Fund will not be diluted as a result of the Reorganization and that
participation in the Reorganization is in the best interests of each Fund and
its shareholders.
The Reorganization Agreement must be approved by shareholders of each Fund,
voting separately. In the event that shareholders of a particular Fund do not
approve the Reorganization of that Fund with and into the corresponding New
Fund, the Reorganization Agreement will continue to remain in full force and
effect with
12
respect to the reorganizations, redomiciliations and liquidations of the other
Funds and their corresponding New Funds for which such shareholder approval has
been granted. The Reorganization Agreement further provides that the benefits
and obligations attendant to the Reorganization are severable with respect to
each Fund and its corresponding New Fund.
The Reorganization Agreement may be terminated and the Reorganization abandoned,
with respect to one or more Funds or with respect to all Funds, at any time
prior to the consummation of the Reorganization, before or after approval by the
shareholders of the Funds, if circumstances should develop that, in the Board's
opinion, make proceeding with the Reorganization inadvisable with respect to
such Fund(s). The Reorganization Agreement provides that the New Trust, St.
Clair, Framlington, the Company, or the Trust may waive compliance with any of
the covenants or conditions made therein for the benefit of any Fund or New
Fund, as applicable, other than the requirements that: (1) the Reorganization
Agreement be approved by shareholders of each Fund; and (2) St. Clair,
Framlington, the Company or the Trust each 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 THE NEW TRUST AND ST. CLAIR,
FRAMLINGTON, THE COMPANY AND THE TRUST
St. Clair and the Company are each Maryland corporations governed by its own
Articles of Incorporation, By-Laws and a Board of Directors. Framlington and the
Trust are each Massachusetts business trusts governed by its own Declaration of
Trust, By-Laws and a Board of Trustees. The New Trust is a Delaware statutory
trust governed by its own Declaration of Trust, By-Laws and a Board of Trustees.
The operations of the New Trust, St. Clair, Framlington, the Company 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 the New Trust, the Trustees of the
New Trust will have more flexibility than Directors/Trustees of St. Clair,
Framlington, the Company and the Trust and, subject to applicable requirements
of the 1940 Act and Delaware law, broader authority to act. The increased
flexibility may allow the Trustees of the New Trust to react more quickly to
changes in competitive and regulatory conditions and, as a consequence, may
allow the New Trust to operate in a more efficient and economical manner.
Delaware law also promotes ease of administration by permitting the Board of the
New Trust to take certain actions, for example, establishing new investment
series of the New Trust, without filing additional documentation with the state,
which would otherwise require additional time and costs.
Importantly, the Trustees of the New Trust will have the same fiduciary
obligations to act with due care and in the interest of the New Funds and their
shareholders as do the Directors/Trustees with respect to the Funds and their
shareholders.
Shareholder Liability
New Trust
The Declaration of Trust of the New Trust provides that shareholders
are not personally liable for the debts, liabilities, obligations and
expenses incurred by, contracted for, or otherwise existing with
respect to the New Trust, the New Funds or any class of shares. In
addition, shareholders have the same limitation of personal liability
as is extended to shareholders of a Delaware for-profit corporation.
13
St. Clair and Company
St. Clair and the Company are each organized as Maryland corporations,
and as such, its shareholders generally have no personal liability for
its acts or obligations.
Framlington and Trust
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 Declarations of Trust for
Framlington and the Trust state that shareholders will not be subject
to any personal liability in connection with the assets of the trusts
for the acts or obligations of the trusts. The Declarations 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 either Framlington or 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 (i) a court determines that the respective trust should be
treated as a partnership, rather than as a business trust, despite the
terms of the Declaration of Trust and (2)(i) a contractual disclaimer
is found to be inadequate, and (ii) and the Fund itself would be unable
to meet its obligations.
Liquidation or Dissolution
Generally, in the event of the liquidation or dissolution of any of the Funds or
New Funds, as the case may be, the shareholders of that Fund/New Fund are
entitled to receive, when and as declared by the Board, the excess of the assets
over the liabilities belonging to the Fund/New Fund. The assets so distributed
to shareholders of a Fund/New Fund would be distributed among the shareholders
in proportion to the number of shares of that Fund/New Fund held by them and
recorded on the books of the Fund/New Fund.
New Trust
The Declaration of Trust of the New Trust permits a majority of the
Trustees to liquidate the New Trust, or any class or series of the New
Trust, upon written notice to shareholders, without submitting the
matter for shareholder approval.
St. Clair and Company
Maryland law requires shareholder approval of a dissolution of either
the Company or St. Clair. If no shares of a class or series are
outstanding, a majority of the Directors may vote to liquidate any
class or series without shareholder approval. Otherwise, the
corporation may first redeem all of the shares outstanding of each
applicable series and/or class, and then liquidate the series or class
without shareholder approval.
Framlington
The Declaration of Trust of Framlington permits liquidation of
Framlington, or any class or series of Framlington, without submitting
the matter for shareholder approval, upon the approval of a majority of
the respective Trustees.
Trust
The Declaration of Trust of the Trust permits liquidation of any class
or series of the Trust upon the approval of a majority of the Trustees,
without submitting the matter for shareholder approval. The Trustees
may sell all of the assets of the Trust in complete liquidation of the
Trust upon the approval of a majority of the outstanding shares of the
Trust voting together if the Trustees recommend such sale, or upon the
approval of two-thirds of the outstanding shares of the Trust voting
together if the Trustees have not recommended the sale.
14
Liability of Directors/Trustees
New Trust
Absent willful misfeasance, bad faith, gross negligence or reckless
disregard of a Trustee's duties, a Trustee acting in such capacity
shall not be personally liable to any person other than the New Trust
or a beneficial owner for any act, omission or obligation of the New
Trust or any Trustee. In addition, the Declaration of Trust provides
that any Trustee who has been designated a financial expert in the New
Trust'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 the New Trust will be indemnified
by the New Trust 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.
St. Clair
Absent willful misfeasance, bad faith, gross negligence or reckless
disregard of a Director's duties, a Director acting in such capacity
shall not be personally liable to any person other than St. Clair or a
beneficial owner for any act, omission or obligation of the St. Clair
or any Director. The By-laws of St. Clair provide that the corporation
will indemnify the Directors to the fullest extent permitted by
Maryland law and the 1940 Act.
Company
The Articles of Incorporation of the Company provide that, except as
otherwise provided by Maryland law and the 1940 Act, a Director is not
liable to the Company or its shareholders for money damages. The
Articles of Incorporation also provide that the corporation will
indemnify the Directors to the fullest extent permitted by Maryland
law and the 1940 Act.
Trust
The Declaration of Trust of the Trust provides that no Trustee shall
be personally liable for or on account of any contract, debt, tort,
claim, damage, judgment, or decree arising out of or connected with
the administration or preservation of the Trust property or the
conduct of any of the affairs of the Trust. However, the Declaration
of Trust does not purport to protect or indemnify a Trustee against
any liability to which such person would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such person's
office.
Framlington
Absent willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of a Trustee acting in
the capacity of such office, Framlington's Declaration of Trust
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. The Declaration of Trust further provides that Framlington
will indemnify any Trustee to the fullest extent possible under
applicable law.
Rights of Inspection
New Trust
Shareholders shall have the right to inspect the New Trust's accounts,
books or documents only to the extent such right is conferred by the
Trustees or by resolution of the shareholders.
St. Clair and Company
Except as required by Maryland law, shareholders of St. Clair and the
Company have only such right to inspect their respective corporation's
records, documents, accounts and books as may be granted by its
Directors. Maryland corporate law provides that one or more persons
who together have owned at least
15
5% of the outstanding shares of a corporation for at least six months
may, on written request, inspect the books of account and stock ledger
of the corporation.
Framlington and Trust
Shareholders of Framlington and 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.
Shareholder Meetings
Neither the New Trust, St. Clair, Framlington, the Company 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 the individual Fund or New Fund; (2) the
matter involves any action that the Directors/Trustees have determined will
affect only the interests of one or more Fund or New Fund, then only the
shareholders of such series shall be entitled to vote thereon; and (3) the
matter involves any action that the Directors/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.
New Trust
The By-Laws for the New Trust permit special meetings of the
shareholders to be called by shareholders holding at least 10% of the
outstanding shares of the New Trust entitled to vote at such meeting.
Shareholders may also take action in lieu of a meeting by written
instrument 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.
Company
A special meeting of shareholders of a Fund may be called upon the
written request of holders of not less than 10% of that Fund's then
outstanding voting securities. Written shareholder consents in lieu of
a meeting are required to be signed by all shareholders.
St. Clair
A special meeting of shareholders of a Fund may be called upon the
written request of holders of not less than 25% of the votes entitled
to be cast at the meeting. Written shareholder consents in lieu of a
meeting are required to be signed by all shareholders.
Framlington and Trust
A special meeting of shareholders of a Fund may be called upon the
written request of holders of not less than 10% of that Fund's
outstanding securities entitled to vote. Written shareholder consents
in lieu of a meeting are required to be signed by shareholders
representing a majority of the shares.
Reorganization/Combination Transactions
New Trust
Under the Declaration of Trust and Delaware law, the Trustees may
generally authorize mergers, consolidations, share exchanges and
reorganizations of a New Fund or the New Trust 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
16
under certain circumstances, such as when the merging funds have
materially different advisory contracts or fundamental investment
restrictions.
St. Clair, Framlington, Company and Trust
A majority of the outstanding shares of a Fund must approve a
merger of the Fund with another business organization, or the
sale or exchange of all or substantially all of the property of
the Fund.
Amendment of Charter Document
New Trust
The Trustees may generally restate, amend or otherwise supplement
the Trust'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).
Company
The Articles of Incorporation provide that the Company reserves
the right to amend, alter, change or repeal any provision of the
Articles of Incorporation, and all rights conferred upon
shareholders are granted subject to this reservation. Under
Maryland law, amendments to the charter of a corporation, other
than to change the name of the corporation, or a class or series
thereof, must be approved by a two-thirds of all votes entitled
to be cast except as otherwise provided in the corporation's
charter or bylaws. The Company's Articles of Incorporation
provide that a majority of the outstanding shares entitled to
vote will be sufficient to approve an amendment.
St. Clair
The Articles of Incorporation provide that the Directors may
amend, alter, change or repeal any provision of the Articles of
Incorporation so long as such change does not affect the contract
rights of outstanding securities, in which case such shareholder
approval is necessary. Under Maryland law, amendments to the
charter of a corporation, other than to change the name of the
corporation, or a class or series thereof, must be approved by a
two-thirds of all votes entitled to be cast except as otherwise
provided in the corporation's charter or bylaws. The Company's
Articles of Incorporation provide that a majority of the
outstanding shares entitled to vote will be sufficient to approve
an amendment.
Framlington and Trust
Generally, the Declaration of Trust of each of Framlington and
the Trust may only be amended by the affirmative vote of the
majority of shareholders. However, the 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
New Trust
Shareholders of the New Trust or any New Fund may not bring a
derivative action to enforce the right of the New Trust or 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 the
New Trust or the New Fund, as applicable, join in bringing the
derivative action. A shareholder of a particular New Fund is not
entitled to participate in a derivative action on behalf of any
other New Fund of the New Trust.
St. Clair and Company
Under Maryland law, shareholders may not bring a derivative
action unless they have first made a demand upon the corporation
to sue in its own name and the demand was refused. If the
Directors improperly refuse to bring a derivative suit or if the
demand upon the Directors is excused, then a
17
plaintiff generally must then make the demand upon the
corporation's other shareholders before commencing suit.
Framlington and Trust
Under the Declaration of Trust of each of Framlington and 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 either
Trust or Framlington or its shareholders.
* * *
The foregoing is only a summary of certain characteristics of the operations of
the New Trust, St. Clair, Framlington, the Company and the Trust, their 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 state laws governing each Fund for a more
thorough description.
MATTERS ON WHICH THE NEW FUNDS WILL VOTE
As noted above, in approving the Reorganization Agreement, shareholders of each
Fund will also be authorizing that Fund to vote on various actions regarding the
New Funds and the New Trust. Fund shareholders are not being asked to vote
separately on these issues. One of these actions will be to approve the election
of Trustees of the New Trust. The nominees for election will be the same
Nominees elected under Proposal 1 at the Meeting. In addition, shareholders of
each Fund approving of the Reorganization will also be approving the liquidation
and dissolution of that Fund and the liquidation and dissolution of St. Clair,
Framlington, the Company or the Trust, as applicable. Below is additional
information regarding some of the other actions to be taken by the Funds with
respect the New Funds and the New Trust in connection with the Reorganization.
Investment Advisory and Sub-Advisory Agreements
The Reorganization Agreement requires each Fund, while it is the sole
shareholder of the corresponding New Fund, to approve investment advisory
agreements and, if applicable, an investment sub-advisory agreement that are
substantially the same as the existing advisory agreements for each of the
Funds, except as noted below.
The proposed investment advisory and sub-advisory agreements are: (1) a proposed
investment advisory agreement by and between the New Trust, on behalf of each
applicable New Fund, and MCM that is substantially the same as the current
Amended and Restated Investment Advisory Agreement, dated May 15, 2001, by and
between St. Clair, Framlington, the Company and the Trust, on behalf of their
respective Funds except those designated in section (2), and MCM; (2) a proposed
investment advisory agreement by and between the New Trust, on behalf of each
applicable New Fund, and World Asset Management ("World"), a division of MCM,
that is substantially the same as the current Amended and Restated Investment
Advisory Agreement, dated May 15, 2001, as amended October 15, 2001, by and
between the Trust, on behalf of International Equity and Index 500, and St.
Clair, on behalf of S&P(R) MidCap Index Equity and S&P SmallCap Index Equity,
and World; and (3) an investment sub-advisory agreement by and among the New
Trust, on behalf of each applicable New Fund, MCM and Framlington Overseas
Investment Management Limited ("Sub-Advisor") that is substantially the same as
the current Amended and Restated Investment Sub-Advisory Agreement, dated April
1, 2002, by and among Framlington, on behalf of Emerging Markets, Healthcare and
International Growth (collectively, the "Sub-Advised Funds"), MCM and the
Sub-Advisor.
Together, the two current Amended and Restated Investment Advisory Agreements
are referred to herein as the "Current Advisory Agreements." The current Amended
and Restated Investment Sub-Advisory Agreement is referred to herein as the
"Current Sub-Advisory Agreement" and, together with the Current Advisory
Agreements, the "Current Agreements." Together, the two proposed Investment
Advisory Agreements are
18
referred to herein as the "New Advisory Agreements." The proposed Investment
Sub-Advisory Agreement is referred to herein as the "New Sub-Advisory Agreement"
and, together with the New Advisory Agreements, the "New Agreements." For the
purposes of this section, the term "Advisor" refers to both MCM and its
division, World.
The Funds have entered into Current Advisory Agreements with the Advisor that
were approved by Fund shareholders on [date]. The Current Sub-Advisory Agreement
among the Advisor, the Sub-Advisor and the Sub-Advised Funds was approved by the
shareholders of the Sub-Advised Funds on [date]. Subsequent to shareholder
approval of the Current Agreements, the Board of Directors/Trustees has, from
time to time, approved certain changes to the Agreements that did not materially
alter the terms of those Agreements and thus, did not require shareholder
approval. Such changes were last amended and restated in the form of the
agreements dated May 15, 2001 referenced above, and further amended but not
restated as noted above.
As of the date of this Proxy Statement, the Board of Directors/Trustees last
approved the continuation of the Current Agreements on May 21, 2002. In
determining whether to approve the continuation of the Current Agreements, the
Board requested, and received from the Advisor and Sub-Advisor, information that
the Board believed to be reasonably necessary to reach their conclusion. The
Board carefully evaluated this information and were advised by legal counsel to
the Funds and by legal counsel to the Independent Directors/Trustees with
respect to their deliberations. In considering the Current Agreements, the Board
of Directors/Trustees reviewed numerous factors. The Board first reviewed each
series' investment performance during the previous year and for all relevant
prior periods. Although investment performance was a factor in determining that
the Current Agreements should be continued, the following factors were also
considered by the Board in evaluating the fairness and reasonableness of the
compensation to be paid to the Advisor and the Sub-Advisor: (a) services
provided under the Current Agreements; (b) requirements of the Funds for the
services provided by the Advisor and Sub-Advisor; (c) the quality of the
services expected to be provided; (d) fees payable for the services; (e) total
expenses of each Fund; (f) the Advisor's and Sub-Advisor's commitments to
operating the Funds at competitive expense levels; (g) profitability of both the
Adviser and Sub-Advisor with respect to their relationship with the Funds; (h)
the capabilities and financial condition of the Advisor and Sub-Advisor; (i)
current economic and industry trends; and (j) the historical relationship
between each of the Funds and the Advisor and Sub-Advisor, as applicable.
Current management fees were also reviewed in the context of the Advisor's and
Sub-Advisor's profitability. In addition, the Board reviewed an analysis
prepared by an independent third-party comparing each Fund's expense ratio,
advisory fee and performance with comparable mutual funds. Among other things,
the Board considered the following factors in evaluating the continuation of the
Current Agreements: (a) the fairness and reasonableness of the investment
advisory fee payable to the Advisor and Sub-Advisor under the Current Agreements
in light of the investment advisory services provided, the costs of these
services, the profitability of the Advisor's and Sub-Advisor's relationship with
the Funds, and the amount of the fees paid compared to fees paid by other
investment companies; (b) the nature, quality and extent of the investment
advisory (or sub-advisory) services provided by the Advisor, in light of the
high quality services provided by the Advisor and Sub-Advisor in their
management of the Funds and the Funds' historic performance, including the
success of the Funds in achieving stated investment objectives; (c) the
Advisor's entrepreneurial commitment to the management of the Current Funds and
the continuing creation of a broad-based family of funds, which could entail a
substantial commitment of the Advisor's and Sub-Advisor's resources to the
successful operation of the Funds; (d) the Advisor's representations regarding
its staffing and capabilities to manage the Funds, including the retention of
personnel with relevant portfolio management experience; and (e) the overall
high quality of the personnel, operations, financial condition, investment
management capabilities, methodologies, and performance of the Advisor and
Sub-Advisor.
Based on their review of the information requested and provided, and following
extended discussions concerning the same, the Board determined that continuing
the Current Agreements was consistent with the best interests of the Funds and
their shareholders, and the Board unanimously approved the Current Agreements
for an additional annual period on the basis of the foregoing review and
discussions.
19
Subsequent to May 2002, the Boards of Directors/Trustees continued to receive
regular updates on the performance of each of the Funds and other matters
relevant to the performance of the Advisor and Sub-Advisor.
On February __, 2003, the Board of Trustees of the New Trust considered and
approved the New Advisory Agreements between the Advisor and the Trust, on
behalf of the Funds, and the New Sub-Advisory Agreement between the Advisor,
Sub-Advisor and the Trust, on behalf of the Sub-Advised Funds. The New
Agreements are substantially similar to the Current Agreements in all material
respects, including the term, except as discussed further below. The New
Agreements will each expire on May 21, 2003, unless the continuation of the New
Agreements for a one-year period is approved by the Board on or before May 21,
2003. When considering the approval of the New Agreements, the Board considered
the fact that (a) all but one of the members of the Board had participated in
the review of the Current Agreements in May 2002, and had been receiving regular
updates on the performance of each of the Funds and other matters relevant to
the performance of the Advisor and Sub-Advisor after that date; and (b) the New
Agreements are substantially similar to those of the Current Advisory
Agreements, including the term (which will expire on May 21, 2003), subject to
review and approval by the Board of the continuation of each New Agreement for a
one-year period.
Below is a discussion of the terms and other relevant information concerning the
Current Agreements. Unless otherwise noted, the New Agreements with respect to
the New Funds are identical to the Current Agreements with respect to the Funds.
If not sooner terminated, each Current Advisory Agreement will continue in
effect until May 21, 2003, and for successive one year periods thereafter,
provided that each continuance is specifically approved annually by (a) the vote
of a majority of the Board who are not parties to the Current Advisory Agreement
or interested persons (as defined in the 1940 Act), cast in person at a meeting
called for the purpose of voting on such approval, and (b) either (i) the vote
of a majority of the outstanding voting securities of the affected Fund, or (ii)
the vote of a majority of the Board. Each Current Advisory Agreement is
terminable with respect to a Fund by a vote of the Board, or by the holders of a
majority of the outstanding voting securities of the Fund, at any time without
penalty, upon 60 days' written notice to the Advisor. The Advisor may also
terminate its advisory relationship with respect to a Fund without penalty upon
90 days' written notice to the Trust. Each Current Advisory Agreement terminates
automatically in the event of its assignment (as defined in the 1940 Act).
Under the terms of the Current Advisory Agreements, the Advisor furnishes
continuing investment supervision to the Funds and is responsible for the
management of each Fund's portfolio. The responsibility for making decisions to
buy, sell or hold a particular security rests with the Advisor, subject to
review by the Board. In addition, with respect to the Sub-Advised Funds, the
Advisor furnishes overall investment management, oversees the purchase and sale
of portfolio securities by the Sub-Advisor, maintains books and records with
respect to the Sub-Advised Funds' securities transactions and provides periodic
and special reports to the Board as requested.
Under the terms of the Current Sub-Advisory Agreement, subject to the
supervision of the Advisor, the Sub-Advisor is responsible for the management of
each Sub-Advised Fund's portfolio, including decisions regarding purchases and
sales of portfolio securities by the Sub-Advised Funds. The Sub-Advisor is also
responsible for arranging the execution of portfolio management decisions,
including the selection of brokers to execute trades and the negotiation of
related brokerage commissions.
The Current Agreements each continue in effect for a period of two years from
their effective dates. If not sooner terminated, each Current Agreement
continues in effect for successive one year periods thereafter, provided that
each continuance is specifically approved annually by (1) the vote of a majority
of the Independent Directors/Trustees who are not parties to either a Current
Advisory Agreement or Current Sub-Advisory Agreement, and (2) either (a) the
vote of a majority of the outstanding voting securities of the affected Fund, or
(b) the vote of a majority of the Board. Each Current Agreement is terminable
with respect to a Fund by vote of the Board, or by the holders of a majority of
the outstanding voting securities of the Fund, at any time
20
without penalty, on 60 days' written notice to the Advisor or, as applicable,
the Sub-Advisor. The Advisor may also terminate its Current Advisory Agreement
with respect to a Fund without penalty on 90 days' written notice to St. Clair,
Framlington, the Company or the Trust, as applicable. Similarly, the Sub-Advisor
may terminate its Current Sub-Advisory Agreement with respect to a Sub-Advised
Fund without penalty on 90 days' written notice to Framlington. The Current
Advisory Agreements and the Current Sub-Advisory Agreement each terminate
automatically in the event of its assignment, as that term is defined in the
1940 Act.
The Current Agreements each provide that the Advisor or, as applicable, the
Sub-Advisor shall not be liable for any error of judgment or mistake of law or
for any loss suffered by a Fund in connection with the performance of the
agreement, except a loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith, or gross negligence on the part of the Advisor, or
Sub-Advisor, in the performance of its duties, or from reckless disregard by the
Advisor, or Sub-Advisor, of its duties and obligations thereunder.
Under the Current Advisory Agreements, the Funds pay the Advisor fees for its
services performed pursuant to these agreements. The fees, which are computed
daily and paid monthly, are stated as an annual rates for each Fund, calculated
as a percentage of the particular Fund's average daily net assets. The fees
applicable to each Fund, as well as the aggregate dollar amount paid to the
Advisor in the Funds' most recent fiscal year may be found in Exhibit C. The
rate of advisory fees to be paid to the Advisor under the New Advisory
Agreements with respect to the New Funds will be the same as under the Current
Advisory Agreements for each corresponding Fund, except that the fees will be
computed daily and paid daily, rather than paid monthly as is the case under the
Current Advisory Agreements. The effect of this modification to the New Advisory
Agreements 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
Funds. However, any such decrease is not expected to be of a material amount.
Under the Current Sub-Advisory Agreement, the Advisor pays the Sub-Advisor a fee
for its services performed pursuant to that agreements. The fees, which are
computed daily and paid monthly, are stated as an annual rates for each Fund,
calculated as a percentage of the particular Fund's average daily net assets.
The fees applicable to each Fund, as well as the aggregate dollar amount paid to
the Advisor in the Funds' most recent fiscal year may also be found in Exhibit
C.
Distribution and Service Plans
The Reorganization Agreement also authorizes each Fund, while it is the sole
shareholder of its corresponding New Fund, to approve a proposed new
Distribution and Service Plan for each applicable class of that New Fund that is
substantially identical to the Amended and Restated Distribution and Service
Plan adopted by St. Clair, Framlington, the Company and the Trust for each
applicable class of each Fund ("Current Plan"). Below is a discussion of the
terms and other relevant information concerning the Current Plan. Unless
otherwise noted, the New Plan with respect to the New Funds and their classes is
identical to the Current Plan with respect to the Funds and their classes.
Under the Current Plan, adopted in accordance with Rule 12b-1 with respect to
the each Class of shares, except Class K shares, each of the Funds may use its
assets with respect to those classes of shares to finance activities relating to
distribution of its shares and the provision of certain shareholder services.
Under the Current Plan for Class A shares, Funds Distributor, Inc., the Fund's
distributor ("Distributor"), is paid an annual service fee at the rate of up to
0.25% of the value of average daily net assets of the Class A shares of each
Fund. Under the Current Plan for Class B, Class C, Class II, Preferred (Y-2) and
Investor (Y-3) shares, the Distributor is paid an annual service fee of up to
0.25% of the value of average daily net assets of the Class B, Class C and Class
II shares of each relevant 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, Class
II, Preferred (Y-2) and Investor (Y-3) of each relevant Fund. Under the Current
Plan for Class L shares of Liquidity Plus, the Distributor is paid an annual
21
service fee of 0.25% of the value of average daily net assets of Liquidity Plus
and an annual distribution fee at the rate of 0.10% of the value of average
daily net assets of Liquidity Plus.
Class K shares are sold to customers of banks and other financial institutions
that have entered into agreements with the Funds to provide shareholder
services. Each Fund may pay to such financial institutions an annual service fee
of not more than 0.25%, or 0.15% in the case of the Money Market Funds, of the
value of the average daily net assets of the Class K shares beneficially owned
by the customers of these financial institutions.
Services provided by financial institutions under their Class K shares service
agreements may include: (1) aggregating and processing purchase and redemption
requests for Class K shares from customers and placing net purchase and
redemption orders with the Distributor; (2) providing customers with a service
that invests the assets of their accounts in Class K shares pursuant to specific
or pre-authorized instructions; (3) processing dividend payments on behalf of
customers; (4) providing information periodically to customers showing their
positions in Class K shares; (5) arranging for bank wires; (6) responding to
customer inquiries relating to the services performed by the institutions; (7)
providing sub-accounting with respect to Class K shares beneficially owned by
customers or the information necessary for sub-accounting; (8) if required by
law, forwarding shareholder communications from the Funds (such as proxies,
shareholder reports, annual and semi-annual financial statements and dividend,
distribution and tax notices) to customers; (9) forwarding to customers proxy
statements and proxies containing any proposals regarding the Funds'
arrangements with institutions; and (10) providing such other similar services
as the Funds may reasonably request to the extent the institutions are permitted
to do so under applicable statutes, rules and regulations.
Under their terms for each of the classes of shares, the Current Plan will
continue from year to year, provided such continuance is approved annually by
vote of the Board, including a majority of the Independent Directors/Trustees
who have no direct or indirect financial interest in the operation of the
Current Plan ("Independent Plan Directors"). The Current Plan may not be amended
to increase the amount to be spent for distribution without shareholder
approval. All amendments of the Current Plan also must be approved by the
Directors/Trustees in the manner described above. The Current Plan be terminated
at any time, without penalty, by vote of a majority of the Independent Plan
Directors or by a vote of a majority of the outstanding voting securities, as
that term is defined in the 1940 Act, of the relevant class of the respective
Fund. Pursuant to the Current Plan, the Distributor will provide the Board
quarterly reports of amounts expended under the Plan and the purpose for which
such expenditures were made.
In the case of Class A, Class B, Class C, Class II, Class L, Preferred (Y-2) and
Investor (Y-3) shares of the Funds, the Directors/Trustees have determined that
the Current Plan will benefit St. Clair, Framlington, the Company and the Trust
and their respective 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 through continued cash flow into the Funds; and (4) maintaining a
competitive sales structure in the mutual fund industry.
In the case of Class K shares of the Funds, the Directors/Trustees of St. Clair,
Framlington, the Company and the Trust have determined that there is a
reasonable likelihood that the agreements with banks and other financial
institutions will benefit the Funds and their shareholders by affording the
Funds greater flexibility in connection with the servicing of the accounts of
the beneficial owners of their shares in an efficient manner.
With respect to Class B, Class C, Class II, Preferred (Y-2) and Investor (Y-3)
shares of each Fund, the Distributor expects to pay sales commissions to dealers
authorized to sell a Fund's Class B, Class C and Class II shares at the time of
sale. The Distributor will use its own funds (which may be borrowed) to pay such
commissions pending reimbursement by the Current Plan. In addition, the Advisor
may use its own resources to make payments to the Distributor or dealers
authorized to sell shares of the Funds to support their sales efforts.
The aggregate fees paid to the Distributor pursuant to the Current Plan for the
Class A, Class B, Class C, Class II and Class L shares during the Funds' most
recent fiscal year are set forth in Exhibit C. During the fiscal
22
years ended December 31, 2002, the Funds made no payments to the Distributor
under the Current Plan for the Preferred (Y-2) and Investor (Y-3) because those
share classes had not yet commenced operations.
* * *
Shareholder Approval: Approval of Proposal 2 will require the affirmative vote
of a majority of the outstanding shares of a Fund, with all classes voting
together and not by class. Shareholders are entitled to one vote for each Fund
share. Fractional shares are entitled to proportional voting rights.
THE BOARD, INCLUDING THE INDEPENDENT DIRECTORS/TRUSTEES,
UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF EACH
FUND APPROVE THE REORGANIZATION AGREEMENT.
---------------------------
Proposal 3 -- All Funds
AMENDMENT OR ELIMINATION OF CERTAIN
FUNDAMENTAL INVESTMENT RESTRICTIONS
---------------------------
What are shareholders being asked to approve in Proposal 3?
The 1940 Act requires each Fund to adopt fundamental investment restrictions
with respect to several specific types of activities, including the Fund's
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 each 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 each Fund to designate any other of its policies as
fundamental policies, as the Fund deems necessary or desirable.
In order to modify, eliminate or reclassify a 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 Funds' fundamental investment
restrictions, as described more fully in this Proxy Statement, in an effort to
standardize the Funds' investment restrictions and permit the Funds the maximum
investment flexibility under current law. The current fundamental investment
restrictions of each of the Funds that are proposed to be revised at this
Meeting are set forth in Exhibit D to this Proxy Statement.
Why are shareholders being asked to approve changes to the Funds' investment
restrictions?
St. Clair, Framlington, the Company and the Trust were organized at different
times and under different state laws. As a result, the Funds' current investment
restrictions often vary from one another and, in some cases, are more
prohibitive than the rules and regulations under the 1940 Act and applicable
guidance by the Securities and Exchange Commission ("SEC") and its staff
otherwise require, limiting investment strategies and resulting in operating
inefficiencies and costs.
Many of the Funds' current fundamental investment restrictions can be traced
back to federal or state securities law requirements that were in effect when
the Funds were organized. These restrictions have subsequently been made less
restrictive or are no longer applicable to the Funds. 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 no longer apply. As a result, the current restrictions
23
unnecessarily limit the investment strategies available to the Advisor and
Sub-Advisor in managing each Fund's assets. In addition, the lack of uniform
standards applicable across all of the Funds leads to operating inefficiencies
and increases the costs of compliance monitoring.
Due to these and other factors, the Board recommends to Fund shareholders the
approval of certain changes to the Funds' fundamental investment restrictions.
The Funds' 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) will remain
fundamental investment restrictions of the Funds. However, shareholders are
being asked to approve amendments to these investment restrictions, as set forth
in Proposals 3.A-3.H. Investment restrictions that are currently deemed
fundamental by each Fund, but which the 1940 Act does not require to be
fundamental, are proposed to be eliminated entirely, or reclassified as
non-fundamental. Those fundamental investment restrictions that are proposed to
be eliminated entirely or reclassified as non-fundamental are addressed in
Proposals 3.I - 3.S.
What effect will the proposed changes to the Funds' investment restrictions have
on the Funds?
While Proposal 3 is intended to provide MCM and the Sub-Advisor with greater
flexibility in managing each Fund's portfolio, should shareholders approve the
Proposals, the Funds 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 each Fund's prospectus. Importantly, neither MCM nor the
Sub-Advisor presently intends to alter the way in which it manages any of the
Funds, nor does it believe that the proposed changes will, either individually
or in the aggregate, materially affect the investment risk associated with any
Fund.
In addition, approval of changes to the Funds' fundamental investment
restrictions will not be dependent upon your vote on Proposal 2 regarding the
Reorganization. Therefore, if approved by shareholders, these changes would take
effect regardless of the vote with respect to the Reorganization. Should
shareholders also approve the proposed Reorganization, each New Fund would have
as its fundamental investment restrictions those revised fundamental investment
restrictions approved by the corresponding Fund's shareholders. Should a Fund's
shareholders not approve a proposal to amend, eliminate or reclassify a
particular fundamental investment restriction, the Fund's current fundamental
investment restriction, as set forth in Exhibit D, would continue to apply
unchanged.
Modification of the Funds' Fundamental Investment Restrictions
Proposal 3.A -- Diversification
Applicable Funds -- All Funds
Proposed New Fundamental Investment Restriction: If the proposed amendment is
approved by shareholders, each Fund's sub-classification as a diversified or
non-diversified Fund would read:
Each 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.
Notwithstanding the above, each of the following Funds shall be a
"non-diversified company" as that term is defined in the 1940
Act:
. Future Technology Fund, and
. International Bond Fund.
24
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 Funds' 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 a Fund's designation as a diversified or
non-diversified Fund. Instead, the proposed change would modify the Funds'
fundamental investment restrictions regarding each Fund's 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 each Fund the requirements of the 1940 Act, as they may be amended from
time to time, without the Funds' Board or shareholders taking further action.
With respect to those Funds that are permitted to be non-diversified, the
restriction is simplified by eliminating the particular percentage limitations
applicable to each non-diversified Fund. This would be consistent with the 1940
Act, which only requires that a Fund state whether it is diversified or
non-diversified.
It is not anticipated that this change would have any effect on the operations
of the Funds. The Funds would remain subject to the same limitations on their
investments under the definition of "diversified" and "non-diversified" as
embodied in the Funds' current fundamental policies (except as noted below with
respect to Liquidity Plus), 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 Funds. In addition, each of the Funds, whether
diversified or non-diversified, will remain subject to the relevant
diversification provisions of the Tax Code, which require that at the end of
each quarter of a Fund's taxable 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.
Special note regarding Liquidity Plus: If the shareholders of the Liquidity Plus
approve the amendment to this fundamental investment restriction, it is further
proposed that as a non-fundamental investment restriction, the Fund would adhere
to the 5% limit on investments in a single issuer with respect to 100% (rather
than 75%) of its portfolio as a non-fundamental investment restriction. This
requirement is currently a part of that Fund's fundamental investment
restriction; if changed to a non-fundamental investment restriction, the Board
may change this policy in the future without shareholder approval.
Special note regarding Michigan Tax-Free Bond Fund and Tax-Free
Short-Intermediate Bond Fund: Each of these Funds is currently described as a
non-diversified fund in the applicable fundamental investment restriction,
although each of these Funds has been operating as a diversified Fund. As a
result, it is proposed that these Funds no longer be listed among the
non-diversified Funds. This change will have no effect on the current operations
or investment program of these Funds.
Proposal 3.B -- Borrowing
Applicable Funds -- All Funds
Proposed New Fundamental Investment Restriction: If the proposed amendment is
approved by shareholders, each Fund's fundamental investment restriction
regarding borrowing would read:
Each 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.
25
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 a
Fund to borrow from banks in an amount up to 33-1/3% of the Fund's assets,
including the amount borrowed. A 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 Funds 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 Funds that are
series of St. Clair (except Liquidity Plus), Framlington and the Company
provide, consistent with the limits imposed under the 1940 Act, that each Fund
may borrow in an amount up to 5% of its total assets for temporary emergency
purposes and in an amount up to 33-1/3% of its assets to meet redemptions. In
contrast, the current fundamental investment restrictions on borrowing for Funds
that are series of the Trust, as well as Liquidity Plus, provide that each such
Fund may borrow up to one-third of its assets to meet redemption requests, but
if at any time such Fund's aggregate borrowings exceed 5% of its assets, the
Fund will not be permitted to make additional investments. If the proposed
restriction is adopted, the effect will be to permit the Funds of the Trust and
Liquidity Plus to borrow more than allowed under current investment
restrictions, which may subject these Funds to a greater degree to the risks
associated with borrowing.
To the extent that any borrowing made by a 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 a Fund's net asset
value and may increase the volatility of the Fund. In addition, any 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
Applicable Funds -- All Funds
Proposed New Fundamental Investment Restriction: If the proposed amendment is
approved by shareholders, each Fund's fundamental investment restriction
regarding issuing senior securities would read:
Each 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.
Notwithstanding this limitation, a Fund may, among
other things: (i) enter into commitments to
purchase securities in accordance with a 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; (ii) engage in short sales of
securities to the extent permitted in its
investment program and other restrictions; and
(iii) purchase or sell futures contracts and
related options to the extent permitted by its
investment program and other restrictions.
Discussion of Proposed Modification
Under each Fund's current fundamental investment restriction, each Fund is
prohibited from issuing senior securities. The proposed amended restriction does
not alter this, except as may be permitted from time to time under the 1940 Act,
but it clarifies that certain types of activities the Funds may engage in are
not considered by
26
the Funds, consistent with applicable law, to be issuing "senior securities."
Furthermore, a Fund would not be able to engage in such activities unless its
investment policies and strategies so permit.
Proposal 3.D -- Underwriting Securities
Applicable Funds -- All Funds
Proposed New Fundamental Investment Restriction: If the proposed amendment is
approved by shareholders, each Fund's fundamental investment restriction
regarding underwriting securities would read:
Each 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. Notwithstanding
this limitation, a Fund may, among other things,
act as an underwriter of securities to the extent
that the Fund may be deemed to be an underwriter
within the meaning of the 1933 Act 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 restrictions for each of the Funds.
However, it clarifies and makes uniform the exception from the prohibition for
all Funds.
Proposal 3.E -- Real Estate
Applicable Funds -- All Funds
Proposed New Fundamental Investment Restriction: If the proposed amendment is
approved by shareholders, each Fund's fundamental investment restriction
regarding investments in real estate would read:
Each 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. Notwithstanding this limitation, a
Fund may, among other things: (i) acquire or lease
office space for its own use; (ii) invest in
securities of issuers that invest in real estate
or interests therein; (iii) invest in
mortgage-related securities and other securities
that are secured by real estate or interests
therein; or (iv) 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 each 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 Funds to acquire or lease
office space for their own use, although it is not anticipated that any of the
Funds will do so. The proposed restriction would also permit the Funds 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). Each Fund
would also be able to invest in mortgage-backed securities and securities of
issuers that invest in real estate interests, to the extent consistent with its
other investment policies and strategies.
27
Proposal 3.F -- Making Loans
Applicable Funds -- All Funds
Proposed New Fundamental Investment Restriction: If the proposed amendment is
approved by shareholders, each Fund's fundamental investment restriction
regarding making loans would read:
Each 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, a
Fund may, among other things: (i) enter into
repurchase agreements, (ii) lend portfolio
securities; and (iii) acquire debt securities
without being deemed to be making a loan.
Discussion of Proposed Modification
The proposed change permits the Funds 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 a 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 Funds' 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 its securities in the future, under the proposed
restriction, each 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 Funds that are series of Framlington and of the Company to
increase the amount of their total assets available for lending from 25% to
33-1/3%. In addition, each of the Funds has been subject to a non-fundamental
policy limiting securities lending to no more than 25% of a Fund's assets. In
light of this amendment, the non-fundamental policy would also be changed to
read 33-1/3%. Therefore, each of the Funds could be subject to a greater extent
to the risks associated with securities lending. These risks include the
possibility of loss to a 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
Applicable Funds -- All Funds
Proposed New Fundamental Investment Restriction: If the proposed amendment is
approved by shareholders, each Fund's fundamental investment restriction
regarding concentration of investments would read:
Each 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: (a) this limitation
will not apply to a Fund's investments in: (i)
securities of other investment companies; (ii)
securities issued or guaranteed as to principal
and/or interest by the U.S. Government, its
agencies or instrumentalities; (iii) with respect
to the Money Market Funds only, instruments issued
by domestic branches of U.S. banks (including U.S.
branches of foreign banks subject to regulation
under U.S. laws applicable to domestic banks and,
to the extent that its parent is unconditionally
liable for the obligation, foreign branches of
U.S. banks); or (iv) repurchase agreements
(collateralized by the instruments described in
clause (ii) and, with respect to the Money Market
Funds, clause (iii)); (b) notwithstanding the
28
above, each of the following Funds will
concentrate its investments in the particular
industry as described or identified in its
investment policies:
. Future Technology Fund
. Healthcare Fund
. International Bond Fund
. NetNet Fund
. Power Plus Fund
. Real Estate Equity Investment Fund
(c) 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
(d) 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.
Discussion of Proposed Modification
With the exception of the six Funds named above, each Fund currently has, and
will continue to have, a fundamental investment restriction that prohibits the
Fund from concentrating its investments in any one industry. 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 Funds' 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. It also promotes uniformity
among the Funds' restrictions to the exceptions to this restriction. This
formulation further adds a degree of flexibility not currently allowed to each
of those Funds to adjust its definitions of the industry in which it
concentrates without further shareholder action.
Proposal 3.H -- Commodities
Applicable Funds -- All Funds
Proposed New Fundamental Investment Restriction: If the proposed amendment is
approved by shareholders, each Fund's fundamental investment restriction
regarding investments in commodities would read:
Each 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 Funds 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 Funds' 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
29
instruments, such as forward commitments and swaps, might also be deemed to be
commodity contracts. 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 each Fund to
enter into foreign currency transactions, in accordance with its investment
objective and strategies.
While several of the Funds may already invest in derivatives, the proposed
restriction may expand the types of derivatives in which those Funds may invest
and may allow Funds that could not previously invest in derivatives to invest in
derivatives for the first time, if such investments are otherwise in accordance
with the Fund's investment objective and strategies. To the extent a 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 a 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 any Fund's
investment policies be changed to permit additional derivatives investments.
Without such a change, each Fund will continue to be subject to the limitations
currently in effect in each Fund's prospectus or statement of additional
information. This proposed change does, however, reserve to the
Directors/Trustees the ability to change a Fund's derivatives policy at a later
date without further shareholder action.
Elimination/Reclassification of Certain Fundamental Investment Restrictions of
the Funds
Proposal 3.I -- Pledging, Mortgaging and Hypothecating Fund Assets
Applicable Funds -- All Funds
Proposal
It is proposed that the fundamental investment restriction on pledging,
mortgaging and hypothecating a Fund's assets be eliminated in its entirety.
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 Funds' fundamental investment
restrictions. The Funds' current limits on pledging may conflict with each
Fund's ability to borrow money to meet redemption requests or for temporary
emergency purposes. This conflict arises because banks may require borrowers
such as the Funds 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 Funds' 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
Funds may borrow in these situations. 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.
30
Proposal 3.J -- Illiquid Securities
Applicable Funds -- Liquidity Plus only
Proposal
It is proposed that the fundamental investment restriction regarding investments
in illiquid securities be reclassified as a non-fundamental investment
restriction.
Reasons for the Reclassifying the Investment Restriction as Non-Fundamental
The restrictions on investments in illiquid securities were required to be
deemed fundamental based on the requirements formerly imposed by state "blue
sky" regulators as a condition to registration. However, as a result of NSMIA,
this restriction is no longer required to be a fundamental investment
restriction. It is proposed instead that the restriction be made a
non-fundamental investment restriction. The Liquidity Plus Fund's ability to
invest in illiquid securities would still be subject to applicable federal
regulatory limitations on investments in illiquid securities. For example, the
SEC's current policy is that funds that are not money market funds may not
invest more than 15% of their net assets in illiquid securities. Money market
funds, such as Liquidity Plus, may only invest up to 10% of their net assets in
illiquid securities. By making this policy non-fundamental, the Board would be
able to revise these percentage limitations or make such other changes as may be
allowed by SEC interpretations in the future without obtaining further
shareholder approval.
Proposal 3.K -- Investments for Control
Applicable Funds -- All Funds except Liquidity Plus
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 Funds' investment restrictions.
Proposal 3.L -- Investments in Other Investment Companies
Applicable Funds -- Balanced, Bond, Cash Investment, Index 500, International
Equity, Intermediate Bond, Large-Cap Value, Michigan
Tax-Free Bond, Small Company Growth, Tax-Free Bond, Tax-Free
Money Market, Tax-Free Short-Intermediate Bond, U.S.
Government Income, U.S. Treasury Money Market
Proposal
It is proposed that the fundamental investment restriction on investments in
other investment companies be eliminated in its entirety.
Reasons for the Elimination of the Investment Restriction
The fundamental investment restriction on investments in other investment
companies was based on requirements formerly imposed by state "blue sky"
regulators as a condition to registration. As a result of NSMIA, this
restriction is no longer required to be among a Fund's fundamental investment
restrictions. In
31
addition, the Funds' stated restrictions conform to the 1940 Act restrictions on
investments in other investment companies. These Funds would remain subject to
the limitations on investments in other investment companies imposed on all
mutual funds under the 1940 Act. However, because the proposed language would
track any future changes in the applicable law and interpretative guidance, each
Fund would be able to take advantage of that increased flexibility without
requiring further shareholder action.
Proposal 3.M -- Writing and Selling Options
Applicable Funds -- Balanced, Bond, Cash Investment, Index 500, International
Equity, Intermediate Bond, Large-Cap Value, Michigan
Tax-Free Bond, Small Company Growth, Tax-Free Bond, Tax-Free
Money Market, Tax-Free Short-Intermediate Bond, U.S.
Government Income, U.S. Treasury Money Market
Proposal
It is proposed that the fundamental investment restriction on writing and
selling put and call options and similar financial instruments be eliminated in
its entirety.
Reasons for the Elimination of the Investment Restriction
The fundamental investment restriction on writing and selling put and call
options and similar financial instruments 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 Funds' fundamental investment restrictions. This proposal also provides
consistency with the proposed changes to the fundamental restriction on issuing
senior securities (See Proposal 3.C), which clarifies that the Funds may
purchase or sell futures contracts and related options to the extent permitted
by its investment program and other restrictions.
Proposal 3.N -- Interests in Oil, Gas, Etc.
Applicable Funds -- Balanced, Bond, Cash Investment, Index 500, International
Equity, Intermediate Bond, Large-Cap Value, Michigan
Tax-Free Bond, Small Company Growth, Tax-Free Bond, Tax-Free
Money Market, Tax-Free Short-Intermediate Bond, U.S.
Government Income, U.S. Treasury Money Market
Proposal
It is proposed that the fundamental investment restriction on purchasing oil,
gas, etc. interests be eliminated in its entirety.
Reasons for the Elimination of the Investment Restriction
The fundamental investment restriction on purchasing or selling interests in
oil, gas, etc. 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 Funds'
investment restrictions. Nevertheless, there are no current expectations that
the Funds will engage in such activities.
32
Proposal 3.O -- Margin Activities and Short Selling
Applicable Funds -- All Funds except Government Money Market, Institutional
Money Market, S&P MidCap Index Equity and S&P SmallCap Index
Equity
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 Funds'
fundamental investment restrictions. There are no current expectations that the
Funds will engage in such activities, except that the Funds may still engage in
activities that are exceptions to the Funds' 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.P -- Reverse Repurchase Agreements
Applicable Funds -- Emerging Markets, Government Money Market, Healthcare,
International Growth, Institutional Money Market, S&P MidCap
Index Equity, S&P SmallCap Index Equity
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
a Fund's issuance of senior securities, a Fund may enter into reverse repurchase
agreements so long as doing so otherwise comports with a Fund's 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 a 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 a Fund may decline below the repurchase price.
In addition, a Fund will pay interest on amounts obtained pursuant to a reverse
repurchase agreement.
Proposal 3.Q -- Joint Accounts
Applicable Fund -- Tax-Free Short-Intermediate Bond only
Proposal
It is proposed that the fundamental investment restriction participation in a
joint account be eliminated in its entirety.
33
Reasons for the Elimination of the Investment Restriction
The fundamental investment restriction on the Fund's participation in a joint
account 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. Furthermore, the 1940 Act and rules
thereunder limit this type of transaction to the extent a Fund may participate
in a trading account jointly with an affiliate. Except in those transactions
that either the 1940 Act or the SEC has deemed, with the proper level of Board
oversight, to pose no problems of over-reaching by the affiliate, the Fund would
be required to seek an exemptive order from the SEC before engaging in the type
of activity covered by this restriction. Because the 1940 Act and related
regulations adequately protect the Fund and its shareholders, there is no need
to maintain this restriction.
Proposal 3.R-- Investments in which a Trustee or Officer is Invested
Applicable Fund -- Tax-Free Short-Intermediate Bond only
Proposal
It is proposed that the fundamental investment restriction on owning an issuer's
security where the Fund's officer or trustee also owns a specified portion of
that issuer be eliminated in its entirety.
Reasons for the Elimination of the Investment Restriction
The fundamental investment restriction on owning an issuer's security where the
Fund's officer or trustee also owns a specified portion of that 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 fundamental investment
restrictions. Furthermore, Section 17 of the 1940 Act and the rules thereunder
limit this type of transaction insomuch as it may be deemed a joint transaction
with a person affiliated with the Fund.
Proposal 3.S -- Unseasoned Companies
Applicable Fund -- Tax-Free Short-Intermediate Bond only
Proposal
It is proposed that the fundamental investment restriction on investments in
issues with less than three years of operations companies be eliminated in its
entirety.
Reasons for the Elimination of the Investment Restriction
The fundamental investment restriction on investing in issuers that have been in
business for less than three years 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. To the extent the Fund
invests in these types of issuers, it may be subject to greater risks. Such
companies may not have experience in operating through prolonged periods of
economic difficulty and, as a result, the price of their shares may be more
volatile than the shares of companies that have longer operating histories.
* * *
Shareholder Approval: Approval of each Proposal 3.A-3.S by a Fund will require
the affirmative vote of a majority of the outstanding voting securities of the
Fund, as that term is defined in the 1940 Act, with all classes
34
voting together and not by class. Shareholders are entitled to one vote for each
Fund share. Fractional shares are entitled to proportional voting rights.
THE BOARD, INCLUDING THE INDEPENDENT DIRECTORS/TRUSTEES,
UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
OF EACH FUND APPROVE PROPOSALS 3.A THROUGH 3.S.
---------------------------
Proposal 4 -- Multi-Season Growth and Real Estate Only
RECLASSIFICATION OF EACH FUND'S FUNDAMENTAL
INVESTMENT OBJECTIVE AS NON-FUNDAMENTAL
---------------------------
What are shareholders of Multi-Season Growth and Real Estate being asked to
approve in Proposal 4?
Shareholders are being asked to approve the reclassification of the fundamental
investment objective of each of Multi-Season Growth and Real Estate Fund as a
non-fundamental investment objective of each Fund. Multi-Season Growth Fund's
investment objective is "to provide long-term capital appreciation." Real Estate
Equity Investment Fund's investment objective is "to provide both capital
appreciation and current income." The proposed reclassification will not result
in any changes to these stated objectives.
Why are shareholders being asked to approve reclassification of the Funds'
investment objective?
As more fully explained above in Proposal 3, the 1940 Act permits each Fund to
designate any of its policies as a fundamental policy, as the Fund deems
necessary or desirable, even though the 1940 Act or other applicable law do not
require that policy to be deemed fundamental. A fundamental policy is one that
may only be changed by a vote of a majority of the Fund's outstanding voting
securities.
Multi-Season Growth and Real Estate are currently the only Funds whose
investment objective is deemed fundamental. The proposal to reclassify these
objectives as non-fundamental is consistent with the changes proposed in
Sub-Proposals 3.I-3.S above, which are intended to eliminate or reclassify any
fundamental policy of a Fund that is not required by the 1940 Act to be
fundamental. In order to promote uniformity among all the Funds, the Board
recommends the shareholders of the Multi-Season Growth and Real Estate approve
the reclassification of each Fund's fundamental investment objective.
What effect will the reclassification of the Funds' investment objective have on
the Funds?
While Proposal 4 is intended to promote consistency across all Funds, should
shareholders of Multi-Season Growth and Real Estate approve Proposal 4, these
Funds would continue to be managed subject to the same investment objectives,
strategies, and policies expressed in each Fund's prospectus, as well as the
limitations imposed by the 1940 Act and the rules and interpretive guidance
provided thereunder. Importantly, MCM does not presently intend to alter the way
in which it manages either Fund, nor does it believe that the proposed change
will affect the investment risk associated with either Fund. However, if
reclassified as a non-fundamental investment objective, the Board may change
either Funds' investment objective in the future without further shareholder
approval.
In addition, as with Proposal 3, approval of the reclassification of the Funds'
fundamental investment objective as non-fundamental will not be dependent upon
Proposal 2 regarding the Reorganization. Therefore, if approved by shareholders,
these changes would take effect regardless of the vote with respect to the
35
Reorganization. Should shareholders of Multi-Season Growth and Real Estate also
approve the proposed Reorganization, each corresponding New Fund would have a
non-fundamental investment objective identical to the Fund's current investment
objective. Should Multi-Season Growth or Real Estate Fund's shareholders not
approve this proposal to reclassify the fundamental investment objective, the
Fund's current investment objective would remain a fundamental policy of that
Fund.
* * *
Shareholder Approval: Approval of Proposal 4 by Multi-Season Growth or Real
Estate shareholders, as applicable, will require the affirmative vote of a
majority of the outstanding voting securities of that Fund, as that term is
defined in the 1940 Act, with all classes voting together and not by class.
Shareholders are entitled to one vote for each Fund share. Fractional shares are
entitled to proportional voting rights.
THE BOARD OF THE COMPANY, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF
MULTI-SEASON GROWTH AND REAL ESTATE APPROVE PROPOSAL 4.
---------------------------
GENERAL INFORMATION ABOUT THE FUNDS
---------------------------
MANAGEMENT AND OTHER SERVICE PROVIDERS
Set forth below is a description of the current service providers of the Trust
and the proposed service providers of the New Trust.
Advisor and Sub-Advisor
Munder Capital Management ("MCM"), 480 Pierce Street, Birmingham, Michigan
48009, is the investment advisor of each Fund. MCM is a Delaware general
partnership and its general partners are Munder Group LLC, WAM Holdings, Inc.
("WAM") and WAM Holdings II, Inc. ("WAM II"). WAM and WAM II are indirect
wholly-owned subsidiaries of Comerica Bank, which in turn, is a wholly-owned
subsidiary of Comerica Incorporated, a publicly-held bank holding company.
Comerica Incorporated owns or controls approximately 97% of the partnership
interests in MCM. World Asset Management, a division of MCM, 255 East Brown
Street, Birmingham, Michigan 48009, is responsible for managing Index 500,
International Equity, S&P(R) MidCap Index Equity, and S&P SmallCap Index Equity.
As of December 31, 2002, MCM had approximately $33.2 billion in assets under
management, of which $13.4 billion were invested in equity securities, $10.9
billion were invested in money market or other short-term instruments, $6.7
billion were invested in other fixed income securities and $1.3 billion were
invested in balanced investments.
Framlington Overseas Investment Management Limited ("Sub-Advisor"), 155
Bishopsgate, London, England EC2M 3XJ, serves as sub-adviser for Emerging
Markets, Healthcare and International Growth. The Sub-Advisor is a subsidiary of
Framlington Group Limited, incorporated in England and Wales, which, through its
subsidiaries, provides a wide range of investment services. Framlington Group
Limited is an indirect wholly- owned subsidiary of Framlington Holdings Limited
which is, in turn, owned 49% by MCM and 51% by HSBC plc, a banking and financial
services organization based in the United Kingdom.
Set forth in Exhibit E is certain information with respect to the executive
officers and directors of MCM and the Sub-Advisor.
36
Following the Reorganization, MCM and World Asset Management, as applicable,
will continue to serve the Funds as investment advisor; the Sub-Advisor will
continue to serve as sub-adviser for Emerging Markets, Healthcare and
International Growth.
Distributor, Administrator, Sub-Administrators, Custodian and Transfer Agency
Services
Following the Reorganization, the Funds' distributor and sub-administrator,
Funds Distributor, Inc., 60 State Street, Suite 1300, Boston, Massachusetts,
will continue to serve as the New Funds' distributor and sub-administrator; the
Funds' administrator, MCM, will continue to serve as the New Funds'
administrator; the Funds' sub-administrator and custodian, State Street Bank and
Trust Company, 225 Franklin Street, Boston, Massachusetts, will continue to
serve as the New Funds' sub-administrator and custodian; and the Funds' transfer
agent and dividend disbursing agent, PFPC Inc., 4400 Computer Drive,
Westborough, Massachusetts, will continue to serve as the New Funds' transfer
agent and dividend disbursing agent.
Independent Auditors
The firm of Ernst & Young LLP ("E&Y") has been selected as independent auditors
of the Funds of St. Clair, Framlington, the Company and the Trust. Certain
information concerning the fees and services provided by E&Y to the Funds and to
MCM and its affiliates for the most recent fiscal years of the Funds is provided
below.
E&Y, in accordance with Independence Standards Board Standard No. 1 (ISB No. 1),
has confirmed to the Audit Committee that they are independent auditors with
respect to the Funds.
Audit Fees. On behalf of the Funds of Framlington, the Company and the Trust,
the fee for professional services rendered for the audit of the annual financial
statements of Framlington, the Company and the Trust were $147,630, $333,992 and
$444,360, respectively, for the fiscal year ended June 30, 2002. On behalf of
the Funds of St. Clair, the fee for professional services rendered for the audit
of the annual financial statements of St. Clair were $106,127 for the fiscal
year ended December 31, 2002
Financial Information Systems Design and Implementation. The Funds of
Framlington, the Company and the Trust did not pay E&Y for any other
professional services relating to the Funds' financial information systems for
the fiscal year ended June 30, 2002.
The Funds of St. Clair did not pay E&Y for any other professional services
relating to the Funds' financial information systems for the fiscal year ended
December 31, 2002.
MCM did not pay E&Y for any other professional services relating to the MCM's
financial information systems for the fiscal year ended December 31, 2002.
All Other Fees. The Funds of Framlington, the Company and the Trust did not pay
E&Y for any other non-audit services for the fiscal year ended June 30, 2002.
The Funds of St. Clair did not pay E&Y for any other non-audit services for the
fiscal year ended December 31, 2002.
37
MCM paid $____ for all other non-audit services rendered for the fiscal year
ended December 31, 2002. The Funds' Audit Committee has determined that the
provision of the services by E&Y to MCM is compatible with maintaining E&Y's
independence.
E&Y examines annual financial statements for the Funds of St. Clair,
Framlington, the Company and the Trust and [provides other non-audit and
tax-related services to St. Clair, Framlington, the Company and the Trust ] OR
[does not provide other non-audit and tax-related services to St. Clair,
Framlington, the Company and the Trust.] MCM [and the Audit Committee of each
St. Clair, Framlington, the Company and the Trust ] have considered whether
other non-audit services by E&Y are compatible with maintaining the independence
of E&Y in its audits of St. Clair, Framlington, the Company and the Trust.
Representatives of E&Y are not expected to be present at the Special Meeting,
but have been given the opportunity to make a statement if they so desire and
will be available should any matter arise requiring their presence.
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
St. Clair, Framlington, the Company, and the Trust, do not hold annual
shareholder meetings. Any shareholder proposal intended to be presented at any
future meeting of shareholders must be received by St. Clair, Framlington, the
Company, or 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.
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 Funds, 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 Funds on or about February __, 2003. Only shareholders of record as of the
close of business on the Record Date, February ___, 2003, 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. Unmarked but properly executed proxy cards will
be voted FOR the proposed Reorganization and FOR any other matters deemed
appropriate. A proxy may be revoked at any time on or before the Meeting by
written notice to the Secretary of the Funds at the address on the cover of this
Proxy Statement or by attending and voting at the Meeting. 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
Reorganization Agreement and the Reorganization contemplated thereby.
Quorum
The presence in person or by proxy of the holders of record of one-third of the
outstanding shares of each of the Funds that are series of the Company, and a
majority of the outstanding shares of each of the Funds that are
38
series of the St. Clair, Framlington and the Trust, shall constitute a quorum at
the Meeting with respect to those Funds.
Voting Requirement
Nominees for Director/Trustee receiving a plurality of the votes cast in person
or by proxy at the Meeting at which a quorum exists will be elected to the Board
of Directors/Trustees of St. Clair, Framlington, the Company and the Trust in
Proposal 1. Proposal 2 requires the vote of the majority of the shares of a Fund
outstanding on the Record Date. Proposals 3.A-3.S and Proposal 4 each require
the vote of the majority of a Fund's outstanding voting securities, 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 shares 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.
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 have no effect on Proposal 1, for which the required vote
is a plurality of the votes cast, and will effectively be a vote against
adjournment and against Proposals 2, 3 and 4 for which the required vote is a
percentage of the shares outstanding and entitled to vote on the matter.
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 MCM and
its affiliates or by proxy soliciting firms retained by the Fund The Funds have
retained _________________. ("_______") to provide proxy solicitation services
in connection with the Meeting at an estimated cost of $[______]. In addition,
the Funds 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 by the Funds.
As the meeting date approaches, shareholders of the Funds may receive a call
from a representative of MCM or _________ if the Funds have not yet received
their vote. Authorization to permit MCM or _________ to execute proxies may be
obtained by telephonic or electronically transmitted instructions from Fund
shareholders. Proxies that are obtained telephonically will be recorded in
accordance with the procedures set forth below. Management of the Funds 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 MCM or _________ representative is required
to ask the shareholder for the shareholder's full name, address, social security
number or employer identification number, title (if the person giving the proxy
is authorized to act on behalf of an entity, such as a corporation), the number
of shares owned 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
MCM or _________ by the Funds, the MCM or _________ representative has the
responsibility to explain the process, read the proposals listed on the proxy
card, and ask for the shareholder's instructions on each proposal. The MCM or
_________ 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. MCM or
_________ will record the shareholder's instructions on the card. Within 72
hours, MCM or _________ will
39
send the shareholder a letter or mailgram to confirm the shareholder's vote and
asking the shareholder to call MCM or _________ immediately if the shareholder's
instructions are not correctly reflected in the confirmation.
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. Any such adjournment
will require an affirmative vote by the holders of a majority of the shares
present in person or by proxy and entitled to vote at the Meeting. 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. Generally, votes cast in favor of a proposal
will be voted in favor of adjournment while votes cast against a proposal will
be voted against adjournment. The persons named as proxies will vote upon such
adjournment after consideration of the best interests of all shareholders.
SHARE INFORMATION
The chart below lists the number of shares of the Funds that are outstanding as
of the close of business on the Record Date:
Name of Fund Number of Shares Outstanding
-------------------------------------------------------------------------------------------
St. Clair Funds, Inc.
Munder Institutional Government Money Market Fund
Munder Institutional Money Market Fund
Munder Institutional S&P MidCap Index Equity Fund
Munder Institutional S&P SmallCap Index Equity Fund
Liquidity Plus Money Market Fund
The Munder Framlington Funds Trust
Munder Emerging Markets Fund
Munder Healthcare Fund
Munder International Growth Fund
The Munder Funds, Inc.
Munder Fund of Funds
Munder Future Technology Fund
Munder International Bond Fund
Munder Micro-Cap Equity Fund
Munder MidCap Select Fund
Munder Multi-Season Growth Fund
Munder NetNet Fund
Munder Power Plus Fund
Munder Real Estate Equity Investment Fund
Munder Small-Cap Value Fund
The Munder Funds Trust
Munder Balanced Fund
Munder Bond Fund
Munder Cash Investment Fund
Munder Index 500 Fund
Munder International Equity Fund
Munder Intermediate Bond Fund
Munder Large-Cap Value Fund
Munder Michigan Tax-Free Bond Fund
Munder Small Company Growth Fund
Munder Tax-Free Bond Fund
Munder Tax-Free Money Market Fund
Munder Tax-Free Short-Intermediate Bond Fund
40
Name of Fund Number of Shares Outstanding
-------------------------------------------------------------------------------------------
Munder U.S. Government Income Fund
Munder U.S. Treasury Money Market Fund
FUND SHARES OWNED BY CERTAIN BENEFICIAL OWNERS
For a list of persons or entities that owned beneficially or of record 5% or
more of the outstanding shares of a class of each of the Funds as of February
___, 2003, please refer to Exhibit F.
[The Funds have been advised by Comerica Bank, an affiliate of MCM and Munder
Fund of Funds, for which MCM serves as investment adviser, that each intends to
vote the shares of the [ ] Fund over which it has voting power FOR and
AGAINST each proposal at the Meeting in the same proportions as the total votes
that are cast FOR and AGAINST that proposal by other shareholders of the
respective Fund. Comerica Bank's economic interest in such shares, which are
primarily held for the benefit of its customers, is less than 1%.]
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of the New Trust will be
passed upon by Dechert LLP, 1775 I Street, N.W., Washington, DC 20006.
41
Exhibit A
MUNDER SERIES TRUST
[ACQUIRED RIC*]
FORM OF AGREEMENT AND PLAN OF
REORGANIZATION AND REDOMICILIATION
THIS AGREEMENT AND PLAN OF REORGANIZATION AND REDOMICILIATION ("Agreement") is
made as of this _____ day of _____, 2003, by and between Munder Series Trust, a
Delaware statutory trust ("Trust"), with its principal place of business at 480
Pierce Street, Birmingham, Michigan 48009, on behalf each of its separate
series: [Applicable Series of the Trust] (each an "Acquiring Fund"), and [the
ACQUIRED RIC], a [FORM AND STATE OF ORGANIZATION], with its principal place of
business at 480 Pierce Street, Birmingham, Michigan 48009, on behalf of each of
its separate series: [Applicable Series of the ACQUIRED RIC] (each an "Acquired
Fund").
WHEREAS, each of the Acquired Funds and each of the Acquiring Funds is a series
of an open-end, registered investment company of the management type;
WHEREAS, each Acquiring Fund has been organized to hold the assets of a
corresponding Acquired Fund and each Acquiring Fund has had no assets (other
than the seed capital required by Section 14(a) of the Investment Company Act of
1940, as amended ("1940 Act")) and has carried on no business activities prior
to the date first shown above and will have had no assets (other than the
required seed capital) and will have carried on no business activities prior to
the consummation of this transaction described herein;
WHEREAS, the following chart shows each Acquiring Fund and its classes of shares
of beneficial interest ("Acquiring Fund Shares") and the corresponding Acquired
Fund with its classes of shares of beneficial interest ($0.001 par value per
share) ("Acquired Fund Shares"):
-----------------------------------------------------------------------------------------------------------
Acquiring Fund, Corresponding Acquired Fund
each a series of Munder Series Trust each a series of [the ACQUIRED RIC]
(a Delaware statutory trust) [FORM AND STATE OF ORGANIZATION]
-----------------------------------------------------------------------------------------------------------
[Applicable Series and Classes of the Trust] [Applicable Series and Classes of the ACQUIRED RIC]
-----------------------------------------------------------------------------------------------------------
WHEREAS, throughout this Agreement, the term Acquiring Fund Shares should be
read to include each class of shares of the applicable Acquiring Fund and each
reference to Acquiring Fund Shares in connection with an 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, each reorganization, redomiciliation and liquidation will consist of
the transfer of all of the assets of an Acquired Fund to the corresponding
Acquiring Fund in exchange solely for the Acquiring Fund Shares, the assumption
by the Acquiring Fund of all liabilities of the Acquired Fund, and 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, each Acquired Fund owns securities that generally are assets of the
character in which the corresponding Acquiring Fund is permitted to invest;
WHEREAS, the Trustees of the Trust have determined, with respect to each
Acquiring Fund, that the exchange of all of the assets of the corresponding
Acquired Fund for Acquiring Fund Shares and the assumption of all liabilities of
the Acquired
- ---------------------
* For the purposes of this Exhibit A, the St. Clair, Framlington, the Company
and the Trust are each referred to as an "ACQUIRED RIC."
A-1
Fund by the Acquiring Fund is in the best interests of the Acquiring Fund and
its shareholders and that the interests of the existing shareholders of the
Acquiring Fund would not be diluted as a result of this transaction; and
WHEREAS, the [Directors/Trustees] of [the ACQUIRED RIC] have determined, with
respect to each Acquired Fund, that the exchange of all of the assets of the
Acquired Fund for Acquiring Fund Shares and the assumption of all liabilities of
the Acquired Fund by the corresponding 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 this
transaction;
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 EACH ACQUIRED FUND TO THE CORRESPONDING 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 each Acquired Fund's
shareholders and the other terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, each Acquired Fund
agrees to transfer all of its assets, as set forth in paragraph 1.2, to the
corresponding Acquiring Fund, and the Acquiring Fund agrees in exchange
therefor: (i) 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; and (ii) 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 assets of each Acquired Fund to be acquired by the corresponding
Acquiring Fund shall consist of all assets and property, including, without
limitation, all cash, securities, commodities and futures interests and
dividends or interests receivable that are owned by the Acquired Fund and any
deferred or prepaid expenses shown as an asset on the books of the Acquired Fund
on the Valuation Date as defined in paragraph 2.1 (collectively, with respect to
each Acquired Fund separately, "Assets"). Each Acquiring Fund shall assume all
of the liabilities of the corresponding Acquired Fund, whether accrued or
contingent, known or unknown, existing at the Valuation Date (collectively, with
respect to each Acquired Fund separately, "Liabilities").
1.3. Immediately upon delivery to the Acquired Fund of the Acquiring Fund
Shares, each Acquired Fund, as the then sole shareholder of the corresponding
Acquiring Fund, shall (i) elect trustees of the Trust, (ii) approve the advisory
and sub-advisory agreements previously approved by the Acquired Fund
Shareholders (as defined in paragraph 1.4), at the meeting described in
paragraph 5.2, (iii) approve the distribution and service plan pursuant to Rule
12b-1 under the 1940 Act, with respect to each class of shares of the
corresponding Acquiring Fund, previously approved by the Acquired Fund
Shareholders (as defined in paragraph 1.4), at the meeting described in
paragraph 5.2, and (iv) ratify the selection of Ernst & Young LLP as the
independent accountants of the corresponding Acquiring Fund.
1.4. Immediately following the action contemplated by paragraph 1.3, each
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 the Acquired Fund
pursuant to paragraph 1.1 and (b) completely liquidate. 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 that class owned by Acquired Fund
Shareholders on the Closing Date. All issued and outstanding Acquired Fund
Shares will simultaneously be canceled on the books of the Acquired Fund. An
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
each Acquiring Fund's Transfer Agent, as defined in paragraph 3.3.
1.6. Any reporting responsibility of an Acquired Fund, including, but not
limited to, the responsibility for filing regulatory reports, tax returns, or
other documents with the Securities and Exchange Commission ("Commission"),
A-2
any state securities commission, and any Federal, state or local tax authorities
or any other relevant regulatory authority, is and shall remain the
responsibility of the Acquired Fund.
2. VALUATION
2.1. The value of the Assets shall be the value of such Assets as of the
close of business of the New York Stock Exchange and after the declaration of
any dividends on the Closing Date (such time and date being hereinafter called
the "Valuation Date"), computed using the valuation procedures set forth in
then-current prospectus and statement of additional information with respect to
each Acquired Fund and valuation procedures established by [ACQUIRED RIC's]
Board of [Directors/Trustees].
2.2. All computations of value shall be made by State Street Bank and
Trust Company, in its capacity as administrator for each Acquired Fund, and
shall be subject to confirmation by each Acquiring Fund's record keeping agent
and by each Acquiring Fund's independent accountants.
3. CLOSING AND CLOSING DATE
3.1. The Closing Date shall be April 25, 2003, 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. The Closing shall be held at the offices of [the
ACQUIRED RIC] or at such other time and/or place as the parties may agree.
3.2. [The ACQUIRED RIC] shall direct State Street Bank and Trust Company,
as custodian for each Acquired Fund ("Custodian"), to deliver to the Trust, at
the Closing, a certificate of an authorized officer stating that (i) the Assets
of each Acquired Fund have been delivered in proper form to the corresponding
Acquiring Fund within two business days prior to or on the Closing Date, and
(ii) all necessary taxes in connection with the delivery of the Assets of each
Acquired Fund, including all applicable Federal and state stock transfer stamps,
if any, have been paid or provision for payment has been made. Each Acquired
Fund's portfolio securities represented by a certificate or other written
instrument shall be presented by the Custodian to those persons at the Custodian
who have primary responsibility for the safekeeping of the assets of the
corresponding Acquiring Fund, as the Custodian also serves as the custodian for
each Acquiring Fund. Such presentation shall be made for examination no later
than five business days preceding the Closing Date, and such certificates and
other written instruments shall be transferred and delivered by each Acquired
Fund as of the Closing Date for the account of the corresponding Acquiring Fund
duly endorsed in proper form for transfer in such condition as to constitute
good delivery thereof. The Custodian shall deliver to those persons at the
Custodian who have primary responsibility for the safekeeping of the assets of
each Acquiring Fund as of the Closing Date by book entry, in accordance with the
customary practices of the Custodian and of each securities depository, as
defined in Rule 17f-4 under the 1940 Act, in which the corresponding Acquired
Fund's Assets are deposited, the corresponding Acquired Fund's Assets deposited
with such depositories. The cash to be transferred by each Acquired Fund shall
be delivered by wire transfer of Federal funds on the Closing Date.
3.3. [the ACQUIRED RIC] shall direct PFPC, Inc., in its capacity as
transfer agent for each Acquired Fund ("Transfer Agent"), to deliver to the
Trust at the Closing a certificate of an authorized officer stating that its
records contain the name and address of each Acquired Fund Shareholder and the
number and percentage ownership of each outstanding class of shares owned by
each such shareholder immediately prior to the Closing. Each Acquiring Fund
shall deliver to the Secretary of the corresponding 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 Acquired Fund shall deliver to
the corresponding Acquiring Fund such bills of sale, checks, assignments, share
certificates, if any, receipts or other documents as the corresponding Acquiring
Fund 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 an
Acquiring Fund or the corresponding 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 Board of Trustees of the Trust or the Board
of [Directors/Trustees] of [the ACQUIRED RIC], accurate appraisal of the value
of the net assets of the Acquired Fund is
A-3
impracticable, the Closing Date shall be postponed until the first business day
after the day when trading shall have been fully resumed and reporting shall
have been restored.
4. REPRESENTATIONS AND WARRANTIES
4.1. Except as has been fully disclosed to the applicable corresponding
Acquiring Fund prior to the date of this Agreement in a written instrument
executed by an officer of [the ACQUIRED RIC], [the ACQUIRED RIC] on behalf of
each Acquired Fund, represents and warrants to the Trust as follows:
(a) The Acquired Fund is duly organized as a series of [the
ACQUIRED RIC], which is a business trust duly organized, validly existing and in
good standing under the laws of [State], with power under [the ACQUIRED RIC]'s
[Articles of Incorporation/Declaration of Trust], as amended from time to time,
to own all of its Assets and to carry on its business as it is now being
conducted;
(b) [the ACQUIRED RIC] is a registered investment company
classified as a management company of the open-end type, and its registration
with the Commission as an investment company under the 1940 Act, and the
registration of 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 at all times 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, [the ACQUIRED RIC], 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, transfer and deliver
such Assets hereunder free of any liens or other encumbrances, and upon delivery
and payment for such Assets, the Trust, on behalf of the Acquiring Fund, will
acquire good and marketable title thereto, subject to no restrictions on the
full transfer thereof, including such restrictions as might arise under the 1933
Act;
(f) The Acquired Fund is not engaged currently, and the execution,
delivery and performance of this Agreement will not result, in (i) a material
violation of [the ACQUIRED RIC]'s [Articles of Incorporation/Declaration of
Trust] or By-Laws or of any agreement, indenture, instrument, contract, lease or
other undertaking to which [the ACQUIRED RIC], on behalf of the Acquired Fund,
is a party or by which it is bound, or (ii) the acceleration of any obligation,
or the imposition of any penalty, under any agreement, indenture, instrument,
contract, lease, judgment or decree to which [the ACQUIRED RIC], 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 A and certain
investment contracts, including options, futures, and forward contracts) will
terminate without liability to the Acquired Fund on or prior to the Closing
Date. Each contract listed on Schedule A is a valid, binding and enforceable
obligation of each party thereto and the assignment by each Acquired Fund to the
corresponding Acquiring Fund of each such contract will not result in the
termination of such contract, any breach or default thereunder 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 its
knowledge, threatened against [the ACQUIRED RIC], 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 its
business. [The ACQUIRED RIC], on behalf of the Acquired Fund, knows of no facts
which might form the basis for the institution of such proceedings and 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 its business
or its ability to consummate the transactions herein contemplated;
A-4
(i) The Statement of Assets and Liabilities, Statements of
Operations and Changes in Net Assets, and Schedule of Investments of the
Acquired Fund at [fiscal year end] have been audited by Ernst & Young LLP,
independent accountants, 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 date in accordance with GAAP, and
there are no known contingent 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 not disclosed therein;
(j) The Statement of Assets and Liabilities, Statements of
Operations and Changes in Net Assets, and Schedule of Investments of the
Acquired Fund at [end of semi-annual period] (unaudited) are, or will be when
sent to Acquired Fund Shareholders in the regular course, in accordance with
GAAP consistently applied, and such statements (copies of which have been, or
will be, furnished to the Acquiring Fund) present or will present fairly, in all
material respects, the financial condition of the Acquired Fund as of such date
in accordance with GAAP, including all known contingent 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;
(k) Since December 31, 2002, 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 maturing more than one year
from the date such indebtedness was incurred. For the purposes of this
subparagraph (k), 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 Acquired Fund liabilities, or the redemption of Acquired Fund
Shares by shareholders of the Acquired Fund shall not constitute a material
adverse change;
(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
Federal and other taxes shown as due or required to be shown as due on said
returns and reports 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 is currently under audit and no assessment has been asserted with respect
to such returns;
(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 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;
(n) All issued and outstanding Acquired Fund Shares are, and on
the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable by [the ACQUIRED RIC] and 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 the 1933 Act and other
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 has
been duly authorized by all necessary action, if any, on the part of the
[Directors/Trustees] of [the ACQUIRED RIC], on behalf of the Acquired Fund, and,
subject to the approval of the Acquired Fund Shareholders, this Agreement
constitutes a valid and binding obligation of [the ACQUIRED RIC], 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
A-5
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; and
(q) 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 (i) not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which such statements were made, not materially misleading, provided, however,
that the representations and warranties of this subparagraph (q) 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 (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 the applicable corresponding
Acquired Fund prior to the date of this Agreement in a written instrument
executed by an officer of the Trust, the Trust, on behalf of each Acquiring
Fund, represents and warrants to [the ACQUIRED RIC] as follows:
(a) The Acquiring Fund is duly organized as a series of the Trust,
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 the
Trust's Declaration of Trust to own all of its properties and assets and to
carry on its business as contemplated by this Agreement;
(b) The Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act and the registration of
the 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 will not result, in (i) a
material violation of the Trust's Declaration of Trust or By-Laws or of any
agreement, indenture, instrument, contract, lease or other undertaking to which
the Trust, on behalf of the Acquiring Fund, is a party or by which it is bound,
or (ii) the acceleration of any obligation, or the imposition of any penalty,
under any agreement, indenture, instrument, contract, lease, judgment or decree
to which the Trust, on behalf of the Acquiring Fund, is a party or by which it
is bound;
(f) No litigation or administrative proceeding or investigation of
or before any court or governmental body is presently pending or, to its
knowledge, threatened against the Trust, 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 its business. The Trust, on behalf of the Acquiring Fund,
knows of no facts which might form the basis for the institution of such
proceedings and 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 its ability to consummate the
transactions herein contemplated;
(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 the Trust 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
the 1933 Act and other securities laws. The Acquiring Fund does not have
outstanding any options,
A-6
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 has
been duly authorized by all necessary action, if any, on the part of the
Trustees of the Trust, on behalf of the Acquiring Fund, and this Agreement
constitutes a valid and binding obligation 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 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; and
(k) Prior to the Closing Date, the Acquiring Fund will have
carried on no business activity and will have had no assets or liabilities other
than the seed capital required by Section 14(a) of the 1940 Act.
5. COVENANTS
5.1. Each Acquired Fund will operate its business in the ordinary course
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. [the ACQUIRED RIC] will call a meeting of the shareholders of each
Acquired Fund to consider and act upon this Agreement and to take all other
action necessary to obtain approval of the transactions contemplated herein.
[the ACQUIRED RIC] will, on behalf of each 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
rules and regulations thereunder.
5.3. Each Acquired Fund covenants that the Acquiring Fund Shares to be
issued 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. Each Acquired Fund will assist the corresponding 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, each Acquiring Fund and
each corresponding 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. Each Acquiring Fund will provide the corresponding 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.
5.7. Each Acquiring Fund and each corresponding Acquired Fund shall 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. [The ACQUIRED RIC], on behalf of each Acquired Fund, covenants that
it will, from time to time, as and when reasonably requested by the
corresponding 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 the Trust, on behalf of the Acquiring Fund, may
reasonably deem necessary or desirable in order to vest in and confirm (a) [the
ACQUIRED RIC]'s title to and possession of the Acquiring Fund Shares to be
delivered hereunder and (b) the Trust's, title to and possession of all the
Assets and to otherwise to carry out the intent and purpose of this Agreement.
5.9. Each 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.
A-7
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH ACQUIRED FUND
The obligations of [the ACQUIRED RIC], on behalf of an Acquired Fund, to
consummate the transactions provided for herein shall be subject, at [the
ACQUIRED RIC]'s election, to the performance by the Trust, on behalf of the
corresponding 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:
6.1. All representations and warranties of the Trust, 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. The Trust, on behalf of the Acquiring Fund, shall have delivered to
the Acquired Fund a certificate executed in the name of the Acquiring Fund by
the Trust's President or Vice President and its Treasurer or Assistant
Treasurer, in a form reasonably satisfactory to [the ACQUIRED RIC] and dated as
of the Closing Date, to the effect that the representations and warranties of
the Trust, on behalf of the Acquiring Fund, made in this Agreement are true and
correct at and as of the Closing Date, except as they may be affected by the
transactions contemplated by this Agreement, and as to such other matters as
[the ACQUIRED RIC] shall reasonably request;
6.3. The Trust, 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 the Trust, on behalf of the
Acquiring Fund, on or before the Closing Date; and
6.4. The Acquired Fund and 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.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH ACQUIRING FUND
The obligations of the Trust, on behalf of an Acquiring Fund, to complete
the transactions provided for herein shall be subject, at the Trust's election,
to the performance by [the ACQUIRED RIC], on behalf of the corresponding
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:
7.1. All representations and warranties of [the ACQUIRED RIC], 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. [The ACQUIRED RIC] 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 [the ACQUIRED RIC];
7.3. [The ACQUIRED RIC], on behalf of the Acquired Fund, shall have
delivered to the Acquiring Fund a certificate executed in the name of the
Acquired Fund by [the ACQUIRED RIC]'s President or Vice President and its
Treasurer or Assistant Treasurer, in a form reasonably satisfactory to the Trust
and dated as of the Closing Date, to the effect that the representations and
warranties of [the ACQUIRED RIC], on behalf of the Acquired Fund, made in this
Agreement are true and correct at and as of the Closing Date, except as they may
be affected by the transactions contemplated by this Agreement, and as to such
other matters as the Trust shall reasonably request;
7.4. [The ACQUIRED RIC], 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 [the ACQUIRED RIC], on
behalf of the Acquired Fund, on or before the Closing Date; and
7.5. The Acquired Fund and 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.
A-8
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH ACQUIRING FUND AND EACH
CORRESPONDING ACQUIRED FUND
If any of the conditions set forth below have not been satisfied on or before
the Closing Date with respect to [the ACQUIRED RIC], on behalf of an Acquired
Fund, or the Trust, on behalf of the corresponding 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. The 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 ACQUIRED RIC]'s
[Articles of Incorporation/Declaration of Trust], By-Laws, applicable [State]
law and the 1940 Act, and certified copies of the resolutions evidencing such
approval shall have been delivered to the Acquiring Fund. Notwithstanding
anything herein to the contrary, neither the Trust nor [the ACQUIRED RIC] may
waive the conditions set forth in this paragraph 8.1;
8.2. On the Closing Date no action, suit or other proceeding shall be
pending or, to the Trust's or to [the ACQUIRED RIC]'s knowledge, threatened
before any court or governmental agency in which it is sought to restrain or
prohibit, or obtain damages or other relief in connection with, this Agreement
or the transactions contemplated herein;
8.3. All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
the Trust or [the ACQUIRED RIC] to permit consummation, in all material
respects, of the transactions contemplated 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;
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, threatened or contemplated under the 1933 Act; and
8.5. The parties shall have received the opinion of counsel to [the
ACQUIRED RIC] 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 [the ACQUIRED
RIC] of representations it shall request of the Trust and [the ACQUIRED RIC].
Notwithstanding anything herein to the contrary, neither the Trust nor [the
ACQUIRED RIC] may waive the condition set forth in this paragraph 8.5.
9. INDEMNIFICATION
9.1. The Trust, out of each Acquiring Fund's assets and property, agrees
to indemnify and hold harmless the corresponding Acquired Fund 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 any breach by the Acquiring Fund of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
9.2 [The ACQUIRED RIC], out of each Acquired Fund's assets and property,
agrees to indemnify and hold harmless the corresponding Acquiring Fund 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 any breach by the Acquired Fund of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
10. BROKERAGE FEES AND EXPENSES
10.1. The Trust, on behalf of each Acquiring Fund, and [the ACQUIRED RIC],
on behalf of each corresponding 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.
A-9
10.2. The expenses relating to the proposed Reorganization will be borne
solely by the Acquired Funds pro rata on the basis of relative net assets. 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, securities registration 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.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1. The Trust and [the ACQUIRED RIC] agree that neither party has made
any representation, warranty or covenant, on behalf of either an Acquiring Fund
or an Acquired Fund, respectively, not set forth herein and that this Agreement
constitutes the entire agreement between the parties.
11.2. The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing and the obligations of each of the
Acquired Fund and Acquiring Fund in Section 9 shall survive 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 the Trust
or the Board of [Directors/Trustees] of [the ACQUIRED RIC], 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 any
Acquiring Fund or any 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 [the ACQUIRED
RIC] and the Trust; provided, however, that following the meeting of the
shareholders of each Acquired Fund called by [the ACQUIRED RIC] 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 the Trust and [the ACQUIRED RIC], 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.
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. The warranties, representations, and agreements contained in this
Agreement made by [the ACQUIRED RIC], on behalf of each of the Acquired Funds,
are made on a several (and not joint, or joint and several) basis. Similarly,
the warranties, representations, and agreements contained in this Agreement made
by the Trust, on behalf of each of the Acquiring Funds, are made on a several
(and not joint, or joint and several) basis. In the event that shareholders of a
particular Acquired Fund do not approve the Reorganization with respect to that
Acquired Fund and the corresponding Acquiring Fund, the Agreement will continue
to remain in full force and effect with respect to the reorganizations,
redomiciliations and liquidations for the other Acquired Funds and their
corresponding Acquiring Funds referenced in this Agreement. The benefits and
obligations attendant to the Reorganization are severable with respect to each
Acquired Fund
A-10
and its corresponding Acquiring Fund and the other Acquired Funds and their
corresponding Acquiring Funds participating in the Reorganization. Shareholders
of the Acquired Funds have no rights under this Agreement with respect to the
reorganization, redomiciliation, and liquidation of any other Acquired Fund in
which they do not hold shares.
15.4. 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 party. 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.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by its President or Vice President.
MUNDER SERIES TRUST, on behalf of its series: [the ACQUIRED RIC] on behalf
of its series:
[Applicable Series of the Trust] [Applicable Series of
ACQUIRED RIC]
By: _______________________________ By: ________________________
Name: Name:
Title: Title:
A-11
Schedule A
Acquired Fund Contracts to be Assigned to Acquiring Funds
[to be inserted]
A-12
Exhibit B
Current Executive Officers of St. Clair, Framlington, the Company and the Trust
Position(s) with
St. Clair,
Framlington, the Term of Office and
Company and the Length of Time
Name, Address and Age Trust Served Principal Occupation(s) During Past 5 Years
- -------------------------------------------------------------------------------------------------------------------------------
James C. Robinson President through 2/04 Chairman and Chief Executive Officer of Munder Capital
480 Pierce Street St. Clair since 5/00 Management (investment advisor) (January 2000 to present);
Suite 300 Framlington since Chief Investment Officer/Fixed Income of Munder Capital
Birmingham, MI 48009 5/00 Management (January 1990 to January 2000); Vice President
Age 41 Company since 5/00 of @Vantage and Munder Series Trust.
Trust since 5/00
Stephen J. Shenkenberg Vice President and through 2/04 General Counsel to Munder Capital Management (investment
480 Pierce Street Secretary St. Clair since 8/00 advisor) (July 2000 to present); Deputy General Counsel of
Suite 300 Framlington since Strong Capital Management, Inc. (investment advisor)
Birmingham, MI 48009 8/00 (November 1996 to July 2000); Vice President of @Vantage
Age 44 Company since 8/00 and Munder Series Trust.
Trust since 8/00
Elyse G. Essick Vice President through 2/04 Chief Marketing Officer of Munder Capital Management
480 Pierce Street St. Clair since 4/95 (investment advisor) (September 1988 to present); Vice
Suite 300 Framlington since President of @Vantage and Munder Series Trust.
Birmingham, MI 48009 11/96
Age 44 Company since 4/95
Trust since 4/95
Peter K. Hoglund Vice President through 2/04 Chief Administration Officer of Munder Capital Management
480 Pierce Street St. Clair since 2/01 (investment advisor) (May 2000 to present); Associate of
Suite 300 Framlington since Heartland Industrial Partners (a private equity group)
Birmingham, MI 48009 2/01 (October 1999 to May 2000); Sr. Portfolio Manager of
Age 36 Company since 2/01 Munder Capital Management (January 1995 to October 1999);
Trust since 2/01 Vice President of @Vantage and Munder Series Trust.
Cherie Ugorowski Treasurer through 2/04 Controller of Munder Capital Management (investment
480 Pierce Street St. Clair since 8/01 advisor) (June 2001 to present); Corporate Accounting
Suite 300 Framlington since Manager, DaimlerChrysler Corporation (automotive
Birmingham, MI 48009 8/01 manufacturer) (September 1999 to June 2001); Manager,
Age 34 Company since 8/01 Audit and Business Advisory Practice, Arthur Andersen LLP
Trust since 8/01 (September 1990 to September 1999); Treasurer of @Vantage
and Munder Series Trust.
B-1
Exhibit C
Fees Payable to the Advisor and Sub-Advisor under the
Current Advisory Agreements and Current Sub-Advisory Agreement
and to the Distributor under the Current Plans
The following table provides the annual fee rate of each Fund under the relevant
Current Advisory Agreements, as well as the amounts paid by each Fund to the
Advisor under that agreement during the Fund's most recent fiscal year.
Advisory Fees Received Fiscal
year ended June 30, 2002
(December 31, 2002 in the case
of the St. Clair Funds) Applicable Fee Rate
- --------------------------------------------------------------------------------------------------------------------------
St. Clair Funds, Inc.
Institutional S&P MidCap Index Equity $ 68,624 0.15% of average daily net assets
Fund
Institutional S&P SmallCap Index Equity $ 119,935 0.15% of average daily net assets
Fund
Institutional Money Market Fund $ 1,779,937 0.20% of average daily net assets
Institutional Government Money Market $ 50,898 0.20% of average daily net assets
Fund
Liquidity Plus Money Market Fund $ 525,115 0.35% of average daily net assets
The Munder Framlington Funds Trust
Emerging Markets Fund $ 397,052 1.25% of average daily net assets
Healthcare Fund $ 3,563,750 1.00% of the first $250 million of average
daily net assets and 0.75% of average daily
net assets in excess of $250 million
International Growth Fund $ 474,634 1.00% of the first $250 million of average
daily net assets and 0.75% of average daily
net assets in excess of $250 million
The Munder Funds, Inc.
Future Technology Fund $ 5,263,983 1.00% of the first $4 billion of average
daily net assets; 0.95% of average daily net
assets from $4 billion to $5 billion; and
0.90% of average daily net assets in excess
of $5 billion
International Bond Fund $ 170,262 0.50% of average daily net assets
Micro-Cap Equity Fund $ 1,211,248 1.00% of average daily net assets
MidCap Select Fund $ 236,107 0.75% of average daily net assets
Multi-Season Growth Fund $ 2,727,808 0.75% of average daily net assets
NetNet Fund $13,357,216 1.00% of the first $4 billion of average
daily net assets; 0.95% of average daily
net assets from $4 billion to $5 billion;
and 0.90% of average daily net assets in
excess of $5 billion
Power Plus Fund $ 995,733 0.75% of average daily net assets
Real Estate Equity Investment Fund $ 422,244 0.74% of average daily net assets
Small-Cap Value Fund $ 682,408 0.75% of average daily net assets
The Munder Funds Trust
Balanced Fund $ 775,066 0.65% of average daily net assets
Bond Fund $ 781,032 0.50% of average daily net assets
Cash Investment Fund $ 3,986,802 0.35% of average daily net assets
Index 500 Fund $ 1,175,053 0.20% of the first $250 million of average
daily net assets; 0.12% of the next $250 million
of average daily net assets and 0.07% of average
daily net assets in excess of $500 million
Intermediate Bond Fund $ 1,904,392 0.50% of average daily net assets
C-1
Advisory Fees Received Fiscal
year ended June 30, 2002
(December 31, 2002 in the case
of the St. Clair Funds) Applicable Fee Rate
- -------------------------------------------------------------------------------------------------------------------
International Equity Fund $ 895,179 0.75% of average daily net assets
Large-Cap Value Fund $1,264,588 0.75% of average daily net assets
Michigan Tax-Free Bond Fund $ 245,639 0.50% of average daily net assets
Small Company Growth Fund $ 598,665 0.75% of average daily net assets
Tax-Free Bond Fund $ 603,752 0.50% of average daily net assets
Tax-Free Money Market Fund $1,114,133 0.35% of average daily net assets
Tax-Free Short-Intermediate Bond Fund $ 866,458 0.50% of average daily net assets
U.S. Government Income Fund $1,113,045 0.50% of average daily net assets
U.S. Treasury Money Market Fund $ 341,708 0.35% of average daily net assets
For the fiscal year ended June 30, 2002, the Advisor reimbursed expenses for the
Healthcare Fund in the amount of $309,938 and the Institutional Growth Fund in
the amount of $81,963. For the fiscal year ended December 31, 2002, the Advisor
waived fees in the amount of $41,974 for the International S&P MidCap Index
Equity Fund, $85,430 for the Institutional S&P SmallCap Index Equity Fund,
$711,974 for the Institutional Money Market Fund and $20,359 for the
Institutional Government Money Market Fund.
The Advisor pays to the Sub-Advisor with respect to each Sub-Advised Fund an
amount equal to 40% of the net revenues earned by the Adviser with respect to
that Fund. For purposes of this calculation, "net revenues" with respect to a
Sub-Advised Fund is equal to the amount of advisory fees charged by the Advisor
for that Fund, above, less the sum of (i) any advisory fee waivers and expense
reimbursements made by the Adviser for that Fund, and (ii) any payments made by
the Advisor to broker/dealers, wirehouses, or other third party intermediaries
based on sales of the Fund made by, and/or assets of the Fund held through, such
entities.
The following table provides the amounts paid by each Fund to the Distributor
under the Current Plan during the Fund's most recent fiscal year.
Class A Shares Class B Shares Class C Shares
Fiscal year ended Fiscal year ended Fiscal year ended
June 30, 2002 June 30, 2002 June 30, 2002
Contingent Contingent Contingent
Distribution Distribution Deferred Deferred Deferred
Service and Service and Service Sales Sales Sales
Fees Fees Fees Charge Charge Charges
- --------------------------------------------------------------------------------------------------------------------
Balanced Fund $ 60,204 $ 258 $ 484,620 $ 225,076 $ 484,620 $ 225,076
Bond Fund $ 17,150 $ 4,844 $ 75,680 $ 55,735 $ 75,680 $ 55,735
Cash Investment Fund $ 312,880 $ 2,231 -- -- -- --
Emerging Markets Fund $ 5,040 $ 1,520 $ 14,492 $ 10,566 $ 14,492 $ 10,566
Future Technology Fund $ 445,246 $ 2,067 $ 2,164,755 $ 1,573,613 $ 2,164,755 $ 1,573,613
Healthcare Fund $ 307,629 $ 561 $ 1,693,542 $ 1,219,975 $ 1,693,542 $ 1,219,975
Index 500 Fund $ 954,213 $ 12,302 $ 3,319,282 $ 749,520 $ 3,319,282 $ 749,520
Intermediate Bond Fund $ 24,922 $ 11,199 $ 97,468 $ 55,734 $ 97,468 $ 55,734
International Bond Fund $ 3,469 $ 9,405 $ 1,637 $ 54 $ 1,637 $ 54
International Equity Fund $ 16,152 $ 30,181 $ 16,804 $ 16,882 $ 16,804 $ 16,882
International Growth Fund $ 3,180 -- $ 7,732 $ 7,688 $ 7,732 $ 7,688
Large-Cap Value Fund $ 16,673 $ 4 $ 117,614 $ 73,204 $ 117,614 $ 73,204
Michigan Tax-Free Bond Fund $ 5,054 $ 46 $ 10,366 $ 442 $ 10,366 $ 442
Micro-Cap Equity Fund $ 107,480 $ 3,981 $ 399,631 $ 163,770 $ 399,631 $ 163,770
MidCap Select Fund $ 6,014 $ 78 $ 18,982 $ 16,926 $ 18,982 $ 16,926
Multi-Season Growth Fund $ 101,962 $ 1 $ 189,732 $ 102,188 $ 189,732 $ 102,188
NetNet Fund $1,215,992 $ 13,543 $ 5,813,403 $ 4,012,086 $ 5,813,403 $ 4,012,086
Power Plus Fund $ 111,797 -- $ 617,103 $ 470,888 $ 617,103 $ 470,888
Real Estate Equity Investment $ 7,902 $ 14 $ 34,210 $ 12,077 $ 34,210 $ 12,077
Fund
Small Company Growth Fund $ 20,820 -- $ 52,315 $ 28,225 $ 52,315 $ 28,225
Small-Cap Value Fund $ 26,883 $ 4,764 $ 237,291 $ 105,967 $ 237,291 $ 105,967
Tax-Free Bond Fund $ 9,574 -- $ 31,028 $ 11,946 $ 31,028 $ 11,946
Tax-Free Money Market Fund $ 213,150 -- -- -- -- --
C-2
Class A Shares Class B Shares Class C Shares
Fiscal year ended Fiscal year ended Fiscal year ended
June 30, 2002 June 30, 2002 June 30, 2002
Contingent Contingent Contingent
Distribution Distribution Deferred Deferred Deferred
Service and Service and Service Sales Sales Sales
Fees Fees Fees Charge Charge Charges
- -----------------------------------------------------------------------------------------------------------------------
Tax-Free Short-Intermediate $ 17,001 -- $ 26,252 $ 8,206 $ 26,252 $ 8,206
Bond Fund
U.S. Government Income Fund $ 26,055 $ 4,555 $138,090 $ 75,101 $138,090 $ 75,101
U.S. Treasury Money Market Fund $ 73,860 -- -- -- -- --
Class II Shares Class L Shares
Fiscal year ended Fiscal year ended
June 30, 2002 December 31, 2002
Contingent Contingent
Distribution Deferred Distribution Deferred
and Service Sales and Service Sales
Fees Charge Fees Charge
- ---------------------------------------------------------------------------------------------
Future Technology Fund $1,213,675 $ 87,509 -- --
MidCap Select Fund $ 9,521 $ 783 -- --
Power Plus Fund $ 245,872 $ 32,297 -- --
Liquidity Plus Money Market Fund -- -- $ 526,688 --
C-3
Exhibit D
Fundamental Investment Restrictions of the Funds to be Amended or Eliminated
Fundamental Investment Restrictions of the Series of St. Clair:
Munder Institutional S&P MidCap Index Equity Fund
Munder Institutional S&P SmallCap Index Equity Fund
Munder Institutional Money Market Fund
Munder Institutional Government Money Market Fund
The Funds may not:
1. With respect to 75% of the Fund's assets, invest more than 5% of the
Fund's assets (taken at market value at the time of purchase) in the outstanding
securities of any single issuer or own more than 10% of the outstanding voting
securities of any one issuer, in each case other than securities issued or
guaranteed by the United States Government, its agencies or instrumentalities.
However, as an operating policy the Money Market Funds intend to adhere to the
5% limitation (with respect to the Fund's investment in the outstanding
securities of any one issuer) with regard to 100% of its Fund to the extent
required under applicable regulations under the Investment Company Act of 1940,
as amended ("1940 Act"). (Proposal 3.A).
2. Borrow money or enter into reverse repurchase agreements except that a
Fund may (i) borrow money or enter into reverse repurchase agreements for
temporary purposes in amounts not exceeding 5% of its total assets and (ii)
borrow money for the purpose of meeting redemption requests, in amounts (when
aggregated with amounts borrowed under clause (i)) not exceeding 33-1/3% of its
total assets. (Proposal 3.B & 3.P).
3. Issue any senior securities (as such term is defined in Section 18(f) of
the 1940 Act) except to the extent the activities permitted by other enumerated
investment limitations may be deemed to give rise to a senior security and as
consistent with interpretations under the 1940 Act. (Proposal 3.C).
4. Underwrite securities of other issuers, except insofar as a 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, but not including
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 a Fund's
total assets, provided a Fund may invest without limitation in short-term debt
obligations (including repurchase agreements) and publicly distributed debt
obligations. (Proposal 3.F).
7. Purchase securities if more than 25% of the value of the Fund's total
assets would be invested in the securities of issuers conducting their principal
business activities in the same industry; provided that: (i) there is no limit
on investments in U.S. Government Securities or, with respect to the Money
Market Funds, obligations of domestic commercial banks (including U.S. branches
of foreign banks subject to regulations under U.S. laws applicable to domestic
banks and, to the extent that its parent is unconditionally liable for the
obligation, foreign branches of U.S. banks); (ii) there is no limit on
investments in issuers domiciled in a single country; (iii) financial service
companies are classified according to the end users of their services (for
example, automobile finance, bank finance and diversified finance are each
considered to be a separate industry); and (iv) utility companies are classified
according to their services (for example, gas, gas transmission, electric, and
telephone are each considered to be a separate industry). (Proposal 3.G).
8. Invest in commodities or commodity futures contracts, provided that this
limitation shall not prohibit the purchase or sale by a Fund of financial
futures and stock index futures contracts, options on futures contracts, options
on securities 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).
D-1
10. Make investments for the purpose of exercising control or management.
(Proposal 3.K).
Fundamental Investment Restrictions of St. Clair (Liquidity Plus):
Liquidity Plus Money Market Fund
The Fund may not:
1. (a) Purchase securities (other than obligations of the U.S. Government,
its agencies or instrumentalities) if more than 5% of the value of the Fund's
total assets would be invested in the securities of any one issuer, except that
up to 25% of the value of the Fund's total assets may be invested without regard
to this 5% limitation; and (b) purchase more than 10% of the outstanding voting
securities of any issuer, except that up to 25% of the value of the Fund's total
assets may be invested without regard to this 10% limitation. However, as an
operating policy, the Fund intends to adhere to this 5% limitation with regard
to 100% of its portfolio to the extent required under applicable regulations
under the 1940 Act. (Proposal 3.A).
2. Borrow money, except for temporary purposes in amounts up to one-third
of the value of the Fund's total assets at the time of such borrowing. Whenever
borrowings exceed 5% of the Fund's total assets, the Fund will not make any
additional investments. (Proposal 3.B).
3. Underwrite securities of other issuers, except insofar as a Fund may be
deemed an underwriter under the 1933 Act in selling portfolio securities.
(Proposal 3.D).
4. 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).
5. Make loans, except that the Fund may purchase or hold certain debt
instruments and enter into repurchase agreements, in accordance with its
policies and limitations. (Proposal 3.F).
6. Invest 25% or more of the Fund's total assets in one or more issuers
conducting their principal business activities in the same industry, provided
that: (a) there is no limitation with respect to obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities, domestic
bank certificates of deposit, bankers' acceptances, and repurchase agreements
secured by such obligations; (b) wholly owned finance companies will be
considered to be in the industries of their parents if their activities are
primarily related to financing the activities of their parents; and (c)
utilities will be divided according to their services -- for example, gas, gas
transmission, electric and gas, electric, and telephone will each be considered
separate industry. (Proposal 3.G).
7. Invest in commodities or commodity futures contracts, provided that
this limitation shall not prohibit the purchase or sale by the Fund of financial
futures contracts and options on financial futures contracts, options on
securities and securities indices, as permitted by the Fund's Prospectus.
(Proposal 3.H).
8. Pledge, mortgage or hypothecate its assets other than to secure
borrowings permitted by its fundamental investment limitation on borrowing
(Proposal 3.I).
9. Knowingly invest more than 10% of its total assets in illiquid
securities including time deposits with maturities longer than seven days and
repurchase agreements providing for settlement more than seven days after
notice. (Proposal 3.J).
10. 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. (Proposal 3.O).
D-2
Fundamental Investment Restrictions of the Series of Framlington:
Munder Emerging Markets Fund
Munder Healthcare Fund
Munder International Growth Fund
The Funds 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 a 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 (i) borrow money or enter into reverse repurchase agreements for
temporary purposes in amounts not exceeding 5% of its total assets and (ii)
borrow money for the purpose of meeting redemption requests, in amounts (when
aggregated with amounts borrowed under clause (i)) not exceeding 33-1/3% of its
total assets. (Proposal 3.B & 3.P).
3. Issue any senior security (as defined in Section 18(f) of the 1940 Act)
except as permitted under the 1940 Act. (Proposal 3.C).
4. Underwrite securities of other issuers, except insofar as a 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 a Fund's
total assets, provided a 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 Healthcare 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 a Fund of forward
foreign currency exchange contracts, financial futures contracts and options on
financial futures contracts, foreign currency futures contracts, and options on
securities, foreign currencies and securities indices, as permitted by a 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.K).
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 a Fund may make margin deposits in
connection with transactions in options, futures and options of futures.
(Proposal 3.O).
D-3
Fundamental Investment Restrictions of Series of the Company:
- ------------------------------------------------------------
Munder Future Technology Fund Munder NetNet Fund
Munder International Bond Fund Munder Power Plus Fund
Munder Micro-Cap Equity Fund Munder Real Estate Equity Investment Fund
Munder MidCap Select Fund Munder Small-Cap Value Fund
Munder Multi-Season Growth Fund
The Funds may not:
1. (For each Fund except the International Bond Fund and the Future
Technology Fund) with respect to 75% of a Fund's assets, invest more than 5% of
a Fund's assets (taken at market value at the time of purchase) in the
outstanding securities of any single issuer or own more than 10% of the
outstanding voting securities of any one issuer, in each case other than
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. (Proposal 3.A).
2. Borrow money or issue senior securities (as defined in the 1940 Act)
except that the Funds may borrow (i) for temporary purposes in amounts not
exceeding 5% of its total assets and (ii) to meet redemption requests, in
amounts (when aggregated with amounts borrowed under clause (i)) not exceeding
33-1/3% of its total assets. (Proposals 3.B & 3.C).
3. Underwrite securities of other issuers, except insofar as a Fund may be
deemed an underwriter under the 1933 Act in selling portfolio securities.
(Proposal 3.D).
4. (For each Fund except the Real Estate Equity Investment Fund) purchase
or sell real estate or any interest therein, including interests in real estate
limited partnerships, except securities issued by companies (including real
estate investment trusts) that invest in real estate or interests therein. The
Real Estate Equity Investment Fund may not buy or sell real estate; however,
this prohibition does not apply to the purchase or sale of (i) securities which
are secured by real estate, (ii) securities representing interests in real
estate, (iii) securities of companies operating in the real estate industry
including real estate investment trusts, and (iv) the holding and sale of real
estate acquired as a result of the ownership of securities. (Proposal 3.E).
5. Make loans of securities to other persons in excess of 25% of a Fund's
total assets; provided the Funds may invest without limitation in short-term
debt obligations (including repurchase agreements) and publicly distributed debt
obligations. (Proposal 3.F).
6. Invest more than 25% of its total assets in any one industry (i)
provided that securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities are not considered to represent industries; (ii)
except that the Real Estate Equity Investment Fund will invest more than 25% of
its assets in securities of issuers in the real estate industry; (iii) except
that the NetNet Fund will invest more than 25% of its assets in securities of
companies engaged in the research, design, development, manufacturing or
distribution of products, processes or services for use with the Internet or
Intranet related businesses; (iv) except that the Future Technology Fund will
invest more than 25% of its total assets in the technology industry; and (v)
except that the Power Plus Fund will invest more than 25% of its assets in
securities of companies that are primarily engaged in non-regulated energy and
power activities. (Proposal 3.G).
7. Invest in commodities or commodity futures contracts, provided that
this limitation shall not prohibit the purchase or sale by the Future
Technology, MidCap Select, Multi-Season, NetNet, Real Estate, and International
Bond Funds of forward currency contracts, financial futures contracts and
options on financial futures contracts, and options on securities and on
securities, foreign currencies and on securities indices, as permitted by each
Fund's prospectus. (Proposal 3.H).
8. 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).
9. Make investments for the purpose of exercising control or management.
(Proposal 3.K).
10. Purchase securities on margin, or make short sales of securities,
except for the use of short-term credit necessary for the clearance of purchases
and sales of portfolio securities, but the Funds may make margin deposits in
connection with transactions in options, futures and options on futures.
(Proposal 3.O).
D-4
Fundamental Investment Restrictions of the Series of the Trust:
Munder Balanced Fund Munder U.S. Government Income Fund
Munder Large-Cap Value Fund Munder Michigan Tax-Free Bond Fund
Munder Index 500 Fund Munder Tax-Free Bond Fund
Munder International Equity Fund Munder Tax-Free Short-Intermediate Bond Fund
Munder Small Company Growth Fund Munder Cash Investment Fund
Munder Bond Fund Munder Tax-Free Money Market Fund
Munder Intermediate Bond Fund Munder U.S. Treasury Money Market Fund
These Funds may not:
1. Purchase securities of any one issuer (other than securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities or
certificates of deposit for any such securities) if more than 5% of the value of
a Fund's total assets (taken at current value) would be invested in the
securities of such issuer, or more than 10% of the issuer's outstanding voting
securities would be owned by the Fund or the Trust, except that (a) with respect
to each Fund, other than the Michigan Tax-Free Bond Fund and the Tax-Free
Short-Intermediate Bond Fund, up to 25% of the value of the Fund's total assets
(taken at current value) may be invested without regard to these limitations and
(b) with respect to the Michigan Tax-Free Bond Fund and the Tax-Free
Short-Intermediate Bond Fund, up to 50% of the value of the Fund's total assets
may be invested without regard to these limitations so long as no more than 25%
of the value of the Fund's total assets are invested in the securities of any
one issuer. For purposes of this limitation, a security is considered to be
issued by the entity (or entities) whose assets and revenues back the security.
A guarantee of a security is not deemed to be a security issued by the guarantor
when the value of all securities issued and guaranteed by the guarantor, and
owned by a Fund, does not exceed 10% of the value of a Fund's total assets.
(Proposal 3.A).
2. Borrow money or issue senior securities except that each Fund may borrow
from banks and enter into reverse repurchase agreements for temporary purposes
in amounts up to one-third of the value of its total assets at the time of such
borrowing; or mortgage, pledge or hypothecate any assets, except in connection
with any such borrowing and then in amounts not in excess of one-third of the
value of a Fund's total assets at the time of such borrowing. No Fund will
purchase securities while its aggregate borrowings (including reverse repurchase
agreements and borrowing from banks) in excess of 5% of its total assets are
outstanding. Securities held in escrow or separate accounts in connection with a
Fund's investment practices are not deemed to be pledged for purposes of this
limitation. (Proposals 3.B & 3.C).
3. Act as an underwriter of securities within the meaning of the Securities
Act of 1933, as amended ("1933 Act"), except to the extent that the purchase of
obligations directly from the issuer thereof, or the disposition of securities,
in accordance with a Fund's investment objective, policies and limitations may
be deemed to be underwriting. (Proposal 3.D).
4. Purchase or sell real estate, except that each Fund may purchase
securities of issuers which deal in real estate and may purchase securities
which are secured by interests in real estate. (Proposal 3.E).
5. Make loans, except that each Fund may purchase and hold debt instruments
(whether such instruments are part of a public offering or privately
negotiated), may enter into repurchase agreements and may lend portfolio
securities in accordance with its investment objective and policies. (Proposal
3.F).
6. Purchase any securities which would cause 25% or more of the value of a
Fund's total assets at the time of purchase to be invested in the securities of
one or more issuers conducting their principal business activities in the same
industry, provided that (a) there is no limitation with respect to (i)
instruments that are issued or guaranteed by the United States, any state,
territory or possession of the United States, the District of Columbia or any of
their authorities, agencies, instrumentalities or political subdivisions, (ii)
with respect to the Money Market Funds only, instruments issued by domestic
branches of U.S. banks and (iii) repurchase agreements secured by the
instruments described in clause (i) and, with respect to the Money Market Funds,
clause (ii); (b) wholly-owned finance companies will be considered to be in the
industries of their parents if their activities are primarily related to
financing the activities of the parents; and (c) utilities will be divided
according to their services, for example, gas, gas transmission, electric and
gas, electric and telephone will each be considered a separate industry. For
purposes of this limitation, a security is considered to be issued by the entity
(or entities) whose assets and revenues back the security. A guarantee of a
security is not deemed to be a security issued by the guarantor when the value
of all securities issued and guaranteed by the guarantor, and owned by a Fund,
does not exceed 10% of the value of a Fund's total assets. (Proposal 3.G).
D-5
7. Purchase or sell commodity contracts, or invest in oil, gas or mineral
exploration or development programs, except that each Fund may, to the extent
appropriate to its investment policies, purchase publicly traded securities of
companies engaging in whole or in part in such activities, may enter into
futures contracts and related options, and may engage in transactions in
securities on a when-issued or forward commitment basis, and except that each
Equity Fund and Bond Fund may enter into forward currency contracts in
accordance with its investment objectives and policies. (Proposal 3.H & 3.N).
8. Mortgage, pledge or hypothecate any assets, except in connection with
borrowing and then in amounts not in excess of one-third of the value of a
Fund's total assets at the time of such borrowing. (Proposal 3.I).
9. Purchase securities of companies for the purpose of exercising control.
(Proposal 3.K).
10. Acquire any other investment company or investment company security
except in connection with a merger, consolidation, reorganization or acquisition
of assets or where otherwise permitted by the 1940 Act. (Proposal 3.L).
11. Write or sell put options, call options, straddles, spreads, or any
combination thereof except for transactions in options on securities, securities
indices, futures contracts, options on futures contracts and transactions in
securities on a when-issued or forward commitment basis, and except that each
Equity and Bond Fund may enter into forward currency contracts in accordance
with its investment objectives and policies. Notwithstanding the above, the
Tax-Free Short-Intermediate Bond Fund may not write or purchase options,
including puts, calls, straddles, spreads, or any combination thereof. (Proposal
3.M).
12. Purchase securities on margin, make short sales of securities or
maintain a short position, except that (a) this investment limitation shall not
apply to a Fund's transactions in futures contracts and related options, a
Fund's sale of securities short against the box or a Fund's transactions in
securities on a when-issued or forward commitment basis, and (b) a Fund may
obtain short-term credit as may be necessary for the clearance of purchases and
sales of portfolio securities. (Proposal 3.O).
The Tax-Free Short-Intermediate Bond Fund also may not:
1. Participate on a joint or joint and several basis in any securities
trading account. (Proposal 3.Q).
2. Purchase or retain securities of any issuer if the officers or Trustees
of the Trust or its Advisor who own beneficially more than one-half of 1% of the
securities of such issuer together own beneficially more than 5% of such
securities. (Proposal 3.R).
3. Invest more than 10% of its total assets in the securities of issuers
that together with any predecessors have a record of less than three years
continuous operation. (Proposal 3.S).
D-6
Exhibit E
Executive Officers and Directors of the Advisor and the Sub-Advisor
Munder Capital Management
Name and Address* Principal Occupation
- --------------------------------------------------------------------------------
Munder Group LLC Partner
WAM Holdings, Inc. Partner
WAM Holdings II, Inc. Partner Partner
James C. Robinson Chairman and Chief Executive Officer
Enrique Chang President and Chief Investment Officer
Elyse G. Essick Vice President and Chief Marketing Officer
Peter K. Hoglund Chief Administrative Officer
Anne K. Kennedy Vice President and Director of Portfolio
Management
Stephen J. Shenkenberg Executive Vice President, General Counsel,
Chief Compliance Officer and Secretary
Sharon E. Fayolle Vice President and Director of Cash Management
Peter G. Root Vice President and Chief Investment Officer,
Fixed Income
Todd B. Johnson Chief Executive Officer of World Asset
Management, a division of Munder Capital
Management
Paul T. Cook Director, Technology Investing
Beth Obear Director of Human Resources
- --------
* The address for each officer and director is 480 Pierce Street, Birmingham,
Michigan 48009.
Framlington Overseas Investment Management Limited
Name and Address* Principal Occupation
- --------------------------------------------------------------------------------
Jean-Luc Schilling Managing Director
Neil Birrell Director
Warren J. Colman Operations Director
Michael A. Vogel Group Managing Director
- --------
* The address for each officer and director is 155 Bishopsgate, London, England
EC2M 3XJ.
E-1
Exhibit F
Principal Shareholders of the Funds
Control Persons and Principal Holders of Securities. As of February ___, 2003
the following person(s) owned of record or were known by the Funds to own
beneficially 5% or more of any class of the Funds' shares.
Amount and Nature of Percentage of Class
Name of Fund and Class Name and Address Beneficial Ownership Outstanding (%)
- ----------------------------------------------------------------------------------------------------------------------------
St. Clair Funds, Inc.
Liquidity Plus Money Market Fund
Munder Institutional Government Money
Market Fund
Munder Institutional Money Market Fund
Munder Institutional S&P MidCap Index
Equity Fund
Munder Institutional S&P SmallCap Index
Equity Fund
The Munder Framlington Funds Trust
Munder Emerging Markets Fund
Munder Healthcare Fund
Munder International Growth Fund
The Munder Funds, Inc.
Munder Fund of Funds
Munder Future Technology Fund
Munder International Bond Fund
Munder Micro-Cap Equity Fund
Munder MidCap Select Fund
Munder Multi-Season Growth Fund
Munder NetNet Fund
Munder Power Plus Fund
Munder Real Estate Equity Investment Fund
Munder Small-Cap Value Fund
The Munder Funds Trust
Munder Balanced Fund
Munder Bond Fund
Munder Cash Investment Fund
Munder Index 500 Fund
Munder International Equity Fund
Munder Intermediate Bond Fund
Munder Large-Cap Value Fund
Munder Michigan Tax-Free Bond Fund
Munder Small Company Growth Fund
Munder Tax-Free Bond Fund
Munder Tax-Free Money Market Fund
Munder Tax-Free Short-Intermediate Bond
Munder U.S. Government Income Fund
Munder U.S. Treasury Money Market Fund
F-1
- --------------------------------------------------------------------------------
VOTING ON THE INTERNET
.. Read the Proxy Statement and have this card at hand
.. Log on to www.proxyweb.com
.. Enter the control number shown to the left and follow the on-screen
instructions
.. Do not return this paper ballot
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VOTING BY PHONE
.. Read the Proxy Statement and have this card at hand
.. Call toll-free 1-888-221-0697
.. Enter the control number shown to the left and follow the on-screen
instructions
.. Do not return this paper ballot
- --------------------------------------------------------------------------------
PROXY CARD PROXY CARD
The Munder Framlington Funds Trust SPECIAL MEETING OF SHAREHOLDERS
Munder Emerging Markets Fund APRIL __, 2003
This Proxy is Solicited on Behalf
of the Board of Directors.
The undersigned revoke(s) all previous proxies and appoint(s) Stephen J.
Shenkenberg, Melanie Mayo West or Mary Ann Shumaker or either one of them,
attorneys, with full power of substitution to vote all shares of the Munder
Emerging Markets Fund (Fund) of The Munder Framlington Funds Trust that the
undersigned is entitled to vote at the Special Meeting of Shareholders of the
Fund to be held at the (Location to be determined), on ________, April __, 2003
at 10:00 a.m. Eastern time, 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 DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL.
---
1. ELECTIONS OF TRUSTEE NOMINEES:
FOR WITHHOLD WITHHOLDING AUTHORITY
all nominees all nominees for individual nominees listed
[_] [_] [_]
01) David J. Brophy 05) TBN
02) Joseph E. Champagne 06) Michael T. Monahan
03) Thomas D. Eckert 07) Arthur T. Porter
04) Charles W. Elliott 08) John Rakolta, Jr.
(INSTRUCTION: To withhold authority to vote for any individual nominee mark
"WITHHOLDING AUTHORITY for individual nominees listed" box at right and write
that nominee's name below.)
- --------------------------------------------
- --------------------------------------------
FOR AGAINST ABSTAIN
2. To approve the Agreement and Plan of Reorganization [_] [_] [_]
and Redomiciliation that provides for the
Reorganization of the Munder Emerging Markets Fund
from a series of The Munder Farmington Funds Trust,
a Massachusetts business trust, to a series of a
Delaware statutory trust.
3. To approve the proposed amendments to the following [_] [_] [_]
fundamental investment restrictions of the Munder
Emerging Markets Fund:
a. Diversification [_] [_] [_]
b. Borrowing Money [_] [_] [_]
c. Issuing Senior Securities [_] [_] [_]
d. Underwriting Securities [_] [_] [_]
e. Investments in Real Estate [_] [_] [_]
f. Making Loans [_] [_] [_]
g. Industry Concentration [_] [_] [_]
h. Investments in Commodities [_] [_] [_]
i. Pledging, Mortgaging, and Hypothecating Assets [_] [_] [_]
k. Investments for Control Over Issuer [_] [_] [_]
o. Margin Activities and Short Selling [_] [_] [_]
p. Investments in Reverse Repurchase Agreements [_] [_] [_]
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN PROMPTLY IN THE POSTAGE-PAID
ENVELOPE PROVIDED.
VOTING ON THE INTERNET
- --------------------------------------------------------------------------------
.. Read the Proxy Statement and have this card at hand
.. Log on to www.proxyweb.com
.. Enter the control number shown to the left and follow the on-screen
instructions
.. Do not return this paper ballot
- --------------------------------------------------------------------------------
VOTING BY PHONE
- --------------------------------------------------------------------------------
.. Read the Proxy Statement and have this card at hand
.. Call toll-free 1-888-221-0697
.. Enter the control number shown to the left and follow the on-screen
instructions
.. Do not return this paper ballot
- --------------------------------------------------------------------------------
PROXY CARD PROXY CARD
The Munder Framlington Funds Trust SPECIAL MEETING OF SHAREHOLDERS
Munder Healthcare Fund APRIL__, 2003
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 Mary Ann Shumaker or either one of them,
attorneys, with full power of substitution to vote all shares of the Munder
Healthcare Fund (Fund) of The Munder Framlington Funds Trust that the
undersigned is entitled to vote at the Special Meeting of Shareholders of the
Fund to be held at the (Location to be determined), on ________, April __, 2003
at 10:00 a.m. Eastern time, 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.
---
1. ELECTIONS OF TRUSTEE NOMINEES:
FOR WITHHOLD WITHHOLDING AUTHORITY
all nominees all nominees for individual nominees listed
[_] [_] [_]
01) David J. Brophy 05) TBN
02) Joseph E. Champagne 06) Michael T. Monahan
03) Thomas D. Eckert 07) Arthur T. Porter
04) Charles W. Elliott 08) John Rakolta, Jr.
(INSTRUCTION: To withhold authority to vote for any individual nominee mark
"WITHHOLDING AUTHORITY for individual nominees listed" box at right and write
that nominee's name below.)
- --------------------------------------------
- --------------------------------------------
FOR AGAINST ABSTAIN
2. To approve the Agreement and Plan of Reorganization [_] [_] [_]
and Redomiciliation that provides for the
Reorganization of the Munder Healthcare Fund
from a series of The Munder Framlington Funds Trust,
a Massachusetts business trust, to a series of
a Delaware statutory trust.
3. To approve the proposed amendments to the following [_] [_] [_]
fundamental investment restrictions of the Munder
Healthcare Fund:
a. Diversification [_] [_] [_]
b. Borrowing Money [_] [_] [_]
c. Issuing Senior Securities [_] [_] [_]
d. Underwriting Securities [_] [_] [_]
e. Investments in Real Estate [_] [_] [_]
f. Making Loans [_] [_] [_]
g. Industry Concentration [_] [_] [_]
h. Investments in Commodities [_] [_] [_]
i. Pledging, Mortgaging, and Hypothecating Assets [_] [_] [_]
k. Investments for Control Over Issuer [_] [_] [_]
o. Margin Activities and Short Selling [_] [_] [_]
p. Investments in Reverse Repurchase Agreements [_] [_] [_]
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN PROMPTLY IN THE POSTAGE-PAID
ENVELOPE PROVIDED.
VOTING ON THE INTERNET
- --------------------------------------------------------------------------------
.. Read the Proxy Statement and have this card at hand
.. Log on to www.proxyweb.com
.. Enter the control number shown to the left and follow the on-screen
instructions
.. Do not return this paper ballot
- --------------------------------------------------------------------------------
VOTING BY PHONE
- --------------------------------------------------------------------------------
.. Read the Proxy Statement and have this card at hand
.. Call toll-free 1-888-221-0697
.. Enter the control number shown to the left and follow the on-screen
instructions
.. Do not return this paper ballot
- --------------------------------------------------------------------------------
PROXY CARD PROXY CARD
The Munder Framlington Funds Trust SPECIAL MEETING OF SHAREHOLDERS
Munder International Growth Fund APRIL __, 2003
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 Mary Ann Shumaker or either one of them,
attorneys, with full power of substitution to vote all shares of the Munder
International Growth Fund (Fund) of The Munder Framlington Funds Trust that the
undersigned is entitled to vote at the Special Meeting of Shareholders of the
Fund to be held at the (Location to be determined), on ________, April __, 2003
at 10:00 a.m. Eastern time, 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.
---
1. ELECTIONS OF TRUSTEE NOMINEES:
FOR WITHHOLD WITHHOLDING AUTHORITY
all nominees all nominees for individual nominees listed
[_] [_] [_]
01) David J. Brophy 05) TBN
02) Joseph E. Champagne 06) Michael T. Monahan
03) Thomas D. Eckert 07) Arthur T. Porter
04) Charles W. Elliott 08) John Rakolta, Jr.
(INSTRUCTION: To withhold authority to vote for any individual nominee mark
"WITHHOLDING AUTHORITY for individual nominees listed" box at right and write
that nominee's name below.)
- --------------------------------------------
- --------------------------------------------
FOR AGAINST ABSTAIN
2. To approve the Agreement and Plan of Reorganization [_] [_] [_]
and Redomiciliation that provides for the
Reorganization of the Munder International Growth
Fund from a series of The Munder Framlington Funds
Trust, a Massachusetts business trust, to a series
of a Delaware statutory trust.
3. To approve the proposed amendments to the following [_] [_] [_]
fundamental investment restrictions of the Munder
International Growth Fund:
a. Diversification [_] [_] [_]
b. Borrowing Money [_] [_] [_]
c. Issuing Senior Securities [_] [_] [_]
d. Underwriting Securities [_] [_] [_]
e. Investments in Real Estate [_] [_] [_]
f. Making Loans [_] [_] [_]
g. Industry Concentration [_] [_] [_]
h. Investments in Commodities [_] [_] [_]
i. Pledging, Mortgaging, and Hypothecating Assets [_] [_] [_]
k. Investments for Control Over Issuer [_] [_] [_]
o. Margin Activities and Short Selling [_] [_] [_]
p. Investments in Reverse Repurchase Agreements [_] [_] [_]
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN PROMPTLY IN THE POSTAGE-PAID
ENVELOPE PROVIDED.