As filed with the Securities and Exchange Commission on April 30,
1999
SEC File No. 811-2046
______________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 25 [X]
MAP-EQUITY FUND
(Exact name of Registrant as specified in charter)
520 Broad Street
Newark, New Jersey 07102-3111
(Address of principal executive offices)
Registrant's Telephone Number, including Area Code 1-800-559-5535
KATHLEEN M. KOERBER
President
MAP-Equity Fund
520 Broad Street
Newark, New Jersey 07102-3111
(Name and address of agent for service)
__________________________________________________________________
MAP-EQUITY FUND
EXPLANATORY NOTE
The purpose of this filing is to fulfill the requirements of
Rule 8b-16 under the Investment Company Act of 1940, which
mandates that every registered management investment company
which is required to file a semi-annual report on Form N-SAR
shall amend the registration statement required pursuant to
Section 8(b) by filing, not more than 120 days after the close of
each fiscal year, the appropriate form prescribed for such
amendment.
This registration statement, as amended, does not constitute
an offer to sell, or the solicitation of an offer to buy, any
interest in the Fund.
On December 31, 1998, MBL Life Assurance Corporation ("MBL
Life"), the sponsor of the Fund, sold its individual life and
individual and group annuity businesses to SunAmerica Inc. (the
"Acquisition"). The Acquisition effected a resolution to the
proceedings associated with the Plan of Rehabilitation of the
Mutual Benefit Life Insurance Company (the predecessor in
interest to MBL Life). As a result of the Acquisition, MBL Life
will wind down its operations and has informed the Board of
Directors of the Fund (the "Board") that it will be unable to
continue as the Fund's sponsor after June 30, 1999. First
Priority Investment Corporation, a wholly-owned subsidiary of MBL
Life, also will be unable to continue as the Fund's distributor
after June 30, 1999.
In light of the foregoing, the Board considered various
strategic alternatives with regard to the Fund. This process
resulted in the Board approving arrangements for the business and
operations of the Fund to be continued by reorganizing the Fund
into a new portfolio of The MainStay Funds (the "New Fund").
PROPOSED REORGANIZATION. The Board has approved an
Agreement and Plan of Reorganization (the "Agreement") between
the Fund and The MainStay Funds, on behalf of the New Fund. The
Agreement provides for the transfer of all of the assets of the
Fund to the New Fund in exchange for Class I shares of the New
Fund and the assumption by the New Fund of all of the liabilities
of the Fund. The aggregate net asset value of the New Fund Class
I shares to be issued in the exchange will equal the aggregate
net asset value of the Fund shares then outstanding. Following
the exchange, the Fund will distribute the New Fund Class I
shares to its shareholders pro rata, in liquidation of the Fund
as provided in the Agreement. The transactions contemplated by
the Agreement (the "Reorganization") can be consummated only if,
among other things, a majority of the Fund's shareholders approve
the Reorganization. A Special Meeting (the "Meeting") of
Shareholders of the Fund will be held on June 3, 1999 and
approval of the Agreement will be voted on at that Meeting. In
connection with the Meeting, the Fund will be delivering to its
shareholders of record a proxy statement describing the proposed
Reorganization and a prospectus for the New Fund's Class I
shares.
Two of the individuals who currently serve as the Fund's
portfolio managers, including the Fund's primary portfolio
manager, will continue to serve as the New Fund's portfolio
managers through a new organization that will serve as the New
Fund's subadviser.
If the Fund's shareholders approve the Agreement at the
Meeting and certain other conditions required by the Agreement
are satisfied, the Reorganization is expected to become effective
in June 1999. In the event that the Fund's shareholders fail to
approve the Agreement, the Board will consider other alternatives
with regard to the Fund, such as liquidating the Fund.
Effective as of the close of business on April 30, 1999, the
Fund closed to new purchases, including purchases under the
Automatic Monthly Investment Plan. The Board believes that
closing the Fund to new purchases will help facilitate a smooth
and efficient transition of the Fund's business and operations in
connection with the Reorganization. Although no new purchases
can be made at this time, Fund shareholders may redeem any or all
of their Fund shares through the effective date of the
Reorganization, subject to the redemption procedures described
herein. Following the Reorganization, if approved, shareholders
would be able to make new purchases in the New Fund.
MAP-EQUITY FUND
PART A
MAY 1, 1999
Responses to Items 1, 2, 3, 5, and 9 have been omitted pursuant
to Instruction B of the General Instructions to Form N-1A.
ITEM 4. INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES,
AND RELATED RISKS
INVESTMENT OBJECTIVES. The Fund's primary investment objective
is long-term appreciation of capital. The Fund also seeks to
earn income, but this is a secondary objective. Since investment
involves both opportunities for gain and risk of loss, no
assurance can be given that the Fund will achieve its objectives.
PRINCIPAL INVESTMENT STRATEGIES. In seeking to achieve its
investment objectives, the Fund invests primarily in equity-type
securities, including common stocks, as well as securities
convertible into, or exchangeable for, common stocks.
Common stocks represent ownership interests and fluctuate in
value depending on such factors as the performance of the
companies whose securities are held and general economic
conditions. Securities convertible into or exchangeable for
common stocks consist primarily of warrants and bonds or
preferred stocks that have warrants attached, or that are
exchangeable into a specified number of shares of common stock.
Investments are made primarily in securities traded on national
securities exchanges and, to a lesser extent, in securities
traded in the "over-the-counter" market.
In selecting specific securities for investment, emphasis is
placed on securities that are out of favor where a catalyst
exists for turning disappointment into opportunity. Any number
of factors can indicate value. These can include statistical
indications such as relatively low multiples of book value or
cash flow. More fundamental factors include industry
consolidations and large tax loss carry forwards on the books of
companies that are moving toward profitability. On a seasonal
basis, in December there is often value in stocks that have
performed poorly during the year that are further depressed by
year-end tax selling. Value can also be reflected by a
competitive advantage such as a brand name, a license or a
copyright. These businesses usually require only modest capital
investment and little debt, producing enough cash to spend
substantial sums in product development and marketing.
Besides value, emphasis is also placed on the presence of a
catalyst that will unlock a company's potential. Management
changes, published purchases by officers, write-offs,
restructurings, employee reductions, sales of underperforming
assets, larger stock repurchases by a company, and tax law
changes on such things as capital gains and investment tax
credits are examples of events which might indicate the potential
for positive developments.
Importance is placed on assessing the judgment, quality, and
integrity of management, such as the way management has allocated
capital over a long period of time and whether management has
repurchased shares when returns have warranted it. Also
important are the track record of product development, and
managers who have a substantial personal investment in the
enterprise, taking most of their compensation in incentives, and
placing more emphasis on profitability than growth.
There may be periods of unusual or adverse market, economic,
or political conditions, or periods during which the Fund's
investment adviser has determined that investment opportunities
in the equity markets are diminished (due to either fundamental
changes in those markets or an anticipated general decline in the
value of equity securities). During such periods the Fund may
adopt a defensive position and hold its assets in cash or in
other kinds of securities such as preferred stocks, bonds,
debentures, notes, government obligations, or other evidences of
indebtedness. If the Fund does so, different factors could
affect the Fund's performance and the Fund may not achieve its
investment objectives.
The Fund normally holds its investments for a relatively
long period of time in seeking its objective of long-term capital
appreciation. However, investments may be sold whenever the
Fund's investment adviser believes that the opportunity for
current profits or the risk of market decline outweighs the
prospect of long-term and short-term capital gains. Certain
securities may be acquired from time to time in an effort to earn
short-term profits. To the extent that the Fund engages in short-
term trading, it incurs greater brokerage charges than would
otherwise be the case.
The investment objectives and policies stated above may be
changed without shareholder approval. If there is a change in
investment objective, shareholders should consider whether the
Fund remains an appropriate investment in light of their then
current financial position and needs. The Fund is subject to
certain investment restrictions which are considered fundamental
policies of the Fund and which may not be changed without the
approval by vote of a majority of the Fund's shareholders. These
fundamental investment restrictions are described in Part B,
"Investment Restrictions".
RISKS. The Fund's net asset value will fluctuate and you could
lose money by investing in the Fund. Investment in common stocks
and securities convertible into common stocks is particularly
subject to the risk of changing economic, stock market, industry
and company conditions, which can adversely affect the value of
the Fund's holdings. An investment in the Fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
ITEM 6. MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
The Fund's Board of Directors and Officers are responsible
for its management. The Officers carry out the day-to-day
functions, subject to the supervision of the Fund's Board of
Directors, which has final responsibility for the management of
the Fund's affairs.
The Fund's investment adviser is Markston Investment
Management ("Markston"), 1 North Lexington Avenue, White Plains,
New York 10601. Markston is a partnership between Markston
International, Inc. and MBL Sales Corporation, an indirect
subsidiary of MBL Life Assurance Corporation ("MBL Life").
Investment decisions for the Fund are made by two
individuals, Michael Mullarkey and Roger Lob. Mr. Mullarkey has
been responsible for the Fund's investment decisions since 1981,
and Mr. Lob has been involved in the investment decisions since
1987. Mr. Mullarkey currently is the Fund's primary portfolio
manager.
Fund assets are divided between the two managers within
certain parameters. Markston reviews this asset allocation by
manager periodically, and may adjust this allocation based on
investment performance and new investment opportunities
identified by each manager. This management structure achieves
the Fund's objective of prudent diversification while allowing
each manager to focus his research on a limited number of
companies.
Under the Investment Advisory Agreement, Markston provides
the Fund with investment advisory and management services and,
subject to the authority of the Board of Directors, is
responsible for overall management of the Fund's business
affairs. A description of the services provided by Markston
pursuant to this Agreement appears in Part B, "Investment
Advisory and Other Services".
For the services rendered to the Fund, Markston receives a
periodic fee, adjusted for investment performance, on the basis
of a percentage of net assets. A description of how the fee is
computed appears in Part B, "Investment Advisory and Other
Services". During 1998, Markston received from the Fund an
advisory fee of .35% of the Fund's average net assets for that
year.
PREPARING FOR THE YEAR 2000
The Fund relies on service providers, including, among
others, its investment adviser, custodian and transfer agent for
the systems and resources necessary to perform the shareholder
services described herein. The Fund has confirmed with its
service providers that they have developed and are in the process
of implementing a Year 2000 transition plan. The resources being
devoted to this effort by these service providers are
substantial. It is difficult to predict with precision whether
the amount of resources ultimately devoted or the outcome of
these efforts will have a negative impact on the Fund. It is not
anticipated that the shareholders will experience any negative
effects on their investment, or on the services currently
provided in connection therewith, as a result of Year 2000
transition implementation, but there can be no assurances.
ITEM 7. SHAREHOLDER INFORMATION
Effective as of the close of business on April 30, 1999, the
Fund closed to new purchases, including purchases under the
Automatic Monthly Investment Plan. The Board believes that
closing the Fund to new purchases will help facilitate a smooth
and efficient transition of the Fund's business and operations in
connection with the proposed Reorganization (see "Explanatory
Note"). Although no new purchases can be made at this time,
shareholders may redeem any or all of their Fund shares through
the effective date of the Reorganization, subject to the
redemption procedures described herein.
HOW NET ASSET VALUE IS DETERMINED
The net asset value of Fund shares is computed by dividing
the value of the Fund's investment securities, plus cash and all
other assets, less all liabilities, by the number of Fund shares
outstanding. The value of the Fund's investment securities is
generally their market value for securities traded on a national
securities exchange or over-the-counter and for which there are
readily available market quotations, amortized cost for debt
securities having a remaining maturity of 60 days or less, or
fair value as calculated by the Fund's Board of Directors for all
other securities or assets. A more detailed description of the
methods of valuing the Fund's investment securities appears in
Part B, "Pricing of Securities".
The net asset value is computed on each day on which the New
York Stock Exchange is open for trading, as of the close of
regular trading of that Exchange.
RETIREMENT PLANS
Shares of the Fund may be held under the following
retirement plans:
1. retirement plans qualified for special tax treatment under
Section 401 of the Code and adopted by corporations or self-
employed individuals;
2. Individual Retirement Accounts ("IRA Plans") qualified under
Section 408(a) and Roth IRAs qualified under Section 408A of
the Code; and
3. retirement programs qualified under Section 403(b)(7) of the
Code and established for employees of certain educational
institutions or organizations described in Section 501(c)(3)
of the Code.
A more detailed description of such arrangements appears in
Part B, "Retirement Plans".
HOW TO REDEEM FUND SHARES
BY MAIL: A shareholder may redeem all or any portion of his or
her Fund shares at any time and at no charge upon written request
to the transfer agent at: State Street Bank, P.O. Box 8500,
Boston, Massachusetts 02266-8500. The request, signed exactly as
the account is registered, may be made by completing a Stock
Power Form or by writing a letter of instruction referencing the
Fund name and account number. A minimum of $250 must be
maintained in the shareholder's Fund account to maintain an open
account. For redemptions exceeding $25,000 or when the proceeds
are being forwarded to an address other than the address of
record, the signature on the stock power or letter must be
guaranteed in accordance with written procedures adopted by the
transfer agent pursuant to requirements of the Securities
Exchange Act of 1934. These procedures provide that signatures
be guaranteed by a bank (as defined in the Federal Deposit
Insurance Act), savings association (as defined in the Federal
Deposit Insurance Act) or credit union which is listed on the
American Bankers Association - Key to Routing Numbers; a national
securities exchange, registered securities association or
clearing agency; or broker, dealer, municipal securities broker,
government securities broker or government securities dealer
which is listed in Standard & Poor's Security Dealers of North
America.
The signature guarantee must appear on the same document as
the signature(s) being guaranteed and as close as possible to the
endorsement. The signature guarantee must contain the name of
the firm, the signature of the individual guarantor with title,
if any, and cannot be qualified in any way. If the guarantee
presented does not meet the transfer agent's requirements, the
transfer agent will notify the presenter and the guarantor of the
rejection within two business days of the rejection.
The signature guarantee procedures are available from the
transfer agent at the address and telephone number given herein.
If certificates have been issued, the same procedures must be
followed and the certificates must be sent to the transfer agent
under separate cover. Additional documents may be required in
the case of redemptions by corporations, trusts, fiduciaries and
similar accounts. (Contact the transfer agent concerning the
requirements for these types of redemptions.)
Shares are redeemed at the per share net asset value next
computed after receipt by the transfer agent of the redemption
request, stock power, and certificates, if any. The per share
net asset value may be more or less than the price originally
paid for the shares, depending upon the Fund's investment
performance.
Payment for Fund shares redeemed will ordinarily be made
within seven days after receipt of the redemption request in
proper form. The Fund will not mail redemption proceeds until
checks (including certified checks or cashier's checks) received
for the shares purchased have cleared. A determination that a
check has cleared can be made through the passage of time
(customarily 10 days). If checks for the purchase of shares to
be redeemed have not cleared, the redemption request will be
returned as not being in proper form.
BY TELEPHONE: Shareholders who have authorized telephone
redemptions in the application may redeem shares up to $25,000 by
telephone instructions to the Transfer Agent, which will wire,
direct deposit or mail the proceeds of redemption to the bank for
deposit in the bank account referenced in the application, except
that telephone redemptions of less than $1,000 will be mailed.
Wire redemptions of $1,000 or more will be wired the day
following the redemption request, and a wire fee charged by the
Transfer Agent (currently $8.00 per wire) will be deducted from
the proceeds. Any change in the bank account specified in the
application must be made in writing with a signature guarantee as
described below for redemptions by mail. Shares to be redeemed
will also be valued as of the close of business on the day that a
request for redemption is received, if received prior to 4:00
p.m. Eastern Time.
Redemption instructions may be given by calling the Transfer
Agent toll free at 1-800-343-0529.
Instructions received by the Transfer Agent must include the
shareholder's name and account number. The Transfer Agent has
advised the Fund that it employs procedures selected to provide
adequate safeguards against the execution of unauthorized
transactions and reasonably designed to confirm that redemption
instructions received by telephone are genuine, including
requiring personal identification, tape recording calls, sending
redemption proceeds only to pre-authorized shareholder accounts
at banks or trust companies and providing written confirmation.
A shareholder who authorizes telephone redemptions will be liable
for any loss arising out of unauthorized or fraudulent
instructions which the Fund, acting through its Transfer Agent,
reasonably believes to be genuine if the procedures selected to
guard against unauthorized transactions are followed.
The Fund reserves the right to terminate or modify the
telephone redemption service at any time after notice to
shareholders.
A partial redemption will be made to the extent that the
shareholder's account included shares for which payment has been
received. Further, the Fund may suspend the right of redemption
or postpone the date of payment on redemption during any period
when (1) the New York Stock Exchange is closed (for reasons other
than holidays and weekends), or trading on the new York Stock
Exchange in restricted, (2) an emergency exists as determined by
the SEC, making disposal of the Fund's investment securities or
valuation of the Fund's assets not reasonably practicable, or (3)
the SEC has so permitted by order for the protection of the
Fund's shareholders.
It is not anticipated that shares will be redeemed other
than for cash. The Fund, however, reserves the right to limit
cash payment on redemption by each shareholder during a 90-day
period to the lesser of $250,000 or 1% of the Fund's net asset
value at the beginning of the period. If the Fund's Board of
Directors determines that it is in the best interests of the
remaining shareholders, the Fund may pay or satisfy any balance
of the redemption price, in whole or in part, by a distribution
in kind from the Fund's investment portfolio, in lieu of cash,
taking the securities at their value employed for determining
such redemption price, and selecting the securities in such
manner as the Board of Directors may deem fair and equitable. If
shares are redeemed in this way, brokerage costs will ordinarily
be incurred in converting such securities to cash.
GIFT TRANSFER: Shareholders may donate shares as a gift to an
individual or charity. For information contact First Priority or
your financial advisor.
HOW TO ARRANGE PERIODIC WITHDRAWALS
As a service to those who wish to receive fixed periodic
payments, the Fund permits the establishment of a Systematic
Withdrawal Plan. Any shareholder who owns, in a single account,
Fund shares having a current value of $5,000 or more or who made
an initial purchase of $5,000 (including sales charge) may
initiate a Plan by completing a form, which will be provided upon
request, and depositing with the transfer agent any share
certificates he or she holds. Such shareholder may request that
enough shares be redeemed from his or her account monthly,
quarterly or at such other interval as the Fund approves, to
produce a fixed amount of money. The amount of each withdrawal
must be at least $50, but this is not a recommended amount and
may not be suitable under all circumstances.
The redemption of shares in order to make payment under this
Plan will reduce and may eventually exhaust the account. Each
redemption of shares may result in a gain or loss, which the
shareholder reports on his or her income tax return.
Consequently, the shareholder should keep an accurate record of
any gain or loss on each withdrawal.
Administrative costs for this Plan are borne by the Fund,
but the right is reserved upon notice to the shareholder to make
a charge against the shareholder's account. Systematic
withdrawals may be terminated at any time without cost or
penalty.
RIGHTS ACCOMPANYING RUND SHARES
The Fund distributes semi-annually any net investment
income, such as dividends, and distributes annually any net
realized capital gains. More frequent distributions may be made
to the extent permitted or required by law. Any such
distribution is ordinarily credited in the form of additional
Fund shares, purchased at their net asset value, i.e., with no
sales charge, on the date that the distribution is payable,
unless the shareholder has elected in his or her application or
by written notice to the transfer agent, at least ten days prior
to the record date for such distribution, that future
distributions are to be paid by check.
TAX CONSIDERATIONS
The Fund has qualified and expects to continue to qualify
for the special tax treatment afforded regulated investment
companies under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). As such, the Fund is not subject
to Federal income tax on that part of its investment company
taxable income (consisting generally of net investment income,
net gains from certain foreign currency transactions, and net
short-term capital gain, if any) and any net capital gain (the
excess of net long-term capital gain over net short-term capital
loss) that it distributes to its shareholders. It is the Fund's
intention to distribute substantially all such income and gains.
For federal income tax purposes, dividends paid by the Fund
from net investment income, and the excess of net short-term
capital gain over net long-term capital loss, will be taxable to
shareholders as ordinary income. Distributions paid by the Fund
from the excess of net long-term capital gain over net short-term
capital loss will be taxable as long-term capital gains
regardless of how long the shareholder has held its shares.
These tax consequences will apply regardless of whether the
shareholder elects to have distributions reinvested in additional
shares or paid in cash. A portion of the dividends paid to
corporate shareholders may qualify for the corporate dividends-
received deduction to the extent the Fund earns qualifying
dividends. Each shareholder will receive a statement after each
calendar year setting forth the amount and character of
distributions received from the Fund for federal tax purposes.
For IRAs and pension plans, dividends and capital gains are
reinvested and are not taxed until a qualified distribution is
received from the IRA or pension plan. A 20% withholding is
required on the taxable portion of distributions from certain
retirement plans that are eligible for direct rollover, but which
are not directly rolled into another eligible plan.
Individuals and certain other classes of shareholders may be
subject to back-up withholding of federal income tax on
distributions and redemptions, if they fail to furnish their
correct taxpayer identification number (or are otherwise subject
to back-up withholding.) Individuals, corporations and other
shareholders that are not U.S. persons under the Code are subject
to different tax rules.
In addition to federal taxes, shareholders may be subject to
state and local taxes on payments received from the Fund.
The foregoing is only a summary of some of the important
Federal income tax considerations generally affecting the Fund
and its shareholders; see Part B for a more detailed discussion.
Shareholders are urged to consult their tax advisors.
ITEM 8. DISTRIBUTION ARRANGEMENTS
Not applicable.
MAP-EQUITY FUND
PART B
MAY 1, 1999
This Part B is not a prospectus, but is incorporated by
reference into, and should be read in conjunction with, Part A
(dated May 1, 1999).
TABLE OF CONTENTS Page
General Information and History .......... B-1
Description of Certain Investments ....... B-1
Investment Restrictions .................. B-2
Management of the Fund ................... B-4
Investment Advisory and Other Services ... B-6
Brokerage Allocation ..................... B-8
Personal Investing ....................... B-9
Rights Accompanying Fund Shares .......... B-9
Pricing of Securities .................... B-10
Retirement Plans ......................... B-10
Taxes .................................... B-11
Calculation of Performance Data .......... B-12
Financial Statements ..................... B-13
GENERAL INFORMATION AND HISTORY
MAP-Equity Fund (the "Fund") was incorporated under the laws
of Delaware on March 6, 1970. The Fund is registered with the
Securities and Exchange Commission (the "SEC") under the
Investment Company Act of 1940 as an open-end, diversified
management investment company. Prior to May 1, 1995, the Fund
was known as Mutual Benefit Fund.
DESCRIPTION OF CERTAIN INVESTMENTS
The Fund's investment objectives and policies are described
in Part A under "Investment Objectives, Principal Investment
Strategies, and Related Risks".
The following are the types of investments which may be made
by the Fund and certain investment restrictions imposed on the
Fund in seeking to achieve its objectives:
A warrant is a right which entitles its holder, for a
specified period of time, to acquire a specified number of shares
of common stock for a specified price per share. If the share
price at the time the warrant is exercised exceeds the total of
the exercise price of the warrant and its purchase price, the
Fund experiences a gain to the extent this total is exceeded by
the share price. However, if the share price at the time the
warrant expires is less than the exercise price of the warrant,
the Fund will suffer a loss of the purchase price of the warrant.
The Fund restricts its investment in securities of foreign
issuers to no more than 10% of the value of the Fund's total net
assets. Such securities may be subject to additional federal
taxes which would increase the cost of such investments and may
be subject to foreign government taxes which could reduce the
income yield on such securities.
In addition, foreign investments may be affected favorably
or unfavorably by changes in currency rates and exchange control
regulations. There may be less publicly available information
about a foreign company than about a United States ("U.S.")
company, and foreign companies may not be subject to accounting,
auditing and financial reporting standards and requirements
comparable to those applicable to U.S. companies. Securities of
some foreign companies may be less liquid or more volatile than
securities of U.S. companies, and foreign brokerage commissions
are generally higher than in the United States. Investments in
foreign securities may also be subject to other risks different
from those affecting U.S. investments, including local political
or economic developments, expropriation or nationalization of
assets, and imposition of withholding taxes on dividend or
interest payments.
In addition to the investments described in Part A, the Fund
may also buy "restricted" securities which cannot be sold
publicly until registered under the Securities Act of 1933. The
Fund's ability to dispose of investments in "restricted"
securities at reasonable price levels might be limited unless and
until their registration under the Securities Act of 1933 has
been completed. The Fund will endeavor to have the issuing
company pay all the expenses of any such registration, but there
is no assurance that the Fund will not have to pay all or some of
these expenses. The Fund has not invested in any "restricted"
securities to date, and has no current intention of doing so in
the future.
INVESTMENT RESTRICTIONS
The investment objectives and policies stated above as well
as those described in Part A may be changed without shareholder
approval. The following investment restrictions are fundamental
policies of the Fund and may not be changed without the approval
by vote of a majority of the Fund's shareholders.
The Fund does not
1. invest more than 10% of the value of its total net assets in
securities which are not readily marketable, such as
restricted stock, debt obligations acquired in private
transactions, and securities which are secured by interests
in real estate; or more than 5% of the value of its total
assets in equity securities which are not readily
marketable,
2. invest in real estate, although it may buy securities of
companies which deal in real estate and securities which are
secured by interests in real estate, including interests in
real estate investment trusts,
3. invest in commodities or commodity contracts,
4. invest in securities of other registered investment
companies, except by purchases in the open market involving
only customary broker's commissions or as part of a merger,
consolidation, or acquisition, subject to limitations in the
Investment Company Act of 1940,
5. make loans, except by the purchase of bonds or other debt
obligations customarily distributed privately to
institutional investors,
6. invest more than 25% of the value of its total assets in
securities of any one industry,
7. invest more than 5% of the value of its total assets in
securities (except U.S. Government securities) of any one
issuer,
8. invest in more than 8% of the outstanding voting securities,
or in more than 10% of any other class of securities, of any
one issuer,
9. invest more than 5% of the value of its total assets in
securities of companies having a record of less than three
years of continuous operations,
10. act as an underwriter of securities of other issuers, except
to the extent that it may be deemed to be an underwriter in
reselling securities, such as restricted securities,
acquired in private transactions and subsequently registered
under the Securities Act of 1933,
11. borrow money, except that, as a temporary measure for
extraordinary or emergency purposes and not for investment
purposes, the Fund may borrow from banks up to 10% of its
total assets taken at cost, provided the total borrowings
have an asset coverage, based on value, of a least 300%,
12. pledge more than 15% of its total assets taken at cost (as
an operating policy, the Fund will not pledge its assets to
the extent that the percentage of net assets pledged plus
sales load will exceed 10% of the Fund's offering price),
13. sell securities short,
14. buy securities on margin, except that it may obtain such
short-term credits as may be necessary for the clearance of
purchases and sales of securities,
15. invest in, or write, puts, calls, or combinations
thereof,
16. invest in interests in oil, gas or other mineral exploration
or development programs,
17. buy or hold the securities of any issuer, if the officers
and directors of the Fund or of its investment adviser, who
individually own beneficially more than one-half of 1% of
the securities of such issuer, together own more than 5% of
the securities of such issuer,
18. participate on a joint or joint and several basis in any
trading account in securities, or
19. invest in companies for the purpose of exercising control of
management.
The Fund does not issue senior securities except to the
extent set out in paragraph 11 above.
MANAGMENT OF THE FUND
The directors and officers of the Fund, together with a
brief description of their occupations during the past five
years, are as follows:
Horace J. DePodwin, Director (76)
One Gateway Center, 9th floor
Newark, New Jersey 07102
President, Economic Studies, Inc.; Professor and
Dean Emeritus, Graduate School of Management, Rutgers -
The State University of New Jersey.
Herbert M. Groce, Jr., Director (70)
875 Berkshire Valley Road
Wharton, New Jersey 07885
The Most Reverend, Archbishop of the Diocese of
St. Paul, Metropolitan of the Anglican Rite, Synod of
the Americas, The Holy Catholic Church as of November,
1996; prior thereto The Right Reverend, Missionary
Bishop of the Diocese of St. Paul, The American
Anglican Church as of January 8, 1994.
Jerome M. Scheckman, Director (63)
P.O. Box 807
Plandome, New York 11030
Formerly Consultant and Managing Director, Salomon
Brothers Inc.; Member of the Corporation, Babson
College; Member of the Auxiliary Board, Mt. Sinai
Hospital; Member of the Business Advisory Counsel,
Alfred University.
* Kathleen M. Koerber, President (49)
520 Broad Street
Newark, New Jersey 07102-3111
Executive Vice President and Chief Operating Officer,
MBL Life since September 1991; Director, First Priority
Investment Corporation ("First Priority"); Member of
the Management Committee of Markston Investment
Management ("Markston").
* William G. Clark, Executive Vice President (38)
520 Broad Street
Newark, New Jersey 07102-3111
Senior Vice President - Pension and Investment
Products, MBL Life since 1995, prior thereto Vice
President - Group Pension Operations; Director and
President, First Priority; Member of the Management
Committee of Markston.
* Albert W. Leier, Vice President and Treasurer (48)
520 Broad Street
Newark, New Jersey 07102-3111
Vice President and Controller, MBL Life; Director,
Vice President and Treasurer, First Priority.
* Judith C. Keilp, Vice President and Secretary (40)
520 Broad Street
Newark, New Jersey 07102-3111
Counsel, MBL Life since 1993; Vice President and
Secretary, First Priority.
* Christine M. Dempsey, Assistant Treasurer (43)
520 Broad Street
Newark, New Jersey 07102-3111
Director of Financial Reporting, MBL Life since
1994, prior thereto Manager of Financial Reporting
Department, MBL Life.
* Vicki J. Herbst, Assistant Secretary (44)
520 Broad Street
Newark, New Jersey 07102-3111
Registered Products Compliance Manager, MBL Life
since 1994, prior thereto Legal Assistant, MBL Life.
- -------------------
* Prior to May 1, 1994, each individual maintained a similar
position and/or title with the Mutual Benefit Life Insurance
Company in Rehabilitation ("Mutual Benefit Life") that he or
she now holds with MBL Life Assurance Coporation ("MBL Life").
The above-named directors and officers have served in the
same capacities for MAP-Government Fund, Inc. and MBL Growth
Fund, Inc.
Mr. Scheckman also serves as a Member of the Management
Committee of the MBL Variable Contract Account-7, a managed
separate account sponsored by MBL Life.
The officers carry out the Fund's day-to-day functions,
subject to the supervision of the Fund's Board of Directors,
which has final responsibility for the management of the Fund's
affairs. The Fund pays no remuneration to directors who also
serve as directors, officers or employees of MBL Life, Markston
or First Priority. Aggregate compensation of other directors,
who are not interested persons of MBL Life, Markston or First
Priority, paid by the Fund during 1998 is shown below. The Fund
does not pay pension or retirement benefits to the Directors.
Total Compensation
from Fund and Fund
Name of Person, Aggregate Compen- Complex Paid to
Position sation from Fund Directors
Horace J. DePodwin, $5,600 $13,600
Director
Herbert M. Groce, Jr., $5,600 $13,600
Director
Jerome M. Scheckman, $4,800 $14,400
Director
As of the date of this Part B, the directors and officers of
the Fund each owned less than 1% of its outstanding shares.
INVSTMENT ADVISORY AND OTHER SSERVICES
Markston, the Fund's investment adviser, is a New Jersey
partnership between Markston International, Inc. and MBL Sales
Corporation. Markston International, Inc., which is wholly-owned
by Michael J. Mullarkey, Roger Lob, and other Markston employees,
is a 49% general partner of Markston, and MBL Sales Corporation,
which is an indirect wholly-owned subsidiary of MBL Life, is a
51% general partner of Markston.
Markston, pursuant to an Investment Advisory Agreement,
provides the Fund with investment advisory and management
services (including investment recommendations based on a
continual study of the general economy and specific industries
and companies), placement of orders for the purchase and sale of
investment securities, office space, all necessary office
facilities, all personnel reasonably necessary for the Fund's
operations and ordinary clerical services, and all compensation
of directors, officers and employees of the Fund except for
compensation of the Fund's directors who are not interested
persons of MBL Life, Markston or First Priority.
In return for these services, Markston receives a basic fee,
adjusted for investment performance, at the annual rate of .50%
of the first $200,000,000 of the Fund's daily net asset value,
.45% of the next $100,000,000 of such value, .40% of the next
$100,000,000 of such value and .35% of all such value in excess
of $400,000,000. The fee is computed and accrued daily and paid
quarterly.
The basic fee may be increased or decreased by an amount
(the "adjustment amount") determined according to a formula based
on the Fund's performance in relation to the Standard and Poor's
500 Composite Stock Index (the "Index"). A period of 104
consecutive weeks is the full period over which performance is
computed. This period is a rolling period with each calendar
week designated as a subperiod, with the most recent subperiod
substituted for the earliest subperiod as time passes. The
performance related portion of the fee is computed over this
rolling period, and the fee is payable quarterly.
This formula provides for an increase or decrease in the
basic fee by an "adjustment rate" equal to .05% per annum
(.00096% per week) for each full two percentage points that the
Fund's investment performance (reflecting reinvestment of cash
distributions) is better or worse respectively, than the
investment record of the Index (with cash distributions also
reinvested) for the 104 calendar week period. The maximum
adjustment is .30% per annum (.00577% per week) for performance
better or worse than that of the Index by 12 percentage points or
more.
The investment performance of the Fund for any period is
equal to the change in the Fund's net asset value per share
during such period expressed as a percentage of the Fund's net
asset value per share at the beginning of such period. The
investment record of the Index for the same period is the change
in the level of the Index during such period expressed as a
percentage of the Index level at the beginning of the period.
Because the adjustment to the basic fee rate is based on the
comparative performance of the Fund and the Index, the
controlling factor is not whether Fund performance is up or down
per se, but whether it is up or down more or less than the Index.
Moreover, the comparative investment performance of the Fund is
based solely on the relevant performance period without regard to
the cumulative performance over a longer or shorter period of
time.
Markston has entered into a separate Service Agreement with
the Fund and MBL Life under which MBL Life furnishes, on a cost
reimbursement basis, investment advisory and other personnel,
research and statistical facilities, and services required by
Markston in connection with its performance under the Investment
Advisory Agreement.
During 1996, 1997 and 1998, respectively, Markston received
from the Fund advisory fees of $231,755, $432,252, and $334,330.
During 1996, 1997 and 1998, Markston reimbursed MBL Life
$32,740, $46,825, and $54,128, respectively.
Under a Distributor's Agreement, as amended, prior to the
close of business on April 30, 1999 (when the Fund closed to new
purchases), First Priority distributed the Fund's shares on a
best efforts basis. As distributor First Priority did not act as
the Fund's agent, but rather as principal which purchased
securities from the Fund and resold them for its own account.
First Priority assumed certain expenses in connection with the
offering and sale of Fund shares, including the expenses of
printing and distributing Fund prospectuses and preparing,
printing and distributing advertising and sales literature
(including copies of reports to shareholders used as sales
literature).
First Priority had been the Fund's distributor since May 1,
1994. In return for its services, First Priority retained the
sales charge paid by purchasers of Fund shares, except that First
Priority reallowed to dealers 82% of any sales charge on shares
sold by dealers pursuant to selling agreements with First
Priority. From time to time, the reallocation percentage may have
been increased up to 100% as a sales incentive. During 1996,
1997, and 1998 First Priority received $22,754, $37,522, and
$162,627, respectively, for its services as distributor.
The Fund pays all corporate expenses incurred in its
operation not assumed by Markston or First Priority, including
brokers' commissions; interest charges; taxes and governmental
fees attributable to transactions for the Fund; all other
applicable taxes arising out of the investment operations of the
Fund, including income and capital gains taxes, if any; expenses
of the issue or redemption of shares; expenses of registering or
qualifying shares for sale; charges of custodians (for custodial,
bookkeeping, and daily share-pricing services), transfer agents
(including the cost of printing and mailing reports, proxy
statements and notices to shareholders), and registrars; costs of
auditing and legal services provided by independent firms; and
premiums for investment company errors and omission insurance.
To the extent that any expenses are allocated between the
Fund and any other entity, the method of allocation is approved
by the Fund's Board of Directors.
First Priority serves as investment adviser and distributor
for MBL Variable Contract Account-7, a separate account of MBL
Life, registered as an investment company. First Priority also
performs distributor services for other entities.
State Street Bank & Trust Company, P.O. Box 8500, Boston,
Massachusetts 02266-8500, is custodian of the Fund's investment
securities and other assets. The Bank also serves as the Fund's
transfer and dividend disbursing agent through an affiliate,
Boston Financial Data Services, Inc., Two Heritage Drive, Quincy,
Massachusetts 02171. In carrying out these functions, neither
the Bank nor its affiliate performs managerial or policymaking
functions for the Fund.
BROKERAGE ALLOCATION
Markston makes decisions as to buying and selling investment
securities. In placing orders with brokers and dealers for the
purchase and sale of the Fund's investment securities, Markston
seeks the best execution at the most favorable prices,
considering all of the circumstances. Purchases and sales of
securities in the over-the-counter market are transacted with
principal market makers, except where it is believed that better
prices and executions are available elsewhere.
While Markston does not intend to limit the placement of
orders to any particular broker, it generally gives preference to
those brokers who are believed to give best execution at the most
favorable prices and who also provide research and other
brokerage services to Markston and the Fund. Research services
include written and oral advice, analyses and reports concerning
issuers, industries, securities, markets, economic factors and
trends, and portfolio strategy.
Commissions charged to the Fund by brokers who provide these
services have been higher than commissions charged by those who
do not provide them. These higher commissions are paid only if
Markston determines that they are reasonable in relation to the
value of the services provided and it has reported to the Board
of Directors of the Fund, on a periodic basis, to that effect.
Markston investment personnel determine the overall
reasonableness of commissions paid by rating brokers on such
general factors as execution capabilities, quality of research
and financial condition, as well as the net results of specific
transactions, taking into account such factors as price,
promptness, size of order and difficulty of execution. Markston
will not use broker commissions to offset business operating
expenses. The availability of those services was taken into
account in establishing the investment advisory fee.
Markston does not purchase securities for the Fund from
dealers in principal transactions, including underwritten public
offerings, with the intention of receiving research, although
Markston frequently receives the standard published research of
these dealers. Markston believes that the Fund could receive no
better prices, consistent with the best execution, for the
securities purchased, even if Markston were to receive no
research.
The Fund paid total brokerage commissions of $48,782 in 1996
(on portfolio transactions amounting to $52,030,342), of which
approximately 41% was paid to brokers that provided research;
$61,779.48 in 1997 (on portfolio transactions amounting to
$84,698,287), of which approximately 24.3% was paid to brokers
that provided research; and $44,996.83 in 1998 (on portfolio
transactions amounting to $63,342,288), of which approximately
37.9% was paid to brokers that provided research.
PERSONAL INVESTING
Personal investing by "Access Persons" of the Fund is
subject to the Fund's Code of Ethics. Access Persons are
permitted to trade for their own accounts subject to certain
restrictions. "Access Person" means any director, officer,
general partner, and "Investment Personnel" of the Fund.
Trading in a security is not permitted generally if an
Access Person knows or should have known at the time of trade
that such security is being considered for purchase or sale by
the Fund, or is being purchased or sold by the Fund.
Generally, for Access Persons, personal investing is
permitted if trades are either not on Markston's list of
securities held by or under consideration for purchase by the
Fund ("Prior Approval List"), or exempt. Among the exemptions
are: 1) de minimis purchases and sales, 2) trades in a large
capitalization company (Standard & Poor's 100), which transaction
would provide a minimal potential for conflict, and 3)
preapproved (precleared) transactions. Preclearance will be
granted because the trade would be: (i) very unlikely to be
harmful to the Fund, (ii) very unlikely to affect a highly
institutional market, (iii) clearly not related economically to
the securities to be purchased, sold or held by the Fund, (iv)
outside a fifteen day window consisting of seven days prior to
trade date, the trade date, and seven days thereafter; or (v) at
a price which is not more favorable than that obtained by the
Fund. Access Persons must seek preclearance for trades which
appear on the Prior Approval List which are not otherwise exempt
as set forth in the Fund's Code of Ethics.
All Access Persons must report all trades subject to the
Code of Ethics on a quarterly basis. Access Persons who violate
the Code of Ethics are subject to sanctions as the Board of
Directors deems appropriate, and any profits realized on trades
in violation of the Code of Ethics may be disgorged to the Fund
or to charity.
RIGHTS ACCOMPANYING FUND SHARES
The Fund is authorized by its certificate of incorporation
to issue 21,000,000 shares of $1 par value common stock. Shares,
when issued, are fully-paid and nonassessable and have no pre-
emptive, conversion or exchange rights. The Fund is generally
required to hold an annual shareholder meeting.
All shares of common stock have equal rights as to
redemption and participation in dividends, earnings, and assets
remaining on liquidation. Shares may be issued as full or
fractional shares, and each fractional share has proportionately
the same rights, including voting rights, as are provided for a
full share. The rights accompanying Fund shares are nominally
vested in the holders of the shares but, where the shares are
held by brokers or dealers in "street name" for the account of
customers, or where the holders are employee benefit plans or
trusts, an opportunity is afforded the beneficial owners of
shares to exercise their proportionate voting rights through the
nominal holders of the shares.
Each share of common stock is entitled to one vote. The
shares have "non-cumulative" voting rights, which means that the
holders of more than 50% of the shares voting for the election of
directors can elect all of the directors if they choose to do so
and, in such event, the holders of the remaining voting shares
will not be able to elect any directors.
PRICING OF SECURITIES
The net asset value of Fund shares is computed by dividing
the value of the Fund's investment securities, plus cash and all
other assets, less all liabilities, by the number of Fund shares
outstanding. The value of the Fund's investment securities is
determined as follows:
1. securities traded on a national securities exchange are
valued at the last sale price, on such securities exchange,
on the day the valuation is being computed;
2. securities traded on a national securities exchange for
which there is no sale on that day and securities traded
over-the-counter are valued at the last bid price; and
3. securities for which there are no readily available market
quotations and all other assets are valued at fair value by,
or under authority delegated by, the Fund's Board of
Directors. In determining the value of "restricted"
securities, suitable recognition will be given to such
factors as the amount of the discount at which the
securities were acquired, the extent of the Fund's right to
require registration under the Securities Act of 1933 and
the provisions as to payment of costs of such registration,
the nature of the market, if any, in which the securities
are traded, the amount of the floating supply of the
securities, and the prospects of the company issuing the
securities.
Notwithstanding the foregoing, all debt securities having a
remaining maturity of 60 days or less are valued under the
amortized cost method of valuation. Under this method,
securities are initially valued at their acquisition date (or the
date on which they first have a maturity of 60 days or less), and
their subsequent value is based on such initial value, assuming a
constant accretion of a discount or amortization of a premium to
maturity, regardless of any subsequent minor fluctuations in the
market value of the security.
RETIREMNT PLANS
Shares of the Fund may be held under the following
retirement plans:
1. retirement plans qualified for special tax treatment under
Section 401 of the Internal Revenue Code of 1986, as amended
("Code") and adopted by corporations or self-employed
individuals ("Qualified Plans");
2. Individual Retirement Accounts ("IRA") qualified under
Section 408(a) of the Code and Roth IRA's qualified under
Section 408A; and
3. retirement programs qualified under Section 403(b)(7) of the
Code and established for employees of certain educational
institutions or organizations described in Section 501(c)(3)
of the Code.
Persons who hold shares under a retirement plan should
consult an attorney or other qualified adviser regarding
applicable federal and state requirements and related tax
consequences, including, among others, adverse tax consequences
that may result from distributions prior to age 59 1/2 (subject to
certain exceptions); distributions that do not conform to
specified commencement and minimum distribution amount; certain
prohibited transactions, such as a sale, exchange, lease,
borrowing, or transfer of assets between a retirement plan
account and the participant; and in other specified
circumstances. Neither the Fund nor any of its affiliates shall
have any responsibility for the legal or tax consequences of a
retirement plan holding shares of the Fund.
For shares held under a retirement plan, the Fund will honor
redemption requests only when submitted through the Plan trustee
or custodian. Payments of redemption proceeds to plan
participants may be subject to restrictions contained in the plan
documents or in the Code.
TAXES
The Fund intends to qualify and to continue to qualify as a
regulated investment company ("RIC") under the Code. The
"Distribution Requirement," in order to qualify for that
treatment, is that the Fund must distribute to its shareholders
for each taxable year at least 90% of its investment company
taxable income, consisting generally of net investment income,
net short-term capital gain, and net gains from certain foreign
currency transactions. The Fund must also meet the following
additional requirements: (1) The Fund must derive at least 90% of
its gross income each taxable year from dividends, interest,
payments with respect to securities loans, and gains from the
sale or other disposition of securities or foreign currencies, or
other income (including gains from options, futures, or forward
contracts) derived with respect to its business of investing in
securities or those currencies ("Income Requirement"); (2) At the
close of each quarter of the Fund's taxable year, at least 50% of
the value of its total assets must be represented by cash and
cash items, U.S. Government securities, securities of other
RIC's, and other securities that, with respect to any one issuer,
do not exceed 5% of the value of the Fund's total assets and that
do not represent more than 10% of the outstanding voting
securities of the issuer; and (3) At the close of each quarter of
the Fund's taxable year, not more than 25% of the value of its
total assets may be invested in securities (other than U.S.
Government securities or the securities of other RIC's) of any
one issuer.
The Fund will be subject to a nondeductible 4% excise tax on
amounts not distributed to shareholders on a timely basis. The
Fund intends to make sufficient distributions to avoid this 4%
excise tax.
Dividends and interest received by the Fund may be subject
to income, withholding, or other taxes imposed by foreign
countries and U.S. possessions that would reduce the yield on its
securities. Tax conventions between certain countries and the
United States may reduce or eliminate these foreign taxes,
however, and foreign countries generally do not impose taxes on
capital gains in respect to investments by foreign investors.
The foregoing is only a general summary of some of the
important Federal income tax considerations generally affecting
the Fund and its shareholders. No attempt is made to present a
complete explanation of the Federal tax treatment of the Fund's
activities. Shareholders are urged to consult their own tax
advisors for more detailed information and for information
regarding any applicable state, local, or foreign taxes.
CALCULATION OF PERFORMANCE DATA
Average Annual Total Return
(Period Ended December 31, 1998)
1 Year 5 Year 10 Year
Fund 18.33% 20.62% 16.90%
Compared to:
S&P 500 28.71% 24.07% 19.20%
The average annual total return of the Fund shown above is a
measure of the change in the value of an investment in the Fund's
shares over the period covered. The calculation of the total
return figures used by the Fund involves four steps:
1. Assume a $1,000 investment in Fund shares at
the beginning of the period illustrated with the
deduction of the maximum sales load of 4.75% of
the offering price (applicable to purchases made
prior to the close of business on April 30, 1999,
when the Fund closed to new purchases);
2. Calculate the value of the hypothetical
investment as of the end of the period covered by
multiplying the total number of shares owned at
the end of the period by the net asset value per
share on the last trading day of the period;
3. Assume a total redemption of all shares at
the end of the period covered;
4. Calculate average annual total return by
applying the following formula:
P(1 + T)n = ERV
P = a hypothetical initial payment of $1,000,
T = average annual total return,
n = number of years,
ERV = ending redeemable value at the end of the 1,
5, or 10 year periods of a hypothetical
$1,000 payment made at the beginning of
the 1, 5, or 10 year periods.
Average annual total return is the average annual percentage
increase (decrease) during the period covered.
In making this calculation it is assumed that all dividends
and distributions made by the Fund are reinvested at net asset
value, i.e. with no sales charge, on the reinvestment date. All
Fund expenses and fees are reflected in the calculation of the
Fund's net asset value and, therefore, affect determination of
total return. The calculation does not include fees charged to
shareholders who hold Fund shares under retirement plans (see
"Retirement Plans"). There are no charges deducted upon
redemption.
The performance figures illustrated may be compared to
performance data for the Standard and Poor's 500 Stock Index
("S&P 500") which represents an unmanaged, weighted index of 500
industrial, transportation, utility and financial companies
widely regarded by investors as representative of the stock
market. This Index is not subject to any charges for investment
advisory or other expenses of the type charged to the Fund.
The performance figures illustrated may also be compared to
performance data for the CDA/Weisenberger Index of Long-Term
Growth Funds which is an equally weighted index of mutual funds
within the stated objective. The funds represented in this index
involve investment risks which include the loss of principal
invested.
The performance figures illustrated may also be compared to
performance data for the Lipper Growth Fund Index which is an
equally weighted performance index of the largest (30) qualifying
funds within the growth objective. This index is adjusted for
capital gains distribution and income dividends.
The performance figures illustrated may also be ranked
according to Morningstar, Inc., an independent company that rates
mutual fund performance. Its proprietary ratings reflect
historical risk-adjusted performance. Morningstar rates a fund's
performance relative to its class based on total returns,
adjusted for applicable fees and charges - thus giving the return
figure. It then calculates a risk statistic, based on monthly
fund returns. The result is a risk rating that is subtracted
from the return rating, with the end number leading to the
Morningstar rating.
FINANCIAL STATEMENTS
The Fund incorporates by reference into this Part B the
Financial Statements, including the Schedule of Portfolio
Investments and Financial Highlights, and the Report of
Independent Accountants thereon contained in its 1998 Annual
Report to Shareholders, as previously filed with the SEC
(Accession number 0001047469-99-007871).
Copies of the Fund's financial statements are mailed to each
shareholder semiannually. The Fund's annual financial statements
are audited by a firm of independent accountants. The firm of
PricewaterhouseCoopers, LLP, 1177 Avenue of the Americas, New
York, NY 10036, has been selected to audit the Fund's financial
statements for the current fiscal year. The Fund will furnish,
without charge, an additional copy of the Annual Report upon
request made to: First Priority Investment Corporation, 520
Broad Street, Newark, New Jersey 07102-3111, Attn: MAP-EQUITY
FUND, telephone number 1-800-559-5535.
MAP-EQUITY FUND
PART C
Item 23. Exhibits: *
(a) (1) Certificate of Incorporation and Amendment thereto,
incorporated by reference to earlier filing on January 6,
1971, SEC File No. 811-2046, Amendment #1 to Form N-8B-1.
(a) (2) Amendment to Certificate of Incorporation, dated
April 12, 1995 and effective May 1, 1995, incorporated by
reference to earlier filing on April 27, 1995, SEC File
No. 2-36663, Exhibit (1)(b) of Post-Effective Amendment
#35 of Form N-1A.
(b) Registrant's By-Laws as amended on April 28, 1997,
incorporated by reference to earlier filing on April 29,
1997, SEC File No. 811-2046, Amendment #37 of Form N-1A.
(c) Specimen Stock Certificate, incorporated by reference to
earlier filing on April 29, 1997, SEC File No. 811-2046,
Amendment #37 of Form N-1A.
(d) (1) Investment Advisory Agreement, dated April 25, 1983,
between the Registrant and Markston International, Inc.,
and amended December 31, 1987 and October 16, 1991,
between the Registrant and Markston Investment
Management, as successor to Markston International, Inc.,
incorporated by reference to earlier filing on April 30,
1992, SEC File No. 2-36663, Exhibit (5)(a) of Post-
Effective Amendment #32 of Form N-1A.
(d) (2) Amendment to Investment Advisory Agreement, dated
February 9, 1995 and effective April 12, 1995,
incorporated by reference to earlier filing on April 27,
1995, SEC File No. 2-36663, Exhibit (1)(b) of Post-
Effective Amendment #35 of Form N-1A.
(d) (3) Service Agreement, dated April 29, 1994, among the
Registrant, Markston Investment Management and MBL Life
Assurance Corporation, incorporated by reference to
earlier filing on April 29, 1994, SEC File No. 2-36663,
Exhibit (5)(b) of Post-Effective Amendment #34 of Form N-
1A.
(e) Not applicable.
(f) Not applicable.
(g) Custodian Fee Schedule, revised December 18, 1992, to the
Custodian Agreement between Registrant and State Street
Bank and Trust Company dated March 4, 1988 incorporated
by reference to earlier filing on April 29, 1988, SEC
File No. 2-36663, Exhibit (8) of Post-Effective Amendment
#28 to Form N-1A. Revision dated December 18, 1992,
incorporated by reference to earlier filing on April 30,
1993, SEC File No. 2-36663, Exhibit (8) of Post-Effective
Amendment #33 to Form N-1A.
(h) (1) Fee Information for Services as Plan, Transfer, and
Dividend Disbursing Agent to the Transfer Agent Agreement
between Registrant and State Street Bank and Trust
Company dated March 4, 1988, as amended February 3, 1992,
incorporated by reference to earlier filing on April 30,
1992, SEC File No. 2-36663, Exhibit (9)(a) of Post-
Effective Amendment #32 of Form N-1A.
(h) (2) License Agreement, dated January 5, 1971,
incorporated by reference to earlier filing on January 6,
1971, SEC File No 811-2046, Exhibit (5)(b) of Amendment
#1 to Form N-8B-1.
(i) Not applicable.
(j) Not applicable.
(k) Not applicable.
(l) Letter incorporated by reference to earlier filing on
January 6, 1971, SEC File No. 811-2046, Amendment #1 to
Form N-8B-1.
(m) Not applicable.
(n) Financial Data Schedule.
(o) Not applicable.
___________________________________________________________
* Page numbers inserted in manually signed copy only.
Item 24. Persons Controlled by or under Common Control with
Registrant.
Not applicable.
Item 25. Indemnification.
(a) Insurance Policies:
The Registrant maintains investment errors and omissions
insurance covering those directors who are not interested
persons of the Registrant. This policy, subject to the
terms and conditions of the policy, protects those directors
from legal liabilities and expenses which they may incur as
a result of claims for breach of duty, negligent acts,
errors, omissions, misstatements or misleading statements
committed or alleged to have been committed by them in their
capacity as directors of the Registrant. The policy,
subject to the terms and conditions of the policy, would
also insure the Registrant. The policy excludes expenses
and liabilities based upon, among other things, any claim
alleging dishonesty or fraudulent acts or omissions or any
criminal or malicious acts or omissions. The limits on the
policy are $5,000,000 each wrongful act and $5,000,000
aggregate. The Registrant also maintains "run-off"
insurance in the same amount for a period of six years,
beginning with the termination of the joint errors and
omissions insurance coverage. Notwithstanding any agreement
or document to the contrary, the Registrant undertakes not
to insure any director for any liability the insurance of
which is prohibited under the federal securities laws.
The Registrant is the joint owner of each policy with MBL
Growth Fund, Inc., MAP-Government Fund, Inc. and MBL
Variable Contract Account-7, and the premiums were divided
based on the proportion of each entity's net assets to the
total net assets of all the joint insureds at the time each
policy was purchased.
The Registrant also maintains an Investment Company Blanket
Bond covering the Registrant against larceny and
embezzlement committed by any director, officer or employee
of the Registrant or its adviser who may have access to
securities or funds of the Registrant.
(b) Delaware Law and By-Law Provision:
The General Corporation Law of the State of Delaware,
Section 145, as amended, permits the Registrant to indemnify
any person "who was or is a party or is threatened to be
made a party" to any proceeding by reason of his
relationship to the Registrant if he acted in good faith and
in a manner reasonably believed to be not opposed to the
best interest of the Registrant. Expenses may be paid in
advance and insurance may be carried by Registrant. Article
13 of Registrant's By-Laws permits similar indemnification.
(c) Distributor's Agreement:
The Distributor's Agreement contains provisions whereby
First Priority Investment Corporation ("First Priority") has
agreed to indemnify the Registrant, any person who controls
the Registrant within the meaning of Section 15 of the
Securities Act of 1933, and each person who is an officer or
director of the Distributor and who is named in the
Registration Statement as an officer or director of the
Registrant against certain liabilities under the Securities
Act of 1933.
(d) Undertaking:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant
to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
Item 26. Business and other Connections of Investment Adviser.
See "Management, Organization and Capital Structure" in Part
A of this Registration Statement and "Investment Advisory
and Other Services" in Part B for a description of Markston
Investment Management (Registrant's investment adviser) and
its business.
The Members of the Management Committee of the Investment
Adviser are as follows:
Other Substantial Business,
Profession, Vocation or
Employment within Past Two
Name Years
Kathleen M. Koerber Executive Vice President -
MBL Life and Chief Operating Officer
520 Broad Street MBL Life; Director, First
Newark, NJ 07102 Priority.
Michael J. Mullarkey Managing Partner, Markston;
Markston International, Inc. Director and Executive Vice
1 North Lexington Avenue President, Markston
White Plains, NY 10601 International, Inc.
William G. Clark Senior Vice President, Pension
MBL Life and Investment Products, MBL
520 Broad Street Life; President and Director,
Newark, NJ 07102 First Priority.
Item 27. Principal Underwriters.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
Item 28. Location of Accounts and Records.
All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act and the Rules
thereunder are maintained at the offices of the Registrant
and State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110, or First Priority
Investment Corporation, 520 Broad Street, Newark, New Jersey
07102.
Item 29. Management Services.
Other than as set forth under the caption "Management,
Organization and Capital Structure" in Part A of this
Registration Statement and under the caption "Investment
Advisory and Other Services" in Part B, Registrant is not a
party to any management-related service contract.
Item 30. Undertakings.
Not applicable.
SIGNATURES
Pursuant to the requirements of the Investment Company Act
of 1940, the Registrant has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Newark,
and State of New Jersey, on the 30th day of April, 1999.
MAP-EQUITY FUND
(Registrant)
By: /s/ Kathleen M. Koerber
Kathleen M. Koerber, President
[ARTICLE] 6
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE ANNUAL REPORT OF MAP-EQUITY FUND DATED DECEMBER 31, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
[/LEGEND]
[CIK] 0000069260
[NAME] MAP-EQUITY FUND
[MULTIPLIER] 1,000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 42305
[INVESTMENTS-AT-VALUE] 60170
[RECEIVABLES] 343
[ASSETS-OTHER] 90
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 60604
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 190
[TOTAL-LIABILITIES] 190
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 39563
[SHARES-COMMON-STOCK] 2458
[SHARES-COMMON-PRIOR] 4143
[ACCUMULATED-NII-CURRENT] 45
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 483
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 17865
[NET-ASSETS] 60414
[DIVIDEND-INCOME] 1125
[INTEREST-INCOME] 607
[OTHER-INCOME] 0
[EXPENSES-NET] 675
[NET-INVESTMENT-INCOME] 1057
[REALIZED-GAINS-CURRENT] 24437
[APPREC-INCREASE-CURRENT] (7606)
[NET-CHANGE-FROM-OPS] 17888
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1059
[DISTRIBUTIONS-OF-GAINS] 12764
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 419
[NUMBER-OF-SHARES-REDEEMED] 2674
[SHARES-REINVESTED] 569
[NET-CHANGE-IN-ASSETS] (33758)
[ACCUMULATED-NII-PRIOR] 47
[ACCUMULATED-GAINS-PRIOR] 1811
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 334
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 739
[AVERAGE-NET-ASSETS] 96365
[PER-SHARE-NAV-BEGIN] 22.73
[PER-SHARE-NII] 0.33
[PER-SHARE-GAIN-APPREC] 4.81
[PER-SHARE-DIVIDEND] 0.33
[PER-SHARE-DISTRIBUTIONS] 2.96
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 24.58
[EXPENSE-RATIO] 0.70
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
