MONEY MARKET PORTFOLIO/CT, PRES14A, 1999-02-19

MONEY MARKET PORTFOLIO/CT
PRES14A, 1999-02-19

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<PAGE> 1

FILE NOS: 2-76640/811-3429
2-76639/811-3428
2-79359/811-3568
2-74285/811-3274

SCHEDULE 14A
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-11(c) or Section
240.14a-12

CAPITAL APPRECIATION FUND
HIGH YIELD BOND TRUST
MANAGED ASSETS TRUST
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

NOT APPLICABLE
- --------------------------------------------------------------------------------
(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)(4) and
0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------

(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):

- --------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------

(5) Total fee paid:

- --------------------------------------------------------------------------------

[ ] 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:

- --------------------------------------------------------------------------------

(2) Form, schedule or registration statement no.:

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(3) Filing party:

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(4) Date filed:

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<PAGE> 2
CAPITAL APPRECIATION FUND
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

March 5, 1999

To the Shareholders:

Notice is hereby given that a Special Shareholder Meeting of Capital
Appreciation Fund (the "Fund") will be held at its office at One Tower Square,
Hartford, Connecticut on Friday, April 30, 1999 at 9:00 a.m. for the following
purposes:

1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES

Item 1.A. Proposal To Amend The Fundamental Investment Policy On
Issuer Diversification
Item 1.B. Proposal To Amend The Fundamental Investment Policy On
Industry Concentration
Item 1.C. Proposal To Amend The Fundamental Investment Policy On
Borrowing
Item 1.D. Proposal To Amend The Fundamental Investment Policy On
Real Estate
Item 1.E. Proposal To Amend The Fundamental Investment Policy On
Loans
Item 1.F. Proposal To Amend The Fundamental Investment Policy On
Commodities
Item 1.G. Proposal To Amend The Fundamental Investment Policy On
Underwriting

2. PROPOSAL TO REDESIGNATE AND AMEND OR ELIMINATE CERTAIN FUNDAMENTAL
INVESTMENT POLICIES

Item 2.A. Proposal To Redesignate And Amend The Fundamental
Investment Policy On Liquidity
Item 2.B Proposal To Redesignate And Amend The Fundamental
Investment Policy On Investments To Exercise Control
Item 2.C. Proposal to Redesignate and Amend the Fundamental
Investment Policy on Short Sales
Item 2.D. Proposal To Redesignate And Amend The Fundamental
Investment Policy On Purchasing On Margin
Item 2.E. Proposal To Redesignate And Amend The Fundamental
Investment Policy On Pledging Assets
Item 2.F. Proposal To Eliminate The Fundamental Investment
Policy On Oil, Gas And Minerals
Item 2.G. Proposal To Eliminate The Fundamental Investment
Policy On "Unseasoned Issuers"
Item 2.I. Proposal To Eliminate The Fundamental Investment
Policy On Investing In Warrants
Item 2.J. Proposal To Redesignate And Amend The Fundamental
Investment Policy On Investing In The Securities Of
Other Investment Companies
Item 2.M. Proposal to Eliminate the Fundamental Investment
Policy on Securities in Which Management Holds

3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO PERMIT
THE FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR MORE
INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE FUND'S ADVISORY
AGREEMENT

4. To act on any and all such other business as may properly come
before the meeting.

The close of business on March 1, 1999 has been fixed as the record date for the
determination of beneficial Shareholders entitled to notice of and to vote at
said meeting.

By order of the Board of Trustees.

ERNEST J. WRIGHT, SECRETARY

Please complete and return the enclosed proxy card as soon as possible in the
post-paid envelope provided. Your prompt response is appreciated.

YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU
OWN.

<PAGE> 3

HIGH YIELD BOND TRUST
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

March 5, 1999

To the Shareholders:

Notice is hereby given that a Special Shareholder Meeting of High
Yield Bond Trust (the "Fund") will be held at its office at One Tower Square,
Hartford, Connecticut on Friday, April 30, 1999 at 9:00 a.m. for the following
purposes:

1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES

2. PROPOSAL TO REDESIGNATE AND AMEND OR ELIMINATE CERTAIN FUNDAMENTAL
INVESTMENT POLICIES

4. To act on any and all such other business as may properly come
before the meeting.

The close of business on March 1, 1999 has been fixed as the record date for the
determination of beneficial Shareholders entitled to notice of and to vote at
said meeting.

By order of the Board of Trustees.

ERNEST J. WRIGHT, SECRETARY

Please complete and return the enclosed proxy card as soon as possible in the
post-paid envelope provided. Your prompt response is appreciated.

YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU
OWN.

<PAGE> 4

MANAGED ASSETS TRUST
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

March 5, 1999

To the Shareholders:

Notice is hereby given that a Special Shareholder Meeting of Managed
Assets Trust (the "Fund") will be held at its office at One Tower Square,
Hartford, Connecticut on Friday, April 30, 1999 at 9:00 a.m. for the following
purposes:

1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES

2. PROPOSAL TO REDESIGNATE AND AMEND OR ELIMINATE CERTAIN FUNDAMENTAL
INVESTMENT POLICIES

4. To act on any and all such other business as may properly come
before the meeting.

The close of business on March 1, 1999 has been fixed as the record date for the
determination of beneficial Shareholders entitled to notice of and to vote at
said meeting.

By order of the Board of Trustees.

ERNEST J. WRIGHT, SECRETARY

Please complete and return the enclosed proxy card as soon as possible in the
post-paid envelope provided. Your prompt response is appreciated.

YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU
OWN.

<PAGE> 5

MONEY MARKET PORTFOLIO
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

March 5, 1999

To the Shareholders:

Notice is hereby given that a Special Shareholder Meeting of Money
Market Portfolio (the "Fund") will be held at its office at One Tower Square,
Hartford, Connecticut on Friday, April 30, 1999 at 9:00 a.m. for the following
purposes:

1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES

2. PROPOSAL TO REDESIGNATE AND AMEND OR ELIMINATE CERTAIN FUNDAMENTAL
INVESTMENT POLICIES

Item 2.A. Proposal To Redesignate And Amend The Fundamental
Investment Policy On Liquidity
Item 2.B Proposal To Redesignate And Amend The Fundamental
Investment Policy On Investments To Exercise Control
Item 2.C. Proposal to Redesignate and Amend the Fundamental
Investment Policy on Short Sales
Item 2.D. Proposal To Redesignate And Amend The Fundamental
Investment Policy On Purchasing On Margin
Item 2.E. Proposal To Redesignate And Amend The Fundamental
Investment Policy On Pledging Assets
Item 2.F. Proposal To Eliminate The Fundamental Investment
Policy On Oil, Gas And Minerals
Item 2.G. Proposal To Eliminate The Fundamental Investment
Policy On "Unseasoned Issuers"
Item 2.H. Proposal To Eliminate the Fundamental Investment
Policies on Puts, Calls, Straddles, Spreads, or
Combinations
Item 2.J. Proposal To Redesignate and Amend the Fundamental
Investment Policy on Investing in the Securities of
Other Investment Company
Item 2.K. Proposal To Redesignate and Amend the Fundamental
Investment Policy on Maximum Maturity of Investments
to Comply with Rule 2a-7.
Item 2.M. Proposal to Eliminate the Fundamental Investment
Policy on Securities in Which Management Holds
Interests

4. To act on any and all such other business as may properly come
before the meeting.

The close of business on March 1, 1999 has been fixed as the record date for the
determination of beneficial Shareholders entitled to notice of and to vote at
said meeting.

By order of the Board of Trustees.

ERNEST J. WRIGHT, SECRETARY

Please complete and return the enclosed proxy card as soon as possible in the
post-paid envelope provided. Your prompt response is appreciated.

YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU
OWN.

<PAGE> 6
CAPITAL APPRECIATION FUND
HIGH YIELD BOND TRUST
MANAGED ASSETS TRUST
MONEY MARKET PORTFOLIO

Shareholders Meetings

April 30, 1999

PROXY STATEMENT

THE BOARDS OF TRUSTEES OF CAPITAL APPRECIATION FUND ("CAF"), HIGH
YIELD BOND TRUST ("HYBT"), MANAGED ASSETS TRUST ("MAT") AND MONEY MARKET
PORTFOLIO ("MMP"), (EACH, A "FUND" AND COLLECTIVELY, THE "FUNDS") SOLICIT YOUR
PROXY ON BEHALF OF EACH FUND. This proxy statement is being furnished in
connection with the solicitation of voting instructions, as further described
below, from owners of variable contracts ("beneficial owners") for use at each
Fund's special shareholders meeting to be held at the Trust's office, One Tower
Square, Hartford, Connecticut, beginning at 9:00 a.m. on April 30, 1999, and
any adjournments (collectively, the "Meeting"). This proxy material will be
mailed to beneficial owners of Fund shares beginning on or about March 5, 1999.

GENERAL

The purpose of the Meeting generally is to adopt standard fundamental
investment policies for all of the Funds. The specific purposes for each Fund
are set forth below and in the accompanying Notice. To adopt the proposed
standard fundamental investment policies, a Fund may need to adopt a
fundamental policy or to amend, redesignate, or eliminate some or all of
current fundamental investment policies. The following chart indicates the
beneficial owners who are entitled to provide instructions on each proposal:

SUMMARY OF VOTING ON PROPOSAL ITEMS

VOTE BY PROXY

An instruction card is enclosed for use at the Meeting. You may
revoke the instruction card at any time before the vote is taken at the Meeting
by sending a written notice of revocation to the Trust's Secretary or by
appearing in person to provide instructions at the Meeting. All instruction
cards that are properly executed, received in time, and not so revoked will be
voted at the Meeting in accordance with the instructions on them. Instruction
cards that are properly executed but provide no specific instructions will be
voted in favor of the Proposals.

COST OF SOLICITATION

Each Fund will pay a portion of the Meeting costs, including the cost
of proxy solicitation allocated on the basis of each Fund's relative net asset
value. Under each Fund's respective Management Agreement, The Travelers
Insurance Company ("Travelers Insurance") reimburses the Fund for the amount by
which its aggregate annual expenses (including the cost, among other things, of
printing, preparing and mailing special meeting notices and proxy solicitation
materials) exceeds 1.25% of each Fund's average net assets (0.40% for MMP) for
any year during which its Management Agreement remains in effect. Travelers
Insurance is located at One Tower Square, Hartford, Connecticut 06183.
Travelers Insurance
<PAGE> 7
has engaged the services of Management Information Services ("MIS") to assist
in the solicitation of proxies. The aggregate cost of soliciting the Funds'
beneficial owners is expected to be approximately [$______].

In addition to the solicitation of proxies by mail, each Fund's
trustees, officers, and/or employees of a Fund's adviser may solicit proxies in
person or by telephone. The adviser for each Fund is Travelers Asset
Management International Corporation ("TAMIC" or the "adviser").

SHAREHOLDERS AND THE VOTE

Shareholders may vote only on matters that concern the Fund or Funds
in which they hold shares. Shareholders are entitled to one vote for each full
share owned and fractional votes for fractional shares. Only shareholders of
record of each Fund at the close of business on March 1, 1999 (the record
date) will be entitled to notice of and to vote at the Meeting.

The number of full and fractional votes for which a beneficial owner
is entitled to provide voting instructions is set forth on the enclosed
instruction card(s). Shares owned by two or more persons (whether as joint
tenants, co-fiduciaries, or otherwise) will be voted as follows, unless a
written instrument or court order providing to the contrary has been filed with
the Trust: (1) if only one person votes, that vote will bind all; (2) if more
than one person votes, the vote of the majority will bind all; and (3) if more
than one person votes and the vote is evenly divided, the vote will be cast
proportionately.

As of the record date, separate accounts that fund variable annuity
contracts and variable life insurance contracts issued by Travelers Insurance
and The Travelers Life and Annuity Company (collectively, with their
affiliates, "The Travelers") were the record owners of all of the Funds'
shares. As of that date, no single shareholder or group, other than The
Travelers, beneficially owned more than 5% of a Fund's outstanding shares.

This proxy material is being mailed to owners of, or participants in,
variable annuities and variable life insurance contracts who had allocated
amounts to one or more Fund through certain separate accounts as of the record
date (namely, the beneficial owners of the shares). The beneficial owners
instruct The Travelers how to vote the shares in which the beneficial owners
have a beneficial interest. The Travelers will vote all shares held by it as
instructed by the contract owners or participants. Further, The Travelers
intends to vote all shares for which no instruction cards are received in the
same proportion as the shares for which instructions are received.

To hold the Meeting with respect to a Fund, a majority of each Fund's
shares entitled to vote must be present in person or by proxy at the Meeting.
In the event that a quorum is present but sufficient votes in favor of one or
more items of a Proposal are not received by the Meeting time, the persons
named as proxies may propose one or more adjournments of the Meeting to permit
further solicitation of proxies. Any such adjournment requires the affirmative
vote of a majority of the shares present in person or by proxy at the Meeting
to be adjourned. The persons named as proxies will vote in favor of such
adjournment if they determine that such adjournment and additional solicitation
is reasonable and in the interests of the particular Fund's shareholders. Each
Fund's shareholders vote separately with respect to each item of a Proposal,
pursuant to the Investment Company Act of 1940, as amended (the "1940 Act") and
the applicable Declaration of Trust.

VOTE REQUIRED: APPROVAL OF EACH ITEM OF EACH PROPOSAL FOR A FUND REQUIRES THE
AFFIRMATIVE VOTE OF THE HOLDERS OF THE LESSER OF: (A) 67% OF THE FUND'S SHARES
PRESENT AT THE MEETING IN PERSON OR BY PROXY, OR (B) A MAJORITY OF THE FUND'S
OUTSTANDING SHARES.

Each Fund's Board of Trustees (each, a "Board", and collectively, the
"Boards") has approved and recommends that Fund shareholders approve the
following Proposals to amend, redesignate (and amend as applicable), or
eliminate each Fund's current investment policies. Proposal items that are
approved at the Meeting will become effective on May 1, 1999. Proposal items
that are not approved will not be implemented.

2
<PAGE> 8
THE PROPOSALS GENERALLY

For each item of the Proposals, the relevant current investment policy
is described generally below. Each proposed fundamental investment policy also
is specifically discussed below. Items designated as "fundamental" may be
changed only with shareholder approval as described above. The effect of a
"FOR" vote on each item of the Proposals is detailed; specifically, whether the
current policy will be: (1) amended, (2) redesignated (and amended as
applicable), or (3) eliminated entirely.

Each Board may adopt additional or supplemental fundamental investment
policies for the Fund without shareholder approval if required by federal
regulators or if each Board determines the policies to be necessary or
desirable. The proposed standard investment policies meet all of the
requirements of the 1940 Act, and no other fundamental investment policies in
addition to the proposed policies are presently required by the 1940 Act. A
detailed listing of the proposed fundamental and operating (nonfundamental)
policies as well as each Fund's current fundamental policies are provided in
Appendices A and B, respectively, for your reference.

The reasons for the Proposals are: (1) to conform the Funds'
fundamental policies to ones that are expected to become standard for all
mutual funds managed by The Travelers, (2) to simplify and modernize the
policies that are required to be fundamental by the 1940 Act, and (3) to
eliminate as fundamental any policies that are not required to be fundamental
by that Act. The Boards believe that standard policies will assist the Funds,
The Travelers, and the adviser and subadviser in monitoring compliance with the
various policies to which the Funds are subject. By reducing to a minimum
those policies that can be changed only with shareholder approval, the Funds
will be able to minimize costs and delay associated with holding frequent
annual shareholders' meetings. The Boards propose to amend certain of the
Funds' investment policies, as described below, in order to render clearer and
simpler statements of the Funds' fundamental policies. Finally, the Boards
also believe that The Travelers' and the adviser's and subadviser's ability to
manage the Funds' assets efficiently in a changing investment environment
should be enhanced and that investment management opportunities should be
increased by these changes. Each Board may approve or revise nonfundamental
investment policies without seeking approval from shareholders.

The Boards do not anticipate that amending, redesignating and
amending, or eliminating a Fund's current fundamental investment policies
generally will result in a material change in the level of risk associated with
an investment in that Fund. If the proposed changes are approved by a Fund's
shareholders at the Meeting, the registration statement (including each Fund's
prospectus and statement of additional information) will be revised to reflect
the changes and reflect any modified investment policies. In the event that a
proposed change is not approved by a Fund's shareholders, the Fund will retain
the relevant current fundamental policy.

In the following discussion, "the Fund" refers to each Fund.

IN ALL THREE PROPOSALS, FUND POLICIES THAT ARE DESIGNATED AS
FUNDAMENTAL MAY NOT BE CHANGED WITHOUT SHAREHOLDER APPROVAL BY SHAREHOLDERS.
OPERATING (NONFUNDAMENTAL) POLICIES MAY BE CHANGED BY THE BOARDS WITHOUT
SHAREHOLDER APPROVAL.

1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES

ITEM 1.A. PROPOSAL TO AMEND THE FUNDAMENTAL INVESTMENT POLICIES
ON ISSUER DIVERSIFICATION

The Boards have proposed amending the Funds' fundamental investment
policies on issuer diversification to conform such policies to the requirements
of Section 5(b)(1) of the 1940 Act and to permit the Funds greater flexibility
to invest in securities that the adviser or subadviser considers to present
attractive investment opportunities, including possible conversion to
master-feeder or fund-of-funds structures. The 1940 Act requires that a
"diversified" mutual fund adopt a fundamental investment policy with regard to
diversification. The Funds are "diversified" within the meaning of the 1940
Act. This means that by law, each Fund must not, with respect to 75% of its
total assets, invest more than 5% of its total assets in the securities of any
one issuer or acquire more than 10% of the outstanding voting securities of any
one issuer. These policies apply only at the time of investment, and the Fund
may invest up to 25% of its total assets without regard to such policies. In
addition, these policies do not apply to Fund holdings of or investments in
cash, cash items, U.S. government securities or securities of other investment
companies.

<PAGE> 9
Currently each Fund's policy is more restrictive than is required by
the 1940 Act. The Funds they apply the diversification policies to a higher
percentage of their assets than is required by law. The proposed investment
policy would conform the Fund's diversification policies with the law and among
the other Funds managed by the adviser. It should be understood that the
proposed amendment, by permitting the Fund to invest a greater percentage of
its assets with a single issuer or to hold an increased percentage of an
issuers voting securities, could potentially increase the risk to the Fund in
the event of adverse developments affecting the securities of such issuer.

The proposed fundamental investment policy on diversification is set
forth below in italics followed by a summary of the Fund's current fundamental
investment policy on issuer diversification. The Boards believe it is in the
best interests of each Fund and its shareholders and beneficial owners to adopt
the proposed fundamental investment policy in lieu of its current fundamental
diversification policy.

PROPOSED NEW FUNDAMENTAL POLICY: [THE FUND MAY NOT] WITH RESPECT TO
75% OF ITS ASSETS, PURCHASE A SECURITY OTHER THAN A SECURITY ISSUED OR
GUARANTEED BY THE U.S. GOVERNMENT, ITS AGENCIES, INSTRUMENTALITIES, OR
GOVERNMENT-SPONSORED ENTERPRISES OR A SECURITY OF AN INVESTMENT COMPANY IF, AS
A RESULT: (1) MORE THAN 5% OF THE FUND'S TOTAL ASSETS WOULD BE INVESTED IN THE
SECURITIES OF A SINGLE ISSUER, OR (2) THE FUND WOULD OWN MORE THAN 10% OF THE
OUTSTANDING VOTING SECURITIES OF ANY SINGLE ISSUER.

CHANGES TO CURRENT FUNDAMENTAL POLICIES: Adoption of the proposed
fundamental diversification policy represent a change in each Fund's
fundamental diversification policy. Currently, each Fund applies part or all
of its diversification policies to a percentage higher than the 75% required by
the 1940 Act for diversified funds. Approval of the proposed policy would
establish that the diversification policies for each Fund apply to only 75% of
the Fund's assets. For CAF, MAT, and MMP the percentage of assets to which the
securities-of-a-single-issuer restriction applies would change from 100% to
75%. For HYBT the percentage of assets to which the securities-of-a-single-
issuer restriction applies would change from 85% to 75%. For CAF, HYBT, MAT,
and MMP the percentage of assets to which the voting securities restriction
applies would change from 100% to 75%.

In addition, the proposed policy exempts from the diversification
restrictions securities issued or guaranteed by the U.S. Government, its
agencies, instrumentalities, or government-sponsored enterprises and securities
of an investment company. Currently, not every Fund exempts these types of
securities from its diversification policies. CFA and HYBT, do not exempt U.S.
government securities from either the securities-of-a-single-issuer or the
voting securities restrictions of their diversification policies. MAT exempts
U.S. government securities from the securities-of-a-single-issuer restriction.
MMP exempts U.S. government securities from both the
securities-of-a-single-issuer and the voting securities restrictions. No Fund
currently exempts securities of an investment company from either the
securities-of-a-single-issuer or the voting securities restrictions.

ITEM 1.B. PROPOSAL TO AMEND THE FUNDAMENTAL INVESTMENT POLICIES
ON INDUSTRY CONCENTRATION

The 1940 Act requires that a mutual fund adopt a fundamental policy
whether or not the fund may invest more than 25% of its assets (concentration
policy) in the securities of issuers in any one industry. The concentration
policy need not apply to investments in U.S. government securities.

The proposed fundamental investment policy on industry concentration
is set forth below in italics followed by a summary of the Funds' current
fundamental industry concentration policies. The Boards believe it is in the
best interests of each Fund and its shareholders and beneficial owners to adopt
the proposed fundamental investment policy in lieu of its current fundamental
industry concentration policy.

PROPOSED NEW FUNDAMENTAL POLICY: [THE FUND MAY NOT] PURCHASE A
SECURITY IF, AS A RESULT, MORE THAN 25% OF THE FUND'S TOTAL ASSETS WOULD BE
INVESTED IN SECURITIES OF ISSUERS CONDUCTING THEIR PRINCIPAL BUSINESS
ACTIVITIES IN THE SAME INDUSTRY. FOR PURPOSES OF THIS POLICY, THERE IS NO
LIMIT ON: (1) INVESTMENTS IN U. S. GOVERNMENT SECURITIES, IN REPURCHASE
AGREEMENTS COVERING U. S. GOVERNMENT SECURITIES, IN SECURITIES ISSUED BY THE
STATES, TERRITORIES OR POSSESSIONS OF THE UNITED STATES ("MUNICIPAL
SECURITIES") OR IN FOREIGN GOVERNMENT SECURITIES; OR (2) INVESTMENT IN ISSUERS
DOMICILED IN A SINGLE JURISDICTION. NOTWITHSTANDING ANYTHING TO THE CONTRARY,
TO THE EXTENT PERMITTED BY THE 1940 ACT, THE FUND MAY INVEST IN ONE OR MORE
INVESTMENT COMPANIES; PROVIDED THAT, EXCEPT TO THE EXTENT THAT IT INVESTS IN
OTHER INVESTMENT COMPANIES PURSUANT TO SECTION 12(d)(1)(A) OF THE 1940 ACT, THE
FUND TREATS THE ASSETS OF THE INVESTMENT COMPANIES IN WHICH IT INVESTS AS ITS
OWN FOR PURPOSES OF THIS POLICY.

<PAGE> 10
CHANGES TO CURRENT FUNDAMENTAL POLICIES: Each Fund currently has a
fundamental policy prohibiting concentration in any one industry. The proposed
restriction clarifies that government securities and securities of investment
companies (under certain circumstances) are exempt from the current
prohibition. The proposed policy also clarifies that issuers domiciled in the
same jurisdiction are not considered to be in the same industry. CAF, HYBT,
and MAT currently have a policy generally prohibiting concentration.
Currently, MMP's fundamental concentration policy exempts securities issued by
banks and securities issued or guaranteed by the U.S. government, its agencies,
or instrumentalities. No Fund currently states that concentration does not
include issuers domiciled in a single jurisdiction.

ITEM 1.C. PROPOSAL TO AMEND THE FUNDAMENTAL INVESTMENT POLICIES
ON BORROWING

The 1940 Act requires that a mutual fund adopt a fundamental policy on
borrowing. The 1940 Act prohibits a fund from issuing any senior security
(including debt), except that it permits borrow from banks in an amount not
exceeding one third of its total assets.

Because a Fund may occasionally need to borrow money to meet
substantial shareholder redemption or exchange requests when available cash is
not sufficient to satisfy these needs, the Boards have proposed amending the
Funds' current policies to permit the Funds greater flexibility to engage in
borrowing transactions. Much of what is included in the Funds' current
fundamental borrowing policies is not required by applicable law. The proposed
fundamental investment policy would permit borrowing up to the maximum amount
allowed by the 1940 Act and related Securities and Exchange Commission ("SEC")
interpretations. Also, the proposed policy would conform the Funds' policies
on borrowing to other funds managed by the adviser. The Boards believe that
standard policy will assist the Funds and the adviser in monitoring compliance
with the various investment policies to which the Funds are subject.

The proposed fundamental investment policy on borrowing is set forth
below in italics followed by a summary of the Funds' current fundamental
borrowing policies. The Boards believe it is in the best interests of each
Fund and its shareholders and beneficial owners to adopt the proposed
fundamental investment policy on borrowing in lieu of its current fundamental
investment policy.

PROPOSED NEW FUNDAMENTAL POLICY: [THE FUND MAY NOT] BORROW MONEY IF,
AS A RESULT, OUTSTANDING BORROWINGS WOULD EXCEED AN AMOUNT EQUAL TO ONE THIRD
OF THE FUND'S TOTAL ASSETS.

CHANGES TO CURRENT FUNDAMENTAL POLICIES: The proposed policy would allow each
Fund to borrow from any person and for any reason and could materially increase
the percentage of a Fund's assets that may be borrowed. Currently, CAF and
HYBT are restricted to borrowing 10% of their respective gross assets and one
third of their net assets. MAT is restricted to borrowing 10% of its total
assets. MMP currently is permitted to borrow up to one-third of its assets.

The proposed policy would change each Fund's borrowing policies by
allowing the Funds to borrow for purposes other than "emergency", "temporary",
or "extraordinary" and by allowing the Funds to make additional investments
before paying back their borrowings. The proposed policy would change MMP's
policy on borrowing by allowing the Fund to borrow for purposes other than to
facilitate transactions during abnormally heavy redemption requests. Approval
of the proposed policy would permit clarification of each Fund's policy as well
as permit it to engage in borrowing in a manner consistent with current law and
the SEC's interpretive positions.

ITEM 1.D. PROPOSAL TO AMEND THE FUNDAMENTAL INVESTMENT POLICIES
ON REAL ESTATE

The 1940 Act requires that a mutual fund adopt a fundamental policy on
acquiring interests in real estate. The Boards have proposed that the Funds'
current fundamental investment policies on investments in real estate be
amended so that they are more clear and uniform.

The proposed fundamental real estate policy is not expected to affect
the Funds' investment programs or instruments in which they invest. The Funds
will not purchase or sell real estate. The Boards believe that the proposed
real estate policy would clarify that the Funds are permitted to hold and sell
real estate only in the event that the Fund acquired the real estate as a
result of the ownership of securities or other instruments. Further, the
proposed amendment would

<PAGE> 11
clarify that the Funds may purchase all types of securities secured by real
estate, or interests therein, or issued by companies that invest in real
estate.

The proposed fundamental investment policy on real estate is set forth
below in italics followed by a summary of the Funds' current fundamental real
estate investment policies. The Boards believe it is in the best interests of
each Fund and its shareholders and beneficial owners to adopt the proposed
fundamental real estate policy in lieu of its current fundamental investment
policy.

PROPOSED NEW FUNDAMENTAL POLICY: [THE FUND MAY NOT] PURCHASE OR SELL
REAL ESTATE UNLESS ACQUIRED AS A RESULT OF OWNERSHIP OF SECURITIES OR OTHER
INSTRUMENTS (BUT THIS SHALL NOT PREVENT THE FUND FROM INVESTING IN SECURITIES
OR OTHER INSTRUMENTS BACKED BY REAL ESTATE OR IN SECURITIES OF COMPANIES
ENGAGED IN THE REAL ESTATE BUSINESS).

CHANGES TO CURRENT FUNDAMENTAL POLICIES: For each Fund, the proposed
fundamental investment policy primarily would conform the language of their
current real estate policies with the standard policy. The proposed policy
would also permit each Fund to invest in securities backed by real estate and
securities of companies engaged in the real estate business. Further, the
proposed policy would ensure that no Fund would be in violation of a
fundamental investment policy in the event that it were to acquire real estate
as a result of its ownership of securities or other instruments. Currently,
CAF is not prohibited from purchasing real estate but is prohibited from
purchasing real estate investment trusts that deal in real estate or related
interests. HYBT is prohibited from purchasing real estate or interests in
real estate, except through the purchase of securities commonly purchased by
financial institutions that do not include direct interests in real estate or
mortgages. MAT is prohibited from purchasing or selling real estate, but is
allowed to invest in securities secured by real estate or interests therein.
MMP is prohibited from investing in real estate, other than money market
securities secured by real estate, or money market securities issued by
companies that invest in real estate or related interests.

ITEM 1.E. PROPOSAL TO AMEND THE FUNDAMENTAL INVESTMENT POLICIES
ON LOANS

The 1940 Act requires that a mutual fund adopt a fundamental policy on
loans. The Funds' current fundamental loan policies prohibit the Funds from
many types of lending that are permitted by law.

The Boards believe that securities lending and other forms of lending
could be attractive investments for the Funds. The Boards propose to amend
each Fund's current fundamental loan policies to permit the Fund to engage in
securities lending to the extent permitted by applicable law. The proposed
policy generally would incorporate each Fund's current investment policy while
restating it more clearly and succinctly. Further, the proposed policy would
allow the Funds to make loans to the extent permitted by law, up to one third
of the Fund's total assets.

The proposed fundamental investment policy on loans is set forth below
in italics followed by a brief explanation of the changes the proposal would
bring to each Fund's current fundamental investment policies on loans. The
Boards believe it is in the best interests of each Fund and its shareholders
and beneficial owners to adopt the proposed fundamental loan policy in lieu of
its current fundamental investment policy.

PROPOSED NEW FUNDAMENTAL POLICY: [THE FUND MAY NOT] MAKE LOANS TO
OTHER PARTIES IF, AS A RESULT, MORE THAN ONE THIRD OF ITS TOTAL ASSETS WOULD BE
LOANED TO OTHER PARTIES. FOR PURPOSES OF THIS LIMITATION, ENTERING INTO
REPURCHASE AGREEMENTS, LENDING SECURITIES, AND ACQUIRING ANY DEBT SECURITY ARE
NOT DEEMED TO BE THE MAKING OF LOANS.

CHANGES TO CURRENT FUNDAMENTAL POLICIES: The proposed policy would
allow each Fund to invest up to the statutory maximum of one third its assets,
for any reason (as permitted by law and the Funds' investment restrictions),
rather than prohibiting them from lending at all, other than in a few
enumerated situations. Further, the proposed policy would clarify that
repurchase agreements, lending of securities and debt securities are not
considered "loans" for the purposes of the calculating the one third
limitation.

<PAGE> 12
ITEM 1.F. PROPOSAL TO AMEND THE FUNDAMENTAL INVESTMENT POLICIES
ON COMMODITIES

The 1940 Act requires that a mutual fund adopt a fundamental policy on
investments in commodities. The Boards have proposed amendments to the Funds'
current fundamental investment policies to provide the Funds with greater
flexibility in buying and selling futures contracts and options on futures
contracts. The Funds' current investment policy prohibits investment in
commodities, though CAF and MAT are permitted to invest in specific types of
securities (i.e. futures contracts and options on futures contracts) for
hedging purposes. The restrictive provisions of the Funds' current fundamental
investment policies on commodities are not required by law. The Boards believe
the Funds' adviser should have greater flexibility to enter into futures
contracts and related options consistent with the Funds' investment objectives
and programs, as market and regulatory developments require and permit, without
the necessity of seeking further shareholder approval. The new policy would
also conform each Fund's policy on commodities to one that is expected to
become standard for the advisor's funds. The Boards believe that standardized
policies will assist the Funds and their adviser in monitoring compliance with
the various investment policies to which the Funds are subject.

The proposed fundamental investment policy on commodities is set forth
below in italics followed by a brief explanation of the changes the proposal
would bring to each Fund's current fundamental investment policy on
commodities. The Boards believe it is in the best interests of each Fund and
its shareholders and beneficial owners to adopt the proposed fundamental
commodities policy in lieu of its current fundamental investment policy.

PROPOSED NEW FUNDAMENTAL POLICY: [THE FUND MAY NOT] PURCHASE OR SELL
PHYSICAL COMMODITIES UNLESS ACQUIRED AS A RESULT OF OWNERSHIP OF SECURITIES OR
OTHER INSTRUMENTS (BUT THIS SHALL NOT PREVENT THE FUND FROM PURCHASING OR
SELLING OPTIONS AND FUTURES CONTRACTS AND OPTIONS ON FUTURES OR FROM INVESTING
IN SECURITIES OR OTHER INSTRUMENTS BACKED BY PHYSICAL COMMODITIES).

CHANGES TO CURRENT FUNDAMENTAL POLICIES: The proposed policy would
change the policies of all the Funds by allowing them to own physical
commodities if such commodities happen to be acquired through ownership of
securities or other instruments and allowing them to invest in securities
backed by physical commodities. The proposed policy also would allow them to
invest in options, futures contracts and options on futures without limitation
as to purpose. CAF and MAT currently are prohibited from purchasing
commodities or commodities contracts except transactions involving financial
futures contracts to limit transaction and borrowing costs and for hedging
purposes. HYBT currently is prohibited from purchasing and MMP from investing
in any commodities or commodities contracts.

ITEM 1.G. PROPOSAL TO AMEND THE FUNDAMENTAL INVESTMENT POLICIES
ON UNDERWRITING

The 1940 Act requires that a mutual fund adopt a fundamental
investment policy on underwriting securities issued by other issuers. The
Funds' current fundamental investment policies on underwriting provide that the
Funds will not engage in underwriting the securities of other issuers. The
Boards propose to restate each Fund's current policy on underwriting to make it
more succinct and uniform. The proposed policy, which does not represent a
material change in the Funds' current investment policies, would prohibit the
Funds from underwriting the securities of other issuers (which is not a part of
the normal activities of a mutual fund). The proposed policy also would
clarify that sales of portfolio securities by the Funds that may be deemed to
be an underwriting are not prohibited.

The proposed fundamental investment policy on underwriting is set
forth below in italics followed by a brief explanation of the changes the
proposal would bring to each Fund's current fundamental investment underwriting
policy. The Boards believe it is in the best interests of each Fund and its
shareholders and beneficial owners to adopt the proposed fundamental
underwriting policy in lieu of its current fundamental investment policy.

PROPOSED NEW FUNDAMENTAL POLICY: [THE FUND MAY NOT] UNDERWRITE (AS
THAT TERM IS DEFINED IN THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT")) SECURITIES ISSUED BY OTHER PERSONS EXCEPT, TO THE EXTENT THAT IN
CONNECTION WITH THE DISPOSITION OF ITS ASSETS, THE FUND MAY BE DEEMED TO BE AN
UNDERWRITER.

CHANGES TO CURRENT FUNDAMENTAL POLICIES: The proposed policy would
not materially change CAF's, HYBT's, or MAT's investment policies regarding
underwriting, but make the language more succinct and uniform. The proposed
restriction does not materially change MMP's restriction on underwriting, but
merely clarifies that, for purposes of this

<PAGE> 13
restriction, it is permissible for the Fund to be technically deemed an
underwriter in connection with the disposition of its assets.

2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE CERTAIN
FUNDAMENTAL INVESTMENT POLICIES

ITEM 2.A. PROPOSAL TO REDESIGNATE AND AMEND THE FUNDAMENTAL
INVESTMENT POLICIES ON LIQUIDITY

The Boards have proposed that the fundamental investment policies on
purchasing unmarketable or illiquid securities be redesignated as operating
policies. If the proposed change is approved by shareholders, each Board has
approved adopting an operating policy that would: (1) allow the Fund to invest
up to 15% (10% for MMP) of its net assets in illiquid securities, and (2)
conform the Fund's operating policy in this area to one that is expected to
become standard for all the adviser's funds. CAF's, HYBT's and MAT's current
fundamental policies for illiquid securities limits each Fund to a maximum of
10% of its total assets, which is no longer required by the 1940 Act and SEC
interpretations. MMP's current policy restricts purchases only of repurchase
agreements with remaining maturities of more than seven days. The proposed
operating policy would permit the Funds (except MMP) to invest up to 15% (10%
for MMP) of its total assets, currently permissible under applicable SEC
interpretations, which should provide the Funds with greater flexibility in
responding to market and regulatory developments. Further, MMP's policy would
be consistent with current legal requirements.

As open-end investment companies, the Funds may not hold a significant
amount of illiquid securities because such securities may present valuation
problems, and it is possible the Funds could have difficulty satisfying
redemptions within seven days as required under the 1940 Act. In general, the
SEC defines an illiquid security as one that cannot be sold in the ordinary
course of business within seven days at approximately the value at which a Fund
has valued the security. Illiquid securities may include those securities with
legal or contractual restrictions on resale ("restricted securities") and
repurchase agreements with a duration of more than seven days.

In recognition of the increased size and liquidity of the
institutional markets for unregistered securities and in light of the
importance of institutional investors in the capital formation process, the SEC
has adopted rules, including Rule 144A under the 1933 Act, designed to further
facilitate efficient trading among institutional investors. These rules permit
a broader institutional trading market for securities subject to restriction on
resale to the general public. Since institutional markets are developing that
trade in these securities, the Funds are constrained by their current
investment policies. Accordingly, the adviser has recommended that the Funds'
current fundamental policy be eliminated. Further, the adviser has recommended
that the Funds adopt operating policies that would permit investing in illiquid
securities to the extent permissible under the 1940 Act and treating
"restricted" securities that are nonetheless liquid to be purchased without
regard to the Funds' limit on illiquid investments. Of course, the Funds would
modify their operating policy to comply with future regulatory and market
developments.

If this proposal is approved by shareholders, the specific types of
securities that might be deemed to be illiquid would be determined from time to
time by the adviser under policies approved by the Boards, with reference to
legal, regulatory and market developments. By making the Funds' policies on
illiquid securities nonfundamental, the Funds would be able to respond more
quickly to market developments because no shareholder vote would be required to
redefine what types of securities may be deemed illiquid. In accordance with
the Funds' policies prohibiting the Funds from acting as underwriters, no Fund
would purchase restricted securities for the purpose of subsequent distribution
in a manner that would cause the Fund to be deemed an underwriter.

If adopted by shareholders, the new operating policy would allow the
Funds to invest up to 15% of its net assets in illiquid securities. The 15%
limit for CAF, HYBT, and MAT would be a higher percentage of illiquid
securities than the Funds are currently permitted (10%) and is the result of a
1992 liberalization by the SEC regarding these securities. If the fundamental
policy is changed to an operating policy, the Funds would, without the
necessity of any further shareholder vote, be able to take advantage of any
future changes in SEC policy in this area.

The proposed operating policy is set forth below in italics followed
by a summary of the Funds' current fundamental investment policies on illiquid
(including "restricted") securities. The Boards believe it is in the best
interests of each Fund and its shareholders and beneficial owners to
redesignate and amend such policies as the proposed operating (nonfundamental)
policy.

<PAGE> 14
PROPOSED NEW OPERATING POLICY: [THE FUND MAY NOT] INVEST MORE THAN
15% (10% FOR MMP) OF ITS NET ASSETS IN: (1) SECURITIES THAT CANNOT BE DISPOSED
OF WITHIN SEVEN DAYS AT THEIR THEN-CURRENT VALUE; (2) REPURCHASE AGREEMENTS NOT
ENTITLING THE HOLDER TO PAYMENT OF PRINCIPAL WITHIN SEVEN DAYS; AND (3)
SECURITIES SUBJECT TO RESTRICTIONS ON THE SALE OF THE SECURITIES TO THE PUBLIC
WITHOUT REGISTRATION UNDER THE 1933 ACT ("RESTRICTED SECURITIES") THAT ARE NOT
READILY MARKETABLE. THE FUND MAY TREAT CERTAIN RESTRICTED SECURITIES AS LIQUID
PURSUANT TO GUIDELINES ADOPTED BY THE EACH FUND'S BOARD OF TRUSTEES.

CHANGES TO CURRENT FUNDAMENTAL POLICIES: The proposed operating
policy would allow CAF, HYBT and MAT to invest up to 15% of its assets in
illiquid or restricted securities, rather than the current 10%, and its
redesignation as an operating policy would give the Funds more flexibility to
respond to changing market conditions. If adopted by shareholders , the new
operating policy would conform MMP's policy with current legal requirements.
If the fundamental policy is changed to the proposed operating policy, the Fund
would, without the necessity of any further shareholder vote, be able to
respond to any future changes in SEC rules or policy relative to money market
funds.

ITEM 2.B PROPOSAL TO REDESIGNATE AND AMEND THE FUNDAMENTAL
INVESTMENT POLICIES ON INVESTMENTS TO EXERCISE CONTROL

The Boards recommend that the shareholders approve the redesignation
of the policies prohibiting purchasing securities for the purpose of exercising
control of the issuer from fundamental to operating policies. If the proposed
change is approved by shareholders, each Board has approved adopting operating
policies that would: (1) prohibit investing for the sole purpose of exercising
control of an issuer, and (2) conform each Fund's operating policy in this area
to one that is expected to become standard for all the adviser's funds to which
this type of restriction is appropriate.

The Funds currently have fundamental investment policies that prohibit
them from investing in securities for the purpose of exercising control over or
management of a company. In the past, this restriction was mandated by certain
state securities laws. However, as a result of the recent enactment of the
National Securities Market Improvement Act of 1996 ("NSMIA"), state law
restrictions on investment to exercise control or management no longer apply to
the Funds. In addition, the 1940 Act currently does not contain any equivalent
restrictions. The Boards, therefore, have concluded that it is in the best
interests of each Fund and its shareholders and owners indirectly invested in
the Fund to redesignate such policy as a nonfundamental operating policy.

The proposed operating policy on investing to exercise control is set
forth below in italics. The Boards believe it is in the best interests of each
Fund and its shareholders and beneficial owners to redesignate the policy as an
operating (nonfundamental) policy and to adopt the proposed language.

PROPOSED NEW OPERATING POLICY: [THE FUND WILL NOT] MAKE INVESTMENTS
FOR THE PURPOSE OF EXERCISING CONTROL OF AN ISSUER. INVESTMENTS BY THE FUND IN
ENTITIES CREATED UNDER THE LAWS OF FOREIGN COUNTRIES SOLELY TO FACILITATE
INVESTMENT IN SECURITIES IN THAT COUNTRY WILL NOT BE DEEMED THE MAKING OF
INVESTMENTS FOR THE PURPOSE OF EXERCISING CONTROL.

CHANGES TO CURRENT FUNDAMENTAL POLICIES: The proposed policy would
not cause any material changes to the Funds' current policies regarding
investing to exercise control. It would merely make their language uniform and
clarify that the Funds could invest in certain types of foreign pools created
for non-residents of that country without being deemed investing for the
purpose of exercising control.

ITEM 2.C. PROPOSAL TO REDESIGNATE AND AMEND THE FUNDAMENTAL
INVESTMENT POLICIES ON SHORT SALES

The Funds have fundamental investment policies limiting short sales of
securities. The Boards recommend that shareholders approve redesignating the
fundamental investment policies as operating policies.

In a short sale, an investor sells a borrowed security and has a
corresponding obligation to the lender to return the identical security. Under
the proposed operating policy, entering into short sales "against-the-box"
would not be deemed to be engaging in the strategy of short sales of
securities. In a short sale "against-the-box," a Fund could engage in short
sales if it owned, or, by virtue of its ownership of other securities, had the
right to obtain, securities equivalent in kind and amount to the securities
sold short.

<PAGE> 15
The Boards recommend that the shareholders redesignate the current
fundamental policies as operating policies and adopt the proposed new language.
The proposal is set forth below in italics followed by a summary of the Funds'
current fundamental investment policies on short sales of securities. The
Boards believe it is in the best interests of each Fund and its shareholders
and beneficial owners to redesignate the policy as an operating
(nonfundamental) policy and to adopt the proposed language.

PROPOSED NEW OPERATING POLICIES: [THE FUND WILL NOT] SELL SECURITIES
SHORT, UNLESS IT OWNS OR HAS THE RIGHT TO OBTAIN SECURITIES EQUIVALENT IN KIND
AND AMOUNT TO THE SECURITIES SOLD SHORT (SHORT SALES "AGAINST-THE-BOX"), AND
PROVIDED THAT TRANSACTIONS IN FUTURES CONTRACTS AND OPTIONS ARE NOT DEEMED TO
CONSTITUTE SELLING SECURITIES SHORT.

CHANGES TO CURRENT FUNDAMENTAL POLICIES: Adoption of the proposed
operating policies would not materially change the substance of any of the
Funds' policies. It would merely clarify that sales "against the box" and
transactions in futures contracts and options, if any, are not considered short
sales.

ITEM 2.D. PROPOSAL TO REDESIGNATE AND AMEND THE FUNDAMENTAL
INVESTMENT POLICIES ON PURCHASING ON MARGIN

The Funds have fundamental investment policies limiting purchasing
securities on margin. Margin purchases involve the purchase of securities with
money borrowed from a broker. "Margin" is the cash or eligible securities that
the borrower places with its broker as collateral for the margin loan. The
Boards recommend that shareholders approve redesignating the fundamental
investment policies as operating policies. The purpose of the proposal is to
allow the Funds greater flexibility in responding to market and regulatory
developments by providing the Boards with the authority to make changes in the
respective Fund's policy on margin without further shareholder approval. The
new policy would also make the Funds' policies on margin uniform with the
policies of other funds managed by their adviser, allowing for more efficient
management. The Boards believe that standardized policies will assist the
Funds and their adviser in monitoring compliance with the various investment
policies to which the Funds are subject.

Set forth below is the proposed operating policy in italics followed
by a summary of the Funds' current fundamental investment policies on
purchasing securities on margin. The Boards believe it is in the best interests
of each Fund and its shareholders and beneficial owners to redesignate the
policy as an operating (nonfundamental) policy and to adopt the proposed
language.

PROPOSED NEW OPERATING POLICY: [THE FUND WILL NOT] PURCHASE
SECURITIES ON MARGIN, EXCEPT THAT THE FUND MAY USE SHORT-TERM CREDIT FOR THE
CLEARANCE OF ITS PORTFOLIO TRANSACTIONS, AND PROVIDED THAT INITIAL AND
VARIATION MARGIN PAYMENTS IN CONNECTION WITH FUTURES CONTRACTS AND OPTIONS ON
FUTURES CONTRACTS SHALL NOT CONSTITUTE PURCHASING SECURITIES ON MARGIN.

CHANGES TO CURRENT FUNDAMENTAL POLICIES: For CAF and MAT, the
proposed operating policy would eliminate the 5% restriction and clarify that
initial and variation margin payments in connection with futures contracts and
options on futures contracts do not constitute purchasing securities on margin
for purposes of this restriction. HYBT and MMP currently are prohibited from
making any purchases of securities on margin. The proposed operating policy
would change HYBT's and MMP's policies in that it would allow the Funds to use
short-term credit necessary to clear transactions and initial and variation
margin payments made in connection with any purchase and sale of futures
contracts and options on futures contracts.

ITEM 2.E. PROPOSAL TO REDESIGNATE AND AMEND THE FUNDAMENTAL
INVESTMENT POLICIES ON PLEDGING ASSETS

Each Fund has a fundamental policy on pledging assets. The Boards
have proposed that the policy be eliminated and replaced with an operating
policy. Restrictions on pledging assets were imposed under certain state
securities laws. As a result of the recent enactment of NSMIA, however, state
law restrictions on pledging no longer apply to the Funds. In addition, the
1940 Act currently does not contain any specific restrictions on pledging,
except indirectly as it relates to "borrowings." The Boards do not anticipate
that redesignating the Funds' current fundamental investment policies on
pledging will result in a material change of the Funds' practices.

The new operating policy would allow each Fund to pledge its assets,
consistent with its current or proposed fundamental policy on borrowing and
only as it is permitted by the 1940 Act. The Boards believe it is advisable to
provide

<PAGE> 16
the Funds with greater flexibility in pursuing their investment objectives and
in responding to regulatory and market developments. The new policy would also
conform the Funds' policies on pledging its assets with one that is expected to
become standard for the Funds advised by the adviser. The Boards believe that
standard policies will assist the Funds and adviser in monitoring compliance
with the various investment policies to which the Funds are subject.

The proposed operating policy is set forth below in italics followed
by a summary of the Funds' current fundamental investment policy on pledging.
The Boards believe it is in the best interests of each Fund and its
shareholders and beneficial owners to redesignate the fundamental investment
policy as an operating policy and to adopt the proposed language.

PROPOSED NEW OPERATING POLICY: [THE FUND WILL NOT] PLEDGE ITS ASSETS
EXCEPT AS PERMITTED BY THE 1940 ACT.

CHANGES TO CURRENT FUNDAMENTAL POLICIES: Currently each Fund is
restricted to pledging assets to secure permitted borrowing in an amount that
is a percentage of the Funds assets. The proposed operating policy would
eliminate CAF's, HYBT's, and MAT's 10% and MMP's 15% restriction. Further, it
would allow them to pledge their assets consistent with their current or
proposed fundamental policies on borrowing and with what is permitted by the
1940 Act.

ITEM 2.F. PROPOSAL TO ELIMINATE THE FUNDAMENTAL INVESTMENT
POLICIES ON OIL, GAS AND MINERALS

CAF and MMP currently have fundamental investment policies prohibiting
investment in oil, gas and mineral leases and exploration and development
programs. In the past, this policy was imposed by certain state securities
laws and regulations. However, as the result of the recent enactment of NSMIA,
these state law restrictions no longer apply to the Funds. The 1940 Act
currently does not contain any equivalent restrictions. Moreover, this
provision is redundant because of the fundamental investment restriction
regarding physical commodities exists under both the current and the proposed
investment policies on commodities. The Boards have concluded that it is in
the best interests of each Fund and its shareholders and owners indirectly
invested in the Fund to eliminate such policies.

ITEM 2.G. PROPOSAL TO ELIMINATE THE FUNDAMENTAL INVESTMENT
POLICIES ON "UNSEASONED ISSUERS"

CAF and MMP currently have fundamental investment policies that
prohibit them from investing in securities issued by a corporation that has not
been in continuous operation for three years (typically referred to as
"unseasoned issuers"). This investment policy is based on restrictions on
investment in unseasoned issuers contained in certain state securities laws and
regulations. However, as a result of the recent enactment of NSMIA, state law
restrictions on permissible investments no longer apply to the Funds. In
addition, the 1940 Act currently does not contain any equivalent restrictions.
Their Boards, therefore, has concluded that it is in the best interests of each
Fund and its shareholders to eliminate the policy on unseasoned issuers. In
addition, the Boards believe that elimination of this policy will increase the
Funds' flexibility to invest in unseasoned issuers that otherwise might meet
its investment objectives and policies.

Securities of unseasoned issuers may be subject to greater risk than
securities of more established companies because unseasoned issuers have only a
brief operating history and may have more limited markets and financial
resources. However, the Boards believe that the increasing prevalence of
unseasoned issuers, the investment opportunities offered by such issuers, and
the fact that any such investments would be made in accordance with the
investment objectives and policies of the Funds warrants the elimination of the
current policy.

ITEM 2.H. PROPOSAL TO ELIMINATE THE FUNDAMENTAL INVESTMENT
POLICIES ON PUTS AND CALLS

MMP currently has a fundamental investment policy that prohibits it
from writing (i.e., selling) or purchasing put or call options or any
combination thereof. Options such as puts and calls are contracts giving the
holder the right to either buy or sell a financial instrument at a specified
price before a specified time. If the option is not exercised or sold, it
becomes worthless at its expiration date, and the premium payment is lost to
the option holder. If a mutual fund writes an option, it receives a premium
that it keeps whether or not the option is sold.

In the past, the Fund's current fundamental policy restricting writing
or purchasing puts and calls was a response to certain state securities laws
and regulations. However, as a result of the recent enactment of NSMIA, state
law restrictions

<PAGE> 17
on purchasing put or call options no longer apply to the Fund. In addition,
the 1940 Act currently does not require that such restriction be fundamental.
Moreover, the Board believes that allowing the Fund to utilize put and call
options would provide the Fund with an additional means of attempting to hedge
some of the risks associated with certain investments, affording it greater
flexibility in pursuing its investment objective. The Board believes it in the
best interest of MMP and its shareholders and beneficial owners that the Fund
be provided with greater flexibility in responding to market and regulatory
developments. It is proposed therefore that MMP's fundamental policy
restricting the use of these instruments be eliminated.

ITEM 2.I. PROPOSAL TO ELIMINATE FUNDAMENTAL INVESTMENT POLICY
ON INVESTING IN WARRANTS

CAF currently has a fundamental investment policy that limits the
Fund's investment in warrants to 5% of its total assets. Restrictions on
purchasing warrants were imposed under certain state securities laws. As a
result of the recent enactment of NSMIA, however, state law restrictions on
purchasing warrants no longer apply to the Fund. In addition, the 1940 Act
currently does not contain any specific restrictions on purchasing warrants.
The Board, therefore, has concluded that it is in the best interests of the
Fund and its shareholders and beneficial owners to eliminate the current policy
on purchasing warrants. The Board does not anticipate that eliminating the
Fund's current fundamental investment policies on warrants will result in a
material change of the Fund's practices.

ITEM 2.J. PROPOSAL TO REDESIGNATE AND AMEND THE FUNDAMENTAL
INVESTMENT POLICIES ON INVESTING IN THE SECURITIES OF
OTHER INVESTMENT COMPANIES

MMP's current policy prohibits it from investing in securities issued
by other investment companies, except in the case of a merger, consolidation or
reorganization. CAF, HYBT and MAT currently have fundamental investment
policies regarding investments in securities issued by other investment
companies that would not allow the Funds to invest in other investment
companies for cash management or other purposes, including use of a
master-feeder or fund-of-funds structure. While the 1940 Act limits the extent
to which a mutual fund may invest in other investment companies, it does not
require the adoption of a fundamental policy with respect to investment in
other investment companies. Further, the Funds' current fundamental policy are
redundant to the 1940 Act in that it merely recites prohibitions similar to
those set forth in that Act with respect to investments in other investment
companies. The Boards believe that the fundamental policy is unnecessary and
should be eliminated and the standard operating policy adopted instead.
Moreover, the Boards believe that the 1940 Act provisions regarding investment
in other investment companies may change from time to time. The elimination of
the fundamental policy and adoption of the standard operating policy,
therefore, would permit the Funds maximum flexibility in responding to a
changing regulatory environment and, further, allow the Funds to adopt
master-feeder or fund-of-funds structures.

The Boards believe it is in the best interests of each Fund and its
shareholders and beneficial owners to eliminate the current fundamental policy
and restrictions on investment in other investment companies and to adopt the
following operating policy:

PROPOSED NEW OPERATING POLICY: [THE FUND MAY NOT] INVEST IN
SECURITIES OF ANOTHER INVESTMENT COMPANY, EXCEPT TO THE EXTENT PERMITTED BY THE
1940 ACT AND RULES, REGULATIONS AND EXEMPTIVE ORDERS OF THE SECURITIES EXCHANGE
COMMISSION.

CHANGES TO THE CURRENT POLICIES: The proposed operating policy would
eliminate unnecessary restrictions on CAF's, HYBT's and MAT's ability to
respond to a changing regulatory environment, and would allow each of the Funds
to adopt a master-feeder or fund-of-funds structure. CAF, HYBT, and MAT
currently cannot purchase the securities of any other investment company except
in the open market and at customary brokerage rates and in no event more than
3% of the voting securities of any investment company. MAT may purchase
securities of another investment company in connection with a merger,
consolidation, purchase of assets or similar transaction approved by the Fund's
shareholders.

ITEM 2.K. PROPOSAL TO REDESIGNATE AND AMEND THE FUNDAMENTAL
INVESTMENT POLICY ON MAXIMUM MATURITY OF INVESTMENTS
TO COMPLY WITH RULE 2A-7

<PAGE> 18
MMP's current fundamental policy prohibits it from purchasing any
security with a maturity date of more than one year. The 1940 Act and Rule
2a-7 thereunder provide requirements to govern the investments of all money
market funds. These requirements prescribe credit quality, diversification,
and maturity restrictions for all money market funds. MMP's current policy is
limited to only one aspect of the Rule, maturity, and limits the Fund to a
requirement that was changed by the SEC several years ago. Further, because
the Fund "holds itself out" as a money market fund, it must comply with the
current requirements of the 1940 Act Rule 2a-7, whether or not those
requirements are incorporated in a policy.

The Board believes that the current fundamental policy is not only
unduly restrictive but also is unnecessary and should be eliminated. The Fund
should have an operating (nonfundamental) policy to comply with the
requirements that govern all money market funds and the standard operating
policy adopted instead. Moreover, the Board believes that the 1940 Act
provisions regarding money market funds may change from time to time. The
elimination of the fundamental policy and adoption of the standard operating
policy, therefore, would permit the Fund maximum flexibility in responding to a
changing regulatory environment.

The Board believes it is in the best interests of the Fund and its
shareholders and beneficial owners to redesignate and amend the current
fundamental policy to comply with the requirements of the 1940 Act regarding
moneymarket funds.

PROPOSED NEW OPERATING POLICY: THE FUND SHALL INVEST PURSUANT TO THE
1940 ACT AND RULE 2a-7 AND OTHER RULES GOVERNING INVESTMENTS OF MONEY MARKET
FUNDS.

ITEM 2.L. PROPOSAL TO REDESIGNATE THE FUNDAMENTAL INVESTMENT
POLICY ON "CREDIT RATINGS OF ISSUERS'

MAT currently has a fundamental investment policy that prohibits it
from investing in securities rated below investment grade or more than 10% of
its assets invested in debt securities in securities rated lower than BBB by
Standard & Poor's Corporation ("S&P") or Baa by Moody's Investors Services
("Moody's"), or, if unrated, deemed comparable to such securities. This
investment policy is based on restrictions on investment in lower-rated issuers
contained in certain state securities laws and regulations. However, as a
result of the recent enactment of NSMIA, state law restrictions on permissible
investments no longer apply to the Fund. In addition, the 1940 Act currently
does not contain any equivalent restrictions. The investment adviser has
indicated that it would be desirable to use the ratings of an additional rating
agency, Fitch Investors Service, Inc. ("Fitch"). Further, rating agency
ratings are only one factor that contributes to the investment adviser's
overall evaluation of credit quality and safety of an issuer. The Board,
therefore, has concluded that it is in the best interests of the Fund and its
shareholders to redesignate as operational the policy on credit rating of
issuers. In addition, the Boards believe that redesignating this policy will
increase the Fund's flexibility to invest in certain lower-rated issuers that
otherwise might meet its investment objectives, quality standards and policies.

Debt rated BB by S&P or Fitch or Ba by Moody's is considered
predominately speculative regarding its capacity to pay interest and repay
principal in accordance with the terms of the debt. The investment adviser
does not intend to purchase this lower-quality debt except as a result of an
independent quality evaluation. The Board believes it is in the best interests
of the Fund and its shareholders and beneficial owners to redesignate the
current fundamental policy restricting credit ratings of issuers as an
operating policy and adopt the following operating policy:

PROPOSED NEW OPERATING POLICY: THE FUND NORMALLY DOES NOT PURCHASE
ANY SECURITIES RATED B OR LOWER AND, OF THE PORTION OF ITS TOTAL ASSETS
INVESTED IN DEBT SECURITIES, DOES NOT PURCHASE MORE THAN 10% IN SECURITIES
RATED BB BY S&P OR FITCH OR Ba BY MOODY'S.

<PAGE> 19
ITEM 2.M. PROPOSAL TO ELIMINATE THE FUNDAMENTAL INVESTMENT
POLICIES ON SECURITIES IN WHICH MANAGEMENT HOLDS
INTERESTS

CAF, HYB and MMP currently have fundamental investment policies that
generally prohibit them from investing in securities in which the officers,
trustees or directors of the adviser or its affiliates hold "substantial"
investments. This investment policy is based on restrictions on investments
contained in certain state securities laws and regulations. However, as a
result of the recent enactment of NSMIA, state law restrictions on permissible
investments no longer apply to the Funds. In addition, the 1940 Act currently
does not contain any equivalent restrictions. The Funds, however, are subject
to certain disclosure requirements with regard to such investments. Their
Boards, therefore, have concluded that it is in the best interests of each Fund
and its shareholders to eliminate the policy on these issuers. In addition,
the Boards believe that elimination of this policy will increase the Funds'
flexibility to invest in issuers that otherwise might meet its investment
objectives and policies. The Board does not anticipate that eliminating the
Funds' current fundamental investment policies on these securities will result
in a material change of the Funds' practices.

3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO PERMIT
EACH FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR MORE
INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE FUND'S ADVISORY
AGREEMENT

Approval of this Proposal would enable a Fund, with the approval of
its Boards, at some future time to invest its assets in a master-feeder or
fund-of-funds structure. None of the Funds currently intends to convert to
either a master-feeder or fund-of-funds structure. In a master-feeder
structure, a fund seeks to achieve its investment objective by investing in a
single investment company having substantially the same investment objective,
policies and risk profile as the Fund. In a fund-of-funds structure, a Fund
diversifies its assets by investing in two or more investment companies, each
with a different investment objective, policies and risk profiles. A Fund
investing in either a master-feeder or fund-of-funds structure would continue
to pursue its current investment objective through investment in one or more
investment companies, referred to as "Master Portfolios." The Master Portfolio
in turn would invest directly in the securities of individual issuers. A Fund
investing in one or more Master Portfolios is referred to as a "Feeder Fund."

The following illustration compares a traditional mutual fund
structure (where a Fund invests directly in portfolio securities) with a
master-feeder and a fund-of-funds structure.

[GRAPHIC: Flow chart of traditional, master-feeder & fund-of-funds
structures]

The primary reason to use a master-feeder or fund-of-funds structure
would be to provide a mechanism to pool, in a single Master Portfolio, the
common investments of a number of Feeder Funds and potentially other direct
investors in the Master Portfolio. After approval of this Proposal and a
subsequent Board determination to implement the policies described herein
(which is not currently proposed), the assets of more than one Feeder Fund
could be pooled in each Master Portfolio. That pooling of assets is designed
to create a larger asset base for each Feeder Fund in order to provide
investment and administrative efficiencies and enhanced portfolio
diversification. See "Board Evaluation" below. There can be no assurance that
any Fund's total expenses would be reduced as a result of the Fund's investment
in a master-feeder or fund-of-funds structure.

Approval by shareholders of a Fund of this Proposal will permit that
Fund to convert in the future to a master-feeder or fund-of-funds structure or
otherwise invest all or a portion of its investable assets in one or more
investment companies to the extent permitted by law.

Specifically, approval of this Proposal by Fund shareholders would
permit a Fund, solely with each Boards approval at some future time, to use a
master-feeder or fund-of-funds structure. It would amend that Fund's
fundamental investment policies regarding diversification, concentration and/or
investment in the securities of other investment companies. The amendments
would clarify that the diversification and concentration policies of a Fund
operating in a master-feeder or fund-of-funds structure apply to the portfolio
securities of the Master Portfolios in which the Fund invests rather than to
the interests in the Master Portfolios held by the Fund. These amendments are
discussed in detail below under "Amendments to Investment Policies".

<PAGE> 20
Approval of this Proposal by a Fund also would amend that Fund's
investment advisory agreement, for a Fund using a master-feeder or
fund-of-funds structure, to eliminate the payment by a Feeder-Fund of advisory
fees for portfolio management on assets invested in a Master Portfolio.

Upon approval of this Proposal, a Fund could convert to a
master-feeder or fund-of-funds structure solely upon the Boards' determination
that the conversion is in the best interests of the Fund and its shareholders.
A Fund would provide shareholders prior notice of a conversion. The Boards
would retain the right to withdraw a Fund's investment in a Master Portfolio at
any time, and the Fund could thereafter resume investing directly in individual
securities or could re-invest its assets in another Master Portfolio.

The conversion to a master-feeder or fund-of-funds structure would be
accomplished by transferring each converting Fund's assets to the appropriate
Master Portfolio in exchange for an interest in the Master Portfolio equal in
value to the assets transferred. Each converting Fund's assets would be
transferred in kind to the Master Portfolio(s) and valued in accordance with
the Fund's normal valuation procedures. The conversion would not affect the
net asset value of the shares of a Fund. All costs of the conversions would be
borne by the Fund or Funds involved.

MASTER-FEEDER AND FUND-OF-FUNDS STRUCTURES

Each Master Portfolio would be a separate series of a registered,
open-end management investment company that was formed as a business trust
under Delaware law. Each master-feeder or fund-of-funds structure and its
corresponding risks are described separately below. Aspects of the two
structures that are similar are described below under "Common Aspects of the
Master-Feeder or Fund-of-Funds Structures."

MASTER-FEEDER

In a master-feeder structure, a Feeder Fund holds as its primary asset
an interest in a Master Portfolio with substantially the same investment
objective, policies and risk profile as the Fund. In addition, to the extent
necessary to manage cash balances, a Feeder Fund may invest directly in cash
and cash equivalents. The Fund would otherwise continue its normal operations.
The structure is designed to achieve investment and administrative efficiencies
and enhanced portfolio diversification by allowing a Fund to pool its assets
with the assets of other entities invested in the Master Portfolio.

When required under the 1940 Act, a Master Portfolio will hold a
meeting of interestholders in order to obtain their approval of a change to the
Portfolio's operations. As an interestholder of a Master Portfolio, a Feeder
Fund would be entitled to vote in proportion to the Fund's relative interest in
the Master Portfolio. If required by the 1940 Act or applicable state law, a
Fund investing through a master-feeder structure will hold a meeting of its
shareholders to obtain instructions on how to vote its interest in the Master
Portfolio and will vote its interest in the Master Portfolio in proportion to
the votes cast by the Fund's shareholders or may, under certain circumstances,
without a meeting of shareholders vote its interests in the Master Portfolio in
proportion to the votes cast by the outside interestholders. In other
circumstances, the Boards will vote the Feeder Fund's interest in the Master
Portfolio in accordance with the best interests of the Fund's shareholders.

Subject to applicable legal requirements, the Feeder Fund will not
seek instructions from its shareholders with respect to: (1) any proposal
relating to a Master Portfolio that, if made with respect to the Fund, would
not require the vote of Fund shareholders; or (2) any proposal relating to the
Master Portfolio that is substantially the same as a proposal previously
approved by the Fund's shareholders.

FUND-OF-FUNDS

In a fund-of-funds structure, a Feeder Fund holds interests in two or
more Master Portfolios and, to the extent it manages a portion of its assets
directly, individual securities of other issuers. The Fund would otherwise
continue its normal operations. A Fund might invest in a number of different
Master Portfolios to achieve investment and administrative efficiencies and
enhanced portfolio diversification by pooling its assets with the assets of
other entities invested in the Master Portfolios.

In general, the fund-of-funds structure is suitable for a Feeder Fund
that follows a "multi-style" investment approach. That approach involves the
investment, through percentage allocations consistent with the Fund's
investment

<PAGE> 21
objective and policies, in a number of Master Portfolios, each with a different
investment objective and investment policies. The "multi-style" approach is
intended to increase asset diversification and to reduce the risk of relying on
a single investment style. A Fund would convert to a fund-of-funds structure
if the Boards were to determine that it was in the best interests of the Fund
to follow a "multi-style" investment approach in which the Fund's assets would
be allocated among several Master Portfolios.

A Feeder Fund's investments in the investment styles and Master
Portfolios would be viewed by the adviser as no different from investments made
directly by the adviser on behalf of a Fund in portfolio securities.
Accordingly, consistent with a Feeder Fund's investment objective and policies,
the adviser would be able to make changes in the percentage allocations at any
time it deemed appropriate, including in response to market or other
conditions. The adviser also would rebalance periodically the investments
among the Master Portfolios to ensure that the Fund continued to operate in
accordance with any target percentage allocations.

When business or financial conditions warrant, a Feeder Fund might
assume a temporary defensive position and directly invest without limit in cash
or prime-quality cash equivalents. During periods when and to the extent that
a Feeder Fund assumes a temporary defensive position, the Fund's assets could
be invested outside of the specified ranges.

If a Master Portfolio holds a meeting of interestholders, for instance
to obtain their approval of a change in the Portfolio's operations or
investment advisory agreement, a Feeder Fund, as an interestholder of a Master
Portfolio, would be entitled to vote in proportion to its relative interest in
the Master Portfolio. A Feeder Fund investing through a fund-of-funds
structure would not, in general, hold a shareholder meeting when a Master
Portfolio is conducting a meeting of its interestholders. As with any direct
investment in securities, the Boards would vote the Fund's interests in the
Master Portfolio in the best interests of the shareholders of the Fund.

COMMON ASPECTS OF THE MASTER-FEEDER AND FUND-OF-FUNDS STRUCTURES

A Fund would invest in a Master Portfolio on the same terms and
conditions as any other investor in the Master Portfolio and would bear a
proportionate share of the Master Portfolio's expenses.

The Master Portfolios generally offer their shares only to
institutional or other qualified shareholders. Other pooled investment
vehicles that invest in the Master Portfolio, including other mutual funds,
might be marketed in different ways than those used by a particular Feeder Fund
or to different types of investors than those investing in that Feeder Fund.
Another mutual fund investing in a Master Portfolio might sell fund shares to
the general public at a different public offering price than the Funds' shares
and could have different fees and expenses than the Funds. Also, other
investors in a Master Portfolio may have different yields and returns than
those of a particular Feeder Fund.

If there are other investors in a Master Portfolio, there could be no
assurance that a vote of all the interestholders of the Master Portfolio would
result in the same outcome as a vote of the shareholders of the Feeder Fund.
If the outcome of a Master Portfolio vote were not consistent with the vote of
the Fund shareholders, the Boards would consider whether it was still in the
best interests of the Fund and its shareholders to invest in the Master
Portfolio. The Boards would retain the right to redeem a Feeder Fund's
investment in a Master Portfolio at any time if the Boards were to determine
that it is in the best interests of the Fund and its shareholders to do so. A
Fund might redeem, for example, if the outcome of a vote of the interestholders
of a Master Portfolio were not acceptable to the Boards. A redemption could
result in an in-kind distribution of portfolio securities (as opposed to a cash
distribution) to the Fund by the Master Portfolio.

If a Feeder Fund were to withdraw its investment from a Master
Portfolio, the Boards would consider what action should be taken to manage the
withdrawn assets. Possible actions could include management of the Fund's
assets in accordance with its investment objectives and policies by its adviser
(and/or named subadvisers) or investment of the assets in another Master
Portfolio. The inability of a Fund to find a suitable replacement
investment(s) could have a significant impact on Fund shareholders.

A Feeder Fund's investments in a Master Portfolio could be affected by
the actions of other large investors in the Master Portfolio. If, for example,
a Master Portfolio had another large investor that redeemed its interest in the
Master Portfolio, the Fund and the Master Portfolio's remaining investors could
experience higher pro rata operating expenses and resulting lower returns.

<PAGE> 22
Investment of a Feeder Fund's assets in a Master Portfolio would
affect the Fund's current arrangements for management and administrative
services. As a result of the investment, some services would be provided by
the service providers of the relevant Master Portfolio while others would
continue to be provided directly to the Fund. Except as described in this
Proxy Statement, the overall rate at which a Fund would bear costs for the
provision of investment advisory and other services would remain unchanged.

TAX CONSEQUENCES

Management of the Trust would proceed with a conversion to a
master-feeder or fund-of-funds structure only upon receipt of an opinion of
counsel to the effect that neither a contribution of the Feeder Fund's assets
to a Master Portfolio in exchange for an interest in the Master Portfolio nor a
withdrawal of a Fund's assets (at that time) from a Master Portfolio would
result in the recognition of gain or loss to the Fund for federal income tax
purposes.

Each Fund currently qualifies for treatment as a regulated investment
company under the Internal Revenue Code of 1986. As such, a Fund does not pay
federal income or excise taxes to the extent that it distributes to
shareholders its net investment income and any net realized capital gain at
certain times. [The Funds are not liable for any income, corporate excise, or
franchise taxes in the Commonwealth of Massachusetts.] Each Master Portfolio
in which a Fund would invest would conduct its operations in a manner such that
any Fund so invested would qualify for treatment as a regulated investment
company.

A Master Portfolio would not be required to pay federal income taxes
on its net investment income and capital gains, as it would be structured for
treatment as a partnership for federal income tax purposes. All of a Master
Portfolio's interest, dividends and gains and losses would be deemed to have
been "passed through" to the respective Feeder Funds in proportion to each
Fund's holdings of the Master Portfolio, regardless of whether such interests,
dividends or gains were distributed by the Portfolio or losses were realized by
the Portfolio.

AMENDMENTS TO THE ADVISORY AGREEMENTS

Approval of this Proposal constitutes approval of changes to the
investment advisory agreements between an adviser and the Trust on behalf of
the Funds (the "Advisory Agreements"). A provision would be added to each
agreement that would prohibit duplicative payment at the Feeder Fund level of
an advisory fee for investment management services if Fund assets were invested
in a Master Portfolio.

AMENDMENTS TO INVESTMENT POLICIES

Upon approval of this Proposal by the shareholders of each Fund, the
Fund would amend its fundamental investment policies regarding diversification
and concentration that otherwise would be inconsistent with the conversion of
the Fund to a master-feeder or fund-of-funds structure. The amendments
described below would not in any other way affect the manner in which a Fund
currently operates. The Funds' new (or current, as the case may be)
diversification and concentration policies, which are set forth in Appendices B
and C to this Proxy Statement, would be superseded or supplemented by the
policies stated above.

EFFECTS ON THE FUNDS

Approval of this Proposal would affect the Funds in the following
ways. Currently, all Funds are not permitted to invest using either a
master-feeder or fund-of-funds structure. Upon approval of this Proposal, all
Funds would be permitted, in the future, subject to the Boards' approval, to
invest using a master-feeder or fund-of-funds structure without obtaining
shareholder approval at that time. None of these Funds, however, currently
intend to convert to either master-feeder or fund-of-funds structure.

Shareholders of each Fund are requested to approve this Item to: (1) permit
the Fund to convert in the future to a master-feeder or fund-of-funds structure
subject only each Boards approval at that time; (2) approve the amendments to
the Investment Advisory Agreements; and, (3) standardize the Funds' investment
policies with respect to master-feeder or fund-of-fund structures.

BOARD EVALUATION

<PAGE> 23
In considering the matters described in this Proposal at the Meeting,
the Boards considered each Fund, including generally the potential benefits,
costs and risks, as presented to the Boards by The Travelers, of a possible
future conversion to a master-feeder or fund-of-funds structure. In this
regard, the Boards considered the following:

- The possibility that a Fund using a master-feeder or fund-of-funds
structure could achieve greater investment and administrative
efficiencies and potentially enhanced portfolio diversification than
it could realize if it did not so convert. The Boards considered that
to the extent certain operating costs may be fixed and are currently
borne by a Fund alone, these expenses could instead be borne in whole
or in part directly by a Master Portfolio and indirectly shared pro
rata by the Fund and other investors in the Fund's Master Portfolio.

- The agreement of advisers to waive fees and/or reimburse expenses so
as to maintain the total combined operating expenses of the Master
Portfolios for the first fiscal year following conversion to a
master-feeder structure at the same levels as each Fund's total
operating expenses prior to the conversion.

- The fact that a larger asset base might allow the purchase of
investment securities by a Master Portfolio in larger denominations,
resulting in possible reductions in certain transactional and
custodial expenses.

- The diversification that might be achieved by investing a portfolio
with a larger asset base. Greater diversification is beneficial to
shareholders of a Fund because it may reduce the negative effect of
the adverse performance of any one security on the performance of the
entire investment portfolio.

- The flexibility both to attract and retain assets under management
provided by a master-feeder or fund-of-funds structure.

- The fact that in certain cases the foregoing benefits would likely
arise only if a Fund's Master Portfolio were to attract the assets of
investors other than those currently investing in the Fund; and, that
there could be no assurance that expense savings or other benefits
would be realized even if other investors were to invest in a Master
Portfolio.

- Management of the Trust's opinion that over time the aggregate per
share expenses of a Fund investing in a Master Portfolio should not be
more than the expenses that would be incurred by a Fund if it
continues to invest directly in securities, although there can be no
assurance that any expense savings would be realized.

- The possibility that the advisers and The Travelers might benefit
through increased economies of scale in the event that assets under
management rise, whether or not there would be a corresponding benefit
to Fund shareholders; particularly, that conversion to a master-feeder
or fund-of-funds structure may enable TAMIC to increase assets under
management through development of new feeder funds with less risk than
would be possible without this structure. Because investors in a new
feeder fund would invest their assets in a Master Portfolio with an
established performance record, TAMIC could attract assets with less
risk of limited success than is typical in the early, developmental
years of an investment vehicle.

Based on the foregoing, each Board, including a majority of the independent
trustees, determined that it would be in the best interests of each Fund and
its respective shareholders for shareholders to approve this Proposal.

OTHER BUSINESS

The management of the Funds knows of no other business that may come
before the meeting. However, if any additional matters are properly presented
at the meeting, it is intended that the persons named in the enclosed proxy, or
their substitutes, will vote such proxy in accordance with their judgment on
such matters.

<PAGE> 24
GENERAL INFORMATION

As of March 1, 1999, there were ______ shares of beneficial
interest of CAF outstanding, ______ shares of beneficial interest of HYBT
outstanding. ______ shares of beneficial interest of MAT outstanding, and
______ shares of beneficial interest of MMP outstanding.

A copy of each Fund's Annual Shareholder Report or the year ended
December 31, 1998, including financial statements, has been mailed to
shareholders of record at the close of business on that date and to persons who
became shareholders of record between that time and the close of business on
February 19, 1999, the record date for the determination of the shareholders
who are entitled to be notified of and to vote at the meeting.

SHAREHOLDER PROPOSALS

The Trust does not have annual or any other regularly scheduled meetings
of Shareholders, and currently has no plans to hold another meeting of
Shareholders of the Trust. Special Meetings of the Shareholders may be called
by the Trustees upon the written request of Shareholders owning at least 25% of
the outstanding Shares entitled to vote and such written Shareholders request
must be received by the Trust's Secretary at One Tower Square, Hartford,
Connecticut 06183 within a reasonable time before the solicitation is made.

It is suggested that beneficial Shareholders submit their proposals by
Certified Mail -- Return Receipt Requested by December 31, 1998. The Securities
and Exchange Commission has adopted certain requirements which apply to any
proposals of Shareholders.

The Investment Adviser

Travelers Asset Management International Corporation, One Tower Squre,
Hartford, Connecticut, serves as investment adviser to the Trust pursuant to an
Investment Advisory Agreement.

The Trust's Administration

Travelers Insurance, One Tower Square, Hartford, Connecticut 06183, is
the administrator of the Trust. Travelers has entered into a subadministrative
contract with an affiliate, Mutual Management Corp. to provide these services
to the Trust.

Officers of the Trust

Name Title Position Held Since
---- ----- -------------------

Heath B. McLendon Chariman and President January 27, 1995

Ernest J. Wright Secretary October 21, 1994

Kathleen A. McGah Assistant Secretary January 27, 1995

Lewis E. Daidone Treasurer October 25, 1996

Irving David Controller October 25, 1996

Barbara Brinn Assistant Treasurer October 25, 1996

Marianne Motley Assistant Treasurer October 25, 1996

Anthony Pace Assistant Treasurer October 25, 1996

The officers of the Trust serve for one year or until their respective
successors are chosen and qualified. The Trust pays no salaries or compensation
to any of its officers, all of whom are employees of The Travelers Insurance
Company or its affiliates.

<PAGE> 25
APPENDIX A

PROPOSED FUNDAMENTAL INVESTMENT POLICIES

Subject to shareholder approval at a meeting held April 30, 1999, the Fund
adopted the following investment policies as fundamental (those that may not be
changed without shareholder approval). The Fund may not:

1. DIVERSIFICATION: with respect to 75% of its assets, purchase a
security other than a security issued or guaranteed by the U.S. Government, its
agencies or instrumentalities or a security of an investment company if, as a
result, more than 5% of the Fund's total assets would be invested in the
securities of a single issuer or the Fund would own more than 10% of the
outstanding voting securities of any single issuer.

2. INDUSTRY CONCENTRATION: purchase a security if, as a result, more
than 25% of the Fund's total assets would be invested in securities of issuers
conducting their principal business activities in the same industry. For
purposes of this limitation, there is no limit on : (1) investments in U. S.
government securities, in repurchase agreements covering U. S. government
securities, in securities issued by the states, territories or possessions of
the United States ("municipal securities") or in foreign government securities;
or (2) investment in issuers domiciled in a single jurisdiction.
Notwithstanding anything to the contrary, to the extent permitted by the 1940
Act, the Fund may invest in one or more investment companies; provided that,
except to the extent that it invests in other investment companies pursuant to
Section 12(d)(1)(A) of the 1940 Act, the Fund treats the assets of the
investment companies in which it invests as its own for purposes of this
policy.

3. BORROWING: borrow money if, as a result, outstanding borrowings would
exceed an amount equal to one-third of the Fund's total assets.

4. REAL ESTATE: purchase or sell real estate unless acquired as a result
of ownership of securities or other instruments (but this shall not prevent the
Fund from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business).

5. LENDING: make loans to other parties if, as a result, more than
one-third of its total assets would be loaned to other parties. For purposes
of this limitation, entering into repurchase agreements, lending securities and
acquiring any debt security are not deemed to be the making of loans.

6. COMMODITIES: purchase or sell physical commodities unless acquired as
a result of ownership of securities or other instruments (but this shall not
prevent the Fund from purchasing or selling options and futures contracts or
from investing in securities or other instruments backed by physical
commodities).

7. UNDERWRITING: underwrite (as that term is defined in the 1933 Act)
securities issued by other persons except, to the extent that in connection
with the disposition of its assets, the Fund may be deemed to be an
underwriter.

8. SENIOR SECURITIES: issue any class of senior securities except to the
extent consistent with the 1940 Act.

PROPOSED OPERATING (NONFUNDAMENTAL) POLICIES

The following investment policies are operating (nonfundamental) policies with
which the Fund (except as noted) currently complies:

1. BORROWING: for purpose of the 1 limitation, the following are not
treated as borrowings to the extent they are fully collateralized: (1) the
delayed delivery of purchased securities (such as the purchase of when-issued
securities); (2) reverse repurchase agreements; (3) dollar-roll transactions;
and (5) the lending of securities ("leverage transactions"). (See Fundamental
Limitation No. 2 "Borrowing".)

2. LIQUIDITY: The Fund will not invest more than 15% (10% for Money
Market Portfolio) of its net assets in: (1) securities that cannot be disposed
of within seven days at their then-current value; (2) repurchase agreements not
entitling the holder to payment of principal within seven days; and, (3)
securities subject to policies on the sale of the securities to the public
without registration under the 1933 Act ("restricted securities") that are not
readily marketable. The Fund may treat certain restricted securities as liquid
pursuant to guidelines adopted by the Fund's Board of Trustees.
<PAGE> 26
3. EXERCISING CONTROL OF ISSUERS: The Fund will not make investments for
the purpose of exercising control of an issuer. Investments by the Fund in
entities created under the laws of foreign countries solely to facilitate
investment in securities in that country will not be deemed the making of
investments for the purpose of exercising control.

4. OTHER INVESTMENT COMPANIES: The Fund will not invest in securities of
another investment company, except to the extent permitted by the 1940 Act.

5. SHORT SALES: The Fund will not sell securities short, unless it owns
or has the right to obtain securities equivalent in kind and amount to the
securities sold short (short sales "against-the-box"), provided that
transactions in futures contracts and options are not deemed to constitute
selling securities short.

6. PURCHASING ON MARGIN: The Fund will not purchase securities on margin,
except that the Fund may use short-term credit for the clearance of its
portfolio transactions, and provided that initial and variation margin payments
in connection with futures contracts and options on futures contracts shall not
constitute purchasing securities on margin.

7. LENDING: The Fund will not lend a security if, as a result, the amount
of loaned securities would exceed an amount equal to one-third of the Fund's
total assets.

2
<PAGE> 27
APPENDIX B
CAPITAL APPRECIATION FUND

CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS

The Fund will not:

(1) invest more than 5% of its total assets, computed at market value,
in the securities of any one issuer;

(2) invest in more than 10% of any class of securities of any one
issuer;

(3) invest more than 5% of the value of its total assets in companies
which have been in operation for less than three years;

(4) borrow money, except to facilitate redemptions or for emergency or
extraordinary purposes and then only from banks and in amounts of up
to 10% of its gross assets computed at cost; while outstanding, a
borrowing may not exceed one-third of the value of the Fund's net
assets, including the amount borrowed; the Fund has no intention of
attempting to increase its net income by means of borrowing and all
borrowings will be repaid before additional investments are made;
assets pledged to secure borrowings shall be no more than the lesser
of the amount borrowed or 10% of the Fund's gross assets computed at
cost;

(5) underwrite securities, except that the Fund may purchase securities
from issuers thereof or others and dispose of such securities in a
manner consistent with its other investment policies; in the
disposition of restricted securities the Fund may be deemed to be an
underwriter, as defined in the Securities Act of 1933 (the "1933
Act");

(6) purchase real estate investment trusts that deal in real estate or
interests therein, or commodities or commodity contracts, except
transactions involving financial futures in order to limit
transactions and borrowing costs, and for hedging purposes;

(7) invest for the primary purpose of control or management;

(8) make margin purchases or short sales of securities, except that the
Fund may place up to 5% of the value of its net assets in total
margin deposits for positions in futures contracts;

(9) make loans, except that the Fund may purchase money market
securities, buy publicly and privately distributed debt securities
and lend limited amounts of its portfolio securities to
broker-dealers; all such investments must be consistent with the
Fund's investment objective and policies;

(10) invest more than 25% of its total assets in the securities of
issuers in any single industry;

(11) purchase the securities of any other investment company except in
the open market and at customary brokerage rates and in no event
more than 3% of the voting securities of any investment company;

(12) invest in interests in oil, gas or other mineral exploration or
development programs;

(13) invest more than 5% of its net assets in warrants, valued at the
lower of cost or market; warrants acquired by the Fund in units or
attached to securities will be deemed to be without value with
regard to this restriction. The Fund is subject to restrictions in
the sale of portfolio securities to, and in its purchase or
retention of securities of, companies in which the management
personnel of The Travelers Investment Management Company Inc.
("TIMCO") have a substantial interest; or

(14) invest in an amount of up to 10% of the value of the Fund's net
assets in restricted securities which may not be publicly sold
without registration under the 1933 Act.

3
<PAGE> 28
APPENDIX B, CONTINUED

HIGH YIELD BOND TRUST

CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS

The Fund will not:

1. invest more than 5% of its total assets in any one issuer with
regard to 85% of the Fund's assets;

2. invest in more than 10% of any class of securities (as defined in
the Declaration of Trust) of any one issuer;

3. borrow money, except to facilitate redemptions or for emergency or
extraordinary purposes and then only from banks and in amounts of up
to 10% of its gross assets computed at cost; while outstanding,
according to the 1940 Act, a borrowing may not exceed one-third of
the value of the Fund's net assets, including the amount borrowed;
the Fund has no intention of attempting to increase its net income
by borrowing and all borrowings will be repaid before additional
investments are made; assets pledged to secure borrowings shall be
no more than the lesser of the amount borrowed or 10% of the Fund's
gross assets computed at cost;

4. underwrite securities, except that the Fund may purchase securities
from issuers thereof or others and dispose of such securities in a
manner consistent with its other investment policies; in the
disposition of restricted securities the Fund may be deemed to be an
underwriter, as defined in the Securities Act of 1933;

5. purchase real estate or interests in real estate, except through the
purchase of securities of a type commonly purchased by financial
institutions which do not include direct interests in real estate or
mortgages, or commodities or commodity contracts;

6. invest for the primary purpose of control or management;

7. make margin purchases or short sales of securities;

8. make loans, except that the Fund may purchase money market
securities, buy publicly and privately distributed debt securities
and lend limited amounts of its portfolio securities to
broker-dealers; all such investments must be consistent with the
Fund's investment objective and policies;

10. invest more than 25% of its total assets in the securities of
issuers in any single industry;

11. purchase the securities of any other investment company except in
the open market and at customary brokerage rates and in no event
more than 3% of the voting securities of any investment company.
When consistent with its investment objectives, the Fund may
purchase securities of brokers, dealers, underwriters or investment
advisers. The Fund is subject to restrictions in the sale of
portfolio securities to, and in its purchase or retention of
securities of, companies in which the management personnel of the
Fund's adviser have a substantial interest; or

12. invest more than 10% of the value of the Fund's net assets in
illiquid securities.

4
<PAGE> 29
APPENDIX B, CONTINUED

MANAGED ASSETS TRUST

CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS

The Fund will not:

(1) purchase any securities which are rated lower than BBB by S&P, BAA
by Moody's or, if unrated by such services, are, in TAMIC's opinion,
of equivalent quality, if as a result more than 10% of the Fund's
assets which are invested in debt securities would be invested in
such securities; or purchase any debt securities rated B or lower by
either service or their equivalent;

(2) purchase any securities (other than securities issued by the U.S.
Government, its agencies or instrumentalities or securities which
are backed by the full faith and credit of the United States) of any
issuer if as a result more than 5% of its total assets would be
invested in the securities of the issuer, except that up to 25% of
its total assets may be invested without regard to this 5%
limitation;

(3) invest in securities of a single issuer if, as a result, the Fund
owns more than 10% of the outstanding voting securities of such
issuer;

(4) borrow money, except from banks as a temporary measure in an amount
not to exceed 10% of its total assets to facilitate redemptions or
for emergency or extraordinary purposes, and any such borrowings
will be repaid before additional investments are made;

(5) pledge assets, except to secure indebtedness permitted by
restriction (4) above and in amounts not in excess of the lesser of
the dollar amounts borrowed or 10% of the Fund's total assets;

(6) underwrite securities of other issuers, except that the Fund may
purchase securities from the issuer thereof or others and dispose of
such securities in a manner consistent with its investment objective
and policies;

(7) purchase or sell real estate, except that the Fund may invest in
securities secured by real estate or interests therein or issued by
companies, including real estate investment trusts, which invest in
real estate or interests therein;

(8) purchase or sell commodities or commodity contracts, except
transactions involving financial futures contracts in order to limit
transaction and borrowing costs and for hedging purposes;

(9) invest for the purpose of control or management;

(10) purchase securities on margin, except that the Fund may obtain such
short term credits as may be necessary for the clearance of
purchases and sales of securities and place up to 5% of the value of
its net assets in total margin deposits for positions in futures
contracts;

(11) make short sales of securities or maintain short positions;

(12) make loans, except that the Fund may purchase or hold debt
obligations and repurchase agreements in a manner consistent with
its investment objective and restrictions;

(13) purchase any security if as a result more than 25% of its total
assets would be invested in a single industry;

(14) purchase securities of other investment companies, except in the
open market and at customary brokerage rates and in no event more
than 3% of the voting securities of any investment company or in
connection with a merger, consolidation, purchase of assets or
similar transaction approved by the Fund's shareholders; or

(15) invest more than 10% of its total assets in illiquid securities.

5
<PAGE> 30
APPENDIX B, CONTINUED
MONEY MARKET PORTFOLIO

CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
The Fund will not:

(1) purchase any security which has a maturity date more than one year
from the date of the Fund's purchase;

(2) invest more than 25% of its assets in the securities of issuers in
any single industry, exclusive of securities issued by banks or
securities issued or guaranteed by the U.S. Government, its agencies
or instrumentalities;

(3) invest more than 5% of its assets in the securities of any one
issuer, other than securities issued or guaranteed by the U.S.
Government. However, the Fund may invest up to 25% of its total
assets in first tier securities, as defined in Rule 2a-7, of a
single issuer for a period of up to three business days after the
purchase thereof.

(4) invest in more than 10% of the outstanding securities of any one
issuer, exclusive of securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities;

(5) borrow money except from banks on a temporary basis in an aggregate
amount not to exceed one-third of the Fund's assets, including the
amount borrowed, and to be used exclusively to facilitate the
orderly maturation and sale of portfolio securities during any
periods of abnormally heavy redemption requests, if they should
occur; such borrowings may not be used to purchase investments, and
the Fund will not purchase any investments while any such borrowings
exist;

(6) pledge, hypothecate or in any manner transfer, as security for
indebtedness, any securities owned or held by the Fund except as may
be necessary in connection with any borrowing mentioned above and in
an aggregate amount not to exceed 15% of the Fund's assets;

(7) make loans, provided that the Fund may purchase money market
securities or enter into repurchase agreements;

(8) enter into repurchase agreements if, as a result thereof, more than
10% of the Fund's assets would be subject to repurchase agreements
maturing in more than seven days;

(9) make investments for the purpose of exercising control;

(10) purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition or
reorganization;

(11) invest in real estate, other than money market securities secured by
real estate or interests therein, or money market securities issued
by companies which invest in real estate or interests therein,
commodities or commodity contracts, interests in oil, gas or other
mineral exploration or development programs;

(12) purchase any securities on margin;

(13) make short sales of securities or maintain a short position or
write, purchase or sell puts, calls, straddles, spreads or
combinations thereof;

(14) invest in securities of issuers, other than agencies and
instrumentalities of the U.S. Government, having a record, together
with predecessors, of less than three years of continuous operation
if more than 5% of the Fund's assets would be invested in such
securities;

(15) purchase or retain securities of any issuer if those officers,
Trustees or Directors of the Fund or TAMIC who own individually more
than 0.5% of the outstanding securities of such issuer together own
more than 5% of the securities of such issuer; or

(16) act as an underwriter of securities.

<PAGE> 31
CAPITAL APPRECIATION FUND
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

March 5, 1999

To the Shareholders:

1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES

2. PROPOSAL TO REDESIGNATE AND AMEND OR ELIMINATE CERTAIN FUNDAMENTAL
INVESTMENT POLICIES

4. To act on any and all such other business as may properly come
before the meeting.

The close of business on March 1, 1999 has been fixed as the record date for the
determination of beneficial Shareholders entitled to notice of and to vote at
said meeting.

By order of the Board of Trustees.

ERNEST J. WRIGHT, SECRETARY

Please complete and return the enclosed proxy card as soon as possible in the
post-paid envelope provided. Your prompt response is appreciated.

YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU
OWN.

<PAGE> 32

HIGH YIELD BOND TRUST
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

March 5, 1999

To the Shareholders:

1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES

2. PROPOSAL TO REDESIGNATE AND AMEND OR ELIMINATE CERTAIN FUNDAMENTAL
INVESTMENT POLICIES

4. To act on any and all such other business as may properly come
before the meeting.

The close of business on March 1, 1999 has been fixed as the record date for the
determination of beneficial Shareholders entitled to notice of and to vote at
said meeting.

By order of the Board of Trustees.

ERNEST J. WRIGHT, SECRETARY

Please complete and return the enclosed proxy card as soon as possible in the
post-paid envelope provided. Your prompt response is appreciated.

YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU
OWN.

<PAGE> 33

MANAGED ASSETS TRUST
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

March 5, 1999

To the Shareholders:

1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES

2. PROPOSAL TO REDESIGNATE AND AMEND OR ELIMINATE CERTAIN FUNDAMENTAL
INVESTMENT POLICIES

4. To act on any and all such other business as may properly come
before the meeting.

The close of business on March 1, 1999 has been fixed as the record date for the
determination of beneficial Shareholders entitled to notice of and to vote at
said meeting.

By order of the Board of Trustees.

ERNEST J. WRIGHT, SECRETARY

Please complete and return the enclosed proxy card as soon as possible in the
post-paid envelope provided. Your prompt response is appreciated.

YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU
OWN.

<PAGE> 34

MONEY MARKET PORTFOLIO
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

March 5, 1999

To the Shareholders:

1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES

2. PROPOSAL TO REDESIGNATE AND AMEND OR ELIMINATE CERTAIN FUNDAMENTAL
INVESTMENT POLICIES

Item 2.A. Proposal To Redesignate And Amend The Fundamental
Investment Policy On Liquidity
Item 2.B Proposal To Redesignate And Amend The Fundamental
Investment Policy On Investments To Exercise Control
Item 2.C. Proposal to Redesignate and Amend the Fundamental
Investment Policy on Short Sales
Item 2.D. Proposal To Redesignate And Amend The Fundamental
Investment Policy On Purchasing On Margin
Item 2.E. Proposal To Redesignate And Amend The Fundamental
Investment Policy On Pledging Assets
Item 2.F. Proposal To Eliminate The Fundamental Investment
Policy On Oil, Gas And Minerals
Item 2.G. Proposal To Eliminate The Fundamental Investment
Policy On "Unseasoned Issuers"
Item 2.H. Proposal To Eliminate the Fundamental Investment
Policies on Puts, Calls, Straddles, Spreads, or
Combinations
Item 2.J. Proposal To Redesignate and Amend the Fundamental
Investment Policy on Investing in the Securities of
Other Investment Company
Item 2.K. Proposal To Redesignate and Amend the Fundamental
Investment Policy on Maximum Maturity of Investments
to Comply with Rule 2a-7.
Item 2.M. Proposal to Eliminate the Fundamental Investment
Policy on Securities in Which Management Holds
Interests

4. To act on any and all such other business as may properly come
before the meeting.

The close of business on March 1, 1999 has been fixed as the record date for the
determination of beneficial Shareholders entitled to notice of and to vote at
said meeting.

By order of the Board of Trustees.

ERNEST J. WRIGHT, SECRETARY

Please complete and return the enclosed proxy card as soon as possible in the
post-paid envelope provided. Your prompt response is appreciated.

YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU
OWN.

<PAGE> 35

CAPITAL APPRECIATION FUND

Proxy for a Special Meeting of Shareholders to be held on April 30, 1999

The undersigned, revoking all proxies heretofore given, hereby appoints Heath B.
McLendon and Robert E. McGill III, or either one of them, as Proxies, with full
power of substitution, to vote on behalf of the undersigned all shares of
Capital Appreciation Fund which the undersigned is entitled to vote at a Special
Meeting of Shareholders to be held at 9:00 a.m. on Friday, April 30, 1099 at One
Tower Square, Hartford, Connecticut, and at any adjournment thereof, in the
manner directed below with respect to the matters described in the Proxy
Statement for the Special meeting, receipt of which is hereby acknowledged, and
in their discretion, upon such other matters as may properly come before the
Special Meeting or any adjournment thereof.

PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.

<TABLE>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
</TABLE>
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES

Item 1.A. Proposal to Amend the Fundamental Investment Policy on
Issuer Diversification
Item 1.B. Proposal to Amend the Fundamental Investment Policy on
Industry Concentration
Item 1.C. Proposal to Amend the Fundamental Investment Policy on
Borrowing
Item 1.D. Proposal to Amend the Fundamental Investment Policy on
Real Estate
Item 1.E. Proposal to Amend the Fundamental Investment Policy on
Loans
Item 1.F. Proposal to Amend the Fundamental Investment Policy on
Commodities
Item 1.G. Proposal to Amend the Fundamental Investment Policy on
Underwriting

2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDAMENTAL INVESTMENT POLICIES

Item 2.A. Proposal to Redesignate the Fundamental Investment
Policy on Liquidity
Item 2.B Proposal to Redesignate and Amend The Fundamental
Investment Policy On Investments to Exercise Control
Item 2.C. Proposal to Redesignate and Amend the Fundamental
Investment Policy On Short Sales
Item 2.D. Proposal to Redesignate and Amend the Fundamental
Investment Policy On Purchasing On Margin
Item 2.E. Proposal to Redesignate the Fundamental Investment
Policy on Pledging Assets
Item 2.F. Proposal to Eliminate the Fundamental Investment
Policy on Oil, Gas and Minerals
Item 2.G. Proposal to Eliminate the Fundamental Investment
Policy on "Unseasoned Issuers"
Item 2.I. Proposal to Eliminate Fundamental Investment Policy on
Investing in Warrants
Item 2.J. Proposal to Redesignate the Fundamental Investment
Policy on Investing in the Securities of Other
Investment Companies
Item 2.M. Proposal to Eliminate the Fundamental Investment
Policy on Securities in Which Management Holds
Interests

3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO
PERMIT EACH FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR
MORE INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE
FUND'S ADVISORY AGREEMENT

<PAGE> 36

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE SHARES REPRESENTED
HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.

PLEASE MARK, SIGN DATE AND RETURN THIS PROXY
CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.

PLEASE SIGN EXACTLY AS NAME APPEARS AT LEFT.

DATE: , 1999
---------------------------

If signing in a representative capacity (as
attorney, executor or administrator, trustee,
guardian or custodian, corporate officer or
general partner), please indicate such
capacity following signature. Proxies for
custodian accounts must be signed by the named
custodian, not by the minor.

----------------------------------------------
Signature(s) if held jointly (Title(s), if
required)

<PAGE> 37

HIGH YIELD BOND TRUST

Proxy for a Special Meeting of Shareholders to be held on April 30, 1999

The undersigned, revoking all proxies heretofore given, hereby appoints Heath B.
McLendon and Robert E. McGill III, or either one of them, as Proxies, with full
power of substitution, to vote on behalf of the undersigned all shares of High
Yield Bond Trust which the undersigned is entitled to vote at a Special Meeting
of Shareholders to be held at 9:00 a.m. on Friday, April 30, 1099 at One Tower
Square, Hartford, Connecticut, and at any adjournment thereof, in the manner
directed below with respect to the matters described in the Proxy Statement for
the Special meeting, receipt of which is hereby acknowledged, and in their
discretion, upon such other matters as may properly come before the Special
Meeting or any adjournment thereof.

PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.

<TABLE>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN

</TABLE>

1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES

2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDAMENTAL INVESTMENT POLICIES

Item 2.A. Proposal to Redesignate the Fundamental Investment
Policy on Liquidity
Item 2.B Proposal to Redesignate and Amend the Fundamental
Investment Policy on Investments to Exercise Control
Item 2.C. Proposal to Redesignate and Amend the Fundamental
Investment Policy on Short Sales
Item 2.D. Proposal to Redesignate and Amend the Fundamental
Investment Policy on Purchasing on Margin
Item 2.E. Proposal to Redesignate the Fundamental Investment
Policy on Pledging Assets
Item 2.J. Proposal to Redesignate the Fundamental Investment
Policy on Investing in the Securities of Other
Investment Companies
Item 2.M. Proposal to Eliminate the Fundamental Investment
Policy on Securities in Which Management Holds
Interests

<PAGE> 38

PLEASE MARK, SIGN DATE AND RETURN THIS PROXY
CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.

PLEASE SIGN EXACTLY AS NAME APPEARS AT LEFT.

DATE: , 1999
-------------------------------

If signing in a representative capacity (as
attorney, executor or administrator,
trustee, guardian or custodian, corporate
officer or general partner), please indicate
such capacity following signature. Proxies
for custodian accounts must be signed by the
named custodian, not by the minor.

-------------------------------------------
Signature(s) if held jointly (Title(s), if
required)

<PAGE> 39

MANAGED ASSETS TRUST

Proxy for a Special Meeting of Shareholders to be held on April 30, 1999

The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
Managed Assets Trust which the undersigned is entitled to vote at a Special
Meeting of Shareholders to be held at 9:00 a.m. on Friday, April 30, 1099 at
One Tower Square, Hartford, Connecticut, and at any adjournment thereof, in the
manner directed below with respect to the matters described in the Proxy
Statement for the Special meeting, receipt of which is hereby acknowledged, and
in their discretion, upon such other matters as may properly come before the
Special Meeting or any adjournment thereof.

PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW

<TABLE>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
</TABLE>

1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES

2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDAMENTAL INVESTMENT POLICIES

Item 2.A. Proposal to Redesignate the Fundamental Investment
Policy on Liquidity
Item 2.B Proposal to Redesignate and Amend The Fundamental
Investment Policy on Investments to Exercise Control
Item 2.C. Proposal to Redesignate and Amend The Fundamental
Investment Policy on Short Sales
Item 2.D. Proposal to Redesignate and Amend The Fundamental
Investment Policy on Purchasing on Margin
Item 2.E. Proposal to Redesignate the Fundamental Investment
Policy on Pledging Assets
Item 2.J. Proposal to Redesignate the Fundamental Investment
Policy on Investing in the Securities of Other
Investment Companies
Item 2.L. Proposal to Redesignate the Fundamental Investment
Policy on "Credit Ratings of Issuers"

<PAGE> 40

PLEASE MARK, SIGN DATE AND RETURN THIS PROXY
CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.

PLEASE SIGN EXACTLY AS NAME APPEARS AT LEFT.

DATE: , 1999
---------------------------------

---------------------------------------------
Signature(s) if held jointly (Title(s), if
required)

<PAGE> 41

MONEY MARKET PORTFOLIO

Proxy for a Special Meeting of Shareholders to be held on April 30, 1999

The undersigned, revoking all proxies heretofore given, hereby appoints Heath B.
McLendon and Robert E. McGill III, or either one of them, as Proxies, with full
power of substitution, to vote on behalf of the undersigned all shares of Money
Market Portfolio which the undersigned is entitled to vote at a Special Meeting
of Shareholders to be held at 9:00 a.m. on Friday, April 30, 1099 at One Tower
Square, Hartford, Connecticut, and at any adjournment thereof, in the manner
directed below with respect to the matters described in the Proxy Statement for
the Special meeting, receipt of which is hereby acknowledged, and in their
discretion, upon such other matters as may properly come before the Special
Meeting or any adjournment thereof.

PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.

<TABLE>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
</TABLE>
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES

2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDAMENTAL INVESTMENT POLICIES

Item 2.A. Proposal to Redesignate the Fundamental Investment
Policy on Liquidity
Item 2.B Proposal to Redesignate and Amend the Fundamental
Investment Policy on Investments To Exercise Control
Item 2.C. Proposal to Redesignate and Amend the Fundamental
Investment Policy on Short Sales
Item 2.D. Proposal to Redesignate and Amend the Fundamental
Investment Policy on Purchasing On Margin
Item 2.E. Proposal to Redesignate the Fundamental Investment
Policy on Pledging Assets
Item 2.F. Proposal to Eliminate the Fundamental Investment
Policy on Oil, Gas And Minerals
Item 2.G. Proposal to Eliminate the Fundamental Investment
Policy on "Unseasoned Issuers"
Item 2.H. Proposal to Eliminate the Fundamental Investment
Policy on Puts And Calls
Item 2.J. Proposal to Redesignate The Fundamental Investment
Policy On Investing in the Securities of Other
Investment Companies
Item 2.K. Proposal to Re Designate and Amend the Fundamental
Investment Policy on Maximum Maturity of Investments
to Comply with Rule 2a-7
Item 2.M. Proposal to Eliminate the Fundamental Investment
Policy on Securities in Which Management Holds
Interests

3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO
PERMIT EACH FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR
MORE INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE
FUND'S ADVISORY AGREEMENT

<PAGE> 42

PLEASE MARK, SIGN DATE AND RETURN THIS PROXY
CARD PROMPTLY USING THE ENCLOSED PRE-ADDRESSED,
POSTAGE-PAID ENVELOPE.

PLEASE SIGN EXACTLY AS NAME APPEARS AT LEFT.

DATE: , 1999
------------------------

If signing in a representative capacity (as
attorney, executor or administrator, trustee,
guardian or custodian, corporate officer or
general partner), please indicate such capacity
following signature. Proxies for custodian
accounts must be signed by the named custodian,
not by the minor.

-----------------------------------------------
Signature(s) if held jointly (Title(s), if
required)